§ 1 Plato in his Laws permits not any one to go and draw water from his neighbor's well, who has not first digged and sunk a pit in his own ground till he is come to a vein of clay, and has by his sounding experimented that the place will not yield a spring. For the clay or potter's earth, being of its own nature fatty, solid, and strong, retains the moisture it receives, and will not let it soak or pierce through. But it must be lawful for them to take water from another's ground, when there is no way or means for them to find any in their own; for the law ought to provide for men's necessity, but not favor their laziness. Should there not be the like ordinance also concerning money; that none should be allowed to borrow upon usury, nor to go and dive into other men's purses, — as it were into their wells and fountains, — before they have first searched at home and sounded every means for the obtaining it; having collected (as it were) and gathered together all the gutters and springs, to try if they can draw from them what may suffice to supply their most necessary occasions? But on the contrary, many there are who, to defray their idle expenses and to satisfy their extravagant and superfluous delights, make not use of their own, but have recourse to others, running themselves deeply into debt without any necessity. Now this may easily be judged, if one does but consider that usurers do not ordinarily lend to those which are in distress, but only to such as desire to obtain somewhat that is superfluous and of which they stand not in need. So that the credit given by the lender is a testimony sufficiently proving that the borrower has of his own; whereas on the contrary, since he has of his own, he ought to keep himself from borrowing...
[§2] ...Thus we ought in our affairs, as in a besieged town, never to admit or receive the hostile garrison of a usurer, nor to endure before our eyes the delivering up of our goods into perpetual servitude; but rather to cut off from our table what is neither necessary nor profitable, and in like manner from our beds, our couches, and our ordinary expenses, and so to keep ourselves free and at liberty, in hopes to restore again what we shall have retrenched, if Fortune shall hereafter smile upon us...
§ 3 ....The Goddess Artemis in the city of Ephesus gives to such debtors as can fly into her temple freedom and protection against their creditors; but the sanctuary of parsimony and moderation in expenses, into which no usurer can enter to pluck thence and carry away any debtor prisoner, is always open for the prudent, and affords them a long and large space of joyful and honorable repose. For as the prophetess which gave oracles in the temple of the Pythian Apollo, about the time of the Persian wars, answered the Athenians, that God had for their safety given them a wall of wood, upon which, forsaking their lands, their city, their houses, and all their goods, they had recourse to their ships for the preservation of their liberty; so God gives us a table of wood, vessels of earth, and garments of coarse cloth, if we desire to live and continue in freedom. Aim not at gilded coaches, steeds of price, And harness, richly wrought with quaint device; for how swiftly soever they may run, yet will usuries overtake them and outrun them....
§ 4 ... And as King Darius sent to the city of Athens his lieutenants Datis and Artaphernes with chains and cords, to bind the prisoners they should take; so these usurers, bringing into Greece boxes full of schedules, bills, and obligatory contracts, as so many irons and fetters for the shackling of poor criminals, go through the cities, sowing in them, as they pass, not good and profitable seed, — as did heretofore Triptolemus, when he went through all places teaching the people to sow corn, — but roots and grains of debts, that produce infinite labors and intolerable usuries, of which the end can never be found, and which, eating their way and spreading their sprouts round about, do in fine make cities bend under the burden, till they come to be suffocated. They say that hares at the same time suckle one young leveret, are ready to kindle and bring forth another, and conceive a third; but the usuries of these barbarous and wicked usurers bring forth before they conceive. For at the very delivery of their money, they immediately ask it back, taking it up at the same moment they lay it down; and they let out that again to interest which they take for the use of what they have before lent.
§ 5 It is a saying among the Messenians, Pylos before Pylos, and Pylos still you'll find; but it may much better be said against the usurers, Use before use, and use still more you'll find. So that they laugh at those natural philosophers who hold that nothing can be made of nothing and of that which has no existence; but with them usury is made and engendered of that which neither is nor ever was.--Plutarch, Moralia (translated by William Watson Goodwin) "Against Running In Debt, or Taking Up Money Upon Usury." [ES: I have not checked the Greek, but hopefully this does not undermine the points I wish to make today.]
In Debt: the First 5000 Years (pp 231-2), David Graeber calls attention to the passage quoted from Plutarch. His excerpt is briefer than my version and he uses the passage to quote Plutarch's likening the role of debt to "a foreign invasion."* Here I have different (ahh) interest in the passage. Before I get to that it's only fair to note Plutarch's main argument, which is that debt is the off-spring of the desire for luxury. Luxury is something one does not need, and so superfluous.+ And so Plutarch's main argument is a prudential plea for moderation.
This commitment helps explain, in part, what would sound strange to us: "that usurers do not ordinarily lend to those which are in distress, but only to such as desire to obtain somewhat that is superfluous and of which they stand not in need." (Hereafter, the maxim of ordinary usury; or, simply, the maxim.) I suspect Plutarch knew (even lacking Graeber's rich account) that there existed plenty of usury (to the distressed) which was 'non-ordinary' in his sense.++ Even so the passage provides nice evidence for the thought that due diligence into the ability to repay ("the borrower has of his own"), and perhaps character, was part of the "ordinary" practice of usury among the Greek aristocrats (who could be taken or be seen to afford the superfluous) that Plutarch would have known.
Of course, Plutarch's larger argument is a proposal to regulate debts ("that none should be allowed to borrow upon usury, nor to go and dive into other men's purses, — as it were into their wells and fountains, before they have first searched at home and sounded every means for the obtaining it.") This puts a requirement on any would-be-debtor, and any would-be-creditor, to fund any expenses that would (ahh) ordinarily be funded by credit out of assets (or savings). Once such due diligence has been done, there is de facto no proper need for credit/debt. This suggests, however, a more far-reaching implication. If the due diligence shows that the would-be-borrower is short of collateral or funds, then from Plutarch's perspective there is no grounds for a debt. So, the point of the regulation alongside the Maxim is clearly to prevent the creation of credit to the distressed that become debts that cannot be repaid. The underlying (political) rationale is clear enough because a debtor is, for Plutarch, somebody un-free, that is, halfway down the path to slavery.*
So much for the political angle. Plutarch also notes that the very existence of interest makes a mockery of one of the versions of the Principle of Sufficient Reason, nothing can be made of nothing and of that which has no existence. We tend to associate the principle with Parmenides; writing much later, Plutarch treats it as a common principle among the natural philosophers. Interest violates a principle of equality built into the nature of debt (recall this one); because what is returned is more -- sometimes dis-proportionally more -- than the principal.**
Of course, there are a whole battery of claims and arguments that interest does represent something (cost of borrowing, opportunity costs, inflation expectation, underlying rate of return in a society, etc.) So, the charging of interest can be made intelligible. And, perhaps, that's sufficient to undermine the idea that interest is somehow un-caused. I like that in the version of the PSR quoted by Plutarch, the PSR is committed to the claim that no thing can be produced by nothing in the sense of not existing. (For, of course, it cuts off a natural temptation to say, in response, that social fictions cause interest!)
Now, Graeber (recall) has quite interesting things to say about the genealogy of philosophy. He argues that philosophy's origins are grounded in paradoxes of coinage, and that philosophy is the complicit offspring of violent eradication of forms of life. In reflecting on this (and recall this post on the PSR), I had the following free association.
As Graeber emphasizes, the Greek word for "interest" literally means "offspring." And, from the perspective of the PSR, one may say that interest is, thus, either un-caused offspring or the product of unusually fertile principal. The latter route is (recall) the Piketty-ian world of disproportionate capital growth, perhaps, characteristic of financial capitalism; the former is a miracle of the sort that founds Christianity.
*My point today is not to criticize Graeber; even so it is worth noting explicitly that it's quite possible that Plutarch is making clear the ongoing effects of Roman control of Greece. (Graeber is very good one the role of debt in Roman political economy, so the point is a natural extension of his.)
+Plutarch seems to divide goods into necessities and luxuries. In context, it's not quite clear how Plutarch understands goods that are not strictly speaking necessary for survival, but in context not especially luxurious.
++I have noted elsewhere that Adam Smith likes to claim that very rare things/practices are common or common-sensical; Plutarch, I think, practices the reverse trope--treating quite common things as normatively non-ordinary.
**Graeber notes that In Greek the word for "interest" literally means "offspring."
Great piece! Bentham's Defence of Usury, as you know, corrects Aristotle by pointing out that in borrowing a daric one enables oneself to generate the 'offspring' (τοκος) by buying a cow that, unlike money, can give birth. But still there is something paradoxical in this, and an apparent violation of the PSR. The thought is this: you were able to raise the calf because you borrowed, but you were only able to borrow because you could raise the calf. There is an explanatory circle here, and the metaphysical fishiness of the whole affair was enough to provoke many Renaissance commentators to suppose that profiting from debt involved some sort of violation of the order of nature.
Posted by: Alexxdouglas | 12/18/2018 at 02:47 PM