Debt Forgiveness
In the Jewish Tradtion
Stephen A. O’Connell:
"The Mosaic law, as set out in the Hebrew Torah, lays out three cyclical periods of rest: the Sabbath, occurring every 7th day, the Sabbatical year, occurring every 7th year, and the Jubilee year, occurring every 50th year (following 7 sabbaticals). Jews are admonished not to work on the Sabbath day and not to plant or harvest in either the Sabbatical year or the year of Jubilee. The Sabbatical and Jubilee years, however, have distinctive features associated with freedom from the bondage of debt or servitude.
Thus:
1 At the end of every seven years you must cancel debts.
2 This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD’s time for canceling debts has been proclaimed. (Deut. 15: 1-2, NIV)
Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants. It shall be a jubilee for you; each one of you is to return to his family property and each to his own clan.. (Lev. 25:10, NIV)
The presumption here is not that loans are made to exploit commercial opportunity, but rather to avert disaster. Indeed the Mosaic law encourages such lending: 7 If there is a poor man among your brothers in any of the towns of the land that the LORD your God is giving you, do not be hardhearted or tightfisted toward your poor brother. 8 Rather be openhanded and freely lend him what he needs. (Deut. 15: 7-8, NIV)
Thus in regulating intra-community debt, the Mosaic tradition imposes a structure of obligation that constrains the lender as much as the borrower. Debt, indentured servitude, and the alienation of land are viewed as the result of misfortune, with the result that creditors acquire an obligation not only to lend but also to remit debts periodically in the interest of justice. This strand of thought is mirrored in the Hebrew, Christian and Islamic prohibitions against usury, all of which grew up in agrarian communities in which technology was largely stagnant and borrowing was as much to avert calamity as to exploit opportunity.
In the Sabbatical and Jubilee traditions, both creditor and debtor operate under normative obligations. To call the periodic cancellation of intra-community debts ‘forgiveness’ in the modern sense is to mistake a presumption of misfortune for a presumption of malfeasance. As fundamentally, it is to repudiate the obligations of the strong towards the weak that have been a central feature of Jewish belief since ancient times. Permanent bondage of debt or servitude were not to be countenanced within the tribes of Israel, in covenant with the God they believed had delivered them from slavery in Egypt.
The Jubilee tradition has most recently provided the inspiration for a massive campaign to eliminate the sovereign debts of poor countries. The substantive considerations that must be weighed in the Jubilee 2000 debate span the range suggested in this note, from considerations of risk-sharing, incentives, and efficiency to considerations of social justice in the human community. Each of these considerations is further complicated by the sovereign nature of the debts. It is a costly diversion to follow economists and journalists in referring to the central proposal as one of debt forgiveness. The question at hand is one of debt cancellation, in all its pure and simple complexity. To advance the substantive debate, let’s call it that." (http://www.swarthmore.edu/SocSci/soconne1/documents/forgive.pdf)