Greece and the Idea of Debt


Eric Frith

(This article originally appeared at Tropics of Meta and is used with the kind permission of the author.)

The Greek sovereign debt crisis reached a climax early this week when, in an impromptu popular referendum, Greeks overwhelmingly rejected the terms of the bailout package offered by Eurozone leaders and the troika (the European Commission, European Central Bank, and International Monetary Fund).

Of the many reactions to the impasse, the one getting the most attention may be the interview of economist Thomas Piketty in the German newspaper, Die Zeit. Piketty accused Germany’s leaders of a “shocking ignorance of history.” “When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid,” said Piketty, “then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”

Some have dismissed Piketty’s indictment by pointing out the imperfections of his historical analogy—the ways in which Germany’s situation in 1953 is different from Greece’s today. No historical analogy is perfect, and in the case of the London Agreement on German debt, the differences as well as the similarities can be illuminating. It is worth noting, however, that both Piketty and his critics tend to analyze the crisis as an economic problem. This is a mistake.

The European Union is first and foremost a political project rooted in the post-WWII desire to prevent another general European war. Long before the common currency, the first institution founded to promote this goal was the European Coal and Steel Community. France and Germany sought to integrate their coal and steel industries not primarily for economic reasons, but so neither nation could mobilize for war without the knowledge and cooperation of the other. Coal and steel, like the common currency, were meant to bind European nations ever more tightly together, so that mutual dependence would ensure peace and build community. Rather than ask whether debt forgiveness makes economic sense, then, perhaps it’s more important to ask what kinds of debt advance this political project. And, given this political framing, to ask what sense of justice Greeks were expressing in the resounding “no” of last Sunday’s referendum.

The foundation of any healthy human society is cooperation and reciprocity. While debt may at first glance look like a manifestation of these, it’s actually a perverted form that becomes their opposite. What’s special about reciprocity—what makes it the glue of human community—isn’t the one-for-one exchange of loans and repayments (let alone interest payments). What’s special is the blurring of the lines between the individual and the community. When you help a neighbor, you don’t expect to be repaid exactly and on time. You expect that the neighbor, who knows you and lives where you live, will help you in a different and inevitably unequal way when and if you most need it. You may give an egg, but you don’t expect an egg back. You expect sugar, or a cordless drill. Both you and your neighbor assume that you’re better off helping each other, because you live together, and cooperation makes you stronger. That’s reciprocity. That’s community.

Debt, on the other hand, is distinguished by the quantification of what’s given, and the enforcement of its return—usually with interest, though this isn’t the defining attribute. Quantification means keeping exact track, and expecting exact repayment. It implies a lack of trust in the other party’s goodwill or mutual benefit. Enforcement means police and violence, or the threat of it. This can be direct, physical, and bloody; or it can be indirect financial enforcement, via impoverishment, malnutrition, foreclosed housing and healthcare, or long-term unemployment. But because debt’s defining features are quantification and enforcement, it can’t be considered of a piece with the reciprocity and cooperation that hold human societies together. It is a perversion; it’s the opposite.


Anyone really looking to see what debt is, at its core, will find that it’s much closer to that other near-universal of human societies: war. As anthropologist David Graeber argued in his remarkable book Debt: The First 5,000 Years, debt often serves to create or restore hierarchical politics within the institutional frameworks of communities formally based on political equality. Interest on an unrepayable debt is no longer the economist’s fee paid for use, but tribute exacted by conquerors; the triumphant use victory in the market to claim moral superiority, just as victors on the battlefield inevitably do. The illusion of community and right may persist, but only because the war is hidden behind a veil of debt.

Europe’s financial institutions and Germany’s political leaders came to Greece to enforce repayment of a debt. Their spiteful and ham-handed enforcement made Greece much poorer over the last five years, and much less able to pay. Yet they have refused to accept even partial responsibility, and continue to insist on the original terms of repayment anyway. As James K. Galbraith reports, they insist as well on their right to remake Greek society by diktat.

There may be other ways to resolve the crisis and rescue the community, if the creditor powers could acknowledge shared responsibility and work toward the goal of mutual benefit. Economist Marie Duggan, for example, recently revived a plan John Maynard Keynes proposed for Britain’s debt crisis in 1944, in the midst of WWII. Keynes’s plan required creditors as well as debtors to make adjustments, cooperatively, and replaced the trap of short-term loans with long-term investment (but without massive shock-doctrine privatization). The idea is to re-align institutional incentives “so that the creditors only gain when the debtors themselves grow.” But Germany and the troika, captive to their commercial lenders and blinkered by their sanctimony, have rejected any proposal that makes demands of creditors.

Now the Greeks have said, that isn’t cooperation. That isn’t reciprocity. That isn’t community. The only question remaining is, will Germany and the troika destroy the community to prosecute their financial war against Greece? And, if they do, will the rest of the world, in solidarity and community with Greece, call them to account for the debts they never repaid?

The “economic” is always moral and political at its root. Creditors will always proclaim their moral superiority, and grasp after political supremacy. The Greek government may yet concede both. In the meantime, thank goodness the Greek people reminded us to think about community, reciprocity, and justice when we talk about debt.

Eric Frith is a doctoral candidate in Latin American history at Columbia University, and assistant professor of history at the US Air Force Academy in Colorado Springs. His research focuses on the history of political and economic thought in Europe and Latin America, and the emergence of the economy as a distinct field of knowledge. He also writes about religion and politics in the modern world, and has begun work on a history of suicide.

11 thoughts on “Greece and the Idea of Debt

  1. Interesting post. And I will read the Piketty article shortly. If I understand you corruptly, there is a problem with a statement you made regarding economic as having morality. “The “economic” is always moral and political at its root. Creditors will always proclaim their moral superiority, and grasp after political supremacy.” The problem I have with this is that Capitalistm, by definition has no human moral or ethical component. As a belief system, an ideology, it is about a belief in the power of capital and by any means necessary. That is not a moral or ethical belief system. What we have is the development over the past few decades of the rise corporation power grown by virtue of its ability to buy politicians, the voting process, owning the media and the resulting destruction of regulations designed specially to keep the corporate need for greed and power under control.

    What bothers me in this post is the assumption that politics are at the root of the economy. I believe this is completely backwards. In all societies social institutions form to support the economic one. Attempts to make the polity the controlling institution have proven weak at best as the public is dumbed down with corporate controlled propaganda and a polity that has been bought and paid for by those corporations.

    With austerity we have seen over and over that it is the process of economic imperialism. Debt is forced onto a society with concomitant demands for the withdrawal of social programs for the people. The IMF has done this for years in Africa and we know the end results. Monies ‘loaned’ to countries are used to build up the facilities for corporations to function with great comfort and convenience. Thus, we see countries with their health, education, infrastructure for the people destroyed while high rise conference centers, near new airports and high end restaurants being built for the wealthy to come and do their business of raping the country of its resources–the people always be damned!

    The Greeks were treated like 3rd world people by the EU. Austerity was being enforced in the usual manner. However, the hubris of exceptionalism backfired here as the Greeks are much more European than being credited. Their history is one of western labor progress and social benefits and large scale community, etc. The EU very cynically demanded a referendum believing the people would be too frightened to reject austerity. They also thought they were being ‘smart’ and forcing the socialist leader’s political hand. So first, the govt called their bluff. And then the people reacted with force and decisively voted NO to the EU rip off.
    It did not escape me to notice the immediate accusation that the election was rigged. Sounds like sore losers to me.

    I do agree with you that this enforced debt is war like, just bloodless as possible. However, militant intervention is the last refuge of the economic scoundrels in power. It is the power of the gun that allows them to pretend to be ‘cooperative.; Cooperation was never part of their make up or plan. Power and total control of the European continent is. And that is what this mess is about. So not in agreement here that the sole purpose of the EU was to prevent another war. The TPP is a good example to examine. Written in secret much of it by corporations, it is a manifesto of greed and destruction of human benefits fought for by millions over the last 2 centuries alone. Just like Monsanto and company that pushed GMOs and their chemical glyphosate, and now 2, 4-D, disastrous to environment and human health, their stated goal is to control the world’s food. Doing so is a means to controlling the world in their mind. The TPP pushes GMOs and protects corporations investments. What constitution in the world promises to protect private investment? Since when should the public be responsible for ensuring the profits of corporations and protecting them from some country passing laws that protect its land and people? This is the mentality of the EU with Greece.

    Something else that I am presently reading are a series of articles that describe some of the same kind of banking Ponzi games as Wall Street played going on with the EU banks, Germany in particular. The idea was that if Greece defaults the EU banks will fall as they are propped up with gossamer at the moment. So again Greece was used as a pawn amongst those EU elites who disrespect Greece and its people.

    I do think that this whole mess is about economic imperialism just moved forward a few years. Who was the author of that book on An Economic Hit Man? He worked high up with IMF and describes in detail the way it worked to take over other countries and their resources. Pretty nefarious stuff if you ask me.

    • Yes, I remember reading “Confessions of an Economic Hit Man.” John Perkins. War and debt — different forms of coercive power that lead to exploitation and that often end in enslavement.

      If anything, economic power is more difficult to resist than military power. The latter usually has a form and a face, yet the former can seem formless and faceless.

      Greece is right to resist. Maybe the Greeks should send a bill to Europe for Socrates, Plato, Aristotle, and the whole notion of democracy and western civilization. Or perhaps a bill for the battles of Marathon and Salamis.

      • it is true that economic encroachment is less visible and noticeably dramatic than war but much more devastating. Clearly a more desirable process than war in terms of sucking in the people. War makes money for the very wealthy, but economic control long term is even more profitable.

        I like your idea of billing the EU for the historic benefits derived from Greece as well as a bill for its destruction

    • Just a quick note: You ask “What constitution in the world promises to protect private investment?” Well, how about every capitalist nation in modern history? The fundamental function of the state IS to protect private property. (And in the attempt at Socialism in the USSR, severely derailed in due time, the economy was supposed to operate in the interest of the masses and thus a system of repression was required to defend the gains of the revolution against a resurgence of Capitalism and attempted sabotage of the economy.)

    • “The EU very cynically demanded a referendum believing the people would be too frightened to reject austerity. ”

      Tsipras called for a referendum after the EU released reform demands in June.

      What referendum did the EU request?

  2. “A basic mathematical as well as political principle is at work: Debts that can’t be paid, won’t be.”
    Michael Hudson
    Debt is a method of control … for example read John K. Turner’s ‘Barbarous Mexico’, but there are many other examples. What can’t be controlled gets punished.

  3. Let’s take a quick look at the domestic scene, where SUPPOSEDLY the economy is recovering just splendidly, thank you, from the crackup of 2008 when so many mortgage- (as I say in preference to “home-“) owners found the market value of their dwellings plunging below what they had committed to pay via that long, long-term debt instrument. Many households are only able to put food on the table by paying the grocery tab via credit card, or worse yet by taking out a “payday loan” at usurious interest rates. Every time you use a credit card you are, of course, assuming a debt.

    • As usual greg is following the correct thread. Just ‘follow the money’, that is, where does it end up as ‘unencumbered’ income. I offer the hypothesis that it ends up in the accounts of creditors (capitalists).
      (in this context ‘unencumbered’ income is that which is NOT reserved for debt service or taxes)
      how much of your income goes to capitalists …

  4. The Greeks folded yesterday by vote of parliament. I was hoping they would do the scary thing few of us might actually have the cajoles for. A moment ago I was looking out a window at the curious site of a tiny worm an inch long and no thicker than a needle, swaying from side to side as it contorted its body in all manner of ways. At lined up with a near tree, and that dark background revealed a single slender strand of a spider’s web wrapped fast around one end of the insect, like a head in a noose. Greece, snared identically by rapacious capitalism wielded by hierarchical authority, may have ceased wriggling for its freedom. My head, too, is in another identical noose. The only difference is I am not being tugged about right at this very moment, my restraint pulled to choke point by my master’s. They will surely do so, though, sooner or later.

    • I just don’t know about this Tsipras guy. If I’m impatient with his flip-flopping–which suggests he’s just another politician, not exceptional–imagine how the Greek people must feel! I fully understand that he’s under tremendous pressure from the Powers That Be, but maybe he IS exceptional in this regard: one day he joins the “Vote No!” crowd in the streets (imagine a US President in this day and age mixing directly with the people like that! *) and the next he’s (apparently) selling them out! Now that takes chutzpah! I guess the safe bet is that he WILL, in the end, prove to be a typical politician. A servant of Capital in a Socialist’s clothing, shall we say?

      * Richard Nixon tried mixing with (some of) the people that crazy morning when he tried to sweet-talk anti-war protestors on the streets of the nation’s capital in the wake of the revelation of the US military actions on Cambodian territory. From that point on his mental stability was in grave question for anyone not in his camp, anyone “with eyes to see.”

    • Caught fast in a spider web of debt and deceit, twisting in the wind, the spider ready to consume its prey. Wonderful visual. Thanks.

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