One error (omission actually) I noticed. He talks about the checks and balances on debt caused by canceling debts every jubilee (7 years). But does not mention that in practice what actually happened is that people would refuse to lend money the closer it got to the jubilee.
And this refusal actually caused social ills, because people needed loans. So in the talmud they instituted something called a http://en.wikipedia.org/wiki/Pruzbul which allowed people to collect debts after the jubilee by turning the debt over to the court.
It's still quite interesting though, just thought I'd share some more info on the subject.
Still, the remarkable thing from the Medieval documents we have from the Middle East is that most people actually did follow the rules: they used to do profit-sharing instead of interest; lenders would become partners instead.
As for the pruzbul I believe that was introduced by Rabbi Hillel around the time of King Herod, a much later period. The remarkable thing is that jubilees were institutionalized in one form or another in much of the Middle East for many thousand years before that and it didn't cause significant economic disruption.
Still, the remarkable thing from the Medieval documents we have from the Middle East is that most people actually did follow the rules: they used to do profit-sharing instead of interest; lenders would become partners instead
> This is not because [kings] are hostile to markets. On the contrary, they normally encourage them, for the simple reason that governments find it inconvenient to levy everything they need (silks, chariot wheels, flamingo tongues, lapis lazuli) directly from their subject population; it’s much easier to encourage markets and then buy them.
> This actually helps explain the rather puzzling behaviour on the part of royal courts: after all, since kings usually controlled the gold and silver mines, what exactly was the point of stamping bits of the stuff with your face on it, dumping it on the civilian population, and then demanding they give it back to you again as taxes? It only makes sense if levying taxes was really a way to force everyone to acquire coins, so as to facilitate the rise of markets, since markets were convenient to have around.
And that's still a very good story for the "backing" of our modern currencies. Apart from the effects of having stable equilibrium, i.e. everyone excepts currency because everyone else does--which is probably the much bigger effect in anything but the very long term.
Another factor is that the world trades oil in USD. So you want to have some of your local currency and some USD around... That's why the dollar is the reserve currency of choice.
Anyway, they raise an interesting question here--one that I never considered at such scope. Not sure if I agree with their conjecture about violence creating markets, yet.
Seven years of slavery for you, your spouse, and your children seems like a fairly high ceiling for punishments. Are the author and Michael Hudson implying that the maximum punishment today -- bankruptcy -- is even more severe?
You couldn't leave, and the owner got to choose your wife for you (if you were not already married), so it was not the same as freedom, but it also was not the same type of slavery you are probably thinking about.
There was a whole procedure a slave had to go through if he voluntarily chose to stay after 7 years - not something you would expect if it was the severe punishment you are thinking of.
There was also a concept of war slaves, which was different from debt slavery.