Debt: The First Billion Years

What  is debt?   The word is only one syllable, only four letters, but it packs an entire world of  significance and complexity that few other words do.  In the modern world debt is synonymous  with money. But if we stop at money, we are not doing the concept of debt justice, for it goes far deeper than money in both human and evolutionary history.

I think we need to look at debt as a more universal concept that includes all of life.  I see debt as an ever-changing balance between the present and the future.  If too much of what is present is consumed then debt grows too high and the  future is undermined.  If not enough of the present is taken  then we die before we even start.  There must be a balance.

OK, forget the metaphor.  What is it really? Debt is an obligation owed by the "debtor" to the "creditor".  It is an agreement, a contract, that rests on  legal  definitions of property and human rights. This  presupposes human society, governments, associations, markets,  language, memory,  and the ability of legal institutions to enforce those rights.  Debt exists over time periods that are bound by human events. In these time periods debts can be paid down, renegotiated, forgiven, kept in perpetuity, processed into derivatives, and  can even create a global financial meltdown.

The growth of debt and money are not subject to physical laws but to conceptual laws, ie, mathematics because symbolic concepts are what humans use to communicate and make agreements.  Since debt is not tied to physical laws it can, in theory, grow exponentially.

If humans went extinct there would be no debt, the debt would be paid, so to speak. So debt is ultimately bound by human mortality.  There are limits to the growth of debt therefore.  And human action depends on the existence of the Sun, the Earth and earth, as in dirt and rocks.  These are all finite although Economics treats them as virtually infinite as if they were contained within the human economy.  This is a fatal error, meaning the science of Economics needs to pull a 180.

Why do humans have debt, while other critters don't?   Maybe debt is a biological subject too.   What is the Darwinian explanation?  Let's go back to the metaphor - "an ever-changing  balance between the present and the future"  Every critter has some form of it:  Invest energy now to keep predators at bay in order to survive and pass on descendants; Consume too much and die back;  Exist in symbiosis  with the eco-systems and maintain descendants;   Grow too big, too fast and run out of resources; Migrate to other continents, but eventually run out of eco-systems to destroy, then go terminal.

What I'm getting at is that while debt is a purely human invention, it's meaning and  history have a "biological" continuity.  We use debt in human society to finance investments that we expect to pay off in the future and to help pay for emergencies  All living things sometimes borrow from the future to keep from starving and being eaten.  As long as they succeed in balancing the present and the future they can keep on going, if not, not.   There are a lot of dumb ways to die.
Humans are known for being smart and problem solving.   Humans evolved the capacity to cooperate and share information.  That's what made language, technology and the economic system of trade and markets possible.

There is an ancient association of debt to morality.  The code of Hammarabi stated:  " an eye for an eye, tooth for a tooth."  This is moral reciprocity:  if I struck out your eye you could strike out my eye in retaliation.  The concept of punishment derives from this moral sense -  You do something wrong, and you have incurred a debt which gets repaid by a punishment.  When something goes wrong it has to be righted.  There is a balance.  the goddess of justice with her scales exemplifies this moral sense of debt.

This derives from the need, in human society to  balance  individuals and groups.  Groups are what makes humans superior to other animals, but individuals are the source of variation.  Without individual variations populations cannot adapt to environmental changes and they go extinct.  But individuals can take advantage of group sharing and cooperation by free-riding without contributing to the group.

 Moral rules and religion are ways that groups control individuals, so that individuals are, for the most part, prevented from taking advantage of the group as a whole. If this were not the case, then groups would have fragmented long ago and humans would have lost out to other primates.

Primate societies operate on dominance relations.  One's ability to reproduce is reflected by one's social dominance.  This creates a social order but it leaves a lot of potential unrealized.  In human societies people are infinitely more cooperative.  Compared  to all other animals, only humans care for dependents for extended lengths of time.  The idea that  we owe a debt to our parents or to society has been around for a long time.  It reflects the time we have spent being fed and cared for before we are ready to strike out on our own.

Only humans have marriage, which is an agreement between two families that many ways resembles  a debt because it is the recognition of a mutual obligation.    There are countless wedding ceremonies and customs which in some way symbolize the transfer of debt from old to new, such as the customs of dowries and bride price. The exchange of rings symbolizes a down payment, and the marriage ceremony itself is a mutual contract. The object of marriage has traditionally been for procreation, thus the wedding can be seen as the loan of resources that are required to start a new family.  This may well be the original form of debt.

 Thus, in inventing and using the  concept of debt we recognize that our very existence derives from a give and take between generations and between humanity and nature.

Unfortunately there is one difference between what the concept of debt means in the human economy and what it means in the bigger economy of nature.  In Nature's economy  we can't re-negotiate ourselves out of extinction by filing for bankruptcy.     Can humans negotiate with Climate Change?  In this sense I don't think the huge debts in non-renewable resources that we are piling up will ever be  forgiven.  I think we are in for a rude awakening.

The creativity with which we use the concept of debt today should not blind us to the fact that we need to understand the physical limits of human action and energy use.  In other words, we need to know how the human economy can exist and sustain itself within the Earth's Economy.  Let's use our brains and knowledge to manage all kinds of  debt wisely so that we can continue to have a future.

Charter 8

III. What We Advocate

Authoritarianism is in general decline throughout the world; in China, too, the era of emperors and overlords is on the way out. The time is arriving everywhere for citizens to be masters of states. For China the path that leads out of our current predicament is to divest ourselves of the authoritarian notion of reliance on an “enlightened overlord” or an “honest official” and to turn instead toward a system of liberties, democracy, and the rule of law, and toward fostering the consciousness of modern citizens who see rights as fundamental and participation as a duty. Accordingly, and in a spirit of this duty as responsible and constructive citizens, we offer the following recommendations on national governance, citizens’ rights, and social development:

1. A New Constitution. We should recast our present constitution, rescinding its provisions that contradict the principle that sovereignty resides with the people and turning it into a document that genuinely guarantees human rights, authorizes the exercise of public power, and serves as the legal underpinning of China’s democratization. The constitution must be the highest law in the land, beyond violation by any individual, group, or political party.

2. Separation of Powers. We should construct a modern government in which the separation of legislative, judicial, and executive power is guaranteed. We need an Administrative Law that defines the scope of government responsibility and prevents abuse of administrative power. Government should be responsible to taxpayers. Division of power between provincial governments and the central government should adhere to the principle that central powers are only those specifically granted by the constitution and all other powers belong to the local governments.

3. Legislative Democracy. Members of legislative bodies at all levels should be chosen by direct election, and legislative democracy should observe just and impartial principles.

4. An Independent Judiciary. The rule of law must be above the interests of any particular political party and judges must be independent. We need to establish a constitutional supreme court and institute procedures for constitutional review. As soon as possible, we should abolish all of the Committees on Political and Legal Affairs that now allow Communist Party officials at every level to decide politically sensitive cases in advance and out of court. We should strictly forbid the use of public offices for private purposes.

5. Public Control of Public Servants. The military should be made answerable to the national government, not to a political party, and should be made more professional. Military personnel should swear allegiance to the constitution and remain nonpartisan. Political party organizations must be prohibited in the military. All public officials including police should serve as nonpartisans, and the current practice of favoring one political party in the hiring of public servants must end.

6. Guarantee of Human Rights. There must be strict guarantees of human rights and respect for human dignity. There should be a Human Rights Committee, responsible to the highest legislative body, that will prevent the government from abusing public power in violation of human rights. A democratic and constitutional China especially must guarantee the personal freedom of citizens. No one should suffer illegal arrest, detention, arraignment, interrogation, or punishment. The system of “Reeducation through Labor” must be abolished.

7. Election of Public Officials. There should be a comprehensive system of democratic elections based on “one person, one vote.” The direct election of administrative heads at the levels of county, city, province, and nation should be systematically implemented. The rights to hold periodic free elections and to participate in them as a citizen are inalienable.

8. Rural–Urban Equality. The two-tier household registry system must be abolished. This system favors urban residents and harms rural residents. We should establish instead a system that gives every citizen the same constitutional rights and the same freedom to choose where to live.

9. Freedom to Form Groups. The right of citizens to form groups must be guaranteed. The current system for registering nongovernment groups, which requires a group to be “approved,” should be replaced by a system in which a group simply registers itself. The formation of political parties should be governed by the constitution and the laws, which means that we must abolish the special privilege of one party to monopolize power and must guarantee principles of free and fair competition among political parties.

10. Freedom to Assemble. The constitution provides that peaceful assembly, demonstration, protest, and freedom of expression are fundamental rights of a citizen. The ruling party and the government must not be permitted to subject these to illegal interference or unconstitutional obstruction.

11. Freedom of Expression. We should make freedom of speech, freedom of the press, and academic freedom universal, thereby guaranteeing that citizens can be informed and can exercise their right of political supervision. These freedoms should be upheld by a Press Law that abolishes political restrictions on the press. The provision in the current Criminal Law that refers to “the crime of incitement to subvert state power” must be abolished. We should end the practice of viewing words as crimes.

12. Freedom of Religion. We must guarantee freedom of religion and belief, and institute a separation of religion and state. There must be no governmental interference in peaceful religious activities. We should abolish any laws, regulations, or local rules that limit or suppress the religious freedom of citizens. We should abolish the current system that requires religious groups (and their places of worship) to get official approval in advance and substitute for it a system in which registry is optional and, for those who choose to register, automatic.

13. Civic Education. In our schools we should abolish political curriculums and examinations that are designed to indoctrinate students in state ideology and to instill support for the rule of one party. We should replace them with civic education that advances universal values and citizens’ rights, fosters civic consciousness, and promotes civic virtues that serve society.

14. Protection of Private Property. We should establish and protect the right to private property and promote an economic system of free and fair markets. We should do away with government monopolies in commerce and industry and guarantee the freedom to start new enterprises. We should establish a Committee on State-Owned Property, reporting to the national legislature, that will monitor the transfer of state-owned enterprises to private ownership in a fair, competitive, and orderly manner. We should institute a land reform that promotes private ownership of land, guarantees the right to buy and sell land, and allows the true value of private property to be adequately reflected in the market.

15. Financial and Tax Reform. We should establish a democratically regulated and accountable system of public finance that ensures the protection of taxpayer rights and that operates through legal procedures. We need a system by which public revenues that belong to a certain level of government—central, provincial, county or local—are controlled at that level. We need major tax reform that will abolish any unfair taxes, simplify the tax system, and spread the tax burden fairly. Government officials should not be able to raise taxes, or institute new ones, without public deliberation and the approval of a democratic assembly. We should reform the ownership system in order to encourage competition among a wider variety of market participants.

16. Social Security. We should establish a fair and adequate social security system that covers all citizens and ensures basic access to education, health care, retirement security, and employment.

17. Protection of the Environment. We need to protect the natural environment and to promote development in a way that is sustainable and responsible to our descendants and to the rest of humanity. This means insisting that the state and its officials at all levels not only do what they must do to achieve these goals, but also accept the supervision and participation of nongovernmental organizations.

18. A Federated Republic. A democratic China should seek to act as a responsible major power contributing toward peace and development in the Asian Pacific region by approaching others in a spirit of equality and fairness. In Hong Kong and Macao, we should support the freedoms that already exist. With respect to Taiwan, we should declare our commitment to the principles of freedom and democracy and then, negotiating as equals and ready to compromise, seek a formula for peaceful unification. We should approach disputes in the national-minority areas of China with an open mind, seeking ways to find a workable framework within which all ethnic and religious groups can flourish. We should aim ultimately at a federation of democratic communities of China.

19. Truth in Reconciliation. We should restore the reputations of all people, including their family members, who suffered political stigma in the political campaigns of the past or who have been labeled as criminals because of their thought, speech, or faith. The state should pay reparations to these people. All political prisoners and prisoners of conscience must be released. There should be a Truth Investigation Commission charged with finding the facts about past injustices and atrocities, determining responsibility for them, upholding justice, and, on these bases, seeking social reconciliation.

China, as a major nation of the world, as one of five permanent members of the United Nations Security Council, and as a member of the UN Council on Human Rights, should be contributing to peace for humankind and progress toward human rights. Unfortunately, we stand today as the only country among the major nations that remains mired in authoritarian politics. Our political system continues to produce human rights disasters and social crises, thereby not only constricting China’s own development but also limiting the progress of all of human civilization. This must change, truly it must. The democratization of Chinese politics can be put off no longer.

Accordingly, we dare to put civic spirit into practice by announcing Charter 08. We hope that our fellow citizens who feel a similar sense of crisis, responsibility, and mission, whether they are inside the government or not, and regardless of their social status, will set aside small differences to embrace the broad goals of this citizens’ movement. Together we can work for major changes in Chinese society and for the rapid establishment of a free, democratic, and constitutional country. We can bring to reality the goals and ideals that our people have incessantly been seeking for more than a hundred years, and can bring a brilliant new chapter to Chinese civilization.

From New York Review of Books website:  http://www.nybooks.com/articles/2009/01/15/chinas-charter-08/Translated from Chinese by Perry Link