gregory, chris. on money debt and morality - some reflections on the contribution of economic...

CHRIS A . GREGORY

On money debt and morality: somereflections on the contribution of

economic anthropology

Peebles, in a recent review of the anthropology of debt and credit, found an astonishing consistency in themoral valuation of credit which is everywhere given a positive evaluation relative to debt. But why is this?Does it apply to creditors as well? What are the theoretical implications of these questions for economicanthropology?

Key words debt, credit, economic anthropology, demand sharing

The p r ob l em

In this paper I offer some reflections on the ethnographic and theoretical contributionof economic anthropologists to the vexed question ofmoney debt andmorality, onwhatwe have achieved, the present state of the question and future directions. The first andobvious contribution of anthropological research has been to considerably broadenour understanding of the notion of debt. Oceanic scholars have given us extremelydetailed ethnographic accounts of the peculiar notions of debt thatmoka, kula, potlatchand other classic forms of ceremonial exchange create. Indianists, for their part, drawour attention to the three theological notions of debt that a Hindu male acquires tothe sages, the gods and to the ancestors which have to be repaid throughout his lifethrough the performance of special rituals. In order to narrow the scope of this essay,I will exclude these classic anthropological notions of debt and focus on that simplenotion of debt that the lending of money creates and that the bookkeeper records. Tonarrow my focus even further, I will restrict myself to household debt and leave asidethe notion of sovereign debt. The focus of my attention, then, is the domestic moraleconomy (DME), not the national political economy as classically understood. TheDME is that domain where profit and loss and virtue and vice form an inseparablewhole; or, to use Polanyis (1944: Chapter 4) famous formulation, where the economyis embedded in kinship and other social relations.

Anthropologists have also made an important contribution to our understandingof money debt in this narrow sense. Their detailed ethnographic studies have charted

380 Social Anthropology/Anthropologie Sociale (2012) 20, 4 380396. C 2012 European Association of Social Anthropologists.doi:10.1111/j.1469-8676.2012.00225.x

ON MONEY DEBT AND MORALITY 381

the extraordinary diversity in the social organisation of the domestic moral economyacross time and place; they have shown how familial relationships have shaped thequalitative form of money-lending transactions and its substantive content. Theoreticalreflections on these data in comparative content have yielded important general insights,problematised old theories and posed new questions. This much is apparent fromPeebless recent comprehensive review article, The anthropology of credit and debt(2010). He states his key finding in the following terms.

When one surveys decades of anthropological literature on credit and debt, anastonishing consistency shines throughmuch of the ethnographic data. Seeminglyeverywhere that credit and debt are discussed, we find many informants whoenunciate a moral stance that credit is considered beneficial and liberating for thecreditor . . . whereas indebtedness is more likely to be seen as burdensome andimprisoning for the debtor. (Peebles 2010: 226)

Peebless important contribution has been to identify this astonishing consistency,one that poses two sets of questions. The first set are of a sceptical and clarifying kind:Does this moral valuation really transcend geographic place, historical time and thecultures of people? If so, what is the reason for this astonishing consistency? Whyis it that people everywhere value credit as a good thing and debt as a bad thing?The second set of questions assumes the validity of the finding: Does the transculturalconsistency of themoral evaluation of debt and credit also apply to themoral evaluationof money lender and borrower? Does it follow that creditors are always consideredvirtuous and debtors vicious?

This essay is a rumination on these questions. In the first part I address the scepticalquestions and argue that Peebless astonishing finding is indeed sound, that peopleeverywhere at all times regard debt as a bad thing and credit as a good thing. Isuggest some reasons for why the consistency of this moral judgement may not beso astonishing. In the second part of the paper I address the second set of questionsand argue that the moral evaluation of the transactors is inconsistent, that it variesover time and place. I also consider some of the theoretical implications of thisapparent paradox for future ethnographic research using illustrative material from thePacific.

I s c r ed i t t o deb t a s v i r t u e i s t o v i c e?

At first glance Peebless key finding about the generality of the moral stance peopletake on debt and credit seems implausible. Anthropologists are renowned for beingmerchants of cultural difference. The history of our discipline is defined by our successin revealing the cultural basis of natural explanations. In the sub-discipline of economicanthropology our founding fathers Malinowski, Mauss, Polanyi all developed theirtheories of exchange in opposition to the theories of natural economy propoundedby free-market economists like Adam Smith and others. Given this history of ourdiscipline, Peebless finding about the transcultural nature of this moral valuation doesindeed appear astonishing.Could it be that hehasmade amistake?Hashemisinterpretedthe literature?Has he unconsciously smuggled an assumption of his own into his reviewof the literature?

C 2012 European Association of Social Anthropologists.

382 CHRIS A. GREGORY

The answer to these questions is an emphatic no. Peebless astonishingconsistency is not an assumption. It is an empirical generalisation gleaned from avast body of ethnographic literature. Furthermore his review, because it only dealswith ethnographic material, only covers a small fraction of the evidence available. Thehistorical archive from different countries around the world contains overwhelmingevidence of the consistency of this finding. The sacred texts of the major religions of theworld, as we shall see below, contain evidence of the generality of the moral evaluationas debt as bad and credit as good. It would be a tedious exercise to assemble this extramaterial to substantiate his claim because the relevant inquiry to be made concerns thenature of this empirical generalisation.

The key point is that the finding is a generalisation, not a statement about auniversal truth. It is analogous to the proposition Homo sapiens are bipedal, whichis to say it admits exceptions. Thus the specific proposition Some men only haveone leg does not deny its validity but is fatal for a universal affirmative propositionof the kind All men have two legs. But if biological anthropologists can give us ageneralisation of this kind from a study of the comparative anatomy of animals, fromwhence does the generalisation of the virtues of credit spring? We are not astonishedby the proposition Homo sapiens are bipedal, so why should we be astonished byan analogous proposition derived from the comparative analysis of money-lendingpractices? It is not obvious that credit is generally regarded as good, but why?

One reason is the generalised confusion one finds in the ethnographic record andsociety in the world at large about the relationship between debt and credit. Thisconfusion is very widespread. The double-entry bookkeeper even gets it muddled upsometimes. The first thing one learns in Bookkeeping 101 is that for every debit there isa credit; in Bookkeeping 201 one learns about the distinction between a debit and a debtand also about the distinction between a credit that is opposed to a debit and anothersort of credit that is opposed to a debt. These issues are complex and it is no wonderthat finance companies report that most customers are often very confused about thedistinction between a debt and a credit (see http://finance.mapsofworld.com/credit/vs-debt.html). The people who are most confused, though, are the subaltern membersof the domestic moral economy, the sub-prime borrowers. Studies of women in thesquatter settlements of the Pacific, for example, have found that financial illiteracy isalmost total. Many do not even know the meaning of the word interest, let alone thedistinction between credit and debt. An additional problem is that many developmentexperts brought in to teach them about debt and credit are themselves muddled; amongother things, they have failed to understand the subtle semantic changes that haveoccurred in the word interest over the past three decades.

Anthropologists often overcome the confusion between debt and credit by holdingconferences that privilege one term or the other. Thus the theme of Firth and Yameysconference in 1960 was credit. This much is clear from the title of their subsequentedited collection, Capital, saving and credit in peasant societies: studies from Asia,Oceania, the Caribbean and Middle America (Firth and Yamey 1964), where the worddebt does not even appear in the index. Some 50 years later, this special issue arose froma conference that had debt as its central theme. Peebles, for his part, entitled his surveyarticle The anthropology of credit and debt and noted that because debt is alwaysalready a dyadic relation that requires its opposite, I henceforth refer to credit/debtrather than trying to distinguish the two (2010: 226). But if we are to understand whyPeebless finding is not so astonishing, then we must distinguish the two.



But what is the difference between debt and credit? It is hard to find anyonewho is able to answer this question coherently. The exceptions are money lenders.Successful money lenders are never confused about the distinction because their dailybread depends on it. Having a customer who is confused about the matter serves theirinterest, which is why they have tended to monopolise their knowledge of the topic.There are exceptions and it is from these more scrupulous money lenders that we mustget a native point of view. Credit, as one finance company-funded website puts it,

is the earlier portion of a debt transaction. An individual should have credit priorto obtaining a debt.This is one area where people become puzzled regarding creditand debt. The automobile loan or mortgage loan is offered in the form of a credit,nevertheless, it is converted to a debt as soon as it is obtained by an individual . . .When a person is looking for a mortgage loan of $200,000, he is actually searchingfor credit for purchasing his new home. At that point in time, he is seeking credit.(http://finance.mapsofworld.com/credit/vs-debt.html, emphasis added)

Credit, then, is a shape shifter. Credit is something a person must request. Credit existsas a potentiality, as something belonging to the future. When the requestor is deemedtrustworthy and is granted the loan, the credit becomes history and takes the form ofdebt. But this is not all there is to the story because there is a liminal phase, the present,the moment of commercial reincarnation when credit is reborn as debt and is exactlyidentical to it.

The double-entry bookkeeper lives for this moment; he occupies the liminal spaceand records the exact time of its rebirth twice in his books, once on the left hand sideof his ledger, once on the other side but always in exactly the same monetary terms. Hedoes this using the language of debit and credit, an opposition that sounds confusinglysimilar to that between debt and credit. As Victor Turner reminds us, a person cannotoccupy a liminal space without themselves becoming liminal persons. The double-entrybookkeeper is, therefore, a threshold being who is betwixt and between, neither herenor there; he is himself a double-entity who exists in mirror-image form. One partof his being records the debits and credits from the perspective of the money-lender,his mirror image alter-ego from the perspective of the money-borrower. The books ofthe double-entry bookkeeper are based on a liminal number, the infidel symbol zero.This number, which is neither positive nor negative, is a necessary product of the rulethat for every debit there must be a credit. This was a revolutionary moment in thehistory of commerce and arithmetic, a fact developed by Rotman (1987) in his bookSignifying nothing: the semiotics of zero. The central role occupied by double-entrybook-keeping (principle of the zero balance) and the calculational demands of capitalismbroke down any remaining resistance to the infidel symbol of zero, he notes(1987: 8) and ensured that by the early seventeenth century Hindu numerals hadcompletely replaced Roman ones as the dominant mode of recording and manipulatingnumbers throughout Europe.

We must therefore distinguish between three states in the money-lending process the preliminary, the liminal and the postliminary and keep these in mind when we aretalking about debt and credit. We are in a Hegelian-type world were debt is identicalto credit, the opposite of credit and the composition of the preceding position andopposition. However, Hegelian logic is not the key to grasping the essence of thedifference between debt and credit, for time is the essence of it all. Potential credit



(call it creditp) is opposed to nothing if the request for credit is refused, but to actualdebt (call it debta) for the borrower when granted. This appears in the books of thelender as actual credit granted (call it credita). The latter type of credit, credita, has analtogether different temporal relationship to debta than does creditp. In the case of abank loan credita and debta, both can grow at exactly the same rate depending on therate of interest agreed, and fall in unison as repayments are made. Familial loans at zeroor negative interest rate behave in different ways over time. It is no wonder that mostpeople are in a muddle about the issue, for it is confusing.

For users of credit cards the difference between debt and credit seems to be thesimple accounting shown in ones statement: debt is the amount owed, credit is theamount of unused limit, and the two amounts are not identical. The fact is, however,that credit cards are a form of financial invention that has complicated the relationshipbetween debt and credit. The granting of a request for credit does not result in animmediate debt but allows the borrower to take up the offer of credit when theyneed it. Credit cards also abolish the notion of a fixed term of a debt by rendering iteffectively perpetual. The ideal borrower, from the banks point of view, is one whomaintains actual debt at the maximum allowable and pays off the interest accumulatedon a regular basis. This enables banks to maximise its profits because interest chargedon credit cards is always much higher than other forms of bank loans.

The central point to be made about credit is that it must first be requested, be itbank credit or familial credit. This notion of request, we shall see below, is crucialfor understanding familial money lending among the relatively poor in the worldtoday. Historically the onus has been on the borrower to initiate this move. The recentdevelopment of sub-prime lending an epoch-making event in the economic historyof money lending has temporarily reversed the situation as financial institutions haveaggressively, and recklessly, extended credit to sub-prime borrowers who cannot repay.This has led to a boom and bust in the financial world, the effects of which we are stillliving through today. The question of the morality of money debt is now back on theagenda, but in a new way. It is one thing to talk about the morality of a money lendingtransaction the relative moral evaluation of credit and debt but quite another totalk about the morality of the transactors, the relative moral evaluation of lender andborrower. We now speak of banksters, a derogatory term that echoes terms used todescribe the usurer of old. This raises issues that I will address in the next section.

To understand the astonishing consistency of Peebless empirical finding, then, itis necessary to focus on the preliminary and postliminary states of a money-lendingtransaction: on credit as the future in the form potential debt and on credit as historyin the form of actual debt. Once we do this it becomes obvious, I hope, why credit hasa positive moral valuation and debt a negative one. The relationship is almost true bydefinition, almost because the relationship arises from the history of commerce nota priori from logic. This much can be established from an examination of dictionarydefinitions of credit and debt, from the etymology of these words, and from proverbsthat, as Mauss (2007: 157) noted, can tell us much about the morality of a society.

The word credit has many meanings in the dictionary, but all bear the wordsbirthmark: credible, honour, repute, trustworthiness, etc. Lenders throughout the ageshave looked for these qualities in their potential borrowers.Debt is not negatively valuedby dictionary definition, but a deep history of impecunious debtors and importunatecreditors has given us the notion of a bad debt. The operation of the law of contagiousmagic has ensured that the vicious moral quality of the adjective has cast its evil shadow



over its accompanying noun. Strictly speaking, what is called a bad debt is, logicallyspeaking, a loan at negative interest. The negative interest on a loan that is not repaidis minus 100%, one that is half paid back minus 50%, one that is fully paid back 0%,and one paid back with interest is plus x%, where x is the interest rate in question. Thedebtor is, by definition, someone who needs money and history tells us that they areever-ready to receive money, but not always ready to pay it back. The Fijian villagers oftoday who flee in fear when the microfinance debt collector arrives are re-enacting anancient postliminary debt ritual. Stories of this kind are so widespread that they havebecome fossilised in our proverbs. Some debts are fun when you are acquiring them,but none are fun when you set about retiring them. Running into debt isnt so bad.Its running into creditors that hurts. Credit is dead, bad pay killed it.

The astonishing consistency that Peebles has found in the ethnographic studiesof money and credit comes about because the whole history of the intertemporalrelationship between a request for credit and the subsequent recovery of the debt hascoloured the meaning of these terms with moral overtones. The moral valuation isa general one because the commercial principle on which it is based is general. Tomake a profit one must buy cheap and sell dear. This commonplace of economicanthropology is analogous to the biological anthropologists homo sapiens is bipedal.As Geertz noted in his study of the market economy of Morocco, the bazaar is morethan another demonstration of the truth that, under whatever skies, men prefer to buycheap and sell dear (1978: 29). The money lender be it the ancient village moneylender or the modern bank also likes to buy his commodity cheap and sell it dear. Assuch, he is concerned to find the good creditor who repays his loan with interest andto avoid the bad debtor who doesnt. The history of money debt and morality, then, isthe history of the pragmatics of commercial language usage. We use the word creditwhen we want to say money lending is a good thing and the word debt when we wantto say that money lending is a bad thing.

The language used to describe the work of Muhammad Yunus, the founder ofthe Grameen Bank, illustrates this. Grameen, it should be noted, means village andYunus is a village money lender who lends money on interest to the poorest of thevery poor. What distinguishes him from other village money lenders is his successboth financially and socially: he is probably the biggest village money lender in humanhistory (8.32 million borrowers in 2010) and perhaps the only one in human historywho is not looked down upon as an exploiter of the human misery of the masses.Thus he is the managing director of a village bank, not a village money-lender; the20% he charges for income-generating loans is called interest not usury as any rate overabout 8% was called in the good old days; the loans he gives are called micro-creditrather than micro-debt; the people to whom this micro-credit is extended are calledborrowers not debtors, 97% of whom are women. My point here is not that Yunusis a bad guy, but that because he is celebrated as a good guy the word debt is notused when talking about his money-lending activities. Needless to say, when he wasawarded his Nobel Prize for Peace in 2006, he got it not because he has sent millions ofthe poorest of the poor women into debt but because he extended them micro-credit.Micro-credit, theNobel Prize citation says (http://nobelprize.org) has proved to be animportant liberating force in societieswherewomen inparticular have to struggle againstrepressive social and economic conditions. If this statement is true, then it is also truethat micro-debt has proved to be a liberating force, but this language would not soundconvincing.



If the semantic valuation of the words credit and debt is always and everywhereassociated with virtue and vice, then the use of these words is an altogether differentmatter. When we want to say that a money lender is a good guy, we use the languageof credit; when we want to say that he is a bad guy, we use the language of debt.Valuations of this kind are historically specific and must be investigated on a case-by-case basis. Again the work of Muhammad Yunus can illustrate this. As people begin toquestion the success of his Grameen Bank, so too does the language begin to change.The title of a recent film, The micro debt: a critical investigation into the dark side ofmicrocredit (Heinemann 2010), says it all: the dark side of micro-credit is micro-debt.And what does the investigation into the dark side reveal? Case studies of people forwhom loans did not get them out of poverty, of instances where people paid interestrates from 30 to 200%, and allegations of corrupt dealings. Again, the truth or falsityof these claims is not my concern. It is the filmmakers use of the terms credit anddebt that interests me, for it is yet another illustration of Peebless finding. This caseillustrates the semantic contrast that is at the basis of his, by now, not-so-astonishingfinding: credit is to debt as virtue is to vice, as light is to dark, as good is to bad, and soon. The case also illustrates the limits of this finding because the pragmatics of debt andcredit poses much more interesting ethnographic questions. The move from semanticsto pragmatics changes the terms of the debate from transaction to transactor, from thecommonplace moral evaluations of credit and debt to the historically specific moralevaluation of lenders and borrowers.

I s l e nde r t o bo r r owe r a s v i r t u e i s t o v i c e?

The answer to this question is an emphatic negative. There is no transculturalconsistency in the moral valuation of creditors and debtors. To the contrary, the answerhas varied over time and across place and across discipline. Most economists of today,for example, would argue that the question is badly posed because the commercialcontracts involving money are morally neutral. They would concede, of course, thatit has not always been this way, noting that money lending has long been considereda vicious activity and the money lender the epitome of evil. But such thinking, theyargue, is a relic from the medieval dark ages of economic theology rather than modernpolitical economy. Smiths classic text, An inquiry into the nature and causes of thewealth of nations (1776), they argue, turned thinking of this kind upside down. Forthe economist, then, Smith is an icon of freedom, a solid-gold statue of liberty. For theeconomic anthropologist, on the other hand, Smith is a straw man whose theories ofnatural economy provided the antithesis for their theories of domesticmoral economy.Neoclassical economic theory is premised on the assumption of homo economicus, arational calculating individual facedwith the problemof satisfying unlimitedwantswithlimited means. Economic anthropologists have substituted moralis personae, a personconfronted with the moral dilemma of having to locate him or herself on a continuumof reciprocity that has the warmth of the caring and sharing household at one extremeand the cold, hard world of higgling and haggling with strangers in the market place atthe other extreme. The former is the domain of positive reciprocity and the latter ofnegative reciprocity. The virtuousness of the former and the viciousness of the latterare implicit in the adjectives, but is also a moral judgement derived from a faithfulreporting of the native point of view and Malinowskis informants are oft quoted



here. When scornfully criticising bad conduct in kula, or an improper giving of gifts,Trobrianders say it was done like gimwali [barter] (Malinowski 1922: 189).

While the notion of natural economy was used as a convenient antithesis forMalinowski andMauss in the development of their theories, it was Polanyi (1944: 434)who was the first to identify Smith as the real target of attack. In his classic work, Thegreat transformation: the political and economic origins of our time, he identified theperiod of the Industrial Revolution in England (roughly 17501850) as the period ofthe Great Transformation when the market economy emerged dominant. His grandnarrative of this event is a variation on themes developed byMarx,Morgan,Dumont andmany others. Adam Smiths two great works, The theory of moral sentiments (hereafterToMS) and Wealth of nations (hereafter WoN), were published in various editionsover the period 1759 to 1790. As such, he is viewed as an ideological revolutionary,a positive evaluation in the eyes of neo-liberals, a negative evaluation in the eyes ofcritics. However, a closer examination of Smiths writing, especially his ToMS, revealsa number of surprises. When it comes to the morality of money lending, he was by nomeans a revolutionary. That status belongs to Bentham, who came shortly after him.Furthermore, what Smith had to say about the morality of money lending anticipatesmuch of what economic anthropologists up to the time of Sahlinss (1972) Stone ageeconomics had to say about the matter. If we are to move forward in our theoreticalunderstanding of domestic moral economy, it is necessary to understand Smiths rolein the Great Transformation of the moral approach to money lending in ChristianEurope.

Benjamin Nelsons The idea of usury: from tribal brotherhood to universalotherhood (Nelson 1969) provides the historical context. His book covers the ethicalevolution of the West in three phases: the kinship morality of the tribal brotherhood;the universal brotherhood of medieval Christianity; and finally the utilitarian liberalismof today. Nelson is a story teller in the classic narrative tradition. His story has fiveparts and it chronicles the vicissitudes of his prime protagonist as he wanders throughthe Western Christian World. And who is his prime protagonist? The Deuteronomicdouble standard, theOld Testament commandant on usury that formed the cornerstoneof the blood brotherhood of the Hebrew tribesmen.

23:19. Thou shall not lend upon usury (neshek) to thy brother (lahika) . . . 23:20.Unto a stranger (nokri) thou mayest lend upon usury; but unto thy brother thoushall not lend upon usury . . . (Nelson 1969: xxxxi)

Or to use more modern colloquial language, Screw the other not your brother. ThisDeuteronomic double standard of the Hebrew tribesman stands opposed to the NewTestament passage in Luke 6:35, which provided the basis of a different morality rootedin the Brotherhood of Man under the Fatherhood of God:

But love ye your enemies, and do good, and lend, hoping for nothing again; andyour reward shall be great, and ye shall be the children of the Highest: for He iskind unto the unthankful and to the evil. (Nelson 1969: 8)

This formed the cornerstone of the universal brotherhood of medieval Christianity.Nelsons book chronicles, in fascinating detail, how negative moral ideas about debtand usury became transformed into positive moral ideas about credit and interest as



the notion of a Tribal Brotherhood was replaced first by the Universal Brotherhood ofmedieval Christianity then by the Universal Otherhood of today. His story takes usup to the time of Adam Smith and beyond, to the time of the emergence of industrialcapitalism in England.

Today the neo-liberal consensus is that the interdiction on usury was the work ofthe Dark Ages when commerce was at its lowest ebb. A commercial society must besupported by interest for interest is the soul of credit and credit is the soul of commerce(Nelson 1969: 119), language which suggests that the economic theology of old liveson.

WhatNelson gives us, then, is a moral history of the transition frommoney lendingas debt creation and something bad, to money lending as the extension of credit andhence something good. I will not even try to summarise this history because I aminterested in the moral valuation of different numerical rates of interest.

We tend to think of interest as a positive number. The fact is, however, that it isa quantity whose value ranges from minus infinity to plus infinity and includes theinfidel number zero betwixt and between these two extremes. All of these numbershave different moral valuations that have varied throughout history. Four cases mustbe distinguished: negative interest rates, zero interest rates, low interest rates and highinterest rates.

Usury is the name for a positive rate of interest that is deemed high, but themagnitude of the positive rate of interest considered bad clearly varies from culture toculture. Implicit in the Deuteronomic double standard is the idea that only a zero rateof interest is good and anything above this is considered bad. In Luke 6:35 we get theidea that negative interest is good, i.e. the loan that is not repaid, the bad debt as it iscalled today.

The moral evaluation of the negative interest rate and zero-interest rate cases areof the greatest interest to anthropologists for they are ambiguous states that admit ofa range of non-commercial interpretations. For example, the negative-interest rate casecan be interpreted as a one-way gift or an alienated gift, as Parry (1986) has suggestedthat the Hindu gift called daan might be glossed. Indeed, the ideology in Luke 6:35has resonances with the Hindu theology. Gifts of the daan-type, Trautmann (1981:279) has noted, involve a theology of reciprocity rather than a sociology: the giver isrepaid with religious merit rather than a material object in a like-for-like transaction.The receiver, the Brahmin, acquires material objects such as food grains and money freeof any obligation to repay. This, at least, is the Brahmanic theology; subaltern economictheologians, Ranajit Guha (1985) reminds us, often see things differently.

The ancient Indianmoral codes dealingwith themorality of positive rates of interestis also an interesting variation on Deuteronomic double standard. The Laws of Manu(VIII, 1412) define 2% a fair rate for a Brahman, 3% for aWarrior, 4% for aMerchant,and 5% for a Sudra. Lending above these stipulated rates was called usury. This is aquadratic standard rather than a double standard and suggests that sub-prime lendingmay have been an ancient Indian invention.

The Christian and Hindu moral codes are all variations on the same theme: lendingat low, zero or negative rates of interest is a virtuous activity; lending at relatively highrates of interest a vice. But what of Adam Smith? He transformed ancient economictheology into modern moral economy, but was not a revolutionary when it came tomoney debt and morality. To the contrary, he merely restated the ancient theology in anew language.



Smith is celebrated as the father ofmodern economics, but only a cursory familiaritywith his work is needed to reveal the real kinship relation. For a start, the theory ofeconomic value developed in his An inquiry into the nature and causes of the wealthof nations (Smith 1776) is a labour theory of value not a marginal utility theory ofthe kind that was later developed by Bentham, Jevons and others. On this account,Smith is the father of Ricardian economics and the grandfather of Marxian economics.Secondly, the theory of moral value he developed in his other great work, The theoryof moral sentiments (Smith 1759), is a theory of affective individualism, not the rationalindividualism of 20th-century homo economicus kind. As the title of his book suggests,he was concerned with moral sentiment rather than moral reason. He was one of thelast great sentimental moral philosophers. There is a sense, too, in which economicanthropology is the bastard offspring of this unacknowledged father.

Smiths theory of affective individualism has the figure of the impartial spectatorat its centre. In Nelsons terms, this is an Other who has become at one with the Self.The impartial spectator is the internalised Other who takes up residence in the breast ofthe affective individual. Smiths favourite image for the impartial spectator is that of thegreat inmate of the breast (ToMS: III.I.43). In other words, the impartial spectator takesup residence in the heart and soul of the non-participant observer, where he moderatesthe passions of his host and guides him in right conduct: it is only by consulting thisjudge within, says Smith, that we can ever see what relates to ourselves in its propershape and dimensions; or that we can ever make any proper comparison between ourown interests and those of other people (ToMS: III.I.43).

This affective individual is a cool-headed character whose judge within is familiarwithAristotles table of virtues and vices, and is able to actwith equanimity in all spheresof action and feeling. Thus in the sphere of pleasure and pain, he opts for temperance,the mean between the excess of licentiousness and the deficiency of insensibility; inthe sphere of getting and spending, he opts for liberality rather than prodigality orilliberality; and so on for all the other spheres of action and feeling.

Anthropologists have been very selective in their reading of Smith. Few get beyondthe oft-quoted paragraph in the WoN about the natural propensity of homo sapiensto truck, barter and exchange. However the ToMS has many surprises in store for theeconomic anthropologist, for here we find that the morality of the affective individualvaries with kinship distance and along with it the morality of the interest rate thatshould be charged on a money debt.

The affective individual is, of course, concerned with himself in the first instance.Next his family:

After himself, the members of his own family, those who usually live in the samehouse with him, his parents, his children, his brothers and sisters, are naturallythe objects of his warmest affections. They are naturally and usually the personsupon whose happiness or misery his conduct must have the greatest influence.He is more habituated to sympathize with them. (ToMS: VI.II.5)

Within the family it is more strongly directed towards ones children. The firstfriendships are with brothers and sisters; with cousins the mutual sympathy weakens.

The children of cousins, being still less connected, are of still less importance toone another; and the affection gradually diminishes as the relation grows moreand more remote. (ToMS: VI.II.9)



Thus what is called affection, he argues is in reality nothing but habitual sympathy(ToMS: VI.II.10) and this continues to weaken as the net widens to include theneighbourhood, the community and the state. The rise of the state and of commercialsociety did not signal the advent of the rugged self-interested individual for sympatheticfeelings are developed with neighbours and friends within the workplace. (ToMS:VI.II.19)

Thus the form of money lending between people who are kin, neighbours andfriends will be governed by the sympathetic relationship that exists between them. Onthe question of money debt and morality, he notes that moral sentiment varies withkinship distance in a way that can only be fully understood by means of concreteanalyses of particular cases.

If your friend lent you money in your distress, ought you to lend him moneyin his? How much ought you to lend him? When ought you to lend him? Now,or to-morrow, or next month? And for how long a time? It is evident, that nogeneral rule can be laid down, by which a precise answer can, in all cases, be givento any of these questions. (ToMS: III.I.121)

Money lending of a commercial kind between non-kin is governed by a differentmorality based on mercantile common sense.

Ask any rich man of common prudence to which of the two sorts of peoplehe has lent the greater part of his stock, to those who, he thinks, will employit profitably, or to those who will spend it idly, and he will laugh at you forproposing the question. (ToMS: II.4.2)

The two obvious points that Smith make then are, firstly, that lending money to friendsand relatives at negative and zero rates of interest raises all sorts of dilemmas and a hostof questions for which there are no simple answers and no general rules to guide us. Thesecond obvious point that Smith makes is that lending money at interest to a merchantwho will use the money productively is a good thing because credit is the life blood ofcommerce; but lending on a commercial basis to someone who will spend it idly is astupid thing to do because they will not be able to repay the loan.

This raises the question of the amount of interest to be charged on commercialloans. Smith had strong illiberal views on this. The rate must not be usurious he said;it must not be set at a rate higher than the going rate of profit on capital because thatwould prevent sober people from using it to venture into competition. If the legalrate of interest in Great Britain, he said, was fixed so high as eight or ten per cent,the greater part of the money which was to be lent, would be lent to prodigals andprojectors, who alone would be willing to give the high interest (WoN: II.4).

Smith, then, did not turn the pre-history of thinking of money debt and moralityupside down; rather, his two great works provide a synthesis of it. Benthamwas the truerevolutionary and it was precisely on the point of high interest rates for commercialloans that he took leave of Smith. A person should be at liberty to make their ownmoney-bargains said Bentham.

no man of ripe years and of sound mind, acting freely, and with his eyes open,ought to be hindered, with a view to his advantage, from making such bargain, intheway of obtainingmoney, as he thinks fit: nor (what is a necessary consequence)



anybodyhindered from supplying him, upon any termshe thinks proper to accedeto. (Bentham 1843: Letter 1)

The general acceptance of this valuation was the death of the notion of usury. Hithertousury was generally defined as a rate of interest in excess of around 58%. Therevaluation of rates of interest in excess of 8% as virtuous meant that the word usuryno longer had meaning for the Big End of town.

Economic anthropologists have targeted the wrong man in Adam Smith, for it isBentham who is the true straw man and quite literally so. In his will he requested thathis body be dissected as part of a public anatomy lecture. His head and skeleton werethen stored in a wooden cabinet called the auto icon, with the skeleton stuffed withhay and dressed in Benthams clothes. University College London acquired the autoicon in 1850, where it is still on public display. Benthams head is nowmade of wax, buthis spirit lives on in the neo-liberal ideas that dominate the world today. Contemporarymoral philosophy and political economy owes much to him. For example, PeterSingers moral philosophy builds on Benthams work on animal liberation, but it wasJevons mathematical formulation of his theory of pleasure and pain in the 1870s thatrevolutionised economic theory, leaving little space for those who argue that economicsshould be wedded to the softer disciplines of history and anthropology. Mandevillesfamous maxim, private greed, public good, was given a new twist: rational self-interest, public good. Thus greed, a vice, was replaced by a new found virtue, rationalself-interest. Smithsmoral sentimentalismwas rationalised and a newmoral philosophyand political economy was born. Smiths rhetoric of the invisible hand of the marketwas appropriated and given new meaning within this new theory of value.

As for the theoretical contribution of economic anthropologists, it can be seen thatourmost celebrated achievement, the theoryof reciprocity, is Smithian andpre-Smithianrather than post-Smithian. The theory of gift exchange we have developed is nothingmore than a fully fleshed out version of the Deuteronomic double standard of the tribalbrotherhood. But is this all we have achieved? Has all our careful ethnographic worksimply lent credence to Mausss notion that credit and debt stand as an inseparabledyadic unit, as Peebles notes (2010: 226)? Peebless review of the literature correctlynotes that Mausss classic text on the gift has been foundational, but he did not addressthere the emerging critique of the Maussian paradigm and the implications of this forour understanding of debt and credit as an inseparable whole. What is this emergingcritique? What new questions does it pose?

The eme rg i ng c r i t i q ue o f t he Mauss i an pa r ad i gm :some ev i dence f r om the Pac i fic

The classic Maussian theory of reciprocity as developed by Polanyi, Levi-Strauss,Sahlins and others has its origins in the early ethnography of the AustralianAborigines and other indigenous peoples who lived in remote communities and whoseexchanges were made between moieties and informed by cross-cousin marriage rules.Contemporary ethnography among Aboriginal people in urban areas whose economyhas become completely monetised has contributed to an emerging critique of theMaussian tradition. Thus when Peterson heard an informant say I want to owe you five



dollars (1993: 860) and coined it demand sharing, he realised that requests for creditof this kind posed new questions for the theory of domestic moral economy. Thesewere taken up and developed by MacDonald (2000), who noted that the obligation togive in response to demands, without expectation of return, sets up a different dynamicin social relations. The Maussian legacy, she argues, blinds us to the reality of demandsharing and its implications. The fact that the demand-sharing literature has escapedinclusion in Peebles review is proof of her argument [but see Peebless contribution tothis volume]. But what are the implications of demand sharing for the anthropology ofmoney debt and morality?

Demand sharing is not something the Australian Aborigines have discovered. Tothe contrary, it is very widespread throughout the Pacific, where different countrieshave special names for it. In Fiji, for example, it is called kerekere, from the verb kerea,to request. Sahlins (1962: 20314) devoted a chapter of his ethnography Moala to theanalysis of this notion. Interestingly, neither the word nor the idea rates a mention in hisclassic work on reciprocity (Sahlins 1972). However, he returned to the issue recentlyin response to an article by Nicolas Thomas (1993). Sahlins (1993) argues that kerekerewas a feature of pre-colonial Indigenous Fijian society. This was undoubtedly true,but it is also true, as Thomas argues, that the idea has flourished in the colonial andpost-colonial era. And so too have the debates about its morality (Spate 1959: 24): Is itfamilial theft? Is it a barrier to economic development?

When it comes to the question of money debt and morality in the Pacific today,there can be no better starting point than Marilyn Stratherns No money on our skins:Hagenmigrants in PortMoresby (1975). This book is one of the unrecognised classics ofeconomic anthropology. The method she followed here could be no better illustrationof Smiths point that no general rule can be laid down when it comes to understandinglending money between friends and relatives. Recording a transaction is not a simplematter of double-entry booking, but rather one of collecting family histories and othercase studies that help us make sense of what is going on in concrete cases.

Stratherns book was way ahead of its time and it as an absolutely necessarymanual for those who want to understand some of the pressing issues that facepeople living in the Pacific and elsewhere today. In the 40 years since Strathern wroteher book, the Pacific has been transformed beyond recognition. While the values ofthe tribal brotherhood of old still linger on, they now must adapt to a world where thetransnational family has become a reality. If money and themorality ofmarket exchangedefined the boundaries of the tribal community of old, then money constitutes theinternal essence of the transnational family today. This is because the development andgrowth of the transnational family has gone hand-in-handwith the growing importanceof remittances globally. Official figures reveal that global flows of money are now twicethe size of overseas development aid. Remittances have grown at an annualised growthrate of 36 per year in the Pacific since 2000 (AusAID 2008: 312). These official figures,it is generally agreed, are serious underestimates because they ignore informal flows.There is now a vast literature on the transnational family and remittances in the post-colonial Pacific (Lee and Francis 2009). The micro-sociology of DME can not onlyhelp us understand the macro-economics of international remittances, but also of intra-national inter-household money flows. The values informing these money flows arecomplex, but requests for money and credit from kin play a central role. These requeststo receivemoney raise questions that overlap with the classic problems of gift exchangeand the obligations to give. A request for money of this kind is a request for credit from



someone who wants to be in debt. But when these requests are prefaced, as they oftenare, with a Hey brother or a Hey sister, the addressee knows they are confrontedwitha money loan of the negative-interest or zero-interest kind and the principal concern ishow to negotiate the request, a problem that will vary from case to case. I illustrate theissues at stake with some data I have collected in Suva.

Single motherhood, my genealogies show, has grown in importance in recent timesand mothers rely on their natal clan for support in kind in raising their children. Whensingle mums need money for everyday expenses, they have two options: informal loansfrom family and friends or formal loans from the banks and retail outlets. Money ofthe former kind for the very poor is limited in size to $5 or $50 at negative and zerointerest rates respectively; if they want to borrow larger amounts, then they must goto the banks. The language used to get a $5 or $50 loan involves the use of the verbkerea, to request, but in two quite distinct ways. The first is Au kerea $5, Give me $5.This, my consultant said, is a demand that can only be made of very close relatives andfriends. This transaction is a one-way flow. The person giving in to the demand knowsthat the money will not be returned, i.e. the interest rate is negative. One does not askfor more than $5 this way because the requestor knows that it will be refused. To getup to $50, my consultant said, one needs to rephrase the request using the polite formof the verb. Kerekere meu dinautaka e $50. Au na qai sauma tale. I humbly requestyou give me a loan of $50. I will pay it back. This is a request for an interest-free loanand use of the polite form of the verb, kerekere, is essential. Again one must not ask formore, because it will be refused.

For the elite Fijian, the matter is, of course, very different. Much larger sums can beobtained via the kerekere system. For example, Ratu Sir Kamisese Mara, the paramountchief who was Chief/Prime Minister from 1967 to 1992, had his education at Oxfordfinanced bymembers of his close kindred group. RatuMara tells the tale of how in 1949his uncle, Ratu Dovi, visited him in Oxford and asked for some money. Mara repliedthat he had none, to which Ratu Dovi replied: Yes you have. You have three hundredpounds in the Bank of NSW. The money has been deducted from my salary until 1948to pay for your education. Well take it. Its yours, replied Mara. Well I would like tobuy you something, he said and bought Mara a dinner suit (Mara 1997: 27).

Needless to say, Fijians, like the Australian Aborigines, have turned the art ofrequesting and dodging requests into a high art form. So too have the Indo-Fijiansamong whom the art takes on an altogether different form that reflects their distinctiveculture and economy. When I asked one well-to-do Indo-Fijian about the practice ofkerekere among them, he laughed. No, he said giving me the rich relatives point ofview, Indo-Fijians are different. We look around for the tall timber and work out astrategy to strip it bare. The first move is to soften up the rich relative by pleadingfor a loan on compassionate grounds. There are three types of compassionate loanwe cannot refuse: those for funeral expenses, marriage expenses and health-relatedpurposes. Having got loans from you for these purposes they then keep laying it on.We receive no gratitude for the money we give them and they often dont repay.

Indo-Fijians and elite Fijians can get large interest-free loans for school fees fromrelatives, but poor Indigenous Fijians cannot. They must take out sub-prime loans atsuper-prime interest rates from banks. Such is the case with women like Lydia, whoneeded $1,000 for her sons first year at a boarding school. It is useful to look closely atthis case because it provides some insights into the profitability of sub-prime lendingand also of the moral semantics of commercial language usage today.



The interest on unsecured loans in Fiji in 2012 was about 10% flat, which is byno means usurious by the global standards of today. However, Lydia was also chargeda bank establishment fee of $125, which added another 12.5% to her debt instantly.The term of her contract was 12 months and she was obliged to pay twelve $5 monthlyservice charges for the electronic deduction from her bank account. This added another$60 to her cost of borrowing. Like all low-income earners, a month is a long timeand out of harmony with the weekly rhythms of the economic life of the poor. Lydiatherefore agreed to make 26 fortnightly payments, which meant an additional fourteen$5 service charges, i.e. another $70. She also had to pay $12 in other expenses, makingher total cost of borrowing to $378. In other words, to borrow $1,000 for one year shehad to pay $378 in bank charges, an effective flat interest rate of 37.8%. This is well inexcess of the rates deemed usurious by the Bible, Manu and Adam Smith. But noticethat the banks only label 10%of this as interest; the extra 27.8% is called bank charges,which is nothing more than a new name for usury. This is the big semantic shift in theword interest that has occurred over the past 30 years.

Bentham, for his part, would say, So what, noting that Lydia is a free agent whois under no obligation to receive this money. The law, for its part, is on Benthams side:caveat emptor, let the buyer beware; ignorance of the law is no excuse.

Sub-prime interest rates like this excite little or no emotion, but mainly, I wouldsuggest, because few people know about them. Lydia, for example, had no idea thatshe was paying $378 to borrow $1000. It took me over a day of working through heraccounts to work it all out, and I did Bookkeeping 101. Lydias case gives us an insightinto the profitability of sub-prime lending. The bank makes 37.8% here, but this isthe absolute minimum. The key term in the contract that makes sub-prime lending solucrative is the arrears provision. Once sub-prime borrowers get into arrears, as theyhabitually do, this provision kicks in. I have another case where the borrower ended uppaying 48% flat per annum because of arrears.

It is for this reason that private finance companies have swarmed the micro-creditworld of the poorest of the poor, the sub-subprime borrower. Companies competeto recruit sub-subprime borrowers, many of whom get saddled with multiple debts.Of course, high returns come with high risks, as many imprudent lenders are nowfinding out as defaults become common and interest rates slide towards the negativeside of the ledger. The explosive growth of Indias privatemicro-credit industry is facingimminent collapse of the classic sub-prime lending kind as borrowers default and talesof the sexual harassment and suicide of female debtors accumulates (Lee and David2010). The morality of the micro-credit lender is now being questioned and with it thelanguage used to describe the loan: micro-credit is becoming known as micro-debt, asthe case of Muhammad Yunus quoted above revealed.

Conc l u s i o n

The theory of moral economy is the theory of the just price. An interest rate is the priceof money and this poses the question of the just interest rate. The question of the justinterest rate, in turn, poses the question of the morality of the credit and debt on the onehand and that of the morality of debtor and creditor on the other. The former question,I have argued, is a relatively simple one of transcultural semantics. Peebless finding ofan astonishing consistency in the positive moral evaluation of credit across cultures



is grounded in the commonplace that traders in money everywhere must buy cheapand sell dear if they are to survive. Widespread confusion of the relationship betweendebt and credit has blinded us to the obviousness of the moral meaning of credit.The question of the morality of borrowers and lenders, I have argued, is an altogetherdifferent matter concerning the pragmatics of commercial language usage. This variesover historical time and geographic place, depending on the values of the speaker, thesocial context of the transaction and the social status of the transactors. Borrowers havethe right to request loans and lenders have the right to refuse but different motivationsto grant loans. Banks are motivated by profit to grant loans at positive rates of interest,but familial lenders havemuchmore complexmotivations, whichmay result in grantingloans at zero or negative rates of interest. Loans of both types have grown dramaticallyin recent decades and raise new theoretical questions about the morality of demandsharing and sub-prime money-debt that the Maussian legacy, and its straw men, haveblinded us to. These questions can only be answered by ethnographic studies informedby an understanding of economic history and the history of ideas about morality andmoney.

Chris A. GregorySchool of Archaeology and AnthropologyThe Australian National UniversityCanberra, ACT [email protected]

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