Clean Slate and Political Battle in the 21st Century

Oligarchy will never cancel the debt

In the Sumerian and Babylonian era around 2000 BC, it was common for all of the society canceling the debt when that was too large and wouldn’t able to be paid. Erasing the debt to make a clean slate is a good way to start economy once again after they had been burdened with no money left could be spent to buy goods and services after the debt had absorbed all of the surplus in economy. This was easy to do in the society when they have a debt which was owned by the state and that’s harder to do when the debt was owned by private hands that frequently called oligarchy. And the lasting they wanted is to have a king that would be canceling the debt and restore the equality.

Rome was the first country in the history that not cancel the debt, it went to war in Sparta, in Greece to overthrow the government because of the kings that were not canceling the debt. The war in the first century BC ended up stripping these countries of everything they had, not only stripped the temples and gold, it was stripping the public building, the economy that they were in reproductive capacity, and also water that made that location similar like desert out of that land. At that time, Rome said “debt was a debt,” foreclosure and collapsing the land had been something inevitable that should be done which was creating ecological devastation led to social, economic, and military problems. The early stages of roman republic you only had a very gigantic egalitarian land owning system in which peasant got an opportunity accessing public land and planting crops there, but as the roman republic became powerful, the lords and generals became appropriate entitled the land to a private hands, more and more peasants became lack of access that was only resulting in reducing number of food availability, and other social destruction occurrence.

What was an absolutely new in roman-empire which was irreversible concentration of wealth in the top of the economic pyramid and that was also had a progress in system “you (society) will never get back what we take from you.” This had been a product of the dark-age that was written and will led to bring the dark-age again if society doesn’t realize it. This was the precursor in which when the debt holder is highly concentrated to the hand of few (oligarchs) that refers to financial class which is only absorbing the surplus of the economy and converting it into the exponential growing of debt, the tangible result when the real economy has been surpassed of debt (couldn’t able to pay the debt) is society should give their asset (land, building, etc) to the hand of creditor. The another payment in exchange without asset was to hand over the entire life of individual to serve what the creditor wanted including body nor soul back then, furthermore, that was the consequences when the political vehicle (government) was being held by the creditor groups. The only solution was to create people power movements to overthrow the regime which hadn’t canceled the debt, this was the only way creating the prosperity inside the society since this situation is zero sum game (when one party wins, another should be lose).

Every society in history for the last 4000 years has found that the debt grow more rapidly than people can pay, the problem is a small oligarchy of 10% of the population at the top to whom all of these net debt are owed to. You want to annul the debts to the top 10% that is not going to do, the oligarchy is running things, they would rather annul to the bottom 90% right to live than to annul the money that’s due to them. They would rather strip the planet and shrink the population and be paid rather than give up their claim, that’s the political fight of the 21^st century, how to bring back prosperity and political control in the hand of society not oligarchy to create the clean slate.

Inclusivity is the key

Deepening how to revive the economy at once creating prosperity, there are many kinds of countries which have a close border with their neighbor that almost have the same condition sociologically or geographically but in fact, they have different level of prosperity. South Korea and North Korea, USA and Mexico are little examples picturing the discrepancy of different state’s management on how to create an economic institution to deliver the justice, access, opportunity especially political decision that can make a progress on economic development. Economic institution which is able to shape the outcome of economy significantly is pivotal enough to be created and used with intervening it through de facto political power since it is a medium for collecting the interest of voice holders that will be processed to create a desirable policies. The question is, who control that institution? Mostly, throughout of history, the elites or famous with the name of “oligarchs” are the influential groups who control the government. They always implement their value and interest through legal policy administration from the government that has been steered by them. There is naïve to excluded groups outside the oligarch’s circle expecting they will grasp a benefit from the issued policies without involving directly in public decision making arena.

In a lot of analysis in the political study area, there are two distinct entities in the political dynamic which can be described as an elite group and majority group. In every situation since Sumerian or Babylonian era up to now, the conflict of interest between them is always happened no matter where the society live on certain systems or situations, the clash always brings up as society grows up. They have contradictory behavior toward public policy that they have wanted, for instance is in tax redistribution, majority group wants higher while the elite group wants less. Meanwhile, they have conflicting interest that brings zero sum game in the play role that only could be intervened through controlling the government. When one group lose its position in that area let say majority group, they should prepare for themselves for receiving the undesired policies such as being disenfranchised on their right to get social security and so forth.

When elites or oligarchs sitting in the public position, they have several kind of behavior to do in order to prevent their interest is always keeping in place. When society feels they want to create a movement like a reformation or even revolution because of injustice that has existed, the elites will do the repression first. It is purposed to kill the wave of social movement itself. The second, when doing repression is too costly, the elites will let some of agreements with the majority (win-win solution) tune up through legal administration, it is called “concession.” And the third, when the society thinks it isn’t sufficient enough to create a pressure and overthrow the existing government outright with creating and distributing justice and prosperity, and they have done to do it, it’s called bottom up consolidation political power. Finally the last resort after doing such as revolution by the society is to implement their value and interest through de jure (legal administration) political power.

Forming up the political power, it should be distributed to entire of population not only in the hand of few. The idea is to construct an economic institution which can boost the economy and share the wealth equally that’s called inclusivity. So, what is the consequences when a country has the opposite? Nations fail economically because of extractive institutions. These institutions keep poor countries poor and prevent them from embarking on a path to economic growth. This is true today in Africa, in places such as Zimbabwe and Sierra Leone; in South America, in countries such as Colombia and Argentina; in Asia, in countries such as North Korea and Uzbekistan; and in the Middle East, in nations such as Egypt. There are notable differences among these countries. Some are tropical, some are in temperate latitudes. Some were colonies of Britain; others, of Japan, Spain, and Russia. They have very different histories, languages, and cultures. What they all share is extractive institutions. In all these cases the basis of these institutions is an elite who design economic institutions in order to enrich themselves and perpetuate their power at the expense of the vast majority of people in society. The different histories and social structures of the countries lead to the differences in the nature of the elites and in the details of the extractive institutions. But the reason why these extractive institutions persist is always related to the vicious circle, and the implications of these institutions in terms of impoverishing their citizens are similar—even if their intensity differs. Finally, we can conclude, in order to generate the path to achieve prosperity, equality and so on, building up the inclusive institution grounded by bottom up consolidation movement is the first foundation that should’ve to be done!

The tendency toward a crisis by misapprehend the problem

Such forgiveness debt policy which is aiming to eradicate all of the debt except the debt inside of relationship between employer and employee to revive the economy actually has a long pedigree. Long time before Islamic and Christian denunciations of usury, and even before the Jewish jubilee year of debt forgiveness that Jesus sought to revive, Sumerian and Babylonian clean slates freed debtors from debt bondage and prevented land and wealth being owed in the hand of foreclosing creditor. Activists who lived around the first of Industrial Revolution recognized the problem of savings and debts mounting up at compound interest. With an almost religious fervor Saint Simon and his followers in 19th-century France advocated that banks shift their lending away from interest-bearing loans to equity-based investment, taking their returns as a share in profits rather than a stipulated interest charge. Marx described the periodic business crashes of his day as a result of interest-bearing debt building up. The question is whether our financial sector today promotes economic growth and rising living standards, or create unproductive credit and use government to enforce creditor claims by imposing austerity reducing large swaths of the world population to debt peonage? The longer we look back in time, the more clearly we find this issue defined. During World War I, for example, British economists debated whether German industrial banking, based on equity financing and long-term relationship with clients, was superior to the more hit-and-run Anglo-Dutch-American merchant banking that had evolved out of trade financing. Sadly, after the Allies defeated Germany, banking in most countries took the Anglo-American path. The stock market has remained a game for insiders rife with fraud. Banking has focused on real estate mortgages and takeover loans for properties and companies already in place.

The path toward more reckless lending was led by the “monetarist” Chicago School. This seems ironic at first sight, because they follow the Austrians in drawing a picture of the economy as if it operates on barter. Prices are considered only a “veil,” and so money also is only a set of “counters,” not a financial system of credit and debt. Instead of relating credit to the dynamics of debt, they focused narrowly on the correlation between the money supply (variously measured) and commodity prices — but not asset prices! Yet most money is spent in the capital markets by “investing ” in real estate, stocks and bonds, not paid for goods and services. Heavily endowed by the financial sector, monetarism’s “learned ignorance” — or as Thorstein Veblen expressed it, an educated incapacity to understand economic problems — has become mainstream and gained control of the major refereed journals, where they have imposed a tunnel vision where the role of debt is concerned. The analysis of debt along these lines helps explain why economies polarize as creditors in the top 1% of the economic pyramid receive debt service as financial tribute from the bottom 99%. It also explains why the solutions being proposed by policy makers to keep the debt overhead (and hence, payments to the financial sector) on the books are so dysfunctional. And the fact that today’s academic curriculum excludes this line of analysis helps explain why so many observers announce their surprise when economies buckle under the debt overhead.

Hyman Minsky explained how the business cycle is basically a financial cycle, characterized by increasingly risky bank credit. Lending standards are loosened as debt service grows so large that borrowers no longer are able to amortize their loans, and ultimately not even to pay the interest. At this point (which Minsky called the Ponzi phase of the credit cycle) banks postpone default by lending their customers the money to pay whatever amounts are falling due. The effect is to add the interest onto the debt principal. The process continues until banks or their regulators realize that the loan balances are largely fictitious, exceeding the debtors’ ability to pay. Unfortunately, socialists who stand on the sidelines repeating the rhetoric of class war between industry and labor (a conflict that never has disappeared, to be sure) miss the threat to labor and industry posed by banks joining with rentiers from the real estate and insurance sectors and monopolies. This makes criticism of financial malstructuring neither left nor right wing. It spans the political spectrum, because the entire economy is threatened by the austerity that results from financial dynamics operating unchecked — and ultimately bankrupts the banking sector itself.

Now, comeback to clean slate policy and inclusive economic institution. As a writer, I have a questions that are always going around inside of my mind, will our people today remember nothing of this lesson? Will our people today do nothing to fight against the parasite role of financial sector? Will our people today let the host’s brain is fabricated by the interest of parasite? The answer is yours!