Five Ways To Get Out Of Debt: Lessons From The Ancient World

The world has a debt problem.

Let’s put this in perspective. Our little blue planet has a Gross Domestic Product of about seventy trillion dollars. That’s a seven with thirteen noughts after it.

The world’s debt meanwhile is at least three times that, an estimated $223 trillion.

‘At least’ being a very guarded phrase as estimates of the total exposure of derivatives, those infamous financial ‘weapons of mass destruction', runs to two or three times that level.

The bank JP Morgan alone has derivative liabilities of $90 trillion, or more than the world's GNP. Given that they effectively hold the world to ransom you may or may not be relived to know that they have one Anthony Charles Lynton Blair working for them and that they were recently fined nearly a billion dollars for illegal trading.

It seems we bailed out the banks, but totally failed to reform the system.

We have however been here before. Debt has been with us one way or another for 5000 years or more, and in that time different ways have been found to deal with it.

So here we are, the ancient world's solution to the debt crisis.

1) More debt

The hair of the dog approach, which has never worked for my hangovers. This tactic probably goes back a long way, probably to the day when Paul was repaid at the expense of Peter.

It was the ancient Sumerians who wrote the book on debt.

Hammurabi is a name I actually remember from school history. Under his reign the first recorded laws were inscribed in stone. They covered all aspects of life from getting married to buying a house to having children to committing adultery and finally getting divorced.

There were also rules for dealing with cowboy builders (by killing them), and an awful lot about debt.

One Babylonian solution to debt is to sell someone else into slavery to pay it off. If you want to know how that feels, ask a modern Greek.

Debt though kept the wheels or the Babylonian economy turning, and turn pretty rapidly they did too.

However it couldn't last forever, and it didn't.

2) Growth

Like sex when you're sixteen, growth today is that mysterious something that everyone talks about but nobody seems to know how to get.

For the Neoliberals it will come back once we cut taxes and public spending. For the Keynesians it will return if we increase debt and don't cut public spending. Standing the sidelines, shaking their heads and muttering about Peak Oil, are the environmentalists.

Not that there were too many of them 5000 years ago when credit fuelled growth made the Fertile Crescent the economic powerhouse of the Known World. But it didn't last. The clue to what went wrong is in the name. Seen any pictures of Iraq recently? Doesn't look very fertile, does it?

The Tigris and Euphrates delta may have been the birthplace of Western Civilisation, and for a while home to a very advanced system of agriculture, but it was also a very fragile eco-system.

Deforestation led to soil erosion and irrigation led to salinisation. Eventually the land that had fed the armies of Hammurabi and Darius the Great was mostly barren salt flats. Their economy weakened and in 330BC the Barbarians overran the frontiers in the form of Alexander the Great.

The problem is, whilst there is no practical limit to how much debt you can create, an economy is firmly based in the real world which has definite limits. As the economist, and peace activist, Kenneth Boulding said "anyone who believes you can have infinite exponential growth on a finite planet is either a madman or an economist". 

It is now more than 40 years since the book Limits to Growth started to map out the ecological limitations of our economy. Since then conventional oil has peaked and just about every other measure of economic activity has declined too. Those early computer models have been widely derided ever since, but the scenario of ecological overshoot and economic collapse in the second half of this century looks rather more convincing today.

3) Inflation

So if you can't grow your economy, why not just grow your money?

It seems rather obvious really. If you lower the interest rates people are more likely to spend than save, so if you could reduce the interest rate to effectively less than zero people would have no motivation at all to keep their money in the bank so they go out an spend it.

There are a few tiny, weeny problems. We sort of got away with this in the seventies as, with full employment and strong Trade Unions, wages more or less kept pace. Today it's more likely that prices would shoot up whilst your pay cheque stays grounded. Economist Max Keiser thinks this will be the next trick our leaders pull, but then he is barking mad.

Inflation first became an economic problem in the fourth century BC. Then, as now, we can blame the Greeks.

When Alexander the Great conquered the Persian Empire, he found truly staggering quantities of gold and silver stored under the mattress. To put some numbers on this, a rich Greek city like Athens might take in about 400 talents of silver a year in tax, which is about 10 tons. In the vaults of Persepolis the Macedonians found over 3000 tons of the shiny stuff.

And then they started to spend it. The resulting price hikes effectively halved the value of the shekel in the pocket of the ordinary Babylonian. Add to that the market uncertainty caused by Alexander's death and you had a Classical Credit Crunch.

4) Wipe the slate clean

But it wasn't the first one.

Life in indebted Babylon could be hard if you were at the bottom of the social ladder. As no ancient civilisation could survive without peasants or infantry it was important to make sure debt didn't completely destroy the social fabric of the nation.

Every few decades, it seems, they hit the reset button and 'wiped the slate clean', a phrase that has passed into the world’s vernacular. Between 2400BCE and 1400BCE some thirty odd instances of debt cancellations have been found in Mesopotamia.

The idea seems to have been picked up by the Israelites, who had a sojourn in Babylon in the sixth century, and the Old Testament tells how the ancient Israelites held land in common and had a Jubilee Year every half century in which debts were cancelled and slaves freed.

Today, only Iceland has tried such a tactic, and so far things are looking good for the Vikings – if not for their banks. What would happen if one of Europe’s debtor nations tried this could be interesting. Probably bad news for the banks, and anyone with savings, but potentially good news for the real economy. 

5) Do nothing

So what happened to Babylon after 1400BC when they stopped cancelling the debts?

Inequality increased, more and more peasants were sold into debt slavery, economic migrants fled and caused a nuisance as far afield as Egypt and Mesopotamia entered a period known as the "Dark Ages".

I wonder if we might be following suit?


Bibliography
Lost Traditions of Biblical Debt Cancellations by Michael Hudson 
Debt: The First 5000 Years by David Graeber

Privatised War: Greek Style

copywrite Karl Kopinski

So Greece took the blue pill, accepted the bailout and has embarked on a wholesale privatisation of its state sector. Ah well, such is the way of the world now.

Not that everything's going to be sold. The military, for instance, will still control its own tanks. For anyone who remembers 1967 this might be a bit ominous.

War is certainly privatised these days in other ways. The second largest contingent in the Iraq War, after the US Army, was the foreign mercenaries, but at least they came a long way second behind the state funded Grunts. 

Surely nobody would be daft enough to let the sell off the whole of their armed forces?

Well, yes. The ancient Greeks did.

What's a Greek Earn?

The Greek hoplite was the Main Battle Tank of the Classical Era. Heavily armed infantry in armour with big shields, their drill and discipline made them invincible in a frontal attack on level ground. Unlike the pouting hunks of the film 300, they fought with the spear rather than the sword and were probably a bit chubby, as a fat cushion helps with wounds.

The hoplite had to buy his own armour and equipment, but was then paid for the time he served defending his city. They were given a food allowance and wage on top of this. By the fourth century BCE this worked out at about 130 grams of silver a month, which in modern money would be about fifty quid. It was worth a bit more than that then, but a glut of trained soldiers after the Peloponnesian war meant mercenary pay was no more than that of a typical skilled worker.

This made the hoplites solidly Middle Class. The aristocratic cavalry of the Upper Class had trembled before its spear points whilst the humble slinger and javelin men of the Working Class had had to accept supporting roles and a third of the salary. Only in Athens, where the plebeian oarsmen of the navy held the balance of power, was the Middle Class hoplite not supreme.

The fought off the Persians, then they fought each other.

Finally, with not a lot else to do, they fought

for the highest bidder. By fourth century BCE there were probably fifty thousand mercenary hoplites knocking about. For comparison Athens, past its prime but still the leading city state, could just about muster ten thousand citizen hoplites and Sparta, the top land power, no more six thousand spearmen, although they these were hard as nails.

There was even a place you went to to buy mercenaries all to sell your services. This was Cape Matapan, at the bottom of the Peloponnese. A nearby cave was reputed to be the entrance to Hades. There, presumably, men in togas and red braces bought and sold hoplite futures which, if you were unlucky, could be a trip down the cave.

If you had the money you could head south and raise an army that would make the greatest cities in Greece quail. The Persians had the dosh, but they seemed to have given up on the quarrelsome Greeks and preferred to spend their time freeing their slaves, developing the Arts and the postal service and spreading peace and good government across the Known World. For some reason history has written them as the Bad Guys in this story.

copywrite roman-empire.net

An example of the sort of military might money could buy occurred in 401BCE. A force of 10,400 mercenary Greeks was employed by the Persian usurper Cyrus the Younger. His private army did the job and soundly thrashed his brother's royal troops, but unfortunately Cyrus lost his head during the battle. Literally.

The Ten Thousand then found themselves unemployed and a long way from home. The Persians managed to separate the officers from the men and then bump them off, but the democratic Greeks just elected some more. They then spent the next two years fighting their way home again.

The story has been read by generations of British Public School boys as a tale of daring-do under difficult circumstances. What has not been recorded is the Persian's opinion of what was effectively a rogue armoured division pillaging its territory for a couple of years, upsetting the freed slaves and no doubt messing up the postal service.

So with so much fighting power available for those able to pay, where could the cash come from? The city states could only just afford to pay their own citizen soldiers. In Athens at this time economic reform had made the rich richer but everyone else poorer. (Plus ça change, but lets move on.)

Phocians Rock

Where there was money was though was at the Temple of Apollo at Delphi. Here an elderly peasant

woman sat on tripod breathing in hallucinogenic gases. Her ranting were then turned into cryptic advice by the resident priests to be given out to anyone who paid enough tribute. Allegedly the priests were also open to a little persuasion from other interested sources if they could match said tribute. The priests were therefore sitting on a pretty packet.

Unfortunately for them Delphi was located in Phocis, a rural backwater of a place that was in 356BCE being threatened by neighbouring Thebes with dire consequences if it didn't make amends for numerous alleged religious offences. Delphi was one of the holiest sites in Greece, but, alas, temptation got the better of the Phocians and they nicked Apollo's gold and went shopping at Cape Matapan.

Using money looted from the gods caused some problems. The Phocian had to pay their men time-and-a-half and ended up with "the worst naves, and those who despised the gods". However they assembled 20,000 of these desperados and soon started kicking ass.

Epaminondas

Thebes had one of the most formidable armies in Greece at this time thanks to the reforms of a rather dislikable character called Epaminondas. The elite of the army was apparently made up of 150 gay couples. They did wear skirts, but whether or not they liked quiche is not recorded. When they eventually died to the last defending Thebes from Alexander the Great's dad, the victorious and somewhat homophobic Macedonian was both impressed and a little grossed out. He ordered the official scribes not to record any allegations of "unseemly" acts by the dead soldiers. As Epaminondas didn't marry or have children you wonder how common such "unseemly" behaviour was in Thebes.

Epaminondas had been dead for six years in 356BCE and so it was someone else who had to take field against Phocis. As the city could only muster 12,000 citizen hoplites of its own they were hard pressed from the start, and it soon got worse as Sparta and Athens soon decided that they disliked the warlike, arts-hating Thebans more than they hated each other and threw in their lot with the temple robbers.

A very messy war then engulfed the region for a decade before the money ran out and the Macedonians stepped in. It was estimated that Phocis had got through 10,000 talents of silver in the course of the war. A talent is 26 kilograms so that's a mountain of silver. To put this into some sort of perspective Athens was taking in no more than 400 talents a year in taxes. The Phocians were made to pay the money back, but being piss poor to start with and devastated by war they were eventually saddled with a thousand years of debt (once again, lets just move on...).

It had all been spectacularly pointless, but that wasn't the end of the Greek Mercenary by any means.

When Philip's son, Alexander the Great, invaded the Persian Empire in 334BCE he found the Persians had bolstered their own cavalry with no less that 48,000 hoplite mercenaries. That meant that Darius actually had seven times as many true Greeks fighting on his side as Alexander did, even though he was supposedly leading a Pan-Hellenic army out to get their own back for the Persian Wars. It seems the Greeks preferred regular pay (and post) to revenge.

They've Got A Lot Of Gaul(s)

All this should have been a dire warning on the perils of privatising war, but it gets worse.

In the northwestern Greece is the city of Phoeniki in Epirus, whose most famous General was Pyrros of the infamous victories. Shortly after he died in a siege, knocked out by a woman armed with roofing slate after an elephant got stuck in a doorway, the citizens decided to save themselves the bother of guarding their own city walls by recruiting a gang of wandering Gauls to do the job instead. It seems they didn't ask for any references.

These Gauls had been serving with Carthage in the Punic Wars but they had pillaged a city they were supposed to be guarding, tried to betray another, gone over to the Romans and sacking a Roman temple before being expelled from Italy.

True to form, their love of money won out over their dedication to the job. A fleet of Ilyrian pirates sailed past and the Gauls discovered they could make more money for less work by selling the citizens into slavery.

From the Black Death to Blackwater.

And that really should have been that for the mercenary army.

copywrite Graham Turner

But after the Black Death called half time on the Hundred Years War, several English armies went rogue, including one that kidnapped the Pope. He offered them a choice of a 5000 crown ransom and his blessing or 10,000 crowns and a solemn curse with bell, book and candle and, just like the hoplites who thumbed their noses at the gods to fight for Phocia, the English opted for the cash and the curse.

The Renaissance perhaps marked the high point of mercenaries in Europe as the Swiss banks were more than prepared to lend wannabe monarchs a sack load of gold to raise an army. The Swiss had also cornered the market in soldiers for hire, so it was really a win-win situation for them. However, as Machiavelli and other noted, that this meant battles were usually fought to the last crown rather than the last man.

March or Die, Columbia Pictures, 1977

Although armies of the Age of Reason often employed non-native soldiers, such as the legions of wandering Scots and Irish, the days of the true mercenary were drawing to an end. After the French Revolution nationalistic fervour became as essential to victory on the battlefield as the musket, and so mercenaries were generally banished from European battlefields and sent to garrison Europe's overseas empires instead.

The wars of the twentieth century saw entire nations in arms, but with the ending of the Cold War the massed conscript armies were replaced by fully professional forces. Perhaps therefore it's inevitable that the mercenary should have returned. Is an American who enlists with Blackwater to defend an Iraqi oil refinery really that much more of a mercenary than a British soldier sent abroad to fight for a cause most of his nation couldn't give a toss for?

However if this the direction of travel in warfare we should perhaps heed the warning words of the ancient historian Polybius "My object, in commenting on the blind folly of the Epirotes, is to point out that it is never wise to introduce a foreign garrison, especially of barbarians, which is too strong to be controlled."

In 2008 69% of the US military in Afghanistan were private contractors.

Bibliography

Armies of the Macedonian and Punic Wars by Duncan Head
Alexander the Great's Campaigns by Phil Barker