DEBT is big business. It is the fuel on which our financial systems run, the energy for growth on which our economies depend. But debt is also a source of misery for many, as more and more people have to borrow to make ends meet.
In this “heretical” little book, Johnna Montgomerie, an academic at King’s College, London, argues that the best way to offset the most pernicious aspects of indebtedness and rehabilitate our debt-addicted economies is through strategic debt-cancellation — strategic because, rather than target specific kinds of debtors, Montgomerie proposes tackling certain types of debt (i.e. housing and student debt, old and high-cost debts, fees, charges, and penalties), and employing established methods for debt-cancellation (among others, long-term wholesale financing and discharging non-performing loans).
Chapter 1 usefully explains how our financial system works, and how modern money is, in fact, debt, loaned into existence by commercial banks and with the blessing of government. Chapter 2 puts forward a “rebellious” and “heretical” proposal for cancelling harmful debts and ending our economy’s debt-dependency. Chapters 3 to 5 set out in detail how the measures would be implemented “to hack” the current global financial system.
On the basis of a recent report on the ethics of debt which I co-wrote for the think tank Theos, I would say, at least, that the idea of cancelling the kinds of debts that Montgomerie mentions, for the reasons that she notes, and in the way that she suggests, is perfectly compatible with Christian ethical thought.
In fact, as I discussed there, debt forgiveness (or cancellation) is of a higher ethical order than debt repayment. Particularly where debts are demonstrably unfair, in their terms or at the level of the social effects they produce, there is good moral reason to consider debt cancellation. When the benefits include, as Montgomerie argues, economic uplift and social equity, the proposal is appealing and, indeed, much more sensible than it perhaps first sounds.
Should we abolish household debt? While Montgomerie talks a good game, I will sit on the fence a bit longer. What we should not do is rule out debt-cancellation on principle. Carefully applied, this economic “heresy” may just be the way to a fairer and more inclusive economy.
Dr Nathan Mladin is a researcher at the think tank Theos and a co-author of Forgive us our debts: Lending and borrowing as if relationships matter (Theos-St Paul’s Institute, 2019).
Should We Abolish Household Debt?
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