The Morality of Debt

A History of Financial Saints and Sinners

The word "Bankruptcy" is painted on the side of a building in Detroit, Michigan, October 25, 2013. Joshua Lott /Reuters

Credit and debt are more than just rational material exchanges within a market economy. They are socially constructed and center on matters of hard moral judgments about character, equity, and “good conscience.” These judgments are, in turn, bound up with powerful emotions of resentment, shame, and humiliation. Changing and conflicting representations of personal credit and debt deeply affect the power and welfare of states.


A diversity of social meanings has been attached to debt over time. And yet certain patterns do recur. In various European languages debt co-occurs with “bondage,” “freedom,” “gratitude,” and “honor,” as in “freedom from debt,” “debt of gratitude,” and “debt of honor.”

In Dutch and German, the word Schuld means both debt and guilt. A similar linguistic association is found in the Hebrew word Chayav. These terms illustrate the deep-seated cultural anxiety attached to debt and the powerful feelings of shame it can provoke. For Germans, the fabled Swabian housewife is the traditional cultural icon of virtuous economic conduct: One should “live within one’s means.” German Chancellor Angela Merkel appropriated this icon in justifying her policies regarding the post-2010 euro area sovereign debt crises.

Reflecting his German context, Friedrich Nietzsche offered an anthropological account of the historical association of guilt with indebtedness (das Schuldgefühl). He stressed that debt was bound up with the moralization of concepts of duty, honor, self-esteem, and standing. In On the Genealogy of Morals, Nietzsche looked back to the “oldest and most primitive” personal relationship between creditor and debtor as the origin of how “one person first measured himself against another.”

Indeed, credit and debt did pre-date money. They took the form of favors among friends and neighbors, which created personal moral obligations. Later, the creation of money provided a unit of account for keeping track of debts. More importantly, it led to a de-personalization of creditor-debtor relations, making commercial society possible. This evolution was bound up with the innovation of posting and exacting collateral. In this way, debt

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