C H R I S A .

G R E G O RY

On money debt and morality: some

reflections on the contribution of
economic anthropology

Peebles, in a recent review of the anthropology of debt and credit, found an ‘astonishing consistency’ in the
moral 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 economic
anthropology?

Key words debt, credit, economic anthropology, demand sharing

The problem

In this paper I offer some reflections on the ethnographic and theoretical contribution
of economic anthropologists to the vexed question of money debt and morality, on what
we have achieved, the present state of the question and future directions. The first and
obvious contribution of anthropological research has been to considerably broaden
our understanding of the notion of debt. Oceanic scholars have given us extremely
detailed ethnographic accounts of the peculiar notions of debt that moka, kula, potlatch
and other classic forms of ceremonial exchange create. Indianists, for their part, draw
our attention to the three theological notions of debt that a Hindu male acquires – to
the sages, the gods and to the ancestors – which have to be repaid throughout his life
through 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 simple
notion of debt that the lending of money creates and that the bookkeeper records. To
narrow my focus even further, I will restrict myself to household debt and leave aside
the notion of sovereign debt. The focus of my attention, then, is the domestic moral
economy (DME), not the national political economy as classically understood. The
DME is that domain where profit and loss and virtue and vice form an inseparable
whole; or, to use Polanyi’s (1944: Chapter 4) famous formulation, where the economy
is embedded in kinship and other social relations.
Anthropologists have also made an important contribution to our understanding
of money debt in this narrow sense. Their detailed ethnographic studies have charted

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 ON MONEY DEBT AND MORALITY 381

the extraordinary diversity in the social organisation of the domestic moral economy
across time and place; they have shown how familial relationships have shaped the
qualitative form of money-lending transactions and its substantive content. Theoretical
reflections on these data in comparative content have yielded important general insights,
problematised old theories and posed new questions. This much is apparent from
Peebles’s 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, an

astonishing consistency shines through much of the ethnographic data. Seemingly
everywhere that credit and debt are discussed, we find many informants who
enunciate a moral stance that credit is considered beneficial and liberating for the
creditor . . . whereas indebtedness is more likely to be seen as burdensome and
imprisoning for the debtor. (Peebles 2010: 226)

Peebles’s 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 the
cultures of people? If so, what is the reason for this ‘astonishing consistency’? Why
is 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 transcultural
consistency of the moral evaluation of debt and credit also apply to the moral evaluation
of money lender and borrower? Does it follow that creditors are always considered
virtuous and debtors vicious?
This essay is a rumination on these questions. In the first part I address the sceptical
questions and argue that Peebles’s ‘astonishing’ finding is indeed sound, that people
everywhere at all times regard debt as a ‘bad thing’ and credit as a ‘good thing’. I
suggest some reasons for why the consistency of this moral judgement may not be
so ‘astonishing’. In the second part of the paper I address the second set of questions
and argue that the moral evaluation of the transactors is inconsistent, that it varies
over time and place. I also consider some of the theoretical implications of this
apparent paradox for future ethnographic research using illustrative material from the
Pacific.

Is credit to debt as vir tue is to vice?

At first glance Peebles’s key finding about the generality of the moral stance people
take on debt and credit seems implausible. Anthropologists are renowned for being
merchants of cultural difference. The history of our discipline is defined by our success
in revealing the cultural basis of natural explanations. In the sub-discipline of economic
anthropology our founding fathers – Malinowski, Mauss, Polanyi – all developed their
theories of exchange in opposition to the theories of ‘natural economy’ propounded
by free-market economists like Adam Smith and others. Given this history of our
discipline, Peebles’s finding about the transcultural nature of this moral valuation does
indeed appear astonishing. Could it be that he has made a mistake? Has he misinterpreted
the literature? Has he unconsciously smuggled an assumption of his own into his review
of the literature?

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The answer to these questions is an emphatic ‘no’. Peebles’s ‘astonishing

consistency’ is not an assumption. It is an empirical generalisation gleaned from a
vast body of ethnographic literature. Furthermore his review, because it only deals
with ethnographic material, only covers a small fraction of the evidence available. The
historical archive from different countries around the world contains overwhelming
evidence of the consistency of this finding. The sacred texts of the major religions of the
world, as we shall see below, contain evidence of the generality of the moral evaluation
as debt as bad and credit as good. It would be a tedious exercise to assemble this extra
material to substantiate his claim because the relevant inquiry to be made concerns the
nature of this empirical generalisation.
The key point is that the finding is a generalisation, not a statement about a
universal truth. It is analogous to the proposition ‘Homo sapiens are bipedal’, which
is to say it admits exceptions. Thus the specific proposition ‘Some men only have
one leg’ does not deny its validity but is fatal for a universal affirmative proposition
of the kind ‘All men have two legs’. But if biological anthropologists can give us a
generalisation of this kind from a study of the comparative anatomy of animals, from
whence does the generalisation of the virtues of credit spring? We are not astonished
by the proposition ‘Homo sapiens are bipedal’, so why should we be astonished by
an analogous proposition derived from the comparative analysis of money-lending
practices? 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 and
society in the world at large about the relationship between debt and credit. This
confusion is very widespread. The double-entry bookkeeper even gets it muddled up
sometimes. The first thing one learns in Bookkeeping 101 is that for every debit there is
a credit; in Bookkeeping 201 one learns about the distinction between a debit and a debt
and also about the distinction between a credit that is opposed to a debit and another
sort of credit that is opposed to a debt. These issues are complex and it is no wonder
that finance companies report that most customers are often very confused about the
distinction 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 members
of the domestic moral economy, the sub-prime borrowers. Studies of women in the
squatter settlements of the Pacific, for example, have found that financial illiteracy is
almost total. Many do not even know the meaning of the word ‘interest’, let alone the
distinction between credit and debt. An additional problem is that many development
experts brought in to teach them about debt and credit are themselves muddled; among
other things, they have failed to understand the subtle semantic changes that have
occurred in the word ‘interest’ over the past three decades.
Anthropologists often overcome the confusion between debt and credit by holding
conferences that privilege one term or the other. Thus the theme of Firth and Yamey’s
conference in 1960 was ‘credit’. This much is clear from the title of their subsequent
edited collection, Capital, saving and credit in peasant societies: studies from Asia,
Oceania, the Caribbean and Middle America (Firth and Yamey 1964), where the word
‘debt’ does not even appear in the index. Some 50 years later, this special issue arose from
a conference that had ‘debt’ as its central theme. Peebles, for his part, entitled his survey
article ‘The anthropology of credit and debt’ and noted that ‘because debt is always
already a dyadic relation that requires its opposite, I henceforth refer to credit/debt
rather than trying to distinguish the two’ (2010: 226). But if we are to understand why
Peebles’s finding is not so ‘astonishing’, then we must distinguish the two.

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But what is the difference between debt and credit? It is hard to find anyone
who is able to answer this question coherently. The exceptions are money lenders.
Successful money lenders are never confused about the distinction because their daily
bread depends on it. Having a customer who is confused about the matter serves their
interest, 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 must
get 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 prior
to obtaining a debt. This is one area where people become puzzled regarding credit
and 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 searching
for 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 exists
as a potentiality, as something belonging to the future. When the requestor is deemed
trustworthy and is granted the loan, the credit becomes history and takes the form of
debt. 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 exactly
identical to it.
The double-entry bookkeeper lives for this moment; he occupies the liminal space
and records the exact time of its rebirth twice in his books, once on the left hand side
of his ledger, once on the other side but always in exactly the same monetary terms. He
does this using the language of debit and credit, an opposition that sounds confusingly
similar to that between debt and credit. As Victor Turner reminds us, a person cannot
occupy a liminal space without themselves becoming liminal persons. The double-entry
bookkeeper is, therefore, a threshold being who is betwixt and between, neither here
nor there; he is himself a double-entity who exists in mirror-image form. One part
of 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 of
the 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 rule
that for every debit there must be a credit. This was a revolutionary moment in the
history of commerce and arithmetic, a fact developed by Rotman (1987) in his book
Signifying nothing: the semiotics of zero. ‘The central role occupied by double-entry
book-keeping (principle of the zero balance) and the calculational demands of capitalism
broke down any remaining resistance to the “infidel symbol” of zero’, he notes
(1987: 8) ‘and ensured that by the early seventeenth century Hindu numerals had
completely replaced Roman ones as the dominant mode of recording and manipulating
numbers 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 are
talking about debt and credit. We are in a Hegelian-type world were debt is identical
to credit, the opposite of credit and the composition of the preceding position and
opposition. However, Hegelian logic is not the key to grasping the essence of the
difference between debt and credit, for time is the essence of it all. Potential credit

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(call it creditp ) is opposed to nothing if the request for credit is refused, but to actual
debt (call it debta ) for the borrower when granted. This appears in the books of the
lender as actual credit granted (call it credita ). The latter type of credit, credita , has an
altogether different temporal relationship to debta than does creditp . In the case of a
bank loan credita and debta , both can grow at exactly the same rate depending on the
rate of interest agreed, and fall in unison as repayments are made. Familial loans at zero
or negative interest rate behave in different ways over time. It is no wonder that most
people 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 the
simple accounting shown in one’s statement: debt is the amount owed, credit is the
amount 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 relationship
between debt and credit. The granting of a request for credit does not result in an
immediate debt but allows the borrower to take up the offer of credit when they
need it. Credit cards also abolish the notion of a fixed term of a debt by rendering it
effectively perpetual. The ideal borrower, from the bank’s point of view, is one who
maintains actual debt at the maximum allowable and pays off the interest accumulated
on a regular basis. This enables banks to maximise its profits because interest charged
on 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 it
bank credit or familial credit. This notion of request, we shall see below, is crucial
for understanding familial money lending among the relatively poor in the world
today. Historically the onus has been on the borrower to initiate this move. The recent
development of sub-prime lending – an epoch-making event in the economic history
of money lending – has temporarily reversed the situation as financial institutions have
aggressively, 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 still
living through today. The question of the morality of money debt is now back on the
agenda, but in a new way. It is one thing to talk about the morality of a money lending
transaction – the relative moral evaluation of credit and debt – but quite another to
talk about the morality of the transactors, the relative moral evaluation of lender and
borrower. We now speak of ‘banksters’, a derogatory term that echoes terms used to
describe the usurer of old. This raises issues that I will address in the next section.
To understand the ‘astonishing consistency’ of Peebles’s empirical finding, then, it
is necessary to focus on the preliminary and postliminary states of a money-lending
transaction: on credit as the future in the form potential debt and on credit as history
in the form of actual debt. Once we do this it becomes obvious, I hope, why credit has
a positive moral valuation and debt a negative one. The relationship is almost true by
definition, ‘almost’ because the relationship arises from the history of commerce not
a priori from logic. This much can be established from an examination of dictionary
definitions of credit and debt, from the etymology of these words, and from proverbs
that, 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 word’s
birthmark: credible, honour, repute, trustworthiness, etc. Lenders throughout the ages
have looked for these qualities in their potential borrowers. Debt is not negatively valued
by dictionary definition, but a deep history of impecunious debtors and importunate
creditors has given us the notion of a ‘bad debt’. The operation of the law of contagious
magic has ensured that the vicious moral quality of the adjective has cast its evil shadow

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over its accompanying noun. Strictly speaking, what is called a ‘bad debt’ is, logically
speaking, a loan at ‘negative interest’. The negative interest on a loan that is not repaid
is 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. The
debtor is, by definition, someone who needs money and history tells us that they are
ever-ready to receive money, but not always ready to pay it back. The Fijian villagers of
today who flee in fear when the microfinance debt collector arrives are re-enacting an
ancient postliminary debt ritual. Stories of this kind are so widespread that they have
become 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 isn’t so bad.
It’s running into creditors that hurts.’ ‘Credit is dead, bad pay killed it.’
The astonishing consistency that Peebles has found in the ethnographic studies
of money and credit comes about because the whole history of the intertemporal
relationship between a request for credit and the subsequent recovery of the debt has
coloured the meaning of these terms with moral overtones. The moral valuation is
a general one because the commercial principle on which it is based is general. To
make a profit one must ‘buy cheap and sell dear’. This commonplace of economic
anthropology is analogous to the biological anthropologist’s ‘homo sapiens is bipedal’.
As Geertz noted in his study of the market economy of Morocco, ‘the bazaar is more
than another demonstration of the truth that, under whatever skies, men prefer to buy
cheap and sell dear’ (1978: 29). The money lender – be it the ancient village money
lender or the modern bank – also likes to buy his commodity cheap and sell it dear. As
such, he is concerned to find the good creditor who repays his loan with interest and
to avoid the bad debtor who doesn’t. The history of money debt and morality, then, is
the history of the pragmatics of commercial language usage. We use the word ‘credit’
when we want to say money lending is a good thing and the word ‘debt’ when we want
to say that money lending is a bad thing.
The language used to describe the work of Muhammad Yunus, the founder of
the Grameen Bank, illustrates this. Grameen, it should be noted, means ‘village’ and
Yunus is a village money lender who lends money on interest to the poorest of the
very poor. What distinguishes him from other village money lenders is his success
both financially and socially: he is probably the biggest village money lender in human
history (8.32 million borrowers in 2010) and perhaps the only one in human history
who 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; the
20% he charges for income-generating loans is called interest not usury as any rate over
about 8% was called in the good old days; the loans he gives are called micro-credit
rather than micro-debt; the people to whom this micro-credit is extended are called
borrowers not debtors, 97% of whom are women. My point here is not that Yunus
is a bad guy, but that because he is celebrated as a good guy the word debt is not
used when talking about his money-lending activities. Needless to say, when he was
awarded his Nobel Prize for Peace in 2006, he got it not because he has sent millions of
the poorest of the poor women into debt but because he extended them micro-credit.
‘Micro-credit’, the Nobel Prize citation says (http://nobelprize.org) ‘has proved to be an
important liberating force in societies where women in particular have to struggle against
repressive social and economic conditions’. If this statement is true, then it is also true
that micro-debt has proved to be a liberating force, but this language would not sound
convincing.

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If the semantic valuation of the words ‘credit’ and ‘debt’ is always and everywhere
associated with ‘virtue’ and ‘vice’, then the use of these words is an altogether different
matter. When we want to say that a money lender is a ‘good guy’, we use the language
of 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 to
question 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 of
microcredit (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 for
whom loans did not get them out of poverty, of instances where people paid interest
rates from 30 to 200%, and allegations of corrupt dealings. Again, the truth or falsity
of these claims is not my concern. It is the filmmaker’s use of the terms ‘credit’ and
‘debt’ that interests me, for it is yet another illustration of Peebles’s finding. This case
illustrates the semantic contrast that is at the basis of his, by now, not-so-astonishing
finding: credit is to debt as virtue is to vice, as light is to dark, as good is to bad, and so
on. The case also illustrates the limits of this finding because the pragmatics of debt and
credit poses much more interesting ethnographic questions. The move from semantics
to pragmatics changes the terms of the debate from transaction to transactor, from the
commonplace moral evaluations of credit and debt to the historically specific moral
evaluation of lenders and borrowers.

Is lender to borrower as vir tue is to vice?

The answer to this question is an emphatic negative. There is no transcultural

consistency in the moral valuation of creditors and debtors. To the contrary, the answer
has 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 commercial
contracts involving money are morally neutral. They would concede, of course, that
it has not always been this way, noting that money lending has long been considered
a vicious activity and the money lender the epitome of evil. But such thinking, they
argue, is a relic from the medieval dark ages of economic theology rather than modern
political economy. Smith’s classic text, An inquiry into the nature and causes of the
wealth of nations (1776), they argue, turned thinking of this kind upside down. For
the economist, then, Smith is an icon of freedom, a solid-gold statue of liberty. For the
economic anthropologist, on the other hand, Smith is a straw man whose theories of
‘natural economy’ provided the antithesis for their theories of domestic moral economy.
Neoclassical economic theory is premised on the assumption of homo economicus, a
rational calculating individual faced with the problem of satisfying unlimited wants with
limited means. Economic anthropologists have substituted moralis personae, a person
confronted with the moral dilemma of having to locate him or herself on a continuum
of reciprocity that has the warmth of the caring and sharing household at one extreme
and the cold, hard world of higgling and haggling with strangers in the market place at
the other extreme. The former is the domain of ‘positive reciprocity’ and the latter of
‘negative reciprocity’. The virtuousness of the former and the viciousness of the latter
are implicit in the adjectives, but is also a moral judgement derived from a faithful
reporting of the ‘native point of view’ and Malinowski’s informants are oft quoted

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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 for
Malinowski and Mauss in the development of their theories, it was Polanyi (1944: 43–4)
who was the first to identify Smith as the real target of attack. In his classic work, The
great transformation: the political and economic origins of our time, he identified the
period of the Industrial Revolution in England (roughly 1750–1850) as the period of
the ‘Great Transformation’ when the market economy emerged dominant. His grand
narrative of this event is a variation on themes developed by Marx, Morgan, Dumont and
many others. Adam Smith’s two great works, The theory of moral sentiments (hereafter
ToMS) and Wealth of nations (hereafter WoN), were published in various editions
over 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 of
critics. However, a closer examination of Smith’s writing, especially his ToMS, reveals
a number of surprises. When it comes to the morality of money lending, he was by no
means a revolutionary. That status belongs to Bentham, who came shortly after him.
Furthermore, what Smith had to say about the morality of money lending anticipates
much of what economic anthropologists up to the time of Sahlins’s (1972) Stone age
economics had to say about the matter. If we are to move forward in our theoretical
understanding of ‘domestic moral economy’, it is necessary to understand Smith’s role
in the ‘Great Transformation’ of the moral approach to money lending in Christian
Europe.
Benjamin Nelson’s The idea of usury: from tribal brotherhood to universal
otherhood (Nelson 1969) provides the historical context. His book covers the ethical
evolution of the West in three phases: the kinship morality of the tribal brotherhood;
the universal brotherhood of medieval Christianity; and finally the utilitarian liberalism
of today. Nelson is a story teller in the classic narrative tradition. His story has five
parts and it chronicles the vicissitudes of his prime protagonist as he wanders through
the Western Christian World. And who is his prime protagonist? The Deuteronomic
double standard, the Old Testament commandant on usury that formed the cornerstone
of the blood brotherhood of the Hebrew tribesmen.

23:19. Thou shall not lend upon usury (neshek) to thy brother (l’ahika) . . . 23:20.
Unto a stranger (nokri) thou mayest lend upon usury; but unto thy brother thou
shall not lend upon usury . . . (Nelson 1969: xx–xxi)

Or to use more modern colloquial language, ‘Screw the other not your brother.’ This
Deuteronomic double standard of the Hebrew tribesman stands opposed to the New
Testament passage in Luke 6:35, which provided the basis of a different morality rooted
in the Brotherhood of Man under the Fatherhood of God:

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

This formed the cornerstone of the universal brotherhood of medieval Christianity.

Nelson’s book chronicles, in fascinating detail, how negative moral ideas about debt
and usury became transformed into positive moral ideas about credit and interest as

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the notion of a Tribal Brotherhood was replaced first by the Universal Brotherhood of
medieval Christianity then by the Universal Otherhood of today. His story takes us
up to the time of Adam Smith and beyond, to the time of the emergence of industrial
capitalism in England.
Today the neo-liberal consensus is that the interdiction on usury was the work of
the Dark Ages when commerce was at its lowest ebb. A commercial society must be
supported 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 lives
on.
What Nelson gives us, then, is a moral history of the transition from money lending
as debt creation and something bad, to money lending as the extension of credit and
hence something good. I will not even try to summarise this history because I am
interested 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 is
a quantity whose value ranges from minus infinity to plus infinity and includes the
infidel number zero betwixt and between these two extremes. All of these numbers
have different moral valuations that have varied throughout history. Four cases must
be distinguished: negative interest rates, zero interest rates, low interest rates and high
interest rates.
Usury is the name for a positive rate of interest that is deemed high, but the
magnitude of the positive rate of interest considered bad clearly varies from culture to
culture. Implicit in the Deuteronomic double standard is the idea that only a zero rate
of interest is good and anything above this is considered bad. In Luke 6:35 we get the
idea that negative interest is good, i.e. the loan that is not repaid, the bad debt as it is
called today.
The moral evaluation of the negative interest rate and zero-interest rate cases are
of the greatest interest to anthropologists for they are ambiguous states that admit of
a range of non-commercial interpretations. For example, the negative-interest rate case
can be interpreted as a ‘one-way’ gift or an ‘alienated gift’, as Parry (1986) has suggested
that the Hindu gift called daan might be glossed. Indeed, the ideology in Luke 6:35
has 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 is
repaid 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 free
of any obligation to repay. This, at least, is the Brahmanic theology; subaltern economic
theologians, Ranajit Guha (1985) reminds us, often see things differently.
The ancient Indian moral codes dealing with the morality of positive rates of interest
is also an interesting variation on Deuteronomic double standard. The Laws of Manu
(VIII, 141–2) define 2% a fair rate for a Brahman, 3% for a Warrior, 4% for a Merchant,
and 5% for a Sudra. Lending above these stipulated rates was called usury. This is a
quadratic standard rather than a double standard and suggests that sub-prime lending
may have been an ancient Indian invention.
The Christian and Hindu moral codes are all variations on the same theme: lending
at low, zero or negative rates of interest is a virtuous activity; lending at relatively high
rates of interest a vice. But what of Adam Smith? He transformed ancient economic
theology into modern moral economy, but was not a revolutionary when it came to
money debt and morality. To the contrary, he merely restated the ancient theology in a
new language.

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Smith is celebrated as the father of modern economics, but only a cursory familiarity
with his work is needed to reveal the real kinship relation. For a start, the theory of
economic value developed in his An inquiry into the nature and causes of the wealth
of nations (Smith 1776) is a labour theory of value not a marginal utility theory of
the 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 theory
of moral sentiments (Smith 1759), is a theory of affective individualism, not the rational
individualism 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 the
last great sentimental moral philosophers. There is a sense, too, in which economic
anthropology is the bastard offspring of this unacknowledged father.
Smith’s theory of affective individualism has the figure of the impartial spectator
at its centre. In Nelson’s 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 of
the affective individual. Smith’s favourite image for the impartial spectator is that of ‘the
great inmate of the breast’ (ToMS: III.I.43). In other words, the impartial spectator takes
up residence in the heart and soul of the non-participant observer, where he moderates
the passions of his host and guides him in right conduct: ‘it is only by consulting this
judge within’, says Smith, ‘that we can ever see what relates to ourselves in its proper
shape and dimensions; or that we can ever make any proper comparison between our
own interests and those of other people’ (ToMS: III.I.43).
This affective individual is a cool-headed character whose judge within is familiar
with Aristotle’s table of virtues and vices, and is able to act with equanimity in all spheres
of 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; in
the sphere of getting and spending, he opts for liberality rather than prodigality or
illiberality; and so on for all the other spheres of action and feeling.
Anthropologists have been very selective in their reading of Smith. Few get beyond
the oft-quoted paragraph in the WoN about the natural propensity of homo sapiens
to truck, barter and exchange. However the ToMS has many surprises in store for the
economic anthropologist, for here we find that the morality of the affective individual
varies with kinship distance and along with it the morality of the interest rate that
should 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 same
house with him, his parents, his children, his brothers and sisters, are naturally
the objects of his warmest affections. They are naturally and usually the persons
upon 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 one’s children. The first
friendships are with brothers and sisters; with cousins the mutual sympathy weakens.

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

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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 the
neighbourhood, the community and the state. The rise of the state and of commercial
society did not signal the advent of the rugged self-interested individual for sympathetic
feelings 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 and
friends will be governed by the sympathetic relationship that exists between them. On
the question of money debt and morality, he notes that moral sentiment varies with
kinship distance in a way that can only be fully understood by means of concrete
analyses of particular cases.

If your friend lent you money in your distress, ought you to lend him money
in 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 no
general rule can be laid down, by which a precise answer can, in all cases, be given
to any of these questions. (ToMS: III.I.121)

Money lending of a commercial kind between non-kin is governed by a different

morality based on mercantile common sense.

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

The two obvious points that Smith make then are, firstly, that lending money to friends
and relatives at negative and zero rates of interest raises all sorts of dilemmas and a host
of questions for which there are no simple answers and no general rules to guide us. The
second obvious point that Smith makes is that lending money at interest to a merchant
who will use the money productively is a good thing because credit is the life blood of
commerce; but lending on a commercial basis to someone who will spend it idly is a
stupid 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 commercial
loans. 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 that
would prevent ‘sober people’ from using it to venture into competition. ‘If the legal
rate 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 and
projectors, 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 morality
upside down; rather, his two great works provide a synthesis of it. Bentham was the true
revolutionary and it was precisely on the point of high interest rates for commercial
loans that he took leave of Smith. A person should be at liberty to make their own
money-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, in
the way of obtaining money, as he thinks fit: nor (what is a necessary consequence)

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anybody hindered from supplying him, upon any terms he thinks proper to accede
to. (Bentham 1843: Letter 1)

The general acceptance of this valuation was the death of the notion of usury. Hitherto
usury was generally defined as a rate of interest in excess of around 5–8%. The
revaluation of rates of interest in excess of 8% as virtuous meant that the word usury
no longer had meaning for the Big End of town.
Economic anthropologists have targeted the wrong man in Adam Smith, for it is
Bentham who is the true straw man and quite literally so. In his will he requested that
his body be dissected as part of a public anatomy lecture. His head and skeleton were
then stored in a wooden cabinet called the ‘auto icon’, with the skeleton stuffed with
hay and dressed in Bentham’s clothes. University College London acquired the auto
icon in 1850, where it is still on public display. Bentham’s head is now made of wax, but
his spirit lives on in the neo-liberal ideas that dominate the world today. Contemporary
moral philosophy and political economy owes much to him. For example, Peter
Singer’s moral philosophy builds on Bentham’s work on animal liberation, but it was
Jevon’s mathematical formulation of his theory of pleasure and pain in the 1870s that
revolutionised economic theory, leaving little space for those who argue that economics
should be wedded to the softer disciplines of history and anthropology. Mandeville’s
famous 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, rational
self-interest. Smith’s moral sentimentalism was rationalised and a new moral philosophy
and political economy was born. Smith’s rhetoric of the invisible hand of the market
was appropriated and given new meaning within this new theory of value.
As for the theoretical contribution of economic anthropologists, it can be seen that
our most celebrated achievement, the theory of reciprocity, is Smithian and pre-Smithian
rather than post-Smithian. The theory of gift exchange we have developed is nothing
more than a fully fleshed out version of the Deuteronomic double standard of the tribal
brotherhood. But is this all we have achieved? Has all our careful ethnographic work
simply lent credence to Mauss’s ‘notion that credit and debt stand as an inseparable
dyadic unit’, as Peebles notes (2010: 226)? Peebles’s review of the literature correctly
notes that Mauss’s classic text on the gift has been foundational, but he did not address
there the emerging critique of the Maussian paradigm and the implications of this for
our understanding of debt and credit as an inseparable whole. What is this emerging
critique? What new questions does it pose?

The emerging critique of the Maussian paradigm:

s o m e e v i d e n c e f r o m t h e P a c i fi c

The classic Maussian theory of reciprocity as developed by Polanyi, Lévi-Strauss,

Sahlins and others has its origins in the early ethnography of the Australian
Aborigines and other indigenous peoples who lived in remote communities and whose
exchanges were made between moieties and informed by cross-cousin marriage rules.
Contemporary ethnography among Aboriginal people in urban areas whose economy
has become completely monetised has contributed to an emerging critique of the
Maussian tradition. Thus when Peterson heard an informant say ‘I want to owe you five

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dollars’ (1993: 860) and coined it ‘demand sharing’, he realised that requests for credit
of this kind posed new questions for the theory of domestic moral economy. These
were taken up and developed by MacDonald (2000), who noted that ‘the obligation to
give in response to demands, without expectation of return, sets up a different dynamic
in social relations’. The Maussian legacy, she argues, blinds us to the reality of demand
sharing and its implications. The fact that the demand-sharing literature has escaped
inclusion in Peebles’ review is proof of her argument [but see Peebles’s contribution to
this volume]. But what are the implications of demand sharing for the anthropology of
money debt and morality?
Demand sharing is not something the Australian Aborigines have discovered. To
the contrary, it is very widespread throughout the Pacific, where different countries
have special names for it. In Fiji, for example, it is called kerekere, from the verb kerea,
to request. Sahlins (1962: 203–14) devoted a chapter of his ethnography Moala to the
analysis of this notion. Interestingly, neither the word nor the idea rates a mention in his
classic work on reciprocity (Sahlins 1972). However, he returned to the issue recently
in response to an article by Nicolas Thomas (1993). Sahlins (1993) argues that kerekere
was 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 and
post-colonial era. And so too have the debates about its morality (Spate 1959: 24): Is it
familial 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 Strathern’s No money on our skins:
Hagen migrants in Port Moresby (1975). This book is one of the unrecognised classics of
economic anthropology. The method she followed here could be no better illustration
of Smith’s point that ‘no general rule can be laid down’ when it comes to understanding
lending money between friends and relatives. Recording a transaction is not a simple
matter of double-entry booking, but rather one of collecting family histories and other
case studies that help us make sense of what is going on in concrete cases.
Strathern’s book was way ahead of its time and it as an absolutely necessary
manual for those who want to understand some of the pressing issues that face
people living in the Pacific and elsewhere today. In the 40 years since Strathern wrote
her book, the Pacific has been transformed beyond recognition. While the values of
the tribal brotherhood of old still linger on, they now must adapt to a world where the
transnational family has become a reality. If money and the morality of market exchange
defined the boundaries of the tribal community of old, then money constitutes the
internal essence of the transnational family today. This is because the development and
growth of the transnational family has gone hand-in-hand with the growing importance
of remittances globally. Official figures reveal that global flows of money are now twice
the size of overseas development aid. Remittances have grown at an annualised growth
rate of 36 per year in the Pacific since 2000 (AusAID 2008: 31–2). 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 only
help us understand the macro-economics of international remittances, but also of intra-
national inter-household money flows. The values informing these money flows are
complex, but requests for money and credit from kin play a central role. These requests
to receive money raise questions that overlap with the classic problems of gift exchange
and the obligations to give. A request for money of this kind is a request for credit from

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someone who wants to be in debt. But when these requests are prefaced, as they often
are, with a ‘Hey brother’ or a ‘Hey sister’, the addressee knows they are confronted with
a money loan of the negative-interest or zero-interest kind and the principal concern is
how to negotiate the request, a problem that will vary from case to case. I illustrate the
issues at stake with some data I have collected in Suva.
Single motherhood, my genealogies show, has grown in importance in recent times
and mothers rely on their natal clan for support in kind in raising their children. When
single mums need money for everyday expenses, they have two options: informal loans
from family and friends or formal loans from the banks and retail outlets. Money of
the former kind for the very poor is limited in size to $5 or $50 at negative and zero
interest rates respectively; if they want to borrow larger amounts, then they must go
to the banks. The language used to get a $5 or $50 loan involves the use of the verb
kerea, 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 and
friends. This transaction is a one-way flow. The person giving in to the demand knows
that the money will not be returned, i.e. the interest rate is negative. One does not ask
for more than $5 this way because the requestor knows that it will be refused. To get
up to $50, my consultant said, one needs to rephrase the request using the polite form
of the verb. Kerekere meu dinautaka e $50. Au na qai sauma tale. ‘I humbly request
you give me a loan of $50. I will pay it back.’ This is a request for an interest-free loan
and use of the polite form of the verb, kerekere, is essential. Again one must not ask for
more, because it will be refused.
For the elite Fijian, the matter is, of course, very different. Much larger sums can be
obtained via the kerekere system. For example, Ratu Sir Kamisese Mara, the paramount
chief who was Chief/Prime Minister from 1967 to 1992, had his education at Oxford
financed by members of his close kindred group. Ratu Mara tells the tale of how in 1949
his uncle, Ratu Dovi, visited him in Oxford and asked for some money. Mara replied
that he had none, to which Ratu Dovi replied: ‘Yes you have. You have three hundred
pounds in the Bank of NSW. The money has been deducted from my salary until 1948
to pay for your education’. ‘Well take it. It’s yours’, replied Mara. ‘Well I would like to
buy 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 of
requesting and dodging requests into a high art form. So too have the Indo-Fijians
among whom the art takes on an altogether different form that reflects their distinctive
culture and economy. When I asked one well-to-do Indo-Fijian about the practice of
kerekere among them, he laughed. ‘No,’ he said giving me the rich relative’s point of
view, ‘Indo-Fijians are different. We look around for the tall timber and work out a
strategy to strip it bare. The first move is to soften up the rich relative by pleading
for a loan on compassionate grounds. There are three types of compassionate loan
we cannot refuse: those for funeral expenses, marriage expenses and health-related
purposes. 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 don’t repay.’
Indo-Fijians and elite Fijians can get large interest-free loans for school fees from
relatives, but poor Indigenous Fijians cannot. They must take out sub-prime loans at
super-prime interest rates from banks. Such is the case with women like Lydia, who
needed $1,000 for her son’s first year at a boarding school. It is useful to look closely at
this case because it provides some insights into the profitability of sub-prime lending
and also of the moral semantics of commercial language usage today.

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The interest on unsecured loans in Fiji in 2012 was about 10% flat, which is by
no means usurious by the global standards of today. However, Lydia was also charged
a ‘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 monthly
service 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 time
and out of harmony with the weekly rhythms of the economic life of the poor. Lydia
therefore 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, making
her total cost of borrowing to $378. In other words, to borrow $1,000 for one year she
had to pay $378 in bank charges, an effective flat interest rate of 37.8%. This is well in
excess of the rates deemed usurious by the Bible, Manu and Adam Smith. But notice
that 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 the
word ‘interest’ that has occurred over the past 30 years.
Bentham, for his part, would say, ‘So what’, noting that Lydia is a free agent who
is under no obligation to receive this money. The law, for its part, is on Bentham’s 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 would
suggest, because few people know about them. Lydia, for example, had no idea that
she was paying $378 to borrow $1000. It took me over a day of working through her
accounts to work it all out, and I did Bookkeeping 101. Lydia’s case gives us an insight
into the profitability of sub-prime lending. The bank makes 37.8% here, but this is
the absolute minimum. The key term in the contract that makes sub-prime lending so
lucrative is the arrears provision. Once sub-prime borrowers get into arrears, as they
habitually do, this provision kicks in. I have another case where the borrower ended up
paying 48% flat per annum because of arrears.
It is for this reason that private finance companies have swarmed the micro-credit
world of the poorest of the poor, the sub-subprime borrower. Companies compete
to 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 now
finding out as defaults become common and interest rates slide towards the negative
side of the ledger. The explosive growth of India’s private micro-credit industry is facing
imminent collapse of the classic sub-prime lending kind as borrowers default and tales
of the sexual harassment and suicide of female debtors accumulates (Lee and David
2010). The morality of the micro-credit lender is now being questioned and with it the
language used to describe the loan: micro-credit is becoming known as micro-debt, as
the case of Muhammad Yunus quoted above revealed.

Conclusion

The theory of moral economy is the theory of the just price. An interest rate is the price
of money and this poses the question of the just interest rate. The question of the just
interest rate, in turn, poses the question of the morality of the credit and debt on the one
hand 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. Peebles’s finding of
an ‘astonishing consistency’ in the positive moral evaluation of credit across cultures

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is grounded in the commonplace that traders in money everywhere must buy cheap
and sell dear if they are to survive. Widespread confusion of the relationship between
debt 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 altogether
different matter concerning the pragmatics of commercial language usage. This varies
over historical time and geographic place, depending on the values of the speaker, the
social context of the transaction and the social status of the transactors. Borrowers have
the right to request loans and lenders have the right to refuse but different motivations
to grant loans. Banks are motivated by profit to grant loans at positive rates of interest,
but familial lenders have much more complex motivations, which may result in granting
loans at zero or negative rates of interest. Loans of both types have grown dramatically
in recent decades and raise new theoretical questions about the morality of demand
sharing and sub-prime money-debt that the Maussian legacy, and its straw men, have
blinded us to. These questions can only be answered by ethnographic studies informed
by an understanding of economic history and the history of ideas about morality and
money.

Chris A. Gregory
School of Archaeology and Anthropology
The Australian National University
Canberra, ACT 0200
Australia
chris.gregory@anu.edu.au

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