Summary: The application of some of the Old Testament law to the financial crisis - in particular, debt-related slavery and the prohibition on charging interest.
The financial crisis and the bible
This year, you could barely read the news without a mention of the financial crisis. Some of the jokes summed it up well: With the current market turmoil, what’s the easiest way to make a small fortune? Start off with a large one. How do you define optimism? A banker who irons five shirts on a Sunday. I was a funds manager for three years in a former stage of life, so I understand the financial world a little. So I’m hoping I can help us to understand how the financial crisis relates to the bible.
Let me start with a short summary of what’s happened. Years of good times led to lots of companies and individuals borrowing heavily, throughout the world. They were expecting good times to continue, so they kept borrowing, and kept spending and kept investing. In America, many borrowers took out home loans which they could not afford. They assumed they could sell or refinance their homes after their home went up in value. But when the boom finished, and house prices went down, the borrowers could not refinance. As a result, many borrowers could not make their payments. They defaulted.
These widespread defaults caused many banks to get into trouble or to fail. Finally, when really big banks such as Bear Stearns and Lehmann Brothers failed, the US government was forced to step in, to make sure the banking system itself did not fall apart.
For everyone else, these events in America had an impact. Banks everywhere became much less willing to lend, and they leant at much higher interest rates. As a result, many firms throughout the world were in trouble, especially those that heavily relied on borrowings. This in turn led to what we call recession in many parts of the world.
Now what does the bible have to say about all this? Is there any wisdom we can gain, either wisdom for the nation or for us as individuals? Yes, I think there’s a lot. However, as you were reading some of what the bible says, you might have been thinking - this is crazy stuff; no charging interest to your countrymen, Deuteronomy 23! Cancelling countrymen’s debts at the end of every seven years, Deuteronomy 15? No permanent land sales outside the city - you get your land back every 50 years, even if you’ve sold it, Leviticus 25! Up to six years of servitude instead of bankruptcy - not slavery, but complusory work nonetheless Deuteronomy 15:12-18! This is so radical, some will say it’s stupid. Are we really going to gain anything from the bible with ideas like these, you might think?
Well let me start with a few comments about applying the Old Testament, and then we’ll see what we gain. See, God gave many laws to his Old Testament people. The laws were of different kinds with different purposes. Some laws pointed the Jews towards Jesus. They got the Jews ready to accept the Messiah when he came. Examples of such laws were the ones about sacrificing animals in the temple - these are laws which we needn’t follow today. Second, there were laws like ’Do not murder’ - laws which should be applied to everyone and can be applied directly to us today. Finally, there were laws related to the running of the nation Israel. For example, they had laws about how many horses the king should have, or the importance of city walls in land sales. These laws need not and can not be applied by a modern country - for example, we don’t have city walls. But they will have wisdom from which modern countries can learn.
So what do we make of the financial laws in the Old Testament? I want to take up two of the key Old Testament laws, and show how ignoring them has led to our recent financial crisis. You can find a whole lot more than I’ll be able to say in this book, "Jubilee Manifesto", edited by Michael Schluter. What I’m saying is in large part taken from this book.
First, notice that the Old Testament pushes us to take repayment of loans very seriously. If you borrow money, you need to pay it back. It’s quite simple. So, a borrower could be forced to work for someone up to six years to repay his debts. Let me read from Deuteronomy 15 verse 12: 12 If a fellow Hebrew, a man or a woman, sells himself to you and serves you six years, in the seventh year you must let him go free. 13 And when you release him, do not send him away empty-handed. Now be clear on what this means. The reason they might sell themselves to you is to pay back their debt to you. The modern alternative to this is bankruptcy. But 6 years service is clearly more demanding. The Old Testament takes repayment of loans very seriously.