Shut your eyes and picture this: debt is spiralling ever higher, populist protests are rising and a new leader fears a political revolt. So he takes a radical step — forgiving all consumer loans to reboot the economy and revive society.
Is this a description of the future of America, Europe or Japan? You might think so, given fast-rising government debt burdens, the fraught political climate and weak economic growth. But state-sanctioned bouts of debt forgiveness were in fact the preferred socio-economic safety valve of ancient Babylon.
While Babylon did not have money — at least in the sense we know it today — it did have a complex ecosystem of credit between merchants, peasants and the ruling family, recorded on clay tablets. Every few decades, these swelling debts threatened to create a political explosion. So ancient Mesopotamian rulers “would declare a debt release”, says Amanda Podany, an American historian. “They [literally] broke the clay tablets” — that is, symbolically forgave the debt.