Economics God’s Way (4)
“You shall not charge interest to your brother—interest on money or food or anything that is lent out at interest. To a foreigner you may charge interest, but to your brother you shall not charge interest, that the LORD your God may bless you in all to which you set your hand in the land which you are entering to possess.” Deuteronomy 23.19, 20
Credit and debt
Credit—and with credit, debt—are the backbone of a consumerist economy such as that of the United States.
It is difficult to argue with the track record of prosperity which free market, credit/debt practices have accumulated over the past 250 years. The American economy has produced more wealth and more goods and services than any economy in the history of humankind. And it has largely been built on the extension of credit and the use of debt as a means of gaining wealth.
But as we are now beginning to discover, when material prosperity is the objective of an economic system, the use of credit and debt can quickly get out of hand, jeopardizing the wealth of the people and the wellbeing, not only of the economy, but of the polity and way of life.
Interest or usury?
The economics of justice and love set forth in the Law of God does not forbid borrowing and lending. People were allowed to borrow or lend from their personal property as they saw fit, within limits outlined in the Law of God.
Above all, they were not to expect, when loaning money, to make more from the loan than they would from their own ordinary use of the money loaned. A lender could expect a borrower to compensate him for his own inability to use his resources while they were in the possession of the debtor. But lenders were not to charge interest on such loans. There is some question among scholars as to whether the term “interest” refers to simple interest—payment for the use of something, or of money, that would compensate for the lost opportunity costs which the creditor would incur—or to usury—exacting interest for profit.
My own view is that “interest”, in the framework of the Law of God, probably refers to usury, which encouraged covetousness and amounted to exploiting one’s neighbor. However, what we might call simple interest was not forbidden.
The Law recognizes what economists refer to as “opportunity costs” and expects those to be covered by borrowers (cf. Ex. 21.18, 19, which sets forth the idea, albeit not in the context of making a loan). When you loan money to me, it is to be assumed that the money you loan to me could be working for you, either gaining interest in the bank—which even Jesus did not discourage (Matt. 25.27)—or being used for your own personal needs. Therefore, it is not unreasonable for me, in paying back what I borrowed, to compensate you for those lost opportunities.
But it would be unreasonable, and unjust, of you to expect to make money on my loan, that is, beyond what borrower and lender might agree together in advance as a reasonable expectation of return. Terms of loans—of extending credit and incurring debt—were agreed upon case by case in ancient Israel. Loan terms these days are established not case by case but by all-comprehensive agencies such as the Federal Reserve, which uses interest rates and monetary flow to manage the overall economy, or by banking institutions as they compete with one another for borrowers.
In an economy defined by justice and neighbor-love, those with money to lend should not be able to conspire or otherwise agree together on a set interest rate, or look to government to establish one. Instead, each transaction was to be treated as a separate case with respect to the amount and length of the loan and terms of repayment. Calculating the opportunity costs incurred by the loan would have been the primary way of determining the amount to be repaid.
Covetousness or sound reason?
When the goal of economic activity is justice—the practice of love for God and neighbor—rather than material prosperity, everything about that economy is going to look different, including the use of credit and debt. These would not be forbidden, but the terms on which they would be engaged and the ends for which they would be employed would, it seems to me, be dramatically different than the easy credit/burdensome debt practices so common in our society today.
Public policies that encourage liberal use of debt can be calamitous in the extreme, as we learn the hard way during times of recession. Moreover, they create a mindset which can be difficult to overcome, as, again, we are seeing in our society.
When people are taught that material prosperity is the way to happiness, and when easy credit is extended on every hand to make that prosperity a reality, covetousness and lust for things will rule instead of sound reason and neighbor-love, and the blessings of God will elude us, though we possess the wealth of all the nations of the world.
Debt can be a trap and a bottomless pit leading to marital difficulties, increasing anxiety, personal bankruptcy, and worse when things are an idol and debt is the easy way of securing them. We must seek the counsel of God’s Word in this as in all other matters.
1. Have you ever experienced debt as a burden? What caused that?
2. How does easy credit encourage idolatry? How can you avoid falling into this trap?
3. How can believers help one another in resisting the allure of things, credit, and debt?
Next steps—Transformation: Review your own practices of using credit and going into debt. Do they line up more with the teaching of Scripture or the temper of the times?
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Except as indicated, all Scriptures are taken from the New King James Version. © Copyright 1982 by Thomas Nelson, Inc. Used by permission. All rights reserved.