No Usury

Francois Tremblay and Noor Mehta source

1. What constitutes usury, and why is it wrong?

Usury is the process by which an owner receives a constant sum of money or percentage of revenues from another person using their capital. Depending on the nature of the property that is loaned out, the name of the sum of money changes: interest (for money), rent (for land and buildings), profit (for means of production).

Usury is a claim to have a right to an indefinite stream of income from a finite amount of labor. The fundamental problem may not be so much the one act in itself, but rather the system that builds upon it– it is that system that allows for enormous power disparities and one class to abuse those. What happens is, a person can obtain a single plot of land, rent it out, use the rent money to buy another plot of land soon, rent that out, use the newly-doubled-income to buy more land and rent it out too, and expand the estate to the point where anyone nearby cannot own land and must labor under the landlord.

As the estate expands, the landlord continues abusing his power and increasing the domain of the power disparity. The landlord also maintains an authoritarian relationship with the tenants, insofar as he can increase the rent and they must labor harder to pay it. (Their only choice is to leave, but the costs of leaving almost always will outweigh the costs of submitting to the authoritarianism, and being free to leave is no justification for social authority.) As the landlord maintains a monopoly of ultimate power over the land, he can also enable statist programs and maintain statelike powers, all while he did not actually labor for the income from the rent. (The only labor he does is in the beginning while acquiring the land, but a finite amount of labor deserves a finite payment, not an indefinite flow of income.)

The landlord now is a central of wealth, and he is justified in using force to extract more from the laborers. (This would be the difference between this situation and an alternative where the tenant offers a one-time finite gift in exchange for use.) This also leads to the situation where the landlord now uses his power to make things his way– in a court case, he can easily bribe the judge and get away with it, or make the tenants serve as eyewitnesses to get the court to rule one way.)

A child born to a tenant would owe rent as he/she grows up on the estate, and the child’s only other choice would be to leave, which resorts the whole situation to a very state-like one, the only possible difference being that the land was ‘voluntarily’ acquired. But libsocs do not believe the State can be justified if only it had acquired the land the ‘right’ way– rather, the State is wrong because power disparities are wrong and inherently violate liberty.

This situation demonstrates the scenario of renting, but the same law applies to profit and interest– allowing the privileged to abuse the power disparities to increase the domain of their power.

Alternatively, usury is predicated on the implicit belief that capital is in and of itself a productive force, and therefore the capital is somehow owed restitution which is then passed on to its owner in the form of interest/rent/profit. But money alone, land alone, or tools alone cannot produce anything, and they are only productive when they are being used by people. Therefore it is invalid to say that owners are owed usury, and since resources are limited, usury represents financial exploitation, which is morally wrong.

Usury is essentially demanding something for nothing, and the results are often very statist. In the landlord case, he owns a vast estate of land from all the renting, and under property-ownership he can make up any rules he wants and enforce them. He could also enable every single statist program for his ‘tenants’, such as Medicare, public schooling, Social Security, etc. while continuously extracting money from his tenants living on there, and caging them if they refuse to pay. If his tenants don’t like something, their only option is to leave, and the “love it or leave it” problem remains.

1a. Some people will want to pay usury, and some won’t, and that’s just time preference.

Time preference (the belief that people put a greater value on present goods over future goods) may or may not explain why people will decide to pay usury. However, it does not provide a justification for the existence of usury. The distinction here is crucial; explaining how something came to be, which is a matter of historical record, and explaining how something is justified, which is a matter of economics or ethics (for example), is not at all the same thing. One can explain how, historically, the institution of slavery arose and was maintained throughout the ages, but these historical facts do not justify its continued existence today. Even though we can all agree that slavery has existed for ages, we also all agree that it must be eradicated.

Our position is not that usury does not exist, but rather that usury is illogical and unethical, and should be eradicated. This is not, therefore, a historical position, but an economic and ethical one.

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