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| Credit, Money and Interest in Ancient Greece |
| Li Xiuhui |
| School of Economics, Hangzhou Normal University, Hangzhou 311121, China |
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Abstract In ancient Greece, credit was a common social phenomenon involving both small loans and the pawn of goods, as well as large monetary loans. The forms of credit included informal and formal, as well as interest free and interest bearing. Credit relationships were embedded in the reciprocal relationships of family and friends in society at that time and resulted in shared and reciprocal social interactions with neighbors and friends. Credit was not primarily an issue of economic value in ancient society but rather a problem of the composition and maintenance of social interactions and relationships. Although credit and money originated and developed independently, when they interflowed with each other, they were both reinforced, and debt was more valued and paid off in money. The use of ancient Greek coinage, especially the daily circulation of small coins, exacerbated this process. The purpose of borrowing was most closely related to the role and function of money, involving aspects such as reciprocity and redistribution. The main reasons for debt were the necessary factors of social survival and social interaction and were rarely economic or productive. The widespread use of credit activities also promoted the development of the monetary economy and to some extent compensated for the shortage of money. In ancient Greece, mutual assistance between relatives, friends, and neighbors was the main method of risk response, and credit and debt relationships were included in the social integration of reciprocal gifts. Reciprocal gifts and debt had a profound internal connection, and receiving gifts and favors was itself a way of being in a debt relationship in the domain of social relations. Debt originated from gifts, and even formal monetary debt, if waived in an intimate social relationship without the need for repayment, does not mean that there is no debt owed to others. Debt is merely transformed into gifts, and the debtor is still in a state of debt that needs to be repaid or recompensed in a certain way in the future. Strangers were outside the circle of acquaintances of individual Greek citizens and beyond the scope of reciprocal lending relationships. From circles of acquaintances to stranger transactions, reciprocity turned into commerce, and future returns became interest payments. Interest collection has been a controversial topic since its inception, and there are two opinions on the understanding of the nature of interest. One is that interest is the result of reciprocity or even voluntary negotiation with the debtor, and the other is that interest is imposed on the debtor as a creditor’s right, representing different understandings of interest in acquaintance society and stranger society. The proportion of interest charged in ancient Greece was relatively fixed, and the formation of specific amounts was embedded in informal customs and conventions. Even “popular” interest rates varied across regions and periods. Existing researches have indicated that the annual fluctuation range of interest rates in ancient Greece was between 10% and 36%. The important social impact of interest-bearing lending business was the disintegration of the close social relationships of the ancient Greek polis community, transforming it into a society of strangers. Therefore, regarding interest, the mainstream concept not only criticizes it morally but also controls it through legal systems and other means. When the accumulation of debt in society is substantial and the social order is affected, debt cancellation may become an important choice. In addition to the need for social stability, reciprocal negotiation of interest can also provide publicity legitimacy for debt cancellation, and the specific outcome depends on the power clash between the debt parties. Debt cancellation was a counterattack by the polis community or society against the erosion of money and credit into social bonds, and this interaction and its variants have persisted till the modern society.
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Received: 14 January 2023
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2023, Vol. 53 
