Debt, Interest and Economic Life

The Old Testament law does not forbid lending; it commands it. 'Instead, you are to open your hand to him and freely loan him whatever he needs' (Deuteronomy 15:8). What it forbids is lending that profits from a neighbour's distress. 'If you lend money to one of My people among you who is poor, you must not act as a creditor to him; you are not to charge him interest' (Exodus 22:25). 'Do not take any interest or profit from him, but fear your God, that your countryman may live among you' (Leviticus 25:36). The word for interest, neshek, comes from a verb meaning to bite. Interest on a survival loan bites into a person who is already bleeding.

Around these bans stand laws that protect the borrower's dignity and livelihood. A cloak taken as security must be returned by sunset, 'because his cloak is the only covering he has for his body. What else will he sleep in?' (Exodus 22:27). The lender may not enter the borrower's house to choose his own security but must stand outside and wait (Deuteronomy 24:10-11). A millstone cannot be taken, 'because that would be taking one's livelihood as security' (24:6). These details matter for students whose neighbours borrow against a motorbike, a sewing machine, a land title or a phone. The law does not let the lender take the tool by which the debtor earns his way out.

Then comes the release. 'At the end of every seven years you must cancel debts' (Deuteronomy 15:1). The Hebrew word is shemittah, a letting drop. Scholars debate whether this meant full cancellation or a suspension of payments for the seventh year, and both views have learned defenders; either way, the debt could not grow without end. The law foresaw how lenders would respond. 'Be careful not to harbor this wicked thought in your heart: "The seventh year, the year of release, is near," so that you look upon your poor brother begrudgingly and give him nothing' (15:9). The same chapter tells the master releasing a Hebrew slave in the seventh year not to 'send him away empty-handed' (15:13). The aim is not only to stop the bleeding but to give a person a fresh start.

The law was not always obeyed, and scripture tells us so. In Nehemiah's day the people cried out that they were mortgaging their fields and selling their children into slavery to pay debts and the king's tax (Nehemiah 5:3-5). Nehemiah called an assembly, rebuked the nobles, 'You are exacting usury from your own brothers!' (5:7), and made them restore fields and houses and stop taking interest. In Jeremiah 34, Jerusalem's slave owners released their Hebrew slaves under a covenant and then 'changed their minds and took back the menservants and maidservants they had freed' (Jeremiah 34:11). And the later Jewish tradition records exactly the fear Deuteronomy 15:9 warned against. The Mishnah (tractate Sheviit, chapter 10) says that Hillel, in the generation before Jesus, saw that people were refusing to lend as the seventh year approached, and so instituted the prosbul, a document by which a creditor transferred his loans to a court so that they were not cancelled. Hillel's purpose was to keep credit flowing to the poor. His critics in later Jewish tradition thought he had set aside a command of God. That tension, between the letter of a protective law and its purpose in a changing economy, runs through the whole history of Christian thinking on debt.

For most of its history the church taught that taking interest on a loan was sin. The Council of Nicaea in 325, in its seventeenth canon, ordered that clergy who lent at interest be deposed. The Third Lateran Council in 1179 decreed that manifest usurers should not be admitted to communion or given Christian burial. Dante placed usurers in the seventh circle of his Inferno, with those who did violence against God and nature. The theological argument was given its classic form by Thomas Aquinas in the Summa Theologiae (II-II, question 78). Following Aristotle, he argued that money is a means of exchange that is used up in its use, like wine or grain, so that to charge for the money and also for its use is to sell the same thing twice, or to sell what does not exist. Money, in this view, does not breed.

The medieval church was not naive about commerce, and it recognised exceptions. A lender could claim compensation, interesse, for real loss he suffered because of the loan, or for profit he gave up by lending, and partnerships in which both sides shared risk were lawful. In the fifteenth century Franciscan friars in Italy founded the monti di pietà, charitable pawnshops that lent to the poor at a small charge to cover costs, in order to rescue them from moneylenders charging ruinous rates. The first is usually dated to Perugia in 1462. Some Dominicans objected that any charge was usury; in 1515 the Fifth Lateran Council approved the monti and their modest charge as lawful.

John Calvin took the next step. In a letter on usury usually dated to 1545, he argued that the Old Testament ban was part of Israel's civil law, not a permanent moral rule, and that what scripture condemns is not interest as such but lending that oppresses the poor. He allowed moderate interest on commercial loans, with conditions: never from the poor, never above what the law permits or equity allows, and never in a way that harms the common good. In 1571 an English statute effectively tolerated interest up to ten percent, and Protestant and later Catholic practice moved in Calvin's direction. Rome reaffirmed the old teaching in Benedict XIV's encyclical Vix Pervenit (1745), and only in the nineteenth century did its offices tell confessors not to trouble those who lent at the moderate rates allowed by civil law.

Most Christians today accept interest on business loans and savings as lawful, on roughly Calvin's grounds, while holding that exploiting a person's need is still the sin the law condemns. A minority hold that the church was right the first time. Islam, which many students live alongside, still forbids riba, interest, and Islamic banks use profit-sharing and cost-plus arrangements instead, which is a reminder that the question is not settled for every serious religious tradition. For a pastor, the live question is rarely whether a bank may pay interest on a savings account. It is the moneylender charging a monthly rate that doubles a debt in a few months, the mobile lending app that shames borrowers to their contacts, and the church member who lends to a desperate neighbour on terms that would have made Nehemiah angry.

In 1976 the Bangladeshi economist Muhammad Yunus began lending small sums to poor women in villages near Chittagong, and in 1983 his project became the Grameen Bank. Its method was lending to the poor without collateral, relying on small groups whose members were responsible for one another's repayment. Yunus and the Grameen Bank shared the Nobel Peace Prize in 2006, and microcredit was hailed as a way to end poverty. Many churches and Christian agencies adopted it, and some still do.

The evidence has been more modest. In 2015 the American Economic Journal: Applied Economics published six randomised studies of microcredit in Bosnia and Herzegovina, Ethiopia, India, Mexico, Mongolia and Morocco. Abhijit Banerjee, Dean Karlan and Jonathan Zinman, introducing them, summarised the pattern as modestly positive but not transformative effects: some borrowers expanded businesses, but average household income and consumption did not rise much. And there were dangers. In 2010, in the Indian state of Andhra Pradesh, a wave of over-indebtedness, aggressive collection and reported suicides led the state government to restrict microlenders. A loan, even a small one at a fair rate, is still a debt, and a debt taken on for consumption by a household with no surplus can deepen poverty rather than ending it.

Many practitioners have therefore moved towards savings before credit. Savings groups, in which members save small amounts weekly, lend to one another from the common pool and share out the fund with its earnings at the end of a cycle, are an old practice under many names: the chama in Kenya, the susu in West Africa, the stokvel in South Africa. CARE International formalised one model, the Village Savings and Loan Association, in Niger in 1991, and many church-based programmes now use similar methods. They keep the interest within the community, build habits of saving and mutual trust, and allow members to borrow for emergencies without going to a moneylender.

None of this settles whether churches should lend. Some pastors are convinced the church should never act as a creditor to its members, because debt between brothers sours fellowship and gives leaders power over the people they shepherd. Others think a well-run church savings group, with clear rules, elected officers and open accounts, is one of the most practical ways to obey Deuteronomy 15 in a place without banks. Both sides agree that if a church does it, the rules should protect the poorest member, and that no leader should ever be the only person handling the money.

Leviticus 25 sets the year of jubilee every fiftieth year: 'you are to consecrate the fiftieth year and proclaim liberty in the land for all its inhabitants. It shall be your Jubilee, when each of you is to return to his property and to his clan' (Leviticus 25:10). Land sold through poverty returned to the family that had held it, because 'The land must not be sold permanently, because it is Mine, and you are but foreigners and residents with Me' (25:23). Israelites who had sold themselves into service were to be treated as hired workers and released (25:39-40). The jubilee was a periodic reset that prevented permanent dispossession.

Was it ever practised? Scholars disagree. Some have judged it an ideal that was never put into effect, pointing to the absence of any clear narrative of a jubilee being kept and to its economic difficulty. Others, such as Christopher Wright in Old Testament Ethics for the People of God (2004), argue that it reflects real social structures of family land in early Israel and that its non-observance is part of what the prophets condemn. Jeremiah 34 records a failed release of slaves, and 2 Chronicles 36:21 explains the length of the exile as the land enjoying its neglected Sabbaths. The question is open.

In the New Testament, Jesus begins his ministry in Luke 4 by reading Isaiah 61, which ends 'to proclaim the year of the Lord's favor' (Luke 4:19). André Trocmé, John Howard Yoder in The Politics of Jesus (1972) and Sharon Ringe in Jesus, Liberation, and the Biblical Jubilee (1985) argued that Jesus was announcing a jubilee with real social and economic content, visible in his teaching on forgiving debts (Matthew 6:12) and lending without expecting return (Luke 6:35). Other scholars accept the jubilee background of Isaiah 61 but argue that Luke presents its fulfilment chiefly as release from sin and bondage to evil, with economic consequences in the church but not a programme for the state.

In the 1990s the Jubilee 2000 campaign, begun in Britain by Christians and joined by churches across Africa, Latin America and Asia, called for the cancellation of the unpayable debts of the poorest countries. Its petition was presented to the leaders of the richest nations at Cologne in 1999 with some seventeen million signatures, and by the end of 2000 it had gathered more than twenty-four million. Debt relief followed through the Heavily Indebted Poor Countries Initiative, begun in 1996, and the Multilateral Debt Relief Initiative of 2005, which together cancelled large debts for more than thirty countries, most of them in Africa. Supporters point to increased spending on schools and clinics in several of those countries. Critics, among them the economist William Easterly in Foreign Policy (2001), argued that relief without reform rewarded governments that had borrowed badly and that many countries soon borrowed again. The question has returned: the United Nations Conference on Trade and Development, in its report A World of Debt (2024), estimated that 3.3 billion people live in countries that spend more on interest payments than on health or on education.

Three positions on jubilee as policy are held by Christians who take scripture seriously. The first treats it as a direct model: modern debt cancellation and land reform are what obedience to Leviticus 25 looks like today. The second, Wright's, treats it as a paradigm: not a law to be copied but a pattern revealing God's purposes, such as that every family should have access to the means of making a living and that no one should be permanently shut out, which must be translated wisely into each economy. The third holds that the jubilee belonged to Israel's land under God's direct covenant rule and finds its fulfilment in Christ and the church, so that it should shape the generosity of believers rather than the policy of states. Each can cite texts; each has to explain the texts the others lean on.

Behind the arguments about debt lies a larger question: what kind of economic order should Christians favour? Christians who hold scripture's authority are divided here, and the division does not run along lines of orthodoxy. Each position below is stated as its own best defenders would state it.

The market view holds that private property and free exchange, under the rule of law, are the arrangements most consistent with scripture and most effective for the poor. Its defenders point to the commandment 'You shall not steal' (Exodus 20:15), which assumes that things belong to people; to Samuel's warning that a king 'will take the best of your fields and vineyards' (1 Samuel 8:14); to Naboth's refusal to sell his inheritance to the king; to the businesswoman of Proverbs 31 who 'appraises a field and buys it' (31:16); and to the vision of each person under his own vine and fig tree (Micah 4:4). They argue from sin: concentrated power in the state is as dangerous as concentrated wealth, and markets disperse it. And they argue from evidence: the World Bank's Poverty and Shared Prosperity 2022 report shows the share of the world's people in extreme poverty falling from more than a third in 1990 to under a tenth by 2019, and they attribute much of that fall to market growth in China and India. Michael Novak's The Spirit of Democratic Capitalism (1982) and Wayne Grudem and Barry Asmus's The Poverty of Nations (2013) make this case at length. Its critics say it underestimates how markets reward the strong and trusts too much in growth.

The mixed view, sometimes called the social market, holds that private property and markets are legitimate but must be bounded by law and by the common good, with the state and other bodies protecting the weak. Catholic social teaching is its fullest form. Leo XIII's Rerum Novarum (1891) defended private property against socialism and in the same breath defended workers' rights to a just wage and to form unions. Pius XI's Quadragesimo Anno (1931) gave the principle of subsidiarity, that larger bodies should not take over what smaller ones can do. John Paul II's Centesimus Annus (1991) gave qualified approval to a business economy within a strong legal and moral framework. Among Protestants, Abraham Kuyper's address on The Problem of Poverty (1891) made a parallel case. Its defenders point to the gleaning laws and the sabbatical release, which sit within a system of private land and limit it. Its critics on one side say it gives the state too much; on the other, that it accepts too much of capitalism's logic.

The socialist view holds that the common ownership or social control of the main means of production best fits the biblical witness and best serves the poor. Its defenders point to the Jerusalem church, where 'No one claimed that any of his possessions was his own, but they shared everything they owned' (Acts 4:32), so that 'There were no needy ones among them' (4:34); to the jubilee; to the fathers who called hoarded wealth theft; and to Jesus' warning that no one can serve God and money. Christian socialism has a long history, from F. D. Maurice and Charles Kingsley in Victorian England to Walter Rauschenbusch's Christianity and the Social Crisis (1907) in America. In Africa, Julius Nyerere, Tanzania's first president and a devout Catholic, set out in the Arusha Declaration (1967) a vision of Ujamaa, familyhood, rooted, he argued, in traditional African family life. Most Christian socialists today defend democratic socialism, not state communism, and point out that unrestrained markets have their own victims. Its critics point to Acts 5:4, where the sharing was voluntary, and to the record of state socialism, including the forced villagisation of the 1970s in Tanzania and its economic costs.

Scripture does not hand the student one of these systems. It does settle some things that every system must answer to: lending must not exploit need; debts must not become permanent chains; workers must be paid; no family should be permanently cut off from the means of life; the powerful, whether king or merchant, are answerable to God for the poor. A student can hold any of the three views with integrity, provided he can state the others fairly and lets these settled things judge his own.

Turn to a new page in your casebook and write: Case 3, Debt. Use the four headings: The situation. The texts. The positions. What I would counsel, and why.

For the situation, take the debt you described in the inquiry, or another real one you know of: a widow pursued by a moneylender, a member who borrowed for school fees through a phone app, a church that lent to a member who cannot repay, a family whose land title is held as security. Describe the terms as exactly as you can: the amount, the rate per month or per year, the security, and what happens on default. Do not write anyone's name or any detail that would identify them. If you can, work out on your phone how much the debt will have grown in a year at that rate. Many students are shocked by the figure.

For the texts, write out Deuteronomy 15:7-8 and at least two of the lending laws from section 1, and say how each bears on the case. For the positions, write a sentence on how a defender of each of the three economic views would see the situation, and a sentence on any disagreement about interest that it raises. Then write your counsel: what the borrower might do, what the lender should do, and what the church could do. Finally, find out one practical fact this week that would help: whether a savings group meets near you, what a local bank or cooperative would charge for the same loan, or whether there is free legal advice for debtors. Write down what you found and where.