Usury & Prisons

There is a poetic association between being trapped in a loan with “interest” that actually runs to the practical.

The start of usury being accepted in the West coincides with the modern school called economics.  Few people realize that Adam Smith, the father of modern economics, was a moral philosopher.  One subset of moral philosophy is ethics , and a subset of ethics in commerce came to be known as economics.  There is something of a trace of this pedigree in the fact that economics, widely touted as scientific and neutral, has a term of art named “moral hazard.”  Odd term for a neutral science.

In any event, Smith had a student named Jeremy Bentham, who urged Smith to accept usury, and Bentham made a catalog of arguments that form the reasons for accepting usury today, which you may review here.  (.pdf download)

Now to be exact, the state had already capped usury rates, so the state had introduced acceptance of some usury.  Bentham was arguing for no caps whatsoever.

Bentham never convinced Smith.  But Bentham is most well known for the philosophy of utilitarianism.  What is less known are his big projects in life.  As he was corresponding to persuade Smith, Bentham was in Russia assisting Potemkin in modernization of Russia.  This is the same Potemkin for which we get the term “Potemkin Villages.”  There are Potemkin cities in China built on Bentham's arguments.

But back to prisons.  Bentham's other great idea was the panopticon.  A way for modern society to command and control all industry, schools, prisons, etc.  Such a plan would take massive amounts of money, but the customers would be big business and big government.  The only sale they made was to the UK government, for building a prison.

Up to this time, criminals were pretty much hanged or released.  A big improvement was to ship condemned off to Australia, instead of hanging them.  Prisons were very temporary affairs.  But with usury and lending money for profit, which leads to lending credit for profit, fantastic sums can be martialled for all manner of projects.  Criminal justice can be turned into a capitalist project, literally, in which people are processed like cattle.

Bentham’s free market principles make sense only if there is a state that orders its patterns and practices to give leverage to certain parties and then protect their preferenced gains.  I don’t think Bentham would be a free marketer in a free market.  He is a "free marketer," like so many who self-style themselves such, as long as it means the can entrap kids and fools.

I wonder if there is something in the Koran along the lines of the New Testament note that we will know them by their fruits.