Forward to the Past Reflections on Interest Rates in Pharaonic Egypt and the Modern World

PICCOLO, Alessandro

In this paper, I will first analyse the limited evidence on debt and credit in Pharaonic Egypt (3000-330 BCE). Specifically, I will focus on (1) the social, legal, and political statuses of both lenders and borrowers, (2) the nature and size of loans, (3) the reasons behind loan practices, and, most importantly, (4) interest rates. After reviewing modern approaches to ancient debt and credit from the perspectives of the social sciences, particularly those of anthropologist David Graeber and economist Michael Hudson, I will focus on a theory recently advanced by Egyptologist David A. Warburton. Warburton argues that finance dominated ancient economies through ‘money’ lending at extremely high interest rates, which in turn stifled technological innovation and prevented output growth. In this context, he notes, ancient economies are comparable to contemporary Western economies, where institutions like the FED and ECB implement rising interest rates while output remains stagnant or even declines – a phenomenon often referred to as ‘secular stagnation.’ Finally, I will build on Warburton’s conclusions by incorporating additional theoretical frameworks, including the Marxian laws of capital centralisation and the falling rate of profit, Augusto Graziani’s theory of endogenous money, and Emiliano Brancaccio’s solvency rule theory.

Session 2. Interdisciplinary Approaches to the Study of Ancient Economies ^[info]