In ordinary language, a debt is a morally and legally binding obligation to (re)pay somebody. But that’s not the only commonly-used definition of debt. In corporate finance, “debt” refers to a class of securities with a fixed interest payments, senior to equity in claims on assets. Until late C20, this description carried with it much of the freight associated with the ordinary definition – failure to repay debt would involve the end of the corporation as a legal person, so any honest and prudent corporate manager sought to avoid this, and to keep a good credit rating. That all changed with junk bonds and Chapter 11 – corporations now routinely restructure, to wipe out debt (particularly debt owed to employees).
Then there’s sovereign debt, which has always been a special category. Historically, loans to sovereigns debt were more like the reciprocal obligations described by Graeber than like the debts owed by subjects to sovereigns. If you lent to a king (your own, or a foreigner) you gained favor, and hoped to be well paid, but couldn’t do much about it. That attitude extended more generally to aristocratic debtors (exemplified by Becky Sharp and Rawdon Crawley in Vanity Fair).
What happens when this view of debt becomes more general As I’ve written previously, current trends imply that most Americans will sooner or later go bankrupt, and of course millions more have defaulted on mortgages in the current crisis. For most of those involved, this event has been catastrophic, and has carried with it a burden of shame and guilt. But, as with divorce, it’s hard to maintain a moral stigma for a life-event that is so commonplace (the fact that bankruptcy is private, while divorce is public, cuts both ways here).
I don’t have an answer on this, only a question. If everyone treated debt as a financial instrument, to be managed in whatever way suited them, how would/will society and the economy change?