What comes to your mind when you think of debt? Well, let’s start by acknowledging that the concept of debt is an inalienable part of human civilization. It influences everything from our politics and economics to, of course, society as a whole.
Even today, governments take upon significant debt to make ends meet. For instance, India’s national debt amounted to $2.37 trillion in 2021, and projections show that our national debt will breach the $5 trillion mark by 2029.
Now, $5 trillion is a big deal, and this national debt has a direct or indirect influence over you and me. So, join me in exploring the history of debt and understanding its effects on people like us.
Tracing The Roots of Debt
For almost any ancient civilization you study, finding their relationship with debt is not that big of a challenge. Conventionally, most of these civilizations had to rely on the barter system, which was quite fair and efficient for immediate exchanges. However, things started to get more complicated when people needed to make larger transactions or meet any future obligations.
These shortcomings in the existing system led to the development of credit systems, which introduced the concept of debt to the world. No matter if you look at the ancient Mesopotamian civilization or the Roman Empire, debt was always an important part of these societies. In my opinion, debt will still continue to play the vital role it has been playing for ages, even in this modern society.
Evolution of Debt And Its Role in Today’s Society
Today, debt is as ubiquitous as it gets. What if I ask you to find me a corporation or government that functions without debt? Chances are high that you won’t be able to find one. As far as I understand, there is nothing wrong with that since debt can truly be a very powerful tool to grow a nation’s economy and provide everyone with equitable opportunities.
But then again, I also understand that people also default on their debt payments, which leads to economic instability and increases inequality in society. Of course, there are many examples of such events, including the 2008 financial crisis and the relatively recent FTX crash in the crypto market. Unfortunately, governments respond to these situations with massive bailouts, which again increases the public’s debt.
I must also mention that it is not just governments and corporations that mess around with debt. In fact, household debt in India averaged about $120 billion in 2010, and this figure has exceeded $600 billion as of 2024. This verifies that individuals are not far behind in taking debt, be it credit card bills or personal loans; debt is everywhere.
How Does Debt Influence the Society?
It took me a while to understand the true impact of debt on society, given the complexity of the entire ordeal. I understand now that debt on an individual level can cause you stress, limit your life choices, and even lead to bankruptcy in extreme cases.
However, things are a little different at the community level, where debt can become the seed of social tension and even hinder economic progress. Then you see the national level debts with figures beyond our comprehension. As a result, I have often seen national debt resulting in increased interest rates, lower government spending, and lower investor confidence.
Yet what really caught me off guard is the avid disparity in the distribution of debt in our society. You can easily find that a certain section of society benefits from debt while others bear the burden. In my opinion, these are the concerns we need to understand and address to create a more equal and just world.
Final Thoughts
Understanding the history of debt is complex, but it is also important to learn from the mistakes of the past. The 21st century presents new and unique debt-related challenges for everyone, be it an individual or a corporation. But thankful, we also have modern and effective tools like the best debt consolidation loan to make things more manageable. In my opinion, you must be wise with debt to get the most out of what it has to offer.
