chapter  Chapter 8
11 Pages

Interest and debt in Ancient China

WithMuhammet Sait Bozik, Murat Ustaoğlu

Ancient China where paper and printing have been invented stands out with not only its innovations but also with its unique approaches vis-à-vis economic and intellectual matters. Thinkers like Confucius and Mencius hold a special place in the history of Ancient Chinese civilization through their contribution to the political and moral development of their society. The traditionalist approach views revenue out of interest-bearing debt as a personal income and does not distinguish it from profit. Confucius who does not see interest as an immoral phenomenon supports this approach. On the other and, followers of Confucius impose a 10 percent restriction to such a personal income. Mencius, noting that personal income should not be prioritized, holds that minimum standards of living should be maintained. He does not favor strict prohibitions and does not specify a certain interest rate. China has also been home to practices of usury performed by temples like other ancient civilizations. The only difference is that the Buddhist monasteries used their material sources to meet the demands of the people in need. For this reason, it is possible to argue that compared to other ancient civilizations, the Chinese temples operated on moral norms.