At the moment, the issue of debt slavery is very topical because of the case of Greece; but it is an issue that has a far more general significance.
Usury, the charging of interest on loans, has a history of being forbidden by several major religions, including not only the three Abrahamic religions, Judaism, Christianity and Islam, but also the ancient Vedic Scriptures of India.
Perhaps the reason for these religious traditions can be found in the remarkable properties of exponential growth. If any quantity, for example indebtedness, is growing at the rate of 3% per year, it will double in 23.1 years; if it is growing at the rate of 4% per year, the doubling time is 17.3 years. For a 5% growth rate, the doubling time is 13.9 years, if the growth rate is 7%, the doubling time is only 9.9 years. It follows that if a debt remains unpaid for a few years, most of the repayments will go for interest, rather than for reducing the amount of the debt.
In the case of the debts of third world countries to private banks in the industrialized parts of the world and to the IMF, many of the debts were incurred in the 1970’s for purposes which were of no benefit to local populations, for example purchase of military hardware. Today the debts remain, although the amount paid over the years by the developing countries is very many times the amount originally borrowed. Third world debt can be regarded as a means by which the industrialized nations extract raw materials from developing countries without any repayment whatever. In fact, besides extracting raw materials, they extract money. The injustice of this arrangement was emphasized recently by Pope Francis in his wonderful encyclical “Laudato Si’ ”.