What is debt?

One of the very first posts I wrote for Enrichmentality was titled ‘What is money?‘. But as I recently noted, reading The Language of Money and Debt made me consider the meaning of debt in more depth than I had previously. Of course, if you are in debt, the lack of money can seem overwhelming. So today I’m asking ‘What is debt?’

There is a wealth of vocabulary associated not only with the possession and transfer of money – buying and selling – but also with the lack of money, indebtedness, and borrowing and lending.

The many meanings of debt – social, mental and financial

According to Investopedia, ‘debt’ simply means ‘an amount of money borrowed by one party from another‘. But as any of us who have been in debt know, it can mean so much more.

Debt can be a source of shame. Of worry. The cause of heart palpitations when the phone rings or the mail arrives. The reason you can’t sleep at night.

But debt can also be that peculiar kind of challenge that some people enjoy. Like the businessman who borrows more than he reasonably needs just so he has something to strive for. Debt can be a marvelous opportunity. Like the family who buys a house they could not otherwise afford to save for while renting.

In short, debt has many social and mental meanings as well as its financial one.

Likewise, ‘money’ has a variety of social and mental meanings as well as its financial meanings. Matters are further complicated by the fact that in English, the word ‘money’ refers not only to coins and notes, but also to payments and electronic transfers. According to Fox, in early modern Britain, a distinction was made between ‘real money’ (coins in circulation) and ‘money of account’ (the abstract system of measurement). Today, French maintains such a distinction in l’argent and la monnaie.

Language in conflict

The language that is used by everyday people in the community and by loan sharks, financial advisors, banking institutions, and counselors can often be in conflict. Sometimes, this is because we use the same word to mean different things. Other times, it is because we use different words to use the same thing.

Kate Harrington, in The Language of Money and Debt analysed occurrences of the word ‘money’ and found that it was much more likely to show up in legal texts than essentially any other kind of written language (adverts, fiction, news etc.).

Consider, for example, the 1770 case in which legal opinion was split over whether stock could be considered money, and hence be seized from a debtor. In a style of thinking similar to much of the discussion today surrounding Bitcoin and other crypto-currencies (and online economics more broadly), it was eventually ruled that stocks were a ‘new species of property’ and ‘not money’.

The language of debt and financial inclusion

Froukje Krijtenburg’s chapter in the same volume looks at how differences in the language of indebtedness may impact financial inclusion.

The UN secretary general defines ‘financial inclusion’ as ‘a lynchpin for achieving other development goals’. Yet 2 billion people are still outside the formal financial industry.

Sometimes this is because they don’t have enough money to open an account. In Australia too, account-keeping fees can be prohibitively high. Don’t put up with this – there are plenty of banks that have no fees. If you are currently paying fees, call your bank and threaten to change. I did about a decade ago, saving myself $600 so far – even more with interest.

But other times, as Krijtenburg’s study of the Kamba of Kitui (Kenya) shows, there are more social reasons. Including understandings of debt.

Here are some of the ways borrowing and lending are understood in Kamba society:

  • kūvoya/kūtetheesya (pray, ask for/assist): focuses on relationships between friends, relatives or acquaintances. Must be a genuine need on the part of the borrower. The lender is expected to assist unless there is a valid reason not to, with no interest, and ambiguity of repayment.
  • kūkova/kūkovethya (borrow/lend): focuses on resources between neighbours, friends, shopkeeper & client etc. Mutual verbal agreement over repayment terms, but no interest, unless in a kikundi financial group.
  • kūkomboa/kūkomboethya (rent, borrow/hire out, lend): focuses on resources between people who don’t know each other well. Security taken and interest paid.
  • kūthooa mbesa/kūta mbesa (buy money/sell money): between an illegal moneylender & client. Short-term loans with high interest rate.
  • kūkwatya (lend): between relatives or friends. Spontaneous and short-term.
  • mūkilye (uplifting): between relatives, friends, neighbours or community members. Involves not only economic but social and mental support.

Social understandings of debt

It is a fundamental principle of the institutional banking system that the more money you have, the more you can borrow. But ‘If low-income and poor people expect to be able to borrow money according to their own understandings – which is when they are (temporarily) penniless – they will be disappointed by banks which refuse to give them credit because they do not have money in the bank.’

Krijtenburg suggests integrating some of the lexical items which people are already familiar with in order to promote formal financial services.

In short, it is not enough for us all to learn more about the financial system and the language of money. Rather, we must lobby for banks and financial advisors to work harder at acknowledging and responding to the understandings of money and debt that the communities they operate in hold.


If financial inclusion – defined as participation in formal financial systems – really underpins other goals, then we ensure that banks meet people halfway. This may help banks get more customers (and hopefully decrease reliance on sometimes unscrupulous lenders). But it may even enrich the banking system for customers, if institutions incorporate notions of social and psychological support.

Let’s not merely lend money, let’s uplift one another.

What changes would you like to be seen made to the banking sector – and how the financial industry more broadly communicates? Let me know in the comments below!

In the next post, I’ll give some suggestions for navigating the maze of legalese and financial jargon as it currently stands.

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