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In whose interest?

Language shapes how we think about money

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Portuguese 10 Escudos banknote from 1925, by Eça de Queiroz.
Portuguese 10 Escudos banknote from 1925, by Eça de Queiroz.

Many European languages use the word interest to describe the extra money we pay to clear a debt. We tend to take this for granted. But what does it mean? That we have an interest in lending money because we get something out of it? Or we are interested in helping others? Or something else?

If the term interest is curiously applied, the Portuguese term for paying interest, taxa de juro, is even more so. Juro means "to swear" or "to vow," so taxa de juro can be roughly translated as a tax on a promise.

Portuguese is a Latin language, yet taxa de juro differs from all other Latin languages: Castilian Spanish (tasa de interés), Italian (tasso di interesse), French (taux d'intérêt), and Romanian (rată de interes).

It also differs from Romance languages such as Catalan (taxa d'interès), and even the Basque language, where there is no certain relation between it and other language(s), uses interest in its expression (interes-tasa).

The only other language that uses a similar expression to Portuguese is Galician (taxa de xuro). Galician is a Romance language that is close to Portuguese.

What's more, the word "interest" exists in Portuguese vocabulary (interesse). So why do the Portuguese differ from other related European languages in their term for interest? And can this tell us anything about attitudes to money?

If language is a site of contention, maybe Portuguese speakers should shift to saying and writing taxa de interesse instead of taxa de juro as it does not obfuscate linguistically the interest there is in the transaction

Let's first use an example from popular culture to understand how debt and interest usually work. In Season 3 the TV series Game of Thrones, Tyrion Lannister was forced to take Littlefinger's job as a manager of a house of ill repute and he talks on the subject with his private guard Bronn.

Tyrion: For years I've heard that Littlefinger is a magician. Whenever the Crown needs money he rubs his hands together and … puff: mountains of gold.

Bronn: Let me guess: he is not a magician.

Tyrion: No.

Bronn: He is stealing it?

Tyrion: Worse, he is borrowing it.

Bronn: What's wrong with that?

Tyrion: We can't afford to pay it back, that's what's wrong with it. The Crown owes millions to my father.

Bronn: Seeing his grandson's ass on the throne, I imagine he will forgive that debt.

Tyrion: Forgive a debt? My father? For a man of the world you are strangely naïve.

Bronn: I've never borrowed money before. I'm not clear on the rules.

Tyrion: Well … the basic principle is: I lend you money and after an agreed upon period of time you return it … with interest.

Bronn: And what if I don't?

Tyrion: Well, you have to.

Bronn: And what if I don't?

Tyrion: This is why I don't lend you money.

Thus, when someone borrows money the loan has to be paid back with interest. One has to do this as debts are not forgiven. But the use of the word interest is weird even in English. Why call the extra part one has to pay when repaying a loan "interest"?

An interest rate is a remuneration, normally a percentage, that one gets for money or capital loaned, invested or deposited. Since it pre-dates writing, the origins of interest remain uncertain, as American (US) anthropologist David Graeber notes in his exhaustive account of debt.

Although coins, strictly defined, first appeared in the 7th century BCE in the Lydian kingdom of eastern Anatolia, money and interest-bearing loans existed already in Mesopotamia thousands of years before coinage.

With the Portuguese expression, the first thing that comes to mind is that juro is the conjugation of the first person of the verb jurar (to swear, to vow, to promise). But the roots of the word juro come from Latin (jus, juris). Portuguese dictionaries state that juro

"seems to come from Lat[in] jure-, 'the law, justice; the law (that ensues from custom, laws, jurisprudence, edicts); what's related to law; law related to people, to things; in common language, the law; power, authority (that ensue from the law)."

The Portuguese expression for interest rate and the roots of the word juro seem to suggest that it is something a person is rightful to get by law. And yet charging interest has actually been against the law in many parts of the world for most of human history.

Whereas medieval Hindu law codes allowed the charge of interest in loans, in the Middle Ages the Catholic Church forbade usury, loaning at interest, as it was opposite to divine law. Islamic finance still prohibits the charging of interest today, although there is some disagreement on what riba, the Islamic word for interest, really means.

There is thus no straightforward relation between law, one's right, and a rate of interest.

Interestingly, my Latin-Portuguese dictionary tells me that juro has a further meaning, "to conspire, to conjure [, to plot]." Could juro be a word that was conjured to make a rate of interest lawful? It is difficult to say for sure.

But in a world where "downsizing" means firing workers, diminishing "costs" means moving a company offshore, and "outsourcing" means paying lower wages with no benefits to workers in countries with weak or no regulations for labour and environmental rights, one cannot be cautious enough.

Whatever the original meaning for using such a word might have been, there is interest in taxa de juro. If language is a site of contention, maybe Portuguese speakers should shift to saying and writing taxa de interesse instead. The former does not linguistically mask the interest there is in the transaction.

In whose interest is a rate charged on a loan? Whose interest does a debt-driven financial system serve?

It's not just money that makes our financial system go round, but also the language we use to describe it.

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