100 Enterprising Words
This summer, I started a new series on the shared language of Enterprise. Naively, I thought I could rattle off a few descriptions and interesting stories about the words of business. It is proving to be a bigger project than I expected. Bigger and more interesting as I dig and delve deeper. Ever the way with archaeologists, we pop in a ‘test trench’ just to get an idea of what’s going on and then before you know it we’re hooked. Just one more hole…
When you look at business words, really look at their origins and meanings, you’d think we were speaking in ancient Greek, Roman Latin, Old English and Medieval French. We are! (Those Normans have a lot to answer…)
Choose a word…
Help me choose which enterprising words to include. Send me one of your favourite business terms. I’ll see if I can excavate its roots and let loose a story of trade, commerce and social exchange.
We’ve reached the D’s.
D is for… Debt
Origin – Middle English dette; from Old English based on Latin debettum ‘something owed’, past particle of debere, ‘owe’.
Definition – Something, typically money, that is owed or due.
In finance, debt is a means of using anticipated future purchasing power in the present before it has actually been earned. Some companies and corporations use debt as part of their overall corporate finance strategy.
Debt as a strategy. At every strength’s core lies the seed of its weakness and in this definition of ‘debt’ the germ that has infected the global financial system is called a ‘bet’. The next stage in this contagion is the need to ‘hedge’ one’s bets and so by selling a debt, the disease is transmitted.
Heads or Tails?
If credit is the heads, the confidence and trust of a promise (see my previous blog in this series) then debt is the tails of this particular currency. It invokes an obligation, a moral duty, a commitment.
Debt is part of an accounting equation. It is the equal but opposite partner of credit. They are two sides of a closed system. They represent two parties in a balanced business relationship. The exchange between the two is mutual and beneficial. The transaction ebbs and flows.
If the promise of future power fails then the balance is lost. The mutuality of the exchange is destabilised and the nature of the relationship turns to one based on broken promises, faded dreams and eventually waking nightmares.
The Latin debere (to owe) and credere (to entrust) describe two sides of a social exchange, not a financial one. We have stripped both meanings down to debit and credit in a financial ledger.
The Eurozone is an economic and monetary union of seventeen member states. They have adopted a common currency as sole legal tender. They have agreed that their monetary policies be set by the European Central Bank, the principle task of which is to keep inflation under control.
Inflation, of course, reflects an erosion in the purchasing power of money. That erosion generates a depreciation in the belief that a debt will be paid, in a trust that the future will be bountiful, in a confidence that the system knows what it is doing.
Credit is not usury. Debt is not a sin. Betting on an ill-defined, random future is.
Financial advisers tell us:
Never invest more than you can afford to lose.
They point us to all that fine print about markets going up as well as down. But who knows how much we can afford to lose when it is our pensions and our own future purchasing power we are betting on?
Social exchange for mutual benefit is what makes the economic world go round. We’ve tilted off our axis. We’ve lost our equilibrium. The rich get richer and the poor get poorer. Creditors and debtors are locked in an asymmetrical dance.
Leave a comment. Tell a friend.