Debt Refusal Essential to Rebuilding Popular Democracy

Debt Refusal Essential to Rebuilding Popular Democracy

Photo courtesy of Reflections on a Revolution.

Editor’s note: A recent spate of scholarly analysis has highlighted how private indebtedness has been very good for those in the 1% while destructive for those in the 99%. But more than that, these works have helped to counter the moral claim that underlies rapacious debt service – the claim that we must all pay our debts.

Having seen large financial institutions bailed out to the public expense, we know that not everyone really pays. We know that much of our economic system is premised on the enrichment of the creditor class. The Federal Reserve’s fight against inflation in the 80s, while sold as good for the country as a whole, served to stealthily shift wealth in this country from the productive elements of the economy to this class of creditors.

Meanwhile, the logic of debt creates an inward monologue of shame and the deadening of public-spiritedness in the face of long-term debt servitude. Silva Federici has called this the “self-managed exploitation” of indebtedness. The result: depression and suicide. From reports of a rising tide of suicides among the middle-aged, the heart-breaking stories of suicides due to student debt, to the spate of suicides in India due to usurious microlending practices, we’re realizing that debt is driving us into our own private hell.

The only way out is to find each other back outside in the public sphere. Authors like Andrew Ross and David Graeber make it clear that resisting debt is not only moral, it may be essential to re-envisioning a democracy built on legitimate bonds to our community.

As Hollis Phelps has said in her recent review of Ross’ new book Creditocracy and the Case for Debt Refusal for ROAR Magazine:

When debt primarily functions as a means to line the pockets of the few, as it is packaged, bought, and sold using complex financial instruments and mechanisms in various markets, it “should not be recognized as binding.”


Ultimately Ross’s call for debt resistance is about energizing democracy, since debt stifles “our capacity to think freely, act conscientiously, and fulfill our democratic responsibilities.” Because debt limits democratic participation and decision-making, “economic disobedience is justified as a protective deed on behalf of democracy.”


Although it has material effects, debt resistance, then, also functions symbolically, providing an image of true freedom, one that gestures toward a real democratic future, as Ross discusses in Chapter 6 in relation to the Occupy movement and the initiatives that have grown out of it. Indeed, for Ross, “democracy has no tenable future unless creditor power is broken apart and dispersed.”


Since it’s unlikely that the creditors will willingly cede power anytime soon, it falls to us to resist and refuse, and that starts with debt.

These works help us rethink to whom we owe our legitimate debts as well as how our present economy undermines the supportive social structures we build everyday in our communities. They also provide a moral basis for resisting illegitimate debt.

To paraphrase Strike Debt, working together to build greater economic democracy would mean weaving a dense, creative network where our debts are to each other, not to them (read: the big banks).

Nine Arguments For Debt Refusal

By Andrew Ross
Originally posted by Strike Debt.

thetiethatbinds1Every other day brings us fresh headlines about malfeasance, fraud and continued predatory behavior on the part of the finance industry. Morally speaking, bankers are the most depraved and derelict actors in our society. And yet they continue to rely upon heavy-duty moralism to enforce debtors’ obligations. What is an appropriate response? Here are nine arguments to justify repudiating debts as an act of economic disobedience. Appealing to basic moral principles, they are fleshed out in much more detail in Creditocracy and the Case for Debt Refusal. The list is far from exhaustive, but it is a start, and I invite you to add others. The goal? To determine which of our debts should be honored, and which should not.

  • Loans which either benefit the creditor only, or inflict social and environmental damage on individuals, families, and communities, should be renegotiated to compensate for harms.
  • Lending to borrowers who cannot repay is unscrupulous, and so the collection of such debts should not be honored. Making loans that clearly can never be repaid in full is a more delinquent act than being unable to pay.
  • The banks, and their beneficiaries, awash in bonuses, profits, and dividends, have done very well; they have been paid enough already, and do not need to be additionally reimbursed. Since the creditor class produces phony wealth, fake growth, and thus no lasting prosperity to society as a whole, it deserves nothing from us in return.
  • The credit was not theirs to begin with–most of it was obtained through the dubious power of money creation, thanks to fractional reserve banking and the “magic” of derivatives. The right to claim unearned income from debts created so easily should not be recognized as binding.
  • Even if household debts were not intentionally imposed as political constraints, they unavoidably stifle our capacity to think freely, act conscientiously, and fulfill our democratic responsibilities. Economic disobedience is justified as a protective deed on behalf of democracy. Indeed, asserting the moral right to repudiate debt may be the only way of rebuilding popular democracy.
  • Extracting long-term profits from our short-term need to access subsistence resources or vital common goods like education, healthcare, and public infrastructure is usurious, anti-social conduct, to be condemned (or outlawed) and not indemnified.
  • Each act of debt service should be regarded as a nonproductive addition to the banks’ balance sheets and a subtraction from the “real” economy which creates jobs, adequately funds social spending, and sustains the well-being of communities.
  • Obliging debtors to forfeit future income is a form of wage theft, and, if the debts were incurred simply to prepare ourselves, in mind and body, for employment, they should be resisted. This applies especially to education debt.
  • Given the fraud and deceit practiced by bankers, and the likelihood that they will not refrain from such anti-social conduct in the future, it would be morally hazardous of us to reward them any further. The finance industry relies on moralism to enforce repayment, but who is the real “delinquent”? It is more moral to deny them than to pay them back.
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  4. Rance Foulston

    I truly agree with the spirit of this article. It is clear that the author has a grip on the idea that the debt is basically unfair, at least in total. I would like to contribute my own thoughts on this matter in a way that points more specifically to the origins of the fraud, and thus an understanding of where we may realistically seek remedy. My study of the situation has led me to see that the problem is essentially one of false claims, all of which originate with the false understanding of the nature of money and the loan agreements which bring about the creation of money.
    The areas of discussion ought to focus around the rights and obligations of these agreements. Who is delivering value? In exchange for what? How does the loan give rise to multiple parallel financial instruments, all of which may be converted into money, but for which there is only one real contribution of value?
    It is common among critics of the monetary system to point to fractional reserve practices and fiat currency as the essence of the problem. I differ somewhat on this score. I see this kind of thing as secondary to the claims of ownership by the banks which really only serve as accountants. The agreements ought to be considered as between those who exchange real value, the money being the mechanism for deferring one half of the transaction, collectively passing through the economy as a generic collection of IOUs which we may recognize as currency (which we all ought to own as the public credit).
    As we now understand money, however, the banks claim ownership of this currency and demand rent for it. They also create multiple financial instruments which duplicate this stream, eventually devaluing the collective purchasing power and accumulating ever greater ownership of all wealth, in particular the means of production. We call the devaluation inflation. The financial assets are claims against all of our future labours and our presently held assets.
    The laws which enable these fraudulent claims are pervasive and duplicated throughout the world by statute. Their foundation is not based in common law. This points directly to the source of our remedy. Surely it is provable that the bank has no standing as a real lender since it offers nothing in consideration. Further, it does not truthfully disclose the nature of the agreement and does not acknowledge that the promise of the “borrower” is its only basis, and that therefore the borrower is actually the creator of the money, the value of which is promised to whose who may accept the cheques he writes. When the borrower fulfills his obligation, recognized by his deposit against the outstanding account, the debt (to the public) ought to be cancelled. In fact, it probably is not recognized as such, as I argue more fully in papers I have written. Furthermore, long after the obligation of the borrower has been met and value delivered to those who he has actually promised such, the financial instruments continue to exist and compound into future obligations which we all must meet in service to the false claimants.
    Please contact me if you would like more comment or would like to read what I have written on this subject.

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