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.
Every 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.