Authors: David Graeber
This was accompanied, at first, by a return to “monetarism”: the doctrine that even though money was no longer in any way based in gold, or in any other commodity, government and central-bank policy should be primarily concerned with carefully controlling the money supply to ensure that it acted
as if
it were a scarce commodity. Even as, at the same time, the financialization of capital meant that most money
being invested in the marketplace was completely detached from any relation to production of commerce at all, but had become pure speculation.
All this is not to say that the people of the world were not being offered something: just that, as I say, the terms had changed. In the new dispensation, wages would no longer rise, but workers were encouraged to buy a piece of capitalism. Rather than euthanize the rentiers,
everyone
could now become rentiers—effectively, could grab a chunk of the profits created by their own increasingly dramatic rates of exploitation. The means were many and familiar. In the United States, there were 401(k) retirement accounts and an endless variety of other ways of encouraging ordinary citizens to play the market; but at the same time, encouraging them to borrow. One of the guiding principles of Thatcherism and Reaganism alike was that economic reforms would never gain widespread support unless ordinary working people could at least aspire to owning their own homes; to this was added, by the 1990s and 2000s, endless mortgage-refinancing schemes that treated houses, whose value it was assumed would only rise, “like ATMs”—as the popular catchphrase had it, though it turns out, in retrospect, it was really more like credit cards. Then there was the proliferation of actual credit cards, juggled against one another. Here, for many, “buying a piece of capitalism” slithered undetectably into something indistinguishable from those familiar scourges of the working poor: the loan shark and the pawnbroker. It did not help here that in 1980, U.S. federal usury laws, which had previously limited interest to between 7 and 10 percent, were eliminated by act of Congress. Just as the United States had managed to largely get rid of the problem of political corruption by making the bribery of legislators effectively legal (it was redefined as “lobbying”), so the problem of loan-sharking was brushed aside by making real interest rates of 25 percent, 50 percent, or even in some cases (for instance for payday loans) 120 percent annually, once typical only of organized crime, perfectly legal—and therefore, enforceable no longer by just hired goons and the sort of people who place mutilated animals on their victims’ doorsteps, but by judges, lawyers, bailiffs, and police.
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Any number of names have been coined to describe the new dispensation, from the “democratization of finance” to the “financialization of everyday life.”
26
Outside the United States, it came to be known as “neoliberalism.” As an ideology, it meant that not just the market, but capitalism (I must continually remind the reader that these are not the same thing) became the organizing principle of almost everything. We were all to think of ourselves as tiny corporations, organized
around that same relationship of investor and executive: between the cold, calculating math of the banker, and the warrior who, indebted, has abandoned any sense of personal honor and turned himself into a kind of disgraced machine.
In this world, “paying one’s debts” can well come to seem the very definition of morality, if only because so many people fail to do it. For instance, it has become a regular feature of many sorts of business in America that large corporations or even some small businesses, faced with a debt, will almost automatically simply see what happens if they do not pay—complying only if reminded, goaded, or presented with some sort of legal writ. In other words, the principle of honor has thus been almost completely removed from the marketplace.
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As a result, perhaps, the whole subject of debt becomes surrounded by a halo of religion.
Actually, one might even speak of a double theology, one for the creditors, another for the debtors. It is no coincidence that the new phase of American debt imperialism has also been accompanied by the rise of the evangelical right, who—in defiance of almost all previously existing Christian theology—have enthusiastically embraced the doctrine of “supply-side economics,” that creating money and effectively giving it to the rich is the most Biblically appropriate way to bring about national prosperity. Perhaps the most ambitious theologian of the new creed was George Gilder, whose book
Wealth and Poverty
became a best-seller in 1981, at the very dawn of what came to be known as the Reagan Revolution. Gilder’s argument was that those who felt that money could not simply be created were mired in an old-fashioned, godless materialism that did not realize that just as God could create something out of nothing, His greatest gift to humanity was creativity itself, which proceeded in exactly the same way. Investors can indeed create value out of nothing by their willingness to accept the risk entailed in placing their faith in others’ creativity. Rather than seeing the imitation of God’s powers of creation
ex nihilo
as hubris, Gilder argued that it was precisely what God intended: the creation of money was a gift, a blessing, a channeling of grace; a promise, yes, but not one that can be fulfilled, even if the bonds are continually rolled over, because through faith (“in God we trust” again) their value becomes reality:
Economists who themselves do not believe in the future of capitalism will tend to ignore the dynamics of chance and faith that largely will determine that future. Economists who distrust religion will always fail to comprehend the modes of worship
by which progress is achieved. Chance is the foundation of change and the vessel of the divine.
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Such effusions inspired evangelists like Pat Robertson to declare supply-side economics “the first truly divine theory of money-creation.”
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Meanwhile, for those who could not simply create money, there was a quite different theological dispensation. “Debt is the new fat,” Margaret Atwood recently remarked, struck by how much the advertisements that surround her daily on the bus in her native Toronto had abandoned their earlier attempts to make riders panic about the creeping terrors of sexual unattractiveness, but instead turned to providing advice on how to free oneself from the much more immediate terrors of the repo man:
There are even debt TV shows, which have a familiar religious-revival ring to them. There are accounts of shopaholic binges during which you don’t know what came over you and everything was a blur, with tearful confessions by those who’ve spent themselves into quivering insomniac jellies of hopeless indebtedness, and have resorted to lying, cheating, stealing, and kiting cheques between bank accounts as a result. There are testimonials by families and loved ones whose lives have been destroyed by the debtor’s harmful behaviour. There are compassionate but severe admonitions by the television host, who here plays the part of priest or revivalist. There’s a moment of seeing the light, followed by repentance and a promise never to do it again. There’s a penance imposed—
snip, snip
go the scissors on the credit cards—followed by a strict curb-on-spending regimen; and finally, if all goes well, the debts are paid down, the sins are forgiven, absolution is granted, and a new day dawns, in which a sadder but more solvent man you rise the morrow morn.
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Here, risk-taking is in no sense the vessel of the divine. Quite the opposite. But for the poor it’s always different. In a way, what Atwood describes might be seen as the perfect inversion of the prophetic voice of Reverend King’s “I Have a Dream” speech: whereas the first postwar age was about collective claims on the nation’s debt to its humblest citizens, the need for those who have made false promises to redeem themselves, now those same humble citizens are taught to think of themselves as sinners, seeking some kind of purely individual
redemption to have the right to any sort of moral relations with other human beings at all.
At the same time, there is something profoundly deceptive going on here. All these moral dramas start from the assumption that personal debt is ultimately a matter of self-indulgence, a sin against one’s loved ones—and therefore, that redemption must necessarily be a matter of purging and restoration of ascetic self-denial. What’s being shunted out of sight here is first of all the fact that
everyone
is now in debt (U.S. household debt is now estimated at on average 130 percent of income), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on
something
other than sheer material calculation.
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One must go into debt to achieve a life that goes in any way beyond sheer survival.
Insofar as there is a politics, here, it seems a variation on a theme seen since the dawn of capitalism. Ultimately, it’s sociality itself that’s treated as abusive, criminal, demonic. To this, most ordinary Americans—including Black and Latino Americans, recent immigrants, and others who were formerly excluded from credit—have responded with a stubborn insistence on continuing to love one another. They continue to acquire houses for their families, liquor and sound systems for parties, gifts for friends; they even insist on continuing to hold weddings and funerals, regardless of whether this is likely to send them skirting default or bankruptcy—apparently figuring that, as long as everyone now has to remake themselves as miniature capitalists, why shouldn’t they be allowed to create money out of nothing too?
Granted, the role of discretionary spending itself should not be exaggerated. The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and increasingly, simply being able to go to college now almost necessarily means debt peonage for at least half one’s subsequent working life.
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Still, it is useful to point out that for real human beings survival is rarely enough. Nor should it be.
By the 1990s, the same tensions had begun to reappear on a global scale, as the older penchant for loaning money for grandiose, state-directed projects like the Aswan Dam gave way to an emphasis on microcredit. Inspired by the success of the Grameen Bank in Bangladesh, the new model was to identify budding entrepreneurs in poor communities and provide them with small low-interest loans. “Credit,”
the Grameen Bank insisted, “is a human right.” At the same time the idea was to draw on the “social capital”—the knowledge, networks, connections, and ingenuity that the poor people of the world are already using to get by in difficult circumstances—and convert it into a way of generating even more (expansive) capital, able to grow at 5 to 20 percent annually.
As anthropologists like Julia Elyachar discovered, the result is double-edged. As one unusually candid NGO consultant explained to her in Cairo in 1995:
Money is empowerment. This is empowerment money. You need to be big, need to think big. Borrowers here can be imprisoned if they don’t pay, so why be worried?
In America we get ten offers for credit cards in the mail every day. You pay incredible real interest rates for that credit, something like 40 percent. But the offer is there, so you get the card, and stuff your wallet full of credit cards. You feel good. It should be the same thing here, why not help them get into debt? Do I really care what they use the money for, as long as they pay the loan back?
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The very incoherence of the quote is telling. The only unifying theme seems to be: people
ought
to be in debt. It’s good in itself. It’s empowering. Anyway, if they end up too empowered, we can also have them arrested. Debt and power, sin and redemption, become almost indistinguishable. Freedom is slavery. Slavery is freedom. During her time in Cairo, Elyachar witnessed young graduates of an NGO training program go on strike for their right to receive start-up loans. At the same time, just about everyone involved took it for granted that most of their fellow students, not to mention everyone else involved in the program, was corrupt and exploiting the system as their personal cash cow. Here too, aspects of economic life that had been based on longstanding relations of trust were, through the intrusion of credit bureaucracies, becoming effectively criminalized.
Within another decade, the entire project—even in South Asia, where it began—began to appear suspiciously similar to the U.S. subprime mortgage crisis: all sorts of unscrupulous lenders piled in, all sorts of deceptive financial appraisals were passed off to investors, interest accumulated, borrowers tried to collectively refuse payment, lenders began sending in goons to seize what little wealth they had (corrugated tin roofs, for example), and the end result has been an
epidemic of suicides by poor farmers caught in traps from which their families could never, possibly, escape.
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Just as in the 1945–1975 cycle, this new one culminated in another crisis of inclusion. It proved no more possible to really turn everyone in the world into micro-corporations, or to “democratize credit” in such a way that every family that wanted to could have a house (and if you think about it, if we have the means to build them, why shouldn’t they? are there families who don’t “deserve” houses?) than it had been to allow all wage laborers to have unions, pensions, and health benefits. Capitalism doesn’t work that way. It is ultimately a system of power and exclusion, and when it reaches the breaking point, the symptoms recur, just as they had in the 1970s: food riots, oil shock, financial crisis, the sudden startled realization that the current course was ecological unsustainable, attendant apocalyptic scenarios of every sort.