6. Debt (& Credit)

Question 1

What is Debt?

Answer 1

• A form of deferred exchange (impersonal, transferrable)
• Public and private
• Embedded within local moralities - obligation repay/forgive?
• Can be bought and sold, be an investment, be speculated upon (a commodity)
• Creates power relations
• The origin of money

Question 2

What is the history of Debt?

Answer 2

When debts are monetised and commoditised, violence is often the cause and further violence and poverty follow.

Graber’s observations:

• The obligation to pay back seems inviolable (never disrespected)
• Makes poverty appear as the impoverished person’s/country’s fault - naturalises obscence inequality
• Creates social hierarchies, relationships

Founding myth of economies was that barter (as the quantification of exchange) came before money… BUT credit (& debt) came first. Money, then barter arose (typically in cash markets).

​1. Virtual Money (esp. 3500-800 BCE)

• Credit Accounts
• Enslaved by debts (but new rulers would ‘wipe the slate clean’)

2. Metal Money (esp. 800 BCE - 600 CE)

• Coinage (taxes, pay soldiers)
• State no longer ‘wipes slates clean’; slavery
• Rise of world religions against logic of market

NOTE: The moral obligation to pay back debts is not ‘universal’.

Question 3

What is the difference between Debt and deficit?

Answer 3

• Debt - everything we owe
• Deficit - spending to service the debt - what we are adding to the debt!

Question 4

Why did the Global Economic Crisis occur?

Answer 4

Convential Explanations

• Human frailty
• Institutional failures
• Everyone was obsessed with a false theory: efficiency of markets
• Cultural origins
• Failure of regulatory policy

Harvey’s Explanation

• Internal contradictions of capital accumulation
• 1970s –> now
  
  • Disciplining labour
  • Thatcher, Reagan
  • Offshoring
  • Wage repression = less consumption (demand) - answer was to give people credit!!
  • Debt is thus empowering the economies.

Where are we now?

• Re-emergence of virtual debt
• Institutions protect creditors now, not debtors
• Thinking about money beyond ‘state’ and ‘markets’- umoor virtual money from a foundation of violence

Question 5

What 2 ethnographies are associated with Debt?

Answer 5

1. Killick, E. (2011).’The Debts that Bind Us: A Comparison of Amazonian Debt-Peonage and US Mortgage Practices.’
2. De Neve, G. (1999). ‘Asking for and Giving Baki: Neo-Bondage, or the Interplay of Bondage and Resistance in the Tamilnadu Power-Loom Industry.

Question 6

What does Killick’s (2011) ethnography tell us about Debt?

Answer 6

Debt bondage (peonage) is a person’s pledge of their labor or services as security for the repayment for a debt or other obligation. The services required to repay the debt may be undefined, and the services’ duration may be undefined. Debt bondage can be passed on from generation to generation. (Considered ‘modern day slavery’ by the UN)

• De-familiarise mortgages (USA); de-exoticise debt-peonage (Amazonia)
• Debts can bound creditors and debtors
• Debts can be seen as a balanced social good
• The meaning of debt changes under different economic and historical circumstances
• When are debts exploitative / empowering?

Question 7

What does De Neve’s (1999) ethnography tell us about Debt?

Answer 7

Bondage and resistance in Tamil (south India) powerloom industry.

• Cash advances to workers (baki) ‘bind’ worker and employer together.
• Key argument: with debt, what people intend is not always what they achieve.
• Ties workers to their employers (patronage)
• Creates dyadic employer/worker relationships
• Workers achieve a degree of job stability
• Workers become individuated:
  
  • Concerned with ‘more individualised strategies of negotiation resistance or withdrawal’ in the face of labour grievances
  • Less collective activities or trade unionism: Baki ‘successfully fragmented the labour force thus preventing the rise of union activity’