Editorial: January 2013

Four million Britons have financed their Christmas using payday loans. This is not a statistic about greed or a lack of ‘personal responsibility’. On average, people have spent less on festivities this year. Instead, the figures point to an economy built upon debt. Unsecured loans with staggeringly high interest rates are becoming for many an increasingly normalised means of meeting basic social needs.

Against a backdrop of stagnating wages, the last few decades have seen a steady increase in living costs with disposable income gobbled up by housing, food, energy bills, and more and more by things which were once free: education and medical costs. In the context of a shrinking manufacturing sector, immaterial goods have spawned a precarious, non-unionised workforce with higher demand on their gradually diminishing earnings.

And so here we have Britain’s success story of the 2008 crash, with growth rates to make all other sectors envious: the personal debt industry. The last five years have seen a 25% increase in payday loan outlets, pawnshops and bookies, all of which now dominate the high streets of impoverished communities. Parasitic in nature, the influx of these poverty vultures is often the harbinger of an area’s decline, as debt levels spin out of control courtesy of exorbitant interest rates, in some cases reaching up to 4000% APR. Between 2006-11 the payday loans industry alone quadrupled. Those who live in these hollowed out communities are well aware of the effect the industry has had – it’s no coincidence that payday loan shops were targeted during the riots.

The ubiquity of the debt economy cuts through class, though its utility still pushes itself onto the poor: an economy that fails the majority forces people to take risks to maintain or aspire to an improved standard of living, which capital tells us we must covet. Debt was not used to improve the lives of the majority; it was used to inflate bubbles and to accumulate fictitious capital for the financial elite, creating the mirage of growth where in reality there was none. Like the money created by the central banks of the world, it does not have a material counterpart. This virtual economic growth doesn’t show up on the balance sheets as debt, but that’s essentially what it is, as it increases the amount of money circulating within the economy without providing clear evidence that value is increasing proportionally as well. Indeed, the vast increase in money within the financial sector is merely the tip of the iceberg. Arguably, the accrued debt laced into the processes of immaterial production around the world is many times greater.

In the quest for infinite expansion of value, coupled with a more immaterial mode of production exemplified in the service sector, we see an increasing exploitation of multiple aspects of human labour: our creative capacity, and our relationships with each other. The boundaries between work and life have blurred. Ask yourselves this, how often do people check their work emails at home these days? Hardt & Negri elaborate on the systemic realignment that has occurred because of this new dynamic when they refer to the indebted as a key subjective figure of the 2008 crash:

“In order to survive the indebted must sell his or her entire time of life. Those subject to debt in this way thus appear, even to themselves, primarily as consumers not producers. Yes, of course they produce, but they work to pay their debts, for which they are responsible because they consume.”

Under a laissez-faire economic system, we are told to consume because it is good for the economy: the ‘wealth creators’ benevolence will allow money to trickle down. But trickle down economies do not work. What trickles down isn’t money, but debt, and its associated conditions of shame, guilt and isolation – central to the history of debt in human society, and made worse by the hyper-individualisation and precarity of a post-Fordist existence.

Our debt is also directly linked to the LIBOR scandal – the biggest financial fraud in human history – when the world’s major banks manipulated the key inter-bank lending rate governing over $300 trillion worth of transactions. It has become increasingly obvious that the system and its institutions are illegitimate, and that debtors have entered into a relationship on false pretenses. If the debt is illegitimate, why must we couch the removal of indebtedness in the language of forgiveness and sin? If a debt is illegitimate, it must be repudiated, refused, and denied. If a system is exposed and tactics are clear, collective refusal can drive a wedge into the wheels of our own destruction.

Although the financial sector is a big part of the economy it cannot survive in isolation. It sustains itself by extracting value from the labours of the majority and the debts they are forced to take on, transforming them into commodities to be gambled with. Most of us, the people who actually do all the productive jobs, don’t work in this intangible economy, but when it stuttered and collapsed, the debt the finance sector incurred was cancelled, with us paying for it, and yet, all our debt – which we now know has been rigged all along – remains.

Until we fully engage in the understanding that debt is a common and historical form of bondage, which must be confronted and collectively organised against, we shall forever be caught in the cycle of self-propelling financial circulation that promises freedom whilst linking us in chains. Many, no longer wishing to be caught in the thrall of exploitation, are already taking action around debt and engaging with how its moral and economic illegitimacy can be challenged. Later in this issue, we cover some of the different methods of resistance and collectivisation which are developing, from the Rolling Jubilee campaign and Strike Debt movement in the US to calls for citizen debt audits in some European countries. People are gathering to discuss their debt stories and plan coherent and radical strategies to fight against debt bondage. As David Harvey said recently: “You retire the debt, you end capital.”