These images are taken across either side of a small square in Sheffield, England. The top image shows a small run of five shops; three bookmakers, another gambling establishment and a payday loan shop. The bottom image is taken across the road and a large payday loan shop has a bookmakers in the same building.
Roberto Unger in a lecture at the London School of Economics and broadcast on BBC Radio 4 identified significant problems with the current left project which he portrays as a lack of imagination. It is counter-productive for those engaged in mainstream leftist political projects (eg the British Labour party) to take “realistic”, “pragmatic” approaches to democratic change, such as limited redistribution of wealth through higher taxation or the raising of the minimum wage to a “living wage“. Such approaches, Unger claimed, cannot effect change because they do not challenge the fundamental structures of an oppressive society. What is necessary is for piecemeal change to be instigated which demonstrates that further change can occur. This is a stimulating challenge to leftist politics and a rarity for a social theorist of any stripe to offer practical solutions.
Unger’s proposal is similar to, although less radical than, Michel Foucault’s (1986) suggestion that the most important aspect of a revolution is that it functions as a spectacle. It demonstrates to others that change is possible through collective action. Action which may qualify as useful under Unger’s terms is taking place against the servitude of indebtedness by the Rolling Jubilee Project who are closely connected with Occupy. Rolling Jubilee recently bought up $14.7 million of medical debt for $400, 000. Usually this debt would be bought as junk debt on the secondary debt market by companies who would then aggressively seek to reclaim as much of it as possible. After buying this debt at a knock-down price Rolling Jubilee “freed” the debtors from it.
Such a gesture, no doubt, is of tremendous benefit to the individual debtors but has little structural impact. Much more importantly, however, it demonstrates that it is possible to effect change through collective action; it functions as a spectacle and is a spur to the imagination. Furthermore, it introduces a third-party into the debt relationship disrupting the accepted morality. By removing the bondage of debt occupy are stating that the debtors do not need to be punished and it challenges the creditors as morally superior actors. This is only a small step, however, and, morally speaking, a relatively easy one as Rolling Jubilee bought the medical debt of American citizens. Such debt is perhaps the most morally legitimate kind, even in the current moral framework in which being indebted is aligned with immorality or moral weakness. The highly common sale of debt at far below its value while people are still made to suffer through repayments and the “bailout of the people by the people” by Rolling Jubilee demonstrates that indebtedness is not merely an economic relationship but a moral one.
The philosopher Friedrich Nietzsche (2006 ) highlighted the moral character of the debt relationship over a hundred years ago. The creditor, he claimed, is positioned as morally superior and as a legitimate punisher with debt as the punishment. Nietzsche claims that for most of human history punishment was exercised over people not because the perpetrator was deemed to be individually responsible for a crime thereby deserving of punishment; this is a fairly recent idea. Rather people were punished as an exercise of the anger perpetrated by the perceived victim. The injury against the victim was seen to have a certain cost which could be paid for with money or taken out of the perpetrator through torture. Indebtedness is one of these forms of “punishment by torture”. It is clear that it is not simply a matter of economics as many debts are never settled and sold off as junk by the original creditors to companies who specialise in collecting what money can be squeezed out of the indebted. In such cases the creditors do not expect to get the full value of the debt back but we still expect the debtors to suffer.
The accountancy firm PwC recently reported that last year saw an £8.5 billion increase in unsecured lending. People in Britain are more indebted than in any country, other than USA and Canada and this is growing. PwC’s prediction was that credit cards, overdrafts and personal loans will continue to decrease while small, unsecured loans will increase and that more mainstream lenders will move into this area of business. The chancellor of the exchequer George Osborne announced that the rate of interest of short-term, unsecured loans would be capped which was claimed to be a step towards greater fairness and better terms for customers. While it is preferable that the ridiculously high interests rates offered by companies such as Wonga, to people who are rarely in a position to manage such debt, along with the findings from PwC’s report, what this really points to is a normalisation of such loans and of indebtedness.
Could the approach of Rolling Jubilee offer an alternative moral framework in which we bail out people rather than banks? Rather than allowing the secondary debt market to make profit from people who cannot afford to pay back their debt by purchasing it cheaply from the original creditors could people not be relieved of their suffering? This poses another moral question as most people are perhaps less sympathetic towards those who become indebted in order to buy a TV or because of gambling than because of necessary medical procedures (as is the case with the debt bought by Rolling Jubilee). But it is important to break out of this moral framework which blames individuals for indebtedness without consideration of the social circumstances which have brought them there.
The photographs above were taken by me of a small square in the centre of Sheffield, England, where I live, and demonstrate the close and cosy relationship between indebtedness and the gambling industry. The proliferation of betting shops and “payday loans” businesses in England over the last few years is indicative of the pressures many people face to gamble or become indebted. Furthermore, it seems absurd to position debtors as morally inferior and deserving of punishment and suffering in light of the predatory tactics of the financial services industry. In answer to the question of how investors can profit from debt securities in failing companies (through buying up the kind of “junk debt” discussed earlier) one investment advice blog offered this guidance “Sharpen your talons and prepare to feast on the weak and the dying”. It seems to be clear where the deficit of morality lies.
Foucault, M. (1986) ‘Kant on Enlightenment and Revolution’ Economy and Society 15(1), 88-96.
Nietzsche, F. (2006 ) On the Genealogy of Morality. Cambridge: Cambridge University Press.
There was a Guardian article some weeks ago regarding the Rolling Jubilee / Occupy buying of debt. It was my first time to understand what actually happens to debt. Is this situation caused by people claiming bankruptcy, thus the debt being purchasable? There seems no end to the tactics for swindling money.
I am fully in agree of setting a precedent for folks to follow. This is essential.
I personally find credit cards repugnant, I have never and aim to never own one. I know I would not max it in some brief period of time, however I simply do not wish to be any part of it whatsoever.
I do think however (perhaps it is a lack of education) that people, ,such as students, need to be more responsible. When I was a student I had friends who took out second overdrafts with another bank other than their own, which isn’t actually allowed, and also had credit cards, just to live the lifestyle of a cosmopolitan, hipster. This was reckless and some people I knew never even finished university and were utterly crippled by debt, not because of being unable to pay their way, but rather due to wishing to keep up appearances.
This I am sure may apply to other gregarious ilks in society. I will not make mention because I do not know for certain. Perhaps you know of one.
Great article as always, I think your’s is the most informative blog I have found to date, lucid, clear, informative and interesting.
Wow, thanks, Daniel! That’s quite an endorsement. Thanks for reading as well. I’m not an economist but as I understand it the secondary debt market is not necessarily related to bankruptcy. Rather, when creditors no longer want the hassle of pursuing the debt (often because the debtors are struggling to pay it) they sell it off at a discount, as “junk” to other companies. A similar thing has recently happened with the sale of a portion of the student debt which the UK government holds in which case £890 million of debt was sold for £160 million and it is impossible to go bankrupt from student debt in the UK.
I am sure you are right that some people get into debt for quite frivolous reasons but it is still important to be aware of the pressures on people or perhaps just opportunities that are available. Quite simply it is easier to get loans than it used to be, they are heavily advertised and highly visible on the high street. The most visible ones are also usually those with the worst terms. A key culprit in the UK is “Wonga” who have a cutesy advertising campaign, massive rates of interest (over £4000 interest on a £100 loan over a year – although they state they are intended to be short term loans) and make significant donations to the Conservative party.
While I agree that people should take personal responsibility, currently the repercussions fall very heavily on the individual and the companies (and governments) are allowed to exploit them.
It is my pleasure. I honestly enjoy reading your work. If I was in England I would make an effort to meet with you for a natter, but that is not possible.
If you ever have the time perhaps you could have a browse through my blog and offer some of your professional insights on its content.
Yes, that would be great, although you are a long way from England. I will definitely read your blog at the weekend. Had a quick look and looks fascinating!