Futures Forum: Keeping bank branches open alleviates financial exclusion
Futures Forum: Rural poverty, rural immobility > "opportunities in rural areas are not as abundant for young people as they are in cities"
Futures Forum: Abolish household debt
And much of this is based on the tyranny of debt:
Futures Forum: What came first: money or debt? ... David Graeber's "Debt: The First 5000 Years"
Here's a recent piece from the Baffler magazine which looks at debt - and whether we can or indeed should do anything about our own credit rating:
Nightmares of the Credit Regime
Can activists out market the markets?
IT’S A PET THEORY of mine, probably wrong, but nonetheless fun to think about, that it’s Trump’s role as debtor that holds a key to his appeal. In June 2016, Donald Trump told CBS This Morning, “I’m the king of debt. I’m great with debt. Nobody knows debt better than me.” And it’s true: Trump has managed to squeak his companies out of six bankruptcies and still hold on to enormous wealth—or at least the appearance of enormous wealth, which can be just as good. His comment was met with stupefaction by clueless pundits and responsible businessmen, but to Americans who toil to meet their obligations—payday loans, credit cards, mortgages, student loans, car payments, small business lines of credit—the man for whom debts are something to be dropped at will must seem awesome, just as Louis Napoleon, a roué with a famous name who resorted to a coup d’etat to obviate his massive debts, appeared on the scene of mid-nineteenth-century France as a champion to the small-holder ruined by his mortgages. Trump seems impossible to totally discredit. And this goes beyond his finances: he has survived scandals that would have buried other politicians. He just shrugs it all off. Again, a man with apparently no guilt or shame must seem like a veritable wonder to some. Much like the central bank is the lender of last resort, Trump serves as scoundrel of last resort, the Sun King of the debt universe that allows a bankrupt system of conservative grifting to keep its orbit.
I am neither political economist nor political theorist so I will not insist too hard on the reality of my own fancy here, but it is a fact that credit and debt dominate our lives. The fallout of the 2008 crisis has apparently done nothing to slow the financialization of capitalism. Raising a company’s value in capital markets in the short-term continues to be the primary concern of corporate managers as opposed to the long-term commercial viability of their businesses. In public finance, the fear of the bond markets continues to limit the possibility of expansionary policy. And the bailout of the financial sector meanwhile works to retrench how much finance acts as the central nervous system of the world economy. Some, like economist J. W. Mason, believe the way the financial sector allocates resources to other areas of the economy, with the state acting as ultimate guarantor, makes it effectively a central planning apparatus manqué.
The tyranny of debt is particularly acute in the “ownership society” of the United States, where, as the sociologist Monica Prasad argues in the The Land of Too Much, access to credit functions as a substitute for the welfare state. At the time of writing, more Americans than at the depths of the last crisis are struggling to keep up with their auto-loans, a sector that still has a considerable “subprime” market that targets the young and precarious. Discrimination in access to mortgages and other forms of credit continues to perpetuate minority poverty. In the corporate world, central bankers and regulators have begun to uneasily eye the $1.3 trillion “leveraged loan” market, where low-grade corporate debt is issued with no virtually no financial requirements and then repackaged into complex securities that are then hungrily bought up by institutional investors, including the pension funds that supplement social security payments. The reader will no doubt have noticed how much that sounds like the collateralized debt obligations made infamous in the Great Recession. (It will surprise no one that leveraged loans seem to be used to fund dividend pay outs rather than capital investment.) As the economy slows in general, the question surrounding the possibility of another financial panic is now “when?” rather than “if?”, and added to that, “how severe?”
Indeed, the cycle of creditworthiness and perpetual indebtedness has become so central to modern capitalism that some now argue that the relation of creditor to debtor has replaced the old relation between labor and capital as the central site of economic struggle in developed societies. The subject of capitalism no longer strictly concerns the worker trying to sell his labor, but now hinges upon the debtor struggling to sustain her various forms of credit rating. One of those voices is Michel Feher, a Belgian philosopher and a founding editor of Zone Books. His compact, yet dense, Rated Agency: Investee Politics in a Speculative Age offers a story of how we got here and how activists can, if not throw off the yoke of debt, at least begin to alter the deal a bit more in their favor.
According to Feher, the hegemony of finance is the (largely unintentional) result of the neoliberal reforms of the 1970s and 1980s. Faced with stagnation and inflation, Western countries, particularly the U.S. and the U.K., abandoned the consensus that had governed economic policy regime since the Depression and Second World War: central bank policy focused on full employment, progressive taxation, a robust welfare state, strong labor unions, counter-cyclical fiscal policy in the face of recession, and financial regulation to restrict risky speculation. In place of the postwar compromise between the interests of labor and capital, the conservative governments of Britain and the United States deregulated the financial sector, opened up avenues for globalization, throttled unions, and pursued a monetary policy whose main goal was to fight inflation rather than ensure full employment. The new policy apparatus skewed the system heavily in favor of the interests of investors and speculators, short-term “shareholder value” became the primary goal of corporate management, and Western economies began to witness the severe asset bubbles and financial crises that marked nineteenth-century laissez-faire capitalism—a constant pendulum swing between excess and ruination.
The neoliberal intellectuals who created these remedies to what they saw as the “creeping socialism” of postwar social democracy and economic planning hoped to shatter the class consciousness of laborers, encouraging people to view themselves as little entrepreneurs rather than members of the working class, encouraging asset ownership and self-responsibility, a process the economist Wilhelm Röpke called “deproletarianization.” Feher argues this has atomized and indebted wage earners and put them at the mercy of the cycle of boom and bust. All of this amounts to a fairly conventional history at this point, if usefully and elegantly recapitulated. Readers may quibble about the specific mechanism that was decisive, but the general story and endpoint is difficult to dispute: financial capital rules and we are at the mercy of its vagaries. Feher’s solution is what is novel.
Instead of proposing a rollback to the heady days of social democratic consensus, which Feher seems to think is neither possible nor desirable, he believes that activists should accept financialization and work to create new institutions within it to fight for the interests of the indebted and economically precarious. He calls this “investee activism,” since, in his view, the subjects of late capitalism are the targets of potential investment—and not merely wage earners. He believes that since the system is driven by speculation on the price of assets, which is in turn driven by the moods and beliefs of the speculators about their future value, that investee activists should “counterspeculate,” or seek ways to discredit the institutions and individuals that harm their interests. The institutional paradigm he wants activists to adopt, his replacement for the labor union if you will, is the rating agency. Imagine, if you will, a cooperative, proletarian Moody’s.
But how will activists manage to affect markets, rather than just being priced in or ignored? This is where his account becomes perhaps most dubious. On the one hand, Feher contends that financial capitalism is so resilient that it can’t be regulated; on the other, he thinks that activists will be able to discipline markets by piercing an ideological chink in their armor: corporate social responsibility. Acknowledging that corporate social responsibility is bullshit, Feher thinks that investee activists should treat it like labor unions of old treated the idea of “free labor”: as an ideological necessity of the wage labor system that was taken seriously insofar as it provided an avenue for the collective negotiation of wages. (Marxists were okay with this gambit, because they thought higher wages would eventually make capitalism self-destruct.) Given that everyone in the system requires credit—moral or financial—somewhere along the line, Feher reasons that disparate groups of activists organized as “stakeholders” can persistently evaluate corporate behavior across a number of fronts and thereby forge a new class consciousness. Maybe, as a result, they could tame the beast of capitalism.
There are a couple of problems with this line of thinking. First, and most superficially, the rating agency is a strange choice for paradigmatic institution since it is broadly understood to be corrupt: the co-option and failure of the rating agency model is part of the twice-told story of the 2008 crash. Financial markets, for example, already know how to manipulate rating agencies. Second, the ideology of corporate social responsibility is not as essential to the operation of capitalism as “free” wage labor is, or was, because free labor is a central necessity of capital accumulation: you gotta find someone to work for you on the cheap, to make stuff, to sell. Free labor must pretty much be accepted system-wide, whereas corporate social responsibility is arguably a bad-faith fad of the managerial class (just read “Lunch with the FT”), one that the dominance of capital markets could easily discipline away. And though Feher imagines activists taking counter-disciplinary measures, like “stalking” and “harassing” the managerial class, he never accounts for, say, the growing rhetoric against “twitter mobs,” which would seem to anticipate this option.
Third, in order for class consciousness to form, there has to be a class. Debtors or “stakeholders” do not form a class necessarily: their lives are not marked in entirety by a single relation to the productive forces of society. Different activists seeking to pressure corporations may have disparate and potentially conflicting interests that no institutional form will be able to fully mediate. You can easily imagine a company rated “A” for its treatment of its employees but “F” because of some environment dumping in its supply chain. Let’s say a cooperative rating agency successfully ruins the asset price of this irresponsible corporation and management reacts by laying off workers. Will there be some co-operative to assist them? A GoFundMe account? They may just wish they still had their jobs back—and deeply resent the activists. No class is thereby formed.
The question is whether indebtedness alone is enough to forge class-consciousness, or something like it. As Dylan Riley recently argued, the experience of debt is more likely to be atomizing than collective: “Every debtor has a quantitatively specific credit score, for example, and the crisis for her or him takes the form of difficulty in paying the bills. Debt therefore tends towards an individualization, or serialization, of political activity.” Hence, again, an identification with a symbolic “king of debt” like Trump, who offers the promise of a clean slate, but, of course, can’t and won’t bring out the eraser.
While Feher’s idea of perpetual rating and discrediting seems unlikely to yield the institutions that will provide for economic well-being, it does offer both a useful interpretation of the present and a plausible vision of the future. In a provocative coda, Feher weaves his theories into a story about social activism from the last few years. He highlights the efforts of the Parkland survivors to discredit the “reputational capital” of Fox News hosts and damage their ability to get sponsorship. Still, impressive as this youthful activism was, it did not nearly finish the job. Interest and attention soon went elsewhere, which is a problem for any strategy that would emulate the highly mercurial financial markets, reliant as they are on subjective feelings about the future. Activists may be able to accomplish temporary “runs” on the market of specific institutions and individuals, but if those institutions and individuals survive, they may yet be stronger.
A more successful example Feher mentions might be #MeToo, which, it seems worth pointing out, was galvanized in part by a tool of accounting: a spreadsheet. The discrediting of predatory individuals certainly appears to be more accomplished in this case, but again, we could question leaving this to the markets (as in Feher’s approach), where the promise of return too often outweighs past disgrace. The financial sector, it turns out, is not exactly the place to look for the weeding out of moral bankruptcy.
It must be admitted that one recent example does seem to strongly validate Feher’s idea. A coalition of activists launched a campaign against banks and other companies funding private prisons and immigrant detention centers called “Corporate Backers of Hate.” They closely tracked the movements of financial markets, even employing a Bloomberg Terminal to track capital flows, and then put pressure on investors by using civil disobedience tactics on bank executives. It worked: JPMorgan Chase and Wells Fargo announced they would be scaling back their relationships to the industry. But the key moment may have been when Alexandria Ocasio-Cortez declared she would hold congressional hearings. Even with the most dedicated cadre of activists, it falls to the state’s willingness to use its investigatory and regulatory powers.
And then there are the nightmarish possibilities of the credit regime: the totalizing public assessment and rating of all our characteristics. Feher points to the 2010 TED talk of technology writer Rachel Botsman, who envisions a “Facebook hyperpage where the various appreciations of friends, lovers, mentors, creditors, customers, and service providers [sit] side by side.” Thanks, but no thanks! Nor does Feher consider the system of social credit being implemented in China, which turns citizens into social pariahs if they fall under a certain rating. These systems are dystopian.
The young Marx saw a world where human potential was swallowed by the machine of capitalism, where the central human capacity—to produce our world—was turned into a mere cog. With the eight-hour work day, vacations, and weekends, the labor movement gradually clawed spaces of human freedom away from the needs of capital. We should hope that people will no longer have to sacrifice their lives and bodies to produce an alienated world that further alienates them.
But the subjection of every person to financialization, the market leveraging of every character trait, is not freedom—it’s an incursion of the metabolic process of economy into our very souls. We should be free from, and not contributing to, the constant rating and evaluation that enables the creation of new capital markets. If neoliberal reformers sought to protect markets from democratic politics, the strategy of the left now should conversely focus on protecting people from the whims of those markets. Feher’s vision is indeed grand and speculative, but I am now more interested in proposals to arrest the hegemony of finance through regulation. How will we begin to tame the booms and busts of capitalism to prevent mass unemployment and ruination? How will we bail out the hopelessly indebted?
Finally, there’s the problem of the digital crapscape: social media has shown us what speculative mania looks like extended to every aspect of life. Why not seek to be governed less by hype and panic, rather than accepting the rhythms imposed by Silicon Valley Technology? Feher’s proposed slogan is “another speculation is possible!”, but I think there’s still good reason to prefer John Maynard Keynes’s “euthanasia of the rentier.”
Nightmares of the Credit Regime | John Ganz