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(en) Irish Anarchist Review #7 - Capital’s Shadow - the left's analysis of debt by Paul Bowman

Date Mon, 06 May 2013 16:07:09 +0300


A century ago this year Dublin was seized by the great social upheaval of the Lockout. As today organised labour was in the process of being crushed under the combined forces of the bosses and the state. Yet so many things have changed in the intervening hundred years. For a start, more free meals are being served out daily in Dublin 2013 to workers faced with hardship, than at the height of the Lockout. ---- But then of course Dublin is many times larger today than then. But another of the great differences is that hardship today occurs in a society not only unrecognisable from the eyes of 1913 in material terms - the cars, smartphones, iPads, etc - but also in terms of social relationships. Today hardship for workers, locally, nationally and internationally, means being faced not only with unemployment and empty pockets, but also by debt.

It’s not that debt is a new thing. In many way it’s as old as civilisation. But if the locked-out workers of 1913 struggled to feed themselves and their families and falling behind on the rent meant the threat of eviction, yet of negative equity, mortgage arrears, car loans and credit card bills they knew nothing. No finance companies a hundred years ago seriously considered making an industry out of lending substantial sums of money to workers. For sure the pawn shops and loan-sharks (that are with us still) were an important part of working class life at the time, but the idea of lending a sum of money equal to 10, 15 or 20 years of wages to an ordinary working man or woman was unimaginable.

Today the talk from the politicians and newspaper editorials justifying austerity and social destruction are legitimised not by the sovereignty of some foreign crown, but by appeal to the authority of “The Debt”. Here debt is raised up from being a condition of individual impecuniosity to the status of a social actor, practically personified as the new sovereign power of capitalism in the austerity age.

Debt and the Crisis
It has become a commonplace to blame the onset of the crisis on the now infamous subprime mortgages. Or in other words, the creation of “bad” debt in the US housing market, particularly in the period of the “jobless recovery” between 2001 and the onset of the financial crash in the Summer of 2007. Since then, in a European context, the subsequent banking crisis led to the bank bailouts, nationalising the bad debts of the banks, transferring them from the private, supposedly risk-taking investors onto the shoulders of the populace at large. The resulting crisis within the Eurozone them became labelled as a “Sovereign debt crisis”. But whichever of the various conflicting explanations of how this process unfolded, and who is and is not to blame, the common thread is that “the Debt” has become synonymous with “the Crisis”. Unsurprisingly then, the question of the debt, whether it should be “honoured”, negotiated down or repudiated entirely somehow, is a key dividing line in political debate today, both in Ireland and across Europe. In that case, it’s important for us to look at what exactly we mean by “the Debt” itself.

Three Levels of Debt
When we talk about debt we need to distinguish three levels. The “micro” level of personal debt. The “macro” level of national or “sovereign” debt. And, last but not least, the “super macro” level of international debt. Of course all three are intimately interrelated, and in the case of the last two, their components are subsumed into the same national accounts. But distinguishing between them is important when creating an account of origins and causes, as we will see further on.
Personal debt is the issuance of financial credit to households and individuals. Whether for consumption (credit cards) or loans for consumer durables (cars) or domestic property (homes). In most cases the same financial channels can be used either for simple reproduction of self and family, or for acquiring materials, tools or property for self-employed or sole trader enterprise (taxis, investment properties, etc). But the debt remains personal rather than the liability of some incorporated trading identity of a business or firm. Given the distribution of would-be entrepreneurs versus wage earners and the strong incentives to incorporate even the smallest of businesses (avoidance of personal liability, VAT and tax efficiency, insurance and legal requirements) the vast bulk of personal debt is for personal consumption and self-reproduction, in the broad sense including families.

The proliferation of personal debt is actually a relatively recent phenomenon. The general expansion of “Hire Purchase” and later credit cards, did not really take off until the 1970s. Since then we have seen drives in nearly all developed countries to get workers to buy their own houses (through the virtually ending of post-war social housing), get consumer loans for cars, household durables, and run up credit card bills on everyday consumption items.

Some commentators have even talked of an emerging pattern of “privatised Keynesianism”. The idea being since the death of Keynesianism in the 1970s and the failure of real wages to rise with productivity since, the resulting gap in aggregate demand has been filled, not with government spending, as in classical Keynesianism, but by credit-fuelled private household consumer spending. Most of this private household debt being anchored around the property value of the family home itself. The difference between the deficit spending of the state and that of private households being that in a credit crisis situation, the state can use its central bank to monetise or inflate away state debts, whereas households have no such power, thus any economy based on their ever-expanding consumption is then trapped in long-term depression when the credit fuelling that consumption collapses along with the house prices that underpinned it. In our current situation it is clear that the end result of this process is that the debt linked to domestic housing remains the central contradiction in Irish economic life.

Although there is not the space to treat this properly here, the other potential debt or surplus holding bodies at the micro level are individual private firms or corporations. What is worth mentioning in our current context of debt-depression and general dearth at the household level (apart from the 1% who are doing nicely as usual), is that the net balance of the corporate sector as a whole is massively in surplus. Mainly because the corporations and their finance providers do not see any profitable opportunities for investing in increased production when the economy is depressed.

National debt is conceptually the debt accumulated from any deficit in the difference between the income and expenditure of the state. This is in contrast to the international debt, which is conceptually the state debt run up as a result of a trade imbalance between its imports and exports to the rest of the world. Although we distinguish these two forms of debt conceptually, in actual fact the net accumulated debt or surplus of the state exists in one balance account, for practical purposes. That is, a deficit in domestic income and expenditure can be offset by a trade surplus, and vice versa. But it is still important not to confuse the two for causative purposes. For example, trying to eliminate a state debt originating mostly from a trade deficit by slashing public spending on health and education, may well fail.

Right-wing politicians and economists often act as if any national debt is necessarily due only to a mismatch in domestic tax and spend policy. They also tend to act as if the current deficit is always a “structural” deficit. The distinction between the two, is that the idea of a structural deficit is supposed to correct for the so-called economic cycle of periods of growth, punctuated by regular “corrective” recessions. The idea being that recessions naturally produce temporary changes in the national accounts, as people are laid off from work, stop paying taxes and start claiming dole, so income goes down and expenditure goes up. This and other effects of what’s called “automatic stabilisers”, are to be balanced out by comparing the deficit or surplus during periods of growth and recession and averaging them out. A structural deficit exists only if there is an overall deficit when averaged over the whole cycle. Which sounds sensible and fine, except for the minor detail that there is no agreed standard way to do this calculation. The end result is that the “deficit hawks” will argue during any period of recession that the current annual deficit is really a structural deficit, justifying savage cuts in the teeth of depression.

If the more social democratic or left orientated commentators are generally opposed to this kind of argument that confuses current and structural deficits, they can often be curiously less vocal on the need to distinguish between domestic and international sources of debt. This despite them often repeating many of the slogans or ideas of the anti- or alter-globalisation movements of the 1990s and 2000s. This may be due to a bias towards looking at the economic problems of the local state as being due entirely to bad or rapacious domestic political policy, which can easily be rectified by electing a sufficiently left-wing alternative. The problems of analysing and understanding global trade imbalances and world market crises are perhaps too intimidating for those more used to framing their anti-capitalist critique in a more parochial frame. Besides Marx didn’t live long enough to write those volumes he planned on international trade and the world market and crisis. And for those who like to claim that Marxism is a complete “science”, such problematic topics are better glossed over, rather than drawing attention to a gaping hole in the dogma.

Theorising debt
The most common theorisation of debt is cast in the frame of a “good cop, bad cop” model of capital. The “good capital” is that invested in firms that produce goods and services that consumers and other firms can use. The “bad capital” then, also known as “speculators” and a host of other names, emphasising their supposedly parasitic nature, is that of financial companies who make profit through financial dealings that do not directly produce “real- world” goods and services.

In this frame, debt is seen as a lack - an absence of “real wealth” - or even as a “fiction”. There is a huge variety of theories in this basic frame, ranging from the obviously paranoid or nutty, to seemingly sober and credible analyses, both right-wing, liberal and left-wing. Here we will only concern ourselves with the left-wing variants. And rather than give an exhaustive overview of the variant forms in this sub-field, we will content ourselves with picking one examplar which will serve to illustrate the limitations of the field as a whole.

For our purposes, John Bellamy Foster and Fred Magdoff’s 2009 book, “The Great Financial Crises: Causes and Consequences”, will serve adequately. Foster and Magdoff’s story is in fact one they have inherited from the founders of the Monthly Review (quite literally in Magdoff’s case, being the son of Harry Magdoff who co-authored the original MR narrative with Paul Sweezy amongst others).

In outline it says that capitalism has progressed from the competitive stage that Marx analysed in the 19th century, to a stage of Monopoly Capitalism, where giant firms and conglomerates make use of their host state power to overcome the problems of overproduction through Keynesianism at home and policies of imperialism abroad.

Since the end of the late 1960s when the theory was originally crystallised, it has had to undergo certain modifications due to the crisis of Keynesianism in the 1970s and the subsequent onset of Neo-liberalism. Still, the claim is that the passage from capitalism’s classically competitive phase to that of monopoly capital represents the end of capitalism’s dynamic, productive period, and the onset of the period of decline where the social relations of capitalism become “fetters on the forces of production” as in the classical or orthodox interpretation of Marx’s 1859 Preface.

The thesis is that capitalism has been in decline since the Great Depression of the 1930s, only interrupted by the effects of WW2 and the subsequent twenty year boom, as a consequence of the destruction of fixed capital in the war providing opportunities for rebuilding, and a Keynesian and imperialist policy designed to hold off the problems of overproduction long enough to prevent a Soviet victory in the Cold War.

Foster and Magdoff provide multiple economic statistics, tables and graphs to show that real wage income and real profit rates (in the US) have stagnated since the end of the post-war boom and the crisis of the 1970s. For them the rapid increase in financialisation since the 1970s and especially since the financial deregulation of the neoliberal era, is just the construction of a decadent speculative “fictional capital” cancer on the stagnating underlying “real” economy.

As in so many other Marxist narratives in the “orthodox” tradition, the underlying cause of everything, the “ghost in the machine” is the “Tendency of the Rate of Profit to Fall” (TRPF), a supposedly objective law of capitalist dynamics that determines development irrespective of class struggle or other historical contingencies of war or redistribution of economic and political power across the global theatre.

What is characteristic in this schema is its isolationism. Effectively the impact of international trade, the global market and economic relations beyond the national borders of the USA are treated as at best marginal, at worst as irrelevant. The development of the US economy, which as the largest and most developed capitalist economy in the world, is assumed to be a viable stand-in for the development of global capitalism as a whole, is seen to be governed primarily by the effects of domestic economic policy.

A peculiar side-effect of this position is the effective disconnection between US domestic economic policy and US foreign policy. The former is to be critiqued, “economically”, through the prism of the TRPF, according to the Marxist “science” of capitalist dynamics, understood to operate objectively. The latter is to be critiqued morally or politically. Ironically, for a generation originally blooded in the struggle against the Vietnam war, the economic analysis of the “decline” of US capitalism of today’s neo-orthodox Marxists has nothing to say of the effect of that war, as it is compartmentalised as a political rather than economic event.

Here the isolationism of the neo-orthodox narrative of US economic decline due to the TRPF reflects an underlying assumption of the disconnectedness of the political and economic spheres, except insofar as disturbances in the former are symptomatic of underlying issues in the latter, in the classical base/ superstructure model of orthodox Marxism.

The Securitised Worker
Before moving on to alternative theorisations of the debt question we want to take a brief interlude to look again at the increasing role of personal debt in the lives of workers already touched on above. We already mentioned the notion of “privatised Keynesianism”, the idea that with the transition to neoliberalism, the burden of economic stimulus via deficit spending moved from the state onto the shoulders of private households, with the associated shift of housing from social housing and the private and public rental sector, into home ownership. For much of the neoliberal era it appeared that the developed world was moving from the industrial age not so much into the digital age as into the plastic age, the age of the “plastic fantastic” of the credit card, our “flexible friend”.

This proliferation of consumer credit was underpinned by the financial revolution in derivatives explored elsewhere and securitisation. Securitisation is really just an extension of the logic that transformed a large portion of company debt into corporate bonds in the 1970s. The idea is to transform a contractual debt obligation between two fixed parties, into a generalised obligation, that can be bought and sold, like any financial security - hence the name - at the creditor end. To standardise the performance of securitised debt, so as to smooth away the different risks of individual debtors defaulting, loans are pooled and tranched according to some fairly complicated, and as it turns out, not entirely reliable, maths.

But the details don’t matter so much as the overall picture of how securitisation helped fuel the consumer credit boom, by turning private household debts, whether for mortgages, car loans, student loans, etc, into a tradable financial asset class. What matters is to look closely at what exactly is being securitised. In line with the fetishism of commodities, we routinely talk of the objects as being the subject of the loan - the house is mortgaged, the car is on hire purchase, and so on. But in fact, in every case, the real “object” of securitisation is not the commodity or service (in the case of a university education, for e.g.) being purchased, but the person to whom the debt is being attached. It is the mortgagee not the house that is mortgaged. Bricks and mortar never owed anybody anything. From the perspective of the expansion of consumer credit that accompanied its rise, we could call neoliberalism the age of the Securitised Worker, with the associated process of the becoming-asset of labour.

Post-welfarism
The wider implications of this move from commodified to securitised labour are too many and various to fully explore here. But suffice it to say that prior to the 2007-8 crash, apostles of the new order dared to dream of the extension of the student loan idea to cover all aspects of social services previously provided by the Keynesian welfare state.

In this neoliberal utopia, the worker would become a kind of human derivative, able to trade options on her or his future earnings to pay for nursery, school, health and other services throughout their life, without ever troubling the state or public sector - which could then be fully privatised. Needless to say, this particular utopia has come crashing down with the epochal crisis of neoliberalism we are now plunged into. Indeed the very situation of many workers in the developed world being saddled with notional debts that bear no relation to real- world asset prices or current earning potential or ability to pay, is itself a major component of the debt-stagnation trap we are currently in.

But even if the neoliberal utopia of the post-welfare human derivative is a bust, the flipside is still evident in the austerity age. The new austerity strategy of extracting money from the population is in some ways a return to a very old one - the “we know where you live” domestic taxation of pre- industrial times, of hearth, chimney and window taxes. But despite its archaic resonances, this return to a “new feudalism” mode of taxation, also emerges from the derivative model. Derivatives have the function of disaggregating a particular income-generating object into its component parts of risks and performances, so as to be able to take a position on the desired facet without buying into the underlying whole package itself. With the increased flexibilisation of work under neoliberalism, the proliferation of precarious, self-employed or grey economy work, the incentive grows to isolate the ‘having income’ facet of living labour from the underlying process of earning it.

In this sense the strategy of the troika in attempting to extract money through new home-based taxes (including the privatisation of water and surcharges on electricity, as in Greece) is the dark side of the application of derivatives to living labour. An attempt that has reached a new apogee in the Cyprus crisis occurring at the time of writing, where the troika have attempted to dispense even with the potentially conflictual mediation of domestic taxes and seize the money directly from the accounts of Cypriot workers.

Naturally this mode of disintermediated appropriation raises its own contradictions. Whereas exploitation in the workplace via the struggle between bosses and workers can wear the disguise of a voluntary “market” relationship, the struggle between state and citizen over taxation dispenses with that voluntary appearance and manifests as a pure relation of force. The anonymous exploitative power of capital operating through the labour market becomes personified in the struggle between government and people, and the capitalist separation between the political and the economic is brought into question, and potentially into crisis.

Profit or Rent?
A number of these new developments have been taken up by the collection of post-autonomist theorists historically loosely grouped around the Paris- based Multitudes review and Toni Negri, including writers such as Carlo Vercellone, Christian Marazzi and Maurizio Lazarrato. One of the questions they raised was whether exploitation has escaped from the classically Marxist wage-labour form, extracted in the factory or workplace, and been replaced by a more generalised means of exploitation, spread somehow throughout the “social factory” as a whole. The common point of all these theories being the starting point originally posed by Negri back in the 1970s, of the supposed crisis of the classical law of value. The question is sometimes posed as “the becoming-rent of profit”

This phrase, is Carlo Vercellone’s, who has made this question of rent versus profit one of the centre- points of his analysis. In his analysis the becoming- rent of profit is a feature of a “cognitive capitalism” where the value-creating process can no longer be pinned down to a specific subsection of the worker’s life, in a particular place and time, but is spread throughout their whole waking life, and even dreams. There is a clear element of truth in this in the work of “creative” producers, whether writers of songs, novels, or obscure academic texts on social theory. For those of us who still like to leave our work in the office or workshop, though, the notion that this tendency has taken over the world of work as a whole, is less credible. And certainly the dormitory cities of the factory workers of Shenzen and the Pearl River Delta will not recognise their lives as being governed solely by “cognitive capitalism”, even if the iPads they manufacture end up in the hands of latte-sipping “cognitariat” creative workers in the West.

Christian Marazzi continues the cognitive capitalism theme with his notion of biofinance. Biofinance, is the idea that financial capitalism has taken over from industrial capitalism as the dominant mode of production. And that rather than extracting surplus value from the wage-labour of externally-directed labour in the workplace, it now extracts surplus value directly from the tendentially self-directed creative labour of the cognitariat, through the various mechanisms of consumer credit and debt. As a descriptive concept, biofinance is a seductive label for the developments we have been talking about, yet its analytical content is at best weak.

By contrast Maurizio Lazzarato, once a significant contributor to the cognitive capitalism research project, has, in his latest book, defected and now says “it seems to me that my friends in cognitive capitalism are mistaken when they make ‘knowledge’ the origin of valorization and exploitation [...] knowledge cannot provide the basis for the class struggle for either capital or the ‘governed’”. His alternative takes inspiration from Nietzsche and Deleuze and Guattari’s description of debt as power and Foucault’s idea of “making an enterprise of oneself”.

Yet ultimately, he too remains loyal to the overall problematic of the post-autonomists, re-asserting once more the crisis in the law of value and if anything, applying even more explicitly on the idea that “The financial and banking systems are at the center of a politics of destruction/creation in which economics and politics have become inextricable.”

Despite the unorthodox Marxian heresies of the post-autonomists over the question of value and the relative autonomy of the economic from the political, their contributions on the question of debt remain oddly mired in the same Euro- (or US-) centric isolationism of the TPRF-inspired “decline” orthodoxies of Foster and Magdoff and their ilk. The notoriously euro-centric perspective of the post- autonomists leaves little room for the role of globalisation in relocating production from the West to China and the rest of Asia and the southern emerging economies in Latin America and South Africa. The idea that the explosion of domestic consumer debt in the West was fuelled by the build-up of huge international trade debts between it and the emergent economies is simply ignored.

The irony here is that whereas the isolationism of the neo-orthodox stems from their assumption of an almost complete disconnection between politics and economics, in the post-autonomists, the opposite assumption - the total lack of such a separation - leads to the same result. Which brings into question how much either side are extracting their analyses from the facts of the current global economic situation, and how much they are simply extemporising from their pre-existing corpus of theory.

A 5000 year old moral quandary?
Nietzsche’s absurd inversion of the blood debt values in barbarian honour codes, that so inspires Lazzarato’s essay, is rightly poo-poohed in Graeber’s “Debt: The First 5,000 Years”. Together with his associated dismissal of the “primordial debt” theory of the French regulation school, a school that has had a strong influence on the Paris-exiled post-autonomists, like Vercellone and Lazzarato, Graeber’s book would be worth reading for that alone. In fact it contains much more than that, being a veritable treasure trove for those interested in broad sweep history and anthropological tales relevant to challenging the received ideas of our own time and culture about economic interaction, senses of obligation and debt.

Of course it is impossible to do justice to such a book in a short article such as this, but if we had to “pitch” it we might say, it’s an anarchist take on Polanyi and Arrighi. It’s the element of an Arrighi- style cyclical “theory of history” in Graeber’s nar- rative that has drawn much critical fire. Graeber posits an oscillation between two different forms of money - bullion and virtual/credit money - as an overarching pattern of history. There are clear parallels to Giovanni Arrighi’s idea of the oscillation between processes of commercialisation followed by financialisation, along with the “longue durée” of Braudel and the world systems theory schools. The justification for such “theories of history” is no more visible here than elsewhere.

Yet for our purposes here, it is less the cyclical theory of history that interests us, rather more the similarity and divergence with Polanyi’s “Great Transformation”. In that book Polanyi also proposes different modes of economic intercourse in pre- capitalist or “primitive” societies: redistribution and reciprocity. By contrast Graeber, proposes three modes: communism, reciprocity and hierarchical. However while Graeber’s splitting of what appears in Polanyi under redistribution, so as to distinguish between redistributive relations between classless societies or groupings, and those between hierarchically unequal or class-divided groups, is an advance on the original, his inclusion of relations of exchange in the same category as reciprocity is a major regression.

With Polanyi, the whole thrust of his schema is that exchange of the commercial market or capitalist type, is radically external to the economic relations that are compatible with the cohesion of economic and social relations within a single social dynamic.

By subsuming both reciprocity and exchange within the same category, Graeber commits a fundamental error that clouds his ability to diagnose exactly what has changed with the emergence of capitalism that has “broken” his posited cyclical progression of history. This is all the more ironic given that he provides in the book all the real-world examples of different social systems needed to explain the difference between the two.

The example he gives of the reciprocity system of the Nigerian Tiv people where each neighbour is careful never to entirely “balance out” the gifts previously given, for fear of giving the impression of wanting to terminate reciprocal relations, illus- trates this perfectly. The whole point of exchange is precisely to sever any ongoing relation of reciprocal obligation - hence why it is possible for the same people to practice both reciprocal gift giving amongst neighbours and community members and exchange buying and selling with strangers.

Despite the similarity of form, exchange is the inversion of reciprocity in content. This is best illustrated by the role of blood debt payment in barbarian honor code societies. Here payment is made not to prolong or recreate a pro-social or cooperative relationship, as in the gift-giving of the Tiv women, but to end the anti-social antagonistic relation of violent clan blood feuds.
With exchange the relation is inverted. With exchange it is the cooperative relation (of swapping goods) that finds closure by payment. It is the failure to close out the exchange with a payment that opens the debt relation - the anti-social relation of compulsion that instrumentalises rather than socially validates the subject.

It is the failure to distinguish this inversion that leaves Graeber struggling to find the means where- by the relations of obligation created by reciprocity become transformed into the relation of debt in exchange-dominated societies. By exchange- dominated societies we of course mean ones where living labour has been separated from the means of production and must sell its labour power as a commodity, as per the common Marxist-influenced socialist tradition.

Although the association with the act of severance of transacted “objects” - whether goods or people - is continually remarked in “Debt”, as well as the observation that obligations in reciprocal systems are interpersonal, the connected insight that capitalist debt severs that interpersonal bond and replaces it with a relation between the debtor and the impersonal force that is capital, notwithstanding that the latter be represented by the agency of a financial intermediary, be it bank, credit card or loan company, seems to be not fully grasped.

It is a point, however, that Hardt and Negri do grasp in their latest text, “Declaration”. In it they make it explicit that if we want to be rid of debt for good, then not only do we have to get rid of the rule of money, but the relations of impersonal debt to capital must be replaced with new interpersonal relationships of mutual obligation. They express this concept as the need to “invert the debt”.

“The refusal of debt aims to destroy the power of money and the bonds it creates and simultaneously to construct new bonds and new forms of debt. We become increasingly indebted to each other, linked not by financial bonds but by social bonds”

With the material that Graeber gives us, we can see this project of Hardt and Negri, for a ‘creative destruction’ of debt, as a return to a society of reciprocity rather than exchange. Once we have properly understood the gulf that separates the two.
Where Graeber is completely correct is in drawing our attention to the way that discussion over fundamental economic categories like debt are overcoded by moralistic discourses. Debt bad, credit good. And the book is full of stories and linguistic information on how those moral tales and baggage have become ingrained in our treatment of the subject.

But to a certain extent, the very title of his book, along with its subsequent activist programmatic transformation into “The Debt Resistors’ Operations Manual”, stills cedes an important point in the very choice of the word “debt” itself. Like all writers on the topic, Graeber accepts that debt is merely the reverse side of credit. But there is a fundamental asymmetry between these terms. To call for the end of the debt is not the same thing as calling for the end of credit. By wanting the end of the (bad) debt, without being against the (good) credit, we are ultimately trying to have our cake and eat it, or falling into the path of least resistance in calling merely for the temporary salve of a short-term reform - i.e. the writing off of currently existing debt in a jubilee.

By calling for an end to credit - the origin of debt - we are calling, inescapably, for the end of capital. Because capital and credit are not two separate “substances”. In fact, although both are measured in money, neither is a “thing” at all, rather they are social relationships, the relationship of command over living labour. If credit is the carrot, command that promises reward for compliance, then debt is the stick, command that threatens punishment for non-compliance. Credit is the light of capital and debt is its shadow.

But if we are calling for an end to credit and capital, we need to understand not only their historically specific form and contradictions, but also the general social function they fulfill in their particular way, so we have some idea what we will replace them with. In that light, one of the most striking similarities in the diverse left theorisations of debt we have looked at above is the absence of the term most commonly associated with credit in conventional economic discourse - risk.

Risk is another category that does not appear either in Graeber, nor in the differing Marxisms whether the orthodoxies of Foster, Magdoff and co, or the heresies of Negri and his comrades. The absence of risk as a category in Marxism, adds weight to the contention of Michael Heinrich that in fact a full theorisation of credit does not actually appear in Capital, despite Engels attempts to make it look so. Simply put, it is not possible to theorise credit without an analysis of the category of risk, which is currently almost entirely lacking in the existing economic analyses of the left.

Here we need to make note of Jacobin magazine editor Mike Beggs’ critique of Graeber’s book from an economist’s perspective. Beggs notes correctly that it is impossible to talk about debt without addressing the nature of money, something which Graeber accepts from the outset. However Graeber displays a basic lack of knowledge of the different existing monetary theories, developing a posited confrontation in the book between commodity or metallic money and “fiat” or state-created and credit money, which he identifies with chartalism. As Beggs notes, Graeber’s assertion that the dominant economic theory of money promotes the former at the expense of the latter is far from the truth. In fact most contemporary economists accept modern money as state-created fiat money, expanded by bank created credit money. The big economic debate between economists is over what determines the value of such money, and the extent to which governments actually control its supply.

Roughly speaking this is an unequal three way split between a dominant quantity theory position, a sizeable minority of neo-Keynesian chartalists and a tiny marginal group of post-Keynesian circuitists or “endogenous money” theorists. Without going into the details (and why the first 2 groups are wrong), which would take an article in itself, Graeber’s understanding of chartalism is simply incorrect from an economic point of view, which is symptomatic of his general approach of throwing the analytical baby out with the ideological bathwater of bourgeois economics. Unless we accept the millenarian visions of the likes of the Communization tendency who believe that all scarcity is an artificial imposition of capitalist malevolence and the need for managing scarce resources (a.k.a. the environment) will disappear, as if by magic, come that glorious day, then economic analysis will remain an integral requirement for the movement of self-emancipation of the class. And an analysis of the genuine dynamics of money in capitalism will also be a precondition not only for its critique, but also its overcoming and abolition.

So, in summary, at the end of our inquiry into left- wing theorisations of debt, we find ourselves in a very unsatisfactory, but perhaps not all that surprising, state of affairs. It becomes obvious that left-wing analysis of debt is lacking certain basic theoretical foundations including the real nature of money, not at the level of abstraction of Marx’s value form analysis of chapter 1 of Capital I, nor yet at that developed in volume III, but one in the more concrete context of a full theory of credit and risk and international trade and the global market. On the plus side, given the current incoherence and ineffectiveness of left-wing responses to the crisis, it would be even more worrying to examine our collective analytical framework and find no obvious gaps. The need for a new research project then, that analyses not only value, but value at risk over time, and through that the role of credit, risk and the world market in the current global regime of accumulation, lies clearly before us. But alongside that analytical project, and inextricably linked to it, is the need to engage in the struggle against debt, one of most significant fronts in the class struggle today.

WORDS: Paul Bowman
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