[-empyre-] Debt Culture--types of debt

Brian Holmes bhcontinentaldrift at gmail.com
Fri Nov 23 11:40:21 EST 2012

On 11/21/2012 03:14 PM, Annie McClanahan wrote:
> Because the state is so incredibly powerful, any student debt mass
> default/debt strike movement would have to set up really powerful
> structures for mutual aid. That's why I find the Student Debtor's Pledge
> (http://www.occupystudentdebtcampaign.org/student-pledge/) in which
> signers pledge to default once 1 million others have similarly promised
> a much more powerful organizing model than the Rolling Jubilee (which
> uses a philanthropic system to collectively buy back non-secured loans,
> anonymously, but in no way threatens the debt system as a whole

I agree with the above, signed the plege almost a year ago (as adjunct 
faculty) and began researching about student debt, writing about it and 
talking about it publicly whenever possible. However, the sobering thing 
is that to date, only some 4,500 debtors have signed that pledge, and 
only some 600 faculty. Like Annie, I doubt the moral argument is the 
decisive one that stops people from taking action. The stronger forces 
appear to be fear of the legal system and simple apathy, or the sense 
that one has no agency whatsoever to effect change. Perhaps a third 
force is self-interest, since the expansion of the university system 
from the 1970s up to 2008 was predicated (without anybody ever talking 
about it) on each university's capacity to draw in the revenue stream of 
student debt. And it's still going on.

How can crippling debt become an issue on campus, given that the 
students have yet to be affected by it, while the faculty are actually 
paid with student debt? How to break the status quo of isolation and 
corruption? What can we do to transform the basis of social solidarity 
that Annie talks about in her post?

One of the things that always interested me was how the rebellious 
students of the 1960s were reintegrated to the capitalist system after a 
decade of deep disaffection. In the late 1990s, the rhetorical 
mechanisms of this reintegration were demonstrated in books like "The 
Conquest of Cool" by Thomas Frank or (with a more extensive sociological 
apparatus) "The New Spirit of Capitalism" by Boltanski and Chiapello. 
The basic idea was that changes in marketing and management styles had 
put to rest the alienation experienced by young cadres in the 1960s and 
70s, to the point where we were living in a new kind of networked dream 
world (a new ideology). Demonstrating this in detail seemed like a 
breakthrough at the time. Yet the magnitude of the current problem makes 
that work appear totally inadequate.

In fact the crisis of the 1970s, and the threat it posed to capitalism 
as a whole, was overcome through a tremendous expansion of middle-class 
status, representing not merely an ideological but also an economic 
cooptation of those who were needed to manage the major social 
transformations that we call globalization. From the 70s onwards the 
core functions of governance became Trilateral (US-Western Europe-Japan) 
and a transnational capitalist class gradually emerged (as described by 
Leslie Sklair or William Robinson). The 1990s and especially the 2000s 
were marked by the urban phenomenon of megagentrification, or the 
construction of giant new metropolitan centers to serve this new class, 
whether in Asia, Eastern Europe, Latin America, or in the older core 
regions. Today, the Trilateral envelope has been ruptured. State, 
financial, corporate and millitary actors now have to contend with 
sovereign forces across the entire planet. Members of the global middle 
classes (that's us) use computer networks to contact peers across the 
world, to organize business, pleasure, or occasionally, revolt. But how 
did this occur? How did we get here?

Right now I'm reading "The New Depression" by Richard Duncan, who gives 
a surprising answer (you can also read a long interview with him, posted 
for free at newleftreview.org). According to Duncan, we got here by 
shifting from capitalism to creditism. In 1968, Johnson revoked the law 
requiring the US to back its currency with 25% reserves in gold. The 
Bretton-Woods system then collapsed in 1971, and not only did the 
world's currencies begin to float against each other, but also the US 
began issuing increasing amounts of paper and electronic dollars. 
Meanwhile we began importing far more than we exported. Corporations in 
the producer countries, especially Japan and later China, ended up with 
the excess dollars. The governments of those countries then printed more 
of their own money, bought up the dollars, and invested them in US bonds 
(including huge amounts of government-backed housing bonds). All this 
sovereign money creation served as the basis for the issuance by private 
banks of much larger amounts of credit -- and the capitalist system 
expanded wildly on the basis of what Marx would have called "fictitious 

The point, however, is that the fiction was effective. The endless 
factories and entirely new cities that now cover the coastline of China 
are there to prove it -- and on a smaller scale, you might also have a 
look at the shiny new physical plant and complex corporate and 
international partnerships of all the more successful universities. The 
global middle classes were created and integrated to the neoliberal 
version of capitalism by means of a credit bubble that has expanded 
continuously since the 1970s.

Since 2007, the Federal Reserve has isued many trillions more dollars 
worth of this imaginary but effective money, most recently via the QE3 
program that is designed to pump out $40 billion *per month* for an 
indefinite period. This is being used to go on bailing out the banks and 
sovereign investors by purchasing toxic assets, especially those based 
on mortgages, which account for some 40% of total US debt. The immediate 
effect of quantitative easing is to reflate stock and commodity prices 
(incidentally sending food prices through the roof). Over the middle 
term, the aim appears to be to bring everything back to the status quo 
ante. The current economic model - from wage stagnation and predatory 
lending to global just-in-time production and devastating climate change 
- is being propped up by the Fed with help from the EU, Japan and China. 
It is as though they believed a new expansion of capitalism were 
possible, that all the currently disaffected people could be brought 
back into the system once again, and that we could end up with a fully 
integrated global governance: the scenario of the 1980s and 90s, 
reloaded at a higher power.

The other, undiscussed but in my view far more likely scenario, is one 
of major breakdowns in international economic relations, resulting in 
conflicts exacerbated by climate change. Something like a variation on 
WWII, a rolling planetary civil war whose first act has been the Arab 
Spring - arguably sparked by the historic rise in food prices in 2010.

How to make student debt a focus of struggle on college campuses? How to 
challenge the reckless pursuit of creditism on the global scale? The 
questions are linked. Because of the orders of complexity involved, only 
the university can produce a counter-discourse to the neoliberal 
creditism that currently governs our planetary society. But we know how 
the university works: people just get lost in all that complexity. Only 
a social movement of students, grads, adjuncts and (with more 
difficulty) professors, acting in solidarity with the other debtors in 
our societies, can give such a counter-discourse the force of acts, the 
real power to refuse the status quo.

let's do it, Brian

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