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

Annie McClanahan anniejmcclanahan at gmail.com
Sat Nov 24 11:42:10 EST 2012

Hi all--

Alas you're right, Brian, that the Pledge has attracted a lot less
attention than the Jubilee; the Jubilee has marketed itself better and is
also a helluva lot more palatable ideologically (hence it has already
attracted support and coverage from all sorts of strange bedfellows). The
organizers themselves have emphasized that the RJ is merely the first step
in a bigger strategy; I remain interested in what happens but my
expectations are sadly pretty low.

What might be a more interesting question is whether all these barriers to
solidarity, organizing, etc.--whether those barriers are moral anxiety,
apathy, fear, complicity, whatever--are really going to matter in the face
of a looming structural crisis. Let's just take student debt: as of 2011,
only 40% of outstanding student debt was in active repayment; the rest was
in forbearance, deferment, or default. Overall, nearly 6 million student
borrowers are in default, which is up 35% since 2006. (And the modest
improvement in the economy/unemployment since 2009 notwithstanding, the
default rate continues to climb: the class of 2008's default rate in 2010
was 7%; by 2011, it had doubled to 14%.) All of which is to say: there's a
mass default *already happening*, it's just happening as a structural
phenomenon and not yet as an organized movement.

I think this suggests two things, one macro and one more micro. On the
macro level, it suggests the importance of thinking structurally and
systemically. I like a lot about Duncan's argument (I haven't read the book
yet, but did read the interview and am generally familiar w/ his work), and
particularly his emphasis on the power of the state in the current
capitalist conjuncture. (Tho I've no idea why on earth he'd see this as a
transition from capitalism into some *new* form, rather than just part of a
cyclical transformation *within* wherein the state plays a different role
depending on the economic contradictions in play...) But the one thing I
think it's important to remember is that credit in the current system plays
the role of crisis manager (i.e. securitized credit and the whole apparatus
of financialization was deployed to resolve intractable crises in
industrial profitability) *but can only play that role for so long*. That
is, a "creditist" economy can't really function without running into some
really fatal structural contradictions--and fast. That's why Marx described
the ideologues of credit as having a dual role--"both swindler and
prophet": precisely by speeding up and intensifying the production
process—by which it may prevent, temporarily, the outbreak of a crisis in
it—fictitious capital only deepens the contradictions it holds at bay, thus
foretelling a worse crisis to come. (While I'm being an unabashed
Marxophile, we might also recall that the other words Marx used to describe
"fictitious capital" besides *fictiv* were *schein* [sham] and *illusorich*
[illusory]. That is, the new value that appears to be produced by
"fictitious" forms of investment is not a fiction in the literary sense, i.e.
it's not merely something which is real so long as we all agree to believe
in it, but instead is a total illusion or sham--a false form of value that
can only mask it's imaginary quality for a while.) <#13b2f70c80c8c7a9__ftn1>

So that's the macro point. The micro point might be something like "Given
this rate of default, and given how many people are affected by the rising
wave of indebtedness is it really the case that only the university (and
its modes of thinking and its models of analysis and its particular set of
actors and its models for affective affiliation) can provide us with a way
to see and understand this?" Might it not be the case that we have
knowledge and understanding in abundance, as the financialization of
everyday life turns us all into organic intellectuals of a kind? In other
words, I guess I'm saying that the current crisis in capitalism is
happening without us having to do much to make it happen (i.e. it's a s
tructural/systemic crisis) but it's also a moment in which capital tends
not to hide its face (i.e.  we actually do already understand this system,
in much of its complexity, because it doesn't bother much anymore to make
itself invisible--or to hide, for instance, it's reliance on the state,
whether by "state" we mean the federal reserve or the cops who will come to
evict you if you don't pay your mortgage to the bank).
Anyway, just some thoughts. Thanks for the conversation...

On Thu, Nov 22, 2012 at 6:40 PM, Brian Holmes
<bhcontinentaldrift at gmail.com>wrote:

> 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 capital."
> 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
> _______________________________________________
> empyre forum
> empyre at lists.cofa.unsw.edu.au
> http://www.subtle.net/empyre
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