The Argentinean economist Guillermo Sullings at the Deutsche Welle Global Media Forum in June this year, explained that “…it is clear that capitalism is approaching a dead end. That capitalism, which sometime ago appeared to reformulate its distributive equation encouraging Keynesian policies and the welfare state, has revived its true predatory nature from the 80s onwards through Neo-liberalism. Multinationals engaged in moving the various stages of production to countries with low labour costs and high flexibility in the labour market. The distribution of income in favour of corporate profits and at the expense of wages went on increasing the gap, and the way that was found to maintain the levels of consumption by the population was through the expansion of credit. This led to growing debt for people, companies and governments, with the consequent wealth increase in the Banking sector.”
This expansion of credit has created the most efficient instrument of social control ever seen in human history. Students loans commit graduates to repaying them as a priority, as soon as they start working and mortgages create panic at the time of “negative equity”, when the market value of a property becomes lower than the mortgage taken to buy it. If the Englishman’s house is his castle, the castle is nowadays owned by the Bank. Bad debt is sold cheaply to debt recovering agencies that pursue people through courts to force them to pay even if they cannot. The short term small loans offered by unscrupulous lenders have outrageous interest rates and credit cards are now the “normal” way to buy. No business appears to be able to start without a Bank loan, and if it is already established, the pressure to expand is also a function of obtaining another bank loan.
Activists in all kinds of campaigns complain about people’s “apathy”. How is it possible that confronted with the level of inequality, austerity, destruction of the right to good healthcare, housing and education, how is it possible that people are not on the streets, in mass, reclaiming their services and their dignity? There may be many reasons, effective propaganda and a corporate media that repeat ad nauseam the politicians mantra “there is no alternative” are obviously some factors. But debt, whether in the shape of a mortgage, or a student loan, or a huge credit card balance or a business loan, is an insidious force that undermines a person’s capacity to feel free. Free to leave an exploitative job, free to demand a change in the economic system – if there is a risk to the bank that owns their house, and free to decide the future of their business.
Money is created as debt and for that to happen there must be some kind of “collateral”, something a person will be in fear of losing. Debt is fear. No matter how outraged a person may be about austerity for the less well off and obscene wealth for the 1%, fear does things to the thinking process. It leads to justifying non-action with “reasonable” arguments. “No time”, “the system is not so bad after all”, “socialism has failed anyway”, “I trust this or that politician to get us out of this mess”, “I have a mortgage, cannot rock the boat!”, and so on. The priority moves from living a meaningful life to being able to repay one’s debts; similar to the impoverished economies of countries that cannot concentrate on development because they are trapped in the vicious circle of servicing debt in order to earn the right to a new loan. In this way money flows from the poor to the rich countries, and inequality grows everywhere.
Is it possible to live without this level, and type of ruthless debt? If mortgages are organised by mutuals, as they used to be, if healthcare, education, housing is payed for by just taxes – our social contract, if accumulation and speculation are deprived or their perverse incentives, if businesses grow their own capital and stick to it, with participation of the workforce, or are built from their onset as cooperatives, we could see a real sense of liberation. Whether we realise or not debt is a form of slavery, established to make sure that only very few, those who have “nothing to lose” would dare to challenge the system.
