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Debt: What It Is and Why We Fight It

David Graeber, Mike Konczal, Sarah Jaffe and Brian Kalkbrenner discuss debt--what it is, why we're drowning in it, why it's a political issue. Moderated by Astra Taylor.

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Taylor: So there were a few questions that were directed at you, and then there’s the question of professorial authority to student debt and solidarity with students, and I feel like that’s an interesting thing to think about. 

Kalkbrenner: I’ll just say quickly that that’s a criticism that’s been leveled at us before. One of the professors involved with the campaign, there was a call from—I believe it was the Chronicle of Higher Education—a columnist called for a gag order on him, which was great publicity for us. I think I would say this: We’re not encouraging students to default, and we’re not encouraging debtors to default either; we’re encouraging debtors to take action. The pledge calls for people to refuse payment after a million people have signed the pledge. When a million people sign that pledge, the landscape is going to be radically different. So we need to think in terms of what it’ll look like, not what it looks like now. 

Konczal: The thing about a debtor strike, especially a student loan strike, is that if you compare it to the logic of a factory strike—why does a factory strike work? It’s because the capitalist, the owner of the factory, wants the factory to be running. The first day he shows up and no one’s producing anything, he’s really upset. And then it’s a contest to see who can hold out the longest for what favorable terms. 

The first day with a debt strike: Well, credit cards are the easiest things. If you miss a credit card payment, fees go up, your rates get jacked up, the owner of the debt is actually happy. It’s a long story but it’s pretty obvious: He can just jack up the amount you owe to him at that point. The same is true about student loans, like the story that Astra opened with. At the beginning of the strike, no one’s mad. The capitalist, who’s essentially the rentier in this case, is not upset about it; they’re happy about it. It goes with what David is saying—are we really in a capitalist society at this point with all this kind of stuff? Or is it more like a feudal society, where the idea of the debts growing is actually very favorable to an ownership class? That’s actually true of mortgage debt, too. 

The other thing is about who’s on the other side—it’s the government; it’s us. We backstop most of the student debt. Why is that problematic? Well, there are things that social democrats like about having the government do things—it has a long time frame; it can print money; it has coercive abilities and compulsion. The flipside of that is that when the government uses those powers to become your debt collector, it’s incredibly repressive. They will find you wherever you go. They can take money out of your old age pension. They ultimately have no timeframe and no horizons, so they can wait you out. Whereas a normal credit card company would try to get your money and try to get you out the door, the government has an infinite timeframe for the person’s collection. So it’s a much more vicious type of debt collection. That’s one of the reasons why breaking the student loan models we have right now has to be one of the highest priorities for us. 

Graeber: I think that we have to think of the system in a global context, absolutely, and we haven’t been emphasizing that here but I think all of us are well aware of that. We have this paradoxical situation, where you have what some refer to as debt imperialism. Well there’s an old joke: If you owe a bank a hundred thousand dollars, the bank owns you; if you owe a bank a hundred million dollars, you own the bank. It’s sort of the same thing: If Mozambique owes money to the US, Mozambique is in trouble. If the US owes money to Japan, Japan’s in trouble. It really depends on who’s got the guns. I’ve actually traced it out—you can look at the increase of the US deficit, the increase of the proportion of it that’s held abroad, and the increase in US military spending. It’s exactly the same curve. So basically what’s happening is that foreigners are paying for the US military that sits on top of them by making loans that are never paid, and just rolled over at a loss, and through Treasury bonds which act like gold and replace gold as the reserve currency of the world banking system, mainly spearheaded first by West Germany, when they were occupied by the US Then Japan, Korea, the Gulf States. Japan, China, even countries like Brazil are getting in on the game. (Of course it’s complicated. China seems to have a long-term strategy to hollow out the US and turn it into a military enforcer for East Asian capital.) We have this curious system whereby the US has this gigantic empire, which we can’t call an empire, the places that we occupy are sending us money, which we can’t call tribute so we call it a loan. And somehow we’re supposed to think this is just a problem with the balance of trade, that these guys are just sending us more stuff than we’re sending them, and, “It’s a real problem, isn’t it? We need to really do something about that!” It has nothing to do with the fact that we have this gigantic army sitting on top of them. If you suggest ways that it might, you’re a wing nut. We need to really make those connections—the whole money system has been linked to military systems for at least since the foundation of the Bank of England in 1694 and really much further back. That’s one of the things that an analysis of capitalism hasn’t really adequately addressed, how all those things are interlocked. I think that system is in crisis right now—that link between the military, what they call seigniorage, which is the term they make up for the economic advantage you get for being the guy who decides what money is. Which is essentially one of the big bases of American global power. It always seems to accrue to the guy with the biggest army. There is a crisis of that. We tried to pass off the crisis of the ’70s onto the third world. I think they fought back relatively successfully—the IMF has been kicked out, has come home. What we’re really witnessing, I think, in all of these social movements—and this is really a cheap cartoon version—is the struggle over the dissolution of the American empire and what’s going to replace it. I think we have reason to be optimistic. Because look at Europe! They lost their colonial empire; it’s not like the rich grabbed all the cookies. They ended up with health care and social security and welfare state. 

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