14 November 2012

Thoughts on Debt Forgiveness

The Strike Debt initiative - which I posted on here yesterday - for playing secondary markets in order to promote debt forgiveness seems to have prompted some interesting discussion.* Coincidentally, The Boston Review is running this symposium on debt forgiveness. But, more to the point, Doug Henwood has raised some smart, constructive questions here at LBO News. What follows are thoughts prompted by Henwood's comments.

(1) First, Henwood is right that the strategy of using markets against debt is in some respects self-defeating. This is a lesson that American evangelicals learned a few years back as they tromped off to sub-Saharan Africa to buy slaves out of bondage. All they got for their efforts was increased demand and hence higher prices and increased supply on the slave markets. That said, it is unlikely that Strike Debt-esque initiatives can come close to  buying enough debt even at discounted rates to make default profitable on the primary market. In other words such initiatives are not going to increase overall levels of debt even if they will encourage "the vultures" in secondary markets. It would seem that  this initiative will leave the primary debt market unaltered and make the exploiters in the secondary market better off. Is that all?

(2) I think of the initiative as a demonstration project. It makes the situation with opaque products being sold on largely invisible markets more transparent to folks who otherwise simply would not pay attention. Hence it demonstrates the systematic character of the finance mess. This hardly is "purely symbolic' - even if this sort of initiative will not bring capitalism to its knees. The initiative will shed some light on a corner - and a particularly unsavory corner - of the market system.

Even if one were to protest that postmortems of OWS are premature, the sort of wide-ranging, informed, vigorous discussion of political economic issues that Henwood seeks hardly exists. And even as groups like Occupy the SEC continue to intervene in the policy making process, the dampening (suppression?) of street level activism such as we witnessed last year means that those interventions will be less forceful than they might otherwise be. So, the Strike Debt initiative helps keep the agenda open. That is a good thing.

(3) Doug's Any characterization of bankruptcy as "an unsatisfactorily individualist solution to a collective problem" should elicit a response from anarchists of the Jim Scott persuasion. Such folks would see bankruptcy as a form of 'everyday resistance' available to people for whom collective action is either unavailable to exceptionally risky. And they would chastise Henwood for reject this view as a too narrow view of politics insofar as he it neglects the political importance of such 'insubordination.'

(4) It is ironic that the Strike Debt initiative consists of a bunch of (relatively) well off Americans addressing the predicament of another bunch of (relatively) well of Americans (even if we recognize that those sets intersect to some considerable extent). It has nothing to say about or to the impoverished here in the US. And it does not, as far as I can tell, have anything to say about the analogous problem of debt relief at the international level. What about all the impoverished denizens of developing countries whose economies languish under the burden of debt enforced by Washington consensus strictures? Here is a possible route into a broader discussion of the sort Henwood wants to see.
P.S.: More here at Dissent.

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Blogger Doug Henwood said...

I didn't say that bankruptcy was "an unsatisfactorily individualist solution to a collective problem"! The edited version of my article said that, and I disagreed with it. Here's what I said:

"And the chapter concludes by saying that it’s an unsatisfactorily individualist solution to a collective problem—which is true in some sense, but not of much help to millions suffering from credit card debt today. Many people are unaware of what a deliverance a bankruptcy filing can be, and many others are inhibited by shame. They shouldn’t be. And filing for bankruptcy has a lot more to offer than some lightly funded scheme to buy bad debt on the secondary market. Why the Strike Debt! collective chose to tone down my exhortations mystifies me."

14 November, 2012 10:59  
Blogger Jim Johnson said...

Sorry Doug! I had a hard time following what was you and what was in the final product. hence "deformed by group editing." This reminds me of why some of the design collectives from ACT UP insisted that their work was not subject to direct intervention by the larger collective. How to interject expertise - in a useful, timely and legitimate manner - into a democratic movement?

14 November, 2012 11:08  

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