Here is (an attempt at) a plain English summary of an academic research article I wrote about debt and inequality. The full article is behind a paywall here. If you would like to read it but don’t have access, send me an email and I can send you a PDF for free.

The relationship between a debtor and a creditor isn’t only an economic relationship between equals. Lots of research now shows it can also become an unequal power relation, where the debtor finds themself on an unequal footing.

But while this might sound common sense, there are varying opinions about the way in which inequalities of power can enter into relationships between debtors and creditors. The fact that debt can be unequal is not as straightforward as it might first seem.

So what kind of power inequalities (or asymmetrical power relations) can you get?

One kind that researchers have found is coercive control, in other words dominating someone’s conduct with threats of force to make them do what you tell them to do, e.g. pay us this much or else we will repossess your house.

A second kind that researchers have found is permanent wealth extraction, in other words keeping someone held down in an inferior economic position – Marxists call this class domination, i.e. an unequal power relation that arises through economic exploitation. One example is Costas Lapavitsas who writes that the fact that many households have to rely on ‘the formal financial system to facilitate access to vital goods and services’ leads to a ‘systematic extraction of financial profits’ from household incomes.

This is not the case for people who end up getting richer from borrowing, such as those able to pay off a mortgage. But it is the case for some, especially those subject to the ‘poverty premium’ that means the poorer you are the higher you pay to borrow (proportionately). 

Both of these forms of power inequality – coercive control and wealth extraction – can operate through debt, some but not all of the time.

There is a third kind of power inequality that can operate through debt, and it’s more about the morality of debt. One of the things that enables debt to control people’s behaviour and to extract wealth from them is the powerful morality that goes with it, which can leave people feeling personally responsible and guilty for things beyond their control (David Graeber and Maurizio Lazzarato write about this). The flipside of this is that in situations where people with debt problems have organised collectively as activists, they tend to ‘create new narratives of indebtedness’ (as Maka Suarez writes), where they replace individual blame with a bigger-picture perspective on how the financial industry accumulates wealth and often leaves people poorer. 

In other situations, people with debt problems have a hard time challenging the morality around debt. I did research with people on low incomes who rent their homes (in the UK). Something that surprised me was that people sometimes joked about being ‘bad’ at paying their debts. This was different to how I heard people talk about their debt problems within a debt advice service, where it was more like a confession – like ‘I did this wrong’, ‘I have learned my lesson now’. I think that people not taking their debts too seriously was something we should take seriously – and by ‘we’ I guess I mean anyone interested in getting better rights for people with debt problems. Their sense of humour not only helps them get through the day, but also tells us something important about the kind of power struggle they are involved in as people who have borrowed money in an economy where wages have stagnated, where work has become more insecure, where benefits have been cut, and where living costs have increased.

The joking suggests they didn’t completely buy into the idea that it was their fault they were in debt. But the same people said there was no use trying to argue with the authorities, like bailiffs or courts – in the sense that it is extremely difficult to get your point of view across to such authorities. Again this is something I think we should take seriously (rather than dismiss as just being about how people ‘feel’). Joking about being a bad debtor expresses a mixture of being sceptical about the morality of debt, and feeling powerless to stop the wider society viewing you as a failure. This difficulty in getting your point across is part of a wider struggle to define what is morally important in life. It is an important form of debt-based power inequality in their own right. This is less about the ability to force others to do what they’re told or to extract wealth from them than about ‘whose perspectives make something valuable’ (to quote Bev Skeggs) or who decides ‘what it is that makes life worth living’ (to quote David Graeber). Debt is often very effective at imposing a simplistic idea about what people’s priorities should have been after the fact. In their daily lives, the people I worked with were taking part in a struggle to counteract that.

December 2019.

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