Politics of the Debt

1. Debt economy and the hegemony of finance capital

The idea of a qualitative difference between a generalized debt economy and the traditional Marxist notion of finance capital, which is defended in particular by Maurizio Lazzarato in The Making of the Indebted Man, certainly touches an important point. Although there were debts in every economy where there was credit (the loaning and borrowing of money), and capitalism in particular could not exist without credit, two essential characteristics of the present regime seem never before to have existed on the current scale: one is that the same credit institutions (banks) subsidize both the production and the consumption of the same goods (e.g., housing), which means that, in a sense, they are selling to themselves at a profit through the mere intermediary of indebted industrials and consumers. The other is that debts are not only discounted, but also transformed into derivatives, which are debts of debts (or assets made of debts, on which one can speculate, a phenomenon its promoters refer to as the miraculous leverage of the modern financial industry, whereas its critics call it a casino economy). We need to insist, however, that the initiative for the creation of the debt economy, with all the power that it carries, arises from the turn towards the speculation of finance capital itself. This turn must be linked to globalization: the debt economy is anintensive aspect, both localized and individualized, of the global extension or reach of financial operations. This also explains why contemporary capitalism acquires atotalitarian dimension, in the etymological sense: in a system in which virtually all subjects or agents are indebted, there seems to be no space or sphere of existence left outside the capitalist subsumption. In Marx’s terms, capital has reached the stage of totality. It remains to be seen, however, what effect this has on the cyclical processes of expansion and crisis. When finance capital concentrates as many resources as possible in short term investments in stocks or bonds it hugely increases risk: at the same time that it makes profits from risk (or even from defaults), it also seeks protection against risk by relying on the support (the loans and bailouts) of the State, the insurer of last resort, which gathers the resources of many entrepreneurs, workers, consumers, and taxpayers – in short, of the citizens. This is called the privatization of profits and the socialization of losses. A formal correspondence, at least, does therefore exist between the debt economy and the transformation taking place at the other end of society: that of statutory labor into what some sociologists now call the precariat, a new historical wave of proletarization or a second proletarization (if the long wave leading from the dispossession of the agricultural commons to the industrial revolution was the first).
 
1.1. Credit is a necessary function of exchanging commodities for money, but one that can become autonomous (and that creates the most ancient forms of capitalism). This autonomy leads to a division of labor between industrial or commercial firms and banks (or credit institutions) whose capital is pure money, which bears interest on loans but also makes a profit through the selling of “financial products.” In a first phase of modern capitalism, finance capital is mainly dependent on industrial or more generally “productive” capital, whose operations it serves or facilitates for its profits. ¹ But this was always a relationship between forces (in which, following Adam Smith’s terminology, one term must command the other). And banks, even in pre-capitalist historical phases, had a relationship with the State, whose civil or military budget they financed (what David Harvey calls the state-finance nexus). Their “mortgage” was provided by taxes of all sorts that gave the State its resources (and sometimes were subcontracted to the financiers themselves). With the development of capitalism and its subsumption of the whole society, banks became also increasingly related to private individuals (or households) whose savings they collected, and who borrowed money from them for their own expenditures.
 
In the early 20^th century, Hilferding, Lenin, Luxemburg and other Marxist theorists of imperialism proposed a theory linking the division of the world among hegemonic (powerfully militarized) nation-states to the new domination of finance capital, whose interests controlled the productive operations of many other capitals through the institution of “holdings.” The banks and financial institutions, however, retained a national character (and sometimes a nationalist outlook, particularly based on their essential link with colonization). But today’s finance capitalism has seen the emergence of multinational private firms whose power exceeds in several respects that of most states, and in any case largely autonomous with respect to their policies, because they are able to organize a competition between States’ territories and services (though, it could be argued, with considerable differences in their resulting dependency). For such neo-capitalism, the world has become largely deterritorialized, but also fragmented into zones of unequal profitability whose value for investments is continuously changing. The idea of an ultra-imperialist phase therefore acquires a new relevance.
 
1.2. It is questionable, however, that this should lead to the assertion—put forth by Antonio Negri, Michael Hardt, and their school, including Christian Marazzi and Lazzarato himself—that global finance capitalism has replaced profit with rent, with profit functioning as a new kind of rent based on external control and exploitation. According to this argument, finance capital uses diverse means of coercion, including wars and insecurity, to extoll surplus-value, without being able to organize productive activities themselves. As a consequence, production’s collective agents, i.e., laborers in the general sense, have become virtually autonomous in their activity. ²> Although I admit it is necessary to link finance capital and the debt economy to a new regime of exploitation, this notion of rent is far from clear in my eyes. It is true that the power of finance capital no longer consists only in concentrating stocks or shares of industrial or commercial firms; it now also consists in the accumulation of debts arising from different sources (such as private firms, states, public agencies, and households) that are then transformed into derivative products supplied on the financial market. ³ But the power of finance capital also produces a generalized surplus-value whose sources can be anywhere in the world (or can become easily delocalized because of advances in transportation systems and digital communication), and makes possible the extreme mobility of financial products (or “fictive capital”). Financial capital, in fact, now chooses the places and methods of exploitation in the first place – be it the exploitation of labor or the exploitation of natural resources. The turning point came when it was no longer industrial capital that calculated its debts towards the banks as financial costs affecting the rate of profit, but rather finance capital (the so-called financial industry) that continuously measured the profitability of its investments in any sector, with the ability to decide which industries to enhance and which to suppress (together with their installations, accumulated experience, and employees). ⁴
 
The extent to which strategies of exploitation are directly subjected to the movements and cycles of financial concentration is not only an economic question; it is also a crucial political question, because banks and financial operators can become omni-competent only inasmuch as they escape or loosen public regulations. This involves a balance of power with the State qua incarnation of the public authority. As François Chesnais has written: “Since the 1990’s, big banks have progressively become transformed into diversified financial groups, which merge the activities of credit and investment” (17). This is due to the abolishment of regulations such as the Glass-Steagall act (part of a more general class of antitrust legislations resulting from New Deal policies in 1933), which had forced banks to remain specialized in either of the two activities or to divide their capital into separate stocks. Indeed a considerable part of the speculative operations of banks are now performed on their behalf by hedge fundsand other operators of “shadow banking” that are not controlled at all. The distance between banks, speculative funds, and stockbrokers has been reduced to a minimum, if not annulled. Correlatively, the State’s loss of power to regulate finance has become, as we will see, the power of finance to control the State and dictate its policies.
 
And finally, a generalized surplus-value is also linked to genuine changes in civilization that have anthropological significance. This value is produced not only through the exploitation of a collective labor-force (that nevertheless remains an important basis of accumulation), but also through the organization of mass consumption on credit (and therefore involves a multiplication of popular debts). Mass consumption on credit in fact combines overconsumption with underconsumption, in the form of an imposition of massive low-quality products and a distortion or neglect of basic needs (health care being a good example). More than before, this value also accrues from the destructive exploitation of natural resources, which ranges from the development of “bio-capitalism” to the discovery of new energy sources and raw materials, making transformations of the environment a direct responsibility of finance capital. ⁵
 
1.3. Global finance capitalism and the debt economy are characterized by the increasing pressure put on economic units (individual or corporate firms) to yield continuously exceptional rates of profit (or returns on investments) as far above the average rate of profit as possible. If, as David Harvey in particular has argued, the neo-liberal forms of management that accompany its hegemony have not proved particularly effective in generating growth, this profitability can be achieved only on the condition that many other investments are forced to accept losses or low returns. One can anticipate, from this point of view, the destructive character of contemporary capitalism with respect to many forms of social life, ranging from the de-industrialization of old regions of production to a new wave of elimination of non-capitalist economic and social activities such as culture, education, and security. The “normal” profits from the financial sphere must now include short-term profits, which cover high financial costs (in particular the liquidities for repaying debts) and the continuously rising salaries and bonuses of managers (allegedly justified by the greater complexity of the skills needed for financial operations and the risks of today’s business careers). Adding to the unequal distribution of profits and the “accumulation by dispossession,” there must also arise a new wave of proletarization, including the ruin of the working classes that, over the twentieth century in the “core” regions of the world-economy, had acquired social rights and social welfare in the framework of a labor society (société salariale). ⁶ This arises from permanent shifting between employment and unemployment (a transition from stable wage labor to precarious jobs) and a continuous intensification of individual labor. Together they generate high levels of exclusion and the elimination of “useless” or “disposable” humans. And this extremely violent situation (or situation of normalized insecurity) is made acceptable globally partially through a fierce competition among territories, populations, and anthropological categories (young versus aged, men versus women, migrants versus the geographically stable). This competition is the concrete face of the “risk society” theorized by some sociologists since Ulrich Beck.
 
1.4. Contemporary economists belonging to different schools (classical, Keynesian, and even Marxist) have described the correlation between the autonomization of finance capital (its rise to command of the economy) and the multiplication of debts and of levels of debt (the leverage effect). ⁷ In effect, multiplication means several things. First, it is a quantitative phenomenon (for example, US public debt rose from $259 billion in 1945, when it represented 116% of the GDP, to $2.9 trillion in 1989 (50% of the GDP), to $16.7 trillion in 2013 (100% of the GDP); from 2000 to 2008, private debt in the US grew from $26.5 trillion to $54.5 trillion) (Amadeo; Clark). But indebtedness also concerns an increasingly wider spectrum of economic agents (public and private corporations, associations, individuals, local communities like the City of Detroit, which has recently been forced to file for bankruptcy, independent countries, etc.). And above all, through the mechanism of insurance, re-insurance, and securitization, debts are pledged upon one another. This is combined with the “leverage effect,” which makes it possible to acquire stocks or shares of corporate properties with a minimal expenditure of actual resources: money is borrowed from others, so that in fact a mere pledge of paying allows one to buy and accumulate assets (what Giraud has called “the merchandising of promise”). After the 2008 financial crisis (which was triggered by credit institutions racing towards the dissemination of loans, particularly mortgages, for individual consumption, and by banks and insurance companies accumulating “rotten” securities pledged on these loans), two phenomena emerged clearly: (1) beyond a certain level of generalized indebtedness, there is a floating debt that is insolvent (what, after a card game where the loser is the player who, by the end, could not get rid of his bad card, Giraud calls the mistigri or black jack): it will never be repaid, and therefore threatens the whole system with a crash, but also generates a ruthless negative competitionbetween agents who try to have the losses transferred to others; (2) the State (even when it is itself heavily indebted) must be not only (qua Central Bank) a lender of last resort, but also an insurer of last resort: essentially transforming (through bailouts and easy liquidities) private debts into social debts that will be covered ultimately by raising taxes (and hence paid for by the poor and the middle class, the “99%”) or by printing money (or by both), with the very real danger that States themselves become insolvent debtors on the global financial market. There is consequently only a choice between two forms of default, which in the end can also become added.
 

2. Debts, taxes, money

Economists (or historians or anthropologists) who theorize about the origins of money (meaning either its historical origin or its contemporary creation as instrument of exchanges, savings, and capitalization) usually adopt one of two rival theories that can be traced back to the classical age: the so-called private credit theory (which insists on the function of banks and the operations of lending and trading securities that generate liquidities) and the so-called Cartalist theory (which insists on the function of the State, through the intermediary of the Central Banks, in defining the currency and preserving its value). ⁸ In both cases, money and debt are linked, but in different ways. The two theories do not describe two sides of a coin, but form part of a general process: in other words they are not incompatible, but should be considered complementary. This becomes more apparent if (following a suggestion from Suzanne de Brunhoff, in her successive attempts at formulating a Marxist theory of money that was not explicit in Marx) one asks about not only the creation but also the steady reproduction of the monetary system, with its different functions. ⁹ Both private banks and States are inevitably involved in this reproduction (which results in interdependency or creates a common interest, but also generates a mobile power relation among banks and the State). This is because two different economic circuits are articulated with each other in the reproduction of money: the banking circuit irrigates the economy with credits, or liquidities, that “mediate” every economic operation, and the fiscal circuit drains contributions of many different kinds appropriated by the State (direct and indirect taxes on households, corporations, revenues, consumption, properties, etc.), making them convertible. ¹⁰
 
The levies of the State are visible in the form of taxes, whose product is used for its own expenditures and investments. But they are also redistributed (returned to their source, as it were) in the form of infrastructures, services, protection, and public safety, a large part of which are invisible because they are distributed not individually but collectively through social institutions, or in a generic manner because they can’t be divided and concern the population as a community (e.g., security, cultural services, education, etc.). On their side, banks gather individual or corporate savings, which they compensate through interest; but they also offer access to credit, which in turn is their specific way of making a profit (and we now know that, just as in the case of the State, but through a completely different mechanism, the monetary resources are concentrated essentially in the mass of ordinary citizens.) Banks “create” money through their credit operations (because securities can be used as means of payment and transferred from a buyer to a seller, what in economic jargon is called an IOU), and the State (i.e., the Central Bank, whose legal autonomy varies from one country or federation to another) “creates” money through the official printing of banknotes, whose value is guaranteed by reserves¹¹ but also fluctuates against other currencies on the market. It is the articulation of these two mechanisms with each other, one public and one private, that reproduces the money “form” as such (a universal function, coextensive with the market, which, however – even in the classical period of the gold standard – exists only in the form of rival national currencies, some of which nevertheless play a transnational role, because they are accepted as “reserve currencies”). Taxes and savings may compete to drain the money of the citizens, but whatever the proportion, there are two “debts” here that ultimately must be convertible into one another. For that reason, money (just like law, in a different manner) is the essential instrument for the articulation of the public and the private realms in modern societies – which means that it constructs society as such (or produces what Althusser had called the “society effect”) (Althusser and Balibar 65).
 
2.1. Contrary to what many Marxists but also other economists believe, because they look for a “real economy” whose concept would be sufficiently defined without the monetary “sign,” de Brunhoff seems right to insist that money is not an exogenous factor that the State would inject into the economy by means of the Central Bank. But it is also not a purely economic factor, in the sense of simply arising from the logic of private exchanges and debts that need a universal quantitative expression or equivalent. The rival theories, which tend to be favored either by liberals or by institutionalists, are unilateral views that do not account for the reproduction of the general equivalent (in terms of its value as well as its function). When the banks and credit institutions lend money and provide securities that can circulate (so long as they are formulated in an official currency, validated by the Central Bank), they create money that is a pledge: this indicates a fundamental homogeneity between money as such and debt, as if money is a generalized or socialized debt. When the State creates bonds that can be acquired by individual or corporate buyers, it also creates a debt that is pledged on a different kind of social debt: its own political legitimacy, or its capacity to command the actual payment of taxes by the citizens (since the State has a “monopoly” on the levy of taxes, which can be delegated to local communities, just as it has a monopoly on the legitimate use of force). And we know that this legitimacy can be contested: it is therefore a political factor as much as an economic capacity, which creates a political risk. Some economists have noted that banks also have a privilege over all other private agents: banks can use their own debts to pay their creditors, or put their debts in circulation, which ordinary citizens cannot do—though banks can do this only as long as they are themselves considered solvent, which is their form of legitimacy. Others believe that the two circuits are equally based on the existence of debt: but on the one side this would be an economic debt, which is finite and measurable, whereas on the other side it is a symbolic or anthropological debt, which means that citizens owe a perpetual debt to the State that protects them (and the Modern “welfare State” would bring this to light and completion). ¹² I prefer to speak of a political articulation of the economic and the social realms with each other, an articulation secured by institutions and power, but also exposed to the conflictual nature inherent in every relation of power. The articulation of the two circuits (or the two debts) generates a “society effect,” but it is itself contingent on the vicissitudes of a power relation.
 
2.2. It seems paradoxical that the private circuit of credit has become increasingly dominant in the evaluation of money or its exchange value (i.e., the exchange of specific currencies, like the dollar and the euro, against one another). Even powerful Central Banks are forced to listen to the indications of the market when they choose to release money or to change the national rate of interest. On one side, commercial operations and investments are increasingly transnational, and banks and financial operators trade currencies with one another just as they trade other commodities (or they speculate on them, at the risk of provoking the devaluation of their own assets, a case of one hand ignoring what the other hand does). On the other side, Public Budgets (and hence Treasuries) are indebted toward various creditors, who can be mainly their national citizens, as in Japan, or – increasingly and not only for “weak” countries – operators on the international financial market itself. As a consequence, the market (with its rating agencies)evaluates not only the currencies (pushing them upwards or downwards) but the States themselves whose solvency is rated high or low.
 
This becomes a powerful factor of speculation, whose trigger is the “spread” between rates of interest that States must accept to access the credit facilities without which their own budget would collapse. But there is a vicious circle here, because higher rates of interest make the public debts even more unsustainable. (Conversely, many public debts considered untenable would rapidly become manageable again if all States had access when necessary to the same low rates of credit as, for instance, the private banks considered too big to fail.) But the high rates of interest and the escalation of secondary borrowings that they provoke are also a primary source of profits for the lenders. So (even if some debts have been canceled or discounted) the banks keep making huge profits on the Greek and the Spanish debts. The US is indeed a special case because, as a “reserve currency,” the dollar keeps financing the country’s huge deficits by providing money in an apparently unlimited manner: it converts its own debt into money, as it were. But this is perhaps only a deferral: it is dependent on the fact that US bonds are bought in large amounts on the financial market, mainly today by Asian and especially Chinese banks – which creates a common interest to avoid a crash or a devaluation of their property. Someday the hierarchy of interests could change.
 
Ultimately, however, any public debts are pledged on the anticipation of tax returns. So the banks that increasingly hold budgets and currencies hostage inasmuch as they give them credits are in need of an insurance provided by the States and thus by the populations represented by their States. In the current crisis, the States are permanently blackmailed by the financial markets, but they keep the banks afloat, first through liquidities offered by the Central Banks, then through virtual or actual bailouts paid for by the population (or in any case advanced by the population). Taxes (and the fiscal circuit) are more than ever a pillar of the system. Taxes are always declared too high, but they are needed.
 
At his point it would be interesting to raise several political questions. One is the question of tax evasion. It is periodically denounced (and occasionally invoked to stigmatize the corruption of certain States), but is it not in fact organized by the States and the financial operators as an element of their permanent negotiation behind closed doors? The States tolerate or organize fiscal havens, where significant financial assets are transferred. ¹³ States are also, more generally, setting up a permanent competition to attract capital through favorable fiscal conditions (a situation that, as we know, the European Union has so far refrained from abolishing). Another question concerns the logic that leads public institutions to define a “middle way” between, on the one hand, using public resources (arising from taxes) to subsidize the private financial sector (e.g., when bailing out banks deemed too big to fail), and, on the other hand, increasing through public investments or subsidies the capacity of the national economy to serve social needs, in terms of employment, infrastructures, scientific research, welfare programs, and the reduction of inequalities. Nobody believes that this can be defined in a “scientific” manner. It is – again – a question of risks and aleatory choices. However, the official doctrine is that these choices are made in the general interest. This seems very doubtful, when it appears that power relations and ideologies inform every negotiation and distribution of debts between the private and public sectors, and between the public (national) agents themselves.
 
2.3. According to economists, the relative strength of currencies whose competition (sometimes amounting to “currency wars”) underpins the “monetary function” is determined by many factors. ¹⁴ In the past, under the influence of productivist or industrialist theories, what was mainly emphasized was the comparative strength of the real economies. It seems now that an even greater role, or at least a necessary mediation, is played by the debt-power, or the capacity to borrow at affordable rates, that is decided by financial operators through their rating agencies. This power is distributed among private and public agents: Aglietta and others insist that private debts are even more decisive than public debts in the difficult situation of European countries (including Germany). But private debts can become public, just as public debts are continuously privatized. ¹⁵ The question of comparative access to credit facilities (and therefore to debt), which concerns everyone within the social system (including individuals in need of a loan, firms needing credits, States negotiating their public debts on the international financial market) appears as a crucial mechanism for generating inequalities as well as a multiplier of inequalities. Only rich individuals or States deemed solvent have access to subsidies or relays when their debts are too high (whereas others have to abandon their properties: something that we see today holds both for homeowners foreclosed in California and for the Greek State coerced by the Troika to privatize public properties in order to keep receiving subsidies). The extreme cases, as we know, are the “TBTF,” who practically escape risk. But at the other end, it is always the poor who help compensate the banks’ risks of speculation, of stretching leverage, and of accumulating toxic assets. This is one reason why democratic-oriented economists such as Joseph Stiglitz have felt the need to bring back considerations of riches and poverty (not only inequality) into economic analysis. ¹⁶
 
2.4. Above all this leads to a new reflection on the notion that taxes can have a redistributive function and therefore serve to reduce social inequalities – especially if a strong progressivity is applied to revenues and basic social services are supported by taxes, which was an essential aspect of the national-social states in the North since the American New Deal and the post-war social democratic regimes in Europe. ¹⁷ This can be considered a question of justice, populist political strategy, or economic efficiency (as from a Keynesian perspective) – or a combination of these. Historically, the redistributive function of taxes was linked to socialist or social-democratic policies that were implemented by what I tentatively call the national-social state: the exemplary model being Sweden over a long period of the 20^th century, but in the US the New Deal practically covered the same orientation. Retrospectively, it can be seen that the national-social state did not only quantitatively increase the level of taxation (which is the starting point of its neo-liberal critique), but also changed its political definition. As a mechanism of redistribution, the tax system is no longer simply a surplus appropriated by the State (like other surpluses appropriated by private actors, such as profits, interests, and rents) that is justified when the State uses it to perform useful or necessary functions (such as implementing security or creating infrastructures). It becomes a relation, mediated by the State, that society establishes with itself (and that transforms it). While the rise of global finance has considerably accentuated the dependency of States (including national welfare systems) on the resources provided by credit (with taxes essentially serving as a security for the markets), on the other side neo-liberal policies tend to substitute social welfare with insurances and loans that individuals must take for themselves to cover their basic needs (such as healthcare, housing, and education). This may increase their feelings of autonomy and “self-ownership” (as we know, this was one reason for the popularity among the working classes of the politics of privatization advocated by Thatcher and other neo-liberals in the 1980s). But it also maximizes their risks and ultimately subjects individuals to the punitive rules of credit access, which are established by the banks. Since the latter have a contradictory interest to “sell” as much credit as possible and to secure its repayments (or a certain proportion of them), it may be asked whether this development of the debt-economy (where privatization of social services plays a crucial role) simply amounts to handing over the functions of the national-social state to the private sector, or actually reverses the mechanism: from a reduction of inequalities toward an increase of inequalities and a greater polarization of society (that can barely remain without political consequences). In any case this is certainly much more than a “technical” change: it is a transformation of the model of society itself. Having seized control at the same time of the resources of the State and of the citizens, the credit mechanisms which concentrate debts from all social actors have become in practice the “regulators” of society. This goes along with a profound ideological transformation of the modes of legitimation of power, since credit is something that is asked for, an object of demand, and whose efficiency must be calculated in monetary terms, whereas public services used to be either imposed or paternalistically conferred upon individuals, even if with their approval or recognition, and (in principle) as a function of their needs.
 

3. From sovereign debts to the sovereignty of debt?

In discussing the relation between an expansion of the debt economy and changes in the regime of sovereignty in our societies, language itself suggests a path of departure with the question of sovereign debts, namely those created by such public institutions as the States themselves, or any of their agencies or subordinate administrations (e.g., a system of public universities) that place short borrowings or long term bonds on the international financial market. (The most famous example is that of the “Russian Bonds” produced by the Tsarist regime to build a railway network, later denied validity by the USSR, but finally acknowledged again towards the end of the Soviet regime.) As I discussed above, sovereign debt makes it possible for the market (anonymously, through rating agencies and decisions made by operators trading in the Stock Exchange) to rate the solvency and profitability of States, thus exercising on them a pressure that can become the threat of cutting lines of credit in extreme circumstances. This leads to our recognition of a superior power exercised upon the Sovereign itself: that of the Global Financial Market (GFM). The classical definition of sovereignty (coined by Medieval lawyers and later resumed by Modern political theorists such as Hobbes, in his famous allegory of the Leviathan) was, namely: a power such that no authority stands above it, which therefore is released from the rule of the law that it decrees itself (ab legibus solutus). It is this new sovereignty of the GFM that substitutes (or subordinates) the old imperialist structures of the world-economy, and in this sense it could be called an Empire (imperium) that – much more than any military power today (i.e., with less possibilities of resistance) – has restricted the independence of States and nations. But this is more of a quasi-sovereignty, negatively defined, than a unified or effective power dictating positive behaviors to its “subjects” ¹⁸—unless one imagines that finance capital works according to a global plan (which is fantastic) or that it will set up a form of universal governance through the interaction of different transnational agencies (such as the IMF, the WTO, etc.) adopting a common set of rules and economic doctrines (which is utopian). One should recall that early theorists of Modern State sovereignty (notably Bodin) argued that every sovereignty claiming to beabsolute is in fact limited not only externally by other sovereigns but also internally. The two internal limitations that Bodin considered irreducible were, on the one hand, the will of subjects to keep their religious allegiances, and, on the other hand, their capacity to resist excessive tax burden or to revolt against it–political dimensions that maintain an undeniable validity today. ¹⁹ Imperialism of course transformed this question, by blurring distinctions between an external and an internal limitation. But the GFM’s quasi-sovereignty seems to subvert radically our very representations of power relations, leading some analysts to diagnose the advent of a post-political age. Control exercised by financial operators on the operations of any State (even a large one) and the everyday life of any nation (even a wealthy one) is thus easily attributed to fantastic impersonations of global finance (which is already the case when, in this essay, we speak of the banks in a generic manner). But the apparent irresistibility of this command essentially comes from inside the budgets, the economies, and the dominant interests: the politics that are adopted and the economic interests that are privileged. So, even before there is a question of any rebellion or resistance, limitations must arise from the contradictions within the financial interests: another reason why the quasi-sovereignty of the GFM is more negative than positive.
 
3.1. A simple representation (accentuated by recent developments in Southern Europe, which recall previous episodes of the defaulting national economies in Latin America or in Asia) admits that sovereign debts are linked to relations of domination between weak nations and imperialist external powers. Clearly the situation now is much more complicated: the question of who owns or controls the debt remains indeed meaningful, but does not allow for a simple answer in terms of a conjunction between banks and imperial nations. The ultimate owners (whose majority control very little or nothing) are individual shareholders and bondholders belonging to the middle class who own in particular through retirement and pension funds offered by their employers or by mass credit institutions. The States with the heaviest debts are not the weakest in terms of economy, military, or political power: witness the emblematic case of the US.
 
Interpreting the US debt, which quantitatively is both the largest in the world and in relation to the internal GNP, but which works as an instrument of domination itself as long as the dollar remains the world’s main reserve currency, is indeed the key challenge here. As I mentioned earlier, this “power of indebtedness,” however impressive, is fragile and internally limited by the fact that other nations, which have imperialist ambitions as well as economic interests, own a great part of the US debt: they therefore have the possibility of controlling its fluctuations and geopolitical consequences. Beyond a declining US hegemony (which was precipitated when US administrations attempted to act as “masters of the world” through military interventions after 9/11), this is what leads commentators to argue (not unreasonably) that practically we are facing a condominium of the World-system exercised jointly by China and the US: the so-called “ChinAmerica” (Jones). This argument, however, does not account for a considerable amount of sovereign funds (e.g., credits and investments from the petro-monarchies of the Gulf) and private hedge funds (that speculate on profitable activities in every corner of the world, or, negatively, on the weakening of some currencies and States). ²⁰ The power of finance capital is disseminated and it is conflictual. Of course, in the last instance, it is ordinary people who are likely to fill the gap between expectations of and capacities for payment (or the redemption of debts).
 
Another salient aspect of the whole mechanism then concerns the governance of this “war of all against all” that aims to prevent systemic crises. ²¹ Organizations such as the IMF are among the visible organs of this governance. They mediate relations between debtors and creditors at the level of States, by both concentrating contributions and allocating rescue funds to indebted nations. Conditions imposed by the IMF for granting its loans have always been destined at the same time to prioritize the safeguarding of private interests and to prevent defaulting nations from trying autonomous strategies of defense, such as the denunciation of “illegitimate debts.” These conditions rely mainly on the imposition of so-called structural adjustments, i.e., forced liberalization and austerity policies in exchange for credits – which in practice means transferring the burden of debts onto the population itself for an indefinite period. With the inclusion of the IMF in the “Troika” (composed of the IMF, the ECB, and the European Union) that monitors the Greek debt, and more generally with the adoption of its guidelines by the EU to solve the budget crisis of its indebted States, it has become clear that the IMF, while directly participating in the decline of national sovereignty, also works against the emergence of another alternative to the old model: for example, a federal solidarity throughout Europe for which the imperatives of a collective protection against the risks of the debt economy would be considered as important as rescuing the banks endangered by their own speculations. In fact the IMF, under successive governors, plays no role in this regulation (or restructuring) of the financial system, both because of its legal rules of functioning and its dominant structural ideology.
 
3.2. In Capital, Volume One (Chapter 23: “Simple Reproduction”), Marx uses a striking expression to describe the effects of a social relationship of production based on the exploitation of wage-labor, whereby, on the one side, laborers who have exhausted their forces working under the command of capital have no other means of reconstituting themselves (i.e., of simply “living”) than reselling their labor-power to a capitalist, while, on the other side, the product of this work is continuously accumulated and transformed (in monetary form) into a new capacity to “command” wage labor, i.e., to purchase labor-powers from the same or other workers. He calls it a double mill orZwickmühle, meaning that in apparently independent manners, on two poles of the social structure, a single cyclical process creates the conditions for its infinite reiteration (and in fact its polarization, since what he had in mind was an enlarged reproduction: increasing accumulation and concentration of capital, and extension of a working class which is steadily impoverished) (723-24). We may adapt this image to describe salient aspects of the debt economy, which are, in fact, a new stage in the development of capitalist social relations. This is visible in the way that – provided certain political or institutional conditions are maintained–financial profits accrue at the same time from debtors who are solvent and from debtors who are insolvent, or from their capacity to borrow at the same time that they don’t have a capacity to repay. ²² Of course there must be losses in this circuit (and for the operations to continue it is vital that the losses be allocated, so to speak, on the “right side”). But on average, the steady accumulation of profits largely compensates for the losses. Or it compensates as long as no new “great crisis” of the 1929 type is taking place…
 
There is also a “mill” working in the relationship between the financial sector and the public sector, in a relationship of power that proves increasingly difficult to reverse as global indebtedness is increased. Financial institutions draw profits from the direct returns of State borrowings, leading all States to rely (though to different degrees) more on credit than taxes to balance their budget. But financial institutions also draw profits from the securitization, insurance or reinsurance, and the sale of risky (not to say rotten) State bonds (which “normally” should be controlled by regulators). As this tendency towards a “privatization” of “public” finances develops, a Steuerstaat (taxation-State) becomes transformed into a Schuldenstaat (debt-State), in the words of German social theorist Wolfgang Streeck. ²³ Financial institutions (especially those deemed TBTF, since their bankruptcy would create a systemic risk) are thus at the same time moneylenders or money brokers for the State and beneficiaries of State (public) money that prevents them from collapsing. In other words they have an almost absolute command over the government both because they are creditors and because they are debtors. But this also means that abstract notions of creditor and debtor that, since time immemorial, have been understood as imposing a dissymmetrical power relation between creditor and debtor, with the first always commanding the second, are now socially and politically differentiated. ²⁴ Not every creditor has power over the debtor, and not every debtor is forced to bow before the creditor: it depends on which side of the mill they are situated.
 
3.3. Several questions consequently become more complicated than the names associated with traditional institutions and roles would indicate. One of them is simply: who owns what? A debt or a pledge is something like a conditional (anticipated) property. Ultimately, therefore, all public assets (including means for protecting, educating, and medically treating individual citizens, paying their pensions if they are public servants, etc.) belong in advance (virtually) to the State’s creditors. But who exactly are these creditors? The money that they lent to the State was most of the time borrowed money itself, or money pledged on more or less risky investments. Due to current deregulations, many of the banks’ investments are increasingly realized not in their own names, but through intermediaries, particularly hedge funds and other participants in the shadow banking system, so that the ultimate owners are impossible to find, or they are not stable. They do not exactly form a class of rentiers in the traditional sense. Among them are, for example, individuals with very limited revenues but in great numbers whose pension funds have been used by financial operators for speculative operations. This, in turn, leads to questions with no univocal answer: Where to draw a line of demarcation between a public and a private property? How to define the “property” that is engaged in speculations? How to describe—according to the traditional notion of sovereignty shared between the State and the people, and protecting the institution of private property—a public power that begins dispossessing not only individuals or classes (as it did frequently in the past, e.g., in the form of nationalization or requisition), but also itself? Who, exactly, in this society is a property-owner and who is propertyless? Is it possible at the same time to own a property and to be propertyless, or virtually dispossessed?
 
All these questions, which lack simple answers, nevertheless point to the issue of regulation and deregulation of financial operations. At stake here is the paradoxical organization, by the State itself, of its incapacity to resist pressures from the financial sector, and therefore its own subjection to another sovereignty (albeit one without a recognizable sovereign). Issues of sovereignty and property are, as always, intimately linked.
 
3.4. The transformation of traditional forms of sovereignty into patterns of quasi- or pseudo-sovereignty appears differently, depending on whether one considers States that are hegemonic in the world-system, dominating others, or “ordinary” States whose stability, legitimacy, and degree of autonomy is premised on their own resources only, and that are therefore perceived as “merely” expressing the history and internal cohesion of their peoples. This situation of unequal sovereignty is rapidly changing, however, into a situation in which, even though there still exist, of course, enormous differences in power, all States are, one way or another, dependent on the credit available on the Global Financial Market, and therefore are dependent on the choices made by its operators. This became clear for the single hegemonic power itself after US attempts (under the Bush Jr. administration) at counteracting a relative geopolitical and geo-economic decline through increased military presence throughout the world culminated in a mindless reassertion of imperial status that left the country with an uncontrollable national debt. According to some commentators, this “va banque” gamble could easily end in a disqualification of the dollar as de facto the “money of the world.”
 
But sovereignty was always a relationship between external power (or autonomy) and internal legitimacy, which is fragile by definition. When States, in order to remain “solvent,” apply the rules and strategies imposed politically by the GFM and take on new debts to repay old ones, they in fact aggravate internal inequalities among their citizens. Implementing austerity policies, allowing privatizations, lifting restrictions on the export of capital and the private appropriation of national resources, they accelerate mass precariousness of employment, housing, and benefits, they dismantle social security, etc., and thereby further antagonize the interests of the rich and of the poor. All of this produces potentially a decomposition of the people as a “unity” of interests and feelings, affecting not only the independence of the nation but also the legitimacy of the State. A comparison with colonial situations – particularly forms of protectorate – is indeed useful here but it can be only indicative, because the nature of the sovereign instance above the State has changed essentially, from a political-military to a financial (or better, financial-political) one. This situation of course contributes powerfully to the imagination of the GFM as a powerful manipulator of the actions and interests of the peoples. The peoples are indeed manipulated, but – in spite of all the coalitions of interests, the networks of reciprocal participations between corporations and individual investors, the official and shadow banking, etc., and in spite of the mimetic strategies of traders – there is no such thing as a Great Manipulator. The old image of the “anarchy of the market” remains true even more for the financial market than it used to be for the market of commodities. David Harvey is right in this respect to insist: “It would be wrong to think of this financial power … as being omnipotent and able to impose its will without constraint. It is in the very nature of financialization to be perpetually vulnerable” (69). Conversely, there are institutions for the governance of the GFM, whose actions oscillate between regulating and deregulating its practices of speculation and appropriation: they may express a dominant interest but never act as an ideal “general will” (as nation-states tended historically in order to reconcile the interests of their ruling classes). This is another reason to speak of a pseudo-sovereignty, rather than a sovereignty, of the GFM.
 
In the recent case of Europe, contradictory representations emerged, resulting from the fact that European states participating in the single currency dropped their monetary autonomy, but at the same time the euro was carefully (and purposely) detached from any real economic objectives for fostering employment or growth in the Eurozone: it thus seemed that a “central bank” (the ECB) was essentially another instrument of global finance. But this representation is probably one sided, because it takes an institutional limitation (politically and ideologically determined) for a permanent structural necessity. For things to change, however, and to have the ECB play the same kind of economic role as the US Federal Reserve or the Chinese Central Bank, radical political changes would be needed, involving new relationships of forces inside and outside Europe.
 

4. Subjection to debt

Symmetric to the question of sovereignty, if we follow the guidelines of political concepts and their history, is the question of the constitution of “subjects,” in two senses that continuously overlap: a formation of “subjectivities,” or modalities for individuals (or groups, collective individualities) to relate and refer to “themselves” as agents, and an institution of “forms of subjection,” whereby individuals obey the interpellation (or the injunction) of socially valid authorities (the most important, in the Western tradition, being the authority of the Law). Inasmuch as market relations in which the individual subjects are inserted are not only contingent situations through which subjects create obligations for one another occasionally, through contracts which are legally binding, but also become a permanent condition of existence, to which subjects are tied by asuccession of debts that they have to repay throughout their life, such market relations create new modalities of domination, subjection, and subjectivation. The subject’s obligation to repay becomes the primary mechanism of dependency, before obedience to the Law itself. Its reverse side is a guilt imputation, conscious or unconscious, in case of defaulting on one’s debts. This imputation produces new forms of transgression, resistance, or rebellion when the debts are seen as an instrument of oppression, parts of an unjust social order. But the obligation to repay also transforms the moral and political relation to the State Law, because the latter no longer appears as the last instance or ultimate bearer of authority. The authority carried by the market (with the help, of course, of legal instruments), is more anonymous, but also more ambivalent, than the authority carried by the State, since it expresses not only a constraint, but also the desire of the individual who seeks to develop her own projects or define her own way of life. The debt market is simultaneously ruthlessly coercive and aggressively individualistic. It also involves a new relationship to temporality and the experience of a lifetime, because debts carry hopes and anxieties that make risk the normal condition of everyday life. ²⁵
 
It is no wonder that the modalities of subjectivation associated with a general economy (and society) of debt, affecting every individual in the social spectrum, are now investigated and discussed by anthropologists, psychologists, and social theorists, who make use of a variety of philosophical paradigms. To mention just a few of them, there is the Althusserian paradigm of interpellation, which can be transferred from its legal and religious models to a description of ideological market apparatuses involving the power of credit institutions (in fact, the intimate personal relationship each individual must establish with her bank and bank official) coupled with a ceaseless advertising pressure that captivates desire in order to channel subjective demand for commodities. ²⁶ There is the idea of the indebted man’s permanent “care of the self,” proposed by Maurizio Lazzarato along Nietzschean, Deleuzian, and Foucauldian lines, according to which the individual’s “internal master” – at the same time created by himself for his daily use and controlled by the credit institution – becomes his credit card. ²⁷ There is Bertrand Ogilvie’s idea of a new “voluntary servitude,” which he retrieves from Etienne de la Boétie’s sixteenth-century elaboration of the monarchic order in order to link it with a phenomenology of the modern “disposable man”: individuals exposed to the risk of elimination acquire a “second nature” provided by the dominant economic ideology. ²⁸ There is the critical paradigm of alienation — of Hegelian and Marxian origin — implemented by disciples of the Frankfurt School, who develop Axel Honneth’s social philosophy to describe pathological forms of recognition in which the “rationality” of social obligations and interactions creates inverted solidarities, with depending individuals not helping one another but putting each other’s existence at risk. ²⁹ The mere variety of these interpretations shows that there is both a compelling and an enigmatic element attached to the new modes of subjectivation associated with the debt economy/society. Of course they are also decisive for understanding which reactions and resistances this social order can produce.
 
4.1. Lazzarato’s essay (already mentioned) is especially interesting, because – returning to Nietzsche’s philological investigations in the second essay of The Genealogy of Morals, but also, in fact, to the discourse initiated by some early manuscripts of Marx on “credit and banking” — he tries to demonstrate how the semantic doublet of debt and guilt (in German, Schulden and Schuld) had prepared in a religious context for a psychology of the “indebted man” who feels unconsciously guilty for never fulfilling his obligations, or, in other words, of never repaying his debts. This is not exactly the same as the Freudian concept of an “originary unconscious guilt,” which is articulated with a predominance of the Law as a moral and civil institution. Rather, it combines an idea of the subject becoming an “indebted man” inasmuch as he lives in a society whereevery citizen is caught in the debt economy, with an idea that debts (whether private or public, or continuously transferred from the private to the public) are essentiallyimpossible to repay. At best they are negotiated (through restructuring and the replacement of old debts by new ones). In order to be able to bargain their deadlines and premiums, indebted subjects are those who must permanently account to the bank for their lifestyles, preferences, and expenditures, and in the end adapt their behavior to what is supposed to be a rational pattern according to their resources and anticipated revenues. No line of credit is granted to the “irrational subject” according to pre-established criteria – which does not prevent banks and credit institutions from creating “bubbles” through their indiscriminate quest for subscribers.
 
4.2. The indebted subject is not only an addicted consumer: she is also a result of the decomposition of the “social citizen,” for whom certain basic services had become (birth)rights — what Robert Castel has called a “social property.” ³⁰ Should we conclude that this, in fact, potentially marks the end of the historical figure of the “citizen,” the typical political and legal subject of the bourgeois era? What makes the situation more ambiguous is the fact that neo-liberal discourse is busy with stigmatizing what it calls “assisted individuals” (or families), while simultaneously endorsing the harassment of individuals by advertisements from banks, insurance companies, and businesses offering “better protection,” i.e., more flexible, individualized loans and contracts that are allegedly more adaptable to the needs and possibilities of everyone, compared to those offered by “anonymous administrations.” In such a situation, however, it would be the buyers themselves who are responsible for their decisions. ³¹ The life of the indebted subject thus appears as an endless race governed by the calculation of her debt’s interests: how much has been repaid, how much remains to pay — meaning how much lifetime can be expected before redemption if this is to be achieved before death. Characteristically, a life in the expectation of “pension,” for which securities, however limited, were acquired in advance (the essential “conquest” of the national-social state), is transformed into a life in the hope that the debts (mortgages, loans, deficits) can become canceled, if no catastrophe takes place (e.g., as a result of losing a job, or finding oneself without health insurance, or living in a period of austerity). But the catastrophe is looming from different angles: loans and mortgages may have been transferred to other credit institutions that impose foreclosure (which means that the indebted man changes master without even knowing), a “private” individual is exposed to the hazard of collective debts affecting States, municipalities, and associations of which he is a citizen (debts that have been decided by practically uncontrolled politicians, corrupted or not). And above all, debts carry interests that can be serviced only through other loans with higher interests, ad infinitum. This was the scheme traditionally applied to States, leading to the crisis of public budgets in the “Third World” in the early ‘80s: it is now reaching the level of individuals (each of them, of course, representing a minuscule risk, but their aggregate mass forming the same type of time-bomb).
 
4.3. The question of the indebted subject is therefore not only a psychological one, it is also political. It begins with the extent to which individuals can become subjected to a life controlled by debt (or normalized by a life of redemption or permanent repayment), and it leads us to asking the possibilities and modalities of resistance to debt (as in past history there had been resistance to tax, or resistance to surplus-labor). Is there a limit to the accumulation of debts, either on the side of debtors or on that of creditors? Neo-liberal discourse and the language of financial advertising describe the individual not only as an entrepreneur of himself (valorizing his capacities as a “human capital” and calculating his own profitability), but also as a micro-business whose rational behavior is to maximize the ratio of his revenues compared to his debts. However, it is not certain that this analogy can be carried to the end, because any business or corporation which can’t reimburse may file for bankruptcy, whereas individuals who can’t reimburse are led to choosing between suicide and destructive revolt. Whether a third possibility exists, which would be a collective, i.e., political resistance, is the decisive question. It is also the most difficult, because the burden of debts that have been “voluntarily” accepted produces negative individualities, for whom feelings of solidarity and political perspectives, the forging of a common interest, have no immediate basis in a professional or cultural experience. Retrospectively, this serves to underline the extent to which class solidarities (and class consciousness) created by identical conditions of the exploitation of labor also reproduced traditional affiliations that have since been abolished.
 

5. Debt and property

If an integral repayment of debts appears impossible, in the case of States (which are ultimately relying on the contributions of individuals) or in the case of individuals (who are always in a relation of dependency upon State legislations and support), what are the possibilities of a political intervention in the infinite chain of their accumulation? One motto now proposed (by political parties such as SYRIZA in Greece, but also by NGOs and moral-intellectual figures in Europe) combines auditing, restructuring, and the denunciation of “illegitimate” or “odious” debts. ³² This would require a widely different orientation of public opinion. But is it thinkable?
 
We must remember here that more or less massive cancellations of debts have been practiced in every human society since time immemorial. They are a regular characteristic of contemporary “liberal” societies, though they are no longer ritualized (as they used to be, for example, in ancient Jewish Law) or part of traditional relations ofpatronage. ³³ Today the mass cancellation of debts is considered exceptional, i.e., imposed by the necessity of choosing the lesser evil, of minimizing losses, or of seeking a practical way out in a blocked situation of massive insolvability, in the interest of creditors, or debtors, or both (which means, in the interest of “society”). Creditors may “rationally” calculate that a more or less complete cancellation of debts, opening the possibility for further contracts, is a “creative destruction” worth more than the ruin of a mass of producers or entrepreneurs (although we see that such rationality is anything but universal: as shown by recent developments in Europe, it is always inflected by ideological beliefs and moralistic attitudes). We should also note that cancellations of debts have frequently been linked to strategies of reconstructing the economic capacities or possibilities of development for individuals and especially States (or nations), e.g., after wars or natural catastrophes, as in the case of post-WWII Germany. ³⁴And finally we should note that the equivalent of formally cancelling debts can also be obtained through different strategies combining monetary manipulations (through the use of inflation) and juridical instruments (which illustrate the superior rule of state power, whether national or foreign, over private interests,); such manipulations can involve more or less voluntary renunciations, which are used to eliminate the toxic assets (as in the recent case of the rescuing of the banks in Cyprus). All this amounts to saying that a choice to uphold or cancel debts, and a choice between different strategies for the cancellation of debts, is always a political decision in which relations of power are waged or shifted. In the late-capitalist world of today, this has probably become one of the most effective political decisions. We could even say that an important part of thepolitics of the global economy is premised on answering the question: which debts, and whose debts are cancelled?
 
It is also highly significant, however, that a cancellation of debts must appear as an encroachment on the right of property, considered as an absolute right: it shows clearly that property (whether private or public) is always in fact a relative or conditional notion. More precisely, in today’s circumstances, property is conditioned by its relationship to debt, because there is hardly a property that is not pledged on credit, or engaged in investments and loans that are the debts of others, or serving as a mortgage for a debt. But property is also dependent on the applicability of the law of property, its possibility of being enforced or vindicated. This makes the correlation of property and debt (or ownership and credit) the real (concrete) social institution, in fact, rather than each of them being considered separately and abstractly. This of course means that monetary property has become by far the dominant form of ownership (or wealth), both for the rich and the poor, either in the form of plenty or lack. But the implications are more significant, since in the traditional sense a “capital” could still appear as an object with a stable (individual or corporate) proprietor, whereas credit is a mobile, fragile, fluctuating token signaling a relationship to others. This also means that economic relations are more permanently premised on the vicissitudes of their own political conditions than before. And finally this leads to considering the ways that processes of expropriation are underpinning transformations of the balance of power in our society, along lines that echo certain celebrated Marxian formulas, but are also very different in their political consequences.
 
5.1. In a final chapter of Capital, Volume One, Marx presents a dialectical perspective on the development of the capitalist mode of production towards its “socialist” overcoming, using the formula, “The expropriators are expropriated. … This is the negation of the negation” (929). He means that capitalism had used the rules of private property to dispossess the majority of the population (first, the peasants and craftsmen transformed into wage laborers, then the small owners of capital themselves), resulting in a concentration of capitalist ownership and a high degree of the socialization of labor. For him, this could only lead to a social appropriation of the means of production for the benefit of the collective labor-force. Contemporary transformations in the condition of individuals with respect to their own laboring capacities show a very different logic at work (which nevertheless can be considered a new stage in the development of what Marx himself called the “real subsumption of labor under capital”) (1035).
 
A good example is the possibility that young people could access higher or professional education (and therefore also access the job market in a competitive manner) through the acquisition of loans instead of grants or scholarships. Grants were conferred on conditions of merit or resources or both. Loans are pledged on future earnings and careers. Students and their families are squeezed between continuously rising tuition fees (attributed to increasing costs in education and the scarce resources of colleges and universities, when of course the withdrawal of funding is a political choice) and the dependence (except for a limited number of wealthy students) of a lengthy training on obtaining a credit that needs to be repaid after completing a degree. This means that young professionals start their career, not with a prospect of progressively improving their living standard, but with the burden of an initial debt, which coerces their family projects and career possibilities, as well as housing and other insurance options—in other words all basic needs. These young people are not independent contractors, much less entrepreneurs in the form postulated by the ideal neo-liberal anthropology; they are in fact already possessed by the collective power of finance capital, and bound to reproduce it through their lifelong indebtedness. Another passage from Marx’s Capitalcomes to mind, where he compares “capitalist bondage” with ancient slavery: “The Roman slave was held by chains; the wage-laborer is bound to his owner by invisible threads. The appearance of independence is maintained by a constant change in the person of the individual employer, and by the legal fiction of a contract” (719). This could appear to be a rhetorical trick, but isn’t it the case that in contemporary debt-society the chains have become “visible” again, though not made of iron, but of paper, signed obligations, and individual files kept in the bank’s records?
 
From an anthropological point of view, we can also say that capitalist exploitation as described initially by Marx was premised on the existence of a work-force made of “independent” laborers who were proprietors of their own force or capacity, in a manner formally compared to the way in which others possess capital (i.e., money) or means of production. Two classes, but one single right or legal form. Classical political philosophy (Locke) expressed this as self-ownership, in opposition to slavery or other pre-capitalist modalities of personal dependency. ³⁵ But, as Marx also demonstrated, this formal property of oneself is annihilated practically when workers are reduced to subsistence level, and therefore have no other choice (for themselves and their families to survive) than to enter relations of subjection with respect to the capitalist class. This was not a stable situation, however. During the decades after the industrial revolution, class struggles (termed by Marx a “protracted civil war”) led to the more or less equitable distribution of “social rights,” which protected workers’ lives, raised their condition above subsistence level, and increased their capacity to bargain with the capitalists. The bulk of these social rights (never complete or indestructible) form – in Robert Castel’s terminology – a social property that recreates some of the conditions of independence for individuals even within a capitalist society. It was the achievement of the welfare state in some parts of the capitalist world (essentially the Global North) to grant these social rights a quasi-constitutional status, and to make them part of the social contract on which the stability of the democratic institutions practically rested – what I have called the national (and) social State. But it is precisely this construction, at the same time political and economic, that is now being dismantled by neo-liberal policies. The idea of social rights and social property has been delegitimized and has been replaced by the idea of human capital advocated by leading theorists of contemporary economics. According to this new paradigm, individuals are not proprietors of their capacities: they must acquire them on a market, in order to be able to invest them in productive activities, where they can treat their own person as an asset. ³⁶ In practice, this amounts to producing an anticipated expropriation of the individual’s capacities, whose training and use entirely depend on market conditions. The only thinkable alternatives for this virtual form of enslavement would come from a new “negation of the negation” based on the social acquisition of capacities: either in the form of generalized public subsidies of individuals’ educational needs (according to social, cultural and meritocratic criteria), or a return – on new historical bases – to the old egalitarian ideal of an education that is common, reciprocal, and, essentially, free of charge for the students.
 
5.2. Another decisive question, however, arises from the constitutive relationship between debt and property: it concerns legitimate and illegitimate indebtedness. Again, this is an ageold problem, traditionally associated with the moral issue of usury (or, in contemporary terminology, odious debts), that resurfaces in contemporary debates, particularly about the causes, consequences, and handlings of sovereign debts — but also in debates concerning the abuses of “mass credit facilities” by banks that led to the ruin and foreclosures of millions of homeowners.
 
The question was first raised in the context of the “Third World” debt crises of the 80s onwards and the punitive “structural adjustments” imposed on indebted countries by the IMF. The governments of Latin American countries (such as Argentina and Ecuador) in particular argued that creditors had been contracting with dictatorial regimes acting in complicity with foreign banks to pressurize their own peoples (as was again the case in the recent manipulation of Greek public accounts with the help of Goldman Sachs). This critique was expanded by the movement for the cancellation of the debt of the “Third World,” which was part of the World Social Forum. The movement argued convincingly that the (huge) amounts of debts subscribed by poor countries are a blatant form of neocolonialism, because they result from a dissymmetric relationship of forces, in which the Global South (already exploited as a source of mining and agricultural raw materials) is really trading promises of development against an accumulation of obligations. Underdeveloped ex-colonial countries are serving a continuous flow of interest to the North, whose sum total largely overcomes whatever they have received: so that in fact they repay their debts not once or twice, but indefinitely. A similar argument is now used by citizen’s movements in the North and by political parties, NGOs, and even economists who are critical of neo-liberalism in European countries. What they have shown is that the usury effect results entirely from the fact that weaker countries and populations inside the European Union (particularly within the Eurozone, where they have no possibility of devaluing their currency) are forced to take loans that are more expensive than for the economically stronger countries. This is called the spread of interest rates, on which speculators play, with the double effect of feeding short term profits for the banks and hedge funds, and of making deficit reductions impossible (while at the same time creating the risk of periodic defaults). In fact, if it were not for this “leverage” of the debt entirely due to the deliberate isolation of the Greek society from the rest of the European Union, and the acceptance by the EU of the rules ofinternational finance to command its own internal relations, Greece would have already repaid its debt several times. Hence the demand on the part of militant groups for an audit of public and private debts showing how they have been created and multiplied, and for whose benefit. ³⁷
 
In any case, it is clear that there can be no resolution, negotiation, or arbitration of the crises of sovereign debts that affect the citizenry without a regulation of the activities and the privileges of the banking system (currently protected by political principles and decisions), whose agents are able to cash in on super-profits without having to accept any significant part of the losses. Officially, this is because the economy as a whole, and the lives of the ordinary population, depends precisely on the survival of the credit system. But doesn’t this logic amount to a vicious circle? And, once again, a political choice, albeit completely enmeshed in economic conditions.
 
5.3. Structural inequality between creditors and debtors is, of course, also a form of mutual dependency. It cannot be treated in purely juridical terms, from the moment it leads to an increasing polarization between classes or collectives of debtors and the corporate interests of creditors, however heterogeneous they may be on both sides. It may even be the case that these classes overlap, as I suggested above (when asking the question: who owns what?). And structural inequality between creditors and debtors is always mediated by decisions of States or interstate institutions regarding the governance of the global market, decisions that confirm certain property rights anddestroy others (or let them decay and become fictions). Again, in his analysis of the class struggles after the industrial revolution, which had led to an apparently limitless prolongation of the working day and the overexploitation of women and children in the factories, Marx used a remarkable formula to express the dilemma arising from this kind of asymmetry: “Between equal rights, force decides” (the German term is Gewalt, which includes everything constituting a relationship of forces, from violence to legal State power). We may conclude that resistance to the abusive power created by generalized debt will also involve a combination of political struggles (or popular revolts) and legislations in the general interest against the free course of speculation – provided these legislations and struggles take place not only at the national level (which is increasingly irrelevant from the point of view of finance capital) but also at the transnational level. Debtors of all countries, unite? Why not? But also: We are the 99%…