The Fed soothed skittish markets, but at what cost? There has been very little conditionality attached to its acquisition of corporate debt, which means that even though Wall Street was buoyed, no guaranteed benefits trickled down to workers in need. The CARES Act granted the Fed discretionary authority to “require corporations receiving rescue aid to retain jobs, maintain collective bargaining agreements, prohibit dividends and stock buybacks, and limit executive compensation,” Amanda Fischer, of the Washington Center for Equitable Growth, has written. But the Fed did not impose such conditions on corporate borrowers. Instead, the Fed bought the corporate debt of companies such as Tyson Foods, a meat-processing company that has become infamous for its Covid-19 outbreaks, and ExxonMobil, which chose to lay off workers instead of reducing payouts to shareholders. These actions create the true moral hazard where debt is concerned, insulating businesses from the downsides of their recklessness by insuring the public picks up the tab.
The question of whether debts must be repaid is always also a question of who will pay them. Will creditors and landlords at the top of the income scale be able to collect in full, or will debtors and renters at the bottom earn a reprieve? In “Debt,” David recounts that, in the ancient world, bad harvests and warfare repeatedly pushed farmers into debt peonage, or even debt slavery, threatening social stability. To prevent total calamity, Sumerian and Babylonian kings announced periodic amnesties. “In Sumeria, these were called ‘declarations of freedom,’ ” David wrote, noting that the “Sumerian word amargi, the first recorded word for ‘freedom’ in any known human language, literally means ‘return to mother’—since this is what freed debt-peons were finally allowed to do.” The economist Michael Hudson points to the Code of Hammurabi, dating to 1750 B.C., which aimed to restore economic normalcy after major disruptions: the forty-eighth law proclaims “a debt and tax amnesty for cultivators if Adad the Storm God had flooded their fields, or if their crops failed as a result of pests or drought.”
As the historical record shows, debt relief is not a utopian demand. In the modern era, more than a million loans were granted by the Home Owners’ Loan Corporation to rescue homeowners with distressed mortgages during the Great Depression. Today, a full student-debt jubilee would be an obvious place to start. Eileen Connor, of Harvard Law School, is unequivocal about President-elect Joe Biden’s ability to eliminate all student debt by executive action: “The legal authority is there. And the moral justification is there, too.” She pointed to the “growing recognition that student-loan debt entrenches structural inequalities, especially racial inequality.” Research shows that a full student-debt jubilee would help close the racial wealth gap, because the burden of student debt falls disproportionately on borrowers of color. (A 2019 study reported that, twenty years after starting college, the median white student owes six per cent of their cumulative federal student loans, or around a thousand dollars, while the median Black student still owes ninety-five per cent, or around eighteen thousand five hundred dollars.) There are also urgent economic incentives for widespread debt relief. Full student-debt cancellation, a 2018 analysis estimated, could potentially boost the economy by as much as a hundred and eight billion dollars a year, with the benefits reaching far beyond the nearly forty-five million people directly burdened by student loans.
A growing number of economists argue that we can’t afford not to cancel debt. As the title of a Washington Post op-ed by Hudson, in March, bluntly put it, “A debt jubilee is the only way to avoid a depression.” Richard Vague, the secretary of banking and securities for the state of Pennsylvania, recently laid out concrete proposals to restructure mortgage debt, student loans, health-care debt, and small-business loans. “Whether called ‘restructuring,’ ‘forgiveness,’ or ‘jubilee,’ ” Vague writes, “it is the only feasible way to reduce private sector debt when it accumulates to crushing levels in societies, and the only way to do so without severely damaging the economy.”
Biden—a former senator from Delaware, the credit-card capital of the world, and a driving force behind a controversial 2005 bill that stripped student borrowers of bankruptcy protections—will need to be pushed to stand up for debtors. Grassroots pressure is building to that end. In June, the Movement for Black Lives called for the absolution of student loans, medical debt, mortgage payments and rent; tenant unions across the country are rallying to cancel rent. In July, the Poor People’s Campaign, co-chaired by the Reverend Dr. William Barber and the Reverend Liz Theoharis, issued a “Jubilee Platform” that includes various forms of debt cancellation. On the first day of the new Democratic Administration, the Debt Collective will launch a student-loan strike, the Biden Jubilee 100, building on the success of our previous strike campaign and demanding that the President immediately abolish all federal student-loan debt using compromise-and-settlement authority. Why should ordinary people honor their debts when the rich walk away from theirs without remorse? If corporations are people, why would they be more entitled to debt cancellation? Instead of sinking and struggling alone and ashamed, debtors are beginning to take a page out of the creditors’ playbook and lobby for their shared interests, in order to challenge the phony morality that upholds an untenable status quo.
The month before David Graeber died, I reread “Debt,” in anticipation of a dialogue that we had planned to record and publish in September. This time, I found the uncompromising, radical vision at its center even more striking. “Debt” does more than challenge the reader to rethink the old shibboleth that all debts must be repaid—it questions the very notion of debt itself.
“On one level the difference between an obligation and a debt is simple and obvious,” David writes. “A debt is the obligation to pay a certain sum of money. As a result, a debt, unlike any other form of obligation, can be precisely quantified. This allows debts to become simple, cold, and impersonal—which, in turn, allows them to be transferable.” Although obligations to family and friends are nontransferable, a loan at a set interest rate is an asset that can be securitized and traded. By adhering to the logic of compound interest, debt crowds out more indefinite obligations, commitments that can’t be paid back in cash and can only be met with respect, gratitude, generosity, and care. Many of us feel indebted to our parents, for example, but that doesn’t mean we can write them a check as payback for bringing us into the world.
We are all, David reminds us, caught up in relationships in which the balance sheet is never wholly settled—simultaneously debtors and creditors, in countless small exchanges. Our everyday language reveals this: the English “much obliged” and the Portuguese “obrigado” mean “I am in your debt,” while the French “de rien” and Spanish “de nada” assure others that it is nothing. To say “my pleasure” is to claim that an action is, in fact, a credit—you did me a favor by giving me an opportunity to be kind.
Credit, of course, is the flip side of debt. Etymologically, the term conjures trust; extending trust to others is the basis of sociability. “The story of the origins of capitalism,” David writes, “is not the story of the gradual destruction of traditional communities by the impersonal power of the market. It is, rather, the story of how an economy of credit was converted into an economy of interest.” What if, instead of believing the myth that we are guilty debtors, we saw ourselves also as creditors—as human beings entitled to a dignified, secure, and flourishing life? What if our societies really do owe us all an equal living?
In David’s view, the slate must periodically be wiped clean, so that we can free ourselves from debt as both an economic burden and as an ideology that shapes and distorts our interactions. For now, debt pervades our thinking, even when we aspire to change things. As protests for racial justice are likely to continue in response to police brutality, it is often said that we are living through a moment of reckoning. This word is telling: to reckon means “to calculate,” or “to establish by counting or calculation”—as in, my dictionary tells me, “his debts were reckoned at $300,000.” Given the scale of the harm, it is impossible to truly reckon with the legacy of slavery and structural racism in this way, which is why leaders of the movement for reparations for the Atlantic slave trade often oppose attempts to assign a number to the debt, arguing instead that it is so vast it necessitates a reordering of international relations. Or consider the recent announcement by the city of Louisville, Kentucky, that it would pay more than twelve million dollars to the family of Breonna Taylor, the young woman killed by the police during a botched raid on her apartment, as though any sum could encapsulate her life’s worth. Certainly, monetary compensation is important, but the state also has an obligation to insure that what happened to Taylor never happens again. “If people are really serious about a national reckoning on racial injustice,” Ayanna Pressley told me, “the only receipts that matter to mitigate the existing hurt and to chart a new path forward are our budgets and our policies.”
David Graeber believed that we might one day free ourselves from the tyranny of debt to embrace a more expansive economic paradigm. As an anthropologist, he understood the enormous variation and inherent mutability of human society and cultural traditions—financial contracts can be rewritten, and social contracts can be remade, as well. That’s what grassroots movements do, pushing against vested interests that, when under enough pressure, typically prefer half-measures to profound transformation. In “Debt,” David remarked that, even when plagued by debt crises, ancient Athens and Rome “insisted on legislating around the edges.” The United States has done something similar, he wrote, eliminating some of the most egregious abuses, including debtors’ prisons, but never having challenged “the principle of debt itself.”
Even though I have spent years organizing for a mass jubilee, I, too, have held on to the idea that some debts are legitimate, and that what we need is a sort of moral audit to separate the odious from the upright. I wanted to ask David about this during the conversation we had planned. Now that he’s gone, I feel like I’m beginning to grasp his deeper point. How could I ever pay back what I owe him? My debt goes beyond what numbers or words can convey. The only way I can honor my obligation is to continue fighting for the transformed world he wanted to see.
