The Politics of Debt

1 . This conference started with an argument in a pub. The argument was about the
long-term political implications of the anti-poll tax campaign. The details of the
argument don't matter, but it made clear to us that we needed some sort of forum to
talk about the wider issues involved in the campaign against the poll tax.
Those of us who are involved in the campaign go frequently to anti-poll tax
meetings, but inevitably most of the time is taken up with questions of practical
organisation and with learning about the details of debt collection procedures. That
is not such a negative experience: on the contrary, the overwhelming feeling coming
out of the anti-poll tax campaign is a sense of our own power, as the threats of the
authorities become more and more ridiculous, as we see the helplessness of
thirty-odd sheriff's officers in the face of over 100,000 non-payers in Lothian
alone. But we have little opportunity to reflect on the implications of all this, on
how it fits into broader political issues, on what will happen to the anti-poll tax
movement after the poll tax itself is gone. The main aim of the conference is to
provide a forum for discussing these issues.

Another way of putting that point is to say that we want to reflect theoretically
on the anti-poll tax campaign and the power which is expressed through that
campaign. To reflect theoretically on our power is to relate it to the society in which
we live, a nasty, oppressive society, a capitalist society, a society dominated by
capital and those who control it, a society in which opposition so often seems
hopeless, a society in which the stifling conformism of the political parties seems to
smother all hope, all dreams. So often it seems that we have to struggle, that it is
something that we cannot avoid if we are not to lapse into vegetable-like
resignation, but that our struggle is just an endless uphill process, in which the
odds are so heavily stacked against us. The anti-poll tax campaign gives us a sense of
our own power, but we need to broaden that out, to understand our power in society
as a whole, to understand the necessity and the possibility of transforming society as
a whole.

That is where Marxism comes in. Marxism is a theory not of capitalist
oppression, but of the contradictions of that oppression. We don't need a theory to
tell us that we are oppressed, that we live in an oppressive society: that is obvious.
The point of Marxist theory is to understand that there can be a way forward, that
the system of oppression is unstable, that it is full of contradictions. Those
contradictions are not external to us, they are not an external 'economic' framework
within which our struggles take place, they are not objective laws of capitalist
development that exist independently of ourselves. The instability of capitalism is
nothing but the expression of our power, albeit an expression which we often do not
recognise as such. Marxism, in other words, is the theory of working class power, a
theory to help us recognise and increase our power.

2. What does this mean in relation to the poll tax? In this session I want to focus on
just one issue: the sheriffs' officers and debt collection. A year ago probaly none of
us even knew what a poinding was, but in the last few months we have all become
experts in debt collection, in poindings and warrant sales, in wage arrestments and
bank arrestments. We have carried out mock poindings at the premises of sheriffs'
officers and we are probably looking forward to the day when the sheriffs' officers
are foolish enough to try to carry out a warrant sale for non-payment of the
poll-tax. And we know quite well, from our own experience and from what people
say to us, that the issue is not just the poll tax: that sort of action against sheriffs'
officers gets a lot of support because people link it with their own experience of
debt and the general hatred of the sheriff officers and, more generally, with a
history of oppression and resistance to that oppression. Probably nearly all of us
here are substantially in debt. In 1986, apparently, the average family owed
f 1,500 in consumer credit alone (leaving mortgages out of account) and spent 60%
of its income in repaying debt and interest, and that figure has certainly grown
since then. The number of people defaulting on their debts is rising all the time, and
well over two million people are taken to court each year for non-payment of debts
in Britain.

But why is this happening at this time and why should our struggle against the
poll tax take the peculiar form of resistance against the enforcement of debt? If debt
plays an important part in the lives of most of us (in the form of mortgages, bank
overdrafts, credit cards), it is because credit and debt play a central part in the
reproduction of modern capitalism as a whole.
Credit has always been important for capitalism, particularly in times of crisis.
As capitals experience difficulty in realising their profits, they turn to banks to
borrow money to tide them over difficult times. Similarly, those who find that
investment in production is no longer giving them an acceptable profit, seek to
realise profit by lending their money to productive capitalists at a certain rate of
interest.

In modern capitalism, however, credit plays a much more central role. Modern
capitalism (by which I mean post-war capitalism, often referred to as 'late
capitalism') is built upon the (reluctant) recognition of the power of labour. The
fear of revolt during the 1930s and the realisation (especially during the War) of
the power of the trade unions led capital to the conclusion that the only way of
securing a stable expansion of capitalism after the war was through recognising the
power of labour and turning it to capital's advantage. Starting with the introduction
of Roosevelt's New Deal in 1933, capital was forced to recognise that the only way of
containing social discontent was by reorganising its domination over society. This
was done, on the one hand, by drawing the trade union bureaucracies more closely
into the state and, on the other, by committing the state to a policy of full
employment through demand management. In terms of economic theory, these
policies were justified by the work of Keynes, which is why they are often referred
to as Keynesian. The important point is that they were based on an enormous
expansion of credit. When profits threatened to fall, full employment was
maintained by expanding credit, by lending both to companies directly and to
consumers so that the market for capitalist commodities was maintained. The
Keynesian solution to the instability of capitalism was to contain social pressures
by expanding credit: the management of credit was to provide the basis for an even
and harmonious development of capitalism. Neither credit nor deficit budgeting by
the state was new, but Keynesianism raised them to a principle of capitalist rule,
anchoring credit at the core of capitalist reproduction.
For a while, all went relatively smoothly. But credit is always a gamble on the
future. From capital's point of view, the use of credit commits in advance a share of
profits not yet created, a share of the surplus value not yet produced by the
workers. If the credit can be used to increase the capitalist's profits, to increase the
surplus value produced by the workers, then the gamble comes off. If not, then the
debt makes the capitalist's position more and more difficult. The key to it all is how
effectively capital can exploit labour, and how effectively labour can resist
exploitation by capital.

By the late 1960s and early 1970s, capital was gambling and losing. Debt was
expanding, but at the same time, the costs of exploiting labour were rising (because
workers were demanding more and more and because of technological change), so
profits were falling. This is what Marx refers to as the tendency of the rate of profit
to fall: as capitalism develops and more advanced technology is introduced, there is a
rise in the investment required to exploit workers, so that although the rate of
exploitation may rise, the rate of profit tends to fall. And as profits fell, two things
happened: on the one hand, one part of capital borrowed more money to make up for
its falling profits, and, on the other, another part of capital decided it was safer to
lend money rather than risk it in productive investment, where profits were so
unsure. Capital was gambling and losing, and the more it lost, the more it gambled.
This is often referred to as the over-accumulation of capital: the rising costs of
exploiting the working class meant that there was too much capital in the world,
more capital than could make a reasonable profit from the exploitation of labour.
When that happens, capital starts running all over the place, trying to find a profit
wherever it can.

The matter came to a head in the mid-1970% not only in Britain, but
throughout the world: profits fell sharply, there were lots of bankruptcies,
unemployment went shooting up, and governments everywhere (conservative and
social-democratic) said that they could no longer follow Keynesian policies, they
could no longer maintain full employment, they could no longer give so many
concessions to the trade unions, they could no longer spend so much on welfare. In
this country, the abandonment of Keynesianism was formally announced by James
Callaghan in a speech to the Labour Party Conference in 1976.
The new philosophy of state action was monetarism, first introduced here under
the Callaghan government, but more fully identified with Thatcher. Credit expansion
was to be replaced by the shopkeeper's philosophy: you pay for what you buy. The
attack on local government, and particularly the poll tax, have been justified in
terms of this philosophy: the market rules, you must pay for the services you
consume.

Cutting back on credit meant trying to undo the whole way in which things had
been done since the war: pushing the trade unions out of the state, cutting back on
social welfare expenditure, cutting back on local government, making the whole
state more and more repressive, more and more an apparatus of bureaucratic
control.
But something has obviously gone wrong with the shopkeeper's philosophy of
monetarism. If you go into a big shop, then ten years ago you might have been
expected to pay in cash, but now they always ask you, 'cash or credit?', and there is
probably no shop on Princes Street that doesn't tell you that it can give you at least
£500 instant credit. How does that fit in with monetarism?

Monetarism as an economic policy was dropped very quickly, by Thatcher, by
Reagan and by all the major governments. To really cut back on credit the way they
said would lead to such a massive destruction of capital that it would cause such a
wave of revolt throughout the world that the very existence of capital would be
threatened. Monetarism as a policy of state austerity and as an abrasive class
strategy against labour has been retained, but at the same time there has been a
massive expansion of credit throughout the 1980s.

In other words, the crisis of the overaccumulation of capital has not been solved,
because that was not possible in the face of the power of labour. The power of the
working class expresses itself in the prolongation of the crisis of capital. There is
still an overaccumulation of capital: more capital than can make a reasonable rate of
profit. This expresses itself in the more and more frenzied flow of capital around
the world in pursuit of a profitable outlet: that is why you get the much talked-of
rise of the City and the financial markets throughout the world: it is not a sign of the
strength of capitalism, but an expression of the weakness of capitalist production.
During the late 1970s and the early 1980s, after the introduction of more
restrictive policies in the more industrialised capitalist countries, a lot of the
capital flowed in the form of loans to Latin American and Asian countries. After the
Mexican government declared in 1982 that it would be unable to pay its debts, those
countries ceased to be seen as a safe outlet. With the relaxation of monetary policies
throughout the world, loan capital flowed back to the more industrialised countries
where it has tried to solve its problems of overaccumulation partly thorugh a
massive expansion of consumer credit. The fact that debt has become so much a part
of our lives is an expression of the continuing crisis of capital.

Monetarism, far from being the simple shopkeeper's philosophy, has developed
two faces: the unregulated expansion of credit on the one hand and the abrasive attack
against the working class on the other. The two sides are closely interconnected. On
the one hand, the more the state cuts back on welfare spending, on housing, health
and social security, the more we are forced into debt in order to maintain a tolerable
standard of living. On the other hand, the more its whole existence is based on
credit, the more capital needs to push through changes in working practices,
changes in technology and reductions in state expenditure in order to increase their
profits, which is the only way of keeping up with their increasing debts.

What is the conclusion from all this? Firstly, it is clear that the struggle
against the poll tax is not a single issue, but just one aspect of the general struggle
against capital and the more and more repressive development of capitalism. We all
know that: probably we all got involved in the poll tax campaign not because of the
particular issue, but because we see it as an important channel for our anger, for
struggle against oppression. And yet we often slip into talking of it as though it were
a single issue, a single case of blatant injustice. That seems to me to be both wrong
and dishonest. The poll tax is a particularly important aspect of class struggle at the
moment, because for once, the government has made a massive mistake: most of the
anti-working class measures introduced over the last ten years have been
introduced in such a way as to divide the working class. This time, it has been done
in such a way that it unites the working class, and provides us with a battle that we
really cannot lose.

The fact that our struggle against the poll tax has taken the form it has, namely,
increasingly a struggle against debt enforcement, is not by chance. In 1990, debt is
central to the way we live because it is central to the way that capitalism survives,
and central to the way that capital maintains its domination over us. It is the respect
and enforcement of debt that holds capitalism together at the moment. Normally,
debt is something that individualises and weakens us: although we are probably all
in debt, few of us would want to talk about it, and we would be ashamed not to be able
to pay our debts. But with the poll tax, it's different, it's a debt we're proud of, a
debt we even boast about, and a debt we are determined not to pay. That is surely one
place where the revolutionary potential of the poll tax campaign can be seen: by
trying to politicise not just our poll tax debt, but the question of debt in general, by
showing that there is a unity between our experience of debt and the international
debt crisis and its effects in Latin American and indeed Eastern European coutries,
and that there is a unity between struggles over debt and struggles over production.

'Can't pay, Won't pay' is a slogan that can be applied to a lot of things besides the poll
tax. Perhaps we should think of the Poll Tax campaign not simply as a campaign
against a specific tax, but as the first step of a 'Can't pay, Won't pay' campaign that
should be developed into other areas.