The news this week has included the following startling, but not surprising, facts regarding household debt in the UK:
Britain’s household debt mountain has reached a new peak, with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders, according to the TUC… The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been at. It is well above the £286bn peak in 2008 before the financial crisis, the TUC said.
Related to 10 years of Conservative-led austerity, household debt has increased as a way to respond to the pressures of being able to afford basic necessities. David Harvey, Distinguished Professor of Anthropology & Geography at The Graduate Center, CUNY, discussed in his latest podcast the concept of necessities and its relation with the concept of freedom. It is often argued that freedom is an exclusive capitalist neoliberal offering, and that a socialist system would remove individual freedoms from people (this argument mostly relies upon comparisons with ‘communist’ regimes such as Soviet Russia, which are criticised by many socialists and would certainly have been criticised by Karl Marx). Whilst this may be true if your individual freedoms include being able to be very, very rich at the expense of the majority, socialism via the public domain, rather than the market, would provide more people more individual freedom by providing everyone with access to basic necessities. Harvey cites Jeremy Corbyn’s Labour party policies as a good example of how this can work in practice.
The level of household debt reported by the TUC, which also as a note doesn’t include outstanding mortgage debts, also relates to the rise of insecure, low paid work. The household debt figure reported on included “the total amount lent in bank overdrafts, personal loans, store cards, payday loans and outstanding credit card debts. It also included student loans, which added a substantial amount to the figures.” The research also doesn’t include Christmas debts, which as I discussed in a previous article, takes on average 5 months to pay off!
The centrality of debt is not a surprise. David Harvey argues in his book Rebel Cities: From The Right to the City to the Urban Revolution that understanding the credit system needs to be central to a critical conception of how the system works and the increasing crises and instability it faces:
Internalizing the credit system and the relation between the rate of interest and the rate of profit within the general laws of production, circulation, and realization of capital is likewise a disruptive necessity if we are to bring Marx’s theoretical apparatus more acutely to bear on actual events.
The rise of fictitious capital has been central to sustaining the capitalist system but also creating pressures and demands upon it that resulted in the 2007/8 crisis (The Big Short is a fantastic film illustrating this very well). However, private debt was transferred into public debt, with well organised and designed campaigns blaming everyone and anyone, whether that be refugees, benefit claimants, ethnic minorities etc. to take attention away from the role of capital and especially fictitious capital in creating the crisis (it’s a lot harder to quickly explain what a Collateralized Debt Obligation is!). Related to this blame game is the political programme of austerity, which attracted condemnation from the United Nations Special Rapporteur on extreme poverty and human rights, which I wrote about in a recent article, and has created an economy that the TUC report shows is more reliant on unsecure debt than ever before.
We have created a system where we ‘value’ the ‘rights’ of fictitious capital over ordinary people, where the failures of the market are protected by the state whilst the same state unleashes a political programme that creates record levels of household debt, insecurity and low wages, as local services are closed or cut. This relates to the contradictions of capitalism and neoliberalism, which David Harvey has written and spoke a lot about and which I touched on in my previous article regarding the contradictions created by demand side economics and supply side economics, with the former relating to Marx’s arguments in Volume 2 of Capital regarding the need for capitalism to be careful when depressing worker and labour power, as there is an awareness that workers need to be able to consume and spend to keep the system going and the latter relating to the issues Marx talks about in Volume 1 of Capital, especially regarding the need to destroy labour power in order to maximise the surplus value and profit relating to capital mobility and also the creation of fictitious capital.
These contradictions create instability and systemic problems, as shown by how there are concerns regarding another crisis happening in 2020 (see here and here for instance). The system isn’t sustainable nor does it work for the majority of people.
Jane Watkinson (she/her) is an anti-capitalist, intersectional feminist and vegan interested in Marxism, social ecology, sociology, revolutionary humanism, and studying radical social, economic, and political theory and how this can be applied in practice. She is a freelance researcher working in the community sector. Her LinkTree is here.