ROAR Issue 3 The Rule of Finance

Reflections on a Revolution
ISSUE #3 - AUTUMN 2016

Wolff Malinen Harrington DiMuzio
Roos Haiven & Thornton Graeber Hager
The rule of
FINANCE
3
Issue #3
The Rule of
Finance
“The first rule of Finance Capital is:
You do not talk about Finance Capital”
FO UN DER A N D E D ITOR
Jerome Roos
MA N AGIN G ED ITOR
Joris Leverink
A RT DIRECTOR
Bojan Kanižaj
IL LUSTRATOR
Mirko Rastić
CO N TRIB UTOR S
Hannah Appel, Tim DiMuzio, David Graeber,

Sandy Brian Hager, Max Haiven, Laura Hanna,
Brooke Harrington, Luke Herrine, Ann Larson,
Fanny Malinen, Alessondra Shackleton,
Cassie Thornton, Richard D. Wolff
EDITO RIA L CO L LECTIVE
Carlos Delclós
Leonidas Oikonomakis
MA DE PO SSIB LE BY
Foundation for
Democracy and Media
and 200+ individual funders
ED I TO R I A L
The Financial
Aristocracy
T
he history of capitalism is characterized by a fundamental para-
dox, in which the most abstract and most impersonal expres-
sion of value — money — mediates the most concrete and most
personal form of power. From Medici popes in renaissance Rome and
Rothschild peers in Victorian England to Goldman Sachs’ private army
of mercenary technocrats, moneyed elites have long exerted extraordi-
nary influence over politics. Contemporary capitalism may present it-
self as a faceless regime steered by anonymous market dynamics, but as
in previous eras it has produced an extremely oligarchic order in which
62 easily identifiable names and faces now control over half the world’s
wealth.
At once astonishingly abstract and intensely personal, global finance

is therefore neither here nor there: one moment it appears as an initial
public offering on the stock exchange, only to vanish in a tax haven
at night and resurface at your doorstep the next morning in the shape
of a bailiff. A single trader’s gamble on a specific monetary movement
may bring great fortune to his hedge fund, yet spell the ruin of an entire
nation. And what’s worse, there appears to be little we can do to bring
these professional gamblers to their senses. The robber barons run-
ning the show could easily be rounded up, put on a double decker bus
and collectively driven into a ravine — and still their firms’ speculative
operations would largely carry on undisturbed. As one of Steinbeck’s
characters in The Grapes of Wrath put it, “It’s the monster. Men made it,
but they can’t control it.”
The so-called international financial markets that undergird the capi-
talist world economy therefore act as an immensely complex facade ob-
scuring a terrifyingly simple truth: the obscene inequalities of wealth
and power at the heart of the contemporary global political economy.
On top of that highly unequal and thoroughly undemocratic order sits
what Marx called “the aristocracy of finance” — that slice of the 1 per-
cent that ostensibly specializes in the allocation of private investment
and the intermediation between lenders and savers. This third print is-
sue of ROAR Magazine aims to investigate the immense class power
and extraordinary political privileges of that moneyed elite. What are
its sources? How did it evolve over time? And how can its rule be re-
sisted — and eventually overcome?
Featuring leading critics of financialization as well as inspiring grass-

roots activists, artists and up-and-coming scholars, The Rule of Finance
also looks beyond the impersonal domination of this “class of idle rent-
iers,” reaching out towards radical new horizons and highlighting the
emancipatory potential of innovative new forms of debtor organizing.
Today, exactly five years after the Occupy Wall Street movement took
the world by storm, the struggle against the 1 percent and the fight for
social justice, debt cancellation and real democracy continues. This is-
sue asks how we might begin to turn the tables.
Jerome Roos
FO UN DER A N D EDITOR
Joris Leverink
MA N AGIN G EDITOR
All original illustrations by
Mirko Rastić
CONT
12
R I C H A R D D. WO L F F
The Contradictions
of Finance
16
SANDY B R IA N H AG ER
The Rise of
Bondholding Class
26
BROOKE HARRINGTO N
The Global 1 Percent

Under Siege
DAV I D G R A EB ER
On Fancy Forms
of Paperwork
34
and the Logic of
Financialized
Violence
ENTS
50
TI M D IM UZ IO
The Life and Times

of the 1 Percent
58 CASSIE THORNTON &

M AX HAIVE N
The Debts of the

American Empire
72 FANNY M AL INE N
The “Golden Noose”

of Global Finance
96
JEROME R OOS
82
D E BT C O L L E C T IVE
Defeating the The Potential of

Global Bankocracy Debtors’ Unions
The
Contradictions
of Finance
12 ROAR MAGAZINE
FICT IT IOUS FUT U R ES
AFTER THE FINANCIAL CRISIS, THE

LONG-TERM FATE OF WALL STREET
NOW HINGES ON THE CONTEXT OF
GLOBAL CAPITALISM AND THE
POPULAR STRUGGLES AGAINST IT.
Richard D. Wolff
L
ike much else in economies, finance to a vast new, lower-waged labor force and the
both enhances the economy’s growth profit gains associated with it. The employers
and development and undermines it. could relocate to where the new cheaper labor
The balance between these contradictory ef- became available or else bring that labor into
fects depends on all the other aspects of an the old centers as immigrants. Most old center
economy and society and how they all influ- countries did both. The result nearly every-
ence financial contradictions. From its first en- where in capitalism’s old centers was stagnation
trance into the economy — that part of society or decline of real wages coupled with sharply
concerned with the production and distribu- worsened inequalities of income and wealth.
tion of goods and services — money has been
contradictory. On the one hand it enabled trade Ironically, the post-war period had enabled the
and exchange far beyond the limits of barter and resurgence of a capitalism that had been hob-
other pre-money systems. On the other hand, bled by the Great Depression and the war. Cou-
money introduced all sorts of new instabilities. pled with the social-democratic gains achieved
during the 1930s and 1940s, the years from 1945
The role of finance and its contradictions to 1975 witnessed a decades-long celebration of
changed especially after the 1970s. The old rising standards of mass consumption paid for
centers of capitalism (Western Europe, North by rising real wages. Indeed, depicted as the
America and Japan) lost major parts of their emergence of a comfortable “middle class,” ris-
global primacy. A combination of computer-re- ing consumption was celebrated by capitalism’s
lated automation, political shifts and relocation ideological champions as the system’s great
of production to low-wage areas — particularly achievement and justification. Product adver-
in Asia and Latin America — brought economic tising exploded alongside rising consumption,
decline to most of the old centers’ people. In ef- intruding into every corner of modern life.
fect, employers in the old center obtained access One key result was to make rising levels of con-
The Contradictions of Finance 13

sumption more than ever the measure — the Credit crucially supported the booms of the
very definition — of each individual’s success 1980s and 1990s into the new century, yet it also
in life. In the US, parents promised one another spread globally the risks that the huge new sup-
and their children an American dream of ever- plies of consumer debt instruments might not
rising consumption financed by ever-rising real pay off. The spurt of financialization after the
wages. 1970s also included major new loans to corpo-
rations and governments. When the credit de-
The arrival and continuance of stagnant or fault crisis broke in and after 2008, it included
declining real wages after the 1970s made the all three types of loans: consumer, corporate
realization of that dream impossible. Yet it was and public. Financialization had yielded large
so deeply internalized and desired by Ameri- new profits and the expansion of the financial
cans, so ingrained in sector relative to all
their expectations, the other sectors of
that they were de- capitalist economies
termined to achieve around the world. It
it even without the Credit crucially supported had also yielded their
rising wages to pay the booms of the 1980s global collapse.
for it. They would
sustain rising con- and 1990s into the new The financial expan-
sumption otherwise, sion phase is often
partly by borrowing.
century, yet it also spread followed by its con-
The latter provided globally the risks that tradictory other, the
a new profit oppor- contraction phase.
tunity for financial the huge new supplies of The crash of 2008
capitalists: lending consumer debt proved to be the turn-
to consumers to en- ing point this time
able their rising con- instruments might not between the phases.
sumption. Families Bailouts, bail-ins and
determined to con-
pay off. a wide variety of
sume more usually other monetary (and
turned first to send- some fiscal) policies
ing more household members out to do more have been tried to “managed” the crash and
hours of work as real hourly wages stagnated. its consequences with, at best, mixed results to
When those extra hours proved insufficient, date. Where some “recovery” has occurred it
borrowing remained as the only way to pay for largely bypassed huge portions of the popula-
rising consumption. In profit-driven response, tion. Recovery’s impacts on the top 1 percent
the financial sector invented new forms of con- and 10 percent of enterprises and individuals
sumer credit extension (especially credit cards also proved uneven.
and later student loans) and greatly expanded
old forms (mortgages and car loans). Banks Financialization facilitated the historic reloca-
bundled all these forms of consumer debt into tion of capitalism from its old to its new cent-
asset-backed securities, enabling them profit- ers. Because this relocation was driven by the
ably to tap globally dispersed sources of loan- profit gains of capitalists moving from high to
able funds. low-wage production, the result was a supply-
14 ROAR MAGAZINE
demand imbalance. Lowered global wages rendered effective demand
deficient. In this situation, debt could temporarily remedy the imbalance.
Global finance thus profited in multiple ways from the globalization it
promoted. Yet it also over-reached, took excessive risks, and eventually
imploded. Its survival became dependent on state intervention and sup-
port.
Will movements demanding state-financial

enterprises to compete with private counterparts
gain strength? Will initiatives to go beyond
capitalism arise, grow and challenge the established
financial institutions? Has that already begun?
As a result, financial industries are now stronger but also weaker, thereby
perpetuating finance’s intrinsic contradictory nature. Their longer-term
fate now hinges most on what happens to the larger capitalist context. As
capitalism declines in its old centers and leaves massive social, economic,
ecological and political divisions and destructions in its wake, how far
will the resistance there go? Will movements demanding state-financial
enterprises to compete with private counterparts gain strength? Will ini-
tiatives to go beyond capitalism arise, grow and challenge the established
financial institutions? Has that already begun?
In capitalism’s new centers, will history repeat there the bitter divisions
and working-class struggles that characterized the early development of
capitalism’s old centers? Might struggles in old and new centers find some
common ground and bond to build an effective alliance in opposition to
capitalism? Answers to these questions will have more to do with shaping
the future of financial industries than the details of their practices.
RIC H A RD D. WOL F F
Richard D. Wolff is Professor of Economics Emeritus

at the University of Massachusetts, Amherst, and a Vis-
iting Professor at the New School in New York. He co-
founded the journal Rethinking Marxism, is the author of
many books, and has been referred to as “America’s most
prominent Marxist economist” by The New York Times.
The Contradictions of Finance 15

THE RISE OF TH
BONDHOLDING
16
HE
PUBL IC FINANC E
WHETHER AUTOMATION WREAKS
HAVOC ON EMPLOYMENT OR NOT,
THE FUTURE OF WORK UNDER
CAPITALISM LOOKS INCREASINGLY
CLASS
BLEAK. WE MUST NOW LOOK TO
POST-WORK HORIZONS.
Nick Srnicek & Alex Williams
THE CONCENTRATION OF THE US

PUBLIC DEBT IN THE HANDS OF
THE 1 PERCENT HAS CONTRIBUTED
TO INEQUALITY AND PRESENTS A
FUNDAMENTAL THREAT TO
DEMOCRACY.
Sandy Brian Hager

T
he history of class conflict, power and inequality in the United
States has always been intimately bound up with the public
debt. Already during the War of Independence (1775-‘83),
revolutionary forces accumulated debts of $54 million, and a difficult
task for the first Secretary of the Treasury, Alexander Hamilton, was to
devise a plan to manage these liabilities. Should the Federal Government
try to repay its debts in full? If so, by what means should it honor its
commitments to creditors?
Defaulting on foreign debts was out of the question. The French and
the Dutch contributed roughly one-quarter of wartime financing, and
the United States did not want to alienate itself from allies that assisted
its drive for independence. At the same time, the Federal Government
was hesitant to renege on its commitment to domestic bondholders. A
small but powerful group of men, including most of the architects of the
Constitution, provided the remaining funds to finance the war. These
men would rally against default and would push for a tax system that
raised reliable revenues to service the public debt. This system would
prove especially advantageous if the tax burden were to fall on someone
else — that someone else being the vast majority of Americans who did
not own government bonds.
In the end, Hamilton decided that the debts were to be repaid in full.
And in order to raise the revenue needed to repay its debts, the US
Congress approved Hamilton’s proposal to levy a highly regressive ex-
cise tax on distilled spirits. Small-scale farmers saw the new tax as a
threat to their livelihood and vented their frustrations through violent
attacks against tax collectors in western Pennsylvania. So concerned
was Hamilton with the unrest caused by the resultant Whisky Rebel-
lion of 1794 that he personally accompanied General George Washington,
and the 13,000 troops he commanded, to put down the rebellion. One
critic, William Findley, seized on the events, suggesting they were proof
that Hamilton’s system of public debt had created a “new monied inter-
est” that wanting nothing other than “oppressive taxes.”
MAPPING THE BONDHOLDING CLASS
Early critics were suspicious of Hamilton’s plan. They saw the public
debt, and the broader system of public finance of which it was a part,
as a culprit of worsening inequality and social instability. And today,
well over two centuries later, the public debt remains a major source
of controversy in American politics.
18 ROAR MAGAZINE
Some continue to suggest that government now-infamous top 1 percent of US households
bonds are still concentrated in the hands of and the top 2,500 US financial corporations.
the rich and powerful. Others insist that go- Distribution of the public debt is tightly cor-
vernment bonds are widely held amongst small related with the distribution of wealth more
savers, even widows and orphans, and help generally. In other words, when the share of
to democratize the financial system. And yet, wealth owned by the top 1 percent and large
despite centuries of contestation, neither side corporations increases or decreases, so too does
has managed to produce much evidence to their share of the public debt.
support their claims. This is a serious oversight.
The US public debt now stands at roughly $18 Figure 1 illustrates this dynamic. What is most
trillion dollars, making it one of the largest and remarkable is the massive increase in concen-
most liquid financial markets in the world. An tration of the public debt that has taken place
absence of reliable data on its ownership struc- since the onset of the crisis. From 38 percent
ture means that we have little understanding in 2007, the top percentile’s share of the public
of the power relations that underpin this vital debt has climbed to a shocking and unprec-
component of global finance. edented 56 percent in 2013, the last year for
which data are currently available.
My new book Public Debt, Inequality, and
Power: The Making of a Modern Debt State A similar dynamic characterizes corporate own-
(California University Press) intervenes into ership of the public debt. Over the past three
this longstanding but muddled debate. The and a half decades, the top 2,500 US corpora-
book unearths some uncomfortable facts about tions have increased their share of corporate
whose interests are really served by the public holdings of the public debt from 65 percent in
finances during this 1977-‘81 to 82 percent
crisis-ridden age. In in 2006-‘10. Much like
particular, my analy- the household sector,
sis reveals a rapid corporate concentra-
rise of a “bondhold-
The spectacular increases tion has intensified
ing class” of wealthy in the public debt since since the onset of the
households and large crisis. In 2006 the top
financial corpora- the early 1980s have 2,500 corporations
tions over the past owned 77 percent of
served the interests of
few decades. the corporate share
a bondholding class of of the public debt
Since the early 1980s, and climbed to 86
and especially since dominant owners at the percent by 2010. Cru-
the onset of the apex of the wealth and cially, these corporate
global financial cri- holdings of the pub-
sis, there has been a income hierarchy. lic debt are increas-
rapid concentration ingly dominated by
in domestic owner- mutual funds, which
ship of the public are owned predomi-
debt. Specifically, the stunning increase in nantly by the top 1 percent, at the expense of
concentration has taken place in favor of the widely owned pension funds.
The Rise of the Bondholding Class 19

FIGURE 1
The top percentile’s share of the US

public debt and net wealth
60 60
55 55
Top O
Onee P
Percent
er ntt
E
50 Ownership
Own rss p of P
Public
ub D Debt
b 5
50
% OF
FHHO USEHOLD
H DS SHARE
45 45
5
40 4
40
35 35
30 30
25 25
Top
p One Percent
n
20 Ownership
w h of WWealth 20
% OF HOUSEH
H S H
HOLD SHARE
H R
15 15
10 10
19
900
00 1910 1 9 20 1930 1 9 40 1950 19
1960 1970 1980
80 11990
990 2000 2010 2020 203 0
FIGURE 2
The logical sequence of

Streeck’s debt state
INEQUALITY (+)
SAVINGS FOR 1% &

LARGE CORPORATIONS (+)
GOVERNMENT SPENDING (+)
TAX REVENUES (N)
TAX PROGRESSIVITY (-)
PUBLIC DEBT (+)
NET
NET W
WEALTH
EAL F FROM
RO
OM SSAEZ
AEZ
ZAAND
ND ZZUCMAN,
UC
CMAN “WEALTH
WEAALTTHIINEQUALITY”;
QU LIT PUBL
PUBLIC
LIC
C DEBT
EB
BT F
FR
FROM
ROM LLAMPMAN,
AMPMA ,T T
TOP
OPWW
WEALTH-HOLDERS,
EALTHH-HOLD
DERS FEDERAL
EDER R RESERVE
ER SURVEYRV
OF
FCCONSUMER
ONS
N U E FINA
FINANCES,
N NCEES 11962-68,
96
962 8 191970-2010,
970 0100 IRS
SPPEROSNAL
ERO
OSNALL WEALTH
ALT
T S STATISTCS
TAT S C F
TA FOR
OR THE
H TO
TOP
OP P
PERCENTILE’S
ERC
CENTLLE’S
SSSHARE
H EO OF T
THE
EPPUBLIC
BL C DEBT
T IN 1969
96
20 ROAR MAGAZINE
Overall, I argue that the spectacular increases federal tax revenues have been the primary
in the public debt since the early 1980s have driver of increases in the public debt. Tax stag-
served the interests of a bondholding class of nation is itself the product of a successful tax
dominant owners at the apex of the wealth revolt on the part of powerful elites. What this
and income hierarchy. How do we explain means is that tax revenues constitute a dwin-
these massive increases in public debt? And dling portion of national income, and also that
how exactly do we explain the connection be- the bondholding class is now paying less and
tween growing inequality and rising public less taxes as a percentage of its total income.
indebtedness? Answers to these questions can
be found in Wolfgang Streeck’s concept of the Declining tax progressivity means, by defini-
“debt state.” tion, greater inequality and increased savings
for those at the top of the wealth and income
THE MAKING OF A MODERN hierarchy. As a result of changes to the tax
system, elites have more money to invest in
“DEBT STATE”
the growing stock of US Treasury securities,
which, thanks to their “risk-free” status, be-
come particularly attractive in times of crisis.
In his book Buying Time: The Delayed Crisis The logical sequence of the debt state is out-
of Democratic Capitalism (Verso), Streeck lined in Figure 2.
traces a shift in the
advanced capital- In essence, what the
ist countries from a transition from the
“tax state” to a “debt tax state to a debt
state.” Under the In deciding to furnish state means is that the
post-war tax state, wealthy households and Federal Government
gradual increases chooses to borrow
in government ex- large corporations with from the bondholding
penditures were class rather than tax-
matched by tax re-
risk-free assets instead ing it. And in decid-
venues, which result- of levying taxes on their ing to furnish wealthy
ed in falling levels of households and large
public indebtedness. incomes, the US debt state corporations with
With the emergence risk-free assets in-
reinforces the existing
of the debt state from stead of levying taxes
the 1970s onward, pattern of inequality. on their incomes, the
government expen- debt state reinforces
ditures have contin- the existing pattern
ued to grow while tax of inequality. This
revenues have stag- raises further ques-
nated, resulting in escalating levels of public tions about the long-term stability of current
indebtedness. arrangements. The status quo of the debt state is
likely to persist into the foreseeable future, and
The US is, in many ways, the ultimate mani- the reason has to do in large part with the role
festation of the debt state, where stagnating played by foreign ownership of the public debt.

A POWERFUL FOREIGN BOND low- and middle-income Americans to main-
tain consumption habits in the face of decades-
long wage stagnation.
Since the early 1970s, there has been a rapid
globalization of the US Treasury securities At the same time, foreign owners have some-
market. In the post-war period, official and thing to gain from the existence of a domestic
private foreign investors consistently owned bondholding class. Foreign investors, especially
less than 5 percent of the US public debt. The China, fear that the Federal Government will
foreign share has climbed steadily ever since “print money” to inflate away its growing debt
and at the present time stands at roughly 50 burden. But the existence of a powerful group
percent. of domestic owners invested in the creditwor-
thiness of the Federal Government should help
This seemingly insatiable foreign appetite for to alleviate these fears. The wealthy house-
US Treasury securities means cheaper credit holds and large corporations that dominate
for the US government, which deflects chal- domestic ownership of the public debt hold
lenges to domestic owners of the public debt considerable sway within the political system
at the top of the wealth and income hierarchy. and provide a powerful check against policies
In the case of the Federal Government, cheap that might compromise the risk-free status of
credit relieves pressures for socially disruptive US Treasury securities.
spending cuts, as well as increased taxation,
which would fall more heavily on elites. A formidable “bond” of interests therefore
Access to cheap credit also dampens resent- unites foreign and domestic owners of the
ment toward those same elites by allowing public debt. In relieving domestic tensions
engendered by growing inequality, this bond
of interests works to reinforce the status quo
of the debt state. In helping to sustain foreign
A formidable “bond” of confidence in US Treasury securities, this
bond also helps to sustain US financial power
interests unites foreign in the global political economy.
and domestic owners of the
CONSEQUENCES FOR
US public debt, relieving DEMOCRACY
domestic tensions
engendered by growing What, then, can we say about the consequen-
ces of growing concentration in ownership
inequality and helping to of the public debt? Why exactly does it mat-
ter? Addressing these questions leads us to the
sustain US financial power question of power.
in the global political
Throughout history a widely held public debt
economy. was thought to be good for democracy and
social cohesion, making wide swathes of the
population feel quite literally invested in gov-
22 ROAR MAGAZINE
ernment. An unequally distributed public debt, however, has been seen
as a threat to democracy, increasing the power of a tiny group of own-
ers at the expense of the rest of the polity. The prevailing sentiments
are captured in the following passage from former Treasury Secretary
Henry Morgenthau Jr., who promoted widespread ownership of the
public debt during World War II:
Every man and woman who owned a Government Bond, we believed,

would serve as a bulwark against the constant threats to Uncle Sam’s
pocketbook from pressure blocs and special-interest groups. In short, we
wanted the ownership of America to be in the hands of the American
people.
The linkages that Morgenthau Jr. draws between the public debt, power
and democracy have obvious intuitive appeal. And Streeck’s concept
of the debt state is once again helpful in exploring the consequences
of growing inequities in ownership of the public debt. In Buying Time,
Streeck argues that the emergence and consolidation of the debt state
has had dire consequences for democratic representation in advanced
capitalist countries. Specifically, he asserts that under the debt state
governments have come to prioritize the interests of owners of the
public debt, the Marktvolk, over the general citizenry, or Staatsvolk.
My research illustrates the ubiquity of the Marktvolk within US policy-

making. As concentration in ownership of the public debt increases,
Federal Government documents begin to refer much more frequently to
the interests of the Marktvolk. In the post-war period, when concentra-
tion in ownership of the public debt was low, references to the terms
associated with the Marktvolk (like international, investors, interest
rates, confidence), were only 75 percent as frequent as those associated
with the Staatsvolk (like national, public opinion, citizens, loyalty). Yet
during the global financial crisis, when ownership concentration was
high, references to the terms associated with the Marktvolk were twice
as frequent as those associated with the Staatsvolk.
Inequality in ownership of the public debt and

inequality in representation within government
policy are really two sides of the same coin.
Concentrated ownership does not necessarily give owners of the public

debt direct power over the political process. But it is clear that there

has been a transformation in policy in recent
years; one that provides an ideological climate
that privileges the interests of the bondholding
class. Inequality in ownership of the public
debt and inequality in representation within
government policy are really two sides of the
same coin. In this sense, the debt state not only
reinforces wealth and income inequality, but
it also contributes to the broader erosion of
democracy.
WHAT SHOULD (AND SHOULD

NOT) BE DONE
Inequality has come to permeate all facets of

contemporary capitalism, and so its perva-
siveness in the public finances should come as
no surprise. What we need to consider is the
possible political measures that might be im-
plemented to counteract growing inequities in
ownership of the public debt. But before dis-
cussing political solutions, a word of caution
is in place.
The problem is not a large public debt. As

Abba Lerner first demonstrated in the 1940s,
the outstanding level of public indebtedness is
inconsequential so long as it is being accumu-
lated as part of a macroeconomic strategy to
achieve non-inflationary full employment. In
COM
fact, for a monetarily sovereign entity like the

TOCK.C
K..C
US Federal Government, which issues debt in

STOC
a currency it fully controls, bankruptcy is never

T ERS
really an issue because the Federal Reserve can

UTT
S UT
purchase government bonds when the private

TTI / SH
sector does not want them. The existence of a

PHOTO BY LM TP, VIA FLICKR
HETT
T
powerful bondholding class should provide no

CCH
solace for “deficit hawks” eager to find evidence

CC
ER CI
to support their fear mongering about the sup-

ROBERT
BERT
posed unsustainability of the public debt.

T BYY ROB
The real problem, then, is a large unequally

HOTO
PHO
distributed public debt. This distinction is

PH
H
24 ROAR MAGAZINE
absolutely crucial. From an emancipatory point of view, the point is not
to try to eliminate or even reduce the public debt, but to find ways to
tackle the inequality that underpins the public finances. As mentioned
earlier, the emergence and consolidation of the debt state was driven
primarily by tax stagnation and declining tax progressivity. The debt state,
in other words, has come into being because the Federal Government
has come to rely on borrowing from the bondholding class instead of
taxing it. Restoring progressivity to the federal tax system, by increasing
tax rates on wealthy households and large corporations, would therefore
go a long way in addressing the growing inequalities in ownership of the
public debt and in the ownership of wealth and income more generally.
Of course measures to make the federal tax system more progressive
would encounter stiff political resistance from powerful groups, and
would have little impact unless combined with global coordination to
minimize tax competition and evasion. And to deal seriously with the
problem of inequality, progressive tax reform would need to be combined
with substantial increases in social spending, which would be most ef-
fectively channeled through a basic income or a federal job guarantee
program.
A monetarily sovereign entity like the US Federal Government is not

revenue-constrained and does not technically “need” taxes to finance its
expenditures. Yet, in a world of deregulation and global capital flows,
and with a legal system ineffective in punishing corporate malfeasance,
taxation remains one of the few coercive tools that governments possess
to influence the behavior of dominant elites. Thus carefully designed
measures to bolster the progressivity of the federal tax system would not
only help to tackle inequality; most importantly, progressive taxation
would also help to restore democratic control over a bondholding class
that has seen its power grow inordinately under the debt state.
SA N DY BRI AN H AG E R
Sandy Brian Hager is a Postdoctoral Fellow at the Weather-

head Center for International Affairs of Harvard University
and a Research Scholar at the Binzagr Institute for Sustainable
Prosperity. His research deals with issues of inequality and cor-
porate power in global finance. He is the author of Public Debt,
Inequality, and Power: The Making of a Modern Debt State
(California University Press, 2016).

TA X HAVE NS
The Global
1 Percent
Under Siege?
Brooke Harrington
BY EXPOSING THE SHEER SCALE OF
OFFSHORE FINANCE, THE PANAMA
PAPERS HAVE RE-FUELLED GLOBAL
RESENTMENT TOWARDS TAX-AVOIDING
ELITES. ARE THE RICH IMMORAL?
Y
ears before the Panama Papers broke, that have come to light from the wealth ma-
many of the world’s richest people nagement firm Mossack Fonseca have re-
felt unappreciated and under attack. opened the case for grievance against the rich
In 2014, Silicon Valley venture capitalist Tom — this time, on a much broader scale. As the
Perkins compared the position of the rich to Panama Papers have shown, the problem is
that of the Jews in 1930s Germany, warning of not just income inequality; it is about wealth
a “progressive Kristallnacht” and “a rising tide inequality. And it is not just about corporate
of hatred of the successful 1 percent.” Though executives; the rogue’s gallery of people ex-
a few of his fellow billionaires distanced them- posed in the leak includes everyone from
selves from these remarks, several jumped vig- heads of state, to celebrities and sports stars.
orously to his defense, expressing their agree- They constitute a global elite in multiple do-
ment that the rich were being “pummeled” mains, and the scale of their wealth dwarfs the
and “picked on.” problem of outsized CEO pay.
The failure of some parts of the public to buy Of course, the problem is not just a matter of
the “wealth creators” narrative — that being individual action or individual morality: in-
rich is the just reward for risk-taking that ben- equality and tax avoidance are structural is-
efits everyone by creating jobs and prosperity sues. But as I show in my new book, Capital
— was shocking and hurtful to people who without Borders (Harvard University Press),
saw themselves as our benefactors. In lieu of those structures are created by and for the
the unadulterated public gratitude and recog- world’s wealthiest people. Government lead-
nition they were expecting, they found resent- ers of the sort named in the Panama Papers
ment and criticism in the form of the Occupy have considerable authority over the forms
Wall Street movement and its offshoots. The that financial structures take, and the uses to
response by the rich, with few exceptions, was which they can be put. For elites who do not
defensiveness and anger, a “toxic mélange of hold public office there are numerous chan-
entitlement and shame.” nels to make their voices heard above those
of everyone else; many offshore states literally
The noisier aspects of this “sore winner” syn- write their laws and run their day-to-day gov-
drome died down for a while, but the Panama ernment business primarily to attract the cus-
Papers seem to have catalyzed a revival. For tom of the rich, with the interests and rights of
many observers, the 11.5 million documents local people a mere afterthought.
The Global 1 Percent Under Siege? 27

The problem is not just a matter of
individual morality: inequality
and tax avoidance are structural
issues. But those structures are
still created by and for the world’s
wealthiest people.
The history and origins of the offshore sys- We learned from Oxfam earlier this year that 1
tem itself are a testament to the power of elite percent of the world’s population now owns 50
agency. As a superstructure in the global po- percent of its wealth. But not until the Panama
litical economy, offshore was created essential- Papers did we get a look at the faces of that
ly as a convenience for the rich to help them global 1 percent. That personalization of in-
get even richer from global trade by working equality — linking real people to a problem so
around legal constraints (not just tax, but cur- huge it can feel like an abstraction — seems to
rency controls and other regulations) that held have catalyzed a renewal of the great debate:
back everyone else. As the journalist and off- are the rich “immoral”? Are they bad people
shore expert Nicholas Shaxson has observed, who need to be stopped?
“offshore is a project of wealthy and powerful
elites to help them take the benefits from soci- Such questions have elicited outrage and
ety without paying for them.” spirited defense in some quarters. Among
the wealthy individuals named in the leak,
Thus, the moral issue raised by tax avoidance the modal response has been anger. Former
and the Panama Papers is not just who uses Icelandic Premier Sigmundur Gunnlaugsson
and benefits from the international financial famously stormed out of a live television in-
system, but who created it in the first place. terview when he was asked about his connec-
28 ROAR MAGAZINE
tion to an offshore firm created by Mossack Did
Di
Did y
you
ou k
know
w th
that...
h .
Fonseca. Juan Pedro Damiani, a member of
the Ethics Committee for the embattled FIFA,
the governing organization for global soccer,
lashed out at reports linking him to offshore
structures created by the Panamanian firm,
calling the allegations “ridiculous” and “outra-
geous.” Former British Prime Minister David
Cameron was “angry” at the way the leak ex-
posed him and his family to public condemna-
L F OF
HALF O F ALL
A L
GLOBAL RA
TRADE
tion — including being dubbed “dodgy Dave”
PASSES
S THROUGH
T R O G TAXAX
A X HAVENS
H VEN
by his colleague, the Speaker of the House of
Commons.
We will likely see much more of this as future

leaks expose more individuals to global pub-
lic scrutiny of what they thought were private
financial matters. So far, little evidence of for-
mally illegal activity has been uncovered. In-
stead, the public opprobrium seems to be di-
rected at unethical use of power. In particular,
what galls observers is elites’ use of offshore
finance to “take the benefits from society with-
out paying for them.”
AN
A N ES
ESTIMATED
T M AT D O ONE-THIRD
NE T IRD O
OF
THE W
THE O
WORLD’S ’S W AL H –
WEALTH
O
ORRA BOU $
ABOUT $32 T
$21-$32 RI LION –
TRILLION
RESIDES
R E S ID
D S IN T
TAX
A X HAVENS
AV
AVENS
Offshore finance is a
project of wealthy and
powerful elites to help
them take the benefits
from society without
paying for them.
THE
T E BRITISH VIRGIN
B RI T I S H V I R G I N ISLANDS
S L A N D S IIN
NTTHE
E
CARIBBEAN
CARIBBEA W WITHITH A P POPULATION
O P U L AT O N
Taking social benefits without accepting re- OF
O F JUST
JU ABOVE
A O E 100,0000 0,0 0 0 AARE
RE H HOME
O E
TO
TO ALMOST
A O S T 500,000 0 0,0 0 0 OFFSHORE
OFFSHO E
sponsibilities? If that sounds familiar, you may
COMPANIES,
C O M PA I E S , OR
O R ABOUT
A B O U T 40%
4 0 % OF
40 O F ALL
ALL
recall them as the terms of condemnation usu- OFFSHORE
OFFS H O E COMPANIES
SH COMP NIE ES
SO ONNT THE
HE
ally applied to “welfare queens.” Nobel Prize- PLANET.
P A ANNET
29
1. PATENT LICENSING
2 COMPANIES
E IN:
N AA) USA
S & B)) TAX HAVEN
VEN
USA TAX HAVEN

35% TAX RATE 5% TAX RATE
PAYS $800K
US PHARMA DAUGHTER PHARMA
“PATENT FEE”
A B
PAYS 35% ON PAYS 5% TAX

$200K = $70K = $40K
1M P
PRE
RE-T
R E --TAX
AX
A XP
PRO
ROFI
R OF
FIT
T TOTA
TO
T OTAL
L TA
TAX
AX = $
$110
$11 10K
K
US PHARMA OWED $350K

IN TAXES, BUT ENDS UP
PAYING JUST $110K.
How tax havens work

2. TRANSFER PRICING
3 COMPANIES IN: A) CANADA,
A AD
DA B) TAX
A HHAVEN, C) ITALY
CANADA TAX HAVEN ITALY
A B C
$25/PC $75/PC $100/PC
COMPANY A PRODUCES BUYS PHONES AT COMPANY C BUYS

PHONES AT $25/PC, SELLS $25/PC, SELLS TO ITALY, PHONES AT $75/PC
TO B FOR SAME PRICE. FOR $75/PC. FROM B, SELLS FOR $100,
NO PROFIT, MEANS $50/PC PROFIT, PAYS TAX

NO TAX FOR A. BUT NO TAX OVER $25 PROFIT.
30 ROAR MAGAZINE
winning economist Paul Krugman has gone
farther with this analogy, saying that the 1
percent are afflicted by “pathology” and “ex-
treme spiritual damage.” The use of “pathol-
ogy” here should ring a bell: there is a long
history association of associating the poor
with a “tangle of pathology.” What we are
seeing now is the wealthy being tarred with
the same brush that has been applied to the
poor for more than a century. Elites accus-
tomed to enjoying public respect and even
admiration are suddenly being portrayed in
an unfamiliar light.
For example, a highly placed member of the

opposition in the UK government tweeted
that David Cameron was “immoral” for prof-
iting from offshore tax avoidance. Public
commentary on news of the Panama Papers
included numerous descriptions of Camer-
on’s fellow travelers in the Panama Papers —
such as actor Jackie Chan and soccer star Li-
onel Messi — as “lazy deceptive thieves.” This
is not too far removed from the terms used
to describe poor people, long thought to be
“prone to lie and steal, and generally opposed
to self-reliance.”
If we were to take seriously the idea that

many of the claims about the alleged “moral
failings” of the poor are actually true of the
wealthiest members of society, what should
be done? Some have suggested the logical ex-
tension of the “welfare queen” analogy, writ-
ing that “we ought to tame, shame and civilize
the super-rich.” While government leaders,
many of whom benefit personally from off-
shore finance, wrangle over formal sanctions,
the Panama Papers have already brought us
to Stage 1 of the informal social punishment
process: naming and shaming.
In the past, as with the LuxLeaks scandal of

2013 — a much smaller but highly revealing
31
THE FINANCIAL SECRECY INDEX RANKS JURISDICTIONS
ACCORDING TO THEIR SECRECY AND THE SCALE OF THEIR
OFFSHORE FINANCIAL ACTIVITIES
2015 1. SWITZERLAND
Secrecy Swiss Banks hold around $6.5 trillion

in assets, with 51% originating from
abroad. The country is home to about
Ranking a third of the world’s offshore private
w a
wealth.
3
1
2
5
2. HONG KONG 3. USA
Companies based in Hong Kong are The US accounts for 21% of the global
only subjected to tax payments for market for offshore financial services.
profits derived from doing business US tax havens were set up in the wake
inside the territory; income gained of the Vietnam War to counter capital
abroad is not taxed. flight and lure dollars back to the US.
4. SINGAPORE 5. CAYMAN ISLANDS
Singapore has for many centuries With 200 banks, 140 trust companies
been the gateway to Southeast Asia, and over 95,000 registered compa-
first as trade hub, now as tax haven. nies, financial services account for
more than half of the country’s GDP.
The island city-state holds about one The Cayman Islands are one of 21
eight of the global stock of total off- countries with links to the UK that
shore wealth. are listed in the top-100 of the Finan-
cial Secrecy Index.
MORE
M ORE INFO
INF
FO ABOUT
AB
BOU THE
TH FINANCIAL
F NA
ANC AL
AL SECRECY
SECR Y INDEX
EX CAN
C N BE FOUND
OU
UND
N A
AT
T WWW.FINANCIALSECRECYINDEX.COM
W AN M
32 ROAR MAGAZINE
disclosure of documents connected with tax evasion in Luxembourg
— the outrage blew over quickly. While the Luxembourg leak was in-
itially described as a “game changer” for public policy makers, it was
later acknowledged that nothing really changed. Nothing except the
shooting of the messenger: Antoine Deltour, the source of the leak, is
now being prosecuted for theft and faces several years in prison.
The Panama Papers have already brought us to Stage 1

of the informal social punishment process: naming and
shaming.
On a positive note, whoever leaked the Panama Papers has been
much more careful about protecting his, her or their anonymity using
encrypted modes of communication. This model has kept the pub-
lic conversation focused on what really matters — the data, rather
than the identity and motives of those who leak it — and may encour-
age other well-positioned individuals within the offshore industry to
come forward.
BROOKE HARRINGTON
Brooke Harrington is Associate Professor of Economic Sociol-

ogy at the Copenhagen Business School in Denmark. Her book
Capital Without Borders: Wealth Management and the One
Percent was published in August by Harvard University Press.
The Global 1 Percent Under Siege? 33

On Fancy F
of Paperwor
and the Logic of Financialized
David Graeber
INT E RVIE W
Forms
FIVE YEARS AFTER
OCCUPY, ACTIVIST AND
ANTHROPOLOGIST
DAVID GRAEBER
rk
SPEAKS TO ROAR
ABOUT THE POWER OF
FINANCE, THE HISTORY
OF INEQUALITY AND
THE LEGACY OF THE
Violence MOVEMENT.
D
avid Graeber is one of the world’s
leading anthropologists and a well-
known activist who played an im-
portant role in the early days of Occupy Wall
Street in New York. In this wide-ranging
interview, he speaks about the unexpected
history of inequality, the role of debt in con-
temporary capitalism, the nature of money as
a social relation, the violent and self-destruc-
tive logic of financialization, the class power
of the 1 percent, the establishment attacks on
Jeremy Corbyn, and the challenges of build-
ing a radical-democratic movement against
the rule of finance.
ROAR: It’s been five years since thousands of

protesters marched into Lower Manhattan,
occupied Zuccotti Park and inspired an inter-
national movement against the rule of finance.
You played an active part in the early days of
the movement in New York. In hindsight, what
do you consider to have been Occupy’s most im-
portant legacy? And what have been the main
challenges it has faced in building and sustaining
a democratic counter-movement to the power
and privileges of the 1 percent?
35
David Graeber: Well I think the thing that the Tea Party. That is, a grassroots movement
surprised us was first of all how rapidly it that would make a lot of anti-establishment
spread, the degree of repression eventually noises but ultimately play the game of raising
brought to bear, and how quickly our liberal money, running candidates again. They tried
allies abandoned us when they did. In the to infiltrate the media teams, set up tacit leader-
end it’s perhaps not so surprising. I had the ship structures… But eventually they figured
sense that most Americans know they live in out we were really serious. If our main com-
a police state, not a democracy, and had just plaint was that the US political system had
assumed that if they tried to take any mass turned into a system of legalized bribery, no,
action, even if it was just camping in their lo- we weren’t going to join the system and try to
cal square, they would be attacked by para- see if we could raise enough bribes ourselves
military forces. And for a couple of months to run candidates and change that from with-
they were all just in. Suddenly the
shocked: “wait, you curtain went down.
mean you can do
non-violent civil Occupy’s legacy is that So that’s about chal-
disobedience in this lenges: we’ll have to
country and not get it reintroduced the think much more
the shit beaten out notion of social class into carefully, next time,
of you?” about alliances, be-
the American political cause at least in the
So hundreds of US, the mainstream
thousands suddenly
debate and managed right knows that
showed up. I mean, to create an enormous they can’t sell out
we had what — like their radicals on policy
800 occupations shift of views about issues if they’ve al-
at peak? Then of capitalism itself. ready sold them out
course came the on existential issues.
evictions and they They want the mi-
realize, “oh, I guess litia guys and anti-
we couldn’t after abortion crazies out
all.” And after that the repression became ex- there, even though they do think they’re
tremely brutal and the media coverage also crazy, but the mainstream left, such as it is,
shifted to be just completely one-sided. But doesn’t think that way.
all that was really just back to normal. So
the question is, why was there any sympa- As for legacy, well, the obvious one is that we
thetic media coverage at all in those first few reintroduced the notion of social class into
months? Why was there this little bubble of the American political debate. No one had
democracy? managed to do that since the 1930s. Not just
class — class power. Because that’s what the
I think in retrospect it’s easy to see: there was 1 percent really meant: these are the people
a fraction of the establishment, basically the who managed to turn their wealth into
left of the Democratic Party, that thought political influence and their influence into
that we were going to become their version of more wealth.
36 ROAR MAGAZINE
Second of all, we’ve managed to create an enormous shift of views
about capitalism itself, a shift whose consequences we don’t really
know because it almost exclusively affected young people. But at the
moment a majority of young people in the US say they would pre-
fer socialism to capitalism, which is insane because you never hear
anything good about socialism anywhere in the media. Presumably
most of them don’t even know what socialism is; they just know what
capitalism is all too well and are basically saying: “fine, we don’t even
care what it is — anything but this!” That’s epochal.
Beside your activism, you are probably best known for your best-
selling book, Debt: The First 5,000 Years, which was published just
before Occupy began. The book brilliantly depicts the continuity of a
number of key themes throughout the ages, like the morality of debt
and the persistence of violence in its enforcement. To what extent
should we conceive of the emergence of capitalism — and its highly
financialized contemporary form in particular — as a break with
pre-existing historical patterns; as something new and fundamen-
tally different? Does debt fulfill the same role in ancient Sumer or
Axial Age India as it does in the capitalist world-system today?
One of the points of the book was that debt means very different
things in different periods. But it’s only by understanding the con-
tinuities that you can understand the differences. When looking at
the history of capitalism, I also discovered something quite surprising:
that while there certainly are forms of debt, currency and the like that
are unique to capitalism, they emerge quite early, mostly in the late
seventeenth century, long before the rise of factories or even wide-
spread wage labor in the mid 1700s. Already in the 1690s you have
governments running on deficit spending, semi-public/semi-private
central banks granted the right to monetize that government debt to
create paper currency, not to mention stock exchanges, municipal
bonds, even practices like short-selling, financial bubbles, and so on.
For me, as someone who was mainly trained in the Marxian tradi-
tion, this was quite startling. I was used to assuming that capitalism
basically means wage labor, and while I would never have gone so far
as someone like Paul Mattick — who insists that you can’t even talk
about “money” in the same sense before wage-labor-based capital-
ism — I did assume that Marx’s argument about capitalist money be-
ing founded on the wage relation was correct. And I also saw myself
very much on the Dobb side of the old Sweezy-Dobb debate, that is,
I had assumed capitalism didn’t develop top-down, from capital, but
bottom-up, from changes in labor relations. So what was one to make
On Fancy Forms Of Paperwork 37

of this? Well, the obvious thing was to look at
the sort of labor relations that might be said
to actually lie behind these early financial in-
novations. In the case of the stock exchanges,
bubbles, and so on, they were quite clearly
colonial ventures, involving slavery, serfdom
(peasants in Eastern Europe became serfs
only after the end of the Middle Ages, when
big landlords started supplying industrial-
izing cities in the west), debt peonage, and
other forms of unfree labor.
This is interesting and important because, as

authors like Yann Moulier-Boutang have point-
ed out, one could make a case that, looking at
capitalism as a world system, it’s never been
based primarily on free labor at all. As in so
many things, Marx wasn’t writing a work of po-
litical economy but a critique of political econ-
omy, and his approach was to show that even if
we assume the bourgeois economists’ assump-
tions (that capitalism is based on “free labor” for
instance), it was still riddled with fundamental
contradictions that undermined its pretensions
and would eventually lead it to self-destruction.
That doesn’t mean those assumptions are true!
Marx was well aware that most were not. Any-
way, I think part of the essence of capitalism is
that it has created new ways of directing this
sort of financialized violence. But the wage
relation is only one of these.
One key question we aim to address in this

special issue is where the sources of the power
of finance really lie, and how best to fight it.
Many liberal critics of finance focus on regu-
latory capture, the revolving door between
Washington and Wall Street, and the corro-
sive power of money in elections. This appears
to suggest that the best way to limit the power
of big banks would be to enforce strict regula-
tion of financial markets, political staffing and
campaign finance. It seems to me that your
work identifies a number of more deep-seated
38 ROAR MAGAZINE
One could make a case that, looking
at capitalism as a world system,
it’s never been based primarily on
I R
A FLLICK
free labor at all. Part of the essence of

ERUM
UM A, VIA
MA,
capitalism is that it has created

HAN PE
EHAN RU
new ways of directing financialized

BY SH
S HE
SHE
H
violence. The wage relation is only

PHO
HOT BY
OTO
one of these.
concerns. What, in your reading, should the radical left and the
movements really be looking at to curtail the power of finance?
Yes I think it goes deeper. As I suggested before, we really need to talk

about the relation of empire and finance. I prefer the term “empire”
to “imperialism” because it’s more concrete. It’s not like we’re fighting
some ideology or “-ism” that’s become incarnate in institutions; we’re
fighting an actual empire here, which might then come up with any
sort of ideology to justify itself, but that ideology is never fundamental
to what it is.
I remember some Italian journalist who was asking me which I

thought was the better course to take: the German industrial model of
capitalism or the American financial one. And I said, well, it’s not like
these are options available to everyone! We have this fantasy that Wall
Street or the City rake in the money because somehow people around
the world are dazzled by the brilliance of their financial instruments.
But what are these “financial instruments” really? They’re just fancy
forms of paperwork. In fact I’ve argued that they are the very pin-
nacle of this newly bureaucratized form of capitalism we have now,
where it almost makes no sense even to make a distinction between
public and private bureaucracies because they’ve totally merged, and
where we’re all supposed to think that value emerges from the paper-
work rather than from whatever it is the paperwork is regulating or
assessing.
What these new financialized and

bureaucratized forms of capitalism are really
about is making state power an intrinsic element
of the extraction of profit. There’s a perfect
synthesis of public and private power.
What these new bureaucratized forms of capitalism are really about

is making state power an intrinsic element of the extraction of profit:
you collude with government to create a regulatory regime that
will guarantee widespread debt, for instance, then you use the court
system to enforce it. There’s a perfect synthesis of public and private
power to guarantee a certain rate of profit to those who essentially
fund the politicians. But it all ultimately comes down to a monopoly
of coercive force inside the country.
40 ROAR MAGAZINE
How does it work outside? Well, I don’t cosmological power — and the fact that it can
think that the US or UK manage to maintain set the terms of international finance and al-
import-based economies — that is, keep so ways does so to its own advantage? I’ve even
many more things flowing into their coun- had one guy throw that at me when I applied
tries than are flowing out — because peo- for a job at LSE: “wait aren’t you the guy who
ple in Brazil or Malaysia are so impressed thinks people buy US treasury bonds because
by their ability to do paperwork. There are they’re scared of being blown up?” — as if
plenty of people in Brazil and Malaysia who there’s a one-on-one relation! There’s a kind
are extremely good at paperwork. It’s clearly of willed naiveté about how people think
a side effect of empire. How does it work? about these things.
Well, it’s subtle, obviously, it’s not like the
Roman Empire where you just show up with As for the political implications, it’s not as
your legions and demand a certain amount clear. As you know I’m often suspicious of
of gold. But if you look past the code words, the “anti-imperialist” left for being naive and
it’s really not all that entirely different. Take puritanical in their own way, and it’s true that
the word seignorage. It is often conceded that those most directly challenging US financial
the US economy’s preeminent role in the hegemony at the moment — Russia, China,
world, the economic advantage that keeps and so on — are not people you really want
resources flowing into the country, is largely to get in bed with. But we do have to look at
based on seignorage, which is, roughly, the the big picture.
ability to decide what money is. Now, I don’t
think it’s insignificant that at least since the You have recently come to the defense of Jeremy
seventeenth century, the global currency of Corbyn following the attempted “chicken
trade and finance has always been that of the coup” against him by the Blairite wing of the
dominant world military power. US seignor- UK Labour Party. As an anarchist, how do
age is a direct result of American military you feel about Corbyn’s economic proposals
dominance. and his stance on the City of London? Let’s
imagine he were to survive the leadership
There’s nothing I wrote in the Debt book that challenge and win the next elections — is
got people so riled up as that. When I argued there anything you would advise him or his
that for thousands of years, debt has been a supporters to do differently, or to pay par-
way of turning sheer military power into a ticular attention to?
moral force that makes it seems like the vic-
tims are the reprobates, well, everyone says, Yes, well, as an anarchist I don’t feel it’s re-
“yes, yes, why didn’t I see that before? That’s ally my business to tell politicians what to do;
brilliant!” When I suggest the same is true to- and I wouldn’t join the party myself or en-
day they call me a lunatic and a conspiracy dorse it or anything like that. But I am very
theorist. How could one possibly suggest that enthusiastic about what’s happening and
there is a link between the fact that the US want to encourage it from my own outsider
government maintains the ability to unleash position. Also, I have to confess there’s a cer-
an apocalypse destroying all life on earth, tain sense of affinity that I haven’t usually felt
and also insists on having the power to strike, with political actors of the same sort before.
from the air, at any point on earth — both Well, part of it is just identification. I rarely
clear attempts at asserting a kind of mythic, talk about what happened to me at Yale, or

1961 - Born to Ruth Rubinstein and Kenneth 1961
Graeber in New York
42
1978 - Graduated from Phillips Academy Andover
1978
19
1984 - Received B.A. from State University

198 4
84
of New York at Purchase
1984 - 1986 - Master’s degree and

1984
Doctorate at University of Chicago
School of Economics.
1989 - 1991 - Conducting field work in Madagascar
1 9 89
2011 volume Debt: The First
Anthropology at the London

5000 Years. He is Professor of
1998 - Assistant Professor at Yale

1998
David Rolfe Graeber is a London-
activist, perhaps best known for his

based anthropologist and anarchist
2000 - Joins New York Direct Action Network

2000
2001 - Takes part in actions against

2001
Summit of the Americas, Quebec City
ROAR MAGAZINE
2004 - Fragments of an Anarchist Anthropology published
2004
2005 - Cancellation of contract at Yale announced for
2 005
2007, causing uproar among students and colleagues
2006 - Invited to give Malinowski lecture at LSE, as well as keynote address

at 100th anniversary of Association of Social Antrhopologists
20 0 6
2008 - 2013 - Lecturer and Reader at Goldsmith’s

2008
College, University of London
2009 - Direct Action: An Ethnography published

2009
On Fancy Forms Of Paperwork

2011 - Helps organize assemblies planning occupation of Zuccotti
2011
Park, Debt: The First 5,000 Years published in New York
2013 - Professor at London School of Economics

2013
2013 - The Democracy Project: A History,

2013
A Crisis, A Movement published
David Graeber
43
2014 - Visits Rojava as part of an international
2014
academic delegation
I have been excited by the Corbyn
phenomenon because the people
involved are actually serious about
trying to create a synergy between
people working in the system and
those working outside.
in American academia more generally, but ously people don’t want to work with him, so
I will confess that when I see the way Cor- he’s by definition a bad colleague.” It seems
byn is being bullied and defamed, it all seems like almost the entire left-wing punditocracy
very, very familiar. here in the UK has adopted variations on this
line: “Oh, it’s certainly not because this is the
In my case, I was perhaps the only “out of the first time in 50 years a left-winger has become
closet” active anarchist — in the sense of actu- head of a major party, that the entire esta-
ally helping organize and taking part in street blishment is turning on him. There must be
actions — in a major university like that, or something wrong with his personality. He’s a
anyway the most prominent; and Yale, a no- bad leader. After all he must be a bad leader
toriously conservative department, fires me because he can’t keep other politicians in his
without giving a reason, and pretty much 90 own party from turning on him!” So many of
percent of all “left-wing” academics seem to the moves I saw seemed so familiar.
have reacted by saying: “oh, it couldn’t pos-
sibly have been his politics, there must have I think there’s a very interesting essay to be
been something wrong with his personality” written about the whole notion of “unelecta-
— though of course they rarely had much idea bility.” It’s quite fascinating to see so many
precisely what. Or this circular: “well, obvi- people, thousands and thousands, on blogs
44 ROAR MAGAZINE
proclaiming how no one else will vote for about some catastrophic collapse, which of
Corbyn. It shows something profound about course might happen, but is nothing we can
the nature of contemporary ideology, which in any way bank on.
I’m becoming increasingly convinced is not
based on convincing the public that the sys- We have to figure out a way for those who
tem is good or fair, but only on convincing want to preserve a prefigurative space where
them that other people think the system is they can experiment with what a free society
good and fair. Everyone is sitting there say- might actually be like — which necessar-
ing: “it’s all a scam, but people are sheep, they ily means not having any systematic relation
actually buy this shit!” — whereas in fact the with political parties, funding bodies, any-
only people being fooled are those who be- thing like that — to actually work with those
lieve everyone else is. who are trying to create more modest and
immediate changes within the system, which
In the case of elections, it’s the ultimate com- is beneficial to both of them. So one piece of
moditisation of the political process. Back
in the 1930s Keynes argued that this is how
equity markets work, you know: it’s not
a beauty contest, it’s like a beauty contest We have to think
where everyone is trying to guess who every-
one else will think is the most beautiful. But theoretically about
in fact it never ends — you can go meta, as
merging the insights
it were, indefinitely, and try to guess who
most people will think most other people of Marxism and post-
will think is most beautiful, and so on and so
forth, forever. But this is what electoral poli- Keynesianism into a
tics has come down to. Everyone’s a pundit. vision of a genuinely
Most don’t even really consider what they
would actually want. redemptive technological
future.
Anyway, I have been excited by the Corbyn
phenomenon because I know the people in-
volved, and I know they’re actually serious
about trying to create a synergy between
people working in the system and those advice would be: think hard about how to do
working outside. Syriza never was, really; this. I think many of them are thinking hard
they co-opted and destroyed everything they about it. But at the moment they’re in a strug-
touched. Podemos seems very uneven and gle for survival, which makes it very hard to
often very disappointing in this regard. The be long-term strategic in that way.
Corbyn and McDonnell people, by contrast,
really want to see if they can do it right. And The other thing I would say is to think theo-
this is important because if anti-authoritarian retically about merging the insights of Marxism
movements actually are going to win, it can and post-Keynesianism into a vision of a
only be by creating that sort of synergy in the genuinely redemptive technological future. I
short to medium term — unless we’re talking love ideas like fully automated luxury com-

munism. But the economic coalition that basically means that they print untold billions
might bring us there is fragile and a lot of of dollars or pounds or euros and use it to buy
work of synthesis needs to be done. Ironically, up certain sorts of assets (Treasury bonds for in-
I was about to embark on a project trying to stance) so as to raise their value. Basically they
synthesize the two with the philosopher Roy print money and use it to bid up the value of
Bhaskar shortly before his tragic death. But the kind of assets that rich people are likely to
someone has to do it. We need a radically already have lying around. Blowing bubbles
new definition of what economics even is and basically. Of course it’s not exactly the same as
what problems it is trying to solve, and this is printing money and handing it to rich people,
the only way we’re going to get one. but the effect is pretty much identical. The os-
tensible idea is that this will cause the rich peo-
You have also come out in support of an ini- ple to be more likely to loan money and stimu-
tiative known as “quantitative easing for late the economy, but in fact it gives them very
the people.” Could you briefly explain what limited incentive — and mostly the money just
“QEP” is about, and why you support it? sits there making them, on paper at least, even
more rich.
My advocacy of QEP rests on similar grounds
as my advocacy of a debt jubilee: I don’t think it QEP advocates are just saying: wouldn’t it stim-
will be a real solution ulate the economy a
to anything, though lot more to take that
it will certainly make same money and
a lot of people’s lives An initiative like do… well, almost any-
easier — I am inter- thing else with it? So
ested in it mainly as quantitative easing for QEP can mean a lot
a kind of mental re- of things in practice.
set button, a way of
the people would be The Corbyn people
forcing the people a dramatic way of say, well, rather than
running the system to making rich people
actually admit what reminding people that richer and hoping
money is under a money is really a social that will make them
credit system such as more likely to lend
we have today, so as relation, a series of to people who want
to open up people’s to build roads, or do
sense of political pos-
promises we make to one high-tech research,
sibility. another, and that we why not just lend it
directly to people
The mechanics create it all the time. who want to build
are simple. Since roads or do high tech
2008, central banks, research? Then oth-
whether the Fed- ers say, why not just
eral Reserve in the US, the Bank of England, take it and build roads or do research your-
or the European Central Bank have engaged self? Finally, others — and I must say I’m most
in rounds of money creation — “quantitative sympathetic with this — say, why not instead
easing” as they euphemistically call it — which of indirectly giving it just to rich people, who
46 ROAR MAGAZINE
already have a lot of money after all, directly give it to everyone? I think
the last round of QE by the ECB involved producing enough money to
give everyone in the Eurozone something like 180 euros a month. Well,
why not just do that?
This shades into the debate about a Universal Basic Income, which
as an anarchist I think is a potentially brilliant left-wing anti-bureau-
cratic issue — but that’s something of another story. As I say, QEP
would be a dramatic way of reminding people that money is really a
social relation, a series of promises we make to one another, and that
we create it all the time.
At the moment people seem genuinely convinced that money is some

sort of limited good, and when politicians say “there’s just not enough
money,” or that social programs create debts our children will have to
pay some day, they actually make some kind of sense. This is because
they see money as stuff that has to already exist before banks can lend
it out, when in fact the reality is precisely the other way around. The
second line of defense of course when you point this out is to fall back
on inflation: well, if the government or central bank just print money,
you end up like Zimbabwe, or Germany in the 1920s. This too is tacit-
ly based on the quantity theory of money. But in fact, with QE they’ve
been printing money like mad, and they don’t seem to be able to spark
inflation at all — it’s pretty clear they would like a little more than they
have. If nothing else, a QEP program will let the cat out of the bag.
What would you say to those who, understandably, feel overwhelmed

by the immense power of finance and who are convinced that “resist-
ance is futile”? What can be done at the everyday level to overcome
this sense of resignation and re-empower our communities? Are
there any particular struggles — past or present — you would point
to for lessons or inspiration?
What we call “finance” is really just other people’s debts. Or, to be

more technical: the art and science of creating, swapping and manipu-
lating such debts. The most obvious way to practice civil disobedience
against finance, then, not to mention to re-empower your community,
is simply not to pay your debts. The Strike Debt group that came out
of Occupy Wall Street faced that dilemma and we discovered some-
thing quite surprising. Our first idea was to create a kind of mass
pledge of debt resistance: have people sign a document that, say, once
they reached 100,000 signatures, everyone would simultaneously stop
paying their student loans. That way they couldn’t single out anyone
in particular for repression. But it was very hard to get anyone to sign

it. We only ended up with a couple of thou- else is in the same boat. So we started talk-
sand signatures. When we investigated why, ing about an “invisible army” of defaulters.
we discovered that a substantial number of the We even wrote an “operations manual” on
people we approached were already in default. how to deal with bailiffs and collection agen-
And a very large chunk more were thinking cies, what you can get away with, what you
they soon might be. The last thing they want- can’t… It’s difficult to see how to marshal that
ed was to draw attention to themselves. movement as an explicitly political force, but
it does make the problem a little less over-
So we started to break down the numbers. whelming than it might seem otherwise.
Now, numbers are hard to come by. I once
tried to figure out what percentage of the av- Final question: we would be very curious to
erage American household’s income is direct- hear what you are working on at the mo-
ly appropriated by the FIRE sector (finance, ment, and how your current research pro-
insurance and real estate) in a given month, jects fit in with your past anthropological
and I found that you can get figures on almost work on money and debt, and your ongoing
anything else, but that one, nobody really had activism against inequality and the power
the slightest idea. When I asked economists and privileges of the 1 percent.
to guess I got everything from 15 percent to
50 percent. But even more curious, almost all Well, as it happens, I’m writing three books
types of loans also saw massive rates of de- at the moment. Two are collaborations. I’m
fault. If you look at writing a book of
rates of student loan essays on kingship
default, credit card with my old teacher,
default, mortgages… What we call “finance” Marshall Sahlins.
It seemed like a ma- For me this is a re-
jority of households is really just the art ally big deal, and
were not paying it’s fun to get back
and science of creating,
some debt or anoth- to serious hardcore
er. But that means swapping and scholarship again. I
most households just finished the last
were already prac- manipulating other of my three essays,
ticing civil disobedi- people’s debts. The most about pirate kings
ence against finance! in seventeenth and
They just weren’t obvious way to practice eighteenth-century
doing it consciously, Madagascar. Many
civil disobedience against
in the sense of as an if not most of the
act of political self- finance, then, is simply Caribbean pirates
assertion. ended up settling in
not to pay your debts. Madagascar even-
The big problem tually. I argue their
with debt is that it presence sparked a
causes such shame kind of democratic
that people are afraid to talk to each other political experiment among the Malagasy
about it. They don’t know that everyone who lived next to them, which should be
48 ROAR MAGAZINE
considered one of the first Enlightenment political experiments, and
would be were it not for the fact that they were Malagasy. The next
is a book about bullshit jobs because everyone wants me to do that
after the essay in Strike! Magazine. And finally I’m working with the
archaeologist David Wengrow on a book about the origins of social
inequality. This one is going to be explosive.
The question isn’t where inequality came from but how

we somehow got stuck.
Our basic premise is that there’s been this story we’ve been telling
ourselves for centuries now, which starts like this: once upon a time
we were all happy little bands of egalitarian hunter-gatherers, and
everything was fine because things were simple and small, but then
we invent agriculture, which allows private property, so things start
going downhill, and then you get civilization, and that means not
just cities but a surplus, social class, states, exploitation, but also high
culture, writing, and so on. It all comes as a package, love it or leave
it. But the problem is the last fifty years of research have shown that
virtually none of this is true. That’s just not what happened. Hunter-
gatherers, even in the Palaeolithic, could be very hierarchical, but
they tended to go back and forth over the course of the year be-
tween almost state-like arrangements and extreme equality. They
were always experimenting with different forms and any top-down
arrangement was inherently temporary. So the question isn’t where
inequality came from but how we somehow got stuck.
DAV I D G RAEBE R
David Graeber is an anarchist activist and Professor of An-

thropology at the London School of Economics. He was among the
early organizers of Occupy Wall Street in New York. His books
include the award-winning Debt: The First 5,000 Years (Mel-
ville House) and most recently The Utopia of Rules: On Tech-
nology, Stupidity and the Secret Joys of Bureaucracy (Melville
House).

WE ALT H INE QUA L I TY
The Life and

Times of
the 1 Percent
Tim DiMuzio
50 ROAR MAGAZINE
DOMINANT OWNERSHIP, MULTIPLE
INCOME STREAMS AND A
THOROUGHLY SKEWED MONEY
SYSTEM PROVIDE THOSE AT THE
TOP OF THE WEALTH PYRAMID
WITH INCREDIBLE POWER.
I
n 2011, the Occupy movement shone a In the latest World Wealth Report by Capgem-
giant spotlight on growing inequality in ini and RBC Wealth Management, there were
the midst of the latest global financial 14.6 million high net-worth individuals. As a
crisis. The scale of the protest — virtually percentage of the global population (roughly
worldwide with over 951 cities participat- 7 billion) this means that they constitute a
ing in 82 countries — was unprecedented. mere 0.2 percent of humanity, or 0.7 percent
Among other things, the mobilizations drew of adults. So in reality, this class of dominant
the public’s attention to the growing wealth owners is far smaller than the Occupy move-
and income inequality between the 1 percent ment imagined. But it is also interesting to note
and the 99 percent. Having a long-standing the vast disparity even within this small class of
interest in the question of inequality and individuals. The vast majority — 90 percent —
spurred on by the movement, I decided to of dominant owners have income-generating
take a closer look at the 1 percent in my book assets between USD $1 and 5 million, while
The 1% and the Rest of Us. The key questions mid-tier millionaires with $5-30 million con-
I wanted to answer were: How can we define stitute only 9 percent of the HNWI popula-
or conceive of the 1 percent? Is this vast action. This leaves a mere 1 percent of dominant
cumulation of wealth in any way justified or owners with $30 million and above invested
earned? And what helps us explain this vast income-generating assets.
disparity of wealth?
It is important to note that the major difference
IDENTIFYING THE 1 PERCENT between dominant owners and most of the rest
of humanity is that their wealth derives from
the power vested in ownership. Most people
To answer the first question I decided to look at — if they are lucky — have only one income
how investment banks and other financial insti- stream, which derives from their work or labor.
tutions conceive of the 1 percent. It turns out that The difference between them and the 1 percent
their term for the 1 percent is “high-net worth is that the 1 percent typically have multiple
individuals,” or HNWIs. These are individuals income streams. Take for example Bill Gates,
who have at least $1 million (USD) invested in whose net worth is $90 billion at the time of
income-generating assets like corporate shares, writing. It may be surprising to some readers
government bonds and real estate. Historically, to find out that Gates only owns 3 percent of
their numbers have grown over time — but they the shares in Microsoft. The rest of his wealth
are still a tiny fraction of global humanity. stems from additional income streams com-
The Life and Times of the 1 Percent 51

ing from Canadian National Rail, Deere & Co., Fomento Economico
Mexicano, Republic Services Inc., and Ecolab Inc., just to name a few
of his largest equity stakes. It is also worth mentioning that Gates, like
others in his class, is what Thorstein Veblen called an absentee owner.
He does not physically work in any one of these companies, yet he is
able to capitalize their earnings through ownership.
MONEY AND POWER
Ownership over multiple income streams gives the 1 percent — particu-

larly those at the top of the wealth pyramid — incredible power. There
is a lot of talk about the functions of money, but a clear definition is
that it is an abstract claim on society and natural resources represented
in a unit of account. What this means in simple terms is that the more
income and wealth you have, the greater is your ability to command hu-
man beings and natural resources. This has tremendous environmental
consequences that are not very well understood at the moment, but the
work of Dario Kenner has been a good start in this regard.
Ownership over multiple income streams gives

the 1 percent — particularly those at the top of the
wealth pyramid — incredible power.
The environmental consequences are made all the worse by competitive

consumption for status. I use the example of “yacht envy” in my book,
where billionaires aim to outdo each other in yacht size and amenities
every year. About five years ago, Roman Abramovich’s Eclipse was the
largest yacht on the seas. Then in 2013, Azzam, believed to be owned by
the President of the United Arab Emirates, was launched and overtook
Eclipse in size. Today, there is another super-yacht project underway.
At 222 meters and at a cost of US$1.1 billion, it will be the world’s largest
and most expensive yacht when launched. This is merely the tip of the
iceberg: competitive consumption takes place across a range of goods
and services, all with environmental and ecological consequences, not
least climate change.
We also know that the 1 percent always want more money, since the
goal of investing is never to lose money but to make more of it. In the
theoretical framework I use we call this “differential accumulation.” No
52 ROAR MAGAZINE
owner or investor wakes up in the morning with Did
id you
ou kn
know
n w tthat...
ha
the goal of making less money today than he
or she did yesterday. So whether the 1 percent
are actively involved in investment decisions
does not really matter; people like Gates and
the rest of the HNWI class are participating in
the logic of differential accumulation whether
they can speak the language of finance or not.
They want the value of their owned income-
generating assets to increase (rising capitaliza-
tion), not diminish, and they are likely to have
an army of wealth managers trained to do this H E 1 PERCENT
THE P E R C T HAS
H S3 6 PERCENT
35.6 E C N
ER
very task. Differential accumulation is an iron O
OF A L P
ALL R AT E W
PRIVATE EAL , M
WEALTH, ORE
MORE
law of capitalism — it is, for lack of a better term, HA T
THAN OT O M 9
THE BOTTOM 5P
95 ERCE
PERCENT
the logarithm of the capitalist universe.
EARNING THEIR WEALTH?
This has major implications for political

change. So long as the 99 percent remains
divided on crucial questions, you can forget
about much-needed structural change. The
most critical question I identify in my book is
whether or not it can be said that these own- THE
T H W
WORLD’S
LD’S 1 PPERCENT
ERCEN O OWN
W
ers earn their income and wealth. How do we $42.7
$4 TRILLION
TR L IO D O L L A R MORE
DOLLARS, ORE
know that they do? What theories might we THAN T
THAN HE B
THE BO OM 3 B
BOTTOM LIO
BILLION
RESIDENTS
R S
SII D E N T OFFEEARTH.
ARTH.
have to demonstrate it? Unfortunately, we do
not have any convincing responses from main-
stream accounts — or even from Marxists, for
that matter.
So long as the 99 percent

remains divided on
crucial questions, you can T H E MEDIAN
THE MEDIAN N ET W
NET ORTH O
WORTH OF F
WH T H
WHITE O U S E H O L D S IIN
HOUSEHOLDS N2 009
2009
forget about much-needed W AS $
AS
WAS 3 9 O
$113,149, VER 2
OVER 200T MES T
TIMES HE
THE
M ED A N
MEDIAN E W
NET WOORTH O
WORTH OFFA F R I C AN
AFRICAN N
structural change. AM
A MERICAN H
AMERICAN O U S E H O L D S (($5,677)
HOUSEHOLDS $55,, 6 7 7 )
A N 118
AND 8T IMES T
TIMES HA O
THAT OFFH ISP PA
AN C
HISPANIC
H O U S E H L D S (($6,325).
HOUSEHOLDS $6 3 5
53
PHOTO BY ALESSIO MOIOLA, VIA SHUTTERSTOCK
54
ROAR MAGAZINE
It is interesting to take a closer look at the dis-
parity, since for most of us all of this is highly
abstract. For example, hedge-fund manager
David Tepper made $3.5 billion in 2013. The
median income in the United States was about
$55,000 that same year. So with these two
numbers, we can provide a ratio:
1 : 63,636
What this means is that every time our ordinary
worker makes another dollar, Tepper will make
another $63,636 dollars. Neoclassical theory says
this compensation is directly related to the con-
tribution made to production and society. Just
on an intuitive level, it is hard to imagine some-
one being 63,636 times more productive than
another human being. Of course there are real
differences in talents, skills and abilities. No one
should deny it. But they certainly are not that
drastic and evolution does not work faster in one
human than another to such an extreme degree.
By this scale of differential income, Tepper

should be considered an X-Man with real su-
perpowers. But of course, he is just a man in a
particular position in society able to redistribute
income to himself and his investors. Consider,
for example, the differences between a profes-
sional marathon runner and an average Joe who
will walk a marathon. Obviously there will be
a massive difference in skill and ability and tal-
ent. So what do you think the ratio will be?
The world record for male marathon running
is 2:02:57 hours set by Kenya’s Dennis Kimetto
in Berlin in 2014. If average Joe walks a mara-
PHOTO BY IHOUGAARD, VIA FLICKR
thon, how long would it take? Estimates vary,

but if we walked at 20-minute miles it would
take about 8.7 hours. So what is the difference
between a highly skilled marathon runner and
average Joe? Turns out the ratio is:
1 : 4.35
55
It is the task of critical political econ-
omy to challenge the radical anti-
social belief that wealth is earned
solely on the basis of individual
knowledge, talents and skills.
We could all agree that Kimetto is a little over only ever be social. Only once we realize this
four times faster or better at running than an can we start to think about how wealth might
average person who simply walks the mara- be distributed in a democratic and free society.
thon. Kimetto undoubtedly deserves to be the
world record-holder. But in no way is Kimetto
63,636 times faster or more talented than the THE MONEY SYSTEM
average person walking a marathon. So some-
thing is seriously askew when we look at these
ratios of inequality — and I believe it is the But another factor — often overlooked — also
task of critical political economy to challenge contributes to the growing disparity between
what I call “the superman theory of wealth the 1 percent and everyone else: the way in
accumulation,” or the radical anti-social be- which new money enters our economies. This
lief that wealth is earned solely on the basis of is not the place for a lengthy exegesis on money
individual knowledge, talents and skills. Since mechanics, but suffice to say that it is now well
this type of thinking is engrained in much of established that banks create new money when
Anglo-American culture, I believe that that the they issue loans at interest. Since most banks
99 percent has its work cut out for it in popu- lend against income streams, accumulated
larizing the idea that all wealth is social and can wealth or collateral, the already wealthy are
56 ROAR MAGAZINE
at a massive advantage when it comes to taking out new loans. This
money can be used to capitalize additional income-generating assets,
exacerbating pre-existing inequalities. For example, it is stated that the
leading hedge-fund managers can leverage their capital by a multiple of
10. In other words, $1 billion can become $10 billion to speculate with.
Inequality is exacerbated precisely because those with no assets, little
assets or average incomes cannot get access to the similar amounts of
money and credit. So there is an advantage for the 1 percent built into
the modern money system and a systematic disadvantage for the part
of the 99 percent who have little or no access to credit.
Unless people organize and push for structural change,

change will continue to happen, but only at the margins.
This disparity will likely continue because it is structural or systematic

and the political opposition is largely fragmented. Unless people organ-
ize and push for structural change, particularly on how we produce
new money as debt in the economy, change will continue to happen,
but only at the margins. The worst-case scenario is that we continue
on our current path, destroy the environment for future generations
in the process and through the practices of differential accumulation,
experience an even greater gap between the 1 percent and the rest of
us. There are waves of hope that this scenario can be avoided — but at
the moment, they are just waves, not the tidal force we need.
TIM DIMU Z IO
Tim DiMuzio is a Senior Lecturer in International Rela-

tions and Political Economy at the University of Wollongong,
Australia. He is the author of The 1% and the Rest of Us (Zed
Books, 2015), Carbon Capitalism (Rowman and Littlefield,
2015), and Debt as Power (with Richard Robbins, Manchester
University Press, 2015).
The Life and Times of the 1 Percent 57

RE AL AND IM AG I N ED
the debts
of the
american
empire
Cassie Thornton and Max Haiven
FROM CHICAGO TO PUERTO RICO TO
SAN FRANCISCO, DEBT IS A TERRAIN
OF STRUGGLE WITHIN AND AGAINST
AMERICA’S RACIALIZED EMPIRE OF
INDIFFERENCE.
W
e are used to speaking about ganizing the world in its image, transforming
debt as an individual experi- everything from education to health to per-
ence, one of lonely insomnia, sonal relationships into “investments” to be
and of grinding, inescapable worry. Authors leveraged and risks to be managed. The result
like David Graeber or Maurizio Lazzarato is a global empire of liquified capital, coursing
have taught us that debt functions so perni- around the world at accelerating speeds and
ciously because it merges economic obliga- seeping intensively into our daily lives, our
tion with moral condemnation: debt and guilt social relationships and our sense of self.
are intimately connected. All the more so in
neoliberal societies where free-market indi- Unavoidably, this empire’s heart is the United
vidualism not only sees the growth of per- States, the world’s unrivaled superpower,
sonal debt levels but also hides or obscures home to Wall Street and other financial forces
the sociological and common roots of those that, in spite of recent rivalries and setbacks,
debts, making them appear solely the fault still dominates global trade and the orches-
and responsibility of individuals. tration of global capitalism. Thus, in this pro-
ject, we wanted to study three crisis zones at
But what about debts experienced not as an the heart of the empire, three spaces of col-
individual, but as a collective, through insti- lective debt that might reveal the complexi-
tutions, nations and cities? In our ongoing ties and characteristics of our moment. In all
research project, we are examining the rela- three cases, debt is the product of vast and
tionship of these forms of collective debt and entrenched economic inequalities rooted in
the imagination. Debt is, after all, everywhere systemic and structural oppression, violence
and also nowhere at all, unavoidable and yet and exploitation. Those injustices made the
ephemeral. In this project, we want to engage emergence of the debt inevitable, and the
with the unconscious of debt within what the debt, in turn, reinforces and re-entrenches
late theorist of financialization Randy Martin the injustices, locking them into the future.
called an “Empire of Indifference,” where it is Yet underneath, other debts — deeper, un-
fruitless to make a distinction today between seen and often unacknowledged — move
the make-believe economies of debt and like subterranean rivers, cracking the pave-
credit and the “real” economy of goods and ments and threatening to erupt in resistance
services: finance rules and is, indeed, reor- and revolt.
The Debts of the American Empire 59

CHICAGO From 1905-‘70, the Black population of Chi-
cago grew from 2 percent to 35 percent of the
total as migrants fled the deadly institutional-
Walking around Chicago’s South Side I’m ized racism of the US South. But thanks to
shocked at how little the infrastructure decades of explicitly or implicitly racist hous-
has been cared for. The streets, streetlights ing policy in Chicago, most of that population
and metro stations are in total disrepair. was restricted to a small selection of neigh-
Sidewalks sometimes just disappear into borhoods on the outskirts of the city’s thriving
broken glass and yellowed grass. Schools downtown. In spite of decades of struggle,
and stores are boarded-up. We’re only a the city remains deeply unequal: since 1990
few blocks from Obama’s house. The white families have seen their income rise
infrastructure is speaking for the city, and by 30 percent on average, not even remotely
the message is: “fuck you, get out.” I know keeping pace with inflation, but Black fami-
that as a white person from the suburbs, lies’ income has actually declined by 4 per-
the message is not meant for me. cent.
Chicago’s school board (CPS) is over $6 bil- The subprime mortgage racket decimated
lion in debt to Wall Street banks and other many Black communities who were explic-
corporate bondholders. These sharks have, itly targeted for predatory loans and fore-
in turn, laced the debt into the investments closures. Meanwhile, in the wake of protests
and savings of small retail investors like pen- against the police shooting of unarmed Black
sion funds, insurance companies and mutual- men, a task force appointed by the city’s
fund holders. Years mayor was unspar-
of neoliberal cuts to ing in its criticism of
taxes at both the city, Chicago’s police de-
state and federal level partment, charging
The subprime mortgage
have led to condi- them with perva-
tions in which, over racket decimated many sive and systematic
the past 20 years, discrimination and
CPS was compelled
Black communities who violence against the
to borrow ever- were explicitly targeted city’s Black popula-
increasing amounts tion as well as ig-
at increasingly ex- for predatory loans and noring or burying
tortionate rates just decades’ worth of
foreclosures.
to keep the doors complaints.
to the schools open
in America’s third As Paula Chakravartty
largest city. While and Denise Ferreria
the city’s corporate media has been quick to da Silva have shown, today’s debt empire de-
blame the fiscal situation on the greed of pends on reproducing racialized subjects who
unionized teachers, the reality is more com- are financially sabotaged by a grid of systemic
plex and involves the invisiblized histories and structural injustices. Indeed, these sub-
of racism in the third-most segregated city in jects become opportunities for speculative
the United States. wealth extraction as private school provid-
60 ROAR MAGAZINE
ers, private prisons, sweatshops, subprime lenders and other indus-
tries blossom while the neoliberal state retreats from any commitment
to social care, instead encouraging the militarization of everyday life.
I bike 30 minutes north along the luxury waterfront highway for

cyclists, pedestrians and runners to arrive on a downtown con-
crete platform reinforced to hold 120 tons of seamless steel and
wood — a huge silver bean, 10 meters tall, surrounded by tour-
ists and locals. Photograph yourself in front of this huge shiny
warped glowing city of skyscrapers, surrounded by concrete and
business suits. See yourself in your city, which is also every city,
a magic city, a quicksilver bubble of opportunity and financial
anxiety. But you can never enter it — it’s nothing but endless,
reflective surface. “Cloud Gate,” the 2006 sculpture by Anish Ka-
poor, was inspired by liquid mercury, the toxic plasma that is
released from power plants and gold mines. A monument to the
convergence of modern money and the postmodern city: a bubble
of financial liquidity itself.
The history of systemic and structural racism is important to un-

derstand to fathom the complexities of the Chicago Public School
debt crisis. While whites, Latinxs and African-Americans represent
roughly 30 percent of Chicago’s population each, only 9 percent of
white parents send their children to the city’s public schools (mostly
in wealthy suburbs). The systematic economic abandonment of the
Chicago Public Schools has actually amounted to society’s abandon-
ment of racialized children. For instance, in response to the debt CPS
incurred to make up for shortfalls in revenues, in 2013 it closed 49
schools, the vast majority of which were in highly racialized neigh-
borhoods.
The history of structural racism is important to

understand to fathom the complexities of the
Chicago Public School debt crisis.
In an age of neoliberalism when all societal problems become seen
as personal responsibilities, racialized families and children are con-
stantly told to “invest” in their education to gain access to opportu-
nities and a chance to escape poverty and oppression. Yet even if
these myths matched reality (they don’t: Black people with univer-
sity degrees typically earn less and pass on less wealth to their chil-
dren than whites without), the possibility of “getting an education”

has been fundamentally sabotaged. Worse,
it has been sacrificed on the altar of high fi-
nance: today, 40 percent of the CPS budget
is dedicated to debt repayment, which goes
directly into the pockets of banks and cor-
porations whose executives and sharehold-
ers are disproportionately white.
The $23 million it cost to erect “Cloud

Gate” was, allegedly, privately raised. But
it feels like the South Side and the West
Side have been squeezed until the gold
came out, squeezed until the paint fell off
the walls, and the cement cracked. And
all of the energy that would repair those
breakages and ruptures has been sto-
len, and pumped into this useless toy, this
growthless seed. It holds hostage all the re-
sources and attention that is missing.
The intersections of debt, race and educa-

tion are hidden in plain sight in an American
media landscape dominated by sensational-
ist headlines about criminal violence. But it
is precisely this dense knot of oppression,
exploitation and inequality, which traces
its roots back to the institutions of slavery,
that drives the perpetuation of exploitative
racialized poverty in Chicago and belies the
meritocratic mythology of white supremacy.
It also animates the righteous and stalwart
rage so powerfully expressed by the Black
Lives Matter movement, which has mani-
fested in Chicago in massive street demon-
A FLLIC KR
IICK
CK
C
strations led by high-school students. It also

inspires the generative and optimistic oc-
VIA
S, V
KA S, IA
cupation of a park across the street from a

PHOTO BY LM TP, VIA FLICKR
M KAY
once-secret police facility that, after years of

K & KIM
community activism, courts have affirmed

was used essentially as a torture chamber.
YC
O BY LAR
CLA RK
That activism successfully won monetary

P TO
reparations for survivors of the facility,

PHO
PH
but Black Lives Matter and its allies also
62 ROAR MAGAZINE
The only remedy that will suffice is a
revolutionary transformation that
fundamentally unseats white
supremacy, abolishes racial privilege
and radically redistributes the
empire’s ill-begotten wealth.
have other, more profound debts to settle. the debt is incalculable. The only remedy
As Ta-Nehisi Coates made clear in his pro- that will suffice is a revolutionary transfor-
vocative 2014 article in The Atlantic, “The mation that fundamentally unseats white
Case for Reparations,” the unspoken and supremacy, abolishes racial privilege and
unspeakable debt owed to Black Ameri- radically redistributes the empire’s ill-be-
cans is not merely for the wealth extracted gotten wealth.
from their ancestors under the institution
of slavery, wealth that quite literally built PUERTO RICO
the nation and its institutions. It is also
owed for the multiple and persistent pro-
cesses of land theft, institutional exclusion An hour west of San Juan, the capital of
and economic sabotage since the Civil War, Puerto Rico, we are standing in a gravel
up to and including the subprime mortgage parking lot at dusk, looking up at a new-
meltdown which hit Black families target- ly assembled bronze sculpture of Chris-
ed by predatory loans disproportionately topher Columbus, slightly taller than the
hard. Yet others argue that the depth of the Statue of Liberty. The “Birth of the New
damage is unfathomable and the scope of World” was meant to celebrate the 500-

year anniversary of Columbus’ blunder Though today its residents enjoy American
into the Americas, but since 1991 six citizenship and its government proclaims itself
other US cities have declined the oppor- a “commonwealth,” Puerto Rico remains es-
tunity to host the statue due (according sentially a colony of the world’s largest super-
to the Economist) “to its monstrous size, power. Odd and unique laws apply here that
ugliness and the prohibitive cost of in- would be unacceptable in either a sovereign
stallation.” nation or a US state: the Puerto Rican consti-
tution is essentially observed at the pleasure
But the mayor of the economically de- of the US Congress and many key legal and
pressed Arecibo, which has been steadily financial policies and decisions occur outside
losing population for the past two decades, their control. These include a bevy of laws that
likely believed in the power of culture and have led to the fateful situation in which an is-
tourism as forces that might offer a road to land with a population of 3 million owes a debt
financial survival for the city. 52 percent of at least $76 billion — with special provisions
of the population and 64 percent of chil- stipulating that bondholders must be paid out
dren live in poverty — a rate that is about first from government revenues, before pen-
10 percent higher than Puerto Rico as a sioners, teachers or police are; that Puerto
whole but more Rico cannot declare
than double the bankruptcy; and that
rate in the United the bonds are triple
States. Through the complicity tax-exempt. In sum,
through the com-
The shadow of Co- of local elites, American plicity of local elites,
lumbus looms over American politicians
politicians and Wall
Puerto Rico. When and Wall Street in-
the Genevan mer- Street investors, the island vestors, the island
cenary arrived on has been made into
his second voyage has been made into a tax a tax haven and a
to the so-called New haven and a utopia for utopia for financial
World, he rapidly speculators.
sought to enslave financial speculators.
the local Taino in- Standing just off
digenous people to the parking lot
hunt for gold. While with our video
the Taino were to put up decades of militant camera, a middle-
resistance, eventually all that remained was aged man yells a warning from the porch
a genetic trace within a mixed Puerto Rican of his mother’s house. We are just making
population, which also inherited a legacy a funny video about Christopher Colum-
from poor European proletarians and en- bus, I tell him, but he orders us to stop: “he
slaved Africans. At the close of the Spanish- was a bad guy but he gave my people jobs.”
American war in 1898 the United States ar- The man says he found three months of
rived claiming to be liberators, but it quickly work helping to assemble the statue, and
became clear that they saw the tiny Carib- now that it is completed he offers tours.
bean island as a possession. “If you could go back in time and talk to
64 ROAR MAGAZINE
Puerto Rico’s 1 8 98 Puerto Rico becomes part of the US at the
end of the Spanish-American War.
Debt Crisis Puerto Ricans are granted US citizenship

1 9 17
A TIMELINE by the Jones act, which also exempts
interest payments from bonds issued
by the government of Puerto Rico.
The island’s first constitution is 1952
proclaimed, establishing a commonwealth
...
with autonomy in internal affairs.
2 0 06 Many schools and government

agencies closed down due to budget
shortfalls. Massive popular protests ensue.
After earlier announcements by Governor 2009
Fortuno regarding spending cuts and possi-
ble job layoffs tens of thousands of workers
2 0 13 Debt crisis mounts, raising the
possibility that it might require
federal assistance.
Three major rating agencies downgrade 2014
Puerto Rico’s bonds to “junk status”
2015
J UNE The island’s debt is declared “unpayable”

by Governor Padilla. Default on next
Puerto Rico defaults on roughly $57 AU G round of payments is imminent, but
million of its $72 billion debt. narrowly avoided.
O CT To avoid a “humanitarian crisis”, President

Obama urges Congress to devise a plan for
Again, the island narrowly avoids default DE C
Puerto Rico’s massive debt
on a debt payment. Puerto Rico continues
to struggle to find money for government
services and future debt payments.
2016
JAN Puerto Rico defaults for a second time on

$37 million of its roughly $1 billion of debt
payments.
State of emergency is declared at the APR
Government Development Bank of
Puerto Rico. J UN The House of Representatives passes
Puerto Rico Oversight, Management and
Economic Stability Act (PROMESA).
For a third time, Puerto Rico defaults J U LY
Later that month, the bill is passed by the
on roughly $2 billion in debt
Senate.
payments due.
65
Columbus, what would you say?” Max ready minimal) economic autonomy from
asks. “I wouldn’t say anything,” he replies. the nation’s government and opens the door
“I would kill him. He was terrible. He to even deeper cuts to education, pensions
doesn’t deserve to be there. But God put and the civil service. It also threatens the pri-
that sack of shit there for some reason. He vatization of the island’s natural bounty: its
gave work to Puerto Ricans. So I am his forests, urban spaces and beaches that are so
bodyguard.” beloved of the people and that have attract-
ed the appetites of developers and resorts.
As with so many countries in the Global Meanwhile, Puerto Rico is currently seeing
South, the hot financial money that flowed the largest emigration of people (especially
into Puerto Rico since the 1980s and that to- young people) to the United States since the
day haunts the island like the spirit of Co- 1950s, leaving cities like Arecibo behind as
lumbus, did little to improve the quality of ghost towns.
life for the island’s working class or the na-
tion’s infrastructure. Puerto Rico remains It is the ecological threat that has most cata-
substantially poorer on a per capita basis lyzed the resistant spirit of Puerto Rico in re-
than the poorest US state, Mississippi. Partly cent years. Since the US claimed the colony
this has to do with the fact that the islands almost 125 years ago it has brutally repressed
are compelled to import almost everything nationalist and independence struggles, us-
from US corporations. Walmart and Wal- ing tactics that have included the bombing
greens (Puerto Rico has the highest concen- of US citizens, the torture of prisoners, il-
tration of both per square mile anywhere in legal incarceration, police entrapment and
the world) dominate consumer markets and extrajudicial assassination. Yet we may be
employment. Even the branch-plant phar- seeing the rise of a new generation of non-
maceutical industry, which once produced violent revolutionaries with a strong anti-
most of the prescription drugs sold in the US, colonial philosophy, a populist approach
has left for greener pastures since a lucrative and a profound ecological consciousness.
set of incentives was ended in the 1990s. Recent victorious struggles have included
forcing the US military to abandon its eco-
In 2015, the Governor of Puerto Rico was logically catastrophic munitions testing on
forced to take the remarkable step of declar- the paradise island of Vieques, the preven-
ing publicly that his government could not tion of the spraying of NALED insecticide to
repay its swelling debts, triggering a series of control the spread of the Zika Virus, and the
Congressional hearings and backroom deals reclamation and re-wilding of a beach in the
that led to the passing of the PROMESA bill hyper-corporate tourist district in San Juan.
in the spring of 2016. Among other things, the These coalition struggles are waged with a
bill forestalls the vulture funds that bought profound love for the land and a sense of debt
up Puerto Rico’s bonds at a huge discount; or obligation to the gentle tropical beauty of
eager to reap the rewards of the US fiscal in- the islands and their fertile abundance. More
tervention they knew would be inevitable. deeply still, they are emerging from a realiza-
But Puerto Rico will now be forced to repay tion that the American Dream of boundless
the odious debt for generations to come, and consumerism is, in reality, an alien nightmare
the bill allows for the establishment of a fis- for which Puerto Rico’s land and people will
cal control board that essentially strips (al- continue to pay the price.
66 ROAR MAGAZINE
These movements often ground themselves in the profound debts
owed to Puerto Rico by the United States, for instance for decades
of ecological damage caused by the presence of the US military
and US industry. As Franz Fanon illustrated over sixty years ago,
the psychic life of colonialism operates by insisting that the colo-
nized owes the colonizer the debt of civilization. But as Aime Ce-
saire noted in his furious Discours sur le Colonialisme, the debt is
actually owed to the colonized, whose land, labor and resources
have been stolen to build the metropole’s cities and reinforce its
self-aggrandizing mythology.
Movements often ground themselves in the

profound debts owed to Puerto Rico by the United
States, for instance for decades of ecological
damage caused by the presence of the US military
and US industry.
SAN FRANCISCO
When I moved to the Bay Area in 2010 to go get an $80,000 Mas-

ters of Fine Art degree I found a big room in an apartment in
the Mission with a local writer for $640 per month. Even back
then they were drilling for truffle oil in the cracks between the
buildings. My roommate had a strict weekly schedule of events
that had nothing to do with money, competition or productivity:
swimming in the ice-cold bay, hitting up the free farmers’ mar-
ket and free meditation, the by-donation yoga, the sliding-scale
acupuncture and clothing swaps. Art galleries or poetry read-
ings existed in parks and in the backrooms of bookstores. I have
nostalgia for a time I barely witnessed. But these facts feel like
ancient history and I feel like a living fossil, though I’m a com-
paratively recent invasive species.
According to the popular landlord rental website Zumper, the me-

dian rent for a one bedroom apartment in San Francisco in 2015 was
$3,410 per month. A worker earning the city’s $13-per-hour minimum
wage would need to work at least nine hours all seven days of the
week to earn that much and have nothing left. Last year the asking
prices for homes across the Bay in Oakland increased 14 percent and
rents increased by 21 percent, only to be outdone by Berkeley to the

north at a 32 percent increase. Reports from like Apple and Google and a thriving “tech
the San Francisco Rent Board indicated that, boom” of start-ups driven by highly-leveraged
in the five years prior to 2015, the eviction venture capital. Thanks to decades of coun-
rate increased by 54 percent. tercultural, queer, Black and Latino arts and
activism, the city had gained a global reputa-
The racialized effects of what is all too often tion as the home of creative thinking, diverse
termed “gentrification” are staggering. Ac- acceptance and anti-establishment thinking —
cording to census data, in the 40 years lead- all things that attracted the pioneers of Silicon
ing up to 2010, the Black population of San Valley. But the influx of wealth drove up prices
Francisco diminished by half. A recent report and rents in ways reminiscent of the city’s ori-
from the Oakland-based grassroots advocacy gins in the 1849 gold rush, which in the span
group Causa Justa indicated that between of a decade nearly obliterated the indigenous
1990 and 2011 the proportion of Black resi- population. Today, those renegade souls who
dents in Oakland fell by nearly 40 percent built the city’s “cultural capital” have been
and the proportion of homeowners who were forced out or underground, or have seen the
Black diminished by half. Last year, San Fran- rich fabric of their cooperative lives commodi-
cisco’s Mission district lost over 1,000 Latino fied and resold in the form of live-work lofts,
families and has seen an influx of 2,900 white hip urban styles or new apps that aim to mon-
households. etize every human experience.
When my roommate left for NYC in 2012 When my landlord raised our rent to
I filled the apartment with other students, $4,000 we tried to avoid him, but eventu-
people new to SF with big futures and lots ally my roommates and I decided we didn’t
of debt. We were all broke and we used want to fight. At viewings of one-bedroom
the apartment to scam money to live on apartments where paint had been used to
so we could buy organic vegetables. We disguise crumbling walls I waited in line
were paying $1,300 a month but we could with men in suits with their sterling credit
rent out our apartment temporarily for reports displayed on their iPads. Denied
$4,000 and I slept better knowing that time and again, I wrote my own credit re-
I could always cash-in. One Christmas port in which I tried to explain that I de-
break when I needed money I collected all served housing as much as someone who
the glass shards in front of my house on was rich and employed full time. Landlords
Folsom Street and hot-glued them to some giggled when they saw that I had manufac-
old jewelry. The owner of the vintage tured my own narrative, that I considered
steam-punk store handed me $400 for the myself trustworthy. But I started to do this
junk I dumped on the counter with shaky for others in the Bay for a year or two, and
hands, figuring, I guess, that he could turn sometimes it helped.
a profit. That place is now closed — the
rent was too high, probably. It has become cliché to note this process oc-
curring in the Bay — the process is so hy-
The story is well known. A city once famous perbolic and rapid it hardly needs comment,
for its artists, academics and working-class brought to light by recent high-profile pro-
manufacturing and transportation jobs found tests at the AirBNB headquarters or against
itself home to the burgeoning corporations the private-bus Google charters to shuttle
68 ROAR MAGAZINE
The story of San Francisco is well
known. A city once famous for its
artists, academics and working-class
manufacturing and transportation
jobs found itself home to the burgeoning
corporations like Apple and Google
and a thriving “tech boom” of start-ups
driven by highly-leveraged venture
capital.
TO BY RIC
PHOTO
PHO JOH S NE
HNSTO
R H JOHN E, VI
NE, LICKR
V A FLIC
FLICKR
69
its employees from their gentrified down- a Lamborghini wearing Google Glasses.
town Oakland lofts south to the corporate The men at the next table, all in Span-
campus in Palo Alto. What perhaps needs dex — designer bikes locked up nearby —
more parsing is the politics of debt that so were having a group therapy session. The
vastly and profoundly transform the city. In city had evicted my friends, and this was
part, the rapid gentrification of Oakland was who was left, enjoying what we helped
enabled by the waves of racialized foreclo- create. I’m leaving. Seven years in and
sures that occurred around the 2008 finan- I’m a young veteran. Most of the people
cial crisis. Meanwhile, the massive buy-up I knew trying to live outside of capital-
of homes in the whole Bay Area in the past ism have left, unless they’ve capitalized
decade was enabled and exacerbated by, on on their anti-capitalism by selling it, get-
the one hand, large hedge funds and investing paid to pursue it as a PhD, or teach-
tors backing highly leveraged speculators ing it at an art school debt factory. The
and property management firms and, on new, crisp white art museums popping
the other, the enthusiasm with which banks up around the Bay, built on borrowed
made loans to (prospective) landlords eager money or the largess of the tech industry,
to cash in on rising rents. are monuments to this process. They’re
the cultural version of investment banks
What’s more, in a city being taken over by with 24-hour security, built to preserve
highly educated tech-workers and those in the Bay’s cultural capital and social
who service them, debt is the unspoken dynamics in climate-controlled rooms
link between of a generation of so-called for the pleasure of those who can pay the
“young professionals” and precarious work- ever-increasing admission. These frozen
ers (denied the right to make a living from zones are, in fact, incubators for the next
the arts and relegated to slinging espresso or (and final) invasive species to occupy the
performing sex work), most of whom have city: wealthy, (half-)dead white men,
emerged with compulsory expensive uni- whose artwork is here exalted, with only
versity degrees. Many people are borrowing a very special area set aside for the living
money (on credit cards, for instance) mere- artists, the non-white people, the women
ly to afford living in the Bay, in the hopes and children.
their fortunes will turn. Others survive on
student loans. Worst of all, the tech indus- The American Empire, built on colonial land
try, powered largely by a culture of smug theft, genocide and slavery, is today an empire
free-market libertarian self-congratulation, of debt that is rotting from the inside. Its self-
has seen fit to revolutionize personal debt aggrandizing culture industries and chauvin-
under the banner of “financial technologies” ist politicos insist otherwise, braying about
(or FinTech), including horrific schemes freedom, fairness and a new American centu-
for peer-to-peer lending and human-capi- ry. Bullishly militaristic in both financial and
tal financing that take the worst aspects of foreign policy, this heavily indebted country
the so-called “sharing economy” and apply is also one of the world’s most unequal. It uses
them to the realms of debt and credit. the individualizing punishments of debt, rent
and prisons to enforce highly racialized forms
At an overpriced café near my room in of injustice that still sometimes bubble over
the Mission I was asked out by a guy in into open revolt.
70 ROAR MAGAZINE
While weaponized debt rages like a river on the
surface, underneath subterranean streams run
in other directions.
While weaponized debt rages like a river on the surface, underneath
subterranean streams run in other directions. The debts owed to the sur-
vivors of racist history, of colonialism, of ecological destruction, of dis-
placement and of exploitation gather momentum and sometimes break
the surface, geysering up with righteous vengeance. The question of
whether many isolated movements will converge around the common
theme of the debts owed to them by this empire of debt is an open one.
What is undeniable is that the empire is near its breaking point. Barbar-
ian, thug, hooligan, terrorist: these are merely the names that empires
give to those who come collecting the debts they are owed. The real
barbarians wear suits in fortresses made of glass, data and hubris.
CASSIE THORNTON
Cassie Thornton is a feminist economist and artist who uses

dance, writing, visual art, hypnosis, experimental research, tours
and radio to protect the unknown and reveal debt as a source of
solidarity (find out more at feministeconomicsdepartment.com).
MAX H A I VEN
Max Haiven is an author, organizer and educator and an As-

sistant Professor at the Nova Scotia College of Art and Design.
He is author of three books, including Crises of Imagination, Cri-
ses of Power and Cultures of Financialization, and co-director of
the Radical Imagination Project.

PO LIT ICIZING D EBT
The “Golden Noose”

of Global
Finance
Fanny Malinen
FICT IT IOUS FUT U R ES
BY REVEALING THE
SOCIAL AND POLITICAL
NATURE OF FINANCIAL
MARKETS, DEBT
AUDITS COULD BECOME
AN IMPORTANT WEAPON
IN THE ARSENAL OF
DEBTORS’ MOVEMENTS.
T
Richard D. Wolff he battle between Greece and its
creditors may have disappeared
from the media spotlight, but the
crisis has not gone away. The latest round of
pension reforms and VAT hikes has been ac-
companied by renewed protests against the
supposedly left-wing Syriza government.
Look to the opposite corner of Europe and
we find the UN issuing warnings that UK
austerity policies, including benefit reforms,
are in breach of the country’s international
human rights obligations. And everywhere
the pain of further belt-tightening by neolib-
eral policymakers is blamed on migrants, mi-
norities, the unemployed and disabled.
What all these different contexts have in com-

mon is that the problem is not one of states
or whole economies running out of money.
Rather, social wealth is being directed from
households and the public purse to the finan-
cial sector in the form of debt repayments
— even if it is not always clear what exactly
is being repaid, as those bearing the costs of
adjustment often did not take the loans in
the first place. When basic needs are not met
because money is flowing to banks instead, it
is time to start questioning the legitimacy of
these debts and the broader financial system
under which they were incurred.
73
COERCION AND CONTROL the neoliberal project been a key tool for
subjecting and incorporating countries
and communities which often had little to
The financial sector lies at the heart of many gain from the brave new world of finance.
of humanity’s most pressing problems — This goes for entire states, like Argen-
from investment in fossil fuels and arms sales tina and Greece, as well as the ordinary
to the extraction of immense wealth from households that are now forced to borrow
society, resulting in the rise of inequality to cover basic expenses — whether it is
and the hollowing out of traditional demo- through payday loans, credit cards, stu-
cratic processes. Although we already seem dent finance or the infamous sub-prime
to have moved on to a new era of permanent mortgage lending that fed into the Wall
austerity, in which further cuts to public ser- Street crash of 2008.
vices hardly need to be justified, it is worth
remembering that the original justification Drawing such a direct parallel between
for such measures stemmed from the bank household debt and public debt may seem
bailouts. odd to those of us schooled in heterodox
economics. After all, we have spent much
In truth, of course, the story did not start in of our time in the past years trying to con-
2008. The deregulation of financial markets, vince people that — contrary to what neo-
a key component of classical econo-
the neoliberal agenda mists imply when
since the 1980s, had they seek to justify
already resulted in a austerity measures
Rather than a mere
massive financial ex- — these two lev-
pansion by the end by-product of the system, els of economic
of that decade. It cre- activity are not
ated the conditions
debt has from the comparable: un-
for the engineering beginning of the neoliberal like a household, a
of products so com- country cannot live
plex that in the end project been a key tool beyond its means,
their face value had as it always retains
for subjecting and
little to do with any the ability to print
underlying values in incorporating entire money or raise tax-
the “real” economy. es in order to ser-
Derivatives markets countries and communities. vice its debts. But
ballooned to outdo debt is not purely
ordinary product an economic phe-
markets manifold; nomenon; it also
they became a seemingly endless pit where fi- has important social and political dimen-
nanciers could hide unpayable debts and keep sions. Looking at it from that perspective,
the accumulation of fictitious capital going. despite important differences in the eco-
nomics, the mechanisms of coercion and
Rather than a mere by-product of the control are very similar whether it comes
system, debt has from the beginning of to household or public debt.
74 ROAR MAGAZINE
ILLUSIONS OF WEALTH
Nothing illustrates these disciplinary mechanisms and the central role

of debt in neoliberalism better than the bout of subprime mortgage
lending in the US during the mid-2000s. It provided people with no
job, no income or no assets the opportunity to buy into the heavily
marketed American dream of homeownership. After the crash, these
poor, marginalized and often Black communities found themselves on
the losing side of a gamble that had been imposed on them. Yet it is
they who were blamed for their supposed profligacy.
More generally speaking, debt has for the past four decades enabled
those of us in the Global North to keep buying and consuming even as
real incomes remained stagnant or steadily declined. Without the il-
lusion of wealth generated by easy access to credit cards, interest-only
mortgages, consumer credit and car loans, there would have been lit-
tle left of the “middle class” by the turn of the century. Neoliberal-
ism’s inherent drive to concentrate all wealth into the hands of the few
would have been self-evident to the average citizen a long time ago.
Without the illusion of wealth generated by easy

access to consumer credit, there would have been little
left of the “middle class” by the turn of the century.
A similar illusion of wealth — and a similar obfuscation of power rela-

tions — appears at the global scale. The richest economies in the world
actually produce very little. Consumption largely relies on the provi-
sion of international credit and the continuous inflow of cheap com-
modities from the Global South. Yet those countries trapped at the un-
favorable end of this international division of labor have little power
to change their situation, as they find themselves trapped in neoliberal
economic policies and a global financial architecture that keep them
impoverished and dependent on foreign investment.
Many of these neoliberal policies and financial dependencies are the

direct result of the conditions imposed in return for international loans.
The Third World debt crisis of the 1980s — triggered by a dramatic
hike in the US interest rate — was remedied by the US government and
international financial institutions dictating developing countries to
cut public services, privatize state assets and liberalize trade and capi-
“The Golden Noose” of Global Finance 75

tal accounts. Only then were these countries debt load to be illegal, illegitimate and odious.
able to borrow the money needed to repay the In Spain, after several municipalities were
original debts, which were unpayable either taken over by progressive coalitions last year,
way. With economies stagnating and the loans Madrid has become the first city to start a
accumulating interest, countries in the Global participatory debt audit with an initial focus
South have repaid $7.50 for every dollar they on corruption. Research by a group I am part
owed in 1980, yet they still owe $4 more. of, Debt Resistance UK, is enabling residents
in councils across England, Scotland and
The austerity recipe first applied in the 1980s, Wales to object to their council’s risky and
however destructive for the debtors, proved expensive borrowing from banks. All these
so lucrative for the lenders that when the cri- projects stand on the shoulders of past move-
sis finally moved to Europe in 2010, the Inter- ments in the Global South, which have done
national Monetary Fund and the Eurozone much to elucidate the social and political na-
creditor nations imposed very similar condi- ture of global financial markets.
tions on the heavily indebted countries of the
periphery, most notably Greece. As before,
the result was not economic recovery but a
humanitarian crisis that pushed millions into
dire poverty and brought back illnesses long The similarities between
eradicated. Even the IMF now acknowledg- austerity in Europe and
es that Greece cannot possibly repay all its
debts, and it has even admitted that the origi- structural adjustment in
nal bailout served as a “holding operation” to
allow private lenders to escape without losses.
Africa, Asia and Latin
America are important
POLITICIZING DEBT
because they show that
hiding human rights
The similarities between austerity in Europe
and structural adjustment in Africa, Asia and violations behind the
Latin America are important because they
show that hiding human rights violations cloak of technicalities is
and the dismantling of welfare provisions not the exception but the
behind the cloak of technicalities is not the
exception but the rule. It is what keeps the rule.
bondholding class in its position of unrivaled
structural power. Hence it is not surprising
that demands for the non-payment of illegiti-
mate debts stretch across decades and con-
tinents — and have emerged anew since the The paradox of the supposedly neutral yet
latest crisis. disciplining market is obvious. If “the mar-
ket” is like a natural phenomenon, stripped
Last year, the Greek Truth Committee on of its social and distributional dimensions,
Public Debt declared much of the country’s then why does it react so strongly to political
76 ROAR MAGAZINE
Public
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01
events? Why does a change in government ternational creditors, freeing up the funds for
in Greece or Portugal send interest rates on a social spending. Ecuador’s was a bold stance.
roller-coaster ride? The power of vested interests, the discipli-
nary force of global financial markets and the
Political economist Susanne Soederberg revolving door between international insti-
rightly describes this global financial archi- tutions, domestic politics and private banks
tecture as a “golden noose.” The noose has to give everyone involved a stake in the hiding
be tight enough to prevent debtor countries game. That indebtedness is so often under-
from delinking from the international credit stood to be the fault of the debtor does not
system whilst simultaneously enabling their help in acting on this predicament.
“socioeconomic strangulation.” In short, “to
recreate the power relations within the in- At Debt Resistance UK, our work started
ternational credit system it is necessary to en- from a member stumbling across an obscure
sure that debtors are kept within the lending acronym in local authorities’ balance sheets:
game.” But if neoliberalism and the seemingly a “LOBO.” This prompted us to dig deeper
apolitical language of debt and finance have into this type of loan, called a “Lender Op-
enabled this balancing act, then the spell can tion, Borrower Option,” but in reality an ex-
be broken by politicizing debt. And debt au- pensive bet on interest rates. We argue that
dits do precisely that. A debt audit starts to LOBOs are not legitimate, and possibly even
ask questions: How was the debt accumulat- illegal, for a council to take on. Yet we found
ed? By whom? Who made or advised on the a total of £15 billion of LOBOs accumulated
decisions? Who benefited from the spending by councils across the British Isles. When
of the borrowed money? trying to obtain the contracts, we discovered
an interesting mix of vested interests and bor-
In Greece, the answers to those questions in rower stigma. The information was difficult
the preliminary report of the Truth Commit- to get hold of despite Britain having a Free-
tee showed that most of the country’s bailout dom of Information Act that ensures trans-
had gone directly to the financial sector and parency in the public sector — although that
had not benefited the Greek people. They law is in the process of being repealed. After
also showed that the conditions imposed on contesting a myriad of rejections to obtain
the loans were often in violation of the EU’s the loan contracts and publicizing the ways
own laws. If the Truth Committee had had in which residents can take action to contest
more time and resources, it could have un- them, it seems we have hit another obstacle
dertaken a full audit of the country’s public in this pseudo-democratic system. The ball
debt and the international bailouts — but it is now in councils’ auditors’ court, and as it
was cut short after Syriza decided not to use turns out, local authorities are audited by the
the findings of its preliminary report as an ar- same big accountancy firms as the banks that
gument in the negotiations with the Troika of issued the loans we are contesting.
foreign lenders.
The complex nature of financial institutions
Ecuador was more successful in 2008. After often appears like the antithesis of transpar-
a public debt audit initiated by President ency, and using loopholes in the system to
Rafael Correa when he came to power, the challenge them can seem overly bureaucrat-
country defaulted on $3.2 billion owed to in- ic. Still, precisely because of this, engaging
78 ROAR MAGAZINE
the public is an important part of a debt au- wage laborers organized to counteract isola-
dit, which is why Madrid is exploring ways to tion and fight against exploitation at the point
realize its audit in a participatory manner and of production, so we can organize as debt-
why the Greek Truth Committee’s work was ors and use our collective power to hold our
broadcast directly creditors account-
through the Parlia- able and reclaim our
ment’s TV channel. social wealth.
The educational as- Just as wage laborers
pect of debt audits The first step is to see
is in a way more im- organized to counteract through the political
portant than lobby- decisions and socio-
isolation and fight against
ing decision-makers economic structures
through available exploitation at the point that have led to
political channels, such vast increases
because the work of production, so we can in private indebted-
is about breaking organize as debtors and ness. For one, when
down existing pow- national or local
er structures. The use our collective power governments — en-
road to a more dem- thralled to the neo-
to hold our creditors liberal dogma that
ocratic system needs
to be both radical accountable and reclaim public debt levels
and accessible, or must be reduced —
else it is likely to be our social wealth. cut welfare spending,
flawed from the very it is individuals and
start. Without trans- households that pick
parency and par- up the bill. While
ticipation, we risk replacing those in power public services are privatized, the liabilities
instead of dismantling the underlying power of the financial sector are socialized. In the
relations. process, we are compelled to further indebt
ourselves. In the UK, for instance, one of the
DEBT-AS-EXPLOITATION AND first measures of the Conservative-led govern-
DEBT-AS-OPPRESSION ment that came to power in 2010 was to tri-
ple university tuition fees and introduce a real
interest rate on student loans. This has led to
The potential of collective action against fi- an average increase in the debt burden of new
nancial exploitation is not just limited to pub- graduates to an estimated £44,000. Nearly half
lic debt: it also extends to the realm of private of the resultant debts will never be repaid. The
debt. Here as well, the language and morality value or quality of education, of course, has
of indebtedness serves to atomize borrowers not increased — yet the pressure on graduates
and makes distressed debtors believe their to obtain well-paid jobs and work “within the
predicament is their own fault. The key to system” has.
breaking that individualizing experience is to
find power in our common condition: under Extreme examples of personal debt also come
neoliberalism, most of us are debtors. Just as from the other side of the Atlantic, where the

public provision of services is even more ab- long-standing struggles for equal access to cred-
sent. Student debt in the US stands at more than it by the women’s rights and civil rights move-
$1.3 trillion and has already led to hundreds of ments — which explicitly bans discrimination
thousands of defaults — with for-profit colleg- on the basis of gender or race.
es unsurprisingly over-represented in default
statistics. But given the shared experience and Roberts also writes of the interconnected-
common conditions of the individual debtors, ness of different debts: she quotes a survey
students also find it easier to organize resistance that found that 29 percent of low- and middle-
than those trapped in skyrocketing credit card income households in the US with credit card
bills or those forced to turn to payday lenders debt linked it to healthcare expenses. Over
to bring food to the table. As they write in their half of medically indebted households that
article in this ROAR issue, the Debt Collective took out second mortgages or refinanced their
— a legacy of the Occupy Wall Street move- homes in 2005 used the money to pay down
ment — took organizing against student debt credit card debt. Anybody with a credit card
to new heights last year when graduates from would know that this is not a sustainable way
for-profit Corinthian Colleges went on a debt to cover major expenses, but one of the ine-
strike to demand the cancellation of their stu- quality-breeding paradoxes of finance is that
dent loans because the degrees from their col- the ones who need credit most generally get
lapsed schools are literally worthless. it at the worst terms. The lower your credit
rating, the higher your interest rate. If you do
Beyond its exploitative side, debt also has im- not have a credit card, payday lenders or loan
portant oppressive dimensions. A look at the sharks are your only option. Again, theory tells
US subprime mortgage crisis shows this very us that interest is the price charged by lend-
clearly. In a 2013 article, political economist ers for the risk of non-payment, which makes
Adrienne Roberts illustrated how racist and usury sound legitimate.
sexist the seemingly apolitical notion of risk re-
ally is. Over half of all subprime loans prior to BREAKING OUT OF THE
the 2008 financial crisis were given to people GOLDEN NOOSE
with credit scores high enough to obtain con-
ventional loans; on average these people paid
an estimated $85,000 to $186,000 more in in- Despite the self-evident fact that not all debt-
terest. Subprime lenders specifically targeted ors have made an informed and voluntary
women and minority groups, leading to a situ- choice, the belief that debts always have to
ation in which an African American with the be repaid is widely held. But what is a debt?
same income and credit risk as a white person As the anthropologist David Graeber writes
was up to 34 percent more likely to be sold on in Debt: The First 5,000 Years, the difference
to a subprime mortgage. The intersectional- between a monetary debt (to a bank, for in-
ity of different forms of oppression means that, stance) and a moral obligation (of the type “I
whereas an African American woman is over owe you a favor”) is that the former can be
5 percent more likely to receive a subprime precisely quantified. Considering that putting
mortgage than an African American man, this numerical values on things that cannot really
likelihood trumps a white man’s by 256 percent. be quantified — such as uncertainty over the
All of this in blatant violation of the 1974 Equal creditworthiness of a borrower — is at the
Credit Opportunity Act — itself an outcome of heart of what the financial sector specializes
80 ROAR MAGAZINE
in, it is not surprising that the language around debt remains inaccessi-
ble and in that sense undemocratic. Until we tackle it, that is, and point
our fingers at each detail of a loan contract.
Politicizing the seemingly technocratic decisions that

are taken under the cloak of economic necessity is
an important first step towards liberating ourselves
from the violence of neoliberalism and breaking out
of the “golden noose” of global finance.
According to Graeber, another key feature of debt is the fact that the
promise to repay can, in the final analysis, only ever be enforced by vio-
lence. The threat of violence — in home repossessions or wage garnish-
ments, for instance — is not just needed to uphold the creditor-debtor
relation; it is also a key pillar of the neoliberal political order more gen-
erally. Indeed, austerity itself is a form of violence, inflicting grave phys-
ical suffering and leading to violent conflicts around the globe: from
the IMF riots of the 1980s to the student marches and occupations in
London in 2010 on to the sustained social unrest in Greece and beyond.
All of this clearly reveals the fiction at the heart of the idea of “the
market” as a set of neutral, self-organizing and apolitical processes that
spontaneously emerge whenever the state is rolled back. In reality, and
especially in times of crisis, markets can neither arise nor survive with-
out state-sanctioned violence. Politicizing the seemingly technocratic
decisions that are taken under the cloak of economic necessity is an
important first step towards liberating ourselves from that violence and
breaking out of the “golden noose” of global finance. As the resultant
struggles progress, debt audits and coordinated defaults may come in
as increasingly powerful weapons in the arsenal of the world’s budding
debtors’ movements.
FAN N Y MAL IN E N
Fanny Malinen is a London-based social justice activist and

freelance journalist, writing mainly on debt and finance but
also on sustainable alternatives to the current system. They have
a degree in Economics and Development Studies from SOAS,
University of London, and are part of the group Debt Resist-
ance UK, campaigning for a debt audit in UK local authorities.

CON T E ST I N G F IN A N C E
Debt Collective
The potential of
82 ROAR MAGAZINE
AIMING TO BUILD COLLECTIVE POWER
IN AN AGE OF FINANCIAL ABSOLUTISM,
THE DEBT COLLECTIVE IS PILOTING
A NEW KIND OF ORGANIZATION:
THE DEBTORS’ UNION.
Debtors’ Unions
Defeating the Global Bankocracy 83
F
inancial markets are political. Stock costs. In the wake of the mortgage crisis, African
markets, bond markets and derivatives American families lost 50 percent of their collec-
markets do not merely (or even primar- tive wealth and Latino communities have lost an
ily) raise capital for goods and services. Rather, astounding 67 percent of total wealth.
they all have direct and often harmful effects
on people’s everyday lives. Our public uni- In households that do not use formal banking
versities issue bonds services, 10 percent
to cover the shortfall of families’ annual in-
from tax cuts and, in come goes to alterna-
turn, use ever-rising For most Americans, tive financial services
tuition dollars as col- including revolving
lateral. Our mort- debt has become debts and exorbitant
gage, car and credit interest payments to
card payments are a basic fact of life— check cashers and
all securitized into payday lenders. In
a circumstance
short-term, lucra- 2015, US students
tive investments for necessary just to get by. graduated from col-
banks and investors, lege with an average
while for us they are of $35,000 in debt, and
shelter, food, and defaults on student
merely getting by. The municipal bond and debt are now occurring at the rate of one million
sovereign debt markets have had plainly dis- per year. These experiences of mass indebtedness
astrous effects from Detroit to Puerto Rico to ramify through credit scores and reports, which
Greece — but for some they have been spec- ensure that people with lower scores pay higher
tacularly profitable. interest rates, have a harder time finding places
to live, and in many cases are even denied op-
If financial markets are political, how can we portunities for work, thus reproducing cycles of
contest them and their effects? What does civil debt and inequality.
disobedience and collective power look like in
the age of finance? The Debt Collective is at- Cities, states and entire countries have also been
tempting to answer that question by piloting remade in the current debt-finance nexus. While
a new kind of organization: a debtors’ union. both municipal and sovereign bonds have been
in use for centuries (to fund infrastructure, public
YOU SAY FINANCE, WE SAY DEBT education and war, among other state endeav-
ors), municipal debt alone has increased 800 per-
cent over the past thirty years. As tax receipts
Today, 75 percent of US households hold con- have plummeted, cities turn increasingly to Wall
sumer debt. All indications are that for most Street for money, and they have been met with
Americans, debt has become a basic fact of life LIBOR fraud, toxic swaps and capital apprecia-
— a circumstance necessary just to get by. Of in- tion bonds with ballooning interest rates on the
debted households, 40 percent use credit cards to order of payday loans.
cover basic living costs including rent, food and
utilities. Some 62 percent of personal bankrupt- Massive bankruptcies in Jefferson County, Ala-
cies in the US are linked to illness and health care bama and Detroit, Michigan, offer two recent
84 ROAR MAGAZINE
examples of what happens when the finance industry decides where and
how to invest municipal capital, always demanding a profit on “public” invest-
ment. And of course we all watched with baited breath as Greece took on
its creditors in a protracted battle over control of a semi-sovereign state. The
fight in Greece was only the most recent sovereign debt struggle in the era of
finance, and was preceded of course by Argentina, Mexico, Indonesia, Mo-
zambique, and most of the Global South in the era of structural adjustment.
Widespread municipal, state and sovereign austerity mean ever more

virulent forms of individual indebtedness. According to a recently filed
class-action lawsuit, the city of Ferguson, Missouri runs a modern debtors’
prison scheme in which impoverished people are routinely jailed because
they are unable to pay debts incurred in the “criminal justice” system. The
lawsuit details how Ferguson families take money needed for food, cloth-
ing, rent and utilities to pay ever-increasing court fines, fees, costs and
surcharges. When they cannot pay, they are imprisoned.
DEBT, POWER AND EXPLOITATION
Needless to say, Ferguson is not alone. Across the United States, debt (along
with outright state terror) often acts as a fearsome mechanism of racist
social control — Jefferson County’s and Detroit’s bankruptcies must also
be understood in this light. From Ferguson to Greece, debt is about power
and subordination as much as it is about repayment at a profit.
From Ferguson to Greece, debt is about power

and subordination as much as it is about
repayment at a profit.
It is no coincidence that these forms of indebtedness have risen exponentially
along with the rise of Wall Street. Since business leaders re-discovered a
more confrontational and unified class-based politics from above, they have
managed to shrink wages and worker power while directing governments’
budgets away from the provision of public goods and the anti-poverty
measures of the post-war period. Yet business profitability depends on
consumer demand — indeed, global capitalism during the neoliberal era
has relied in large part on the power of US consumers’ inclination to push
their money back into the dollar-driven import-export cycle.
In the face of stagnant or declining wages, the obvious solution has

been simply to lend consumers the money. More credit and debt means
The Potential of Debtors’ Union 85

that an increasingly financialized business class crisis can be leverage for debtors. Experienced
actually gets paid (in the form of interest, fees alone, debt is isolating, frightening and morally
and derivative profits) to provide the rest of us laden with shame and guilt. Indebtedness is
the money needed to keep demand inflated — being afraid to open the mail or pick up the
until it pops! phone. But as a platform for collective action,
debt can be powerful. Consider oil tycoon JP
It is more profitable for the creditor class, in the Getty’s adage: “If you owe the bank $100 that’s
short and medium term, to lend money at inter- your problem. If you owe the bank $100 mil-
est than to transfer it in wages. And as the gov- lion, that’s the bank’s problem.” Student debt
ernment has offloaded the costs of public goods alone stands today at $1.3 trillion. Together,
including medical we can be the banks’
care and education problem.
onto consumers, the
demand for debt has Let’s think back for a
only grown. In other Credit has stepped in to moment to the mort-
words, credit has “compensate” for falling gage crisis, when
stepped in to “com- non-payment of
pensate” for falling wages, and debt thus mortgage debts es-
wages, and debt thus sentially took down
becomes one of the becomes one of the the global economy.
central mechanisms We can learn several
central mechanisms of
of exploitation. things from this ca-
exploitation. tastrophe. First, it is
What does this mean a great illustration of
for us? As financial- the centrality of debt
ized capitalism ex- payments to capital
pands, so too do our accumulation and
debts: the financial sector has rapidly become stability today. Second, these mortgage debts
the way we access many basic goods and ser- could never have been repaid in the first place.
vices — food, shelter, medical care, education. In the financial frenzy of mortgage backed
In this terrain of mass indebtedness, disem- securities, reckless creditors interested only
powerment and debtors’ prisons, what does in short-term profit concocted wildly unsus-
collective action look like? What does civil tainable lending schemes, selling borrowers
disobedience look like in the age of finance? mortgage packages they could never have paid
What forms of material and conceptual subver- off. The failure, in other words, was already
sion can we imagine? baked in — the only question was: who would
pay for it?
FINANCIAL DISOBEDIENCE
The bailout ensured that homeowners paid
while banks, massive insurance companies and
Debt fuels crises, taking power out of the hands bondholders were made whole. And home-
of all but the financial capitalist class. Yet it also owners did not lose equally. Quantitative data
presents an opportunity for a new form of re- in the American Sociological Review shows that
sistance to capitalist exploitation. The threat of the mortgage crisis represents one of the largest
86 ROAR MAGAZINE
75
7 5 % OF
F US H
HOOUS
SEHOLDS
EH L HOL
L D CONS U
UM E R D E B
BT
IIn
n th
the wake ooff the
h mmortgage
o tga
g
40%
40% ccrisis,
isiss African
is
ffamilies
American
Af i an A
famil es llost 550
m ic n
0 percent
r ent of
of
ttheir
heir collective
l e iiv wealth
c ll w l h and
a nd
Latino
L tin ccommunities
ati munit s hhave
USE
U S CREDIT
C E T CARDC RD T TOO
COVER
CO R BA
ASI
SII C L I VIN G llost
os aan astounding
sto d ng 67
7
percent
p ntt off total
ercen
er o l wealth.
a h.
h
62%
62%
P E R S O N A L B A N KR
RUPCIES-
LINKKEE D TO I L L N E S S & H E A L
LT H
IIn
n22015,
01155, U
0 S sstudents
US tudents
ggraduated
ra
ra
ad
dua from
rom college
atted ffr
ro coolle
leggee
with
w h an
iittth an average
aveer
ra
agge $35,000
ge ooff $
$3
35 0
35 00
00
iin
nddebt,
ebt, and
de an
ndd defaults
d ffa ts on
ault
lts on
sstudent
t d nt debt
debt are
are now
noow
w
ooccurring
cccu ng at
urrin at the
the rate
rate of
of
oone
n million
lion per
milli pe year.
yeear.
y r
Consider JP Getty’s adage:
“If you owe the bank $100
that’s your problem. If you
owe the bank $100 million,
that’s the bank’s problem.”
Student debt alone stands
today at $1.3 trillion.
Together, we can be the
banks’ problem.
destructions of the wealth of people of color in a few years. Many of us first started plotting
US history. To be clear, it is not simply a mat- on the streets of Manhattan during Occupy.
ter of the crisis dispro- We educated our-
portionately impacting selves about the nitty
diverse populations. gritty of interlocking
Rather, Black Ameri- debt systems by col-
cans have long been Imagine if the power of lectively authoring
the target of economic a critical-analysis-
mortgage-holders had
violence, and 2008 cum-financial-literacy
was no exception. At been deployed guide that we called
the time, Wells Fargo the Debt Resister’s
loan officers devastated collectively and Operations Manual.
entire communities by We gained some
pushing hundreds of
tactically to retain homes
unexpected main-
Baltimore area home- while forcing creditors to stream media atten-
owners (referred to tion with our first
as “mud people” by sustain the losses. That is initiative, the Roll-
banking staff ) with ing Jubilee, through
good credit into high-
one potential of a debtors’ which we have now
interest subprime union. bought and abol-
mortgages they called ished nearly $32 mil-
“ghetto loans.” lion of medical and
student loan debt on
The aftershocks of these practices are still be- the secondary debt market for mere pennies
ing felt, in Baltimore and beyond. The results of on the dollar.
the mortgage crisis were so devastating in part
because, while banks and their lobbyists were But these tactics were only preliminary — at-
well organized to fight for debt relief, the rest tempts to undermine two of the weapons in
of us were not. (“They got bailed out. We got creditors’ arsenals: obscurantism and promis-
sold out.”) Imagine if the power of mortgage- sory moralism. When, via the Rolling Jubilee,
holders — paradoxically, the power of their we chanced upon a portfolio of private student
collective debt — had been deployed collec- debt from what was then one of the biggest
tively and tactically to retain homes while forc- chains of for-profit colleges in the country, Co-
ing bondholders and creditors to sustain the rinthian Colleges Inc., we knew we had found
losses. That is one potential of a debtors’ union. an opportunity to see if a confrontational form
of debtor organizing could work.
DEBT RESISTANCE AND
HIGHER EDUCATION Higher education offers both an exemplary
case study of financialization and fertile ground
for contesting that process. During the admin-
Aiming to build collective power through debt istration of Governor Reagan in California,
organizing, but rigorously cautious about the states and the Federal Government began dra-
pitfalls, we in the Debt Collective have been matically defunding both public and private
nosing our way towards a debtors’ union for universities. That process continued through

the 2008 financial crisis and beyond. Early on, gaming the federal student loan system to the
defunding was partly a right-wing attack on tune of $1.4 billion in federal grant and loan
the institutions that nurtured 1960s radicalism. dollars in 2010 alone, more than the ten Uni-
More recently, it has become a bipartisan class versity of California campuses combined for
politics and a hallmark of neoliberalism. that same year.
While lamenting state cuts to higher education, As Corinthian’s many scandals grew increasing-
college administrators have used the funding ly public in the summer of 2014, a small group of
crisis to take on debt from Wall Street, fre- former students had already begun to organize.
quently using tuition as collateral. This allows Collaborating with these students, and enrolling
colleges to fund projects that have nothing to technology experts and lawyers daring enough
do with education, such as the construction to take us seriously, we began to work closely
of lavish stadiums and investments in real es- with a group of 15 former Corinthian students
tate ventures. In league with Wall Street, the who were ready to publicly declare their refusal
schools promise to pay off this debt by hiking to make any more payments on their federal stu-
tuition, forcing students further into the red. dent loans. To broaden the reach of this action to
all current and former Corinthian students, in-
In addition to turning ostensibly public uni- cluding those who would choose not to join the
versities into profit centers for the financial strike, we also put together an online legal tool
industry, student indebtedness has disastrous (via what was then a little-known provision in
socio-cultural effects. Debt forces people to the Higher Education Act known as Defense to
live lives focused on getting out of debt, rather Repayment) that allowed students to challenge
than defining themselves or pursuing their their debts with the Department of Education.
curiosity and passion. Debt, again, becomes
a successful disciplinary technique, eliminat- In February of 2015, after an intensive retreat
ing life paths that don’t produce for capital. with the strikers that included legal advice, story
For-profit colleges take debt-financed higher sharing and media training, the Corinthian 15
education to its extreme. Their business model went public with their history-making strike.
is to attract as many students disenfranchised Requests to join the strike poured in from cur-
by the mainstream educational system as possi- rent and former Corinthian students across the
ble, compelling them to mortgage their futures country. Rather than merely mark down all of
in return for subprime educations while fun- the thousands who wanted to join, we made
neling federal student loan money to execu- sure that each potential striker understood the
tives and shareholders. potential consequences of their act — a trashed
credit score, wage garnishment, tax return gar-
GETTING ORGANIZED nishment, social security garnishment — phone
call by phone call. Soon the strike had grown
to 200 students, and their demand for debt can-
For-profit schools are notorious for running cellation had been endorsed by politicians and
afoul of the law. Corinthian Colleges Inc., once labor unions alike.
the nation’s largest for-profit educational chain,
was no exception. The company has been ac- With the Corinthian 200 as our pilot union, we
cused of fraud and predatory lending by eve- have begun to expand outward to other for-
ryone from Attorneys General to the CFPB, profit colleges working on the same model,
90 ROAR MAGAZINE
To build collective power in these
conditions, we know that we must
work towards understanding Wall
Street’s role in mass indebtedness — we
must politicize the bond market.
including ITT Tech and Art Institutes. Organ- To build collective power in these conditions,
izing debtors is complex, and the barriers to or- we know that we must work towards under-
ganizing debtors’ unions are high. There are no standing Wall Street’s role in mass indebted-
shared factory floors. People in debt to the same ness. That is to say that we must politicize the
institution are often geographically remote and bond market. As public institutions like the
disconnected from one another. Many debtors University of California effectively take orders
don’t know who profits when they pay their from Moody’s bond rating agency, we must ask:
debts, or who stands to lose if they don’t. Debtors what is the effect on secondary markets of the
struggle to distinguish originators, aggregators, Federal guarantee of student loans? Who is
guarantors and servicers. For instance, most stu- profiting from student loans? Who is profiting
dent debtors think they have Sallie Mae loans from unsustainable mortgage markets? Who
because Sallie Mae is their servicer. But many is profiting from municipal debt that wreaks
are actually in debt to Citibank, Chase, Deutsche havoc on our communities? When we can lev-
or the Department of Education. And of course, erage the credible threat of collective, targeted
once our student loans are pooled and tranched non-payment over banks, when we can force
into asset-backed securities, their owners are the bond market to take losses, then we will
dispersed further still. have realized the power of debtors’ unions.

YO ARE
YOU A E NOT
AR OT A LOAN,
N,
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o So it m
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As the Corinthian debt strikers continue to In a way we find exciting, debt organizing and
press their demands, we know that re-envi- labor organizing have different targets, and
sioning higher education is only the beginning thus different (and again, complementary)
of what debtors’ unions can do. Imagine the potential outcomes. Labor organizing targets
power of mortgage-debtors’ unions to lever- the employer, workplace regulation and the
age eminent domain means of distributing
to halt foreclosures, corporate surplus.
or criminal justice The workplace’s
debtors-unions gum- economic role in a
ming up the works of When we can leverage worker’s life is the
the debt-to-prison payment of wages
pipeline from Fer- the credible threat of and benefits, so la-
guson to Los Angeles. bor organizing natu-
Debtors’ unions can
collective, targeted rally focuses on how
change the spaces non-payment over we (don’t) get paid.
of possibility across Debt organizing, on
the unequal land- banks, then we will the other hand, tar-
scapes of contempo- gets the creditor, the
rary capitalism. But have realized the regulation of lending
only on-the-ground power of debtors’ and the means of fi-
organizing, with all nancing the good or
its challenges and unions. service in question.
imperfections, can Thus, debt organiz-
make such action ing naturally focuses
possible. Most of this on how and by whom
work has never been things we care about
done before, so a willingness to experiment (education, healthcare, housing) are paid for.
is in order. This means that debtors’ unions are not sim-
ply renegotiating debt but also forcing open
EXPERIMENTATION WITH DEBT
questions that the era of finance seems to have
foreclosed: how do we even pay for things in
We see this sort of experimentation with debt the first place?
as complementary to other forms of collective
resistance. Debt, after all, is a claim on future The challenge is to build a politicized class of
wages. As Fight for $15 movements triumph debtors who go beyond particular victories
across the country there is little solace to be toward collective power writ large. One out-
had if the cost of housing and education contin- come of successful organizing could, of course,
ues to skyrocket. A substantial portion of union be a debt jubilee — perhaps better called a “fast
wages go towards repaying consumer debts, to bailout” in which bondholders take deep losses
say nothing of the relationship between mas- and the slate is wiped relatively clean. But we
sive union pension funds and their role in the cannot stop there. A major debt jubilee would
financial system. In other words, debt, wages be a significant victory, but only if it was cou-
and benefits are intertwined under financialized pled with a deep, durable shift in the distribu-
capitalism, and need to be addressed together. tion of political and economic power.
94 ROAR MAGAZINE
With this shift, both creditors and debtors would negotiate the terms
of every contract, and indeed, produce a world in which indebted-
ness is no longer required to finance life’s most basic needs. Were
a jubilee to occur as a “benevolent gift” from creditors to debtors,
without an accompanying power shift, crises of indebtedness would
continue indefinitely because debtors would remain without a seat
at the bargaining table. Moreover, if a jubilee were to occur without
a substantive reimagining of our economic system, and a collective
reckoning with the way debt is and has been used as a mechanism of
social control, we will have gained little.
The challenge is to build a politicized class of

debtors who go beyond particular victories
toward collective power writ large.
What this new economic system might look like — the ways it would
use socially productive forms of debt and credit, the ways it might
enable a truly democratic society — remain to be seen. What we know
is that debtors’ unions could give us a timely tactic through which to
build collective power — and it is only through collective power that
we will be able to answer these questions for the first time.
D E BT COLLE CTIVE
The Debt Collective leverages collective power by offering a

shared platform for organization, advocacy and direct action.
Find out more at debtcollective.org. This article was written
by Laura Hanna, Alessondra Shackleton, Ann Larson, Hannah
Appel and Luke Herrine. It originally appeared in ROAR’s
online-only inaugural Issue #0: Building Power, and is repro-
duced for the first time in print here.

Defeating
the Global
Bankocracy
96 ROAR MAGAZINE
BEYOND RE SE NT M EN T
DETHRONING THE FINANCIAL

ARISTOCRACY WILL REQUIRE
MORE THAN MORAL OUTRAGE
AND TINKERING AT THE MARGINS.
WE NEED TO PUSH FOR DEEP,
STRUCTURAL CHANGE.
Jerome Roos
B
ankers have never really been a very Old Continent. In medieval Barcelona, for in-
popular lot. Resented by the land- stance, bankers who went broke were publicly
owning aristocracy, the puritanical humiliated by town criers and forced to sur-
clergy and the laboring popolo minuto alike, vive on bread and water until they had fully
the moneychangers of renaissance Florence reimbursed their depositors. Those who failed
were punishable by torture if they dared to de- to do so within a year were beheaded in front
fraud their unsuspecting customers. In his In- of their counter — which is precisely what
ferno, Dante reserved a special place for usu- happened to an unfortunate Catalan banker
rers on the seventh circle of hell, where sinful named Francesch Castello in 1360. Parentheti-
lenders with charred faces would sit still in the cally, the words “broke” and “bankrupt” have
burning sand for all eternity, under whipping their origins in the Old Italian banca rotta, or
winds and rains of fire, weighed down by the “broken bench,” referring to the moneylenders
moneybags around their necks. whose exchange counters had metaphorically
collapsed under the weight of their liabilities.
In a similar vein, when supporters of the Do-
minican friar Girolamo Savonarola ran for If cheating the little people or simply “break-
office on an anti-Medici platform in the late ing the bank” was sure to lead to decapitation
fifteenth century, the radical preacher’s cam- or torture in the city’s dungeons, messing with
paign stunt involved the burning of luxury the nobility was certainly out of the question.
items and symbols of wealth on his “bonfire of The Knights Templar learned this the hard
the vanities.” Such moral outrage at the emerg- way early on: when they insisted that Philip
ing bourgeoisie — and the class of idle rentiers IV of France repay the debts he had incurred
it spawned — was deeply engrained across the for the dowry of his sister and the quelling of

a domestic tax revolt, the king simply had his ties. While these debates have often been fairly
lenders rounded up and burned at the stake. technical or carried out at a high level of theo-
Seen in this light, the Bardi and Peruzzi of retical abstraction, they cannot be dismissed
Florence were probably lucky to be out of as irrelevant or merely “academic.” Identifying
reach of King Edward III’s troops — but they the sources of corporate influence on economic
still suffered massive financial losses when policymaking and social life matters because
the English monarch repudiated his debts af- our answers to these questions shape the type
ter the Hundred Years’ War. Their respected of solutions we come up with in the attempt
family banks, once the most formidable of to democratize our societies.
Europe, went bust not long after in the eco-
nomic depression of the 1340s. Later, a branch
of the Fugger of Augsberg, a mighty banking
dynasty in the Holy Roman Empire, suffered
a similar fate following the serial defaults of
Identifying the sources
King Philip II of Spain. of corporate influence
In the very early days of capitalism, then, pri- matters because our
vate financiers were still relatively powerless answers shape the type of
in the face of sovereign authority and often
held publicly accountable for immoral behav- solutions we come up with.
ior or irresponsible lending. They most cer-
tainly were not seen to be “doing God’s work,”
as the most universally despised banker of our
times — Lloyd Blankfein of Goldman Sachs One interpretation of financial power com-
— would have it. So what changed? Barring monly found in liberal circles centers on
the general reluctance to engage in cruel me- personal connections, lobbying and the role
dieval methods of punishment, why is it that of “money in politics.” It blames the “corrup-
we can no longer seem to hold private len- tion” of the democratic process and the fail-
ders accountable for their immoral behavior? ure to hold the financial sector accountable on
Why did we allow them to escape unharmed “regulatory capture” and the “revolving door”
in 2008, while the rest of us bore the conse- between Wall Street and Washington. It also
quences? Surely the answer has something to tends to denounce the failure of free-market
do with the vast increase in the bankers’ power ideology and the faulty assumptions of neo-
over the years. But where does this power classical economics — especially its Efficient
come from? What are its sources, how did it Markets Hypothesis and its metaphysical belief
evolve — and how can it be resisted and over- in “expansionary contractions” — for making
come? European leaders buy into the “dangerous idea
of austerity,” or tricking US policymakers into
THE SOURCES OF FINANCIAL believing that what is good for Wall Street is
POWER good for America (and by implication for the
world). Prominent exponents of this line of
Political economists have long debated the thinking include the Nobel Prize-winning
sources of financial power — and of business economist Joseph Stiglitz and the reformed
power more generally — in capitalist socie- ex-IMF chief economist Simon Johnson.
98 ROAR MAGAZINE
““The
The R
Revolving
evolving D
Door”
oor”
SOME
S M PPROMINENT
ROM P
POLITICAL
O L C L FIGURES
IG
GUU R E S WITH
T CLOSE
O TIES
I S
TO
OTTHE U
US INVESTMENT
NVE T BANK G
NT GOLDMAN
O D N SACHS:
ACHS:
HS
HENRY
H N Y PA
PAULSON
L ON MARIO
M A O MONTI
O T
Former
Formme Goldmanlld
dma S Sachs
hs chief
ief executive,
ie xecu v , Former
Forme advisorvis to G Goldman
o a S Sachs,
a s pre- e
served
se ve as US T Treasury
su Se Secretary
e reta y under
nd sided
i ed o over
v a technocratic
ch c government
e n e ass
Bush
ush JJrr (2003-’06).
Bu 3- 0 P Presided
ded over e tthe
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baan
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record
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ba out of of Wall Streett bbanks
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Became
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us e it
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r of 2008-’09.
- 09
9 and
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neoliberal
oli e rreforms.
e ms
M
MARIO
ARIO D
DRAGHI
AG H ROBERT
R OBERT R
RUBIN
BIN
Fo
Former
F o meerr v
or vice
ice cchairman
haiai m an a
and
nd ma m
managing
an
a na inin
nggddirector
iirecttor
for
ffo
or G Goldman
oldldmaa S
an Sachs
achs IInternational,
a nternati
nt tionnaal ccurrently
urrree tltly Former
Formeerr Goldman
Go
G old
ldma S Sachs
c board
ar m member
be
President
P re ide t o off tthe European
hee Eu
h E urope
peaeaannCCentral
Ceen ral B Bank
Ba a k and
and cco-chairman,
o- airma n served
an r da as U
US T Treasury y
((since
siin
inncc 2 2011).
1 ). P Presided
esi
essid
ide
d do over
ver tthe
ve he ““liquidity
liqu di y Secretary
Secretarry yuunder
nder C Clinton
in on (1995-’99).
9 ’99 9) B
Be-
e
asphyxiation”
a phy n of of tthe
he leftist
effttis
i tSSyriza
Syyriza p
yr party
rtyty iin
n came
came
ca me a ccheerleader
heerle de der
er ffor
or financial
an ia deregula-
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G e ce duringriing the he summer
ummemer o off 2
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015 aand
nd m mas- s- tion
tiio
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nd pushed
push
shed dddevastating
v s g neoliberal
ib l
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iv
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o
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an
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na ri o off 1997-’98.
9 9
The solution that naturally flows from this
position is straightforward: impose strict
regulations on public staffing and corporate
lobbying to establish a firewall between poli-
cymakers, regulators and the financial sector;
restrict campaign finance to “take money out
of politics”; and promote a more heterodox
— that is to say, Keynesian or post-Keynesian
— approach to the study of finance to ensure
that the next generation of leaders will at least
have some macro-economic sense drilled into
their heads in college or business school. Going
further, the more systemically-minded critics
of finance may highlight the fact that many
important institutions are simply “too big to
fail,” to which the answer would be the break-
ing up of these firms and the introduction of
strict limits on company size. This was basi-
cally Bernie Sanders’ position.
Needless to say, all the above would be quite

helpful in loosening the stranglehold of finance
and of neoliberal ideology on the existing dem-
ocratic process. But if these solutions ultimate-
ly seem rather cosmetic, it is because they are
the logical corollary of theoretical explanations
that, in the final analysis, fall short in identify-
ing the deeper source of the problem. In a way,
many liberal critics of Wall Street get causality
the wrong way around: they argue that finance
is powerful because so many bankers and in-
vestors hold positions of political influence,
have direct access to policymakers, and have
successfully shaped the political narrative. In
PHOTO BY ILO / D.MAILLARD, VIA FLICKR
truth, however, bankers are not just powerful

because they are “in government” — they are
in government because they are powerful.
GATEKEEPERS OF CREDIT
ACCESS
In my own research, including a forthcoming

book on the power of finance in sovereign
100 ROAR MAGAZINE

If credit is the lifeblood of the
capitalist economy, the banking
sector is its beating heart.
debt crises and ongoing work on the histori- The sway that finance holds over politics
cal proximity of bankers to policymakers, I and society is therefore ultimately a prod-
distinguish between the “instrumental” forms uct of its structural position in the capital-
of power deployed by the finance industry ist economy. The exact nature of this posi-
and its underlying structural power. These tion is not pre-determined; it is historically
two are not mutually exclusive: instrumental contingent on the outcome of major events
forms of power like lobbying, campaign do- like wars and revolutions, and constantly
nations and direct staffing of key government reshaped by economic conjunctures, the
positions remain very important channels of ever-shifting balance of power between dif-
political influence. But these more personal ferent social forces, and the ideational and
and more overt forms of influence are un- institutional legacies they leave behind. But
dergirded by a much deeper and less visible one constant throughout the history of capi-
source of power that goes to the very core of talism is for the role of credit-provision to
what capitalism is about: the accumulation of eventually become concentrated and cen-
capital. To reproduce itself over time and ful- tralized in the hands of a small group of pri-
fill its need for constant expansion, the system vate financiers — traditionally large dynas-
depends on a healthy and uninterrupted flow ties like the Houses of Medici, Rothschild
of credit. And if credit is the lifeblood of the and Morgan, but nowadays mostly powerful
capitalist economy, the banking sector is its international corporations like Deutsche
beating heart. Bank, HSBC and Bank of America.

This tendency towards concentration and CREDIT ASPHYXIATION AS A
centralization in the credit system renders WEAPON
everyone else in capitalist society — states,
firms and households alike — increasingly
dependent on an ever-smaller number of pri- To see what happens when a sovereign state
vate banks and financial institutions for their and an entire people refuse to abide by the con-
own reproduction. The result is to endow a ditions laid down by global finance, prompt-
limited number of giant financial firms with ing a cartel of public and private lenders to
the position of private gatekeepers to market actively exercise their gatekeeping function
access, ensuring that everyone else will have in order to bring the delinquents back in line,
to accept and adhere to their demands and look no further than Greece in the summer of
conditions if they are to survive economi- 2015. Unlike in previous historical eras, pri-
cally. vate bondholders and European creditors did
not need to resort to the instrumental power
This is why we must be careful not to personal- of gunboats to bring the Syriza government to
ize the problem. Modern society is simply not its knees. After a tense six-month standoff in
the same as the fading Christian lifeworld that which they had slowly asphyxiated the Greek
inspired Castello’s beheading and Dante’s state by halting the flow of credit, all they had
Inferno. There are epochal differences here that to do was stop the provision of further emer-
hint at the limits of the “politics of resentment” gency liquidity to the country’s fragile bank-
and its logic of moral ing system. The next
outrage in our times. morning, as citizens
Unlike the feudal or- across the country
der that preceded it, If credit circulation lined up in front of
contemporary capi- ATMs to withdraw
talism is a system of constitutes the blood fl ow their precarious
impersonal domina- savings, the govern-
of a capitalist economy
tion in which social ment was forced to
power is largely me- and the banking system shut down the banks
diated by the abstract and impose strict
expression of value: its beating heart, Greece capital controls
money. Thus poor was having a massive
Savonarola ended up The results were
torched on his own heart attack. just short of
bonfire, his moral- catastrophic. The
ism rendered mute Greek economy ef-
by the superior class fectively ground
power of the moneyed Medici family. Today, to a halt: industries were no longer able to
the financial aristocracy no longer needs to obtain trade credits to acquire key inputs,
burn its opposition at the stake; it is the abstract many employers stopped paying wages and
violence inherent in the global financial system production came to a standstill. Had this
that compels us all to play by the rules of the credit embargo continued much longer, the
game. And if that’s not enough, there’s always results would have been disastrous, as the
the violence of the state to back it up. government had not prepared any contin-
102 ROAR MAGAZINE

gency plans on how to import oil or medicine after strategic reserves
would run out, nor on how to ship water and energy to arid islands or
distribute food from the countryside to the city once stocks would be
depleted. If credit circulation constitutes the blood flow of a capitalist
economy and the banking system its beating heart, Greece was hav-
ing a massive heart attack — deliberately provoked by its own money
doctors to force it to desist. The widespread moral outrage expressed
in the subsequent referendum, in which 61.8 percent of Greeks voted
to reject the creditors’ ultimatum, was summarily shoved aside.
Dramatic developments like these have prompted a number of com-

mentators to highlight the growing incompatibility between capital-
ism and democracy under conditions of financialization. As Germany’s
pre-eminent economic sociologist Wolfgang Streeck has convincing-
ly demonstrated in his book Buying Time, the long-standing conflict
between the Marktvolk of private creditors and the Staatsvolk of or-
dinary citizens has in recent years been decisively settled in favor of
the former. But while Streeck presents the preceding evolution of the
“debt state” and the more recent rise of the European “consolidation
state” as a relatively novel political development, its systemic roots
actually go back to the very origins of capitalism and the concurrent
emergence of the capitalist state, public debt and the first private and
central banks in early-modern Europe.
To truly grasp the nature and scope of our present

predicament, it would be useful to follow scholars
like Fernand Braudel and Giovanni Arrighi in
familiarizing ourselves with the longue durée of
capitalist development
To truly grasp the nature and scope of our present predicament, it

would therefore be useful to follow scholars like Fernand Braudel
and Giovanni Arrighi in familiarizing ourselves with the longue du-
rée of capitalist development — a process that has unfolded over
eight centuries and that, for our purposes here, can be divided into
three distinct stages, each of which has allowed finance to succes-
sively extend its sway over political authority; over economic pro-
duction and the global periphery; and finally over social reproduc-
tion and everyday life.

1. THE STATE-FINANCE NEXUS
The first phase of capitalist development, which began in the Eu-

ropean city-states of the late-medieval period, was marked by the
gradual decline of the personal power of feudal sovereigns and the
growing impersonal power of a moneyed merchant elite. While the
court lenders of the middle ages had derived much of their political
influence from their direct and exclusive access to kings and princes,
the intensification of inter-state rivalry over the centuries gradually
increased the reliance of sovereigns on other sources of financing.
Since trade competition and military conflict were especially fierce
on the Italian peninsula, where local rulers presided over a number
of important city-states, the latter increasingly depended on merce-
nary armies to fend off foreign invasions, claim new territories and
trade routes, and maintain the regional balance of power.
But if mercenaries for self-defense were expensive, empire-build-

ing was even more so. Thus the rulers of small cities with big am-
bitions — like Venice, Genoa and Florence — grew increasingly
dependent on taxation and credit: what Cicero famously called the
“sinews of war.” For this, they turned towards the emerging mid-
dle class of propertied merchants and merchant bankers, which
in turn prompted powerful demands for political representation.
Over the course of the following centuries, the growing depen-
dence of city-states on credit and the resultant struggles over taxa-
tion, debt repayment and political rights gave rise to a number of
financial and institutional innovations that would dramatically
transform the nature of political authority, the economic structure
of society and the relation between the emerging merchant class
and the landed nobility. The first and most foundational of these
was the development of the public debt.
The first and most foundational financial

innovation of the capitalist era was the
development of the public debt.
In Capital, Marx identified this moment as a historical landmark,

noting that the rise of the public or national debt — which he also
referred to as “the alienation of the state” by private financiers —
“marked with its stamp the capitalistic era.” Over time, the process
gradually ate away at the vested power of the nobility and the Church
104 ROAR MAGAZINE

and gave rise to the first bourgeois republics, tus into a wealth-collection machine for the
with representative institutions centered on rising bourgeoisie, redistributing vast sums of
local merchant oligarchies. For some time, the social product from the public purse to
these small proto- private pockets. This is why Marx considered
capitalist city-states the development
managed to spec- of the public debt
tacularly outcom- to constitute “one
pete the massive “The national debt has of the most power-
feudal kingdoms ful levers of primi-
and landed aristoc-
given rise to joint-stock tive accumulation.”
racies of Old Eu- companies, to dealings in At the same time,
rope in both trade he also recognized
and war, thanks in negotiable effects of all how it prepared the
large part to their ground for the even-
kinds, and to agiotage, in tual rule of finance,
superior capacity to
attract credit. a word to stock-exchange noting how “the na-
tional debt has given
On the back of the gambling and the rise to joint-stock
system of public modern bankocracy.” companies, to deal-
credit and the first ings in negotiable
national banks — — Karl Marx effects of all kinds,
founded to man- and to agiotage, in
age the resultant a word to stock-
national debts — in exchange gambling
turn arose a complex continental network of and the modern bankocracy.”
merchant banks. After early endeavors by the
Bardi and Peruzzi of Florence faltered, the art This modern bankocracy, which David Harvey
of international banking was first properly has also referred to as the “state-finance nexus,”
perfected by the Genoese, who developed found its most explicit expression in renais-
an ingenious system of syndicated lending sance Florence, where the Medici family took
to Philip II of Spain that financed his many the fusion between concentrated financial
wars and colonial conquests in Europe and power and nominally independent govern-
the Americas while bringing untold riches mental authority to unprecedented heights.
to the Ligurian coast. Despite the king’s re- Yet by driving their political ambitions to the
peated defaults, this Ibero-Genoese alliance extreme — even having four members of the
is generally recognized as the first success- House of Medici elevated to the papacy and
ful regime of cross-border contract enforce- another made Queen of France — the Medici
ment, marking a seminal shift in the balance ultimately rendered their power too personal.
of power between creditors and sovereigns. Even as their pet project of attaining supreme
control over Florence flourished, their finan-
At the same time, the rise of the public debt cial empire floundered. It was only in the mer-
also served to dramatically transform political chant bastions of Genoa and later Amsterdam
authority inside the city-states themselves, that the impersonal rule of finance reached its
effectively turning the evolving state appara- early apogee.

Banking Dynasties
THE MODERN BANKOCRACY EMERGED IN EARLY-MODERN
EUROPE FROM A FUSION BETWEEN FINANCE AND GOVERNMENT.
ROTHSCHILD
For a long time, the Rothschilds were possibly the wealthiest and
most powerful family in the world. The founder of the dynasty,
Mayer Amschel Rothschild, was born in a Jewish ghetto in Frankfurt
in the mid-eighteenth century. He grew up to become a so-called
“court Jew” to the local nobility, handling their finances and provid-
ing loans. His five sons set up offices in Frankfurt, Vienna, Paris,
London and Naples, simultaneously laying the foundations for both
modern international finance and the family banking business. The
Rothschilds have since expanded into many other fields of business,
and have joined the nobility of several European countries.
BARING
The Barings Bank was the UK’s oldest merchant

bank, founded in 1762, until it collapsed in
1995 after a rogue trader single-handedly
lost $1.3 billion as a result of bad
investments.
FUGGER
The Fugger from Augsburg grew

over the course of several centuries
from a family of local cotton trad-
ers to the private financiers of popes
and emperors, replacing the House
of Medici as Europe’s most powerful
banking dynasty. The Fugger held a
near monopoly on the mining of silver
and copper in Europe and had stakes in
the Transatlantic slave trade. This, com-
bined with close relations to the Holy Ro-
man Empire’s ruling elites, meant that before
long they amassed more wealth than had ever
before been concentrated in a single family’s hands.
MEDICI
The Medici bank existed

for less than a hundred
years, but within that
relatively short span of
time it served as a vehi-
cle for the Medici fam-
ily to establish itself as
one of the richest and
most influential bank-
ing dynasties in Europe.
Through their wealth
they acquired vast politi-
cal influence. Cosimo the
Elder, head of the Medici
family from 1434 onwards,
became the Gran Maestro of
Florence, effectively ruling the
city for the next thirty years. The
Medici bank closed down in 1494,
after King Charles VIII invaded Italy.
MORGAN
The American banking empire
known as the House of Morgan BERENBERG
was founded by in the mid-
nineteenth century by John Founded in 1590, the Berenberg Bank
Pierpont (J.P.) Morgan. By in Hamburg is currently the oldest
trading in government bonds merchant bank in the world. For cen-
and foreign exchange, along turies, the Berenberg-Gossler family
with clever investments and has played an important role in finance,
strategic takeovers, Mor- trade and politics.
gan’s company soon became
the world’s first billion-dollar
corporation. During the First SIGNORI DI GENOVA
World War, J.P. Morgan loaned
billions to the UK and France, prof- Some of the richest families of six-
iting massively from the distribution teenth-century Genova served as pri-
of war bonds and lobbying for the US vate bankers to the Spanish monarchy,
to join the fray, thinking of the profits to funding its many wars and colonial
be made in financing the war effort. ventures.
PHOTOS / IMAGES V
VIA WIKIMEDIA
DI COMMONS
2. FINANCE CAPITAL peripheral states — which allowed finance to
AND IMPERIALISM consolidate two additional bases of power:
industry and empire. In the latter third of
In the seventeenth century, after the decline the nineteenth century, the first gave rise to
of their Italian competitors and the defeat what Hilferding called “finance capital”: the
of the Spanish in the Eighty Years’ War, the monopolistic confluence of productive and
Dutch took international finance to new banking interests as a result of money capi-
heights with the creation of the first stock talists taking ownership of industrial firms.
exchange, the founding of the first multina- The second led to what Hobson called the
tional joint-stock corporation (the East India “export of capital”: vast sums of money flow-
Company), and the development of interna- ing from core to periphery, especially the
tional capital markets. As a result, the city of newly independent states of Latin America
Amsterdam, con- and the Mediterra-
trolled by an ethni- nean, where inves-
cally diverse oligar- tors hoped to find
chy of merchants As Karl Polanyi higher yields than
and bankers, firmly they could extract
established itself as powerfully portrayed in from the increasing-
Europe’s first inter- ly saturated markets
The Great Transformation,
national financial at home. These de-
center — until it was the late nineteenth century velopments reached
gradually displaced their climax in the
by London and Paris was to become the hour of so-called “first wave
in the late eighteenth haute finance, made up of of globalization” un-
and early nineteenth der the Pax Britan-
centuries, with the formidable international nica of the classical
English assuming gold standard era.
the mantle of “bank-
banking dynasties like the
er to the world” and House of Rothschild and As Karl Polanyi
the French coming powerfully por-
in second as banker the House of Morgan. trayed in The Great
to the continent. Transformation, this
was to become the
This new phase in capitalist development, hour of haute finance, made up of formida-
which properly took off with the industrial ble international banking dynasties like the
revolution in Great Britain and the displace- House of Rothschild and the House of Morgan,
ment of the Dutch by the English as the which collectively served as “the main link
dominant colonial, maritime and commercial between the political and the economic or-
power, again witnessed a number of finan- ganization of the world.” Building on the
cial and institutional innovations: from the state-finance nexus that had already been
expansion of international capital markets established in the mercantile period, haute
to the creation of the classical gold stand- finance expanded its sphere of influence and
ard. This in turn opened up two major new took its established power position to new
outlets for investment — domestic firms and heights through its close ties to industry and
108 ROAR MAGAZINE

its hold on foreign states. Polanyi noted how the Rothschilds, in par-
ticular, “were subject to no one government; as a family they embod-
ied the abstract principle of internationalism; their loyalty was to a
firm, the credit of which had become the only supranational link be-
tween political government and industrial effort in a swiftly growing
world economy.”
Taken together, the rise of finance capital — or haute finance — and

the increasingly competitive search for profitable investment oppor-
tunities abroad eventually gave rise to high imperialism, which was
analyzed most prominently by Lenin, Bukharin and Luxemburg. This
period between 1870 and 1914 witnessed the penetration of finance
into the global periphery, facilitated by the prominent role of the state
in settling international debt disputes and intervening on behalf of
bondholders and other investors: from the use of gunboats by Eu-
ropean powers off the coast of Venezuela and the occupation of the
customs houses of several Caribbean nations (including Puerto Rico)
by US Marines, on to the establishment of creditor control over the
public finances of Greece, Turkey, Egypt and several other Mediter-
ranean countries.
By and large, however, it was the impersonal power of haute finance

— operating through the abstract disciplining mechanism of the bond
market and the fiscal straitjacket of the international gold standard
— that enforced compliance. As Polanyi poetically put it, “the Pax
Britannica held its sway sometimes by the ominous poise of a heavy
ship’s cannon, but more frequently it prevailed by the timely pull of a
thread in the international monetary network.”
3A. THE FINANCIALIZATION OF THE WORLD

ECONOMY
World War I brought this Pax Britannica and the associated “dicta-
torship of finance capital” to a violent end. Despite a fleeting financial
resurgence in the roaring 1920s, the Great Depression and the mass
destruction wrought by World War II finally led to the total collapse
of international capital markets. Strict financial regulations imposed
during the 1930s and the international monetary regime established
at Bretton Woods at the end of the war briefly brought finance back
under public control, leading to a short-lived period of “financial re-
pression” in which interest rates were deliberately held close to or be-
low inflation so as to stimulate industrial production and inflate away

The financialization of the world
economy radically escalated
the long-term trend inherent in
capitalist development towards
“space-time compression.”
enormous war debts. The three decades that accounts and deregulate financial markets,
followed are often described as the “golden and to purge the Bretton Woods institu-
age of capitalism,” as they were marked by tions — the IMF and World Bank — of their
exceptionally high growth rates. Keynesian legacy and restructure them into
international debt collection agencies and
But after this postwar expansion had gradu- enforcers of fiscal discipline, “good” institu-
ally begun to falter under the weight of a set tions and investor-friendly policies. The in-
of systemic contradictions in the late 1960s, ternational debt crises of the 1980s and 1990s
the Keynesian compromise between capital- marked a turning point in this respect, with
ist markets and state control over money and finance reclaiming its stranglehold over the
finance finally came undone with Nixon’s periphery. This time the impersonal force of
suspension of the convertibility of the dollar market discipline and IMF loan conditional-
into gold in 1971 and the subsequent Volcker ity were generally sufficient to enforce debtor
Shock of 1979, which jacked up interest rates compliance; a development that is reflected
to suppress inflation. In the following decade, in the dramatic decline in sovereign defaults.
neoliberal governments in the US and UK set
out to repurpose central banks to focus nar- The resultant financialization of the world
rowly on “sound money,” to liberalize capital economy radically escalated the long-term
110 ROAR MAGAZINE

trend inherent in capitalist development to- erected in recent decades — most importantly
wards what David Harvey has called “space- the European Union — have been geared to-
time compression.” For the sake of comparison: wards the efficient administration of this highly
it took Florentine bankers many weeks to de- globalized and financialized world order, not
liver a letter of credit by ship from Pisa to Ip- towards its democratization.
swich or Bruges. The Rothschilds significantly
sped up the process by relying on carrier pi- 3B. THE FINANCIALIZATION
geons to communicate news and price changes OF EVERYDAY LIFE
between different branches. The development
of commercial telegraphy transformed inter- But with the resurrection of global finance in
national trading in the era of haute finance. But this latest phase of capitalist development we
it is only with the digital revolution of recent also witness a further expansion in the sphere of
decades that we witness the emergence of a hy- financial influence. On top of the deeply rooted
per-charged, extra-mobile and highly abstract state-finance nexus and the increasing depend-
financial universe that is governed by the speed ence of companies and developing countries on
of fiber optic communication and the imper- all kinds of financial operations, finance now
sonal algorithms of complex super-computers extends its reach into the very fabric of mod-
as much as it is by the “animal spirits” of indi- ern society and every aspect of social life. This
vidual traders. For the possible consequences financialization of everyday life endows finan-
of such automated trading, just consider the cial elites with an even more central role in the
36-minute trillion-dollar flash crash of May 6, operating logic of capitalist society — render-
2010. ing not just states and firms but all individuals,
households and communities increasingly de-
Together with the liberalization of capital flows pendent on financial operations for their social
and the deregulation of financial markets, these reproduction: from student finance to bank de-
technological innovations fully unleashed posits, insurance policies to credit cards, mort-
Schumpeter’s “gale of creative destruction”: gage loans to retail investment, payday advanc-
over the last thirty-five years, financial crises es to pension schemes.
have become more frequent and more intense
than in any other historical period. The same In the process, financial rationalities, subjectivi-
process has also eroded the sovereignty and au- ties and imaginaries increasingly begin to pro-
tonomy of nation states, taking away much of trude into how people work, live, speak, dream
the decision-making authority of government. and interact with one another. In our highly
Territorially delimited and slow-moving, dem- globalized, financialized and digitized 24/7 in-
ocratic procedures can no longer keep up with formation economy, everything has to be quan-
the instantaneous and “liquid” logic of high- tifiable and measurable to justify its existence.
frequency trading. While citizens get to vote As the abstract expression of value, money itself
on their government once every so many years, thus becomes an ever-more important mecha-
investors now get to vote on government policy nism of social control. Deleuze perceptively ob-
every nanosecond. The result is to place demo- served this transformation in his famous Post-
cratic forms of government at a distinct disad- script in the early 1990s, when he wrote that
vantage to unaccountable technocratic forms of “man is no longer man confined, but man in
governance. As the response to the latest crisis debt.” As finance steadily expands its reach, no
has confirmed, the transnational institutions stone is left unturned. Under neoliberalism, the

logic of the moneylenders gradually takes over DEFEATING THE GLOBAL
as the governing logic of our very existence. BANKOCRACY
The resultant anxieties over due dates, inter-
est rates, overdrafts, house prices, enforcement
agents, home repossessions and credit scores All of this goes to show that financial impu-
are destroying lives and communities around nity is not merely due to some failure of the
the globe: from the millions of evicted familiesregulatory regime, nor should it be reduced
in Spain and the US to the mass suicides of in- to the moral failings of individual bankers.
debted farmers in India. While regulators may have been “asleep at
the switch” in the years preceding the crisis,
Financialization therefore completes the rule and while certain traders and executives have
of finance by firmly establishing a “global certainly displayed criminally irresponsible
bankocracy” at the or morally repulsive
apex of the capital- behavior both before
ist world-system and after, the over-
and extending its whelming power
The rule of finance is no
(de)regulating pres- of finance is about
ence from politics mere accident of history; much more than
and the economy regulatory capture
to every nook and
it is a deeply entrenched or personal greed.
cranny of modern and recurring feature of The real sources for
society. If the first society’s subservi-
phase of capitalism capitalist development ence to the interests,
was marked by the ideas and imaginar-
that seems impossible to
“alienation of the ies of private bank-
state” and the second fully extirpate from the ers lie much deeper
by the penetration of — in the essence of
finance into industry nature of the beast. what capitalism is all
and empire, the third about as a historical
phase is marked by social order: the ac-
the wholesale sub- cumulation of capital
sumption of the global political economy through the maximization of private profit.
and of every aspect of our lives under the ra-
tionality of the financial markets. More than In this sense, the rule of finance is no mere
ever before, the system’s modus operandi is accident of history; it is a deeply entrenched
abstract, impersonal, untouchable. Today, fi- and recurring feature of capitalist development
nance hardly ever needs to reveal its true face that seems impossible to fully extirpate from
to exert its authority; Greece was actually the the nature of the beast. The struggle against
exception. Most of the time the global bankoc- the corrupting influence of big banks on the
racy is content to quietly operate in the back- democratic process is therefore necessarily a
ground, shaping the conditions of possibility struggle against the very substance of the profit-
under which everyone else — states, firms and driven financial system and of contemporary
households — is forced to secure their contin- capitalism more generally. It follows that the
ued existence. “politics of resentment” and its logic of moral
112 ROAR MAGAZINE

The broader left will need to go
far beyond the populist veneer
of moral outrage and emotional
protest. What is needed is deep,
structural change.
outrage will do little to improve the situation. terweight to the rule of finance, while simul-
Similarly, tinkering at the margins through taneously opening up prefigurative spaces for
piecemeal reforms and regulations is unlikely the creation of and experimentation with al-
to dramatically alter the course of history. ternative monetary and financial forms.
Instead, what is needed is deep, structural While these observations may seem self-
change that abolishes the exorbitant privilege evident to those engaged in the various move-
of private money creation and removes the ments against the class power of the 1 percent,
profit-motive from the allocation of credit it turns out that some of the world’s leading
and investment altogether, placing the pub- critics of finance — including the otherwise
lic function of credit-provision under direct astute Wolfgang Streeck — have pinned their
democratic control. To make the economy only remaining hopes exactly on such fleeting
work for “real people,” as well as their wider outbursts of moral indignation, hoping that
communities and the natural environment, angry protests will somehow push policymak-
the opposition will need to do much more ers to pursue progressive reforms that will put
than clamor for retribution or express its re- finance back on a leash and return the world
sentment at the bankers: it will need to start to a more palatable form of capitalism. “Ex-
by rebuilding its collective power from below press your disgust,” Streeck recently advised
so that it can begin to form a democratic coun- the readers of ROAR Magazine when asked

what can be done to resist the rule of finance, “and don’t be afraid
of appearing emotional, since emotional protest is what technocrats
are most afraid of.”
But the time for emotional self-expression has long since passed. If the
defeat of the Greek OXI is anything to go by, the broader left will need
to go far beyond the populist veneer of moral outrage and emotional
protest. To truly turn the tables on the 1 percent, we will need to start
thinking very hard about what it would mean to actually build strong,
inclusive and enduring social movements; to construct a common po-
litical project capable of striking at the heart of the bankers’ regime;
to dismantle the institutional foundations of global finance from be-
low; to strengthen the autonomy of democratic procedure, economic
production and social reproduction from the financialized logic of the
world economy; to radically overhaul the present monetary system and
rethink the capitalist money-form altogether; and ultimately to replace
the concentrated, centralized and profit-driven finance industry with a
thoroughly democratized, decentralized and non-profit credit system
centered on collectively-owned and self-managed institutions like pub-
lic investment funds, mutual savings banks and community-based credit
unions. Since such cooperative non-profit lenders should focus their
efforts on bankrolling the transition towards an inclusive, egalitarian,
ecological and communal economy, the struggle for the democratization
of finance cannot be uncoupled from broader emancipatory struggles
for popular control over production, exchange and the commons.
There is unfortunately no space here to discuss the inevitable challenges

and infinite complexities involved in the ambitious pursuit of such a
post-capitalist future — a vast and contested subject that easily merits
an entire ROAR issue of its own. But about this there can now be little
doubt: as long as we continue to tinker on the margins and refuse to
look towards radically different horizons, the next 800 years of moral
outrage are unlikely to take us anywhere new.
J E ROME ROOS
Jerome Roos is the founder and editor of ROAR Magazine.

He holds a PhD in International Political Economy from the
European University Institute in Florence, where he stud-
ied the structural power of finance in sovereign debt crises.
114 ROAR MAGAZINE

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“Sure, cried the tenant men, but it’s our land… We were born
on it, and we got killed on it, died on it. Even if it’s no good,
it’s still ours… That’s what makes ownership, not a paper with
numbers on it.”
“We’re sorry. It’s not us. It’s the monster. The bank isn’t like
a man.”
“Yes, but the bank is only made of men.”
“No, you’re wrong there — quite wrong there. The bank is

something else than men. It happens that every man in a bank
hates what the bank does, and yet the bank does it. The bank
is something more than men, I tell you. It’s the monster. Men
made it, but they can’t control it.”
John Steinbeck, The Grapes of Wrath

h (1939)
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ROAR Issue 3 The Rule of Finance

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ROAR Issue 3 The Rule of Finance

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Reﬂections on a Revolution

ISSUE #3 - AUTUMN 2016

Hannah Appel, Tim DiMuzio, David Graeber,

At once astonishingly abstract and intensely personal, global ﬁnance

Featuring leading critics of ﬁnancialization as well as inspiring grass-

The Global 1 Percent

The Life and Times

58 CASSIE THORNTON &

The Debts of the

The “Golden Noose”

Defeating the The Potential of

AFTER THE FINANCIAL CRISIS, THE

The Contradictions of Finance 13

Will movements demanding state-ﬁnancial

Richard D. Wolff is Professor of Economics Emeritus

The Contradictions of Finance 15

THE CONCENTRATION OF THE US

Sandy Brian Hager

MAPPING THE BONDHOLDING CLASS

The Rise of the Bondholding Class 19

The top percentile’s share of the US

The logical sequence of

SAVINGS FOR 1% &

TAX REVENUES (N)

TAX PROGRESSIVITY (-)

PUBLIC DEBT (+)

The Rise of the Bondholding Class 21

Every man and woman who owned a Government Bond, we believed,

My research illustrates the ubiquity of the Marktvolk within US policy-

Inequality in ownership of the public debt and

Concentrated ownership does not necessarily give owners of the public

The Rise of the Bondholding Class 23

WHAT SHOULD (AND SHOULD

Inequality has come to permeate all facets of

The problem is not a large public debt. As

fact, for a monetarily sovereign entity like the

US Federal Government, which issues debt in

a currency it fully controls, bankruptcy is never

really an issue because the Federal Reserve can

purchase government bonds when the private

sector does not want them. The existence of a

powerful bondholding class should provide no

solace for “deﬁcit hawks” eager to ﬁnd evidence

to support their fear mongering about the sup-

posed unsustainability of the public debt.

The real problem, then, is a large unequally

distributed public debt. This distinction is

A monetarily sovereign entity like the US Federal Government is not

Sandy Brian Hager is a Postdoctoral Fellow at the Weather-

The Rise of the Bondholding Class 25

The Global 1 Percent Under Siege? 27

We will likely see much more of this as future

USA TAX HAVEN

PAYS 35% ON PAYS 5% TAX

US PHARMA OWED $350K

How tax havens work

CANADA TAX HAVEN ITALY

$25/PC $75/PC $100/PC