Recommended: Michael Hudson: America’s Deceptive 2012 Fiscal Cliff, Part II
Wage Slavery plus debt peonage — these are the fates awaiting the ‘better off’ members of the 99%, Alan Simpson’s “lesser people.” The ‘worst off’ shall continue to find themselves existing on city streets, squatting in vacant land and buildings, suffering one of the many prisons which pockmark the body politic or dying from untreated illnesses. These fates — wage slavery, debt peonage and social outcast — should not be considered accidents of history. They have obvious systemic causes. The economist Michael Hudson explains in the second of a four-part series:
Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.
Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.
The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.
What is truly astonishing about this situation is the nature of contemporary finance capital. In essence, it is functionless. It does not exist to generate capital for investment in the real economy. It does not provide safe storage for pension funds, insurance monies, personal savings, etc. It does not even provide the common investor with rational investment programs. Rather, finance capital today is just a system specific mechanism (or, better, set of mechanisms) which extracts massive quantities of wealth from the world. Profit taking — that is its sole purpose. Moreover, it is omnivorous and perpetually famished. It cannot be satiated. Its appetites thus put everyone at risk. It lacks a home, a national identity. It cares not for people, their cultures, societies and well-being. It is everywhere and nowhere.
It is, in a word, the vampire about which so many Americans fantasize.