The Theories Of The Debt - Essay Example

The Theories Of The Debt Introduction It is evident that in the recent years, the major economies across the world have seen a resurgence of interest in the area of debt, money and the power and influence of finance in a societal as well as economic construct. The fact that uncontrolled levels of credit and unsustainable debt policies have resulted in major economic and financial downturns, makes the way for imminent attention to be paid to review the existing financial and monetary systems across the globe. In relation to these arguments, building on the insight that the role of debt remains critical in defining the financial and economic structures and social power would be the most appropriate way to evaluate the topic. The influence and role of debt in both democratic and neo-liberal conditions are to be considered in the process of understanding how debt should be re-conceptualized and disciplined in the contemporary democratic situations. The morality, politics and economics of debt as an element of any financial and economic construct are highly debatable and complicated discussions. Though the per-history of debt suggests that monetized debt are obligations for sustaining a society, the recent history of debt suggests that focusing on human economy rather than commercial economy would be a more valuable and practical way of viewing and imposing debt in a democratic society. Both debt and money can be related to subjectivity in two complimentary and heterogeneous manners. The first is driven by social subjection while the second is based on mechanic control. While, social subjection functions on the basis of human factors like conscience, judgment and mutual benefits, mechanic control operates on pre-individual and structural elements. Since the current state of the global economy has become more of a debt economy, therefore, the consideration of debt as a crucial contributor to economic and social structure and efficiency has become mandatory for developing economically, politically, theoretically and morally efficient global constructs. Discussion In the recent times, many social theorists and economists have presented their view on how debt has become the main determinant of social and economic relations in different countries, while superseding the existing relations of consumption and production in the socially formative and economically dynamic contemporary nations. For instance, the book, the making of the indebted man by Maurizio Lazzarato suggests that the transition from traditional disciplinary governance to neo-liberalism in the contemporary world is defined by a man being in debt that is within a controlled society rather than a man confined in disciplinary society. Certainly, it can be argued that debt plays a critical and prominent role in the modern day regime of financial transactions and capital accumulation because the debt based financial instruments provide by the banking and other financial institutions are traded in the international markets while the assets of the individuals are stripped from them. The role of individuals as both consumers and citizens are more controlled by the society and societal structures rather than by the principles of human economy. However in a neo-liberalistic society, debt assumes a hegemonizing role in which the collective components of capital and individual components of capital are disciplined and accumulated by relating these to their sense of independence, especially in social formations by suggesting that the human entities are free to choose whether they will access debt or not. Graeber’s view of debt The most striking contemporary description of debt as a discourse of the society or community has been presented by David Graeber in 2011. His views have been presented in his book Debt: The first 5000 years, in which he has attempted to remove the myths related to primordial debt and barter. Graeber has argued that the projection of bartering and trucking systems of exchange are actual mythical past which legitimates and naturalizes the currently prevailing contemporary relations in different societies which have actually been produced through a long history of revolts and violence (Graeber 12). The author rightly points out that debt in the existing social systems can act as the main driver of legitimate power dynamics as well as social structures and hierarchies. Graeber has explored the origin and history of the debt component as deciphered since the old Biblical period. As per this view, debt in a significant component of the colonial legacies present in the Western countries. Debt as an instrument is used for relieving or ameliorating poverty by informing the policies related to credit and debt management in an economy. Debt is more than often imposed within an economy through the use of undemocratic ways and means in which the debt policies are decided by the international monetary authorities, institutions and dictators without taking any input or consent from the general people. Additionally, there being an absence of any kind of referring guideline to the global economic policies makes it more difficult for the general people to access debts in manner that is beneficial for them. The fact that the replacement of human economies by the commercial or state driven economies in which there are enforced and mathematically evaluated forms of debt make an economy or society more vulnerable and exposed to widespread violence and impoverishment. This has been observed in a number of economies across the world over the last 5000 years of debt and credit. The informal, imprecise and community building form of credit and indebtedness seems to be a more appropriate form of credit policy when it comes to the management of humane economies. Indebtedness within a society can lead to insurrection, unrest and revolts in the long term scenario. Another argument that can be placed in this arena is that debt has been the oldest techniques of trade in the world, wherein debt was used as a primitive form of conducting transactions of goods and services. The barter and cash transactions arguably have been developed later as the means of conducting business and transactions in different parts of the globe. Debt is one form of trade which has retained its primacy over years, especially in situations where in the barter and cash systems of business and trade are not easily applied. The barter and cash transaction systems are usually limited to situations in which transactions are conducted with strangers and as such, there is a low level of trust in the transaction and the level of credit worthiness is also low. This view is in contrast to the standard views related to the history of money and trade in which, the barter system is indentified as the earliest form of conducting transactions. It can be argued that credit and debt had emerged as the components of trade before money in business transactions. This automatically means that credit and debt has also emerged as the main elements of transaction before barter because the concept of money has emerged before barter. This view is in contrast to that presented by economists and scholars like Adam Smith in their standard economic theories. However, there is suitable base available for the theory of debt emerging as a component of trade before money. The credit systems developed across the globe through historical times primarily involve debt and credit system as a main form of managing money. Credit till date is used a main technique of conducting transactions in non monetary based economies (Dymsk 104). On the other hand, systems like barter and cash exchanges were used for transactions which involved limited exchange quantities between varying societies in which ritualized warfare and infrequent contact was identified. Economic life in a country can be related to the social currencies prevailing in the country. The non market based interactions also play a critical role in determining the economic state of life within a country. As such, the credit policies, systems and techniques existing within a country also act as the main influencers of the way in which the economic landscape of a society is shaped. The concept of everyday communisms is widely base on responsibilities and mutual expectations existing among the individual entities within a society. This kind of economy is in contrast to the exchange systems which are based on reciprocity, hierarchy and formal equality among the agent and entities involved in the exchange and transaction systems. The hierarchical systems in turn result in the formation of institutionalized inequalities in the way customs are formed for different sections of a society. This in turn leads to inherent complexities and biased behaviors within the society which if not controlled can trigger unrest and political upheavals in the society. The economic value of portions as used in the time of the Great Axial civilization is the earliest form of humane economy as coined by Graeber. The Great Axial Age civilization period was from 800-200 B.C. during which a radically distinct concept of social relations, debt and indebtedness was held within the society. These concepts were mainly based on the constant creation of social bonding through general sociability, marriages and gifts and the incalculable nature of human life. This provided the base for the creation of an economy which focused on the human factor and as such, the policies and systems of the society were enforced by concentrating the social relations and bonds and primarily revolve around the human factor. In these kinds of economies, the economic values of societal potions are quantified and human beings are directly included in the social context of the economy (Armstrong 45-46). This era was followed by the growth of a different kind of social structure which was based on a complex system of military coinage in which the social connections were cut out form the societies and work systems and new policies of debt and credit were enforced through the use of mercenary functions. This kind of system as proved in the history of countries like Greece and Rome ultimately results in extreme violence and revolt within the societies and communities. The obligations of paying taxes, using money for transacting and increased predominance of currencies made it difficult for the people to form a socially bonded framework in the countries and resulted in greater difficulties in the terms of trading. Also, these kinds of systems lead to increased levels of slavery and debt which disturbs the stability and constituency of a society to a large extent (Marx 540). The concept of anti capitalism or everyday communism in a society can arise from the analysis of the lives of the low income group of people in a community. The everyday communism concept is based on the society remaining rooted to amity and love. This establishes the fact that communism acts as the foundation or platform for all kinds of human sociality. Communism is thus, indentified to be a prime driver which makes a society exist by enhancing the societal bonds and supporting the development and well being of the human entities in a society. The assumption in this case, is that any entity that is included in the society and is not in particularly an enemy of the society is likely to act in accordance within the principle of responsibility, mutual benefits and support according to the level of their abilities. For this purpose, a minimum extent to which the abilities of each of the entities are mandatory to be displayed within the society are prescribed and set as the standard level. The sociology included in everyday communism states that this field is a potential field with various levels and multiple dynamics which if enforced properly can add to the economic and social growth of any nation. The level of indebtedness, thus, decides the structure of a society. It can be inferred that the kind of debt policies existing in the present situation of the world has triggered new systems like go–go banking which help to add wealth in the society but do little to develop a human economy. Lazzarato’s view of debt As per the view of Lazzarato, neoliberal society has been a main driver of the integration of financial systems, banking and monetary systems across the world. The aspect of neoliberal society has led to the use of techniques that have been aimed at making the relationship between debtor and creditor a central point of political developments related to regulations and reforms in a country. This argument suggests that debt is the basis on which consumption is driven. The landscape of an economy is developed and predicated on the basis of credit and credit policies. Debt as a component produces consumers and credit as a component predicts the future of the economy. Credit and debt in the current economic satiation act as the tools for exploitation of the assets of human entities by the state governments and financial institutions. Also, in the background of neoliberalism, an economy does not function as a market economy. Instead, a contemporary economy includes different exchange networks based on money and in which the purchasing power of the people depend on the flow of money into and out of the economy. In this view, the economy of a country is not dependant on the social structure of the country. The relationship between the debtors and the creditors functioning in a market sharpen the mechanisms of domination and exploitations in an indiscriminate manner (Radzivilovskiy 160). Since, in these kinds of economic systems, there are no differentiation made between the producers and the consumers, the employed and the unemployed people, the welfare recipients and the retirees, therefore, all these entities are considered to be the debtors in the economy. On the other hand, the creditors include both the private and the public lenders including the governments and financial institutions. The debtors in this aspect are seen as the entities that are responsible for the capital management and economic prerogatives of a nation (Patel 102). However, as per the arguments presented by Lazzarato, debt is not an influencing factor of problems in capitalist economies, instead, debt exits at the core of the economies based on neo-liberalism. Also, it is argued in this line, that debt can be demonstrated to be an element which is above the regulatory and political constructions in a society and the relationships between the creditors and the debtors in a market is an important driver of the social relations existing within the nation. Additionally, it can be inferred that it is not possible to reduce debt to a simplified economic mechanism, because debt is also a technique through which public safety is guaranteed for the general public of a country. Debt and credit forms are also used as mechanisms through which the collective and individual subjectivities are controlled and governed (Lazzarato and Jordan 10). The two primary paradigms included in the debt economy are that credit instead of exchange should be included as the essence of a society and secondly, debt should not only form a part of production and relations of production butt also form a base for production of subjectivity of debtors and creation of identity for the debtor agents in an economy. The regime of credit in this format is asymmetrical when viewed from the terms of power because the role of the debtor entities is defined to be inferior as compared to that of the creditor entities in a transaction system. The main objective of instigating debt processes in a nation is to minimize the redundancies and uncertainties associated with the behaviors and time of the governed entities in the society. The neoliberal conditions of the general public in an indebted condition seem to be upended by the entire effective, physiological and material horizons in the society. Though debts are necessary elements in any economic system, yet the control and management of debt ion both public and private debts is necessary to ensure that the negative effects of uncontrolled credit and debt procedures and policies are mitigated to the maximum possible level (Baucom 66-68). There cannot be any simple economic, financial or technical solution to relieve people from the indebted status. Instead, the way to improve the conditions of indebtedness in society is to radically challenge and contest the existing fundamental structuring capitalism, debt systems and social relations. The arguments presented by Lazzarato are based on the idea that the creditor and debtor relationship acts as a fundamental from of social relationship in neoliberalism. It also suggests that the class and society in the contemporary world struggles to make itself safe from this dichotomy. Since, in this theory, every entity is viewed as debtors, therefore, they are guilty and accountable for the management or mismanagement of capital in the modern economic and financial systems. Also, the decentralization of the owner and worker division needs to be done so that the importance of debt and debt instruments as the driving forces of capitalism in the modern day societies can be established properly. This theory is built up on the notion presented by Bourdieu and Wacquant in 2008, which suggests that neoliberalism, is a concept which has emerged as a universally accepted common sense in which the entities are taken as self evident and self sufficient agents (Meaney 42). Crucially, it is seen that the theory of Lazzarato does not aim at demoting the existing theories and the techniques of productions to any kind of subsidiary position. In contrast, the public debt aspects are recognized as the key components of the derogatory debt constitutions in the current economic conditions. This emphasizes on the state sponsored, systematic and structural functions of debt which act the driving forces for developing a neoliberal capitalist society. If framed in other words, this means that debt is indicative of a series of conditions and not of any particular situation. As such, the manifestations related to the totality of debt and debt instruments indicate that debt can act as an important agent of production in a capitalist background and a significant agent of financial control in a neoliberal background (Slothuus 44). Conclusion Thus, it can be inferred that debt forms the basis of the contemporary social lives and economic systems. The theories of the debt component and the indebted concepts can be formed on the review of the existing transformation which has been driven by the history of debt economy and it is not necessary to introduce any new totalized theory related to debt and debt components in order to suit the economies based on democracy and capitalism. Additionally, the importance of debt as well as debt conditions are increasing under the influence of neoliberal conditions (Toscano 441). These kinds of structure provide a highly persuasive, chronological and logical framework that can be developed for exploring the pivotal role of debt as a main element of capital in function. Thus, the principles on which the neoliberal economies function suggests that debt needs to be embedded in the right manner so as to make the economy function in a more optimal and progressive manner. Also, it can be said in this context that the reduction of moral obligations related to debt is necessary. This includes the personal financing systems, the impersonal accountable debts as well as the interpersonal obligations incurred by the entities in an economy. Thus, the depersonalization of debts through the techniques of abstraction or quantification can help to develop justifiable behaviors among the creditors and debtors functioning in an economy. The human economies, in the present scenario seem to have been destroyed by the emerging commercial economies. This is because, while human economies focus on the use of social currencies to develop and maintain relationships and social bonding between people, commercial economies focus on the use of money for generating profits. In commercial economies, qualities are replaced by quantities so that the calculations of profits and losses can be made direct and easier. However, when the human economies and commercial economies exist within a society at the same time, the power of the latter often leads to the destruction of unique social formats and human relations. Works cited Armstrong, Tim.  The Logic of Slavery: Debt, Technology and Pain in American Literature.  Cambridge: Cambridge University Press, 2012. Print. Baucom, Iain.  Spectres of the Atlantic: Finance Capital, Slavery and the Philosophy of History. Durham: Duke University Press. 2002. Print. Dymski, Gary. Racial Exclusion and the Political Economy of the Subprime Crisis.  Historical Materialism. 17(2), 149-79. 2012. Print. Graeber, David. Debt the first 5000 years. New York: Melville House publishing. 2011. Print. Lazzarato, Maurizio. &. Joshua David Jordan. The making of the indebted man: Essay on the Neoliberal Condition. Cambridge: MIT Press. 2012. Print. Marx, Karl. Excerpts from James Mill’s Elements of Political Economy. London: Penguin. 2002. Print. Meaney, Thomas. Anarchist Anthropology.  New York: The New York Times Company. 2011. Print. Patel, Raj. A key to unlock the door of debtor's prison. Toronto: The Globe and Mail. 2011. Print. Radzivilovskiy, Edward. Noam Chomsky on Student Debt and Education. Retrieved From: . 2013. Slothuus, Lukas. Review of The making of the indebted man. Retrieved From: http://marxandphilosophy.org.uk/reviewofbooks/reviews/2013/870. 2012. Toscano, Alberto. Alien Mediations: Critical Remarks on the Making of the Indebted Man. Retrieved From: . 2012. Read More