The agreements that we call money and debt can be changed. To do so, however, will require a movement that contests the immutability of the current system and explores alternatives to it.
*Some highlights from Eisenstein’s recent Yes Magazine article entitled “Don’t Owe. Won’t Pay.” Everything You’ve Been Told About Debt Is Wrong. As always, we encourage readers to click on and soak in the whole text.
But what about the huge amount of debt that financed large-scale, centralized development projects? Neoliberal ideology says those are to the great benefit of a nation, but now it is becoming apparent that the main beneficiaries were corporations from the same nations that were doing the lending. Moreover, the bulk of this development is geared toward enabling the recipient to generate foreign exchange by opening up its petroleum, minerals, timber, or other resources to exploitation, or by converting subsistence agriculture to commodity agribusiness, or by making its labor force available to global capital. The foreign exchange generated is required to make loan payments, but the people don’t necessarily benefit. Might we not say, then, that most debt owed by the “developing” world is odious, born of colonial and imperial relationships?
Tax laws, financial deregulation, and economic globalization have siphoned money into the hands of corporations and the very rich, forcing everyone else to borrow in order to meet basic needs. Municipalities and regional governments now must borrow to provide the services that tax revenues once funded before industry fled to the places of least regulation and lowest wages in the global “race to the bottom.” Students now must borrow to attend universities that were once heavily subsidized by government.
What should be the ultimate goal of the debt resistance movement? The systemic nature of the debt problem implies that none of the policy proposals that are realistic or reachable in the present political environment are worth pursuing. Reducing rates on student loans, offering mortgage relief, reining in payday lending, or reducing debt in the Global South might be politically feasible, but by mitigating the worst abuses of the system, they make that system slightly more tolerable and imply that the problem is not the system—we just need to fix these abuses.
Conventional redistributive strategies, such as higher marginal income tax rates, also face limitations, mostly because they don’t address the deep root of the debt crisis: the slowdown of economic growth worldwide…
The problem is that canceling the debts means erasing the assets upon which our entire financial system depends. These assets are at the basis of your pension fund, the solvency of your bank, and grandma’s savings account.
Fortunately, there are deeper and more elegant alternatives to conventional redistributive strategies. I’ll mention two of the most promising: “positive money” and negative-interest currency.
Both of these entail a fundamental change in the way money is created. Positive money refers to money created directly without debt by the government, which can be given directly to debtors for debt repayment or used to purchase debts from creditors and then cancel them. Negative-interest currency (which I describe in depth in Sacred Economics) entails a liquidity fee on bank reserves, essentially taxing wealth at its source. It enables zero-interest lending, reduces wealth concentration, and allows a financial system to function in the absence of growth.