[p2p-research] New faces of poverty – debt as a sociological category

[Michel Bauwens]

On Mon, Nov 1, 2010 at 4:02 AM, Dante-Gabryell Monson <
dante.monson at gmail.com> wrote:

>  revolving around ( what I call "coercive" ) debt - academic paper -
>
> http://skemman.is/stream/get/1946/6725/1/41-48_PiotrKowzan_FELRADbok.pdf
>
> excerpts :
> *
> *
> *... " changes the notion of the citizen by redefining the*
> *social contract into an obligation towards financial institutions "*
> *
> *
> *... " „Ukredytowany” [Credified = the combination of the
> words credit and crucified] "*
> *
> *
> *... "People get into debt for various
> reasons, but in general they do it to improve their lives. However, in
> this paper I tried to present how debt could appear and grow
> independently from loans and how it can make debtors' lives miserable
> and impoverish both themselves and their relatives."*
>
> I've met Piotr - years back.
>
> I found out about he's paper through edu-factory - public mailing list.
>
>
> ---------- Forwarded message ----------
> From: Piotr Kowzan <satkow at gmail.com>
> Date: Sat, Oct 30, 2010 at 8:58 PM
> Subject: <edu-factory> New faces of poverty – debt as a sociological
> category
> To: Conflicts and Transformations of the University <
> edufactory at listcultures.org>
>
>
> fyi
>
> NEW FACES OF POVERTY - DEBT AS A SOCIOLOGICAL CATEGORY
> by Piotr Kowzan
>
> http://skemman.is/stream/get/1946/6725/1/41-48_PiotrKowzan_FELRADbok.pdf
>
> My research project was to find the meaning given to indebtedness in
> Iceland. The project is part of my doctoral research and was conducted
> under the supervision of Prof. Tomasz Szkudlarek and Dr. Steinunn
> Hrafnsdóttir. It was supported by Iceland, Lichtenstein and Norway
> with a grant received from the Norwegian Financial Mechanism and the
> European Economic Area Financial Mechanism through the Scholarship and
> Training Fund. In Autumn 2009 and Sping 2010 I took 20 semi-structured
> interviews with indebted people whom I met in Reykjavik: 10 of them
> were Icelanders and 10 – immigrants.
>
> When I came to Iceland in 2009, I realised that debt was not
> considered a problem in itself, only the unpredictability of their
> growth. Meanwhile, for many Poles the whole idea of financial debt was
> controversial. At first, I felt somehow old-fashioned. Later, I was
> inspired by anthropology, when I found that my research can be seen as
> an à rebours repetition of the traditional movement of scientists from
> modern to pre-modern societies.
>
> In this article, I will use both examples from Iceland and from my
> previous observations in Poland, hoping that they will also indicate
> more general processes. I will present indebtedness in relation to
> several divisions, institutions, social phenomena and in this way show
> that both the amount and the quality of debt are crucial for
> understanding peoples' reactions of opportunities and threats of the
> contemporary world. The category of debt can be especially important
> for the sociology of poverty, because debt can link to poverty in two
> ways: firstly, debt can lead to poverty, and secondly, poor people can
> incur debt in order to pay their bills or take loans to increase the
> quality of their life. It does not mean that these two phenomena –
> debt and poverty – are identical. Nevertheless, their co-occurrence
> and potential mutual conditioning encourage further research.
>
> DEBT AND EMANCIPATION
> The basic reason for being in debt among my respondents in Iceland was
> a loan taken to buy a house or a flat. The second popular reason was a
> car loan, and then credit taken to launch one's own business (secured
> by the mortgage). Getting educated also resulted in being indebted,
> because of student loans. These student debts were not considered as a
> significant burden in the monthly spending of respondents' households,
> though the eventual date when student loans will be repaid was
> unimaginable for everybody. In this perspective, debt can be
> understood as a kind of shadow following active people. They chose a
> place to live (a house), they became geographically mobile (a car),
> they decided to educate themselves (a degree) and to run a business.
> Their debt is the long-term consequence of purchases made on credit.
>
> The two elements of the opposition credit/debt inform us about a basic
> lack. It was the lack of resources for the subjects, which made it
> difficult to become equal with their reference groups. They felt this
> lack before taking the loan and when they had to pay it without
> necessary resources. Reference groups are people one aspires to and
> compares oneself to – for example when people from the group have
> cars, one usually also wants to have it. At the same time, the
> purchase can be treated as luxury for the broader public. As a
> consequence, people who became indebted trying to get what others from
> their reference group already have, are often blamed for their fate,
> unless their aspiration was to lever themselves to a generally
> accepted minimum standard, that is, to escape poverty.
>
> Debt can also be produced independently from loans; e.g. by getting
> fines; because of unpaid housing rent; by being charged for obligatory
> reparations of buildings; because of guaranteeing someone else's debt;
> because of healthcare costs or by receiving an inheritance burdened
> with debts.
>
> DEBT AND SOCIAL CLASSES
> In the contemporary world or at least within the European context, the
> amount of money workers have does not depend only on their salary.
> Workers are credited (Urbański, 2007). Peter Sloterdijk (2009) claims
> that this is the reason why tensions between capitalists and workers,
> as they were seen by Karl Marks, can be considered minor.
>
> Nowadays, it might be easier than in the 19th century to realise that
> in order to launch a company capitalists borrow resources on financial
> markets and because these credits must be paid together with
> interests, the business has to generate profit to cover these
> interests. Indebtedness is the basis for the thesis that the political
> interests of workers and capitalists happens to be convergent, if they
> are about limiting the power of creditors.
>
> From the researcher's perspective I can say that debt is a social
> class problem in the sense that the collected knowledge about
> mechanisms governing the lives of people who experience economic
> violence comes mostly from representatives of the middle class. If
> problems related to the issue of indebtedness were not touching
> teachers, journalists, office workers, scientists etc. I would have
> had few respondents, because the majority of people in debt seem to
> avoid discussing financial issues, whereas those who “work with words”
> are less ashamed by their debt. It is only an observation and it is
> hard to say if it illustrates a broader regularity. My respondents,
> who – after Barbara Ehrenreich – could be named the “Nouveau Poor”
> (2009) were sometimes outraged because indebtedness forced them to use
> social assistance institutions. Some said that in turn they “withdrew
> their support for the state”, which had turned its middle class into
> the poor, for which the institutions of help and control were
> originally established.
>
> DEBT AND GENDER
> One of the reasons of falling into debt is the traditional division of
> social roles in the family, which is slightly different nowadays, but
> still exists. It presupposes that the man is the breadwinner and the
> woman decides how to satisfy the household's needs. Tracing stories of
> debt, one may find that even in Icelandic society the man undertakes
> contacting financial institutions and subsequently decides which
> decisions need to be discussed collectively by the family. Despite the
> traditional gender scheme being often abandoned, it is especially
> strong among couples from different countries in which the woman is an
> immigrant. As a result, there are cases when women get married to men
> who present a wide variety of signs indicating a high social status
> (e.g. a house, cars, holidays abroad, consumption of luxury goods),
> but these signs are all “on credit”. Insufficient knowledge regarding
> rules of possession in contemporary capitalist societies leads women
> into debt;, the existence of which they don't know about until the
> divorce. Debts which burden people because of such a “catch”, are
> called sexually transmitted debts (STDs), emphasising their connection
> to diseases of this type. This term, called also Emotionally
> Transmitted Debts (Baron, 1995), is especially popular in Australia.
> Its definition and other causes particular to the vulnerability of
> women to STDs are extensively described by Miranda Kaye (1997).
>
> More complex cases of STDs come into being when migrants create
> “migrant networks” (Faist, 2000) by supporting more or less kin
> new-comers in a new country. Sometimes, help meant that a migrant
> family, which was well-established in Iceland (owned a house)
> guaranteed a loan for a car that a new-comer needed. Without such
> guarantees, a person with “no history” had hardly any chance of buying
> products, which were relatively expensive, but popular enough to be
> seen as inevitable. However, displaying trust in people in order to
> equip them with resources is burdened with some risk. The financial
> crisis in Iceland induced a sudden diminishing of these support
> networks. Debts caused by car loans (often taken in foreign
> currencies) increased rapidly, new-comers capitulated and left the
> island, while their debts accumulated and loaded mortgages of
> guarantors, which threatened the financial security of the most
> integrated immigrant families. It is worth noticing that it was not
> only immigrants who supported new-comers. Icelanders guaranteed loans
> to immigrants as well, but I did not come across any cases in which
> they were hurt because of that.
>
> DEBT AND SUBJECTIVITY
> It is more difficult for indebted people to say “enough” and answer a
> “hippie” call to leave the “rat race”. They will not stop working even
> if they have all the material goods they need. The necessity to pay
> back their debts in instalments forces them to sustain relationships,
> which provide them with constant income. Thus, debt seems to be an
> important part of disciplinary mechanisms in affluent societies.
>
> It is important to distinguish obligations to other people from debts
> in financial institutions (called legal personalities, although they
> are not people as such). Debts between people suggest deeper social
> relations between the debtor and the creditor, while relations between
> people and legal personalities are only based on law. These debts are
> measurable and they may be collected by the use of all means
> attributed to the power in a given society. The quality, quantity and
> popularity of such obligations are interesting features of modern
> societies.
>
> In the case of Poland and other so called post-communist countries,
> where promoting individual loans as a solution for social problems is
> a new phenomenon, the dislike for being indebted to financial
> institutions is still strong. In Poland, the reason for that may be
> partly attributed to a strong presumption that the long economic
> crisis preceding the collapse of the communist regime was generated by
> the government taking foreign loans; and to the still alive criticism
> of “living on credit” in the 1970s. Moreover, even Polish proverbs
> warn against borrowing money and there is a tradition of thinking that
> one should not spend more money than one has (Kwaśniewski, 2010). The
> aversion to debt is especially visible among immigrants in Iceland,
> when it is contrasted to the relaxed (until 2008) attitude of
> Icelanders towards debt.
>
> The financial crisis in Iceland suddenly brought many people into
> financial distress. What was new was the scale of the problem. There
> are heavily indebted people in all capitalist countries, but usually
> their problems are considered individual, not social. There are many
> reasons for that. One of them is the process of the growing isolation
> of indebted individuals. This process may be called the collapse of
> subjectivity or alienation. Financial distress often turns sociable
> people into apathetic ones, who isolate themselves from the world.
> Consequently, their families may fall apart and they will lose
> interest in their jobs, if the salary doesn't prevent their debts from
> growing. Social workers in Iceland told me that their main challenge
> was to persuade indebted people to be more active. Organisations,
> which help the indebted, often face their apathy. Sometimes they need
> to go as far as to give orders to their clients, so that they would
> take a few simple actions and reduce their debt with the use of
> available knowledge. Unfortunately, often only giving clients orders
> helps to restore the debtor’s hope that escaping debt is possible.
>
> Not all indebted people go to social assistance institutions. Some
> commit “heroic” deeds under the influence of their debts; i.e. actions
> that exceed existing social norms. This makes it even more difficult
> to perceive the problem of debt from more than an individual
> perspective. One such spectacular heroic deed in Poland was an
> indebted catholic priest robbing a bank (Kącki, 2010). It was
> controversial, because he subordinated many social norms to the
> obligation of repaying his debts.
>
> DEBT AND EDUCATION
> Graduating from university, both in Poland and Iceland, increasingly
> results in debt. In the global context, subsidising student loans by
> the state was supposed to soften the consequences of fees at
> universities worldwide. The contribution of the state to student loans
> differs between countries (Shen & Ziderman, 2008). Only some
> countries, such as Denmark, provide students with real scholarships,
> which are enough to survive. Fees at universities differ as well, and
> once introduced, they tend to grow (Handley, 2010; Shepherd, 2010).
> One of the effects of state subsidies is specifically the
> impossibility to distinguish loans from scholarships. Eventually, even
> people who were raised to be cautious with borrowing money decide to
> live under long-term financial obligations. The “profitability” of
> student loans seems to be functional for the contemporary capitalist
> order and this function is pedagogical. Subsidised credit “tames”
> young people for the financial system and simultaneously overcomes
> their cautiousness towards “living on credit”. Student loans tend to
> be perceived as an additional income and some student organisations
> protest when the loan is too little to survive. When students in
> Iceland realised that there would not be enough summer jobs for them,
> because of increased unemployment, their organisations started
> lobbying for loans during summer holidays and summer courses to
> support their claim.
>
> Being aware of long-term obligations changes students’ behaviour – the
> decision if they should do postgraduate study becomes a matter of
> financial calculation. Previous research shows that debt prevents
> people from further studies, at least in the USA. They also seem to
> influence the decisions of females more than the decisions of males
> (Davies & Lea, 1995; Fox, 1992). People calculate how much education
> they can afford. Thus, debt can have its role as a mechanism
> regulating the number of students at universities.
>
> Debt is not a side-effect of education any more, but instead it became
> its primary condition. Thus, Jeffrey Williams (2009) claims that debt
> needs to be understood as a central experience for students and he
> enumerates 6 lessons which form “the pedagogy of debt”. Firstly, debt
> teaches that education is only a consumer service. Secondly, it
> teaches to choose career paths which enable people to pay debt back.
> Relatively low interests rates and a long time to pay the debt back
> (in comparison to consumer credits) allows students to ignore the
> significance of starting their career “in the red”, but the necessity
> of paying regular instalments makes it difficult for graduates to look
> for alternative or less commercial career paths. Thirdly, debt creates
> a world-view, in which everything is exchangeable on the market.
> Fourthly, it changes the notion of the citizen by redefining the
> social contract into an obligation towards financial institutions,
> which in return enables the indebted citizen to subscribe to public
> services. Fifthly, debt teaches only one value – that the basic
> dimension of other human beings is their financial potential, i.e. how
> much debt they can carry. Sixthly, debt teaches a very specific type
> of sensitivity. It is based on the fear of losing one‘s job or health
> (Ehrenreich, 1989), which would lead quickly to insolvency and
> subsequently to the financial ruin and social degradation of one's
> family. It is too early to say how effective this pedagogy is, but it
> is important to observe these lessons.
>
> DEBT AND ENSLAVEMENT
> People in debt are not always poor in a way that would allow social
> workers to help them. Both in Poland and in Iceland, support from the
> social security system is restricted to those who have a low income.
> Poverty occurs, however, when indebted people pay instalments before
> satisfying all other needs. It is not always possible to secure a
> sufficient amount of money to survive, since paying debts is
> considered by some a question of honour and respect for oneself. Apart
> from that, people are afraid not to pay their instalments on time,
> since then their debt could rapidly grow.
>
> In Poland, the reason for rating obligations towards banks higher than
> an obligation towards friends and relatives comes sometimes from the
> psychological terror which debt-collecting departments organise for
> debtors, with the use of communication networks. Sending letters and
> text messages "reminding" the debtor about a delay in paying the debt,
> as well as about the consequences for this lack of discipline; calling
> the debtor and using manipulation techniques in the conversation; or
> even using automatic machines for the conversation with a debtor – all
> this contributes to an enormous level of stress experienced by people
> who have problems with paying their debts, and, as a consequence, also
> problems in judging their own situation. To show how frequent the
> reminders from banks are, I would like to give an example of a suicide
> from an article „Ukredytowany” [Credified = the combination of the
> words credit and crucified] by Joanna Blewąska (2010; p.3): "He
> received text messages every half hour from many different banks. He
> made a mistake, he got involved in a dangerous spiral. But the banks
> were harassing him. Could they have hoped that he would find the money
> in half an hour? No. It was just to terrorise him!”
>
> Another interesting issue related to debt is the so called “working
> off” the debt, that is, working for the creditor and paying the debt
> this way (Servet, 2004). This kind of deal gets only positive comments
> in the Polish media (Mikulec, 2010), even though it can easily lead to
> enslavement. Today, working debt off needs the debtor's consent and
> involves mostly housing co-operatives. However, it is slowly spreading
> to schools that collect fees (Stańczyk & Płoskońska, 2005; Szumer,
> 2008). However, we can already read that one can work the debt off for
> another person (Moritz, 2009). It does not need much to imagine
> grandchildren working off their grandparents' debts. The occurrence of
> this new servitude can grow, especially if it is not possible to pay
> the debt off and the work lasts forever.
>
> DEBT AND RESISTANCE
> Since debt is related to freedom, debtors sometimes demand political
> representation of their interests. In Poland, a spectacular example of
> such a movement was the farmers' labour union and then the political
> party called “Samoobrona” [Self-defence] in the 1990s. Its first
> members were farmers who got into the so called spiral of
> indebtedness. They were constantly endangered by debt collectors. The
> financial and legal situation of the first victims of the new banking
> system in Poland forced them to seek political representation. In
> Iceland, on the other hand, indebted people were mobilised into social
> movements and organisations during the financial crisis. One of these
> organisations was Hagsmunasamtök heimilanna [Iceland's Home
> Coalition], which organised a pay-strike on all mortgage loan
> payments. Starting political campaigns in order to influence an
> organisation or a country – by giving Voice – is after Albert
> Hirschman (1970) seen as a symptom of loyalty to the structures one
> would like to change. The loyalty is probably forced upon individuals
> by the fact that they are not able to act more radically (e.g. because
> of their age) and leave the place (an organisation or a country),
> where they suffer from injustice.
>
> The strategy of Exit, considered by Hirschman as an alternative to the
> strategy of Voice, is also a traditional reaction to indebtedness.
> David Graeber claims, in an article introducing his book “Debt: The
> First Five Thousand Years” (2009) that already in the ancient Sumerian
> empire, debtors were leaving cities in masses, in order to lead a
> partially criminal nomadic lifestyle far from the power that could
> enslave their family as a result of their unpaid debts. Exit strategy
> is nowadays used by 20,000 student debtors from Sweden. They refused
> to pay their debts and disappeared (probably left the country). The
> Swedish agency responsible for student loans tries to trace them
> internationally to get back the money estimated to be about 340
> million dollars (Simpson, 2009). Even though today personal bankruptcy
> does not lead to slavery, but usually to a long social exclusion from
> the banking system and other spheres of life, still one of the
> reactions to the growing personal indebtedness in Iceland was
> emigration (in 2009 for the first time in Icelandic history more
> people left the island than came there and were born).
>
> Debts were also an important reason for many Poles to come to Iceland
> before the crisis. On the one hand, some came to work in Iceland and
> earn more money than in Poland, so that they could pay their debts
> back home. On the other hand, many migrants that I managed to talk to
> came to Iceland in order to avoid having debt. They were so unwilling
> to buy flats, cars or other things with the use of loans, that they
> were ready to leave their country of origin in order not to have these
> obligations.
>
> FINAL NOTES
> To conclude, in the context of the financial crisis indebtedness means
> a significant driving force for people in Iceland. However, debts do
> not necessarily mean poverty. People get into debt for various
> reasons, but in general they do it to improve their lives. However, in
> this paper I tried to present how debt could appear and grow
> independently from loans and how it can make debtors' lives miserable
> and impoverish both themselves and their relatives. Indebtedness makes
> all social differences and inequalities more severe, because it
> exposes people to power. Debt can be collected by the use of
> legitimate violence. People seem to be aware of their vulnerability
> and therefore there is a relation between debt and migration.
>
> Exploring fields where debt can occur and influence human behaviour
> and living conditions was aimed to start a discussion about the new
> neoliberal subject – an indebted human being. It is a heroic
> personality – either extraordinary active or extraordinary passive.
> These new subjects are both encouraged to debt and blamed for it.
>
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>
>


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