Since the 1990s, a mounting number of people living near or below the poverty line have become increasingly reliant on expensive consumer loans to either replace and/or augment their wages to pay for basic subsistence needs, such as groceries, rent, education, health bills, and so forth. Under the aegis of financial inclusion strategies, a highly lucrative and rapidly expanding business aimed at lending to the poor—or, what might be characterised as the poverty industry—has emerged alongside the growing marginalisation and social insecurity that characterises many countries.
A core aim of my book Debtfare States and the Poverty Industry: Money, Discipline and the Surplus Population is the desire to interrupt and interrogate dominant tropes such as financial inclusion and the democratisation of credit in a way that facilitates a more rigorous and complete explanation regarding the origins of power, social transformation, and the reproduction of monetised relations of debt that populate the poverty industry.
Put another way, drawing on a Marxian approach, I seek to explain how and why the configurations of class-based power has extended and deepened the privatisation of the commons through monetised relations as well as normalised an overarching policy preference for hyper-individualised and marketised forms of self-help for under- and unemployed workers, or what I, drawing on Marx, refer to in the book, as the relative surplus population.
The main argument is that increasing reliance of the working poor on credit (or, a more political articulation of the same phenomenon—privately created money) is a construction that has been facilitated, mediated, and reproduced—often in complex, uneven, and contradictory ways—by powerful capitalists and neoliberal states, particularly new forms of governance, captured by what I refer to as debtfarism.
I advance this thesis in two main phases. First, I develop a historical materialist framework that incorporates and elaborates on three key concepts: money, credit and debtfarism to complement the relevant debates about financialisation, financial inclusion and consumer studies literature. Second, apply this approach to concrete studies of the various facets of the poverty industry such as student loans, credit cards, and the payday industry in the United States as well as micro-lending and sub-prime housing in Mexico. Below, I elaborate briefly on the reasons for my choice of the United States and Mexico as sites of investigation into the poverty industry. Before doing so, I would like to highlight two key features of my conceptual approach upon which my argument rests: the social power of money and debtfarism.
My motivation to employ the social power of money as my theoretical foundation arose out of the analytical limits in the existing debates—both critical and mainstream—on consumer credit. Due to space restraints, I will restrict my discussion of these weaknesses to two points. First, in many debates about debt, scholars have been content to relegate the meaning of money and credit to economists. As such, money is largely viewed as ‘given,’ that is, neutral and technical things that are regarded as economic categories. But also, in doing so, theorists of financialisation, financial inclusion and consumer studies merely graft on social and cultural meanings to fetishised understandings of money. This oversight means, among other things, that revolutionary power of money remains uncontested and unexamined.
Second, in much of the literature on consumer debt, money and credit are largely studied solely in the realm of exchange, where alone, Marx warns, Freedom, Equality, Property, and Bentham rule. One result of studying debt solely in the realm of exchange is that it locks one’s analysis in an artificial separation of the nature and role of money and privately created money from the wider dynamics of, and tensions in, capital accumulation, particularly one of its contemporary hallmarks, namely: realising value (i.e., in the form of interest) without producing it. Remaining solely in the realm of exchange also facilitates a representation that individualised debtors voluntarily enter ‘the financial’ devoid of any historical consideration of structural constraints and silent compulsions. The exclusive focus of money and credit (and monetised debt relations) in the realm of exchange also facilitates the illusion of power of things and abstractions (e.g., interest rates and credit scores) over people, especially the growing number of surplus workers.
Taken together, these two analytical limits of beginning and ending a study with the fetishised understanding of money (i.e., money seen as a ‘thing’), blinds us to the fact that money, as with all commodities in a Marxian framework, is a historical social relation of power. In the book, I attempt to demonstrate, both in abstract and concrete terms, that an understanding of money as a social relation of power permits us to comprehend that the increasing dependence of the poor on privately created money for survival is neither a neutral nor a natural state of affairs, but instead is a tension-ridden, class-based phenomenon that needs to be continually reproduced and re-legitimated.
The question that emerges at this point is: how is the poverty industry and the monetised relation of debt therein mediated and normalised? My response to this question is neoliberal forms of governance, such as debtfarism.
I develop my concept of debtfarism from rich insights into the governance of marginalised workers in neoliberalism. Loïc Wacquant, for instance, has coined the term ‘prisonfare’ to capture the expanding nature of the criminalisation of poverty as a way of disciplining and warehousing the working poor. Jamie Peck, on the other hand, has drawn on the concept of the workfare state to analyse the commodification and coercive nature of ever-restrictive social welfare programmes.
Prisonfare and workfare are not standalone neoliberal conditions. Instead, they should be understood as vital, dynamic, and overlapping features of neoliberal governance that are rooted in, albeit not determined by, the wider tensions in capital accumulation processes.
In this same vein, I propose that debtfare represents an important feature of neoliberal intervention, which serves to mediate, normalise, and, discipline the monetised social relations that inhabit the poverty industry. More specifically, the rhetorical (e.g., tropes such as financial inclusion) and regulative interventions (e.g., usury law, personal bankruptcy law, and consumer protection law) of debtfarism facilitate both the widespread reliance of the poor on privately created money as well as the extraction of interest and fee-based revenue from social insecurity in the form of the poverty industry.
Through its regulative and rhetorical interventions, debtfarism also helps fill the void of a material pact of the Keynesian Welfare State based on public support for social protection by facilitating the naturalisation of a commodified and highly individualised safety net that is available for purchase on the market. Low-wage, Wal-Mart workers or welfare recipients turning to payday loans to meet healthcare and shelter needs being a case in point.
This tacit social compromise has been rearticulated in terms of safeguarding market freedoms and equality to ensure that all consumers—regardless of their income, or lack thereof—may benefit from standards of fairness, competition, transparency, and accountability. These market standards—which are constantly reframed and guaranteed by debtfarism—are not only continually bounded in the realm of exchange but also bolstered by the seeming neutrality of the legal obligation of debt and the protection of the consumer.
The decision to focus on the United States and Mexico as the primary sites of analysis is driven by a motivation not only to examine the particularities of the poverty industry in both a developed and developing world context, but also to explore the cross-cutting relational factors of the industry writ large. Although the United States was not the first country to embrace neoliberalisation—that dubious honour belongs to Chile under the Pinochet regime—the combination of its geopolitical significance and the fervour with which the state has implemented and defended neoliberalism has thrown the articulations of debtfarism and the poverty industry into stark relief. Because of its geographical proximity to, and thus particular historical relationship with, the United States, Mexico represents fertile ground to study the coercive and ideological features of the poverty industry in the context of a middle-income country.
Through five case studies drawn from the respective U.S. and Mexican poverty industries, I illustrate the broader power structures and strategies involved in the creation and reproduction of the poverty industry as well as the roles of money, the surplus population, and debtfarism therein. Debtfarism and the poverty industry are certainly not exclusive to these two countries, and the theoretical framework of this book is intended to provide a launching pad for the pursuit of future studies in different national as well as scalar contexts. The increasing dominance of credit and the new modes of governance embodied in debtfare are salient, yet undertheorised and understudied, features of neoliberalism. This book takes a modest first step in that direction.
To conclude, my primary objective in the book is to reveal, both in abstract and concrete terms, how debtfarism and the social power of money assists in reconstituting ‘the financial’ as a liberal myth of individualised market freedoms, equality and, democracy, whilst undergirding a key feature of the poverty industry and wider forms of capital accumulation, namely what Marx characterised as the accumulation of money as unlimited social power.
The social, ideational, and material processes that construct and recreate the conditions for the unlimited power of money and the structural violence it continues to wield over an ever growing number of working poor across the globe is where, I believe, radical analyses of the poverty industry and monetised relations of debt must begin, not in the fetishised world of financial inclusion nor with woolly, and largely uncontested, terms like financialisation.