Category Archives: student debt

The Debt-Prison System

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Debt is prison. Few debtors, whether dealing with students loans, credit cards or mortgages, would disagree I imagine. By this phrase I intend not a metaphor but a description: debt is a systemic way to limit options, impose unfreedom and sustain the unfree labor market on which capitalism depends. In the United States, this debt-prison system is necessarily intertwined with what Angela Y. Davis calls the post-slavery prison-industrial complex. Resisting debt servitude in this country is a central part of extending and completing the Civil Rights movement.

The old face of the new refusal

This is a proper concern for Occupy for any number of reasons. As I mentioned a while ago, Wall Street was the site of New York’s slave market. Combine that with its role as a barrier against the indigenous population (hence the name) and as a site of financial speculation and we begin to understand what the symbol “Wall Street” really means. So while what I have to say here may sound like a history lesson, it’s very much a history of the present that enables us to see what how high the stakes are in the apparently technical problem of student debt.

Transatlantic slavery was a system dependent on debt financing. The slavers borrowed money for the costs of the voyage and the trade good they exchanged for human property in Africa. These goods were far from worthless and developed into a money form based on copper. The enslaved were purchased by American planters buying on credit. It was only with the sale of the products of the plantation back in Europe that true profit entered the system.

But this profit was spectacular: a ship called the Lively left Liverpool, England, in 1737 with cargo worth £1307 and returned with £3080 in cash plus a cargo of sugar and cotton. In short, a profit of at least 500%, unavailable anywhere else in the early modern financial system. Don’t take my word for it: here’s Adam Smith, inventor of the concept of the market in his 1776 Wealth of Nations: “The profits of a sugar plantation in any of our West Indian colonies are generally much greater than those of any other cultivation that is known.” Haiti was the wealthiest place on the planet when its revolution began in 1791.

Just as the factory system described by Marx was not participated in by anything like a majority of workers but was typical of its time, the slave system was the hallmark of American capitalism. Today I would argue it’s the debt-prison system that marks out the peculiarity of the United States. Debt servitude, racialized segregation and mass incarceration of those so racialized are thus the true American exceptionalism–while debt is central to capitalism worldwide only in the United States do we have such a peculiar and networked system of debt as racialized punishment.

US slavery persisted much longer than in Europe, as we all know. At the outbreak of the Civil War, the enslaved enacted a general strike against slavery in which half a million people moved away from plantations to the North. The South claimed that millions of its capital were, so to speak, contained and hence “lost” in the bodies of the enslaved in 1863. The period known as Reconstruction (1865-77) was a struggle by the formerly enslaved to escape being, as it were, recouped by the planters into the debt-prison system. In so doing, the freed used many of the tactics we continue to deploy today from occupying to marches and strikes. It failed because of a Wall Street real-estate speculation crash that produced the typical binary form of US racism in its wake.

The freed claimed their own land to farm. If the Freedmen’s Bureau would not give it to them, they occupied it. The concept was simple: a small group of people would create sufficient food for themselves and a surplus to trade with. It was a sustainable anti-poverty system that did not rely on wage labor. But as David Graeber puts it:

It is the secret scandal of capitalism that at no point has it been organized primarily around free labor.

The idea that the freed would work freely was abhorrent to the planters and to Northern capital alike. Instead, they were to be compelled to work for their former owners.

All the new labor systems that were developed to this end were, as Angela Davis puts it, “dramatic evidence of the persistence of slavery.” That is to say, share cropping, tenant farming, the scrip system and the convict lease system of imprisoned labor all depended on a new series of connections between debt, labor and prison. Share cropping meant that the farmers were entitled to a share of the crop they produced, usually a third. However, as this meant they were paid only once a year, they had to make purchases on credit for the rest of year at the notorious crossroads or company stores. Very often the annual payment would not cover this debt meaning that the sharecropper could never escape the land. In fact, wage laborers were often not paid in cash but in scrip, a paper form allowing you to buy things at inflated prices in the company store.

Even this labor was too expensive for the planters. So the new Black Codes passed in the South after the Civil War criminalized minor financial transgressions. In Mississippi any person who “handled money carelessly” could be declared a vagrant and imprisoned. Simple theft, whether of bread or an animal, was turned into a felony and those convicted were imprisoned. The new African American prisoners were turned into a virtually free labor force by the convict lease system in which employers could use convicts to work for almost nothing. Even today, the University of California gets its office furniture from prison workshops.

The freed resisted these innovations. In South Carolina, the legislature attempted to borrow money to buy land for the freed. Wall Street would not buy their bonds. The laborers organized and called strikes for waged field labor. In Louisiana, workers refused to labor for their former owners, organized and marched. One freed organizer named John J. Moore testified that planters said  to them: “if you do not let politics alone you will get killed here.”

But in 1873, Wall Street crashed, having speculated wildly in railroads and real estate. It took down the Freedmen’s Bank and with it about $3 million of deposits made by the formerly enslaved. Emboldened by the crash, known then as the Great Depression, planters reduced wages where they were paid, as in Louisiana, from $18 plus food to $13 only a month. When the Hayes-Tilden compromise withdrew Federal troops from the South, the political gains of Reconstruction were rapidly overturned and the convict lease labor system swung into full effect.

Even now, the freed were not willing to give up. In 1887, a major strike on the sugar plantations of Louisiana was repressed only by armed force, in which about thirty strikers were killed and hundreds injured. Although the strikers came from all backgrounds, the planters defined them as “black” and themselves as “white.” It was three years later that the “Separate Car Act” enforced racialized segregation on trains in Louisiana, leading to the infamous 1896 Plessey v. Ferguson case at the Supreme Court that declared “separate but equal” facilities to be legal.

In short, the debt crisis that has generated over one trillion dollars of student debt, $700 billion in credit card debt, 4 million foreclosed homes, 6 million other homes in danger of foreclosure is part and parcel of the system that has placed over two million people in jail.

The consequence is simple and challenging: there will be no making the debt system better, or less burdensome. Even today, sub-prime lending was reported to be on the rise again. Graduate student loans accrue interest immediately as of next year so that someone working on a PhD will have eight years of interest at a minimum of 6.8% by the time they graduate. Debt is so central to what we are trying to occupy when we Occupy Wall Street that it cannot be separated out.

I do not think this is depressing but rather it shows that Occupy continues to advance our understanding of the tasks that lie before us. It should be remembered that it was once said to be impossible to abolish slavery, and not long ago it was supposed to be inevitable that there would always be segregation. It’s not inevitable that we agree to live in debt, accept debt as our punishment for not having been born wealthy and apply for opportunities to get more and more in debt. The first step is refusal, which is why the new slogan going the rounds is Bartleby’s rejoinder to a Wall Street banker:

I would prefer not to.

Me too.

Student Debt Crisis Intensifies

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Student demonstrations in MontréalThe new refusal of the student debt crisis first evidenced by the Occupy Student Debt Campaign appears to be spreading and to have good cause. Student strikes are shutting down Montréal, while new evidence makes it clear how serious the crisis is now and how it is going to get worse soon.

In Canada, Quebec has proposed doubling tuition over the course of the next five years. As it currently stands at roughly $2500, state authorities claim that tuition will still be lower than in other states and affordable. Students counter that nonetheless lower-income students will be deterred from college and that once the idea of substantial increases is conceded, they will become the new normal. Their resistance today has included shutting down the port of Montréal and a demonstration that even the media concede is around 100,000.

People there have obviously looked to the American situation. The Federal Reserve Bank of New York has released a report giving striking new data showing both U. S. student debt and rates of delinquency reaching new highs. Unsurprisingly students have concluded that either tuition comes down or they will stay away.

According to their calculations, student debt is now at least $870 billion, the largest category of personal debt in the country, surpassing both the total credit card balance ($693 billion) and the total auto loan balance ($730 billion). This was already known but their analysis breaks it down further. $580 billion of the total student loan debt is owed by people younger than forty. About one million people owe more than $100,000. By excluding those people currently in deferral because they are still in education, it can be seen that 27% of debtors are either behind payments or in default.

That percentage is set to increase still further. The Obama administration has changed the regulations so that new federally subsidized graduate student loans will incur interest while a student is still in school as of July 1, 2012. As those loans currently attract 6.8% interest, a student in school for the six to nine years it takes to acquire a doctorate would find their loans had ballooned before they had even graduated.

For a long time universities have believed that they are immune to all protests for two reasons. Student debt is the most secure loan available, one that cannot be mitigated by bankruptcy, unemployment or old age. Loan companies can and do garner Social Security. Combined with what administrations believe is the unquenchable desire and need to gain degree qualifications for work, this security has given universities the confidence to raise tuition to the current levels.

Now the first sign has come that students are no longer lured by the Pied Piper of the career path. Applications for the Law School Aptitude Test, required for admission to law school, dropped by 16% this year. The combination of insane debt and 40% unemployment amongst newly-qualified lawyers was enough to deter nearly a fifth of potential candidates. What if other students are thinking the same way? High tuition schools without an endowment to back them up will become the Lehmanns and the Bear Sterns of the student debt bubble.

If we decided that higher education was “too big to fail,” it would cost $70 billion a year to make all public higher education free. Once that would have seemed like a lot of money. After the last few years, it seems like the bargain it is.

 

 

The Out of Control Society

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The disciplinary society of enclosed spaces known as school, army or work has largely collapsed under the assaults of neo-liberalism. What is becoming clear is that the society of control that was imagined to be its replacement is getting out of control.

Permanent school in the form of life-long training was the society of control: now we have debt out of control, and machines to do the labor. Permanent prison was to replace the panopticon but society can no longer afford it. The permanent counterinsurgency has collapsed into a brutal necropolitics–the right to determine who shall be killed.

Debt was today discussed in genteel terms on the New York Times editorial page. The Times found it “welcome” that Mount Holyoke has frozen its price of attendance at a trifling $53,000. Sewanee, the University of the South, has reduced costs to “lure” students with a mere $44,600 charge, to be kept constant for four years.

On the facing letters column, the President of Sarah Lawrence, the most expensive school in the country, suggests that with grant aid her institution can be an “affordable choice” if “educational value” is factored in. In short, financial aid is another form of privilege. It’s been widely noted that for many students Harvard can be less expensive than the California State system, which was designed to cater to working- and middle-class students.

Less well-heeled institutions have stopped bothering to pretend. The University of North Iowa Regents today approved cuts, reported to involve closing its Physics department, among several others, as well as a Lab School and its museum. 30 tenured and tenure track faculty will be dismissed.

Yesterday came a spectacular declaration of the collapse of global counterinsurgency into sovereign assertion of the right to kill. Attorney General Eric Holder claimed:

Some have argued that the president is required to get permission from a federal court before taking action against a United States citizen who is a senior operational leader of Al Qaeda or associated forces,” Mr. Holder said. “This is simply not accurate.”

This is, to the contrary, by any standard out of control. If the Bush administration had said this, we would all have gone crazy–and maybe run for President on the idea of restoring the rule of law.

Let’s consider how Deleuze defined the society of control in 1990:

The operation of markets is now the instrument of social control and forms the impudent breed of our masters. Control is short-term and of rapid rates of turnover, but also continuous and without limit, while discipline was of long duration, infinite and discontinuous. Man is no longer man enclosed, but man in debt.

It is possible, then, to claim that the rapid change of direction we are seeing is simply an intensification of the society of the control. Deleuze did note that universities would abandon research and education would become corporate throughout. However, it seems now to read better as

Debt is continuous and without limit.

It was striking for ,e to see how often the closing phrase of my preceding post on debt was cited on Facebook and elsewhere:

The most dangerous idea now might be this: it’s not worth paying for college because there are no jobs anyway and no job that you want would pay you enough to service the debt.

As I reflect on this context, it seems that being dangerous means taking the fact that everything is out of control as a starting point.

In the era of the emerging disciplinary society, such people were called visionaries or prophets, like the Digger Gerard Winstanley, who saw that the “earth was a common treasury for all” in a 1649 vision during the English Revolution. So he and some companions went and occupied St George’s Hill in Surrey. They called for what has been called a “general strike” against waged labor and for communal living. The Army and the gentry soon put an end to all that. Their heir was the far better-remembered “prophet against Empire,” William Blake, who railed against “One King, one God, one Law.”

As if to remind us that this is no longer the age of prophecy, Mark Butterworth’s play Jerusalem has been running on both sides of the Atlantic since 2009, although it opened in New York in 2011. The play is a lament for the passing of a certain possibility, shrouded in mythic Englishness by being set on St George’s Day in rural Wiltshire with a lead character called Byron. Johnny Byron. Johnny occupies a patch of common land, like a latter-day Digger, except that he deals in drugs and his trailer acts as a hang-out for the local marginal population.

Mark Rylance as Johnny Byron in "Jerusalem"

His encampment was an Occupy in all but name and the action begins when it becomes one, because a local real estate developer plans to turn the land into a sub-division (in US terms), so Rooster (as he is known) is served an eviction notice. These themes, like the English flag and the song “Jerusalem,” are not without clear overtones of white nostalgia for empire. The play ends in such a way that you either have to assume that Rooster is sleeping with a teenager or that her brother has been abusing her. It’s the dangerous supplement to the good old Oedipus complex that has been the stuff of drama for so long.

What Jerusalem was not was a revival of the prophetic voice–most critics talked about Shakespeare not Blake, lat alone the poet Byron, a reference they all seemed to miss. Nor did it in fact prophesy Occupy because the overwhelming majority of sites were urban, not rural, such as the long-lasting Occupy Bristol, closest to Wiltshire.

What’s dangerous about rejecting even the out of control society is very clear to people–that you risk giving up the one chance you might have, however attenuated, to break out of your social strata. US social mobility is amongst the lowest in the overdeveloped countries. At the same time, the chance of being perceived as a prophet, as opposed to an out of control homeless person, is too low to mention. In Terence Malick’s odd film Tree of Life, the only prophet that could be evoked was Job, whose sufferings at the hand of an apparently malign deity ring somewhat truer than stories of redemption.

The religiosity is the problem. Where messianism once offered a counterpoint to law, it scarcely does today in the evangelical US, where being Christian is a requirement for office every bit as strict as the shariah of Iran.

It’s the anarchic streak implied by “out of control” that now rings true from Rosa Luxemburg to Winstanley and Occupy–“no god, no master.” It’s perhaps the least commented on feature of the movement and it’s most dangerous one: not just out of control but a rejection of the desire to be controlled.

 

 

Abolition (Free, Open) Education

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If debt refusal becomes a point of self-affirmation, what then happens to education? The tactical answer is the common sharing of education in non-hierarchical institutions, as part of the strategic goal of creating free public education from pre-K to PhD. Yet this goal of abolition education since Reconstruction has always been undermined by debt. What’s so important, I think, is the emerging possibility of discussing this as a collective failure rather than as a set of individual problems.

Abolition education was forged by Reconstruction. Du Bois highlighted the complementary actions of the newly elected South Carolina Convention in ending imprisonment for debt and creating free, public education. While they complained mightily about their “loss” from the abolition of slavery

usury laws had been repealed by the planters in 1866, and interest rates rose to 25 and 30 per cent. Banks commonly charged from 18 to 24 per cent.

Nonetheless, South Carolina committed itself to creating public education by means of an annual levy on all property and a poll tax. The reason was clear: for the first time, those without property were making decisions. Twenty-three out of 47 white delegates and fifty-nine of the 74 African-American delegates paid no income tax. In our own time of millionaire representatives and billionaire financing, this seems scarcely credible.

The “free common school system” was in place by 1868 and made permanent in 1870. Perhaps not entirely by coincidence, Wall Street financiers refused to back South Carolina bonds in 1868. Finally, with interest rates of between 15 and 20 per cent, bonds were issued, driving South Carolina into over $20 million of debt by 1871, at least half of which was payment of interest, a situation enabled, wrote Du Bois, by the

financial graft of Wall Street and its agents, made possible by the slander and reaction of the planters.

Debt has never been a separate question to public education in these not-so-United States.

On my way downtown for an Occupy meeting today, I looked up at the subway ads–no less than four for-profit “colleges” were advertised at my end of the car. These institutions like ASA College, Professional Business College and the Grace Institute are outside the research universities discussion about humanities versus STEM subjects: all degrees are vocational. That does not mean they are cheap: ASA expects tuition to be about $12,000 a year and total costs to be about $30,000 a year, according to its own website.

While this debt is, then, being imposed on people as a structural requirement for work, we still can’t ask people to renounce the formal structures of education: it’s going to be a process. Much of that might involve rethinking how we got here in the first place. Today I saw a discussion between the artist Deborah Kass and the young artist Amy Lincoln that highlights these issues:

Ms. Lincoln: …I don’t like the stereotype, the bohemian idea. We’re definitely very career-oriented. You have to be serious about spending time in the studio. You have no free time. You never have the day off…I know a lot of people who have to work a lot because they’re paying off a $30,000 student loan.

Ms. Kass: I didn’t get an MFA. I didn’t have a student loan. We expected our parents to pay for college.

Ms. Lincoln: We all got MFAs and the art market was booming. You could get picked up by a gallery at a student show. We had really high expectations. Now, there is so much angst over, “I want to be showing at such-and-such gallery, and this curator called but then I never heard back….”

Ms. Kass:I didn’t have any expectations. What you expected didn’t exist yet.

For all her debt, Lincoln sells work for between $300-700 in Bushwick where she lives. There’s no disgrace in that, far from it, and it’s interesting that in the short discussion, Lincoln doesn’t question her choices.

By contrast, J, the PhD student who I mentioned yesterday as being saddled with scary debt, wrote to me:

I used to have trouble sleeping at night because I was afraid that they would bring back debtors prisons … and hating myself for having taken out loans. It’s taken me a while to wrap my head around it and to decouple the value and necessity of education from the burden of the debt, and to see that debt structurally.

Here we see the full wisdom of the OWS slogan highlighted by McKenzie Wark: “Shit is fucked up and bullshit.”

Interim tactics: consider learning, or teaching, at free, open institutions like The Public School, OWS’s own OccU, or following courses by using free syllabi provided by institutions like MIT. If you teach, allow people to audit, sit in, podcast and live-stream. If you write, make it available free by open access means (you can publish it as well, of course, if you can find a press that will give you rights to your own work: and good luck with that).

I know people can’t learn how to be doctors like this and that’s why this is a tactic. Let’s also remember actions like those of the South African Students Movement in 1976, who refused to participate in the apartheid school system and set in motion the collapse of the regime. At the same time, many individuals deprived themselves of education to make things better for others.

So it is heartening to see the success of Chile’s high school students who did not walk out but occupied their schools:

“The assembly is the control center,” Cristóbal explains. “All students participate and at times it’s open to teachers. We have watch duty and volunteers come in to make meals. Teachers teach, but they also learn from the students. At the beginning we had classes subject by subject, but later we saw that parceling out knowledge wasn’t the real way to learn, and we all got together for each subject.”

The high school system is the key to an abolition education in the Americas. Here in New York the high schools are more segregated than they were before official desegregation. There was official celebration last week when admissions to the city’s selective high schools produced a class that is 6% African American and 8% Latin@–in a majority minority city. Behind that failure lies the still-greater disaster of data-driven quantification of education as a standardized test score result.

From Chile to South Africa and South Carolina, the impetus to a free, open public education is clear and elusive at once. Perhaps it’s no coincidence that Arizona has banned the teaching of Paulo Freire’s classic The Pedagogy of the Oppressed. We might want to begin by re-reading it, assigning it, making free copies of it, and discussing it at Occupies everywhere.

Endebt and Punish

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William Hogarth, "The Rake's Progress"--in the Fleet Prison for debt

Yesterday the M1 student march in New York stopped for personal and institutional histories. On three occasions people I’m working with at undergraduate, MA and PhD level recounted how debt has deformed their lives. I used to say that in academia one at least did very little harm. Now I feel like a pimp for loan sharks.

The accounts moved from an angry and articulate sophomore via an MA, who is teaching three adjunct jobs to keep up her payments, to a PhD candidate looking at 30 years of repaying $800-1000 a month. Hearing such stories one after another made it seem structural: the further one advances, the greater the debt and so the greater the pressure to conform.

The graduate students both spoke about wanting to stay in education, while not being sure that they could afford the profession. It’s the contemporary Student’s Progress, which, like a modernization of Hogarth’s Rake’s Progress, does not so much end in debtor’s prison as begin there–only it’s the “soul” that is imprisoned, not the body.

I started to think that debt was parallel to the transformation of the legal system over time. If Foucault taught us to think of early modern corporal punishment being transformed into modern discipline in the nineteenth century, Angela Davis has supplemented that analysis with her description of the prison-industrial system. Thus the penitentiary was instituted in the aftermath of abolition both to control and contain the free African population and to create lend-lease minimal cost labor to replace chattel slavery. The binary turns out not to be as simple as we had thought.

So we might think to map a parallel and intertwined structure for debt. In the early modern period, common people were hanged or otherwise punished for minor debt and theft. Those of higher social rank might find themselves incarcerated in the Fleet prison–bankrupts and those charged with contempt of the courts of Chancery, Exchequer and common pleas were not the working classes. Violent crime and theft was the province of the Court of the King’s Bench and the Assizes. The Fleet therefore usually contained only about 300 inmates, many of whom were well-known. It was closed in 1844, while imprisonment for debt was abolished in 1869.

This apparently Foucauldian pattern needs complicating. As David Graeber points out in his brilliant Debt, the violent punishments against debt crime were rarely enforced in the late Middle Ages, which is not to say there was no bad feeling:

the criminalization of debt was the criminalization of the very basis of human society. It cannot be overemphasized that in a small community, everyone normally was both a lender and a borrower….[C]ommunities, much though they are based on love, in fact because they are based on love will also be full of hatred, rivalry and passion.

The innovation of the “market” in the late eighteenth century was to challenge the possibility of such intertwined community by creating a new self-love, to quote the most famous passage of Adam Smith’s Wealth of Nations (1776):

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves not to their humanity but to their self-love.

Graeber shows that the concept of self-love, or self interest, creates a new hybrid: a singular “self” that owes nothing except to itself; and “interest” that is paid to that self, now registered as “love.”

We might see Bentham’s Panopticon as a machine for the production of such self-interested operatives. For it was intended to function as well for the manufactures, or factories, as it did for the prison or asylum. Writing in the Panopticon Letters (1788) a decade after Smith, Bentham noted of Panoptic surveillance: “Each person should actually be in that predicament, during every instant of time.” If I follow Graeber’s suggestions correctly, we should as much stress the singularity as the permanence: it is the process of breaking up mutually-endebted communities and the subsequent production of self-interested individuals with singular debts.

With the end of the reforming Panopticon around the same time as the resurgence of financialization (c.1975-81) has come a new configuration: the individual is “locked into” debt from the earliest age. If this debt is centered around education, it is more likely to apply to middle and upper-middle class children, who may have college savings plans created for them at birth or before. This debt is now the largest sector of consumer debt in the US economy at about $1 trillion, and it is regarded as highly secure because you cannot declare bankruptcy on student debt and agencies can even garner debtors’ Social Security.

What has further changed is the transformation of the equation of interest and love into what I think we want to call hate. It’s not enough to make sure most graduates have their lives locked into debt before they even graduate. Everyone has to suffer.

When I was in Arizona recently, I heard about a proposal from the Arizona State legislature to require even students who have full scholarships or grants to pay at least $2000 in tuition. Here’s the legalese (in blue block capitals on their site):

each student who is a full‑time student enrolled at a university under the jurisdiction of the Arizona board of regents in fiscal year 2012‑2013 shall personally contribute at least two thousand dollars during the academic year for tuition.  A student may not use any other source of public or private funding, including grants, gifts, scholarships or tuition benefits or other types of funding administered by or through a university or an affiliate of a university, to reduce or eliminate that student’s contribution.

What is the motive of this “personal contribution”? Last night I happened to see a production of Brecht’s classic play Galileo. It begins by stressing Galileo’s debt. His need to repay his debt leads him to leave Venice and venture into the monk-controlled regions of Italy. When his decentering astronomical discoveries imply a different social order than the Bible-sanctioned control of the nobles, he recants under the threat of the Inquisition’s torture, ending his days in a physically comfortable prison of the soul. He ends as he begins, locked into a system that only debt can supply.

If debt is a means to teach you to hate yourself, it is also and equally true that the imagination is dangerous. Ideas can overturn social order. The most dangerous idea now might be this: it’s not worth paying for college because there are no jobs anyway and no job that you want would pay you enough to service the debt.