Debt slavery is an ancient institution that traces back to the beginning of Empire. In earlier times, it was more explicit and visible, because it was more personal. The hapless borrower became the bonded servant or slave of the lender—a condition that prevails today in many low-income countries. In the contemporary United States, it is more systemic and less personal.
Indentured service played a major role in the economic history of the United States. During the early colonial period, those unable to pay for passage to the New World agreed to commit to a period of indentured service to whoever was willing on their arrival to pay their debt to the ship captain who provided passage. Many a young woman voluntarily became the wife of whatever man paid the captain’s fee. Once married, a woman and all she owned, acquired, or produced became the property of her husband.
The proper goal is not to make debt slavery safer and more comfortable.
Following the Civil War, blacks were technically free, but whites owned the land and controlled the jobs on which blacks depended for survival. Continuing the imperial pattern, the rights of owners continued to trump the rights of workers as the moneylenders stepped in for the kill. Blatantly unfair sharecropper arrangements forced blacks into debts that became an instrument of bondage only one step removed from an outright return to slavery.
In the period following World War II, full employment and high wages for working people, combined with high taxes for the rich, created the celebrated American middle class. For a historically brief period, debt slavery became a relatively rare condition, at least for whites. Then as Wall Street fundamentalists gained control, they weakened unions and outsourced jobs to create a downward pressure on wages while increasing the use of sophisticated advertising to promote ever more extravagant lifestyles and the use of credit card debt to finance them.
As wages continued to fall relative to the cost of living, Wall Street promoted credit card and mortgage debt as the solution. Some people responded out of sheer desperation to put food on the table. Innocents simply bought into Wall Street’s enticements to consume now, pay later.
People were soon locked into ever-growing debt they could never repay, and Wall Street’s take from whatever pittance they were able to earn increased, as did the total share of income going to those who lived off Wall Street profits relative to those who did honest work. Thanks to Wall Street’s control of the political system, this kind of indentured servitude is mostly not just legal; it is also enforced by a legal system that favors the rights of property over the rights of people.
The proper goal is not to make debt slavery safer and more comfortable. It is to eliminate it by raising the wages of working people and the taxes of the moneylenders while rethinking our approach to meeting a variety of needs to which Wall Street offers itself as the solution.
Abstracted and adapted from Agenda for a New Economy, pp.191-194