A brief history of the politics of debt

There can be little doubt that thinking through the problem of debt and the related experience of indebtedness has become central for understanding social, economic, political, and cultural conditions in the early 21st century. Following the 2007-08 financial crash, consequent credit crunch, and subsequent turn to austerity in many of the world's major economic powers, the apparent need to ‘balance the books’ and ‘live within our means’ in a world characterised by low economic growth has pushed the problem of unsustainable public and private debt centre stage. Against this backdrop, indebtedness and financial and economic insecurity have become a kind of ‘new normal’ for many people. In the UK, where economic growth has been largely based upon consumption, borrowing, and financial innovation since the 1980s, government plans to cut public debts have pushed private, household debts in the opposite direction, with the result that the ratio of personal debt to GDP is heading back towards levels seen in the boom years before the financial crash, when there seemed to be no end to what one could borrow (Inman and Barr, 2017). Given economic uncertainty and insecurity, however, current rises in household debt cannot easily be explained away in terms of a reckless desire to consume based on a belief in endless growth and wage increases, but rather reflect the problem of ‘making ends meet’ in an economic situation defined by sluggish productivity and increasing prices. This is, of course, not simply a British problem, though my own experience of living in an society defined by indebtedness has undoubtedly shaped my understanding of what being in debt means and how it impacts upon social life. The US has similarly grown its economy on the back of consumption and consumer debt in recent years in a way that now seems largely unsustainable. The situation is similarly problematic in Canada, where household debt has rapidly increased on the basis of a property boom which has pushed house prices to record levels in urban areas (Inman and Barr, 2017).