The role of debt in both maintaining our economies and creating huge inequalities is explored to good effect, despite some problems, writes Lindy Syson

The government may try to put a positive spin on the economy and claim that economic growth is increasing but James Meadway has shown this is a flawed assessment. In any case, growth since 2008 has continued to be debt-driven, producing a false prosperity and a financial bubble which will only get worse.While bankers continue to pay themselves million-pound bonuses, working people are still working harder for less and falling back on credit to make ends meet.

This debt fuelled economy, or ‘Creditocracy’ is the subject of Andrew Ross’s book. Ross is an academic and activist in the USA who has been involved in debt resistance initiatives arising out of the Occupy Wall Street movement. In Ross’s view the USA is currently a ‘full blown creditocracy’ (p.11), which is his definition of liberal democracy coupled with a heavily financialised economy, where the costs of social goods such as education, health and social care are debt financed.As more responsibility for welfare is privatized and falls to individuals, private debt financing becomes more significant.He also points out that debt, and the austerity measures associated with it, is not only part of the re-structuring of neoliberal capitalism but also exists as form of social control where people are afraid to risk their jobs or are ashamed to ask for help in repaying debt.

This is a challenging and informative book and has many strengths. For example, Ross offers a wide ranging historical and international perspective on the use of debt economically and politically, and its consequences. He points to the role of the IMF and the World Bank and the power of these institutions to act in the interests of the elite rather than working people, and to impose austerity measures that increase immiseration and exploitation.

Ross also gives a clear account of personal and household debt that will resonate with many people struggling to make ends meet. He explains how the banks and financial institutions keep us hooked into a debt system, offering consolidation loans, making it easy to pay off just the minimum on credit cards, which in some cases does not cover interest repayments. He argues that we are all ‘revolving debtors’, never clearing our debts as this would be of no use to the creditor class. Alongside this debt misery for millions, from April to June 2013, US Banks recorded the highest ever profits for a quarter; $42.2 billion. And most of these went to just six banks, including Goldman Sachs and JP Chase Morgan.

It is such appalling disparities of wealth that has led to political disillusionment where the electorate feels that voting will achieve nothing. Ross rejects the current form of representative democracy as being in the sway of big business and thus completely discredited.

A further strength of this book is that it links theory with practical strategies for change. Ross sets out in some detail a vision for the future. It is two-fold. First, it involves debt cancellation or debt refusal, which for Ross is ‘a defensive act of civil disobedience’ (p.23). He cites the legal case for debt cancellation on a world-wide scale as it was taken up by groups such as Third World Debt, the Jubilee South Movement and the Jubilee 2000 movement. Such groups suggest using the tactic of a ‘people’s audit’ to determine what debts are legitimate and should be paid, and what are unfair and should be rejected. However, given Ross’s explanation of the economic and political power of the creditor class it is unclear how effective would be a people’s audit. In any case, multi-national companies are skilled at hiding their billions in off-shore accounts.

Much is made of the importance of moral arguments and human rights for debt refusal at a global as well as a personal level. For example, that: ‘the repudiation of debt is the responsibility of sovereign states if the debt violates human and environmental rights’ (p.64). Yet Ross has earlier shown the corruption and hollowness of existing liberal democracy. There is no universal morality or legal rights to which we have recourse within neo-liberal capitalism, which is a system of exploitation with its own logic of accumulation, not swayed by ideas of fairness and morality.

The second aspect of Ross’s vision for the future links an alternative economy to new forms of political expression and organisation based on anarchist inspired ideas of direct democracy, horizontality, mutual aid and co-operative practices. This alternative economy will be ‘mixed’, i.e. a public element to organise education, health and so on; and commons-based initiatives such as mutual aid; barter networks, community currencies; Freecycle; time banks; gift economies; free stores; hacker spaces; community crowd funding; and self-education.

Ross does not think that the move to an alternative economy will be problematic as he argues that the institutions needed to support an alternative economy already exist. In his view: ‘fledgling efforts are already underway in a variety of forms, so it may not require a herculean effort or state takeover to realise a post-capitalist system’ (p.232). He points to community orientated and non-profit organisations, credit unions, and workers co-operatives. Although he claims such organisations are ‘thriving’, I would have like to have seen some evidence on the extent and impact of this alternative economy. Ross’s view tends to underestimate the power of capital to co-opt ‘alternative’ arrangements.

As with much anarchist-inspired writing, the role of the state in Ross’s book is downplayed; instead the focus is on the existence, and development, of commonist activities. Contradictions emerge here, though, as Ross, referring to the Occupy camps in the US, says that: ‘police suppression of these encampments and related movement activism showed how far the state would go to defend the power of high finance by rooting out the effective right to public protest’ (p.13). But this would surely also be true of the development of alternative economies that threatened the capitalist system of production.

In terms of social divisions within a ‘creditocracy’, Ross posits a society composed of a creditor class versus an active citizenry who no longer trust elected officials and increasingly practice ‘real democracy’ through public assembly, direct action, mutual aid and commoning. In this way he mirrors the 1% v 99% slogan of the Occupy movement. Whilst this captures vividly the inequality under capitalism and the hollowness of liberal democracy as Ross has outlined, the slogan has its limitations. For example, it can gloss over real class and ideological contradictions within the majority, as well as a lack of clarity regarding the state and other ruling-class institutions.

In conclusion, Ross has produced a detailed, vivid account of the reality of the lives of the ‘debtor-citizen’ (p.33) and one which certainly shows the hollowness of the ‘American Dream’. The strengths of this book are that it is based on the activity of people coming together to change society and, in the process, changing themselves; it shows that another world is possible.

Here in the UK, organisations such as the People’s Assembly against Austerity (PAAA), a broad based movement which articulates working-class demands, is a response to exactly those issues of power and inequality that Ross sets out in his book and provides a way forward for the anti-austerity movement and for an alternative future.

Creditocracy and the Case for Debt Refusal is exclusively available from the O/R website