Why we ought to rethink debt

Why we ought to rethink debt

“It is easier to imagine an end to the world than an end to capitalism”

This iconic quote, attributed to philosophers Fredric Jameson and Slavoj Zizek, embodies the essence of the concept “capitalist hegemony”. In this world, one’s common sense is moulded by the prevailing powers within society. This is done in order to align what is seen as “normal”, or even “moral” with the private interests of the wealthy few. This manipulation of public opinion and morals has elevated the role of debt, defined here as a quantified obligation between two equal parties, in judging morality. Capitalism then becomes a vehicle that further promotes the central tenet that equates morality with the repayment of debt.

To illustrate this notion of viewing simple morality as repaying debt, consider the following enlightening example. Anthropologist David Graeber recalls a conversation he had with an activist lawyer regarding the campaigns that each had undergone. A decade ago in Madagascar, the IMF had undergone various structural adjustments that led them to withdraw funding for a program that aimed to eradicate malaria in the country. The cited reason for this withdrawal was that the government had fallen behind their debt schedule. As a result, approximately 10,000 people died, with around 7,000 of them being babies, from new strains of malaria that developed after the program’s withdrawal. When Graeber told the lawyer that his campaign’s goal was for the IMF to forgive the outstanding debt, the lawyer gave an incredulous answer “But surely they have to pay their debts!”

Besides appealing to one’s moral impulse of repaying debts, how else can one justify the deaths of 7,000 babies? What is it about debt that allows it to have such a grasp over our perception of morality?

To even begin to answer this, it is necessary first to understand the role of hierarchy and money in a self-perpetuating process of debt creation. Recalling the definition of debt, it differs from an obligation in that it is quantifiable. If I can quantify what I owe, then it does not matter to whom I owe the sum; debt is thus an impersonal concept that can be bought and sold (does mortgage backed financial securities ring a bell?). In such a world, simply through coincidence (although this is rarely the case), the right to collect loan can be concentrated in the hands of a few. Using the second component of our definition of debt – a deal between two equal parties, we can infer that the indebted party is momentarily reduced to a lower standing to the other party due to the contractual obligation to repay their debt. Hence, we end up in this scenario of a social hierarchy that resembles a pyramid.

The story, unfortunately, does not end here. Those high up in the hierarchy have no desire to relinquish their alpha status. Fortunately for them, they have a couple of options to extend the current hierarchy. The easiest is to create markets for new products, which does indeed pose certain benefits that neoliberal economists postulate, but also further their ability to hand out loans, further solidifying their position atop the societal ladder. Although Graeber goes further in his book “Debt: The first 5000 years” to point out that the creditors then pay for an army with excessive funds to form colonies, impose markets upon these colonies and then enslave their population when loans handed out to indigenous peoples are not paid back, I will stop here.

From this analysis, it is apparent that money is a necessity in this process, as it is the yard-stick that allows for an accurate and precise measure of debt. And it is precisely under this book-keeping context that promulgated the use of money in the world.[1]

To illustrate the striking effect of quantifying an obligation, consider the following example. I live with a roommate James. One day, I need a lift to the airport, and James obliges for any number of reasons. I now owe him a similar favour that he can call upon me to answer. In the near future, he can ask me for a lift to the airport, or maybe I’ll buy him a beer. However, it is near impossible to reciprocate his actions exactly, and thus what I repay will either not be enough or be more than enough that results in him owing me again. This constitutes an essential part of our relationship, and one might even say that it is what defines friendship. However, if my obligation to James was quantified and we are able to square away our debts, not only will the basis of our relationship take on a transactional nature, but it also somewhat signals a certain finality to our friendship, as it may seem as if we want nothing else to do with each other. This story is also an example of the “human economy” described in footnote 1. Again, there should be no reminiscence of human economies of the past as they were often just as cruel; however, this merely provides a framework to understand some abstract notions that have been developed previously.

To see the relevance of this analysis of debt with capitalism, consider the many trends of modern society. Firstly, the ever present advertisements constantly reinforce and promote the idea that material things are essential for your happiness, encouraging consumers to forgo fiscal responsibility. As one’s consumption increases, there is a higher probability they fall into debt traps – situations where interest payments are engineered so that a loan actually cannot be paid back (this is what happened in Madagascar).

Moreover, recall the devastation caused by the GFC, and the scars that it has left within the world. At its core, financial deregulation caused large financial institutions to create more and more dubious financial instruments backed by the mortgages of the American people. These creations are made possible through the impersonal characteristic of debt, which is compounded through CDO’s (collateralised debt obligations). To borrow an example from the “Big Short”, a CDO basically allows one to bet on the outcome of a financial instrument. However, Wall Street did not stop here. CDO’s could bet on other CDO’s, which is what allowed the mass obliteration of $5 trillion of wealth in the GFC.

Throughout the past decade, there has been a fundamental shift in how people support and justify capitalism. The pivot has been from arguing the benefits that markets have bestowed upon the world, of which there are many, to the slogan “what else is there?”. Indeed, there is an ominous ring to this answer – have we resigned ourselves to the current state of affairs and have no tolerance for the discussion of other ideas that are capable of producing positive outcomes?

This brings us full circle, back to the idea of capitalism hegemony. The reason why this answer has become vernacular is because we have become indoctrinated by the neoliberal capitalist mantra – “markets are good”. As a result, we continue to ridicule those who provide alternatives to capitalism, and this enforces the “common sense” shared by much of the world that there is no alternative. This is why even for an activist lawyer, she cannot escape the grasp of debt on her morality, and why mainstream thinking has become so aligned with the neoliberal capitalism tenets.

In order to subvert the trend towards a world dominated by static hegemonic thought, critical analysis of new and existing ideas should be coupled with active debate and pragmatism. To borrow a quote from Paul Samuelson on Friedman “To keep the fish that they carried on long journeys alive and fresh, sea captains used to introduce an eel into the barrel. In the economics profession, Milton Friedman was that eel.” Whilst Friedman’s postulates stand in stark contrast to the contents of this article, the point of the quote is to encourage all those with ideas to speak out, whether they may support or refute the current political and economic climate. Ideas remain fiction without action.


Bain-Selbo, E. (2014). Deep in debt: A Review of David Graeber’s Debt: The First 5000 Years. Soundings: An Interdisciplinary Journal, 97(4), 491-508.

Evans, E & Moses, J. (2011). Interview with David Graeber. The White Review. https://www.thewhitereview.org/feature/interview-with-david-graeber/.

Fisher, M. (2009). Capitalist Realism (Ed. 1). John Hunt Publishing.

Graeber, D. (2011). Debt: The First 5000 Years (Ed. 1). Melville House Publishing.

Tselepy, J. (2015). Capitalist Hegemony: The Political Challenge of Alter-Globalisation. Inquiries Journal. http://www.inquiriesjournal.com/articles/1013/capitalist-hegemony-the-political-challenge-of-alter-globalization.

Waterstone, M. & Chomsky, N. (2020). Consequences of Capitalism (Ed. 1). Penguin Books.

[1] This stands in stark contrast with the sacrosanct economics origin story of money narrated by Adam Smith, which implies that money was invented to facilitate barter and avoid the “double coincidence of wants”. However, Graeber points out that in no human society that had previously experienced money has there ever been human tendencies to actually barter. Instead of idealising such “human economies” which often were just as brutal, they pose as potent examples that pursuing wealth accumulation was never the societal norm in most of history.