Debt,Neoliberalism and Crisis: Interview with Maurizio Lazzarato on the Indebted Condition

Debt in the Works of Maurizio Lazzarato: The Deleuzian Influence

Mathieu Charbonneau (MC) and Magnus P. Hansen (MPH):

Before undertaking your analysis of debt, you worked on several other questions,notably immaterial labour, biopower and governmentality, French sociologist Gabriel Tarde, as well as inequality and precarious labour. How did you come to focus your attention on debt?

Maurizio Lazzarato (ML):

As a matter of fact, I have been concerned with debt for a long time; for around 20 years, but with-out digging deeper into it, without developing a specific analysis of it. Back then, the reading of Gilles Deleuze’s article on control societies, first published in 1990, had had a strong impact on me. In it, Deleuze (1992: 6) was simply suggesting that present day societies’ problem ‘is no longer man enclosed, but man in debt’. This statement had struck me and, at that time, I thought it was an interesting idea despite the fact that debt was not an issue as central as it is today. Therefore, I decided toread Deleuze more closely in order to find out if some of his other texts were actually focusing on debt. While doing so, I noticed that in Nietzsche et la Philosophie, Deleuze (1962) focused precisely on debt. As a great reader of Nietzsche, he developed a really interesting analysis of debt in this book. Later on, this topic is still highly important in L’Anti- Œdipe (Deleuze and Guattari, 1972), less so in MillePlateaux (Deleuze and Guattari, 1980), and finally it is present in the article on societies of control (Deleuze, 1992).

Furthermore, my own trajectory is linked to another question: money. Money has been an interest of mine since reading Marx, and also Deleuze. The latter asserted that the current challenge is not to criticize Marx, but rather to produce ‘a modern theory of money as good as Marx’s that goes on from where he left off’ (Deleuze, 1995: 152). As the relationships between money and debt constituted my questioning, Deleuze became central. Considering my interest for a mode of thinking which refuses to isolate economy from subjectivity, Deleuze and Guattari have been the authors that have contributed the most to my own approach. I thus endeavoured to outline this conjunction between debt, money and the production of subjectivity as I started to trace back the history of debt starting with the 1990 article, and then back to its origins, particularly through the reading of Nietzsche.

The Indebted Condition and the Moulding of Subjectivity: Nietzsche’s Neglected Contribution

MC and MPH:

A large part of your method rests on a Nietzschean genealogy of the creditor–debtor relationship. In that sense, you propose to grasp debt as a process of ‘subjectivation, what Nietzsche calls the “labor of man on himself”, a “self-torture”.’ You assert that this ‘labor produces the individual subject, a subject answerable and indebted to his creditor’ (Lazzarato, 2012: 42). Can you explain precisely, according to you, what is the nature of the power relation constituted by the creditor–debtor relationship?

ML:

My inspiration for this analysis indeed comes from Nietzsche. Despite a small amount of anthropological evidence at hand, Nietzsche examined pre-modern societies in order to oppose classical political economy (see Nietzsche, 1887). During the 19th century, burgeoning political economy was considering exchange as the central social relation. It is precisely Nietzsche’s refusal to do so that caught my attention. While classical political economists were focusing on the exchange relation and Marx placed emphasis on the productive relation between capital and labour, Nietzsche offered another point of view: the creditor–debtor relationship. Hence, my interest in the Nietzschean approach can be explained by the obvious fact that this relationship has become extremely important today. In reality, since the inception of neoliberalism – way before the 2007–2008 subprime crisis – economy became fundamentally structured around the issue of credit. Furthermore, Nietzsche allowed me to go back to Marx, according to whom money as capital manifests itself into credit money. Although Nietzsche actually analyses pre-modern societies, he raises an interesting question related to credit money in capitalism.

In addition, Nietzsche simultaneously relates the analysis of the creditor–debtor relationship to both subjectivity and time. According to him, the establishment of the creditor–debtor relation necessitates specifically adequate forms of subject and subjectivity. Since debt as such constitutes a promise – a promise of future reimbursement – it thus necessarily requires the construction of a subject able to promise. This is a first aspect. The second relates to time and therefore concerns the neoliberal economy understood as an economy projected into future since its functioning revolves around finance. As the creditor–debtor relationship rests on a promise of future reimbursement, Nietzsche suggests that debt faces temporal indeterminacy and unpredictability. In his view, the construction of the subject and of memory becomes a way to anticipate and even to hinder subjectivity, hence this idea of a requirement for ‘the debtor to stand as self-guarantor’ (Lazzarato, 2012: 49).

Within the creditor–debtor relation, power also stems from the social nature of such a relationship: it is not restricted to the space of the factory, as with the capital–labour relation. It is in fact transversal to society, and this appears even clearer today with the issue of sovereign debt. The indebtedness of a state – for instance following a crisis of private debts – means that society as a whole becomes a debtor. Whether one is unemployed, part-time worker, or retired, each individual is caught in such a dynamic producing a system of social capture. In fact, I believe that the shift that has occurred with neoliberalism – a movement already initiated by German ordoliberalism in 1948 – concerned the issue of society: how to control society as a whole? The power of debt in neoliberalism represents a highly efficient mechanism of control and capture, more efficient than the modes of resistance put in place by the workers’ movement. While the latter still focuses on dynamics located within the productive space, power is now exerted on a broader social scale. Hence, there is an asymmetry between capital and the forms of resistance. To sum up, and without going through Nietzsche’s theory of power in detail, I resorted to the Nietzschean concepts of subjectivity and time in order to apply them to the capitalist society.

One of the fundamental gaps between Nietzsche’s analysis and the reality of debt in capitalism is that debt has become ‘infinite’. This point is really important and this is why I turned to Deleuze and Guattari’s L’Anti-Œdipe (1972). One of their main arguments derives from Marx and suggests that a major innovation of capitalism lies in the introduction of endlessness into the economy. In this context, the infinite refers to the Marxian formula ‘money-commodity-money’ (M-C-M). Starting and ending with money, this cycle actually never ends in practice. Capitalism runs on the infinite and generates it everywhere, not only within production but also in consumption: the ‘consumption-frustration-consumption’ cycle indeed sustains itself endlessly. With debt, one observes an identical dynamic. Hence, the capitalist debt differs from debt in pre-modern societies mainly due to the impossibility of its complete reimbursement. Under capitalism, debt rests on and unleashes an infinite process. Beyond these theoretical remarks, the impossibility to fully reimburse debt appears obvious today. In other words, in the neoliberal economy, the power of debt needs to be grasped through considerations of subjectivity and temporality, and also as an infinite process.

Questions of Method: The Genealogy of Debt and Neoliberalism

MC and MPH:

In The Making of the Indebted Man, you trace the genesis of the indebted condition through a genealogy of debt. First, commenting on Nietzsche, Marx, and Deleuze and Guattari, the second chapter presents a long-term genealogy of the creditor–debtor relation going back to the origins of Christianity and capitalism and the emergence of the infinite debt. Second, in the third chapter, you analyse the recent history of debt economy as the core of neoliberalism. In that sense, the privatization of money – occurring with the ‘shock of 1971’ – constitutes in your opinion neoliberalism’s moment of birth or, as you put it, ‘the source of all privatizations’ (Lazzarato, 2012: 96). How should one understand the specificity of this new debt economy regime – emerging out of the crisis of Fordism and having recently been consolidated through the Global Economic Crisis?

ML:

With the end of the gold standard declared by Nixon, the year 1971 represents the outset of this history. In a certain way, money got completely dematerialized through this process, that is to say that it ‘became debt’. From then on, money lost its bases in both labour in particular and the social world in general. Being reduced to debt, money now mainly constitutes a phenomenon dependent upon writing operations. This appears as the important tipping point: we observed the deterritorialization of money, as Deleuze and Guattari (1972) would put it. By virtue of losing any roots in commodity or in another social substance, money became infinitely mobile and mobilized. It thereby turned into a political apparatus (‘dispositif’). Therefore, the central novelty consists in money now being debt by definition; private banks issue most of the money in circulation and do so by means of pure writing operations. This way of creating money became absolutely fundamental. As you mentioned, the end of the convertibility of the dollar into gold led the way to a major privatization as the state has delegated, or rather retroceded, its sovereign rights of coinage to banks and private organizations.

This entire story represents a problem for most economists. They have a hard time dealing properly with money since money is precisely not a creation of the market. It is produced by a centre, by the state, and by a series of powers. The only economists working under such a perspective come from the French Regulation School. For instance, André Orléan recognizes the equivalence between money and debt (see Aglietta and Orléan, 1984, 2002). Regulationist theory indeed appears as the only one having acknowledged this absolutely fundamental fact. A contrario, Milton Friedman’s monetarist economics is very symptomatic since it suggests that money possesses a mere functional role. Friedman once explained that money could simply be dropped on a city from a helicopter for production to occur (1969). Accordingly, money would hence follow production and would functionally ensure proper circulation of commodities by offering means of measurement, hoarding and payment. In a book I recently completed (Lazzarato, 2013), I demonstrate the opposite: money does not follow production but precedes it. Such a theoretical shift is very important since money, and also taxation form the presumptions of market and production. One can clearly observe this throughout the sequence of major changes having affected the organization of capitalism. For example, from 1929 to the New Deal, and from Fordism to neoliberalism, the fundamental transformations have first and foremost concerned money and taxation. In the transition from Fordism to neoliberalism, the state retroceded the right of coinage and money was disentangled from gold. Under the current debt economy regime, these are the new presuppositions and conditions of production.

MC and MPH:

In your view, how were neoliberal policies innovative in transforming the creditor–debtor relationship?

ML:

I suggest to refer to Keynes who, despite the fact that his point of view has not been put into practice, represents the paradigmatic theoretician of this shift. The Keynesian theory puts forth the ‘euthanasia of the rentier’, in other words the need to neutralize the power of the rentier (Keynes, 1936: 375f). In fact, one of the causes, if not the main cause, of the 1929 crisis lies in the functioning of finance. Some observers then approached this problem by considering that the regulation and control of finance would allow industrial capitalism to regain some space and some possibilities of development. In reality, neoliberalism did not organize the euthanasia of the rentier and rather achieved exactly the opposite. As a result, the expansion of the creditor–debtor relationship came to be the predominant concern.

Born with the New Deal in the USA and after the Second World War in Western Europe, Fordism required, as conditions of possibility, both the rentier’s neutralization and the establishment of a historical compromise between capital, labour (through unions) and the state. The Fordist compromise came to be put into question at the end of the 1960s and in the beginning of the 1970s – for different reasons on which I cannot elaborate here – as profit levels were pressured by increasing wages. In this context of restrained capitalist value creation, personal investment (‘placement’) appeared as the device allowing for a displacement of the Fordist balance of power. The labour movement was therefore completely marginalized as one of the bases of the Fordist compromise – the linkage between gain in profits and wage levels – was ruled out by the power of the creditor–debtor relationship. And this was a success from the creditors’ point of view. In fact, throughout the history of the labour movement, resistance to capitalism has not been organized around the debt relation but of course around the capital–labour relationship. Moreover, the difficulties in resisting these dynamics are clearly observable: workers have not yet created forms of struggle and resistance specifically aimed at the issue of indebtedness.

While the New Deal had in a certain way neutralized the power of creditors, indebtedness progressively spread at every level of social life in the neoliberal era. My latest book (Lazzarato, 2013) includes a chapter analysing the history of the university in the United States. It is a very interesting history since the American university represents an archetype of the creditor–debtor society. Up to a certain extent, it constitutes the fully accomplished neoliberal model: the majority of university graduates are indebted while the remaining minority are rich, sometimes coming from families of creditors. As this case highlights, the creditor–debtor relationship is not restricted to the mere space of finance. In countries like the United States where neoliberalism is the most advanced, there is a tendency to structure all social relations in terms of credit relationships. In Europe, such a thing would be inconceivable, and political movement in direct resistance to indebtedness has risen even in places like Québec (Canada). Interestingly, one has to recall that neoliberalism’s first attempt to launch its offensive occurred in Chile. When Pinochet took power in the aftermath of Allende’s assassination, the Chicago Boys contributed to the introduction of the neoliberal system to the Chilean university. A closer look at the history of the student movement in Chile indeed reveals that indebtedness was at the core of political struggles.

To sum up, the creditor–debtor relationship – once relegated in the background during the Fordist period – is now central to every social relation: consumption (for instance in housing), education, training, etc. The neoliberal attempt aimed and still aims at structuring all social relationships in terms of credit dynamics.

Debt and Crisis: The Capture of Social Wealth through Fiscal Policies and Tax Havens

MC and MPH:

And how did the 2007–2008 crisis influence this dynamic?

ML :

In reality, there is no crisis from the point of view of creditors as they are currently operating a second great appropriation by virtue of capturing the welfare state’s social wealth. Up until 2007, a first great appropriation had been carried out through financial mechanisms allowing for the capture of money generated by private debts. Then, this wealth has been redistributed. But to whom? In my opinion, the 19th-century image of the bourgeois rentier is now obsolete since the first beneficiaries of the rent are now corporations; the latter have replaced the former as the classical figure of the rentier. In short, the first financial capture through private indebtedness has resulted, since the onset of the Global Economic Crisis, in a complementary capture of social wealth through public debt and neoliberal fiscal policies. For instance, a few months ago the Financial Times announced that tax havens could be concealing between USD21,000 and 32,000 trillion (in 2010) (Henry, 2012; Sachs, 2013). In that sense, there are good reasons to conclude that a significant part of the global debt is being pumped up from societies into tax havens.

Fiscal policies indeed constitute one of the main instruments of constitution and regulation of social debt. But why did the state become indebted to such an extent? Simply put: due to tax decreases. Since the Reagan era, fiscal policies have basically been limited to reducing taxes to the rich and to corporations. This was the case of the last Bush administration, which stands as a caricature of this movement. These policies are so ridiculous that someone like Warren Buffet has even admitted to be paying less tax than his secretary (Isidore, 2013). It is simple: if taxes are being reduced while services are maintained, there is a need for the state to get indebted. There is no other way. The present welfare state – although it is now hard to talk about a welfare state per se – is a state that serves the rich and the corporations. With neoliberalism, and this is even more clear since the 2007–2008 crisis, the Keynesian theory has been totally reversed as the state now represents a fundamental device allowing wealth to be transferred to creditors.

Neoliberalism hence constitutes a radical shift: the principle of redistribution has been preserved, but the direction of redistribution has been inverted. As Carl Schmitt (2007) explained, the welfare state slowly became the loot of class struggles. And what we are now witnessing is not the destruction of the welfare state, but the destruction of a form of social state that was the result of labour and women movements. In the neoliberal economy of indebtedness, the Keynesian redistribution system now allows for massive transfers of money from non-owners towards owners. Debt, monetary system and fiscal policies are the mechanisms through which social wealth is being captured by the creditors.