Neoliberalism,mass incarceration,and the US debt–criminal justice complex

Introduction

On 4 March 2015, seven months after the police killing of Michael Brown, an unarmed black man in Ferguson, Missouri, the Department of Justice (DOJ) released its report on the Ferguson Police Department. The report investigating the systematic racial bias and unconstitutional practices of the police department unearthed inter alia a coordinated effort between the police department, city staff, and municipal court system to maximize revenue from criminal justice fees. In 2013, the city accumulated over 20% of its revenue from fines and fees imposed on low-income racialized populations for minor bylaw infractions such as traffic violations (United States Department of Justice, 2015). This report revealed a small component of a systemic practice: the number of Americans currently entangled in the criminal justice system for debt is unknown, though some estimates indicate there are over 10 million people who owe more than $50 billion in criminal justice debt (Evans, 2014). This trend has prompted media, legal advocacy groups, and scholars to lament the return of debtors’ prisons (American Civil Liberties Union (ACLU), 2010, 2015, 2018; Brennan Centre for Justice (BCJ), 2010, 2015; Beckett and Harris, 2011; Holland, 2011, 2014, 2016; Coco, 2012, 2014; National Public Radio, 2014, 2015; Harris, 2016; Human Rights Watch (HRW), 2016; Jones, 2018). Despite a growing body of work on this subject, with a few exceptions (Lebaron and Roberts, 2012; Coco, 2012, 2014; Roberts, 2014; Jones, 2018), there is a dearth of scholarship situating the debt–criminal justice complex within the landscape of neoliberalism in the US.

This article utilizes the conceptual framework of disciplinary neoliberalism to help explain the political, economic, and ideological restructuring that has taken place in the US over the past 40 years (Gill, 1995, 2003, 2008). Incorporating the centrality of race into this framework, this article builds on the work of several theorists who conceptualize race and class as impossible to disarticulate under capitalism (Bannerji, 2005: 151), in which race is often the ‘modality through which class is “lived”’ (Hall et al., 1978: 374). Charting the intersections of race, class, debt, and criminalization in the US, this article contributes to a growing body of literature examining the interrelation of socio-economic and carceral policies in the US (Gilmore, 1999, 2007; Davis, 2003; Western, 2006; Wacquant, 2009, 2012; Lebaron and Roberts, 2012; Camp, 2016). I argue that the modern debt–criminal justice complex illustrates the numerous ways in which carceral and economic policies mutually reinforce market discipline in the US. I maintain that the current intersections between debt and the criminal justice system in the US are rooted in an historical process of economic restructuring by the US state. Following a brief analysis of the origins of the carceral state and disciplinary neoliberalism, I analyze ‘workfare’ and the marketization of poverty in the US (Peck, 2001; Wacquant, 2009, 2012; Gustafson, 2011). Drawing on critical theorists’ work on the structural imperatives of debt and its racialized nature throughout the neoliberal period (Moten and Harney, 2010; Mahmud, 2012; Chakravartty and da Silva, 2013; Soederberg, 2013, 2014; Roberts, 2014, 2017), I then analyze legislative reforms and data related to bankruptcy in the US within the broader emergence of consumer debt. I conclude by examining the expanding scope of the debt–criminal justice complex, which continues to ensnare the racially and economically marginalized underclasses of the US social system.

The origins of the carceral state and the rise of disciplinary neoliberalism in the US

Debt and imprisonment have long been entwined in the US. Imported from Britain into the US colonies, debtors’ prisons were commonplace throughout the 18th and into the 19th centuries (Peebles, 2013). As debt proliferated with the ascendance of capitalist relations of exchange in the early 19th century, the prison’s capacity to harbor debtors from creditors became seen as a threat to the collection of debt (Peebles, 2013). Abolished at the federal level in 1833, the eradication of debtors’ prisons in the US, as Roberts (2014: 676) suggests, was part of a reconfiguration of class relations to enshrine limited liability for expanding enterprises, while creating ‘new, more efficient, means for creditors to compel repayment’ from debtors. Despite the legal cessation of debtors’ prisons, relations of debt and criminalization continued to play central roles in the configuration of Black lives and labour. Following the Civil War and the formal abolition of slavery, the criminal justice system was the primary site through which the convict lease system emerged, channeling tens of thousands of indigent former slaves into forced labour camps (Blackmon, 2008). The passage of Black Codes throughout several southern states during this period coerced many former slaves into relations of debt peonage, in which they often worked indefinitely for an employer who agreed to pay off their accumulated criminal justice debt (Blackmon, 2008). The widespread exploitation of forced Black labour – facilitated by judicial processes from the mid-19th to the early 20th century – was, as Angela Davis (2003: 33) asserts, ‘in very literal ways the continuation of a slave system’. While much has changed since the convict lease system was abolished, class relations, debt, and institutional racism remain central features of the modern US criminal justice system.

Many accounts of the contemporary mass incarceration system in the US trace its ideological and legislative origins from the racially charged ‘tough-on-crime’ politics of the 1960s, to the War on Drugs agenda intensified under the Reagan administration (Beckett, 1997; Mauer, 1999; Alexander, 2012). Recent scholarship has expanded the scope of the US criminal justice system. Authors have highlighted the school-to-prison pipeline in African American communities (Annamma, 2015), the regimes of counterinsurgency and containment in the early Cold War period to the 1960s uprisings (Camp, 2016), post-war racial liberalism (Murakawa, 2014), the expansion of domestic social programs in the 1960s (Hinton, 2016), and the crises of Keynesianism and surplus accumulation (Gilmore, 1999, 2007) in laying the foundations of the modern carceral state.

Acknowledging the disparate socio-economic and political origins of the mass incarceration system, I seek to chart the interrelation of carceral expansionism and neoliberal economic restructuring within the US. I focus in large part on the 1980s and 1990s because of the seismic transformations in global capitalism, the consolidation of the neoliberal project, and the marked expansion of the prison population in the US during this period. Rather than recounting the legislative history of criminal justice policies, I seek to broaden the vista of scholarship on the origins of the criminal justice system, situating it within the economic reforms that have taken place since the late 1970s in the US. Disciplinary neoliberalism is used as a conceptual framework to situate these reforms within the transformations of global capitalism over the past 40 years.

Following an historic slowdown in capital accumulation in the early 1970s, neoliberalism emerged in the West in full force under the far-right administrations of Ronald Reagan and Margaret Thatcher (Glyn, 2007). Neoliberalism is loosely defined here as a variegated set of ideas, policies, and practices materializing in large part after the crises of capital in the 1970s as part of a political project to restore capitalist profitability, which constitutes the politico-economic order of current capitalist systems. ¹ Within this period, disciplinary neoliberalism describes on a systemic level the ways in which pressures to adhere to market logic and reconfigure relations of production and social reproduction along liberal capitalist lines have been exerted on different jurisdictions and states, and implemented within various institutional configurations over the past 40 years (Gill, 1995, 1997; Gill and Bakker, 2003). As numerous theorists have argued (Gill, 1995; Gill and Bakker, 2003; Roberts, 2017), disciplinary neoliberal policies are geared toward securing property rights, consolidating investor interests, liberalizing markets, stabilizing prices, creating obedient work forces, and solidifying the ideological and regulatory supremacy of the market. Such policies have been implemented unevenly across different regimes through numerous economic, political, and legal institutions, expanding the structural power of capital globally and enforcing market discipline for the poor (Gill, 2003; Roberts, 2014). Applying this framework to the US, this article examines the marketization of social support systems and debt and bankruptcy infrastructure alongside the emergence of the mass incarceration system since the 1980s.

The US imprisons more of its citizens than any other country, possessing less than 5% of the world’s population and incarcerating almost 25% of the world’s prisoners. The Sentencing Project notes that, as of 2016, over 2.2 million people in the US were held in prisons or jails, with close to 7 million under supervision of the criminal justice system including those on probation and parole – a 500% increase over the past 40 years (The Sentencing Project, 2016). The criminal justice system overwhelmingly targets racialized and particularly African American populations in the US, with systemic racial bias permeating all levels of the criminal justice process from detention to sentencing (Mauer, 2011; The Sentencing Project, 2016: 46; The Sentencing Project, 2017), leading some commentators to designate the carceral system as one of racial control (Alexander, 2012). Relatedly, as recent data have shown, the carceral state is largely about the ‘systemic management of the lower classes’, primarily affecting working-class communities (Lewis, 2018). As a 2016 report on the economic effects of incarceration revealed, real pre-incarceration annual earnings of prisoners ranged from $3,000 to $28,000, illustrating the extent to which prisons warehouse those living below the poverty line (Council of Economic Advisors, 2016: 46). Given the racialized composition of the working class (Lewis, 2018), this article argues that race and class ought to be conceptualized as co-constitutive within the US carceral system. The US criminal justice apparatus, which targets the economically disenfranchised and racially oppressed populations in the US, is thus conceptualized, as Angela Davis (2003: 16) writes, as a ‘black hole into which the detritus of contemporary capitalism is deposited’. The expansion of the criminal justice system occurred alongside numerous transformations in US society, notably economic restructuring during the neoliberal period (Wacquant, 2009: 43). Perhaps no other social issue elucidates the intersection of economic restructuring and carceral expansionism more clearly than the current nexus between debt and imprisonment, which is rooted in US state policies enacted over the past 40 years.

From welfare to workfare: The marketization of poverty

The emergence of neoliberalism in the US occurred alongside the reorganization of state priorities, institutions, and spending policies. As opposed to the post-war social order in which the state undertook the responsibility of managing some of the inequalities produced by the market, many state priorities have been rearranged to accommodate the short-term interests of capital (Roberts, 2017). A fundamental component of this shift in state priorities has been the restructuring of social support systems. Spearheaded in the US and expanding into a transnational regulatory enterprise, ‘workfarism’ is described by Jamie Peck (2001: 10) as an ‘uneven, inchoate, and unstable process of regulatory reform’, involving the ‘imposition of a range of compulsory programs … with a view of enforcing work while residualizing welfare’. Part of a broader transformation in the US economy that inaugurated a disciplinary regime of low-wage work, public assistance cutbacks have been underway since the 1970s (Wacquant, 2009).

During the historic slowdown of capital accumulation of the 1970s, demand for Aid to Families with Dependent Children (AFDC) increased significantly. Near the end of his tenure, President Carter proposed several reforms to the federal welfare system, which included cutting social assistance to recipients of AFDC that refused to work (Gustafson, 2011: 33). Since then, virtually every federal administration has subjected AFDC to significant cutbacks and attempted to attach work requirements to social assistance (Wacquant, 2009: 49). The project of workfarism in the US emerged within the ideological milieu of ‘personal responsibility’ and anti-black racism, cultivating popular contempt for ‘welfare dependency’ (Gustafson, 2011: 32). The denigration of African American women, epitomized by the caricature of the ‘welfare queen’, which portrayed Black women as recipients of state assistance intent on defrauding the welfare system, was central to the legitimization of welfare reform. In this sense, as Jones (2018: 43) notes, racism – and the pathologization of Black women in particular (Thomsen, 2016) – ought to be conceptualized as ‘part and parcel of the neoliberal project’ in the US. Relying on this rhetoric, the Reagan administration accelerated the transformation toward workfare by decentralizing welfare funding to the state level and cutting federal AFDC expenditures (Peck, 2001: 70–71). The 1981 Omnibus Budget Reconciliation Act markedly reduced eligibility for AFDC, slashing welfare payments, and incentivizing states to implement their own workfare policies (Peck, 2001: 91). In particular, the legislation markedly narrowed eligibility for government assistance for many working-class families (Peck, 2001: 91). As Gustafson (2011: 37) notes, between 1978 and 1985, the number of poor Americans increased by 10 million.

Federal welfare reform loomed large in the 1992 presidential election, with then-Governor Clinton promising to ‘end welfare as we know it’ on the campaign trail (Peck, 2001: 99). Pressure from states with their own workfare regimes, alongside the Republican-controlled Congress and Senate, culminated in President Clinton signing the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in the summer of 1996, replacing AFDC with Temporary Assistance to Needy Families (TANF). Praised by Democrats and Republicans, PRWORA ruptured the federal welfare system, replacing it with a system that provided incentives for the ‘retrenchment of state’s residual welfare commitments while favouring low-cost, labor-attachment approaches’ (Peck, 2001: 117). The 1996 decimation of the welfare system essentially abolished the social right to assistance in the US and facilitated forced, de-skilled wage labor (Wacquant, 2009: 58), mandating recipients to find employment within two years of assistance and introducing a lifetime cap of five years of government support.

Hailed as a success in the late 1990s, welfare reform occurred alongside increasing levels of poverty, the proliferation of low-wage work, and burgeoning income and wealth inequality. As Peck (2001: 188, 353) asserts, the US labor market for many low-income earners was characterized by ‘chronic job instability, poor benefits, and low pay’, as workfare churned populations into low-skill, high-turnover jobs with little security. Workfare policies generated significant downward pressures on wages, precipitating a more than 11% decrease in wages in low-paying jobs after its implementation (Peck, 2001: 185). Most of the jobs that workers acquired lacked stable hours and failed to provide benefits such as health care coverage, paid sick leave, or vacation time. By the early 2000s, rates of extreme poverty had increased, alongside food insecurity and homelessness (Gustafson, 2011: 48). By 2003, over 40% of the 2.7 million adults who previously depended on AFDC did not find jobs, and 60% relied on insecure part-time jobs, losing access to Medicare and Food Stamps (Wacquant, 2009: 97).

Welfare reform generated a crisis of social reproduction, ² uprooting low-income earners, and particularly single racialized women who faced discrimination and bore the additional burdens of unpaid reproductive and domestic labor. As Burnham (2001: 42) indicates, there was a marked shift across the US after the implementation of TANF toward an increased reliance on private sources of food, shelter, and support. As a study of 25 major US cities from 1999 reveals, over 85% of cities saw an increased demand for emergency food, rising on average by 18% between 1998 and 1999 (United States Conference of Mayors, 1999). One in three families headed by single women experienced food insecurity and one in ten faced hunger (Burnham, 2001: 41). As part of a larger political project intended to restore corporate profitability and increase labor market flexibility, workfarism reproduced a sharply unequal distribution of wealth by race. A recent report by the Institute of Policy Studies (Collins et al., 2017) demonstrates that from 1983 to 2013, the median wealth of white households increased by $15,000, reaching $116,800 in 2013, while Black and Latino wealth plummeted from $6,800 and $4,000 in 1983 to $1,700 and $2,000 in 2013, respectively (Collins et al., 2017: 8). The transition from welfare to workfare in the US was, however, part of a broader transformation throughout the 1990s in which all workers’ incomes stagnated as social wages were clawed back, precarious work became the new norm, and corporate profits expanded. As Montgomerie (2007: 166) points out, the employee-cost index, measuring worker compensation, rose by only 0.4 in 1999, ‘the slowest in 17 years’. Moreover, workers’ real wages continued to stagnate despite gains in productivity growth: on average, throughout the 1990s, output per hour increased 4.9%, while unit labor costs fell 0.2%, allowing corporations in the US to significantly increase profit margins (Montgomerie, 2007: 166).

The marketization of federal and state social support systems in the US mirrored a coercive shift in criminal justice policies. From 1991 to 1998, despite overall crime rates decreasing by 22%, state and federal prisoner populations rose from 789,610 to over 1.2 million, a 59% increase in 7 years (Gainsborough and Mauer, 2000: 3). As a report by the Bureau of Justice Statistics (United States Department of Justice Bureau of Justice Statistics, 2011: 20) indicates, between 1982 and 2007, the total cost of US police, corrections, and judicial and legal services increased by 171%, adjusted for inflation, totaling $228 billion in 2007. As billions were devoted to constructing the world’s largest criminal justice system, expenditures on key social services were clawed back throughout the neoliberal period. From 1986 to 2013, on average, as Harris (2016: 9, 10) indicates, ‘states increased spending on K–12 education by 69%, on higher education by less than 6%, and on corrections by 141%’, as criminal justice outlays superseded money allocated to public assistance on which many millions of the country’s most vulnerable depended. The marketization of social support systems was thus intimately wedded to the expansion of the penal state (Wacquant, 2012: 241), inaugurating an era of austerity and carceral expansionism. While workfarism and the inflated carceral apparatus comprise key elements of the neoliberal social order in the US, the proliferation of consumer debt during the 1980s and 1990s – in addition to stabilizing aggregate demand and augmenting profits in the financial sector – further entrenched market discipline and institutionalized the structural necessity of debt. The role of the US state in these historical processes illustrates how criminalization and market discipline intersect and mutually reinforce one another.

Bankruptcy reform and the structural imperatives of debt

Throughout the 1980s and 1990s in the US, levels of consumption remained constant despite falling real incomes, and household debt rose drastically (Gill, 1995: 14). The expansion of personal indebtedness occurred alongside the growing power of finance, reflected most clearly in the increased profitability of financial institutions. As McNally (2011: 86) asserts, in 1973, ‘financial returns made up just 16% of total profits in the American economy’; yet, by 2007, on the eve of the financial collapse, they increased to 41%. The financialization and securitization of homeownership, and the proliferation of consumer credit more broadly, drew more people into financial markets, which, as Mahmud (2012: 469) asserts, sustained ‘aggregate demand, fuel[ed] liquidity … and facilitate[d] [an] assemblage of entrepreneurial subjects’. The pronounced growth of personal indebtedness was wedded to the consistent reduction of real worker compensation and the marketization of social support systems. By destabilizing traditional means of social reproduction and establishing the conditions which gave rise to consumer credit, the US state played an active role in constructing the structural necessity of debt in the neoliberal period.

Alongside the general expansion of consumer debt across the US, debt has uniquely affected African American communities under neoliberalism. Scholars have illustrated the historical connections between the injustices of slavery and Jim Crow and the current period of mass incarceration and financialization, in which the ‘reign of credit’ reproduces inter-generational debt and poverty within low-income Black communities (Moten and Harney, 2010). Authors have further theorized the racialized discourses and practices of debt and lending under neoliberalism in the US. They have highlighted the uneven accumulation of high-risk and high-cost debts across racial lines as well as the discourse of colorblindness, which obfuscates the racialized practices of predatory lending and shifts the blame of financial precariousness onto subprime and high-risk borrowers (Chakravartty and da Silva, 2013; Thomsen, 2016). Throughout the 1960s and 1970s, the legal and legislative infrastructure surrounding debt was reconfigured, opening new channels of profitability for financial institutions, and allowing them to draw low-income and racialized populations into profitable financial markets.

Beginning with the Truth in Lending Act (TILA) in 1968, numerous loopholes were established that allowed banks issuing credit cards to circumvent state caps on interest rates by adding fees and surcharges to turn profits (Soederberg, 2013: 500, 501). In 1977, President Carter signed into law the Community Reinvestment Act requiring Fannie Mae and Freddie Mac to underwrite home loans by banks in poor communities, which, as Panitch and Konings (2009: 73) indicate, effectively ‘opened the market in mortgage-backed securities for low-income family housing’, intensifying the extension of private credit to poor urban populations. Within the legal realm, the Supreme Court’s 1978 decision in Marquette National Bank of Minneapolis v. First of Omaha Service Corp. changed the modern landscape of anti-usury laws. The court held that state anti-usury laws, which regulated the interest rates that banks could charge, could not be enforced against nationally chartered banks in a different state from the debtor (Soederberg, 2013: 501). In effect, the decision allowed nationally chartered banks to charge interest rates in their states irrespective of the borrower’s state of residence. Alongside the growth of consumer credit, this decision prompted states to dismantle their anti-usury laws to attract business from financial institutions, effectively legalizing usury in the US. These legal and political changes in the US state restructured the institutional landscape allowing consumer credit industries to emerge (Soederberg, 2013: 501). Within this context, two key reforms in bankruptcy legislation were passed, which intensified the disciplinary logic of debt and significantly expanded creditor profits.

Lobbied heavily by the American Bankers Association, systemic reform within the US federal bankruptcy system came in 1994 with the passage of the Bankruptcy Reform Act. One of the primary intentions of the legislation was to deter consumers from filing for bankruptcy under chapter 7, a more forgiving legal avenue for low-income debtors with few assets, which permits the liquidation of debts, as opposed to chapter 13, which enforces a reorganization of debts through stringent repayment plans. As Soederberg (2013: 502) explains, the 1994 reforms made ‘it easier for creditors in recovering claims against bankrupt estates, whilst simultaneously allowing creditors more time … to impose market discipline and extract payments’. The bankruptcy reform was part of a class project to bolster creditors’ profitability by enforcing extended periods of interest rate payments on low-income and racialized communities. Following the 1994 reform, levels of consumer debt skyrocketed. Total revolving debt in the US – debt which allows consumers to continually borrow against their lines of credit without a fixed repayment plan – expanded from $54 billion in 1980 to over $796.1 billion in 2011 (Soederberg, 2013: 496). Americans devoted more of their income to servicing debts, spending an average of 16.7% of after-tax incomes on debt service in 1995, totaling more than $900 billion (Henwood, 1998: 65). At the same time, delinquency rates on unsecured debt – the rates at which debtors fail to make payments on debt not legally collateralized by other assets, such as credit card debt, student loans, or medical bills – rose above 3.5%, the highest rate in 20 years (Soederberg, 2013: 502).

In 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). BAPCPA was intended to ‘protect creditors from bad market citizens’ (Soederberg, 2013: 505). The legislation forced debtors into more protracted debt management programs, extending the 1994 legislation by compelling debtors to file under chapter 13, which mandates the reorganization of debts through repayment plans, thus affording creditors more time to extract debt-servicing fees (Soederberg, 2014: 96). The legislation achieved these reforms by compelling debtors to pass a means test, which significantly narrowed the eligibility of debtors to file under chapter 7 (Soederberg, 2014: 96). In addition to restricting eligibility to discharge debts under chapter 7, the 2005 legislation, Coco (2014: 712) notes, ‘puts up barriers to entry’ by increasing the costs of filing and imposing new counseling requirements and eligibility standards for consumers, thus preventing individuals from accessing the bankruptcy system and compelling them to seek additional credit to service accumulated debts. ³ BAPCPA thus significantly tilted the balance of power toward creditors, socializing their risks by lengthening repayment schemes, and preventing consumers from discharging debt they accrued to sustain living standards throughout the neoliberal period.

The reformation of bankruptcy legislation in the US contributed to rapidly increasing levels of household debt, with outstanding debt as a percentage of disposable income rising from 62% in 1975 to over 127% in 2005 (Mahmud, 2012: 475). Though the entire US population saw debt loads rise, levels of indebtedness and the costs of debt were unequally distributed amongst low-income and racialized populations. Moderate and low-income segments of the US population typically amassed the highest levels of debt relative to income, while those on the lowest strata of the racialized class system paid the most egregious interest rates to higher-cost sources of credit, such as payday lenders and credit card companies (Lebaron and Roberts, 2012; 33; Roberts and Soederberg, 2014: 660). Leading up to the 2007/08 financial crisis, several reports have revealed the racialized practices of sub-prime and predatory lending, in which racialized communities in the US were disproportionately targeted and extended high-risk subprime loans (Fishbein and Woodall, 2006). The racialized accumulation of high-risk debt is consistent across several forms of consumer debt. In 2001, Black and Hispanic families were found to be more likely to incur credit card debt, facing disproportionately high interest rate payments; the percentage of cardholders with outstanding debt was 51% amongst whites, 75% amongst Hispanics, and 84% for Black families (Draut and Silva, 2003: 23). By some measures, low-income Black and Hispanic Americans are currently 500% more likely than white homeowners to find themselves bankrupt (Soederberg, 2014: 87). In recent years, authors have further highlighted the disparities in student loan debt across racial lines (Addo et al., 2016: 74), which has reproduced inter-generational inequalities in racialized communities. Those at the bottom of the racialized class hierarchy in the US face the greatest pressures to increase their debt loads in order to sustain living standards. While bankruptcy reform contributed to rising debt for consumers and increasing profits in the financial sector, alongside the expansion of the carceral system at the federal, state, and municipal levels, it also contributed to emergence of the modern debt–criminal justice complex.

From neoliberal restructuring and carceral expansionism to the debt–criminal justice complex

Within the past few years, media outlets have documented the return of debtors’ prisons in the US (Jones, 2011; Anderson, 2017). These sources describe a process in which large debt-buying firms purchase vast portfolios of delinquent consumer debt, utilizing ‘in personam remedies’ in the legal system in which judges summon debtors to court to assist creditors with debt-collection efforts (Shephard, 2011: 109). Equipped with sophisticated technologies and an army of corporate lawyers, debt-buying firms keep record of debtors’ credit history, employment, and income, using databases to target marginalized populations for aggressive collection, and overflowing small claims courts with hundreds of thousands of lawsuits (Goldberg, 2006: 727, 736). Due to intimidation, insufficient notice, precarious financial circumstances, and lack of knowledge about legal rights, debtors often fail to appear in court, leading judges to enter into default judgments overwhelmingly in favor of creditors (Holland, 2014: 183). If debtors then fail to appear for post-judgement hearings, they can be found in contempt of court and imprisoned (Shephard, 2011: 117; ACLU, 2018). Though state and nationwide data on the number of debtors in prison are unknown, 44 states currently authorize judges to issue arrest warrants for those who fail to appear at post-judgement proceedings (ACLU, 2018: 6).

In addition to contempt of court, debtors may also be imprisoned for ‘willful refusal to pay’. Incarcerating citizens for debt is technically outlawed in the US. However, in Bearden v Georgia (1983), the Supreme Court held that, if a defendant was found financially able to pay back their debt but refused to do so, they could legally be incarcerated, establishing the legal precedent of a defendant’s ‘willful refusal to pay’ (Beckett and Harris, 2011: 524). The terminology behind this precedent has become notoriously unclear in the legal sphere, affording what Alexes Harris (2016) calls ‘street-level bureaucrats’, including clerks, judges, and prosecutors, enormous discretion in determining the meaning and applicability of ‘willfulness’, ‘indigence’, and ‘financial hardship’ in these cases. The vast majority of these sentences occur at small claims courts in the US, part of a deliberate strategy by debt-collection firms. As Peter Holland (2011, 2016) has demonstrated, debt-collection firms buy large portfolios of delinquent debt from creditors for pennies on the dollar, purposely overflowing overburdened small claims courts with collections lawsuits. Within small claims courts, evidentiary rules such as hearsay, the authenticity of documents proving outstanding consumer debts, amongst other legal standards, are not fully enforced (Holland, 2011). As such, there is a widespread perception within the legal community that small claims courts have become ‘an extension of the debt collection industry’ with some reports suggesting that more than 95% of all collection cases end in a judgement in favor of the collector (Holland, 2014: 183). Despite the lack of data, several case studies in recent years have shed light on the nature of these debt-collection processes. As Holland (2014: 187) found in an article that aggregates data from 4,400 lawsuits by debt buyers in Maryland, over 99% of judgments against defendants were obtained without trials and fewer than 2% of defendants were represented by lawyers – percentages which have been substantiated by numerous other reports (Federal Trade Commission, 2010; Wilner et al., 2010).

With the consistent rise in consumer debt, private debt collectors have become ubiquitous. A 2018 report by the ACLU indicates that roughly one in three US adults (77 million people) currently have debt owed to private collections agencies (ACLU, 2018: 4). Debt-collection firms emerged throughout the 1980s and 1990s as one of the most profitable businesses in the US in the context of welfare restructuring, financialization, and bankruptcy reform. As Goldberg (2006: 727) notes, by 2006, there were over 6,500 debt-collection agencies operating in the US, growing by 25% in merely three years. In the same year, as Roberts (2014: 673) indicates, debt-buying firms purchased more than $100 billion in consumer debt, with the four most profitable firms increasing net income by over 700% between 2001 and 2006. Several oligopolistic firms currently dominate the debt-collection market, with Encore Capital as the largest and most profitable. As a report by HRW (2016: 10, 11) indicates, the debt-buying industry has become ‘so routine that tens of millions of people across the US either owe money to a debt buyer or have in the past’. In 2013 and 2014, Encore Capital bought up more than 35 million consumer accounts with a total value of $100 billion, collecting more than $1 billion from consumers (HRW, 2016: 11). As numerous studies have illustrated (Roberts, 2012; Kiel and Waldman, 2015), these debt-collection processes overwhelmingly affect low-income, racialized communities, expropriating wealth from families struggling to make payments on medical bills, put their children through school, and lead a life of basic dignity. Debt accumulated outside the criminal justice apparatus is not the only way debt can lead to imprisonment, however, and the avenues through which debtors become imprisoned have expanded in recent years.

Within the past several decades, the financial architecture of the US criminal justice system has shifted, with legal financial obligations (LFOs) emerging at all levels of the criminal justice system. As Harris (2016: 12) maintains, LFOs are governed by state law and include a series of fines, fees, and surcharges levied on defendants. LFOs can be imposed on everything from misdemeanors to felonies – all states currently permit fines and fees to be imposed in criminal cases – occurring within traffic courts, juvenile courts, district courts, and federal courts (Harris, 2016: 23). While robust data are limited, as Harris and Beckett (2011: 515) found in their 2004 study, it is estimated that ‘roughly two thirds (66%) of felons sentenced to prison, and more than 80% of other felons and misdemeanants, were assessed fees and fines by the courts’. More recently, a 2015 report by the National Public Radio found that all 50 states increased the rates at which they impose LFOs in their legal systems (National Public Radio, 2015). From temporary holding fees in jails, to court fees, ‘pay-to-stay’ fees in prisons, probation and parole fees, and the debt-collections fees that follow individuals after their release, LFOs are imposed at all levels of the criminal justice apparatus. Due to the highly discretionary ways in which they are imposed, LFOs have reproduced marked inequalities along racial and class-based lines. ⁴

The list of LFOs has continued to expand, with charges currently levied for police transportation, case filing, electronic monitoring, and drug testing (ACLU, 2015: 3). Failure to pay these debts, which increase exponentially given the usurious rates of interest charged, often leads to re-incarceration, with all but two states currently permitting incarceration for failure to pay LFOs (BCJ, 2015). Over the past few decades, as austerity measures and neoliberal restructuring policies have crippled government budgets, LFOs have become a vital source of revenue for municipal governments. A recent study (Kopf, 2016) utilizing data from the US Census’s Survey of Local and State Finances found that, in 2012, 4.8% of municipalities received more than 5% of their revenues from the imposition of LFOs, while 38% received more than 10%. The ‘broader apparatuses of the carceral state’ in addition to state and federal governments, including local police departments and municipal courts, have become critical enforcement mechanisms for states to extract revenue from the poor (Jones, 2018: 43).

The imposition of LFOs ‘ballooned in the early 1990s’ during the apex of criminal justice expansion and aggressive tax cuts for the wealthy as a means for municipal and state governments to recover revenues (Harris, 2016: 5). As a report by the ACLU (2010: 8) maintains, ‘[s]tates and counties, hard-pressed to find revenue to shore up failing budgets, see a ready source of funds in defendants who can be assessed [for] LFOs’. Paradoxically, governments are often unable to recoup criminal justice costs because the accused are unable to pay the debt they owe. Governments across the US have devoted enormous resources to elaborate debt-collection procedures, often spending more on debt-collection efforts than they are likely to recover (Evans, 2014: 1). The shift toward a user-funded criminal justice system has contributed to cyclical poverty across the US, particularly in low-income African American communities. LFOs continue to follow debtors long after their release, leading to re-incarceration and severely curtailed civil, political, and economic liberties. As Harris (2016: 48) indicates, ‘legal debtors remain under judicial supervision, subject to court summons, warrants and jail stays until their LFOs are paid in full’. Offenders thus continue to carry accumulated debts from the justice system long after their release, limiting the possibilities of establishing a legal means of economic subsistence and increasing the likelihood of re-incarceration. The succession of economic dislocation, debt, and criminalization comes full circle in the disciplinary neoliberal US economy.

Conclusion

In this article, through the lens of debt-related imprisonment, I sought to unpack the interplay of race, class, debt, and criminalization within the US social order. Noting the centrality of institutional racism within the broader politico-economic project of neoliberalism, I argued that the US criminal justice system is closely connected to several structural economic reforms initiated by the state. More specifically, I asserted that the contemporary relation between debt and imprisonment in the US is rooted in the historical destabilization of the welfare system, bankruptcy reform, and an unprecedented expansion of the penal state. Taken together, I have sought to establish how these interrelated transformations displaced marginalized populations relying on social assistance, contributing to expanding consumer indebtedness, the growing power of creditors and financial institutions, and the materialization of the nexus between debt and the criminal justice system.

Debt remains widespread across the US population, with revolving consumer debt rising from US $845 billion in 2012 to just under US $970 billion in 2016 (United States Federal Reserve Board, 2017). While systemic data are sparse, recent reports indicate that the number of people currently warehoused in local jails and state prisons across the US – simply because of their inability to pay debt – is growing. The mutually reinforcing logic of debt and imprisonment continues to configure the realities of everyday life for growing numbers of low-income Americans, particularly in racialized communities. While data generated by non-profit organizations and legal scholars have been invaluable in exposing the scope of debt and imprisonment in the US, this literature largely prescribes cosmetic legal reforms that fail to acknowledge the systemic change needed to address this deeply rooted social phenomenon. It is only by recognizing the structural imperatives of debt, the exploitative social relations of capitalism more broadly, and the related disciplinary functions of the mass incarceration system that the debt–criminal justice complex in the US – symptomatic of a deeply repressive social system – can be challenged, resisted, and overturned.