Britain’s household debt mountain has reached a new peak, with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders, according to the TUC… The level of unsecured debt as a share of household income is now 30.4%, the highest level it has ever been at. It is well above the £286bn peak in 2008 before the financial crisis, the TUC said.

Related to 10 years of Conservative-led austerity, household debt has increased as a way to respond to the pressures of being able to afford basic necessities. David Harvey, Distinguished Professor of Anthropology & Geography at The Graduate Center, CUNY, discussed in his latest podcast the concept of necessities and its relation with the concept of freedom. It is often argued that freedom is an exclusive capitalist neoliberal offering, and that a socialist system would remove individual freedoms from people (this argument mostly relies upon comparisons with ‘communist’ regimes such as Soviet Russia, which are criticised by many socialists and would certainly have been criticised by Karl Marx). Whilst this may be true if your individual freedoms include being able to be very, very rich at the expense of the majority, socialism via the public domain, rather than the market, would provide more people more individual freedom by providing everyone with access to basic necessities. Harvey cites Jeremy Corbyn’s Labour party policies as a good example of how this can work in practice.

The level of household debt reported by the TUC, which also as a note doesn’t include outstanding mortgage debts, also relates to the rise of insecure, low paid work. The household debt figure reported on included “the total amount lent in bank overdrafts, personal loans, store cards, payday loans and outstanding credit card debts. It also included student loans, which added a substantial amount to the figures.” The research also doesn’t include Christmas debts, which as I discussed in a previous article, takes on average 5 months to pay off!

The centrality of debt is not a surprise. David Harvey argues in his book Rebel Cities: From The Right to the City to the Urban Revolution that understanding the credit system needs to be central to a critical conception of how the system works and the increasing crises and instability it faces:

Internalizing the credit system and the relation between the rate of interest and the rate of profit within the general laws of production, circulation, and realization of capital is likewise a disruptive necessity if we are to bring Marx’s theoretical apparatus more acutely to bear on actual events.

The rise of fictitious capital has been central to sustaining the capitalist system but also creating pressures and demands upon it that resulted in the 2007/8 crisis (The Big Short is a fantastic film illustrating this very well). However, private debt was transferred into public debt, with well organised and designed campaigns blaming everyone and anyone, whether that be refugees, benefit claimants, ethnic minorities etc. to take attention away from the role of capital and especially fictitious capital in creating the crisis (it’s a lot harder to quickly explain what a Collateralized Debt Obligation is!). Related to this blame game is the political programme of austerity, which attracted condemnation from the United Nations Special Rapporteur on extreme poverty and human rights, which I wrote about in a recent article, and has created an economy that the TUC report shows is more reliant on unsecure debt than ever before.

We have created a system where we ‘value’ the ‘rights’ of fictitious capital over ordinary people, where the failures of the market are protected by the state whilst the same state unleashes a political programme that creates record levels of household debt, insecurity and low wages, as local services are closed or cut. This relates to the contradictions of capitalism and neoliberalism, which David Harvey has written and spoke a lot about and which I touched on in my previous article regarding the contradictions created by demand side economics and supply side economics, with the former relating to Marx’s arguments in Volume 2 of Capital regarding the need for capitalism to be careful when depressing worker and labour power, as there is an awareness that workers need to be able to consume and spend to keep the system going and the latter relating to the issues Marx talks about in Volume 1 of Capital, especially regarding the need to destroy labour power in order to maximise the surplus value and profit relating to capital mobility and also the creation of fictitious capital.

These contradictions create instability and systemic problems, as shown by how there are concerns regarding another crisis happening in 2020 (see here and here for instance). The system isn’t sustainable nor does it work for the majority of people.

Jane Watkinson (she/her) is an anti-capitalist, intersectional feminist and vegan interested in Marxism, social ecology, sociology, revolutionary humanism, and studying radical social, economic, and political theory and how this can be applied in practice. She is a freelance researcher working in the community sector. Her LinkTree is here.

There isn’t a better example of how our system, economy and culture relies upon debt than Christmas. Research shows that “the average person will spend £923 on food, drinks and presents” at Christmas. Additionally, “over half of Brits will spend more than they earn in December and that the average time to pay off Christmas debt is five months.” This links into the concept of a ‘Debt Hangover’ – another example of how capitalism normalises debt and excessive consumption alongside related instability and imbalances through language (also, remember the use of ‘Credit Crunch’ to describe the international financial meltdown of 2007/8).

UK debt – including household debt, student debt and consumer credit – is increasing. As you can see from the graph below we are the second most indebted country in the G8:

This links to small or non-existent wage increases when taking into account inflation, as people turn to credit to cope with the increasing cost of living with The Resolution Foundation finding the UK “on course for the longest fall in living standards since records began in the 1950s.”

Related to this is the concept of debt peonage that David Harvey has discussed:

I mean basically debt is a claim on future labor, and when people are indebted they have to labor to pay off their debts. And we see this with students, for example, right now. Many of them come out, they’ve got this huge debt, in a sense their future is foreclosed — they’ve got to pay off that debt before they can really have a life. And this is extremely, extremely difficult. That’s why I call it anti-value, because it’s not as if people have a right to the value they’re going to create. They have to actually create value in order to pay off the debt. So for them it’s a negative life that they’re living as opposed to a positive life…So this is the world we’re living in, we’re living in a world of debt peonage…their future is foreclosed by the way in which the capital is wrapped around them. This kind of thing about the good life is: borrow money and then everything will be OK.

This is an important concept to understand the reality of the system we find ourselves within. Debt constrains what we can do, it keeps us invested in a system we need to be able to pay for basic things but also to live up to cultural demands of consumption that things such as Christmas create. Described as a ‘golden quarter’, the Christmas period is considered a great time for business – with food shops and online shopping especially benefiting – and despite there being concerns about consumers tightening some of their spending, especially when it comes to the high street, there is still a big increase in consumption:

Total retail spending is expected to rise 4% in December, compared with the same month in 2017, to reach nearly £48bn excluding VAT, according to data from the market research firm Mintel.

The obsession with consumption also links into the biggest threat to our future: environmental crisis. Extinction Rebellion are an inspirational grassroots organisation raising awareness of this issue. The effect Christmas has on the environment was something Adbusters have highlighted in a recent email sent to subscribers:

Since manufacturing and consumption are responsible for more than half of the global carbon emissions, choosing to buy as little as possible this Xmas may give our Planet Earth some much needed relief. And if you still need to be convinced to consume less, consider that if we heat up just 4 degrees more, we will witness the total and irreversible collapse of human civilization as we know it.

The Washington Post also covered why such an increase poses a danger to the world as we know it in a recent article here.

Alongside being critical of what is happening we have to be positive and hopeful about what we are for. Whilst I am critical of the capitalist co-option of Christmas, there are lots of good things about this time of year including: a healthier work life balance; focus on the importance of seeing friends and family; compassion, togetherness and caring about people in positions and situations of disadvantage and hardship. However, rather than being reserved for this time of year, they are things we should be focussed on all year around. It shouldn’t be part of a token appeasement tied up with capitalist driven consumption. That fun, enjoyment and happiness and concern for others and having a more cohesive, fairer and inclusive society for all should be something we strive for no matter the time of year. Only through a radically new way of doing things via systemic change can this happen.

Jane Watkinson (she/her) is an anti-capitalist, intersectional feminist and vegan interested in Marxism, social ecology, sociology, revolutionary humanism, and studying radical social, economic, and political theory and how this can be applied in practice. She is a freelance researcher working in the community sector. Her LinkTree is here.