Of Markets and markets

Gautam Bhan explores divergences in attitudes towards debt in his response to Arjun Appadurai's lecture, Thoughts on a Capitalist Imaginary.

Reflecting on complex arguments while they are still percolating in one’s brain is, as this reflection is bound to be, an incomplete and possibly even unfair task on both the reader and writer. Nevertheless, in the spirit of thinking out loud in the Johannesburg Workshop, the words below offer first reflections on Arjun Appadurai’s talk Thoughts on a Capitalist Imaginary that opened the current edition of the JWTC.

Appadurai’s context is a moment of deep financialisation at a time of late capitalism with a possibly new mode of production that – and herein lies the contest at the heart of the argument – he argues must push us to rethink the commodity form itself. Looking at the form of the derivative, he says that Marx’s core concept of relative surplus is no longer extracted by increasing the productivity of workers but by a new medium: the leveraging and circulation of debt, or risk upon risk. It is debt then that becomes the base of accumulating relative surplus, of creating value. This debt becomes available to the financial machine through its deep inroads into everyday life. We cannot refuse debt, he says, to live, access shelter, educate ourselves, protect our health. Though this “we” is unevenly distributed across and within different parts of the world, “we” are increasingly, he argues, debt-labourers rather than wage-labourers.

Value then is no longer simply related to price. Commodities begin to merge into commoditized assets rather than take other more familiar, tangible, historical forms. Here the echoes of the many bankers, heads of state and economists throwing their hands up saying that had no way to say how much the bundled, securitized, sold and re-sold American housing mortgages were really worth at the peak of the foreclosure crisis resound convincingly. A trading and investment bank, argues Appadurai, cannot tell you with any accuracy whether it made money at the end of the month or not – value can no longer be calculated in the double entries of the bookkeeper’s accounts.  

How do people enter this imagination? They are, as argued above, debt-labourers. They are also, however, agents of resistance. Resistance comes in the more recognizable form of debt refusal (which he acknowledges but argues is limited) and his own claim: the possibility of socializing and democratizing debt itself. He favours the latter because, he argues, extracting future value (the very idea of debt) is not inherently “bad” – the question is of who controls it and to what ends. This is certainly the moment when one’s spine tingles with a slight nervousness: can the very mechanisms of debt that he describes as being so opaque submit to an idea of control, let alone a democratic one?

I want to engage briefly with only two of the ideas here: one is to take seriously the unevenness of debt penetration in everyday life given our task to think from Johannesburg and the South; and the other to think about the institutional challenges of a resistance that seeks to “socialize and democratize debt.”

The first response is to think about what place a market of derivatives has with markets of everyday life. This is not to argue that global financial markets are not connected to each other across geography and scale and that they influence the local street corner as much as the stock exchange. It is instead to say that the materialities, specificities and degrees of these connections matter. Global processes and flows localize through what Anna Tsing described as “friction.” That friction is an essential space for those of us concerned with place and with the local. How does this new system of value impact markets that run on other modes of production – informal markets, industrial markets, or even national markets of countries “off the map”? Appadurai is right to point out that countries like India were insulated from the worst of the global financial crisis in 2008 because they were not as deeply enmeshed in these cycles of debt-fuelled financialisation. Appadurai argues that it is possible that such enmeshment could just be a matter of time but is it possible that such a “trajectorist” (to use another of his own terms) logic is not inevitable? That resistance could also take the form of refusing this enmeshment?

Edgar Pieterse’s presentation on the following day outlines one kind of friction. He argues that for a significant many across Africa, the future will remain in informal, vulnerable and uncertain work and shelter. For the markets that such places and urban residents produce, what is the imagination and reality of debt? What are the circuits of production and the generation of value? I am not saying that Appadurai claims that a move from wage labour to debt labour is happening in such places. I am seeking to translocate his inquiry to ask it from a different site and push us to think: how would we reconstruct his arguments if we asked them from the informal market rather than the New York stock exchange? How would we think about what kind of representation of the Market the derivatives market really is. Such a translocation could allow us to recalibrate the relative location, power and spread of the debt economy vis-à-vis the Market.

The second point of engagement is to think about resistance. I echo Appadurai’s relative lack of enthusiasm about debt refusal but for a different reason. In transitioning economies (and trajectorist words re-enter our dialogue!) like India, debt remains a sign of social and economic mobility; the ability to arrive and be able to partake in formal market mechanisms not just to alleviate emergency or disaster spending or to smooth consumption but to actually improve the quality of one’s life and enter onto a trajectorist, progressive narrative of upward mobility. The hunger of many Indian residents is not to refuse debt’s pervasive hold on their life as in the US but, in fact, to desperately seek an ability to harness it.

Yet, at least now, even this harnessing is particular. To generalize and speak unforgivably broadly in categories like “India,” debt cannot be seen outside a culture of very high savings in the country. Debt is something that one enters post-saving, as a reward for financial discipline and always alongside it. Debt default in India is a story of the poor, not of those in the formal financial system. It is a story of farmer suicides and micro-lending, though the latter allows a much easier connection to Appadurai’s global financial circuits of debt and value. In short: to be in debt remains a deeply ethically, spiritually and social difficult space for most Indians, even those with the financial means to be able to leverage and afford it.

Yet Appadurai’s other option of refusing financialisation – to socialize and democratize debt— immediately makes one wary precisely because the institutions and processes that are to be reclaimed remain so unclear. If the very premise of a hyper-financialisation is its opacity, how and where does one begin to think about controlling or re-directing this set of actions towards different ends? Here, my final thought is to think tangibly about the derivative as a contract, one that then can be regulated and adjusted through controlling its terms – refusing, for example, the ability of banks and traders to have contracts that do not have the limits of time and closure that we expect them to.

Across the global South, the challenge to reclaim institutions may be a different one from the North – if the latter has economic institutions that are undemocratic, opaque, protected and powerful; the former, in many ways, has institutions that struggle to exist and remain effective – either to ride a new global financial value ride or to resist it.

Gautam Bhan teaches at the Indian Institute for Human Settlements, Bangalore.