By 2013 the indebtedness of ordinary working people had increased more than fivefold since Margaret Thatcher’s election triumph in 1979.
Unsecured debt – which is basically what people owe, excluding mortgages - has increased from 4.8% of household annual income to 26.3% in the last three decades. That means for the average person today for every pound he or she earns, excluding mortgage payment, over 26p would have to be paid for twelve months to clear the loans and credit card debt.
If we count in mortgages, then total household debt amounts to over 150% of household income. Bear in mind that 40% of mortgage lending in the period 1999-2005 was taken to finance consumption, not to purchase a property. That means that the equity to mortgage ratio is falling.
How has this situation come about which threatens personal financial meltdown for ordinary working people? First, borrowing has increasingly filled the gap left by the withdrawal of social provision since the 1970s. People need housing and higher education, which can only be acquired through borrowing. Periods in which income is reduced and expenditure rises (e.g. birth of a child, under-employment, temporary unemployment) have also increasingly been financed on credit. Second, the increasing commercialisation of every aspect of life has meant that more and more spheres are commodified: e.g. the use of leisure centres for recreation, shopping as a ‘day out’
Widespread indebtedness is something capitalism promotes – just think of all that junk mail we used to receive offering us loans, or our ‘right to buy’ our council houses. Not only does usury provide a steady flow of purchasing revenue for capital, but it also enslaves. The worker must work, not just to secure current consumption, but to pay debts to ward off bankruptcy. Weak, indebted and insecure people are far easier to control, just as debt-ridden developing countries are putty in the hands of the IMF.
1 comment:
We seem to have reached a state in which capital cannot live by the straightforward exploitation of labour (I'm not sure if it ever could). So the methods use tend to worsen the mess the system is in. The other side of the point is the way that the state subsidises low paid work. Things like housing benefit, tax credits and so on are used to prop up employers who pay wages at below subsistence level. Thus, the core relationship in our society is breaking down. It depends on the state to work in a way that is radically different from the past. Meanwhile, the level of trust in governments has fallen to such low levels that taxes cannot be raised to cover the costs. So we have 'stealth taxes', privatisation and cuts.
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