The Way of All Debt

payback-bookBritish political philosopher John Gray reviewed Margaret Atwood‘s prescient book Payback: Debt and the Shadow Side of Wealth in the New York Review of Books article The Way of All Debt:

One of the many impressive features of Margaret Atwood’s new book is its almost eerie timeliness. Consisting of five chapters that were broadcast in November 2008 by the Canadian Broadcasting Corporation as the Massey Lectures, a series intended to provide a radio venue for the exploration of important issues, Payback appeared in print last October. The book must have been written some months earlier, but there is no sign that it was composed in haste. Atwood examines the role of ideas of debt in religion, literature, and society; she discusses the nature of sin, the structure of plot in fiction, the practice of revenge, and the ecological payback that occurs when human beings take from the planet more than they return. A celebrated novelist, poet, and critic, Atwood has combined rigorous analysis, wide-ranging erudition, and a beguilingly playful imagination to produce the most probing and thought-stirring commentary on the financial crisis to date.

Atwood’s project is to show how human thought has been deeply shaped by notions of debt. It will be objected that she is merely spinning out an extended metaphor suggesting analogies between debt and noneconomic phenomena that are only vaguely analogous. In fact she is advancing the contrary and more interesting claim that economic activities involving borrowing and lending are metaphorical extensions of an underlying human sense of indebtedness. Beliefs about debt are not shadows cast by processes of market exchange. They are presupposed throughout much of human activity. Economic life invokes a sense of order in human affairs, widely dispersed throughout society.

There is another, larger obstacle to restoration of the American economy. The level of consumption achieved in America in recent decades did not depend only on a high level of borrowing from China. It also involved running up a large debt to the planet. In the last chapter of Payback, Atwood imagines an amusing and enlightening dialogue between a latter-day Scrooge—”Scrooge Nouveau,” a self-centered hedonist who believes he owes nothing to anyone else—and “the Spirit of Earth Day Past.” The Spirit’s message to Scrooge is that there are limits to the expansion of production, consumption, and human numbers:

Mankind made a Faustian bargain as soon as he invented his first technologies, including the bow and arrow. It was then that human beings, instead of limiting their birth rate to keep their population in step with natural resources, decided instead to multiply unchecked. Then they increased the food supply to support this growth by manipulating those resources, inventing ever newer and more complex technologies to do so…. The end result of a totally efficient technological exploitation of Nature would be a lifeless desert: all natural capital would be exhausted, having been devoured by the mills of production, and the resulting debt to Nature would be infinite. But long before then, payback time will come for Mankind.

Atwood puts into the mouth of the Spirit a “limits-to-growth” argument of a sort that is nowadays highly unfashionable. Contemporary evangelists of the free market, Marxian social critics, many religious fundamentalists, and most development economists are at one in believing that neo-Malthusian claims about the scarcity of resources are groundless; and that a mix of moral regeneration, institutional reform, and technological innovation can overcome natural limits to growth.

Yet Atwood seems to me to have the truth of the matter. Global warming as we observe it today is a byproduct of the industrial expansion of the past two centuries.

If Atwood’s Payback contains a lesson it is that debts must be repaid. The type of political economy that operated in the US over the past twenty years, which some imagined would spread throughout the world, was based on the belief that this old-fashioned maxim no longer applied. A new era had arrived, in which sophisticated techniques of financial management could transform debt into a means of wealth creation from which even the poor could benefit.

The new era turned out to be short-lived, or else nonexistent. America was able to live on credit only by borrowing from other countries, above all China. With the bursting of the bubble it has become less clear whether America’s creditors will continue to commit funds on the required scale, while the claim of American finance capitalism to be a universal economic model has collapsed. Along with other governments, the Obama administration is faced with the task of dealing with the danger of recession turning into something worse. A large-scale monetary and fiscal stimulus will be administered in order to stave off depression. We must hope the stimulus has the desired effect. Whether or not it succeeds, it involves a redistribution from savers to borrowers that does not square with traditional values regarding the payment of debt. In order to resume economic growth, past debts will be devalued and new debts incurred.

That does not mean payback will be avoided. Returning to the levels of consumption of the recent past means running up an ever-larger environmental bill. As Atwood argues, there must eventually be a reckoning; the ancient conception of a link between human society and the natural world has not been rendered obsolete. If humanity is unwilling or unable to pay back its debts, the planet will surely collect.

Suggested by Brian Walker

One thought on “The Way of All Debt”

  1. I must thank Sir John Gray for his brilliant review of the book “Paybaack: Debt and the shadow side of wealth.” It is rightly said :” The end result of a totally efficient technological exploitation of Nature would be a lifeless desert: all natural capital would be exhausted, having been devoured by the mills of production, and the resulting debt to Nature would be infinite. But long before then, payback time will come for Mankind.”

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