This notion of a ‘creditocracy’ comes from Professor Andrew Ross, based at NYU and a founding member of Strike Debt and The Debt Collective in the US. Ross coined the term in his 2014 book of the same name. Clearly the book alludes to what Ross feels is a hijacking of democracy by a ‘creditor class’ who are taking over and exploiting the democratic system and using it for their own ends, wrapping credit around access to all social goods. To me, the word ‘creditocracy’ conjures a sinister atmosphere verging on conspiracy, a dark and dystopian system lurking just below the shiny surfaces of our western democracies.
But what evidence does Ross present to convince us that this could be the case?
Ross’s book opens with a series of financial records, in which he demonstrates the ever increasing balance sheets of the US and European banks.
If you'd like to read more about the creditocracy - and our thoughts on Andrew Ross's book - please click below
April - June 2013 the US banks made record profits, the Lion’s share going to Bank of America, Citigroup, Wells Fargo, JP Morgan Chase, Goldman Sachs, Morgan Stanley. All of these were more powerful and larger than before the 2008 crash. They were also more ‘leveraged’ ie they had lent more and borrowed more.
“Using international accounting rules, the combined assets of the big six totaled $14.7 trillion (93% of US GDP in 2012) while the entirety of the country's banking assets was worth 170 per cent of GDP. In Europe the situation was even more acute; Germany's banking sector clocked in at 326 per cent of national GDP, while the UK banks were at 492%."
Further research reveals that the Bank of England predict that by 2050 the banking sector’s assets will be at a ratio of 950% of GDP. Can you imagine what that means in terms of the power relations between our banks and the rest of the economy and their influence on policy and government?
I was shocked at these figures. But Ross was far from resting his case there. I would highly recommend any of you who are interested in the theme of economics, debt and power to look at his book.
"It is not enough for every social good to be turned into a transactional commodity, as is the case in a rampant market civilisation. A creditocracy emerges when the cost of each of these goods, no matter how staple, has to be debt financed, and when indebtedness becomes the precondition not just for material improvements in the quality of life, but for the basic requirements of life. Financiers seek to wrap debt around every possible asset and income stream, ensuring a flow of interest from each.”
For most well off middle class people this perhaps doesn't ring true, at least not in the older professions. But what about for the working poor or zero hours minimum wage earners? What about the 'just about managing' or the so called 'precariat' of artists, writers, filmmakers. And what about public sector workers, who have experienced pay caps over the last 10 years, at a rate lower than inflation? Think about access to higher education. Think about recent reports on house prices and soaring rents in metropolitan areas, where the young generation are being encouraged not to eat sandwiches at lunch in order to save to buy a place. Just about the only place where we're free of debt - at least on the surface - is the NHS - but as we'll see in another email, perhaps financiers do have it by the throat.
Over the last 12 months alone, British household debt has gone up 10%. And why has there been a 30% increase in county court judgements against those who have been unable to discharge their debts, and have been punished in court. CCJ's are necessary to obtain before bailiffs are sent round to seize personal possessions. But let's not rest our case yet. And certainly let's not be despondent - as we believe we have plenty of agency at our disposal.
Court's dismissed for the day. See you tomorrow to hear more evidence!