Written by Laura Hanna, Alessondra Shackleton, Ann Larson, Hannah Appel and Luke Herrine.

Financial markets are political. Stock markets, bond markets and derivatives markets do not merely (or even primarily) raise capital for goods and services. Rather, they all have direct and often harmful effects on people’s everyday lives.

Our public universities issue bonds to cover the shortfall from tax cuts and, in turn, use ever-rising tuition dollars as collateral. Our mortgage, car and credit card payments are all securitized into short-term, lucrative investments for banks and investors, while for us they are shelter, food, and merely getting by. The municipal bond and sovereign debt markets have had plainly disastrous effects from Detroit to Puerto Rico to Greece—but for some they have been spectacularly profitable.

If financial markets are political, how can we contest them and their effects? What does civil disobedience and collective power look like in the age of finance? The Debt Collective is attempting to answer that question by piloting a new kind of organization: a debtors’ union.

You say finance, we say debt

Today, 75 percent of US households hold consumer debt. All indications are that for most Americans, debt has become a basic fact of life—a circumstance necessary just to get by.

Of indebted households, 40 percent use credit cards to cover basic living costs including rent, food, and utilities. Some 62 percent of personal bankruptcies in the US are linked to illness and health care costs. In the wake of the mortgage crisis, African American families lost 50 percent of their collective wealth and Latino communities have lost an astounding 67 percent of total wealth.

In households that do not use formal banking services, 10 percent of families’ annual income goes to alternative financial services including revolving debts and exorbitant interest payments to check cashers and payday lenders. In 2015, US students graduated from college with an average of $35,000 in debt, and defaults on student debt are now occurring at the rate of one million per year.

These experiences of mass indebtedness ramify through credit scores and reports, which ensure that people with lower scores pay higher interest rates, have a harder time finding places to live, and in many cases are even denied opportunities for work, thus reproducing cycles of debt and inequality.

Cities, states and entire countries have also been remade in the current debt-finance nexus. While both municipal and sovereign bonds have been in use for centuries (to fund infrastructure, public education and war, among other state endeavors), municipal debt alone has increased 800 percent over the past thirty years. As tax receipts have plummeted, cities turn increasingly to Wall Street for money, and they have been met with LIBOR fraud, toxic swaps, and capital appreciation bonds with ballooning interest rates on the order of payday loans.

Massive bankruptcies in Jefferson County, Alabama and Detroit, Michigan, offer two recent examples of what happens when the finance industry decides where and how to invest municipal capital, always demanding a profit on “public” investment. And of course we all watched with baited breath as Greece took on its creditors in a protracted battle over control of a semi-sovereign state. The fight in Greece was only the most recent sovereign debt struggle in the era of finance, and was preceded of course by Argentina, Mexico, Indonesia, Mozambique, and most of the Global South in the era of structural adjustment.

Widespread municipal, state and sovereign austerity mean ever more virulent forms of individual indebtedness. According to a recently filed class-action lawsuit, the city of Ferguson, Missouri runs a modern debtors’ prison scheme in which impoverished people are routinely jailed because they are unable to pay debts incurred in the “criminal justice” system. The lawsuit details how Ferguson families take money needed for food, clothing, rent and utilities to pay ever-increasing court fines, fees, costs, and surcharges. When they cannot pay, they are imprisoned.

Debt, power and exploitation

Needless to say, Ferguson is not alone. Across the United States, debt (along with outright state terror) often acts as a fearsome mechanism of racist social control—Jefferson County’s and Detroit’s bankruptcies must also be understood in this light. From Ferguson to Greece, debt is about power and subordination as much as it is about repayment at a profit.

From Ferguson to Greece, debt is about power and subordination as much as it is about repayment at a profit.

It is no coincidence that these forms of indebtedness have risen exponentially along with the rise of Wall Street. Since business leaders re-discovered a more confrontational and unified class-based politics from above, they have managed to shrink wages and worker power while directing governments’ budgets away from the provision of public goods and the anti-poverty measures of the post-WWII period. Yet business profitability depends on consumer demand—indeed, global capitalism during the neoliberal era has relied in large part on the power of US consumers’ inclination to push their money back into the dollar-driven import-export cycle.

In the face of stagnant or declining wages, the obvious solution has been simply to lend consumers the money. More credit/debt means that an increasingly financialized business class actually gets paid (in the form of interest, fees and derivative profits) to provide the rest of us the money needed to keep demand inflated (until it pops!).

It is more profitable for the creditor class—in the short and medium term—to lend money at interest than to transfer it in wages. And as the government has offloaded the costs of public goods including medical care and education onto consumers, the demand for debt has only grown. In other words, credit has stepped in to “compensate” for falling wages, and debt thus becomes one of the central mechanisms of exploitation.

What does this mean for us? As finance capitalism expands, so too do our debts: the financial sector has rapidly become the way we access many basic goods and services—food, shelter, medical care, education.

In this terrain of mass indebtedness, disempowerment, and debtors’ prisons, what does collective action look like? What does civil disobedience look like in the age of finance? What forms of material and conceptual subversion can we imagine?

Financial disobedience

Debt fuels crises, taking power out of the hands of all but the financial capitalist class. Yet it also presents an opportunity for a new form of resistance to capitalist exploitation. The threat of crisis can be leverage for debtors.

Experienced alone, debt is isolating, frightening and morally laden with shame and guilt. Indebtedness is being afraid to open the mail or pick up the phone. But as a platform for collective action, debt can be powerful. Consider oil tycoon JP Getty’s adage: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” Student debt alone stands today at $1.3 trillion. Together, we can be the banks’ problem.

Let’s think back for a moment to the mortgage crisis, when non-payment of mortgage debts essentially took down the global economy. We can learn several things from this catastrophe. First, it is a great illustration of the centrality of debt payments to capital accumulation and stability today. Second, these mortgage debts could never have been repaid in the first place. In the financial frenzy of mortgage backed securities, reckless creditors interested only in short-term profit concocted wildly unsustainable lending schemes, selling borrowers mortgage packages they could never have paid off. The failure, in other words, was already baked in; the only question was, who would pay for it?

The bailout ensured that homeowners paid while banks, massive insurance companies, and bondholders were made whole. And homeowners did not lose equally. Quantitative data in the American Sociological Review shows that the mortgage crisis represents one of the largest destructions of the wealth of people of color in US history.

Imagine if the power of mortgage-holders had been deployed collectively to retain homes while forcing creditors to sustain the losses. That is one potential of a debtors’ union.

To be clear, it is not simply a matter of the crisis disproportionately impacting diverse populations. Rather, Black Americans have long been the target of economic violence, and 2008 was no exception. At the time, Wells Fargo loan officers devastated entire communities by pushing hundreds of Baltimore area homeowners (referred to as “mud people” by banking staff) with good credit into high-interest subprime mortgages they called “ghetto loans.”

The aftershocks of these practices are still being felt, in Baltimore and beyond. The results of the mortgage crisis were so devastating in part because, while banks and their lobbyists were well-organized to fight for debt relief, the rest of us were not. (“They got bailed out. We got sold out.”) Imagine if the power of mortgage-holders—paradoxically, the power of their collective debt—had been deployed collectively and tactically to retain homes while forcing bondholders and creditors to sustain the losses. That is one potential of a debtors’ union.

Debt resistance and higher education

Aiming to build collective power through debt organizing, but rigorously cautious about the pitfalls, we in the Debt Collective have been nosing our way towards a debtors’ union for a few years. Many of us first started plotting on the streets of Manhattan during Occupy.

We educated ourselves about the nitty gritty of interlocking debt systems by collectively authoring a critical analysis cum financial literacy guide that we called the Debt Resistor’s Operations Manual. We gained some unexpected mainstream media attention with our first initiative, the Rolling Jubilee, through which we have now bought and abolished nearly $32 million of medical and student loan debt on the secondary debt market for mere pennies on the dollar.

But these tactics were only preliminary—attempts to undermine two of the weapons in creditors’ arsenals: obscurantism and promissory moralism. When, via the Rolling Jubilee, we chanced upon a portfolio of private student debt from what was then one of the biggest chains of for-profit colleges in the country, Corinthian Colleges Inc., we knew we had found an opportunity to see if a confrontational form of debtor organizing could work.

Higher education offers both an exemplary case study of financialization and fertile ground for contesting that process. During the administration of Governor Reagan in California, states and the federal government began dramatically defunding both public and private universities. That process continued through the 2008 financial crisis and beyond. Early on, defunding was partly a right-wing attack on the institutions that nurtured 1960s radicalism. More recently, it has become a bipartisan class politics and a hallmark of neoliberalism.

While lamenting state cuts to higher education, college administrators have used the funding crisis to take on debt from Wall Street, frequently using tuition as collateral. This allows colleges to fund projects that have nothing to do with education, such as the construction of lavish stadiums and investments in real estate ventures. In league with Wall Street, the schools promise to pay off this debt by hiking tuition, forcing students further into the red.

In addition to turning ostensibly public universities into profit centers for the financial industry, student indebtedness has disastrous socio-cultural effects. Debt forces people to live lives focused on getting out of debt, rather than defining themselves or pursuing their curiosity and passion. Debt, again, becomes a successful disciplinary technique, eliminating life paths that don’t produce for capital.

For-profit colleges take debt-financed higher education to its extreme. Their business model is to attract as many students disenfranchised by the mainstream educational system as possible, compelling them to mortgage their futures in return for subprime educations while funneling federal student loan money to executives and shareholders.

Getting organized

For-profit schools are notorious for running afoul of the law. Corinthian Colleges Inc., once the nation’s largest for-profit educational chain, was no exception. The company has been accused of fraud and predatory lending by everyone from Attorneys General to the CFPB, gaming the federal student loan system to the tune of $1.4 billion in federal grant and loan dollars in 2010 alone, more than the ten University of California campuses combined for that same year.

As Corinthian’s many scandals grew increasingly public in the summer of 2014, a small group of former students had already begun to organize. Collaborating with these students, and enrolling technology experts and lawyers daring enough to take us seriously, we began to work closely with a group of 15 former Corinthian students who were ready to publicly declare their refusal to make any more payments on their federal student loans.