The economic crisis is in essence a debt crisis. For all the economic complexity involved in the details it is basically easy to understand. There are way too many pieces of paper that supposedly entitle their holders to social wealth and there is not enough of that wealth to meet all those claims. Debt is just a promise to pay in the future what one does not have today. There are simply way too many of these promises and no way that they can all be paid.
In order for our society to get out of this crisis much of this debt has to be “forgiven.” In other words the creditors who lent the money have to accept that they are not going to be paid back and they will have to take the loss. This is no sin nor is it a crime. It is a part of the risk which lenders take and which, according to their economic theories, entitles them to profit. It also entitles them to lose. That is what “risk” means. The crisis continues because they won’t accept that they lost.
Once they take the loss the economy will start to move forward again. The crisis is continuing because the banks who loaned the money don’t want to accept the loss.
The bailouts are designed so that the banks do not have to accept the loss. Instead of the banks taking the hit, the government will borrow money to be paid back by our future tax dollars and they will give this money to the banks to make up for the losses they should have taken. That is a solution to the crisis but not the only one.
Instead of asking Washington to bail out people instead of banks, or asking the government to help Main St. instead of Wall St., we should just help ourselves, and solve this crisis, by forming a union of debtors.
A debtors union is open to all who are indebted — credit cards, car loans, mortgages, student loans, medical bills, etc., and once we organize ourselves, we can refuse to pay and organize a mass default and force the debt to be written off, or we could decide to renegotiate the debt at a steep discount maybe twenty cents on the dollar. That will be for the union members to decide for themselves. In any event, we can take our destiny into our hands — let’s “bail out” ourselves, let’s “recapitalize” ourselves, let’s get out of debt!
This article was first published in Pirate Caucus: A Blog of Revolutionary Democracy on 4 February 2009; it is reproduced here for non-profit educational purposes.