Is Debt Write-off a Viable Solution to the Crisis of Financialisation?, SOAS University of London
Channel: SOAS University of London
Date: 2017-06-06

This Development studies Seminar titled “Is Debt Write-off a Viable Solution to the Crisis of Financialisation?” was given by Dr Johnna Montgomerie at SOAS University of London on 29 November 2016

You can find out more about this event at https://goo.gl/1zFS38
Find out more about Development Studies at SOAS at https://www.soas.ac.uk/development/

This presentation makes the case for a comprehensive approach to debt restructuring, write-downand write-off as an effective solution to the economic malaise gripping financialised economies.Looking at examples of debt cancellation or repudiation over the past century, we consider what can be learned about the moral economy of debt governance and the effectiveness of debt-write off as a tool for solving protracted crisis. However, the specific focus here in on household-level debt as a central pillar of financialisation, and the household economy as pivotal to shaping wider macroeconomic and global economic trends. Household-level debt is the driving force of financialisation because bank-based debt is the mechanism for money creation and, ultimately,wealth holdings. What financialisation has made more apparent is that debt is transformative,inasmuch as its temporal shift first creates economic activity only to destroy it. In other words, ‘buy now, pay later’ writ-large ensures that when debt is issued it materialises as economic activity at that time, but over the ensuing years or decades of repayment present-day income diverts from economic activity directly into financial revenue flows. The effects on the economy and society is a collective sense of ‘financial melancholia’, which is qualitatively different than a Great Depression, in which debt creates a future of always paying for the past. A comprehensive package of debt restructuring, write-down and write-off for households is the most direct and effective means of treating financial melancholia.

Johnna Montgomerie is a Senior Lecturer in Economics and Deputy Director of the Political Economy Research Centre (perc.org.uk) at Goldsmiths, University of London. She has published widely in the area of financialisation, debt and the household. Her latest publications include ‘Austerity and the Household: The Politics of Economic Storytelling’ forthcoming in British Politics; and, ‘Caring for Debts: How the Household Economy Exposes the Limits of Financialisation’ with Daniela Tepe-Belfrage in Critical Sociology.