Recently I learned that my book The Emotional Logic of Capitalism has been awarded the Transdisciplinary Humanities Book Award, sponsored by the Humanities Research Institute at Arizona State University. The award is given each year to “a non-fiction work that exemplifies transdisciplinary, socially engaged humanities-based scholarship.” The list of previous awardees show the wide range of work considered to fall under this heading, and I am grateful to the Institute’s Director Sally Kitch and the Board for selecting my book. I’m looking forward to visiting the Institute in the fall.

Of course recognition of one’s work is always nice, but there is something particularly gratifying about receiving this award. One reason would be that I did not in fact realize that the book had been nominated (many thanks to my wonderful Stanford editor Emily-Jane Cohen!). More to the point, going down the path that eventually led to the writing of this book has not been free of occasional professional uncertainty. Having been trained as a meat-and-potatoes political economist, and having done most of my early work on the question of power in American finance, The Emotional Logic of Capitalism is a more theoretical work that draws on perspectives and fields that are not usually brought to bear on questions of money and finance – semiotics, psychoanalyis, pragmatism, religious history, among others. Contemporary academia does not always take kindly to interdisciplinary work, so the recognition bestowed on the book by this award is gratefully received.

So what led me to write the book, and why did I feel it was necessary to venture deeply into social theory to make sense of questions of money and finance? Let’s go back for a moment to the financial crisis of 2007-08. Progressively minded commentators immediately took this event as announcing the end of neoliberal capitalism, and they loudly declared an imminent return to Keynesian intervention and public regulation. Such arguments are closely associated with the revival of Polanyi’s work, which sees capitalist history as driven by alternating movements of market disembedding (when the speculative and individualizing logic of the market spirals out of control) and re-embedding, (when society regroups and resubordinates markets to the public good). In the book I take this “double movement” model as emblematic of a highly influential but problematic way of thinking about economic and financial life.

The idea of the double movement has turned out to be a poor guide to the development of capitalism since the financial crisis: instead of a break with the politics of financial expansion, what we got was a neoliberalism recharged. My book is essentially an extended reflection on the deeper – psychological and emotional – sources of resilience that capital can tap into and that have eluded the tendency to understand it in terms of the Polanyian image of market disembedding. To this end, it recovers the moral and theological origins of the concept of “economy,” arguing that our relationship to money is regulated by a complex infrastructure of affectively charged (inter)subjective investments. In this way, the book develops an understanding of economy that is critical but takes seriously the idea that money and markets have self-organizing and self-regulating properties.

The second part of the book traces how, over the course of the twentieth century, progressive thought gradually lost sight of the emotional and theological content of economy. It argues that the turn to a disembedding narrative should be understood as the way progressive thinkers have sought to come to terms with the disappointments of democratic capitalism. To lament the speculative and individualizing character of the market always seems like a promising move in the moment – it offers a way to make a critical point that is relatable and so offers a particular kind of rhetorical traction. But over time it has resulted in a critique that is moralistic and increasingly unable to engage the complex, subterranean ways and often not fully conscious ways in which people are invested in (neoliberal) capitalism.

The book can be read as a way of doing political economy that is different from where it is currently heading in its leading journals – which is characterized by a definite and growing scepticism about the value of theory. That sentiment is no doubt understandable, as one of political economy’s main concerns has always been the “reality-blindness” of the formal models that mainstream economists build. But not doing theory is doing theory by default, and the current sway of the Polanyian model seems to me to be a result of a reluctance to revisit thorny but fundamental conceptual issues.

For interested readers, elsewhere on PPE I have elaborated these points with more specific reference to the question of austerity politics, and this discussion by my colleague Fiona Allon provides an excellent account of the book’s key conceptual moves. The book’s introduction can be read here.

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“Did you know that approximately 3 million Australians – around 16.9% of the adult population – are either fully or severely excluded from obtaining credit from the banks?” So asks the peak body representing Australia’s payday lenders as part of their Small Loans Big Need campaign.

Debtfare states and the poverty industry provides a timely corrective to this rhetoric of “financial inclusion”, which seeks to recast poverty as a problem of underdeveloped consumer credit markets. The award-winning book seeks to “pierce this fetishised surface to grasp that consumer credit is not only infused with class-based power, but also structural violence and silent compulsions.” With the aid of a historical materialist framework, Susanne Soederberg powerfully demonstrates how movements by capital and states to create financial equality in credit markets simultaneously exacerbate and conceal class, race and gender inequality through the “social power of money.”

Soederberg offers an account of the rise of the poverty industry by developing Marxist understandings of consumer credit as “privately created money” and the marginalised workers that that depend on it as the “surplus population.” This grounds detailed case studies of the payday lending, credit card and student loan industries in the United States, as well as the microfinance and housing finance industries in Mexico, within the contradictory dynamics of capital accumulation.

According to Soederberg, these types of debt are critical to the reproduction of the unemployed and underemployed workers that make up the surplus population because repayment obligations intensify the compulsion for debtors to work in low paid jobs. The private creation of money also provides direct opportunities for the poverty industry to profit from the “secondary exploitation” of already-exploited workers by charging often exorbitant interest rates, fees and commissions.

Debtfare states illuminates a fundamental tension between these two components of a credit-led accumulation strategy based on the commodification of social reproduction: consumer credit is a “fictitious value” that is based on a “risk/gamble” on the future earnings of workers that have a precarious relationship to the labour market. Asset-backed securitisation provides a temporary “fix” for creditors by bringing forward these income streams. But ultimately, as David Harvey via Soederberg reminds us, “no matter how far afield a privately contracted bill of exchange may circulate, it must always return to its place of origin for redemption” – that is, to the repayments of the debtor.

Enter “debtfare states”, a concept that represents the most innovative, original and important contribution of the book. Meticulous empirical work demonstrates the crucial role of institutional, regulatory and rhetorical strategies by public authorities in the United States and Mexico in mediating tensions between the requirements of privately created money and the conditions of the surplus population. Debtfare states have boosted profit rates for the poverty industry through actions such as lifting interest rate caps while working to ensure repayment obligations are met, for example by amending legislation to make bankruptcy out of reach for the surplus population. When states have acted in response to public outcry or financial crisis, this has been limited to consumer protection efforts that seek to enhance transparency and disclosure in order to provide consumers with the information they need to make rational decisions.

Between the different credit markets and geographical locations covered in the book, it is commonality in state policy, rather than variegation, that stands out. The modus operandi of debtfare states is to naturalise debt and discipline the debtor while depoliticising the underlying causes of indebtedness: below living wages, inadequate pensions and unemployment benefits and the marketisation of public services.

From the vantage point of the Department of Political Economy’s Past & Present reading group at the University of Sydney, it is clear that debtfarism has become a central component of Australian public policy. State-issued student debt has underpinned the privatisation of the vocational education and training system, which has been sold by successive Australian governments as extending access to income-contingent loans to a new layer of students. Through its international aid program, the Australian government has also been focused on extending access of the big banks to Pacific Island communities by teaming up with Westpac and ANZ to “bank the unbanked.”

Debtfare states makes valid criticisms of post-structuralist scholars, such as Andrew Leyshon and Paul Langley, for reproducing this financial inclusion discourse by remaining in the sphere of exchange. However, the rich analysis of the intertwining relations between the spheres of production and exchange is at times limited by a tendency to assert Marxist categories in an a priori fashion. For example, Soederberg clearly distinguishes between credit advanced for personal consumption as the “money-form of revenue” and credit advanced for private investment as “fictitious capital.” But efforts to leverage and risk manage skills, in the case of student loans in the United States and Australia, and communities, in the case of microfinance in Mexico and the Pacific, raise interesting questions about whether the capital relation itself is being transformed by debtfarism, and how conceptual distinctions between production and exchange may also need to change with it.

Soederberg’s study of the rise poverty industry nonetheless makes a significant step towards an expanded conception of class relations in contemporary capitalism that accounts for the integral role of finance in social reproduction. Its contribution to state theory through this opens up an important research agenda into debtfare states as a terrain of class struggle.

Indeed, the campaign by the Australian payday lending industry, which has been challenged in the past year by class actions and media exposés, shows that debtfarism is a contested process that remains politicised. That states continue to frame the problem as one of market failure was typified by a recent penalty imposed by the financial regulator ASIC on pay day lender Nimble for irresponsible lending practices, which required the online operator to donate $50,000 towards financial literacy programs. In this context, Debtfare states and the poverty industry provides an essential resource to understand, and question, individualised solutions to poverty.

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