Living on Borrowed Time

Conversations with Citlali Rovirosa-Madrazo

Zygmunt Bauman

• Publisher: Polity
• Year: 2013
• Print ISBN: 9780745647395, 9780745647388
• eBook ISBN: 9780745659213
• Edition: 1
• Topic: Philosophy
• Subtopic: Philosophy History & Theory

The global financial crisis has shattered the illusion that all was well with capitalism and forced us to confront the great challenges we face today with a new sense of urgency. Few are better placed to do this than Zygmunt Bauman, a social thinker whose writings on liquid modernity have pioneered a new way of seeing the world in which we live at the dawn of the 21st Century.

Our liquid modern world is characterized by the transition from a society of producers to a society of consumers, the natural extension of which is the society of perpetual debtors. The ruling idea of the society of consumers is to prevent needs from being satisfied and to create demand; its natural extension is to enable consumers to consume more by borrowing. Debt was transformed into a crucial profit-earning asset of capitalism in liquid modern times. The present-day 'credit crunch' is not the outcome of the banks' failure but rather the fruit of their success in transforming the majority of men and women, young and old, into a race of debtors. They got what they were looking for: a society of debtors whose condition of being in debt was made self-perpetuating, with more debts being offered, and more undertaken, as the only way of escaping from the debts already incurred.

Starting from this reflection on the current global financial crisis and prompted by the probing questions of his interlocutor, Citlali Rovirosa-Madrazo, Bauman examines in an historical perspective some of the most pressing moral and political issues of our time, from international terrorism and the rise of religious and secular fundamentalism to the decline of the nation-state and the threats posed by global warming, issues whose seriousness and urgency attest to the fact that we are living today not only on borrowed money but also on borrowed time.

Part One

Conversation I
The credit crunch: an outcome of the Bank’s failure, or a fruit of its outstanding success? Capitalism is not dead

Citlali Rovirosa-Madrazo You grew up during the first major recession of the twentieth century and experienced extraordinary historical times in its aftermath. You have since come a long way, only to find yourself amidst the first major recession of the twenty-first century. But you were never a mere passive observer of what ‘history threw at’ you; from a very young age you were politically active and engaged in controversial movements deeply resonant of today’s new challenges. What were your first thoughts in the last few weeks when you realized that we were facing a ‘financial tsunami’ and were heading towards the ‘implacable collapse’ of the Western economy? What could we have learnt from the twentieth century recession and failed to learn? What can we still learn from the mistakes made in the past? Did you experience a socialist or indeed a communist nostalgia?

Zygmunt Bauman ‘Communist nostalgia’ is for me out of the question. Communism, which I once described as ‘socialism’s impatient younger brother’, means to me a project of an enforced ‘shortcut to the Kingdom of Freedom’ – which, however attractive and emboldening it may sound in words, proves in its practical application to be a shortcut to the cemetery of liberties, and to slavery, whenever it is executed. The idea of shortcuts, not to mention the practice of enforcement, stands in stark opposition to liberty. Enforcement is a self-propelling and self-intensifying practice; once started, it must focus on a vigilant and never slackening effort to keep the enforced meek and silent. If it is proclaimed in the name of human freedom (as Jean-Jacques Rousseau once mused it could be, as Lenin resolved to hammer home, and as Albert Camus saw in despair was the fast settling habit of the twentieth century), it destroys its declared target and then it has nothing to serve except its own continuity.

‘Socialist nostalgia’? It would be, if I had ever abandoned my belief in the wisdom and humanity of the socialist stance (which I have not), and it could be, if I did not perceive ‘socialism’ as a stance, an attitude, a guiding principle, but viewed it as a type of society, a specific design and a particular model of social order (which I have not for a long time now). Socialism means to me a heightened sensitivity to inequality and injustice, oppression and discrimination, humiliation and the denial of human dignity. To take a ‘socialist stance’ means opposing and resisting all those outrages whenever and wherever they occur, in whatever name they are perpetrated and whoever their victims are.

And ‘capitalism’? As the recent ‘financial tsunami’, as you have vividly called it, has shown ‘beyond reasonable doubt’ to the millions of those who were lulled by the mirage of ‘prosperity now and forever’ into believing in capitalist markets and capitalist banking as the patent methods of successful problem-resolution – capitalism is at its best when creating problems, not when trying (if it does!) to resolve them. Capitalism, as with systems of natural numbers in Kurt Gödel’s famous theorem, cannot be simultaneously consistent and complete; if it is consistent with its own principles, problems arise it cannot tackle; and if it tries to resolve them, it cannot do that without falling into inconsistency with its own founding assumptions.

Long before Gödel worked out and jotted down his theorem, Rosa Luxemburg wrote her ‘capitalist accumulation’ study, in which she suggested that capitalism cannot survive without ‘non-capitalist’ or ‘pre-capitalist’ economies; it can proceed according to its principles as long as there are ‘virgin lands’ as yet untouched and open for expansion and exploitation – yet, when it conquers them for the purpose of exploitation disguised as cultivation, capitalism deprives them of their pre-capitalist virginity and so reduces the supply of its own future nourishment. Capitalism, to put it bluntly, is essentially a parasitic system. Like all parasites, it may thrive for a time once it finds an as yet unexploited organism on which it can feed, but it can’t do that without harming the host and sooner or later destroying thereby the conditions of its prosperity, or even of its own survival. Writing in an era of rampant imperialism and territorial conquest, Rosa Luxemburg did not and could not, however, foresee that the premodern lands of exotic continents are not the only potential ‘hosts’ on which capitalism can feed to prolong its lifespan and initiate successive time-stretches of prosperity. Now, a hundred years later, we have come to know that capitalism’s strength lies in its amazing ingenuity in seeking and finding (or indeed producing) new species of hosts whenever the previously exploited species get thin on the ground or are extinguished; we came to know, too, the virus-like expediency and speed with which it manages to readjust to the idiosyncrasies of its new grazing pastures. The present ‘credit crunch’ does not signal the end of capitalism – only the exhaustion of the latest grazing pasture.

There was once a joke about two salesmen travelling to Africa on behalf of their respective shoe companies. The first sent home a message: don’t dispatch any shoes – everybody here walks barefoot. The message sent by the second was: dispatch 10 million pairs of shoes immediately – everybody here walks barefoot. That old joke was composed in praise of aggressive business acumen and in condemnation of the business philosophy prevalent at the time: of business aimed at the satisfaction of existing needs, and of offers following the current demand. In the few dozen years that followed, business philosophy completed its U-turn, however. Today, in a setting successfully transformed from one of a society of producers (profits made mostly from the exploitation of hired labour) into one of a society of consumers (profits made mostly from the exploitation of consumerist desires), the ruling business philosophy insists that the purpose of business is to prevent needs from being satisfied and to evoke, induce, conjure and beef up more needs clamouring for satisfaction and more potential customers prompted into action by such needs: in short, that the task of the offer is to create demand. That belief applies to all products – of factories or of financial companies alike. As far as business philosophy is concerned, loans are no exception: the offer of a loan must create and magnify the need for borrowing.

The introduction of credit cards was a signal of things to come. Credit cards were sprung ‘on the market’ a couple of dozen years ago under the telling and uniquely seductive slogan: ‘take the waiting out of wanting’. You desire something but haven’t earned enough money to pay its selling price? Well, in olden times, now fortunately over and gone, you would have to delay the satisfaction of the desire (that delay, according to Max Weber, one of the fathers of modern sociology, was the rule that made the advent of modern capitalism possible): you would have to tighten your belt, avoid many temptations and deny yourself many momentary joys, spend prudently and frugally, and put the monies you managed to spare that way in a savings book, hoping that with due care and patience you would collect enough of them to make your dreams come true. Thank God and the banks’ benevolence, no longer! With a credit card, you can reverse the order: you can enjoy now, pay later! A credit card makes you free to manage your own satisfactions: to obtain things when you want them, not when you earn them and can afford them.

This was the promise. But there was also small print attached, difficult to decipher, even if easy to divine in a moment of reflection: that every ‘later’ would turn at some point into a ‘now’, and that the loans would then need to be repaid, and the repayment of the loans you took in order to take the waiting out of wanting and to promptly satisfy your current desires would make it all the more difficult to satisfy the desires of the future. Not thinking about ‘later’ meant in that case, as it always does, storing up trouble. One can stop worrying about the future only at one’s peril. There will surely be a price to pay. What one will find out sooner rather than later is that the somewhat uncomfortable delay of satisfaction has been replaced by a brief delay of the truly terrifying punishment for haste. One may have the joy when one wants; but speeding its arrival won’t make enjoyment more affordable. In the last account, only the realization of that sad truth will be delayed.

Toxic and sad as it may be, that was not the only small print surreptitiously attached to the promise in bold letters of ‘enjoy now, pay later’. In order to avoid reducing the effect of credit cards and easy borrowing to just a one-off lender’s profit, the debt incurred had to be and was bound to be transformed into a permanent profit-earning asset. You can’t repay your debts? First of all, you shouldn’t try to repay them in full and right away – having no debts is not at all the ideal state to be in. Secondly, don’t worry: unlike the old-style niggardly moneylenders of yore, eager to have their loans promptly repaid at a time fixed in advance and not to be extended – we, the new race of generous and benevolent lenders, do not call back our money; instead, we offer to lend you yet more credit to repay the old debt, leaving you moreover with some extra money (that is, debt) to pay for new joys. We are the banks who like to say ‘yes’. Your friendly banks. Smiling banks – as one of the most ingenious of commercial slogans declared.

What none of the advertisements openly declared, leaving the truth to the debtors’ own dark premonitions, was that the lending banks don’t really want their debtors to repay the loans. Were the debtors duly to repay their borrowings, they would no longer be in debt; but it is precisely their being in debt (and so paying interest month in, month out on their loans) that the new race of friendly (and remarkably ingenious) moneylenders have decided and managed to recast into the principal source of their continuous profit. Clients promptly returning the money they borrowed are the present-day moneylenders’ nightmare. People refusing to spend money they did not earn and refraining from borrowing it are of no use to moneylenders – and neither are the people who (whether prompted by prudence or by old-fashioned honour) hasten to repay their debts on time.

For their and their shareholders’ profits, banks and credit card providers now count on the continuous ‘servicing’ of debts, rather than on their prompt repayment. As far as they are concerned, an ‘ideal borrower’ is one who would never repay the loan in full. People with savings accounts but no credit cards are viewed as a challenge to marketing skills: ‘virgin lands’ yelling for profitable, promising rich new crops of exploitation. Once drawn under cultivation (that is, into the lending–borrowing game), they should never be allowed to opt out – to ‘lie fallow’ again. To keep them in the game, heavy penalties are imposed on those who wish to repay their mortgage loans in full before the scheduled time. Until the recent ‘credit crash’, banks and issuers of credit cards were more than willing to offer new loans to insolvent debtors to cover the unpaid interest on earlier loans. One of the major credit card companies in Britain recently caused a public outcry (short-lived, to be sure) when it let the pig out of the poke: when it refused to reissue cards to clients who repaid their debts in full every month, thereby avoiding interest just as the banks avoid paying taxes.

To sum up: the present-day ‘credit crunch’ is not an outcome of the banks’ failure. On the contrary, it is a fully predictable, even if by and large not predicted, fruit of their outstanding success: success in transforming a huge majority of men and women, old and young, into a race of debtors. Banks got what they aimed to get: a permanent race of debtors, the condition of ‘being in debt’ made self-perpetuating, the universal habit of seeking more loans seen as the sole realistic (even if temporary) stay of execution.

Entering that condition has recently become easier than ever before in human history; escaping that condition has never been as difficult. Anyone who could be made into a debtor, including the uncountable millions who could not and should not have been lured into borrowing in the first place, has already been enticed and seduced into living on credit. As in all previous mutations of capitalism, this time, too, the state assisted the establishment of new grazing grounds for capitalist exploitation. It was on President Clinton’s initiative that the ‘subprime’, government-sponsored mortgages in the US were introduced to offer credit for buying houses to people with no means to repay their loans – and so to transform into debtors parts of the population hitherto inaccessible to credit-mediated exploitation. But just as the disappearance of barefoot people spells trouble for the shoe industry, so the disappearance of debt-free people spells disaster for the loan industry. Rosa Luxemburg’s famous surmise has been verified once more: again, capitalism came dangerously close to unwitting suicide by managing to exhaust all the reserves of new virgin lands for exploitation.

In the US, the average debt of a household has risen in the last eight years – the years of apparently unprecedented prosperity – by 22 per cent. The total sum of unpaid credit card loans increased by 15 per cent. And perhaps most menacingly, the overall debt of college students, the future political, economic and spiritual elite of the nation, doubled. Students have been forced/encouraged to live on credit – to spend money which at best they might hope to earn many years later (assuming the prosperity and consumerist orgy lasted that long). The training in the art of ‘living in debt’, and living in debt permanently, has been incorporated into the curriculum of national education. A very similar situation has been reached in Great Britain. In August 2008, the total of un-repaid consumer debts overtook the entire gross domestic product. British households now owe more than the value of the whole produce of their factories, farms and offices. The rest of European countries are following suit, not far behind. The banker’s planet is running short of virgin land, the vast expanses of endemically barren land having already been recklessly exploited.

CRM Are the latest events in the economy going to represent a turning point; the ‘decisive moment’ in Western political thought? Have our political paradigms (modern or postmodern) also crumbled and vanished, never to return? Is it time to bury the dead?

ZB The news of capitalism’s death, as Mark Twain would have said, are grossly exaggerated … Even the obituaries of the credit-mediated phase in the history of capitalist accumulation are premature.

The reaction to the ‘credit crunch’ so far, impressive and even revolutionary as it may appear once it has been recycled in the media headlines and politicians’ sound-bites, has been ‘more of the same’ – in the vain hope that the potential of that particular virgin land for profit and consumption reinvigoration has not yet been fully exhausted: an effort to recapitalize the moneylenders and to make their debtors creditworthy once more, so the business of lending and borrowing, of falling in debt and staying there, can return to the ‘usual’. The welfare state for the rich (which, unlike its namesake for the poor, has never had its rationality questioned, let alone put out of operation) has been brought back to the showrooms from the service quarters to which its offices were temporarily relegated to avoid invidious comparisons. The state’s muscles, long unused for that purpose, have been publicly flexed again – this time for the sake of continuing the game that makes its muscle-flexing resented yet – abominably – unavoidable; a game that curiously cannot bear the state flexing its muscles, yet cannot survive without it.

What is joyously (and foolishly) forgotten on that occasion is that the nature of human suffering is determined by the way humans live. The roots of the currently lamented pain, like the roots of all social evil, are sunk deep in our contrived and trained mode of life: by our carefully cultivated and by now deeply entrenched habit of running for consumer credit whenever there is a problem to face or a difficulty to be overcome. Life on credit is addictive like few if any other drug, and surely still more addictive than other tranquillizers on offer, and decades of lavish supply of a drug cannot but lead to a shock and a trauma whenever the supply runs thin or even grinds to a halt. We are now advised to take the apparently easy way out of shock that afflicts both drug addicts and drug pushers: through resuming the (hopefully regular) supply of drugs. Back to the addiction that seemed until now to help us all so effectively not to worry too much about problems, and even less about their roots.

Reaching to the root of the problem that has now been taken out of the ‘top secret’ compartment and brought into the focus of public attention is not – can’t be – an instant solution. It is, however, the only solution with a chance of being adequate to the enormity of the problem; and of surviving the intense, yet comparatively brief agonies of withdrawal.

Thus far, there are not many signs that we’ve arrived anywhere near the root of the problem. The moment it was halted at the edge of a precipice by a lavish injection of ‘taxpayers’ money’, TSB Lloyds bank started lobbying the Treasury to divert part of the rescue package to shareholders’ dividends; notwithstanding the official indignation of state spokespersons, it proceeded undisturbed to pay bonuses to those whose intemperate greed had brought the disaster on the banks and their clients. We have heard from the US that $70 billion, about 10 per cent of the subsidies the federal authorities intend to pump into the American banking system, have been used to pay bonuses to the people who brought that system close to ruin. Since then, that practice has become so repetitive that it no longer hits the headlines. However impressive the measures already undertaken by governments, intended or declared, they are all aimed at ‘recapitalizing’ the banks and enabling them to return to ‘normal business’: in other words, to the activity that bears the main responsibility for the present crisis. If borrowers have failed to pay directly and personally the interest on past consumer orgies inspired and beefed up by the banks, perhaps they may be induced/forced to pay the cost via taxes raised by the state.

We have not as yet started to give serious thought to the sustainability of our consumer-and-credit-propelled society. A ‘return to normality’ portends return to bad, and always potentially dangerous, ways. The intention to do so is worrying: it signals that neither the people who run the financial institutions nor our governments have reached to the root of the trouble in their diagnoses – let alone in their deeds. Quoting Hector Sants, the head of the Financial Services Authority, who had confessed a few days earlier to ‘business models ill-equipped to survive the stress … a fact that we regret’, Simon Jenkins, the uniquely insightful analyst of the Guardian, observed that ‘it was like a pilot protesting that his plane was flying just fine except for the engines’. But Jenkins did not lose hope: he still reckoned that once the culture ...

Table of contents

• Cover
• Title page
• Copyright page
• Introduction
• Part One
• Part Two
• Index