Lived Economies of Default

Consumer Credit, Debt Collection and the Capture of Affect

Joe Deville

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780415622509
• eBook ISBN: 9781134087785
• Edition: 1
• Topic: Business
• Subtopic: Consumer Behaviour
• Index: Business

Consumer credit borrowing – using credit cards, store cards and personal loans – is an important and routine part of many of our lives. But what happens when these everyday forms of borrowing go 'bad', when people start to default on their loans and when they cannot, or will not, repay? It is this poorly understood, controversial, but central part of both the consumer credit industry and the lived experiences of an increasing number of people that this book explores.

Drawing on research from the interior of the debt collections industry, as well as debtors' own accounts and historical research into technologies of lending and collection, it examines precisely how this ever more sophisticated, globally connected market functions. It focuses on the highly intimate techniques used to try and recoup defaulting debts from borrowers, as well as on the collection industry's relationship with lenders. Joe Deville follows a journey of default, from debtors' borrowing practices, to the intrusion of collections technologies into their homes and everyday lives, to the collections organisation, to attempts by debtors to seek outside help. In the process he shows how to understand this particular market, we need to understand the central role played within it by emotion and affect.

By opening up for scrutiny an area of the economy which is often hidden from view, this book makes a major contribution both to understanding the relationship between emotion and calculation in markets and the role of consumer credit in our societies and economies. This book will be of interest to students, teachers and researchers in a range of fields, including sociology, anthropology, cultural studies, economics and social psychology.

1 ‘A curious and sort of subconscious temptation’

The lure of consumer credit

I think I shouldn’t be allowed around these things.

Interview with Angela, 2009

What drives people to borrow? More precisely, what drives so many to borrow so constantly, so heavily, that their debt becomes unmanageable? These are the kinds of question that you learn to expect fairly soon after you declare an interest in consumer credit. They can be posed in a range of different ways, as readily by those who have had difficulties with their own borrowing as those that have not. And they demand an answer.

In the years before the rise of the sub-prime credit crisis similar questions were already being asked in public in the UK. In particular, 2004 was a year when certain British newspaper editors decided this question was a matter of broad public interest. ‘CREDIT “KILLS” A FAMILY MAN’, screamed the cover of the Daily Mail in early March – the story addressed the case of a borrower who had committed suicide, perhaps as a result of high levels of borrowing and being chased by multiple debt collectors (Poulter and Wilkes 2004). Six days later it followed up with another splash, concerning a potentially looming ‘CREDIT CARD MELTDOWN’ – this time, the story was the dangers to the national economy of the rising levels of personal debt, as well as the ongoing effects on families (Poulter 2004). The next week the Daily Express weighed in: ‘CREDIT CARD MADNESS’, it shouted, with its front page highlighting the fact that UK citizens were accruing an apparently huge proportion of Europe’s total amount of credit card debt (Vickers 2004).¹

In these mass-circulation publications with tabloid, right-leaning sensibilities, an issue that might more conventionally be seen as a macroeconomic fact (the economy’s increasing reliance on consumer credit spending) becomes variously recast in lurid front page spreads. Blame for the apparent problem of excessive consumer credit borrowing was on the one hand levelled at business practices (the ‘greedy’ banks (Poulter and Wilkes 2004)) and, on the other, consumer culture (‘a “spend now, pay later” culture’ (Poulter 2004)). At the same time, the apparently cognitively deficient borrower is also held at least partially to blame, with articles such as the above also proclaiming the irrationality (‘madness’) of such high levels of consumer credit spending (often articulated in terms of a reckless ‘addiction’ to consumer spending).

However sensationalist these headlines and their accompanying stories may be, these three ‘figures’ as we might call them – that is, consumer culture, a cognitively deficient borrower, and the practices of the credit industry – in many ways find their parallel in causal arguments that are mobilised in academic and policy debates that too have sought to examine the causes of high levels of consumer-credit borrowing, even if with a little more care.

Of the three, it is the attention to the role of consumer culture that comes closest to a sociological response. While for much of the twentieth century consumer credit simply was not subject to much sociological attention as an analytical object in its own right, as Dawn Burton (2008, p. 31) has argued, one reason for this is the near monopoly that economic theories and models had over research into consumer credit) this situation began to change in the mid- to late-1990s. Important field-defining work was undertaken by writers including Lendol Calder (1999), Robert Manning (2000) and George Ritzer (1995).² Although their arguments do not always map cleanly onto one another, this work outlined the significant role played in the expansion and adoption of consumer credit by major cultural and economic shifts engendered by and connected to the rise of forms of mass consumption. It also succeeded in resituating consumer credit within a diverse set of historical trajectories, showing the necessity of attending to the slow but steady institutionalisation and normalisation of consumer credit in, most notably, American society. Finally, amongst a range of other themes, this work also shed light on the crucial role played by the aggressive expansion and marketing of consumer credit, in which consumers were increasingly encouraged to use their newly acquired borrowing instruments, in particular their credit cards, to fund their everyday consumer needs.

An emerging body of more recent work continues to explore these currents, while adding layers of nuance. In what can be seen as a broadly post-Foucauldian analysis, connections have been drawn between the expansion of consumer credit and the rise of new models of economic personhood. In these, the responsible consumer credit borrower is revealed as an entrepreneurial and idealised figure, imagined to be able to manage successfully and benefit from the risks entailed in everyday borrowing practices (see Langley 2008a, 2008b, 2014; Marron 2009, 2012). Attention has also been directed to the relationship between consumer credit borrowing and what has become known as ‘financialisation’: that is the increasing dependence of social and economic relations of all kinds on the ups and downs of the global financial markets (Langley 2008b; Martin 2002; Montgomerie 2006, 2007, 2009). On the one hand, new financial instruments (asset-backed securities, for instance) can be seen to have played a direct causal role in the growth of, and national economic dependence on, consumer credit borrowing. On the other, as debtors’ lives become intertwined with the flows of finance, they become ever more filled with uncertainties and insecurities. Further research has looked at how the consumer credit market, and some of its specific social and material agents, can be seen to have affected other social and economic domains. Most notably, this has involved drawing direct causal connections between the rise of the credit rating as a measure of individual economic competence and, via its spread into global markets as debt became repackaged, the global economic crisis that erupted into public in 2007 (see Poon 2009; Rona-Tas and Hiss 2010).

If we turn towards more policy-oriented writing, or the specifics of government policy itself, we can observe a far narrower, more restricted focus on the analysis of the causes for and effects of what is seen as a problematic reliance on consumer credit products. A recurrent concept in these accounts is ‘over-indebtedness’. As Donncha Marron (2012) has documented, over-indebtedness in the UK has been largely represented within governmental discourse as a problem of self-government. That is to say, people’s problems with their borrowing are largely assumed to stem from either individual calculative failures or failures to manage themselves properly as ideally entrepreneurial subjects. In other words, what we have here is the summoning up of the figure of the cognitively deficient debtor. A major part of the problem is held to be debtors’ financial management skills, to which the response, overwhelmingly, is to recommend more and better financial education for debtors. Similar tendencies can be found in North American and European contexts (Arthur 2012; Lazarus 2013a; forthcoming (a); forthcoming (b)). A particularly striking example from the US is the institutionalisation of compulsory credit counselling and financial education courses for those applying for bankruptcy, introduced as part of the Bush-era bankruptcy reforms (Lawless et al. 2008; U.S. Code 2012, §§ 109, 727, 1328).

The same apparently faulty individual decision-maker that is the target of these pedagogical interventions is also the target of a related attempt to improve the conditions of consumer credit borrowing: the provision of more and better information. This is often framed around ideals of informational transparency (more or less explicit in which is the assumption that this will, in turn, lead to more efficient markets).³ This can be seeing as addressing the third figure in our account – the practices of the credit industry. This is a causal explanation focused on the role of the commercial organisation. For instance, writing about the ‘incomprehensible fine print’ that can accompany credit applications, the newly established Consumer Financial Protection Bureau (CFPB) in the US makes transparency central to its ambition: ‘Companies shouldn’t compete by figuring out how to fool you best’, they write, ‘[t]ransparency means that markets really work for consumers’ (CFPB 2013b). Very similar language features in both recent EU-wide legislation on consumer credit agreements⁴ and a sequence of government-sponsored reviews of the UK consumer credit market (see Marron 2012).⁵

From a conventional sociological point of view, the problem with the turn to either education or transparency as the solution to problems of excessive borrowing is that it obscures the underlying structural factors that drive credit borrowing in the first place, and indeed the way in which the individualisation of responsibility in this way can serve particular political agendas. At the same time, in this focus on the capacity of these quite specific tools to influence market-oriented decision-making there are echoes of the device-oriented approaches that were outlined in the book’s introduction. The ‘economisation’ programme, which brings this focus into the domain of economic relations, high-lights the role that quite specific devices can play in shaping and directing the calculative endeavours of users, albeit in some quite different terms.

A device-oriented perspective therefore needs to be clear about whether and how it can provide a distinct contribution to these debates. With this in mind, I will put devices to the test in this chapter and, in the process, propose some other intellectual resources that may required. In particular, I introduce the work of the philosopher Alfred North Whitehead and the role played by what he calls ‘lures for feeling’. This approach will allow room for understanding ways of being and relating to one another – ontologies – which a device-centred perspective has been less successful in following.

The early history of the credit card

Pinning down exactly what we mean when we talk about consumer credit is by no means straightforward (see Calder 1999, p. 5). Technical definitions tend to variously stress:

• the particular temporality of consumer credit – it is usually intended to be relatively short term;

• its constituency – the ‘public’;

• the basis for the guarantee of the loan – tending to be ‘unsecured’ and thus not tied to a particular asset (the contrast is usually with mortgage lending, in which debt is secured on property);

• particular credit products – here often including personal loans, credit cards, and forms of hire purchase;

• and, finally, its object – consumer goods and services.⁶ It is perhaps these that have occupied social scientific attention more than the others.

However, if we look at the kinds of credit products that are included under the consumer credit umbrella – personal loans, credit card products, and forms of hire purchase – we see that these do not necessarily map cleanly onto some of the criteria I have just outlined. The repayment schedules for consumer credit products can be eminently long term – with credit card products the borrower can vary what they will repay each month and of course even if a single debt is repaid, a user may use and return to the same credit card over the course of many years. Hire purchase loans, meanwhile, are usually ‘secured’ on the products they are used to buy, often high value consumer goods – cars or expensive household equipment for instance. These remain as assets that can be reclaimed if repayments are not maintained. And consumer credit may well be used to fund expenses that are quite far from the kinds of pleasure-oriented, conspicuous consumption with which it is often associated. It is perfectly possible to obtain consumer credit loans to pay off other loans, or to withdraw cash on a credit card (at high rates of interest) to meet rental or mortgage repayments for instance, or to simply use forms of consumer credit to put food on the table for your family. Unsecured credit can also be converted into secured credit: releasing equity from a property to pay off some unsecured debts for instance.

Consumer credit is therefore clearly a heterogeneous entity. And what it is and to what other debts and entities it can become connected depends very much on the places and times where it is inserted alongside its users. As we will see in later chapters, this is worth keeping in mind given the particularly stretched temporalities that can accompany the routine experience of consumer credit default. That said, there is one form of consumer credit that has become the main analytical placeholder, in both academic and popular writing, for the shifts in the distribution of personal debt that has taken place in many economies over the past 100 years or so: credit card enabled borrowing. It is this object that has taken pride of place in the titles and front-cover imagery of some of the most important social scientific books on consumer credit.⁷

This focus is understandable. In the UK, for instance, although in recent years other types of consumer credit make up almost two thirds of the annual outstanding debt,⁸ when you look at monthly figures for gross lending – which includes lending which is then repaid in full on a monthly basis – credit card debt makes up almost three quarters of the amount lent out.⁹ This kind of information is not publicly available in the US, although, similar to the UK, non-revolving forms of consumer credit make up around two thirds of outstanding debt.¹⁰ However, given that of the approximately two thirds of American families use credit cards and just over half of these report usually paying off their balances in full each month (Bricker et al. 2012, p. 67), it is clear that transactional credit card borrowing permeates millions of people’s everyday routines.

Despite this, however, little serious analytical attention has been paid to this mundane monetary object itself.¹¹ The credit card tends to stand as the symbol for consumer credit and, in occupying this symbolic, referential position, its specific capacities come to be glossed over. The credit card, in these instances, becomes simply the carrier of credit relations, the transmitter of much broader, more significant socio-economic forces. ‘The idea is to keep people at the business of consumption’, writes George Ritzer, and that

[t]his is nowhere clearer than in the case of credit cards, which lure people into consumption by easy credit and then entice them into still further consumption by offers of ‘payment holidays,’ new cards, and increased credit limits.

He continues:

The beauty of all this, at least from the point of view of those who profit from the existing system, is that people are kept in the workplace and on the job by the need to pay the minimum monthly payments on their credit card accounts and, more generally, to support their consumption habits.

(Ritzer 2005, p. 26 emphasis added; see also Ritzer 1995)

Ritzer’s argument follows a trajectory that is common in (broadly) sociological writing on consumer credit, in which the ‘devices’ of consumer credit tend to figure as largely bit part actors in a drama whose central characters are the forces involved in putting these objects in front of borrowers in the first place.¹² It is these forces that are held responsible for the ‘lure’ of credit. Another more recent example is provided by Maurizzio Lazzarato, whose approach in this specific respect, if not necessarily either his conclusions or the theoretical apparatus that is brought to bear, mirrors Ritzer’s. Lazzarato moves the terrain away from consumption and towards neoliberalism, where debt, of whatever type, becomes ‘the most general power relation through which the neoliberal power bloc institutes its class struggle’ (2012, p. 89; this claim is explored further in the book’s conclusion). When his attention turns specifically to consumer credit, we find the often unnoticed credit card transformed into a powerful apparatus of de-individualisation, with its user functioning ‘like a cogwheel, a “human” element that conforms to the “non-human” elements of the sociotechnical machine constituted by the banking network’ (2012, p. 148). While this is not a total denial by Lazzarato of the agency of the borrower (the other component of this ‘machinic’ subjugation is that which is ‘social’, where the borrower performs as decision maker and calculative agent), again the intimate and quite specific formatting of the encounter between borrower and credit technology fades from view.

What happens, then, when we look a little more closely at what this apparently mundane, everyday consumer device actually does? For, while the credit ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Preface
• Acknowledgements
• List of abbreviations
• Introduction: lived economies of default
• 1 ‘A curious and sort of subconscious temptation’: the lure of consumer credit
• 2 In the fold of default: living with market attachments
• 3 The discovery and capture of affect: a history of debt collection
• 4 The strategic management of affect: venturing inside the collections company
• 5 The amplification of calculative opacity: the creditor, the collector, the collections letter
• Conclusion: bringing affect to markets
• References
• Index