The Passions of Credit and the Dangers of Debt

From the Series: Finance

Photo by Fabian Blank.

What follows is the opening section of a book manuscript I submitted for review in 2002 called Empowering Debt. (That book was eventually published as Markets of Dispossession.) At the time, my introductory story of debt in 18th century England was deemed irrelevant to my ethnography of “empowerment debt” in Egypt in the 1990s, and I cut all that material from my book and a related article. A mere 10 years later, the relevance of those 18th century debates to events in Egypt and the United States now seems much more obvious. I leave it as I wrote it in 2001.

“Like the Soul in the Body, it acts all Substance, yet is it self Immaterial; it gives Motion, yet it self cannot be said to Exist; it creates Forms, yet has its self No Form....If I should say it is the essential Shadow of something that is Not; should I not Puzzle the thing rather than Explain it...To come to a direct and clear Understanding of the Thing, the best Method will be to describe its Operations, rather than define its Nature; to shewhow it Acts, rather than how it Exists; and what it does, rather than what it is." (Daniel Defoe, An Essay upon Publick Credit, London 1717, 6)

What does debt have to do with empowerment? At first glance, the answer would seem to be nothing. Debt, in the western tradition at least, is commonly associated with the loss of power. In early Greece, debt could lead to enslavement. One of the great radical slogans of 4th century Greece was thus the abolition of debt (Murray 1978, 189-90). Here, debt was a threat to the freedom of the citizen. Much later, with the rise of the modern state, debt was seen as a threat to the nation. At the turn of the 18th century, debates about the rise of public debt and the new class of speculators in public funds, or stock-jobbers, were the way in which capitalism “imparted its first shock and became involved in its first major controversy in the history of English-language political theory” (Pocock 1975, 460).

In this period of “Financial Revolution,” a deep sense of unease pervaded about the role of debt and credit in a society undergoing rapid change, the direction of which was not yet clear. The creation of new financial institutions -- the Bank of England and the National Debt -- for the first time drew prosperity into close association with the political stability of a regime. It made possible the expansion of government activity and, most importantly, the conduct of war, in the period where England/Great Britain was emerging as a world power. A new form of property, “the material foundation of both personality and government” (Pocock 1985,112, cf. Hont 1990), had arisen. Unlike the landed property upon which earlier notions of civic virtue had been grounded, this property was “not merely mobile but imaginary” (Pocock 1985, 112).

Such a development was a “momentous intellectual event.” There was a “sudden and traumatic discovery of capital in the form of government stock and a sudden and traumatic discovery of historical transformation as something brought about by the advent of public credit” (Pocock 1985, 108). New figures entered into public debate and public consciousness. “The fundholder and the stockjobber, the bull and the bear, had come upon the stage; and the figure around which they were grouped, the concept which they introduced into the language of English politics, was not Trade but Credit” (Pocock 1975, 426). In the developing language of political economy, which was still largely discussed in terms of Aristotelian and civic humanist values (ibid., 460-61), finance and credit were seen as corrupting and destabilizing forces. The new power of finance and credit seemed to signal the “ascendency of the passions and the female principle” (Pocock 1985,114), and the dissolution of social order “into a shifting mobility of objects that were desired and fictions that were fantasized about” (Pocock 1975, 459).

In political debates of the times, we find the “cognition of society through money and credit being unequivocally presented by all concerned in terms of opinion and passion, fantasy and false consciousness” Pocock (1975:461). The personification of Credit as “an inconstant female figure” was the device of Whig writers Daniel Defoe and Joseph Addison. Pocock cites Defoe as putting matters in these terms:

Money has a younger Sister, a very useful and officious Servant in Trade, which in the absence of her senior Relation, but with her Consent, and on the Supposition of her Confederacy, is very assistant to her.....This is a coy Lass, and wonderful chary of her self; yet a most necessary, useful, industrious Creature: she has some Qualification so peculiar, and is so very nice in her Conduct, that a World of good People lose her Favour, before they well know her Name. (Pocock 1975:452)

In the view of David Hume [and in wording that sounds quite familiar in 2012] public credit was a threat to the very existence of the nation: “Either the nation must destroy public credit, or public credit will destroy the nation” (Hume [1777] 1985, 360-61). Hume’s concerns about public debt lay in the “conjunction of commercial society and international power politics” (Hont 1993, 322), rather than in the rise of commercial society per se. Hume was horrified by the speed with which financial markets operated. The speed with which ownership of stocks could fluctuate was a threat to social order: “The stocks can be transferred in an instant, and being in such a fluctuating state, will seldom be transmitted during three generations from father to son” (Hume 1985, 358; cf. Hont 1993, 340). “Adieu,” Hume warned his readers, “‘to all ideas of nobility, gentry, and family’” (ibid.). With the collapse of social ranks would come the collapse of the constitution as well: “The political stranglehold of the annuitant class over the Lords and Commons was an inevitable consequence of the debt” (Hont, op. cit.).

The century also witnessed efforts to turn the scourge of credit into a source of social stability. In the writings of Addison, for example, credit became “the cognition of social, moral and commercial reality,” and an epistemology of the real. Everything was done “to eliminate the element of fantasy and fiction which had seemed so subversive of property and personality” (Pocock 1975, 456). Such writings display a strong ideological effort to absorb the frightening image of the stockjobber into the merchant; and the rentier, who similarly frightened social theorists, into the figure of the entrepreneur (ibid.). This was part of a broader dilemma: how to formulate a new basis for civic morality and political individuality in the context of commercial society. Given the dissolution of the stable property relations on which notions of political virtue and individuality had rested, what would be the basis of political individuality for economic man? “If indeed capitalist thought ended up privatizing the individual, this may have been because it was unable to find an appropriate way of presenting him as citizen” (ibid., 461).

Few social analysts trying to understand the changes underway in the world today [writing in 2001] read Pocock or the other authors I cited above for inspiration. Most draw on the writings of Foucault (Ong 1999; Ferguson and Gupta 2001). At least one important commentator on Foucault, however, noted the deep affinities between the projects of Pocock and Foucault. In Gordon’s view, both were concerned to understand the rise of “political individuality” (Gordon 1996, 257). That notion of political individuality arose in a context where anonymous mechanisms of credit and new forms of “imaginary property” were giving birth to “commercial society,” before the “triumph of capitalism” (Hirschman 1977). These new forms of interaction via credit and debt, in turn, helped develop “economic and intersubjective man” (Pocock 1975, 466).

All this implied a “non-totalizable multiplicity” of interest in society and a “dialectic of spontaneous multiplicity.” The period witnessed the rise of a “denser, fuller and more complex reality of the collective environment in which men as economic subjects of interest must be located, in order to govern them" (Gordon 1996, 257). The new realities engendered by the rise of public debt and commercial society, in other words, implied new forms of power as well. That power, in turn, seemed “incompatible with the unitary principle of totalization of wills assumed by doctrines of juridical sovereignty” (ibid.). In Gordon’s reading of Foucault, these new realities were addressed in Adam Ferguson’s reworking of the concept of civil society in the second half of the 18th century (Ferguson [1767] 1966), where the incompatibility between juridical sovereignty and the new forms of power was confronted (Gordon 1996, 257).

Perhaps, as Gordon suggests, those late 18th century writings on civil society resolved dilemmas engendered by the rise of commercial society and political individualism (ibid., 1996, 257). As the Comaroffs have suggested, we can gain much insight into the transformations underway in the 1990s, when civil society became the “ultimate magic bullet” of millennial capitalism, by reexamining those debates (Comaroff and Comaroff 2000, 334). [By 2012, it is clear that the solution of “civil society” has failed. As such,] we need to look a bit further back in the 18th century as well, to the onset of the controversies about debt and the rise of commercial society. [In 2001, we could] overestimate the importance of Ferguson’s writings on civil society, due to their retrospective importance for the “civil society” movements of the 1980s in Eastern Europe, and the institutionalization of “civil society” as a political project at the turn of the millennium (Mastnak, 2005). But there is another, more important reason to look at what came before the 18th century discussions of civil society. At least as relevant for understanding the processes underway in our own times are the 18th century debates about debt and the rise of commercial society.

Inchoate new forms of power were mediated by debt and finance at the turn of the 18th century. Those debates about debt signaled the rise of both the modern state and commercial society. At the end of the 20th century, in turn, new forms of dangerous debt and finance are linked to the end of the sovereign state and a deep transformation in the nature of market society at the time of triumph of global capitalism. At the end of the 1990s, we also witnessed efforts to transform dangerous debts into a source of moral virtue -- of empowerment. This was particularly true in global programs to empower the poor through the provision of microloans. Preoccupation with debt and credit -- as a source of danger and as a source of virtue -- is as intense today as it was in Hume’s times. It behooves us to think more about why that is so.


Comaroff, Jean, and John L. Comaroff. 2000. “Millennial Capitalism: First Thoughts on a Second Coming,” Public Culture 12, no. 2: 291-343

Elyachar, Julia. 2005. Markets of Dispossession: NGOs, Economic Development, and the State in Egypt. Durham, NC: Duke University Press.

Ferguson, Adam. [1767] 1966. An Essay on the History of Civil Society, ed. D. Forbes. Edinburgh: University Press.

Ferguson, James and Akhil Gupta. 2002. Spatializing States: Toward an Ethnography of Neoliberal Governmentality. American Ethnologist 24, 4: 981–1002

Gordon, Colin. 1996. “Foucault in Britain.” In Barry, Andrew, Thomas Osborne, and Nikolas Rose, eds., Foucault and Political Reason: Liberalism, Neo-liberaliosm, and Rationalities of Government. London: UCL Press.

Hont, Istvan. 1990. “Free Trade and the Economic Limits to National Politics: Neo-Machiavellian Political Economy Reconsidered.” In John Dunn, ed., The Economic Limits to Modern Politics. Murphy Institute Studies in Political Economy. Cambridge and New York: Cambridge University Press.

-------. 1993 “The Rhapsody of Public Debt: David Hume and Voluntary State Bankruptcy.” In Phillipson, Nicholas, and Quentin Skinner, eds., Political Discourse in Early Modern Britain. Cambridge: Cambridge University Press.

Hume, David. 1985 [1777]. “Of Public Credit,” in David Hume, Essays Moral, Political and Literary, ed. E.F. Miller. Indianapolis: LibertyClassics.

Mastnak, Tomaž. 2005. The Reinvention of Civil Society in Eastern Europe: Through the Looking Glass of Democracy. Archives européennes de sociologie/ European Journal of Sociology 46 (2005), no. 2, pp. 323-355.

Murray, Oswyn. 1993. Early Greece, Second Edition. Cambridge MA: Harvard University Press.

Ong, Aihwa. 1999. Flexible Citizenship: The Cultural Logics of Transnationality. Durham, NC: Duke University Press.

Pocock, J. G. A. 1975. The Machiavellian Moment: Florentine Political Thought and the Atlantic Republican Tradition. Princeton, N. J.: Princeton University Press.

———. 1985a. Virtue, Commerce, and History: Essays on Political Thought and History, Chiefly in the Eighteenth Century. Cambridge: Cambridge University Press.

———. 1985b. “The Mobility of Property and the Rise of Eighteenth-Century Sociology,” in Pocock 1985a.