Dead Pledges
Debt, Crisis, and Twenty-First-Century Culture
Annie McClanahan



Dead Pledges

What is a “dead pledge”? Despite its gothic connotations, it actually names something that is probably quite familiar to many readers: a mortgage contract. The name for a contract on a real estate loan comes from the French mort gage. From this surprising etymology, we might exhume any number of meaningful lessons: about the terrifying nature of debt; the strange ontology of property; the uncanniness of ownership; the implicit threat at the heart of the credit contract. Dead Pledges is an attempt to show how these and other difficult lessons about debt are encrypted across contemporary culture. Looking at how debt has been represented aesthetically and conceptually in a period of crisis, this book aims to connect debt’s cultural representations to its material and political consequences. Casting credit’s certainty into doubt, reckoning with the problem of unpayable debts, and revealing the hidden violence of the credit economy, credit-crisis culture reminds us that debt is a matter of life and death: not just for individual borrowers but also for the economy as a whole.

Debt has certainly become the defining feature of economic life today. Since the mid-1970s, US consumers have been using credit to pay not only for housing and automobiles but also, and historically unprecedentedly, for education, health care, groceries, clothes, and all manner of other daily necessities. By the third quarter of 2008, when US and global markets suffered their worst crisis since the Great Depression, US households held $13 trillion in debt, more than thirty times what they held in the mid-1970s.1 Meanwhile, the US economy had grown increasingly dependent on the borrowing of households, corporations, and the federal government. This borrowing not only funded consumption but also provided opportunities for the financialization of debt-based assets. When this financial market collapsed—when a vicious cycle of falling wages and increasing debt led to a rise in debt defaults, causing a decline in the value of the assets backed by those debts, causing in turn more defaults—the results were catastrophic. From the beginning of 2007 to the end of 2011, more than four million foreclosures were completed; by 2011, nearly one in ten borrowers was defaulting on a credit card or student loan.2 In the US economy of the twenty-first century, the “dead pledge” of the capitalist system thus appears in all its horror, bringing us face-to-face with everything that is strange and violent about the most taken-for-granted aspects of our economic system: investments and liabilities, owing and ownership, repayment and default.

Dead Pledges is a study of our contemporary culture of debt. Examining novels, poems, conceptual artworks, photographs, and films, this book shows how cultural texts have grappled with the consequences of the rise and fall of the financialized consumer credit economy. As a study of cultural representations of the economy, Dead Pledges does not argue that the economy itself is representational—it does not argue that the debt economy can be reduced to our collective belief in it. Rather, my claim is that debt is such a ubiquitous yet elusive social form that we can most clearly and carefully understand it by looking at how our culture has sought to represent it. The chapters that follow seek to show how cultural texts from popular entertainment to avant-garde art allow us to map the landscape of contemporary debt: foreclosure and credit scoring, student debt and securitized risk, microeconomic theory and anti-eviction activism. Across this range of sites, this book offers a history and an aesthetics of contemporary indebtedness as well as an account of the theoretical and political consequences of debt: how it affects our ideas of personhood and moral character; how it changes our understanding of rationality and responsibility; how it transforms our relationship to property and possession. Bringing together economic history, debt theory, and cultural analysis, Dead Pledges demonstrates how our understanding of the economy can be illuminated by culture. What is at stake in our contemporary culture of debt, I argue, is not just our measures of economic credibility but also the limits of our imaginative credulity; not just our account of economic character but also our literary characters; not just the money we see but also the way we see money; not just how we pay but also how we imagine getting payback.

Debt, Credit, Culture

Since 2008, a number of theorists have provided much-needed critical accounts of the relationship between debt, sociality, and political subjectivity, including David Graeber (Debt: The First 5000 Years), Mauricio Lazzarato (The Making of the Indebted Man: An Essay on the Neoliberal Condition, originally published in French as La fabrique de l’homme endetté), Richard Dienst (The Bonds of Debt: Borrowing against the Common Good), Angela Mitropoulos (Contract and Contagion: From Biopolitics to Oikonomia), Fred Moten and Stefano Harney (The Undercommons: Fugitive Planning and Black Study), Miranda Joseph (Debt to Society: Accounting for Life under Capitalism), and Andrew Ross (Creditocracy and the Case for Debt Refusal).3 Dead Pledges owes much to this scholarship, from Graeber’s claim that debt turns sociality “into a matter of impersonal arithmetic,” to Dienst’s more historically situated argument about the relationship between contemporary debt and other forms of exploitation, to Mitropoulos’s evocative treatment of the domestic economy of contracts.4 But it is also an attempt to connect debt theory back to questions of cultural form—a sphere these works rarely address. For an account of the relation between the credit economy and culture, one would have to turn to a now canonical body of historicist literary scholarship—yet this scholarship is almost exclusively focused on credit relations rather than debt. This is largely because there has long seemed to be an intimate connection between credit and culture: more than any other economic relation, credit relies on the systems of naturalization and faith that culture provides. As Marc Shell puts it in Money, Language, and Thought, “Credit, or belief, involves the very ground of aesthetic experience, and the same medium that seems to confer belief in [credit] money . . . also seems to confer it in literature.”5 Shell argues that to speak of “credit” was, from the beginning, to speak of faith—the faith required to lend money out and expect to receive it back with interest—and that the realist novel provided a model for faith in such paper fictions. Later New Historicist scholarship on literary and economic form—scholarship not incidentally produced in the boom period for contemporary credit—also focuses primarily on credit and the novel. In Genres of the Credit Economy: Mediating Value in Eighteenth- and Nineteenth-Century Britain, Mary Poovey argues that the novel taught readers how to believe in things that couldn’t be proved, making possible the leaps of faith necessary to the capitalist economy and “mak[ing] the system of credit and debt usable and the market model of value familiar.”6 Deidre Lynch (The Economy of Character: Novels, Market Culture, and the Business of Inner Meaning), Margot Finn (The Character of Credit: Personal Debt in English Culture), and Ian Baucom (Specters of the Atlantic: Finance Capital, Slavery, and the Philosophy of History) have likewise suggested that the realist novel humanized an unfamiliar marketplace and produced a confidence that both the fiction of paper money and the fiction of novelistic character could “go without saying.”7 Descriptions of the relationship between literary form and the credit economy have also underwritten broader claims about the way that credit ostensibly creates a sense of social community. Thus Jennifer Baker argues in Securing the Commonwealth: Debt, Speculation, and Writing in the Making of Early America, for instance, that seventeenth-century credit fostered a “sanguine . . . view of capitalism’s promise to promote simultaneously both individual opportunity and communal cohesion.”8

We thus find in the rich landscape of recent interdisciplinary scholarship either criticism that explores debt but not culture or criticism that explores culture but not debt. In our own twenty-first-century moment, however, the smooth circulation of credit has demonstrated its ability to stall out, and the riskiness of an economy fueled by debt has become apparent. Such a moment requires us to take stock of an entirely new relationship between economic and cultural form. Dead Pledges contends that in a moment of debt crisis—in a moment in which the fantasy of credit as a salutary cultural and social form has been abandoned—the standard modes for representing credit and debt have likewise been altered. The credit-crisis texts analyzed in this book reveal the overt risks, phantasmatic realities, and incalculable debts that a debt economy can no longer redeem.

In Dead Pledges, cultural texts perform the urgent work of mediation. The economic and social history this book tells alternates between two different scales. On the one hand is the scale of the visible, the experienced, and the everyday: the strange experience of receiving a “personalized” credit card offer; the fear of housing insecurity; the public scene of eviction. On the other hand is the scale of the economic system as a whole and of the complex global financial markets that have driven world economic growth for the last four decades. Dead Pledges argues, first, that what connects these two scales is consumer debt; and second, that what illuminates this connection is cultural form. This book focuses on consumer debt rather than national or corporate debt because consumer debt, I suggest, is uniquely situated between our everyday experience of the economy and the economy’s larger structural dynamics, which function far beyond our agency, knowledge, or control. Consumer debt’s dual face—at once specific and systemic, everyday and epochal—is mirrored by cultural forms (literature, art, poetry, film) that, as this book reads them, similarly work to connect our daily lives of indebtedness to the systemic totality of the credit economy.

Debt: A Contemporary History

In order to understand the two scales of this book’s analysis, it is necessary to tell the history of our contemporary debt economy. Beginning in early 2007, the first signs of an emerging crisis in US credit markets were becoming obvious. Declining real estate value and an increase in the consumer credit default rate were the first signals of the coming contagion; they were followed by a crash in securities backed by risky debt, then by defaults among the institutions that had bet on or insured those securities, and eventually by the failure or near failure of banks connected to other financial institutions who had invested in debt. By the late summer of 2008 the devastation was no longer containable, and in the fall of that year it became apparent that the entire global economy was swept up not simply in a crisis of liquidity (banks unwilling to lend) but in a crisis of solvency: the banks themselves were bankrupt. Dozens of major international financial institutions failed or were bailed out; almost unimaginably large amounts of money were infused into collapsing markets by both federal governments and the International Monetary Fund (IMF)/World Bank; a looming sovereign-debt crisis in Europe was exacerbated by the contagion in financial markets, eventually leading to a seemingly permanent state of imposed austerity; and a downturn in global economic activity overall, including productive investment and state investment, caused a global recession whose consequences (both in and outside the United States) included massive unemployment, food crises, and increased rates of eviction, bankruptcy, homelessness, and suicide.9

The crisis of 2007–8 was particularly destructive because by the end of the twentieth century, consumer financing had moved from the margins to the center of the US economy. The development of debt securitization (which allowed debt to function as a tradable financial instrument) meant that consumer credit was no longer simply an aid to consumption but an industry in itself. Technological improvements in data collection and processing made it possible to both evaluate and price credit risk to a fine level of quantifiable detail. Retailers began tracking consumer behavior and relying more heavily on information collected by credit bureaus. Following the passage of the Equal Credit Opportunity Act in 1974, which prohibited discrimination on the basis of race, religion, nationality, sex, marital status, or age, lenders sought out new statistical and behavioral models that used standardized data and credit-monitoring systems.10 This science of consumer credit rating made it possible for banks to hedge credit risk in new ways by measuring a wide range of calculable risks and creating an equally wide range of chargeable rates.11 Very low federal borrowing rates in the early 1990s and through most of the 2000s, which made the banks’ own borrowing cheap, and the deregulation of caps on interest rates and fees, which allowed them to raise prices on consumer loans, made consumer lending an even more attractive industry.

The story in the market for housing debt is similar. In housing, even more than in credit card lending, securitization, which makes debt a fungible commodity by creating a secondary market for its sale, fueled the supply of consumer credit. Investors looking for profitable investment opportunities were confident that housing prices would continue the unprecedented rise they had made over the second half of the twentieth century and thus invested heavily in a financial instrument called a mortgage-backed security (MBS). The MBS was not an entirely new invention—it was originally created by the Federal Housing Administration (FHA) as a means to improve the liquidity of the mortgage-lending market after the Great Depression—but legislation passed in 1970 permitting the Federal National Mortgage Association (FNMA, or Fannie Mae) to purchase private, non–federally insured mortgages, as well as the deregulation of the savings and loan industry in the 1980s, gave more investors access to these increasingly complex financial products. The result was that whereas once most mortgages were “deposit financed”—one bank customer’s debt was funded by another’s savings—increasingly mortgages were funded through the sale of speculative financial instruments that turned a borrower’s mortgage payment into a revenue stream by grouping many mortgages together and selling them as an investment. Those bundled mortgages were typically “tranched” into different risk categories, with the low-risk loans offering the lowest rate of return but also the least uncertainty. Many of those loans, however, were not as low risk as investors might have convinced themselves they were. As in the consumer credit industry, the repeal of ceilings on mortgage interest rates had opened up more and more markets for credit and made “adjustable-rate” mortgages (ARMs) increasingly common: ARMs are home loans whose monthly payments steadily increase over time, often well beyond the borrower’s ability to pay them.12 Demand for credit securities also produced ever-greater demand for the debt that underwrote them, which meant that soon lenders had to relax their lending requirements for mortgage credit to meet this demand. By the early 2000s, the so-called subprime market—the market in the riskiest debt—had gone from 5 percent of all lending to 30 percent.13 Eventually, demand for housing-debt securities threatened to outpace demand for housing itself, and lenders had to attract entirely new categories of borrowers by ceasing to even conduct background, income, and credit-history checks.14

The change from deposit-funded lending to the use of capital and securities markets—from mortgages funded directly by banks to mortgages funded by far-flung investors—greatly increased market liquidity: the value of a “fixed” asset like a house, or the value of mortgage payments on that house, could suddenly flow across the country in a single keystroke.15 Or across the globe: in his excellent history of personal credit in the United States, Louis Hyman writes that securitization made it possible for “oil money from the Middle East [to] finance housing developments in the [US] Mid-west.”16 Everyone from financial investors to the Federal Reserve believed that this kind of global securitization created a virtuous cycle, through which banks could lend to previously unqualified buyers and dilute the risk by reselling those loans as securities to speculative investors around the world. But enhanced liquidity had also radically altered the use of structured finance techniques by creating opportunities for high-risk practices like arbitrage (the practice of taking advantage of small price differences) and leverage (the practice of borrowing to fund investments).17 Commercial banks took on massive amounts of debt to buy financial instruments based on the risky loans made by other lenders, and creditors increasingly became more indebted than those to whom they were lending. Consequently, a single default could trigger a chain reaction that would spread swiftly and virally through the whole economy. The increased liquidity of money, hailed as the singular achievement of securitization, meant that a crisis in the system spread like a virus—hence the description of financial derivatives as “toxic assets.” Because lenders had either passed the loans they made on to other investors or invested in instruments like credit-default swaps, it was no longer always in their interest to prevent debtors from defaulting, tearing asunder the fantasy of a socially salutary creditor/debtor relation.

Technological developments in data monitoring and analysis, alongside institutional, regulatory, and technocratic transformations in the ability of financial institutions to create, price, and trade increasingly complex financial instruments, also made it possible for creditors to lend more money than ever before. The outstanding consumer debt of households more than doubled as a percentage of disposable income (from 62 percent to 127 percent) between 1975 and 2005.18 As of 2015, Americans owed more than $12 trillion in debt: $8.2 trillion in mortgages, $1.3 trillion in student loans, and around $890 billion in credit card debt.19 Although default risk was increasingly easy to quantify and predict, which opened up the market to new borrowers, and although low federal interest rates made it cheap for banks to lend money, debt was not always more affordable for the borrowers themselves. So-called affordability products—loans that did not require borrowers to document their income, interest-only loans, no-down-payment loans, and loans that allowed lenders to borrow twice the value of the house—proliferated during the last years of the twentieth century and the beginning of the twenty-first. But for many borrowers, this “affordable” credit was actually coming at a very high price: credit card interest rates peaked in the 1980s during Reagan’s “Volcker shock” and then steadily fell over the next few decades, but increases in fees, penalties, and membership charges—as well as the ubiquity of variable-rate cards, which add a fixed percentage to the prime rate based on a borrower’s perceived credit risk—ultimately made borrowing more expensive for most debtors, especially for those who “rolled over” their debt from month to month.20 Meanwhile, for those still trapped in the “alternative-financing industry”—the vast, unregulated, and largely undocumented system of payday loans, check-cashing services, and pawn shops that has boomed in the last few decades—the economic, social, psychological, and even physiological costs of debt have been even higher. Payday loans typically charge interest rates of well over 100 percent, often as high as 1,000 percent. In 2008 payday lenders charged their customers a collective $7 billion in fees, and if one combines payday lenders, rent-to-own shops, check-cashing services, and pawnbrokers, the alternative-financing industry robs the poor, low-credit-scored, and “unbanked” in the United States of more than $25 billion every year.21

Some of the most significant changes in regulated consumer lending have been in the education loan sector. In the early 1990s, only around 30 percent of students borrowed to pay for college; today, more than 65 percent of students take out loans, and more than forty million Americans currently hold at least one student loan. Having increased by more than 160 percent over the last decade, student loan debt is still on the rise, and the average graduate of a four-year institution leaves with her diploma in one hand and a bill for $29,000 of debt in the other.22 While most student loans continue to be provided through the federal lending system, unmet financial need has increased far faster than the maximum borrowable amount, allowing a multi-billion-dollar private student loan market to emerge to fill in the gap. According to the College Board, in 1997–98 private education loans totaled $2.5 billion; ten years later, they totaled $17.9 billion, a nearly 800 percent increase.23 These companies market their loans very aggressively, although the loans often have very high interest and much stricter rules on repayment than federal loans do. Exploited by the marketing efforts of private lenders, many borrowers take out private loans even when they are still eligible for lower-interest-rate federal loans: half of those taking out private bank loans have not used up their full federal loan eligibility, a figure almost precisely the same as the number of prime-qualified mortgage borrowers who unnecessarily ended up with subprime home loans.24

Because the amount of consumer lending across all these sectors (mortgages, credit cards, student loans) far outpaced other economic gains (especially wages) between the 1980s and the early 2000s, default on all these risky loans eventually became widespread. When it did, the interconnectedness of credit markets—once seen as a model for the interdependence of the social order—threatened to destroy the economy. The effects on the indebted were especially catastrophic. In the United States following the crisis, unemployment rose by more than 5 percent, while home values fell by as much as 60 percent in some regions.25 In a single year between 2008 and 2009, credit card default rates nearly doubled.26 In early 2009, households who had some retirement savings reported that those savings had dropped in value by around 30 percent.27 Personal bankruptcies went up dramatically as well: the rate in 2004 (before the crash) was more than four times as high as the rate in 1980 and nearly eighty times as high as the rate in 1920.28 At the beginning of 2011, three years after the collapse of credit markets, nationwide one in ten homeowners was ninety days or more late on her mortgage, and one in seven was ninety days or more late on a credit card payment.29 In the first four years of the recession, 8.2 million foreclosures were begun.30 Losses in wealth were worst within communities of color: every cent of the wealth accumulated by African American households in the post–civil rights era was lost as a result of the collapse of home and investment values.31 Post-crisis immiseration also had a ripple effect, impacting even those too poor for mortgage debt: foreclosure significantly increased the rate of family homelessness, since many of those evicted were renters who lived in buildings owned by landlords or property developers who had defaulted on their mortgages.32 In short, far from being sustained by collective confidence and the technocratic management of uncertainty, the financial markets of the early twenty-first century were in fact predicated on the selective deployment of uncontrollable risk and on the transfer of much of this risk to the most vulnerable economic subjects.

This history emphasizes a series of economic, social, and historical transformations in the management of consumer debt in the US economy, explaining the institutional, regulatory, and technological changes that allowed US consumers to go into more debt than they could repay. By attending to the shift from bank deposit–financed lending to speculative securitization, it also explains where the money they were borrowing came from. Yet two questions remain. First, why did borrowers go into so much debt: What explains the growing demand for credit, especially given that it was more available but less affordable than ever? Second, what explains the ready supply of liquid money: Why were capitalists so desperate for places to put their money that they were willing to divert ever more of it into financial instruments and risky speculation, spheres of the economy that had for most of the twentieth century been secondary to safer, more profitable forms of investment?

We begin with the question of demand. Here too we find that consumer and housing debt in the twenty-first century had a markedly different function than it had in the past. Historically, consumer debt was a tool to enable the purchase of expensive or luxury goods and to “smooth” consumption, allowing for a more regular and predictable quality of life over the course of a consumer’s lifetime. In the last few decades, however, consumer debt has become a means for the reproduction of households and a stopgap to compensate for wage stagnation. As Hyman notes, “In the face of uncertainty and declining real wages, Americans indebted themselves to maintain the life they had once been able to afford.”33 Over a thirty-year period between 1980 and 2010, housing prices increased 50 points above the Consumer Price Index (CPI) of inflation.34 Annual per capita health-care spending in the United States rose (in inflation-adjusted dollars) from $350 in 1970 to $7,500 in 2008.35 Child-related costs also increased significantly in the same period: child-care spending increased from $84 to $143 per week between 1985 and 2011, and between 2000 and 2010 the overall cost of raising a child to age seventeen jumped 8.5 percent, not including college costs.36 Not surprisingly, the cost of higher education has climbed the most vertiginously of all: since 1975 the average price of tuition at US colleges has increased 900 percent, or 650 points above the CPI.37

During the same period that prices for basic goods and reproductive needs climbed, wages stagnated. If one compares the CPI to increases in the minimum wage between 1970 and 2011, for every $1.00 increase in the minimum wage since 1970, the price of the average consumer good has gone up $1.36.38 Even after the collapse of housing prices in 2008, a house today costs approximately three times as much as it did in 1970 compared to the average wage earned. The Economic Policy Institute puts the story of wage stagnation clearly and starkly: “Over the entire 34-year period between 1979 and 2013, the hourly wages of middle-wage workers (median-wage workers who earned more than half the workforce but less than the other half) were stagnant, rising just 6 percent—less than 0.2 percent per year. . . . The wages of middle-wage workers were totally flat or in decline over the 1980s, 1990s and 2000s, except for the late 1990s. The wages of low-wage workers fared even worse, falling 5 percent from 1979 to 2013.”39 And while the cost of higher education has been outpacing inflation almost exponentially, the wages of young college graduates have been stagnating, and fewer college graduates have been able to find jobs that provide health insurance, meaning that the total income of these workers, including benefits, is not simply stagnating but falling.40 Unemployment numbers tell a similar story, particularly if we use data on “employment as a percentage of population” (which, unlike the commonly referenced “unemployment rate,” takes into account workers no longer seeking employment, the underemployed, and those who do not enter or reenter the workforce because they cannot earn enough to pay for child care or transportation): as of 2013, employment as a percentage of population was at its lowest rate in thirty years.41

This history of declining wages and rising costs of reproduction explains much of why US workers and the unemployed were so willing to go into debt: there were not a lot of other options for them. Put simply, the availability of cheap credit, along with the effort to prop up real estate value as a form of middle-class wealth, was the means through which both capital and workers themselves compensated for declining wages and the decimation of the social safety net once funded by a high rate of profit and growth. No longer simply a means to enhance “discretionary” spending, debt became the means through which many working- and middle-class families, as well as households experiencing persistent unemployment or underemployment, were able to continue to survive.42

So what about supply? Why were investors willing to take on more risk than ever to make more credit available? Here again we need to take a step backward to think about the role credit typically plays in the economy. Historically, credit serves as the means through which capital extends itself in periods of growth and renews itself in moments of crisis. The first way it does so is through spatial expansion. Marx describes this succinctly in Capital: “The credit system . . . accelerates the material development of the productive forces and the establishment of the world-market, which it is the historical task of the capitalist system of production to bring to a certain level of development, as material foundations for the new form of production.”43 Much as credit allowed seventeenth-century merchant capitalists to create a vast export market, making possible some of the “primitive accumulations” that led to fully developed capitalism, it also enabled the globalization of the postwar twentieth-century economy. As a result of competitive pressures, high oil prices, and the rising cost of labor in developed countries, by the early 1970s capital desperately needed what David Harvey has influentially termed a “spatial fix”: it needed new markets for its goods and less expensive labor to produce them. Capitalists who were invested in industry, agriculture, and transportation thus struck out for new territory, seeking the cheaper labor markets and other resources of the developing world. Credit fueled all this motion and expansion, allowing capitalists to invest in new places; to speed up the turnover time between production, circulation, and sale; and to mitigate the costs and risks of moving between national currencies. The result in the United States and other developed countries was rapid deindustrialization, which caused pressure on wages and led to lower rates of industrial employment—the very things that caused the boom in demand for consumer credit described previously.44

Yet even globalization’s spatial fix wasn’t enough of a remedy for the postwar slowdown. As a result of the so-called microelectronic revolution, investments in fixed capital (machines and technology) had grown far faster than investments in the labor force, and the rate of industrial profit began to fall precipitously.45 As political economist Norbert Trenkle puts it, “The self-supporting thrust of post-war growth came to an end. There was no increased investment in the means of production, factories, buildings etc., because these could no longer produce sufficient profit.”46 Put simply, then, those capitalists who did not move their money out of US industrial production moved it out of production altogether. Instead, they turned to financial markets, newly empowered and newly flexibilized by deregulation (itself a response to structural transformations like the rise of the multinational corporation and the boom in offshore banking).47 Contemporary financial investments—what Peter Gowan describes as “money-dealing money”—mostly allow investors to trade on anticipated future profits (their own or other capitalists’), to insure against risk, or to provide credit to everyone from corporations and nations to individuals.48 The financial markets that began to drive capital accumulation in the 1970s are thus different from the shares or bonds that have long funded productive investment directly. Contemporary financial speculation increasingly takes place in secondary markets such as the derivatives markets that, by the 1990s, were briskly funding mortgage and credit card debt. Whereas globalization is a spatial fix that increases the space over which commodities can be produced and circulated, this kind of financialization makes possible a kind of “temporal fix”: it allows capital to treat an anticipated realization of value as if it has already happened. Thus while some of the return on this money-dealing money was the result of interest and fees siphoned off from the present profits of global manufacturing, the main source was the anticipated profits of a perpetually deferred future: money-dealing money depends on the assumption that all that corporate, or national, or personal debt will eventually be repaid when everyone has the money to do so. The rapid growth of financial markets in the 1970s was therefore not the effect of pure ideology. Rather, capital was invested in financial markets simply because they provided a higher rate of return on investment than production did: financialization allowed capitalists to supplement the declining profitability of investment in present production with money borrowed from the profits of a hoped-for future production.

Crisis and Culture

In 2008, however, all those hopes came to a grinding halt. No longer could capital convincingly promise to make good on its speculative obligations. When financial markets fell apart, the resulting crisis revealed the earlier, more intractable problem that capital had temporarily deferred: the absence of any real productive opportunities in the wake of deindustrialization. The events of 2008 were, as Gopal Balakrishnan persuasively argues, “the inexorable resurfacing of the pressure for a system-wide shake-out that was never allowed to happen over the course of the last three decades.”49

One way to view the contemporary crisis is as yet another in the series of repeating, intensifying “shakeouts” that have characterized capitalism since its inception. The most influential account of this view appears in Giovanni Arrighi’s The Long Twentieth Century, which describes “a recurrent pattern” in capitalism between epochs of material expansion (investment in production and manufacturing) and phases of financial expansion (investment in the stock and capital markets).50 Reading this oscillatory history through world systems theory, Arrighi argues that each of these phases corresponded to a different imperial power. As each hegemon enters its final stage of financialization, it comes into crisis and is forced to cede control of the global economy to a new, rising hegemon: from the seventeenth to the mid-twentieth century, Italian rule gives way to Dutch, Dutch to British, and finally British to US. As Arrighi’s account suggests, the current crisis is thus a crisis not only in financial markets and the global economy but also in US hegemony. Decisively the superpower of the productive economy in the postwar period, the United States entered its own phase of financialization in the mid-1970s, and this epoch of US financial and state domination arguably came to an end with the crisis of 2008. According to Balakrishnan, “We are now at the end of an Indian summer of American imperial power.”51 In his reference to the closing of US hegemony as an “Indian summer,” Balakrishnan intentionally echoes Arrighi’s description (itself borrowed from Fernand Braudel) of the “signs of autumn” that precede a crisis. For Arrighi, the signs of autumn are the evidence—registered culturally, socially, and politically—that a crisis is nigh and that a hegemon is at the end of its economic and political reign. It is thus in the United States where we can most clearly see both the effects and the aesthetics, both the material signs and the ideological signals, of the global crisis that came to the surface in 2008.

Yet as Balakrishnan also reminds us, the crisis that began in the 1970s and came to full, manifest expression in 2008 is a different kind of crisis from those that heralded the ends of the Italian, Dutch, and British financial empires. In this crisis, there is neither a new rising hegemon to take the reins nor an immanent resolution available within the current regime of capital accumulation: winter is coming, but not spring. As political economist Claus Peter Ortlieb puts it, “The capitalist process of accumulation and expansion [has] come up against absolute material limits, the observance of which must lead to the burning-out of the capitalist logic of valorization, and the disregard for which to the destruction of its material foundations and the possibility of human life as such.”52 Balakrishnan and Ortlieb’s arguments exemplify an important strain of thought in contemporary Marxist political economy known as “value critique,” which contends that the massive improvements in labor productivity made possible by the technological and computing revolutions of the late twentieth century herald not the perfection of capitalism but its end. The shift from productive enterprises to financial markets that these revolutions required allowed capital to sustain itself a little longer, but the contemporary collapse of those markets suggests the exhaustion of all other sources of profit. According to value critique, the current crisis will not lead to the emergence of a new regime of capitalist accumulation under a different imperial superpower. Instead, it heralds something akin to a “terminal crisis” in which no renewal of capital profitability is possible.53

Although Dead Pledges is not a work of political economy, the theory of terminal crisis is of profound importance to this book’s understanding of debt and culture. Credit is the economic form of the boom time; it is a temporal fix when it is still possible to fix things. But debt—as a figure for credit that is unpaid, defaulted, foreclosed, bankrupted, written off, unredeemed—is the economic form of crisis: of a period in which no one can pay. For our contemporary era of debt, crisis is an invaluable historical hermeneutic, compelling us to anticipate limits, to imagine alternatives, to welcome collapse, and thus to resist the “end of history” triumphalism characteristic of late capitalist ideology in boom times. As I articulate in Dead Pledges, this sense of crisis has become both the ambient context and the manifest content of cultural production, social experience, and economic life in the United States.54 You can see it in the scenes of foreclosure that occur in our neighborhoods, in the volatile stock market whose ups and downs have become a part of the daily news, in the collapsing bridges and empty housing developments that signal the effects of vanishing social surpluses, and in the reactionary and often violent economic protectionism that characterizes the social politics of a declining empire. Crisis, you could say, allows us to glimpse the owl of Minerva in the autumnal afternoon instead of only at dusk. The historical glimpse made possible in a time of crisis is afforded us, finally, by cultural form. The aesthetic forms surveyed in Dead Pledges are the cultural expression of our shared autumnal condition. They thus allow us to reckon with the ways crisis has transformed our sense of personhood, our understanding of property, and our experience of social belonging. While economic ideology attempts to explain away catastrophic failures of market self-regulation, capital renewal, and social connection, the cultural texts explored here expose these contradictions for what they are. The texts studied in this book do not, as in Claude Levi-Strauss’s famous description, provide imaginary attempts to overcome real social contradictions.55 Instead, they offer their own unresolved and overdetermined responses to the unique social and economic contradictions of debt. At the limit of what can be represented about debt, we confront not only the ongoing crisis that is capitalism but also the terminal crisis now stirring within it.


Dead Pledges is organized into two parts. Part One takes up the problem of subjectivity as it manifests within contemporary conditions of credit and debt. More specifically, this half of the book explores the changing relationship between the individual person and the social totality in the contexts of behavioral economics and credit scoring. Part Two focuses on the social form that most explicitly mediates our relationship to debt, property. In considering the effect of foreclosure and eviction not just on our view of the home but on our imagination of private possession itself, I suggest that the housing crisis has revealed the “dead pledge” of the mortgage to be a radically antisocial form.

Chapter 1 analyzes novelistic representations of the credit crisis. Focusing on Jonathan Dee’s The Privileges, Adam Haslett’s Union Atlantic, and Martha McPhee’s Dear Money, I read the credit-crisis novel’s interest in individual psychology alongside and against the rise of behavioral economics. Behavioral economists understood the financial crisis as a consequence of individual choices and cultural climates, seeing it variously as an effect of social or familial values, individual “taste” and “preference,” or collective “irrational exuberance.” At once mirroring and refuting these explanations, the credit-crisis novel reveals a deep ambivalence about the model of psychological complexity that undergirds both novelistic character and the behavioral economic subject. Imagining the social world in terms familiar to microeconomic theory—as the aggregation of the free acts of private, autonomous consumers in a public marketplace—these novels struggle to represent a coherent social order, bringing to the surface the buried tension in behavioralism between belief in individual accountability and resistance to a language of individual blame. This tension, I argue, is formalized in the credit-crisis novel as a problem of narrative perspective. Taken together, these credit-crisis novels suggest that the rich, full, autonomous homines economici of both the realist novel and microeconomic theory are bankrupt.

Chapter 2 addresses the relationship between debt and personhood. The development of a standard practice for evaluating consumer credit in the late eighteenth and early nineteenth centuries both depended on and enabled the emergence of a realist model of literary character. In the late twentieth and early twenty-first centuries, however, credit evaluation practices turned away from subjective, qualitative, narrative forms of credit evaluation and toward objective, quantitative, data-driven models of credit scoring. Although contemporary creditors claim to translate persons into impersonal numbers—freed of the designations but replete with the marks of race and class—they import the fictions of personhood stripped from human subjects into the scores themselves. To understand the perduring presence of the person, this chapter considers both characterization—the ways in which the novel produces socially legible fictional figures—and personification—the ways in which conceptual art and conceptual poetry offer mediating forms through which the subject is made or made to speak. Gary Shytengart’s novel Super Sad True Love Story attests to the persistence of racial discrimination as the secret behind seemingly objective methods of credit evaluation, while conceptual art by Cassie Thornton and poetry by Mathew Timmons and Timothy Donnelly register debt as not simply as a personal experience but also as a material and historical force.

Chapters 3 and 4 turn from the individual and consumer credit to the larger social order and to securitized debt, specifically in the form of the mortgage. In Chapter 3, I bring together a wide range of photographs—including photojournalism, conceptual photography, and satellite images—that document the economic crisis with images of abandoned homes and evicted families. These photographs reveal the effects of the boom and bust of the mortgage market on our cultural or ideological view of the home: the difference between inside and outside, private and public, architecture and nature, inhabited and empty. But they also raise questions about the politics of representation. The ability to visualize the economic crisis by photographing a home in the process of eviction or foreclosure depends not only on technical and artistic conditions but also on legal and material forces. Photographs of the housing crisis are thus compelled to draw on what I describe as an unheimlich aesthetic. Rather than read the uncanny simply as the psychic and aesthetic correlative of debt in general and foreclosure in particular, I argue that the uncanny conjures a kind of historical temporality. Images of abandoned industrial landscapes and empty housing developments register the uncanny power property holds over the social order. These photographs also glimpse the foreshadowed crisis in capitalism, such that the uncanny temporality of debt becomes both the reappearance of the past and the promise of a coming future.

Chapter 4 begins by asking why the language of horror characterizes so much contemporary discourse on the economic crisis, from the ubiquitous “zombie banks” to the description of Goldman Sachs as a “great, blood-sucking vampire squid.” To understand this, I turn to four credit-crisis horror films that explicitly link fear, foreclosure, and financialized credit: Drag Me to Hell (dir. Sam Raimi), Dream Home (Wai dor lei ah yut ho, dir. Pang Ho-cheung), Mother’s Day (dir. Darren Lynn Bousman), and Crawlspace (dir. Josh Stolberg). All four films explicitly take up real estate lending, mortgage speculation, and foreclosure risk, locating horror not just in the “gothic economy” of high finance but also in the “dead pledge” of the mortgage contract. In them, the formal mechanisms of suspense become an index of the somatic tolls of risk; the visual excesses of gore become the signs of financial contagion and toxicity. Using horror and the home-invasion genre to explore not only the risks of foreclosure but also the shifting understandings of property and ownership consequent to the housing crisis, these films horrifically literalize the doctrine of caveat emptor. Exploring the relationship between “paying back” as a seemingly salutary structure of social obligation and “payback” as the logic of revenge, they suggest that the introduction of speculative risk has shifted the social force of credit contracts from the promise of trust to the threat of revenge.

As I have already suggested, the credit contract’s presumption of free and equal exchange, its confidence in social judgments of moral character, and its reliance on collective belief have led many scholars to see it as the basis for social mutuality in a dispersed modern world. In the 2008 crisis, however, credit was exposed as an antagonistic rather than reciprocal relationship. The Coda to Dead Pledges thus explores an emerging antidebt politics. I argue that “debt strikes” and the occupation or sabotage of domestic space are forms of protest that attempt to block capital at the point of circulation. Such movements also offer a new view of sociality—one that lies outside the realm of both economic rationality and social “debts.” They suggest the emergence of what I describe—against the commonplace descriptions of our illusioned belief in the defaulted promises of capitalism—as a kind of crisis subjectivity, a demystified condition of radical percipience and canny knowing.


1. Meta Brown, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw, “The Financial Crisis at the Kitchen Table: Trends in Household Debt and Credit,” Current Issues in Economics and Finance 19.2 (2013),, 9.

2. Pam Bennett, “The Aftermath of the Great Recession: Financially Fragile Families and How Professionals Can Help,” Forum for Family and Consumer Issues 17.1 (Spring/Summer 2012),

3. David Graeber, Debt: The First 5000 Years (Brooklyn: Melville House, 2011); Mauricio Lazzarato, The Making of the Indebted Man: An Essay on the Neoliberal Condition, trans. Joshua David Jordan (Cambridge, MA: MIT Press/Semiotext(e), 2012); Richard Dienst, The Bonds of Debt: Borrowing against the Common Good (London: Verso, 2011); Angela Mitropoulos, Contract and Contagion: From Biopolitics to Oikonomia (Wivenhoe, NY: Minor Compositions, 2012); Fred Moten and Stefano Harney, The Undercommons: Fugitive Planning and Black Study (Wivenhoe, NY: Minor Compositions, 2013); Miranda Joseph, Debt to Society: Accounting for Life under Capitalism (Minneapolis: University of Minnesota Press, 2014); Andrew Ross, Creditocracy and the Case for Debt Refusal (New York: OR Books, 2014).

4. Graeber, Debt, 14.

5. Marc Shell, Money, Language, and Thought: Literary and Philosophical Economies from the Medieval to the Modern Era (Baltimore: Johns Hopkins University Press, 1993), 7.

6. Mary Poovey, Genres of the Credit Economy: Mediating Value in Eighteenth and Nineteenth-Century Britain (Chicago: University of Chicago Press, 2008), 2, 113.

7. Deidre Lynch, The Economy of Character: Novels, Market Culture, and the Business of Inner Meaning (Chicago: University of Chicago Press, 1998); Margot Finn, The Character of Credit: Personal Debt in English Culture, 1740–1914 (Cambridge: Cambridge University Press, 2003); Ian Baucom, Specters of the Atlantic: Finance Capital, Slavery, and the Philosophy of History (Durham, NC: Duke University Press, 2005). Quotation from Lynch, The Economy of Character, 13.

8. Jennifer Baker, Securing the Commonwealth: Debt, Speculation, and Writing in the Making of Early America (Baltimore: Johns Hopkins University Press, 2007), 4.

9. See Otaviano Canuto, “Food Prices, Financial Crisis and Droughts,” Growth and Crisis Blog, World Bank, November 23, 2011,; Melanie Haiken, “More Than 10,000 Suicides Tied to Economic Crisis, Study Says,” Forbes, June 12, 2014, Sources for the other claims here about unemployment, eviction, bankruptcy, and homelessness appear throughout this Introduction where they are discussed in more detail.

10. For an excellent account of these changes, see Louis Hyman, Borrow: The American Way of Debt (New York: Vintage, 2012), and Debtor Nation: The History of America in Red Ink (Princeton, NJ: Princeton University Press, 2011); Lendol Calder, Financing the American Dream: A Cultural History of Consumer Credit (Princeton, NJ: Princeton University Press, 1999).

11. See Martha Poon, “From New Deal Institutions to Capital Markets: Commercial Consumer Risk Scores and the Making of Subprime Mortgage Finance,” Accounting, Organizations, and Society 34 (2009): 654–74.

12. See Maya Gonzalez, “Notes on the New Housing Question: Homeownership, Credit, and Reproduction in the Post-war US Economy,” Endnotes 2 (April 2010),; Robin Blackburn, “The Subprime Crisis,” New Left Review 50 (March–April 2008): 63–106.

13. See Souphala Chomsisengphet and Anthony Pennington-Cross, “The Evolution of the Subprime Mortgage Market,” Federal Reserve Bank of St. Louis Review 88.1 (January–February 2006): 31–56; Dan Immergluck, Foreclosed: High Risk Lending, Deregulation, and the Undermining of America’s Mortgage Market (Ithaca, NY: Cornell University Press, 2009).

14. See Alyssa Katz, Our Lot: How Real Estate Came to Own Us (New York: Bloomsbury, 2010).

15. Ben Bernanke, “Housing, Housing Finance, and Monetary Policy,” Federal Reserve Board speech, August 31, 2007, Jackson Hole, WY,

16. Hyman, Borrow, 213. See also Aaron Unterman, “Exporting Risk: Global Implications of the Securitization of US Housing Debt,” Hastings Business Law Journal 4.1 (Winter 2008): 77–134.

17. See Vincenzo Bavoso, “Financial Innovation, Structured Finance, and Off Balance Sheet Financing: The Case of Securitization,” Social Science Research Network, January 1, 2010,

18. John Bellamy Foster and Fred Magdoff, The Great Financial Crisis: Causes and Consequences (New York: New York University Press, 2009), 29.

19. New York Federal Reserve Bank, “Household Debt and Credit Report (Q3 2015),” November 2015,, 3.

20. See Hyman, Debtor Nation; Immergluck, Foreclosed; and Alyosha Goldstein, “Finance and Foreclosure in the Colonial Present,” Radical History Review 118 (Winter 2014): 42–63.

21. See Gary Rivlin, Broke USA: From Pawnshops to Poverty Inc., How the Working Poor Became Big Business (New York: Harper Business, 2011).

22. See Federal Reserve Bank of New York, “Household Debt Continues Upward Climb While Student Loan Delinquencies Worsen,” February 17, 2015,; Juan Sánchez and Lijun Zhu, “Student Loan Delinquency: A Big Problem Getting Worse?,” Economic Synopses 7 (April 10, 2015),; Meta Brown, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw, “Looking at Student Loan Defaults through a Larger Window,” Federal Reserve Bank of New York Liberty Street Economics (blog), February 19, 2015,

23. College Board, Trends in Student Aid, 2008,, 6.

24. American Association of State Colleges and Universities, “The Public Realities of Private Student Loans: A Higher Education Policy Brief,” April 2008,, 2; The Institute for College Access & Success, “Private Loans: Facts and Trends in 2008,” May 2014,

25. Jeffrey P. Cohen, Cletus C. Coughlin, and David A. Lopez, “The Boom and Bust of U.S. Housing Prices from Various Geographic Perspectives,” Federal Reserve Bank of St. Louis Review 94.5 (September/October 2012): 350.

26. Saskia Scholtes and Francesco Guerrera, “Banks Rush to Rescue of Credit Card Trusts,” Financial Times, June 24, 2009, Some economic commentators have noted approvingly the decline in indebtedness between 2009 and 2012, suggesting that it was due to consumers paying off debt and saving more, but in fact most of the decrease can be ascribed instead to an increase in the “charge-off” rate: the amount of very delinquent debt being written off by the lenders as uncollectable. Erin El Issa, “American Household Credit and Debt Statistics: 2015,” May 2015,

27. Michael Hurd and Susann Rohwedder, “Effects of the Financial Crisis and Great Recession on American Households,” National Bureau of Economic Research Working Paper 16407, September 2010,, 10–13.

28. Thomas A. Garrett, “100 Years of Bankruptcy: Why More Americans Than Ever Are Filing,” Federal Reserve Bank of St. Louis, Spring 2006,

29. New York Federal Reserve, “Quarterly Report on Household Debt and Credit,” February 2011,, 9.

30. Bennett, “Aftermath of the Great Recession.”

31. Jacqueline Ayers, Suzanne Bergeron, Garrick T. Davis, Valerie R. Wilson, and Madura Wijewardena, eds., 2012 State of Black America Report (New York: National Urban Renewal League, 2012),

32. National Coalition for the Homeless, National Health Care for the Homeless Council, National Alliance to End Homelessness, National Association for the Education of Homeless Children and Youth, National Law Center on Homelessness & Poverty, National Low Income Housing Coalition, and the National Policy and Advocacy Council on Homelessness, “Foreclosure to Homelessness 2009: The Forgotten Victims of the Subprime Crisis,” 2009,, 5.

33. Hyman, Debtor Nation, 219.

34. See S&P Case-Shiller Home Price Indices, accessed May 23, 2016,

35. Henry J. Kaiser Family Foundation, “Health Care Spending in the United States and Selected OECD Countries,” April 12, 2011,

36. Ruth Mantell, “The Numbers on Child Care’s Skyrocketing Costs,” Market-Watch, April 8, 2013,

37. Malcolm Harris, “Bad Education,” n+ 1 (April 2011),

38. See statistics from Census Bureau and Consumer Price Index compared by Trent Hamm, “A Dose of Financial Reality,” Simple Dollar, August 1, 2014,

39. Lawrence Mishel, Elise Gould, and Josh Bivens, “Wage Stagnation in Nine Charts,” Economic Policy Institute, January 6, 2015,

40. Hilary Wething, Natalie Sabadish, and Heidi Shierholz, “The Class of 2012,” Economic Policy Institute, May 3, 2012,

41. Annalyn Kurtz, “Employment Is Still Near a 30-Year Low,” CNN Money, June 6, 2013,

42. See Hyman, Borrow; Elizabeth Warren, Teresa Sullivan, and Jay Westbrook, As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America (Oxford: Oxford University Press, 1989), and The Fragile Middle Class: Americans in Debt (New Haven, CT: Yale University Press, 2001).

43. Karl Marx, Capital, Volume 3, trans. D. Fernbach (New York: Penguin Classics, 1991), 573.

44. See Robert Brenner, The Boom and the Bubble: The US in the World Economy (London: Verso, 2002); Blackburn, “The Subprime Crisis”; Joshua Clover, “Value, Theory, Crisis,” PMLA 127.1 (January 2012): 107–14; David Harvey, Seventeen Contradictions and the End of Capitalism (Oxford: Oxford University Press, 2014); Robert Kurz, “On the Current Economic Crisis,” Mediations 27.1–2 (Fall/Spring 2013–14),

45. Neil Larsen, Mathias Nilges, Josh Robinson, and Nicholas Brown, “Editors’ Note,” Mediations 27. 1–2 (Fall/Spring 2013–14),

46. Norbert Trenkle, “Tremors on the World Market,” trans. Josh Robinson, Krisis (May 2008),

47. See David McNally, “From Financial Crisis to World Slump: Accumulation, Financialisation, and the Global Slowdown,” Historical Materialism 17 (2009): 35–83.

48. Peter Gowan, The Global Gamble (New York: Verso, 1999), 8–13.

49. Gopal Balakrishnan, “Speculations on a Stationary State,” New Left Review 59 (September–October 2009): 11.

50. Giovanni Arrighi, The Long Twentieth Century (London: Verso, 1994), 8–14.

51. Balakrishnan, “Speculations,” 25.

52. Claus Peter Ortlieb, “A Contradiction between Matter and Form,” in Marxism and the Critique of Value, ed. Neil Larsen, Mathias Nilges, Josh Robinson, and Nicholas Brown (Chicago: MCM Publishing, 2014), 45.

53. Nor is this position entirely limited to Marxists. Three new books have likewise questioned the possibility of continued growth—books with diagnoses and prognoses startlingly similar to Balakrishnan’s despite being written from very different political perspectives. See Mohamed El-Erian, The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (New York: Random House, 2016); Satyajit Das, The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril (New York: Prometheus Books, 2016); Robert Gordon, The Rise and Fall of American Growth: The US Standard of Living since the Civil War (Princeton, NJ: Princeton University Press, 2016).

54. For a particularly powerful account of the autumnal condition of crisis, see Marija Cetinic, “House and Field: The Aesthetics of Saturation,” Mediations 28.1 (Fall 2014): 35–44.

55. Claude Levi-Strauss, “The Structural Study of Myth,” Journal of American Folklore 68.270 (1955): 428–44.