Conclusion

This article has combined insights of critical political economy with Michel Foucault's constructs of governmentality, bio-power, and assemblage of self-caring subjects to explore the symbiosis of debt and discipline in the neoliberal era. Laws and public policy were indispensable for choreographing the displacement of Keynesian welfare by the hegemony of finance capital, the hallmark of neoliberalism. Strategic use of monetary policy and radical rearrangement of legal regimes facilitated financialization of the economy, broke the power of organized labor, and expanded debt to sustain aggregate demand. Financial markets extended their reach and expanded liquidity by bringing ever-increasing sections of the working classes within the ambit of the credit economy. Faced with shrinking welfare, wage pressures, and precarious labor markets, working classes had little choice but to fund their basic needs through debt. The subprime mortgage boom testifies to this structural transformation. Neoliberal rationalities procreated constructs of individual responsibility and human capital that facilitated assemblage of subjects who were coaxed to engage the financialized economy as risk-taking entrepreneurs. Engulfment in relationships of debt induced self-discipline and conformity with the logic of the financialized economy and precarious labor markets. Neoliberal *53 financialization of the economy, thus, has transformed capitalism and recruited within its modes of governance the transformation of subjectivity. Neoliberalism emerges as a regime of immanent social control through the market. Public policies drew the frame for conventions and norms of social practice and shaped the horizon within which individuals pursued strategies of economic survival and security. State power created a field of possibility within which market governmentality instilled in the subject an understanding of herself as capital. To live and survive in the debt-fueled financialized economy, this understanding had to be reproduced in practices of daily life. This ensemble sutured debt with discipline.

For three decades, neoliberal financialization combined with globalization contained the crisis of profitability and produced debt-encumbered self-disciplined working classes. In the process, however, it sowed the seeds of a larger crisis. Syphoning of savings from the periphery to sustain demand in the core and securitization of subprime mortgages to generate liquidity had its limits. Pushed beyond the frontiers of sustainability, this empire of debt collapsed. Securitization of debt, designed to spread risk, now spread contagion. The result was the 2008 global financial meltdown and the resulting Great Recession. This trajectory underscores the history of capitalism; it never solves its foundational contradictions and tendencies to crisis, it only transforms them.

The magnitude of the ongoing crisis created by neoliberal financialization is alarming. The global losses of the financial sector exceed 3.4 trillion dollars, and the bill for public rescue of financial institution exceeds 20 trillion dollars. Worldwide, over 50 million jobs were lost, 200 million working people slipped below the poverty line, and high unemployment has become the “new normal.” Value of derivatives at 596 trillion dollars dwarfs the entire world output of 48.6 trillion dollars. By 2014, government debt of G20 countries is projected to be 120 percent of GDP. The credit worthiness of the U.S. stands questioned and the *54 status of the dollar as the dominant global currency is in jeopardy. The policy responses to the crisis thus far are consistent with the track record of the last three decades: using crises to reinforce the priority of financial institutions and bondholders over the well-being of working classes. The myriad policy responses have stubbornly refused to ease the debt burdens of consumers and sovereigns, lest the disciplinary role of debt falter. There have been five typical policy responses to the crisis thus far: (1) massive injections of liquidity into the financial system and bailouts of major financial institutions; (2) imposition of fiscal discipline through austerity measures, turning governments into collection agencies for the bond markets; (3) accelerated hollowing out of welfare systems and further pressure on wages; (4) activation of racist xenophobia to recalibrate the boundaries of legitimate membership in society; and (5) acceleration of militarization and use of direct violence both locally and globally.

The crisis and the policy responses have triggered resistance from below. From the Arab Spring to Greek general strikes and from the Occupy Wall Street Movement in the U.S. to mass demonstrations in London, new spaces and modes of resistance are being forged. However, finding a way to respond to the disciplinary function of debt is yet to achieve priority on the agendas of these movements. It is imperative that theory and praxis aimed at emancipatory transformation and global justice take account of the nature and magnitude of the contemporary crisis and the implications of policy responses on the offer. In particular, we must focus on how to deal with the new and refurbished disciplinary regimes that are reinforcing the discipline of debt through national policies to transfer all costs of the crisis to the working classes and the marginalized. Popular democratization of finance through management of finance as a public utility must be high on the agenda of popular movements. An urgent challenge is to explore agendas, coalitions, and organizational forms of resistive social movements suitable to pursue popular democratization of finance. Also needed are designs of political and economic governance conducive to organizing banking and finance as public utilities. The current crisis has opened up the possibility of alternative social orders and modes of life. What shape the future will take depends in no small measure on how contending social forces will confront the perennial question of finance and the relationship between debt and discipline.


. Professor of Law and Director, Center for Global Justice, Seattle University.