Reviewed: Royce Kurmelovs, Just Money: Misadventures in the Great Australian Debt Trap, University of Queensland Press, 2020
When the Latin American nations of the 1820s became independent of Spanish rule, they did so largely financed by money borrowed from British bankers. In the same decade, Greece borrowed extensively from the banks of Britain, France and Russia, in part to finance its own struggle for independence from the Ottoman Empire (which those banks also financed). The banks of the European financial centres did good business on these loans: by the mid-nineteenth century, they were searching for new clients in new territories. Soon, countries such as Egypt and Tunisia became indebted to bankers from London and Paris. How generous of the banks to extend lines of credit to nations in need!
The conditions of those loans were predictably one-sided and odious. After commissions and fees, the debtor received only a portion of the loan’s face value. In turn, the expenditure of each nation was sponged by the servicing of their debts, which saw their economic development stalled as a result. And when the payments stopped? The banks, with the backing of their government’s militaries, stepped in to help. By the 1860s, Mexico was forced to agree to free trade deals with Europe and North America as a condition of their debt restructure.
In 1881, France invaded and colonised Tunisia, citing their financial irresponsibility. And in 1843, Britain, France and Russia took such control over debt-ridden Greece that they wrote them a brand-new constitution. With the power of unpaid debt on their side, European banks indirectly imposed austerity measures, opened up global markets in their favour, and reoriented the priorities of less powerful nations by making them focus on paying off what they owed.
When political scientist Éric Toussaint outlined these nineteenth-century events in The Debt System, he did so to demonstrate the way in which lines of credit act as a ‘permanent weapon to exercise domination’. The two-fold effect of instant profits on the part of creditor nations, and the compounding loss on the part of indebted nations, would reshape global power dynamics. Indebted parties have for centuries been ruled by their creditors, and in the long shadow of the sovereign debts of the nineteenth century, we can see analogues to individual lending practices in the financial systems of today.
The struggles for Mexican and Grecian independence in the 1820s really aren’t that different to the struggles for financial independence that individuals face in a late-capitalist 2021. The personal loan is sold to consumers as a way of getting ahead of a limited pay cheque, or to be free of an overdue service bill. It might cover the consequences of an accident, or save a farm from defaulting due to a drought-affected crop. Maybe a credit card can finance the initial expenditures of a move to a new city that offers better work opportunities. Regardless of the reason, these are all common pathways to ‘the Great Australian Debt Trap’, as journalist Royce Kurmelovs outlines in his new book, Just Money.
Just Money focuses on the Australian context of debt by virtue of Kurmelovs’ own experiences following a car crash. When a debt collector arrives on behalf of the insurance company a year after the accident, Kurmelovs decides to use his newfound experiences as an investigation into indebtedness in Australia. He soon discovers a world of debt vultures, unqualified financial advisors and irresponsible lenders who make their living off the plight of indebted individuals. While the characters he discovers are all too familiar to those of us who have encountered them, the book’s biggest achievement is that in detailing the stories of debtors and creditors, two distinct groups are revealed: a creditor class and an indebted class.
It’s a leading observation in Just Money that everyone in Australia has a story about debt, but rather than thinking of it as a series of disparate individual stories, Kurmelovs identifies a broader narrative. The indebted class find themselves burdened by a struggle to get ahead of their debt servicing, living precariously and at the whim of banks (and the companies associated with them) as they try to meet their repayments. For the creditor class, the apparent drawback of being owed money by someone who can’t pay up is vastly overstated.
The ‘inherent risk’ of lending is largely absorbed in commissions and fees that pay out immediately, and if impatient, on-selling the debt retrieves a quick profit, and shifts the responsibility of collecting repayments onto a third party. The broader political project of the creditor class becomes clearer when reading between the lines of debt history, thus revealing the link between contemporary Australian debt traps and the historical crises of sovereign debt abroad—an increase in indebtedness proves to be remarkably good for economic growth.
In Toussaint’s The Debt System, it’s apparent that the predatory lending practices of economic centres helped enable legal grounds for the colonisation of indebted nations. The trade channels that were opened contributed to the widespread globalisation project of the twentieth century, and when the wealth extraction of nation-states reached a limit, the project turned to the individual. It was then that the indebted class was financialised; easing access to individual funds under the illusion of financial empowerment shows itself to be uncannily similar to the promises behind nineteenth-century lending. The dynamics are alike: from the quick relief of the loan, to the banks speculating on the debt, all the way through to the creditor exercising control over the debt holder’s behaviour. If we examine indebtedness as a common struggle across centuries, it illuminates the falsehood of the individualistic narrative that so often overtakes the conversation.
The burden of taking individual responsibility for systemic problems has long been familiar to those most likely to be a part of the indebted class. They’re told that it’s not the inaccessible housing or rental markets that push people into debt, nor is it the disappearance of affordable services, or the unlikelihood of stable work: rather, it’s fiscal irresponsibility. These myths have been rendered as fact in mainstream media, ranging from the wasteful millennial at a café to the single parent with a credit card. The strength of Just Money is in demonstrating the common factors between the various forms of debt that individuals find themselves in.
While Just Money gives a thorough investigation of the trappings of debt in Australia, it can suffer from inconsistencies of style that blur the detailed image Kurmelovs sets out to present. A great work of investigative journalism is interrupted by personal narrative in a way that feels less like a presentation of a worldly problem than a plea by the author to be understood and forgiven for his indebtedness. In that sense, it’s a text that is as useful for understanding the emotions of indebtorhood as it is for coming to terms with Australia-centric debt traps. If anything, it speaks to the pervasive dominance of the financial system that even a book-length critical investigation needs to stop and marvel hopelessly at the injustice of it all.
As Just Money comes to a close, it becomes clear that it doesn’t proffer steps towards transcending the pervasive problem of predatory debt. Even though it ends on a positive note—with the suggestion that Kurmelovs’ debts somehow cleared as he came to understand their complexities—it comes across as a hollow victory, an investigative work presented as a job well done. As to how to escape that ‘great Australian debt trap’, Kurmelovs does what many authors are forced to do when they’ve bitten off more than they can chew, fatalistically claiming that he will ‘leave it to others to decide’.
Perhaps it is unfair to criticise a journalist for not finding a solution to such a vast and complex economic problem. By his rushed conclusion, Kurmelovs falls victim to the overwhelming nature of debt, which might be yet another example of the debt trap’s power. He does tack on some brief financial solutions, such as economist John Quiggin’s plan to introduce new taxes and regulations on the financial industry, or to introduce a universal basic income (UBI) to raise the income floor. But even in mentioning these quick fixes, he ignores his own analysis of the power of an industry capable of skirting regulation, which can reshape itself to dangle ever-larger carrots to the desperate. What would Just Money’s rogues’ gallery of irresponsible lenders do with the influx of capital created by a UBI, other than to approve larger loans? And as for taxation, Kurmelovs shows that the innovation of the financial industry only begins at tax avoidance.
Just Money is promoted as a book that defines debt as an ‘urgent social justice issue’, yet it is stuck within a kind of economic rationalism. With no clear investigation of how we might ameliorate the injustice of the financial system’s underbelly, it feels akin to being diagnosed in detail by a doctor and then told to go home and dwell on it. Thanking in the book’s acknowledgements the insurance company that sank him is one thing (admittedly, ‘Without you guys, there would be no story’ is at least half in jest), but then there are lines such as ‘Recessions, after all, are cyclical events and so cannot be avoided’ that are telling: how could such an expertly crafted investigation of the ills of some of capitalism’s pulleys and levers be resigned to its own fate?
It’s an interesting time to publish a book that settles on reform in its push for social justice. Last year, the Black Lives Matter movement yet again communicated the weakness of reform and regulation as methods of addressing the injustices associated with policing and imprisonment. So with abolition on the mind, it would be more timely to consider those who might want to abolish our predatory financial systems. Adjacent to the economic theorists Kurmelovs cites for his own history of debt (such as the late David Graeber) is economist Yanis Varoufakis, the author of post–global financial crisis explainer The Global Minotaur. Varoufakis’s work also circles the injustice of debt, and his conclusions—after a lifetime as an economist and activist—are pointed.
In a recent live interview with The Dig, he stated that ‘markets can only function in the public interest if we terminate, not regulate, share markets, labour markets, and commercial banking’. Juxtaposing Varoufakis’s remark with Just Money, then, presents a contradiction: a book that outlines the symptoms of a financial system that cannot act in the public interest, yet concludes that we could make gracious attempts to tame it.
It’s less clear about what mechanisms can be triggered to terminate predatory lending markets, but there are historical examples in Toussaint’s work. The Debt System concludes with examples of successful repudiations of odious debts, such as Mexican revolutionaries who suspended the debt payments of the overthrown government in 1914, or Russian revolutionaries who, in 1918, formally rejected debts accrued by the tsars. In the words of the Petrograd Soviet of the Workers’ Delegates who led Russia’s debt repudiation charge, we can find echoes of Varoufakis: ‘We have therefore decided not to allow the repayment of loans which the government contracted while it was clearly and openly waging war against the entire people.’
Although the parallels to the present day may seem a stretch, there is a hint in Just Money. One of the book’s best chapters is its investigation of Centrelink’s fabricated ‘robodebt’, a debt that was shown to be illegal before it was overturned in large part by the hard work of grassroots movements such as #NotMyDebt and the Australian Unemployed Workers’ Union (AUWU). From that chapter, we see that the indebted class appears to have a lot more in common with the Mexican and Russian revolutionaries of the 1910s than with the bankers they’re indebted to. The similarities are perhaps summed up best by AUWU organiser and debt activist Asher Wolf, who is quoted on robodebt near the end of the book: ‘If someone walked up to you on the street and said you have a debt for $300, you’d tell them to get fucked.’
Max Easton is a writer from Sydney. He is an ex-research scientist and host of underground music podcast Barely Human. His first novel will be published in 2021 by Giramondo.