The Social Meaning of Credit

• In Event: The Politics of the Credit Welfare State: Access, Inequality, and Democracy

Abstract

Over the past generation scholars from across the social sciences have pointed to financialization as a key feature of contemporary capitalism. We have learned that in late capitalist economies such as the United States, many companies make more money off of financing and fees than they do off of selling physical products (Krippner 2011). The product has become the interest-and-fee-paying consumer, who despite being the engine of economic growth receives scant attention in the literature. In this article I focus on the consumer side of consumer finance, turning my attention to the practice of credit and its micro-politics. Following the approach of economic sociologist Viviana Zelizer (1994), I analyze consumer credit’s ideology, practice, and social relations, combining the theory and history of credit with information gathered from original in-depth interviews with Americans going through Chapter 13 bankruptcy.

Ideologically the social meaning of credit is tied up with norms and beliefs about personal responsibility, often in ways that reinforce broader political ideologies emphasizing personal responsibility. In terms of practice, I find that although one can now purchase anything from a cup of coffee to a car on credit, there are norms surrounding its use. Certain purchases such as vacations might be bought on credit, but many interviewees felt strongly that they should never be allowed to become debt. Other purchases, such as medical expenses, are made on credit only when there are not other options available. Credit involves multiple social relations, both between lender and borrower and between the borrower and his or her social network. I explore both of these facets. Interviewees describe changing relationships with local banks as banks have become nationalized and have increased their reliance on fees as a source of revenue. The relations between borrowers and their social networks often revolve around children or grandchildren who the borrower does not wish to deprive of food, clothing, or medical assistance, even if it means going into debt.

I place these observations regarding the ideology, practice, and social relations of debt in the context of privatized Keynesianism (Crouch 2009) to make a statement about the role of credit and debt in contemporary capitalist society. While it is tempting to think of institutions such as personal bankruptcy as a “safety valve,” that are a necessary, but small part of a functioning system, my research shows that they are actually fundamental and significant parts of the social safety net, touching millions of Americans each year and representing a larger economic transfer than any other aspect of the welfare state.

Author

• Tess Elizabeth Wise, Amherst College