Writing for the Guardian’s Comment is Free blog yesterday, David Graeber warned that we may be heading towards yet another crisis of the kind we saw in 2007–08. In his Comment, Graeber takes to task George Osborne’s 2015 Mansion House speech (or rather the logic underpinning it), in which Osborne made a commitment to run a budget surplus in ‘normal times’, much to the consternation of dozens of academic economists. It seems that the utterly misleading and moralizing analogies so frequently made between well–disciplined householders ‘tightening their belts’ when times are tough, and the national government cutting its spending to pay down its debts – part of the mythos termed ‘mediamacro’ by Oxford macroeconomist Simon Wren-Lewis – simply won’t go away. And yet, as Graeber shows, “the less the government is in debt, the more everyone else is…If the government reduces its debt, everyone else has to go into debt in exactly that proportion in order to balance their own budgets.” Everyone cannot simultaneously ‘balance their budgets’ and continue to interact, because all money is debt, as the Bank of England ‘revealed’ in January 2014: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.”
Similarly, at last week’s launch of his new book Between Debt and the Devil, Lord Adair Turner, who took over the Financial Services Authority as the 2007–08 crisis began to unfold, suggested that the UK has reached a position in which our debts are not being paid down, but simply shuffled back–and–forth between the public and private sectors – though the vast majority of ‘private sector’ lending is going into a game of property speculation played by the wealthiest, at the expense of the most vulnerable. For those seeking to make sociological sense of this scenario, the recent work of Stefano Sgambati, at the University of Naples Federico II, provides one of the most powerful pathways to making political and theoretical sense of money, debt and finance in the modern economy.