Committee for the Abolition of Illegitimate Debt

In this extract from his doctoral thesis, [1] Christoph Sorg begins by drawing a distinction between the CADTM and Eurodad, a European NGO specialising in debt and development financing. Christoph Sorg then focusses on the analyses produced by the CADTM. This extract from the thesis corresponds to pages 167 to 171.

CADTM (“Committee for the Abolition of Illegitimate Debt”) shares a lot of Eurodad’s frames and criticisms, which is not surprising considering they emerged at the same time out of the same larger process. I will therefore focus on the concepts and stances particular to CADTM in order to avoid repetition.

CADTM identifies as a more radical network than Eurodad, which is reflected by their language and knowledge production. Whereas Eurodad’s terminology engages with the technical-professional terminology of global governance circles, CADTM’s publications relate more to discourses within Global Justice networks and merge structural-radical critiques with agitating-emotive calls, depending on the context of the text. For instance, in one of his most important recent publications, CADTM spokesperson Eric Toussaint (2015, 5) [2] would like his reader to understand “the logic underpinning private banks’ responses, and the crimes they perpetrate on a daily basis with the collusion of governments and central banks.” Since the network does not aim to primarily convince policy insiders, but to organize broad movements, it does not need to perform a politics of respectability and instead attempts to convince other civil society actors and interested individuals that debt is constitutive of severe grievances.

Since CADTM network does not aim to primarily convince policy insiders, but to organize broad movements, it does not need to perform a politics of respectability

As already elaborated above, the network is heavily inspired by the world social forum process and indeed part of its international council. Social movement scholars have argued that the social forum strongly centered on constructing concrete alternatives, whereas the recent acampadas were more prefigurative (della Porta 2015, 187 [3]). Both however constituted sites of contention and learning, which is reflected by CADTM’s pluralist assemblage and application of global justice discourses on debt politics. The network’s publication makes frequent reference to a plurality of contentious identities, from ecological, gender, socialist, autonomist, to anti-imperialist discourses.

CADTM publication makes frequent reference to a plurality of contentious identities, from ecological, gender, socialist, autonomist, to anti-imperialist discourses.

Discourses of ecological debt are linked to post-colonial and antiimperialist demands, which call for “the payment of compensation by the most industrialised countries for the pillage they have wrought over centuries in the Peripheral countries”:

The last five hundred years in particular have been scarred by the colonial conquest, the “mining” and exportation of black slave labour, the extermination of populations, the extinction of local cultures (or of entire civilisations), the depletion of resources and degradation of the environment. … Over the course of history the most industrialised countries have contracted a historical and ecological debt towards these people. It is now time to transform what is termed official development assistance ODA
Official Development Assistance Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs. (ODA) into grants in reparation. … The CADTM therefore backs the African organisations at the UN Conference Against Racism in Durban in September 2001, who demanded compensation for the historical crimes committed against their populations, and for the ravages of the slave trade in particular. It also supports those movements fighting for recognition of an ecological debt. (CADTM 2007c)

CADTM along with other Global Justice Movements argues that debt transfers reduce the resources to react to climate change and lead to structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ policies, which destroy local markets and food sovereignty

Such critiques center on the ecological inequality in global consumption patterns, and argue that ecological debt derives from the Global North’s responsibility for climate change parallel, which at the same time mainly impacts the South (Karunakaran 2004; Duterme 2016). They also relate to discussions about women’s and farmers’ rights, who are more vulnerable to climate change (Leroy 2017). CADTM along with other streams of Global Justice Movements argues that debt transfers reduce the resources to react to climate change and lead to structural adjustment policies, which destroy local markets and food sovereignty (Attac/CADTM Maroc 2018). The network also makes frequent reference to feminist struggles, and especially to autonomist feminism (Federici 2016), with one of its founding members writing:

In CADTM’s view, women must free themselves; to do so they must build the organizations they see as best suited to achieve this end. CADTM works alongside women’s movements with a similar political outlook, i.e. putting mobilization first, such as the World March of Women. (Comanne 2010)

Another important domain constitutes heterodox socialist debates critiquing the class transformations produced by and reinforcing financialization and translating discussions about common-ist ownership into finance and banking (Toussaint 2018; Roberts 2018). Beyond these, the range of topic reaches from anti-racism, migration, health, and so forth.

Those different discourses merge in the recurring concept of the “debt system,” which CADTM perceives as the use of “public resources to pay creditors instead of meeting the basic rights and needs of people” (Toussaint & Munevar & Gottiniaux & Sanabria 2015, 86), as a “permanent mechanism for the transfer of wealth produced by the people to the capitalist class” (Toussaint 2015, 12).

The “debt system,” which CADTM perceives as the use of “public resources to pay creditors instead of meeting the basic rights and needs of people”

In relation to the recent crisis, this means that “the losses and debts of major banks were transformed into public debt” as “governments socialised bank losses so that banks could continue to make profits, which are then redistributed to their capitalist owners” (Toussaint
2015, 12). Along these lines, the “debt system” is perceived to be interrelated with ecology, ethnic divides, gender etc. in the pluralist ways mentioned above, and overcoming the debt system and capitalism thus constitutes a necessary but not sufficient step for ensuring the fulfillment of human rights, according to CADTM (2007a).

Overcoming the debt system and capitalism thus constitutes a necessary but not sufficient step for ensuring the fulfillment of human rights, according to CADTM

While CADTM’s knowledge production is pluralist and pragmatic, and merges Keynesian, Marxist, and Autonomist knowledge traditions, among others, a couple of central themes can be inferred. In the following lines, I will try to reconstruct some of the main arguments from central CADTM publications in relation to the origins of financialization, its path into
the North Atlantic Financial Crisis, and the subsequent accumulation by dispossession facilitated by what they consider to be a “debt system.”

Financialization. CADTM’s perspectives on “financialization” or “finance dominated capital accumulation” (Fattorelli 2013 [4]; Dhar & Nagappan 2013; Toussaint 2015) tend to see the emergence of recent structures in the 1970s and 1980s. First, the end of Bretton Woods “cleared the way for the printing of vast sums of money and played a central role in the creation of excess international liquidity Liquidity The facility with which a financial instrument can be bought or sold without a significant change in price. in the 1970s” (Fattorelli 2013, 33). Secondly, banking and finance were heavily privatized and deregulated, which enabled the transformation of “loans into securities in the form of structured financial products, which they sold to other banks or private financial institutions” (Toussaint 2015, 26). Finally, Northern governments progressively ended the control of international movements of capital and thus liberalized national financial systems (Toussaint 2015, 37). CADTM authors argue that these financialized practices were globalized via international financial institutions under the umbrella of the Washington Consensus (Fattorelli 2013, 28).

Crisis. Toussaint sees the crisis as the product of the larger financialization of capitalism, which eventually produced a large real-estate bubble to burst in 2006-2007. His analysis follows the 1987 stock-market Stock-exchange
Stock-market The market place where securities (stocks, bonds and shares), previously issued on the primary financial market, are bought and sold. The stock-market, thus composed of dealers in second-hand transferable securities, is also known as the secondary market. crash to the Enron scandal in 2000, which “was followed by an aggressive low interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. -rate policy implemented by the Federal Reserve FED
Federal Reserve Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/ to jump-start the economy without cleaning it up” (Toussaint 2015, 17). He argues that this produced a real-estate bubble, which was fueled by the George W. Bush administration’s ownership society, and in combination with financial deregulation created a perfect storm:

The combined effect of a crisis of overproduction in the real estate sector in the U.S., as well as the banking and financial crisis of great magnitude produced the economic and social disaster. The banking and financial crisis was itself caused by the deregulation of the financial sector launched by the successive governments in the U.S. and Europe starting from

the widespread introduction of neo-liberal policies in the 1980s. This deregulation allowed large banks and major insurance companies to develop derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). and structured products that are powerful weapons of mass destruction. These bombs began to explode in 2007 and the explosions are not yet over. The current crisis is clearly a major crisis of the capitalist system. (Toussaint 2013, 17)

The debt system and accumulation by dispossession. CADTM sees the crisis as a culmination of and as accelerating debt-based dispossession. While increasing household debt managed to hide subaltern impoverishment, and private corporate debt restored and largely maintained private profits, public debt works at the intersection of the commons and private profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. (Toussaint 2015; Federici & Toussaint 2017).

CADTM sees the crisis as a culmination of and as accelerating debt-based dispossession

From such a perspective, increasing public debt constitutes a continuous flow of value from the commons into private pockets, a process that intensified by the bailout policies since the recent crisis. Tremendous amounts of public resources flew into private financial institutions and thus essentially socialized private financial losses, without putting the same institutions under public control (Fattorelli 2013, 79 ff; Toussaint 2013):

For us, it’s clearly a problem of private debt. Not only, but mainly, from banks. Private banks. That’s including Greece. One of the main conclusions for us in the audit, it’s showing how the bubbles created by Greek and all the international banks in Greece have broken the economy there, and that 25 billions have been feeding the Greek banks to save them. And still now,

with the two memorandum, having more debt to put more money into the Greek banks without changing anything of their function. The same, here in Belgium. Not so dangerous, but still … So, for the majority of the countries, it’s clearly that problem which created the public debt. (Interview CADTM 1)

As a consequence, austerity policies have since restricted public services to pay for these resource flows to the corporate sector.

Against this background, CADTM basically argues that the institution of debt is integrated into capitalism as an instrument of accumulation of dispossession. This idea relates to Marx’s notion of “primitive accumulation” (Marx 1887 [5]), which was later further developed by Rosa Luxemburg (1913 [6]) and dependency as well as world-systems approaches (Frank 1969 [7]; Amin 1974 [8]; Wallerstein 1979 [9]), and recently popularized by David Harvey (2003 [10];
2005 [11]).

CADTM basically argues that the institution of debt is integrated into capitalism as an instrument of accumulation of dispossession

Harvey argues that profits alternate between expanded reproduction (M-C-M’) via regular labor exploitation, and accumulation of dispossession. The latter constitutes the appropriation and integration of external terrains into the process of capitalist valorization. The concept has recently been applied to privatization, outsourcing, and socio-ecological relations, but also to financialization.

In accordance with its radical analysis, CADTM publications tend to locate the origins of financialization and debt-based exploitation in the inner logic of capitalism and unequal North-South relations, which drive capitalists and powerful states towards the reproduction of hierarchies. As a consequence, the network directs itself not towards the persuasion of polity insiders, but to the creation of mass-based social movements, whose interest would be to overcome such a system. In this location of oneself within a broad popular movement, CADTM could easily relate to identification strategies of recent movements and started to make reference to the “99%,” in addition to the “citizens” or the “people.”