The Consumer Debt Crisis and the Reinforcement of Class Position

Abstract

This article critically examines the public and private policies and practices that have contributed to consumer over-indebtedness and discusses the relationship of those policies to class creation, reinforcement, and mobility. Analysis of class issues in connection with government and private policies is essential to understanding the effects of such policy decisions, yet scholarly and public discourse often neglect the topic of class and class position. This article begins to remedy that neglect.

Part II explains the various conceptions of ‘class’ recognized in the United States and outlines a working definition of the factors that mark one’s class position. Part III analyzes the origins of the consumer debt crisis, including the rise of consumerism, the deregulation of the consumer credit industry, and the democratization of credit. It describes the relationship between the hegemonic forces that operate together to strengthen class divisions and thwart class mobility, and further examines the role of debt in the lives of low-means consumers. Part IV then discusses the class-related effects of over-indebtedness. Because of the credit market’s negative externalities and the erosion of public trust in the market, broad-spectrum intervention and oversight is needed, argues Part IV. A thorough understanding of the causes of consumer over-indebtedness and its impact on class mobility and opportunity leads inexorably to the conclusion that the policies and practices supporting the existing consumer debt system are indefensible.

Keywords: Consumer Debt, Consumers, Debt, Social Class, Class, Credit Industry, Credit Cards, Class Mobility, Debt Crisis, Consumer Debt Crisis, Bankruptcy, Consumer Bankruptcy, Mortgage Crisis, Foreclosure, Securitization, MBS, Structured Finance, CMO, Credit Enhancement