Consumer Bankruptcy in the Neoliberal State

Abstract

The rise of financialized capitalism as a component of the neoliberal state has resulted in our debt-based economy under which utilizing credit – and incurring significant debt – is a necessary strategy for individuals and families to undertake to avoid economic marginality and to maintain some semblance of financial security in an evaporated welfare state. The current capitalist logic of differential accumulation and financial expropriation has created perpetually indebted citizens where debt needs to be understood as a social power and a class relation of domination and exploitation between creditors and debtors. Many consumers who experience unmanageable debt often turn to the bankruptcy process to find financial relief. Drawing upon a critical sociological framework informed by both Marxist economics and conceptualizations of disciplinary power espoused by Michel Foucault, the purpose of this Article is to examine the role that the modern consumer Bankruptcy Code plays in the neoliberal state. I argue that the consumer Bankruptcy Code is a significant component of financialized capitalism and an intentionally constructed statute to advance the interests of the creditor class to the detriment of debtors. More specifically, my primary argument is that the consumer bankruptcy system embodies a legislative technology of disciplinary power molded to the ideals of the creditor class under neoliberalism and is but another step on the perpetual treadmill of living indebtedness as a form of quotidian existence for households across the nation. Seen through this theoretical perspective, the modern consumer Bankruptcy Code is a statutory mechanism for socially controlling the lower and middle classes by imposing discipline and inculcating a spirit of self-regulation where future debts can be managed and timely repaid as they are needed to be in the neoliberal state.

Keywords: Bankruptcy, Neoliberalism

JEL Classification: K35, P10