Capitalist Debt vs Use-value Debt

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Capitalist Debt vs Use-value Debt

When George Caffentzis spoke at OB a few weeks ago, he talked about two kinds of debt: capitalist debt, and use-value debt. Capitalist debt is debt incurred for the purpose of making profits; use-value is debt incurred for meeting one's individual needs. The Strike Debt movement is concerned with use-value debt, particularly the systemic use of use-value debt as a means of oppression and control.

Where do small business owners fit in? Would their debts be considered capitalist (for the purpose of making profit), or use-value (running a business to provide basic needs)?

Debt vs Debt....

{Apologies for getting to this good question a bit late}
The G Caffentzis talk did open up a lot of issues about the different uses of "Debt". It became clear that "Debt" does not always mean the same thing, at different times/places and for different classes. Being "in debt" can be a burden, can be a form of virtual enslavement; or, debt contracts can be voluntarily entered, there may be strong cultural or legal limits on them (time limit, debt not heritable, no imprisonment for debt, right of debtor to own property...)
Large-scale capitalists are usually calculators, and so take on debt freely with expectation to profit out of it (but they may mis-calculate). In our "neo-liberal" economic era, Corp are often advised to take on more debt, to gain more "leverage", by Wall St. whizz kid types. With, "leveraged buy-outs", a group of "investors" can borrow money, use it to buy up a company, gobble up it's pension fund, fire half of the employees, ship remaining jobs to low-wage nations-- then, if lucky, pay off loans by selling stocks in the "Re-arranged" company at (briefly) inflated prices... and call it, "The free market at work..."
In that case, "borrowing" is a privilege of the already rich and connected--"It takes (borrowed) money to make money" Looks a bit like a scam to plain folks..
By comparison, the borrowing of a small enterprise, to expand, hire more employees, etc, looks pretty benign. Small businesses are often desperate for access to loans; esp., farmers traditionally, in poor and in affluent societies, depend on borrowing to get thru their yearly cycle of plowing, planting, harvesting and selling crops. Potentially, every smallish enterprise that sustains itself economically is a challenge and hedge against Global International Corporate Capitalism. If there are no "shareholders" making profit by the mere act of investment (capital)--- then the enterprise is more like crafts/ small manuf. Before there was capitalism. There would be no total division of role and interest between "boss" and "worker"--- the Owner is also a worker and manager, and s/he can't Do Well unless the enterprise as a whole Does Well. S/he has "skin in the game".

And, some of the small enterprises desperately seeking loans are Coops-- which from their first appearance circa 200 yrs ago, have often been stunted by the unwillingness of commercial banks to lend to non-profits. So, some of the first institutions established by Cooperators were--- cooperative, or "Mutual", lending associations, where there are no investors, only Members who share in all risks and benefits. As we look toward possible transition out of the Global International Greed-Driven Capitalist system, would it not be useful to make it---easier-- for cooperative enterprises like this to borrow the funds they sometimes need to adapt to a changing market?
But of course, small enterprises still operate in a market, and usually (not always!) for a "profit". As I understood it, George Caffentsis is a sort of Purist, totally opposed to profit, interest on investment ("rent"), to all debt and loans, and to every form of inequality. A very high Standard indeed by which to judge any society or economic activity. I asked him what he thought of "Micro-credit" approaches such as the Grameen Bank, which makes tiny, low-interest, collateral-free loans to the very poor in developing countries-- enabling the borrowers to start very small enterprises, sustain themselves and families, eat better, send kids to school....etc. Caffentzis' answer was-- "Terrible! Totally the wrong direction!"". Yet, there is on-the-ground evidence that the Grameen approach is self-sustaining, that it has improved communities and transformed some of the sub-subsistence poor into decent, sustainable life situations.

I would not want to turn up my nose at any strategy that changes desperately poor people into significantly better off and more independent people, Here and Now. So-- whether for small sustainable enterprises, (for-profite
Coops, small sustainable businesses may be steps on the way to a fairer, more equal, more sustainable economy... or may not. Who can give a final "Yea" or "Nay" on that right now?