the inverse kingdom

Traditionally, creditors wielded more power than debtors. Creditors charged exorbitant interest, resorted to intimidation and violence, and seized land and possessions of their debtors.

Strangely enough, today in America, if you’re willing to take a loose definition of creditor and debtor, the debtors often wield more power than the creditors. This idea was suggested in Jacques Ellul’s Money and Power in application to the modern corporation: … the ancient reality of the superiority of the creditor. Obviously in our society, the debtor is often much more powerful than the creditor. The corporation cannot be compared with the hundreds of shareholders who compose it.

To further complicate matters, the corporation is not an individual and a corporation does not just consist of its shareholders or its board of directors or its employees. It takes on a life and a spirit of its own. And then we find ourselves faced with an unwieldly monster whose actions and decisions can have enormous impact on our lives.

The injustice of the debtors’ superiority is what angers us so much about the AIG bonuses as billions of taxpayer dollars trickle into the banking system.* I feel sympathy for Edward Liddy and those who received bonuses who were not directly responsible for credit default swap transactions that were the downfall of AIG.** Yet I am also outraged at the debtor’s entitlement—but it’s not Edward Liddy nor the bonus recipients who are the actual debtors to America, it’s AIG the corporation. And how do we understand how AIG’s employees are both part of and yet distinct from the corporation? And as a result, though they may have no personal wrongdoing related to the credit default swaps, they may have to uphold the moral responsibility of a powerful debtor before less powerful creditors.

So for better or for worse, the 90% tax may get passed and we may feel a little bit better.*** But the larger problems still remain unsolved…



* Compared to the total amount lent to AIG, the bonuses were a drop in a bucket. Dealing with large amounts of money can have two contrary psychological impacts—either you start penny pinching and counting every little cent or you figure since the debt is so large, little savings won’t make a big difference in the long run. Clearly in this case, the American public as the creditor feels the former. No creditor would like to see a debtor living the good life if there is no evidence of repayment.
** I’m sympathetic to the fact that many of them are the wrong target of the angry mob. That being said, I personally find large bonuses rather distasteful wherever, but that stems from a larger critique of American capitalism and compensation.
*** Has it been passed already? I don’t think I’ve been paying that close attention to the news in the last few days.