About Debt and Slavery

Two Forms Of Slavery That Still Exist In America

By Ashvin Pandurangi

It is almost surprising that the concept of slavery is very foreign to those living in the developed world, especially the U.S., since it was extensively practiced as recently as 70 years ago.

What’s more disturbing about this ignorance is the fact that the system of post-Civil War slavery in the U.S. was not so different than the systems of slavery many Americans and Europeans will be experiencing in upcoming years. Indeed, I’m sure many people will probably take offense to such a comparison even being made, as they feel it demeans the atrocious acts committed in the past.

I would argue, however, that we demean history by failing to understand it and learn from it. Many people refer to debt slavery when referencing current policies of the West, especially in Greece right now where the concept has become very real, but they perhaps still under-estimate how bad it can get. These systems of slavery are primarily borne out of deeply-rooted economic structures which foster high levels of dependency, greed and malice by those with unchecked levels of political power. In the late 19^th and early 20^th centuries, these powerful groups consisted of wealthy Southern agricultural and industrial elites.

In his book “Slavery By Another Name”, Douglas A. Blackmon documents how very few of the 4 million slaves that existed at the end of the Civil War were actually allowed to realize their freedom until decades later. As the white middle class of the South grew from 1870-1950 (with the exception of some years encompassing the Great Depression), due in no small part to the success of Southern industry, the blacks were kept in their chains through various mechanisms, such as convict leasing and debt peonage, over and above the outright discrimination and violence that they also suffered.

The Southern convict leasing systems were a means of extending slavery for African Americans well past the Civil War, Emancipation Proclamation and the 13^th and 14^th amendments. Southern laws were crafted to guarantee that the now “free” African Americans would be incarcerated at much higher rates than whites. Blacks were picked up, hauled off and locked up for ridiculous crimes such as “vagrancy” (being homeless or unemployed), loitering in public, speaking loudly in the company of white women or selling farm products after dark, to name only a few.

Once these people were matriculated into the prison system, they had effectively become slave laborers again. The state allowed convicts to be leased out to private corporations for little more than a pittance - convict laborers were rented out at monthly rates that represented a 50-80% discount over the wages paid to free laborers. They were forced to work in some of the most dangerous environments at the time, laying railroad and mining coal, and a significant percentage developed severe illness/injuries and died in the course of such work.

It is estimated that at least 9000 convict workers were murdered or died of “natural causes” over a few decades under this system alone. As one historian described it, the system was “brutal in a social sense, but fiendishly rational in an economic sense”. That is really the crux of the matter – the Southern plantation economy, as well as newly developing transport industries, was very dependent on extremely low-cost labor, in both an economic and psychological sense. Convict leasing proved to be even more profitable than slavery in many cases, since there was really no need to keep the workers healthy and alive for very long.

Many African Americans were also placed into peonage or “debt servitude”, despite the fact that the federal government made it illegal after the accession of New Mexico into the U.S and the Civil War. These blacks were typically accused of falsely owing money or trivial sums, given sham trials and quickly sold off by the courts into a privatized system of debt slavery. The peonage contracts contained horrifying terms, allowing the employer to trade, confine, whip and beat workers as long as the debt was deemed unpaid, which could practically last forever.

It was established that some of the wealthiest Alabama farmers had their own “justices of the peace” who would fraudulently try and convict blacks on charges of unpaid debts. The federal government launched an investigation into these practices, and an Alabama court convicted a few of the farmers of public bribes and illegal debt peonage. However, they were given minimum sentences and then pardoned by President Theodore Roosevelt shortly after. Despite the investigation and state court ruling, this practiced continued in many Southern states for years after.

Another less explicit form of forced labor was sharecropping, in which the poor black farmers theoretically received a percentage of the profits from sale of a certain crop grown by them. However, these workers were forced to take out relatively large loans just to meet daily expenses and these loans sometimes carried interest rates upwards of 50% or 60%. At the end of day, many of these sharecroppers were treated just like slaves and received very little compensation for their work, besides the basic necessities of life.

It is probably quite obvious to most readers how all of these mechanisms of forced labor and debt slavery are still being practiced today and are only getting worse. The prison-industrial complex in the U.S. has become more extensive than ever, as the list of petty crimes for which people are incarcerated has grown longer (but still does not include corporate/banking fraud or political corruption at the highest levels). There are, of course, many serious offenders in the system, but the point is that it is becoming ever-easier for our modern “slavemasters” to blur the line.

Foremost among the petty punishment is for drug use and addiction, which, as Dr. Gabor Mate has insightfully explained, are conditions that primarily develop from environmental influences at an early age (as opposed to genetics). The socioeconomic structures and growing wealth inequality embedded in our society, especially at this time of economic depression, places enormous amounts of stress on its poorest members and can literally re-wire their brains in ways that eventually lead them down a path of self-defeating drug addiction and associated behaviors.

U.S. Department of Justice – Prisoners in 2010

In 2009, the most recent data available, 53% of state prison inmates were serving time for violent offenses, 19% for property, 18% for drug, and 9% for public order or other offenses.

About half (51%) of federal inmates in 2010 were serving time for drug offenses, 35% for public-order offenses (largely weapons and immigration), and less than 10% each for violent and property offenses.

Instead of working to change our fundamental economic structures and mitigate the stress triggers, our society has sought to “punish” and “rehabilitate” these people by placing them in environments of unprecedented fear and stress, such as prison. Given the amount of money and resources poured into the “war on drugs” in the U.S. over decades, there is never any shortage of people that can be easily sucked into this prison complex and then become a part of an enslaved labor force. Maintaining prisons and their populations has become very costly to taxpayers, but that’s the whole point.

The growing and increasingly outsourced U.S. prison workforce is frankly a wet dream for private corporations, just like the convict leasing system was for Southern corporate elites. They have already been stripped of almost all their freedoms through the system of incarceration, and can be forced to work for a very low wages in poor working conditions, under very strict levels of order and discipline. This pool of enslaved labor exploded since the early 1970s, as shown above, and therefore has already been thoroughly exploited by private corporations for many years.

On top of that, the entire business of building and running both state and federal prisons has been in the process of being outsourced to private corporations as governments come under fiscal pressure. These private interests now have even more incentive to help state and federal governments maintain the currently elevated number of prisoners. In recent years, the annual percentage increase in prisoners has dropped off, but that’s a “problem” which can be easily solved by the powers that be. In addition to inevitable increases in crime rates associated with economic depression, the list of jailable offenses can simply be expanded along with their associated sentences, like they were for blacks after "Reconstruction".

Right now, we have millions of people up to their eyeballs in housing and consumer debts, paying upwards of 20% interest on their credit cards and “payday loans”. It is an entrenched system that forces people to work longer hours for fewer benefits and wages over time. But, even as such, the titans of industry and owners of concentrated financial wealth are finding it difficult to squeeze enough blood from the stones. So what’s to stop the corporate elites and their political/judicial flacks from manufacturing debts out of thin air and exacting excessive wealth/punishment from those with debts owed?

In the follow up to this piece, we will look at the other ways in which the era of global indebtedness today has come to resemble that of the post-Civil War enslavement of African-Americans, except at a much larger scale. Is it really so unimaginable that an average lower or middle class American family, of all different races (although the racially-divided inequality of the past is still with us in many real ways), could find themselves in literal contracts of debt peonage, despite the technical “illegality” of such contracts at this time? What is the likelihood that laws will be re-written and/or ignored and how easy is it for the line between financial harassment/abuse and physical enslavement to simply disappear?

"Debt" has been used as a means of slavery throughout human history, in ancient societies dating as far back as thousands of years ago, such as those in Mesopotamia, Egypt, North/South America, etc. Debtors in these societies would be forced to relinquish their crops, land, freedom and even their wives and children to satisfy unpaid debts. Such extravagant periods of debt creation often culminated in the necessity for systemic debt forgiveness (or "Jubilee") by the decree of chiefs, emperors and kings to simply maintain some sense of social order [see Debt: The First 5000 years].

However, the decree of the all-powerful ruler no longer exists in these traditional forms, in which the rulers and landed aristocracy could easily maintain their power through force even after all lower classes’ debts were wiped out. Instead, our modern network of nation-states requires a continuous level of economic and financial coercion to exert discipline and maintain the status quo relationships of wealth, power and dominance.

As explained before, our global society is facing conditions of systemic dependency, greed and malice very similar to those which existed in the American South of the late 19^th century, which created a system of slavery for blacks just as ruthless as that which existed before the Civil War. The modern industrial and financial elites cannot tolerate any policies of systemic debt forgiveness, since almost all of their wealth is invested in instruments tied to those debts (including the underlying currencies).

At the same time, they cannot continue extracting surplus value when large segments of the developed world’s population remain saturated with debt, which acts to suppress aggregate demand for goods, services and capital investment. In order to continue making profits, then, they must have extensive access to very cheap labor and fixed capital inputs. They must transform the consuming classes of the first world into indentured servants and slaves through already established channels of financial and political oppression, and also pick up productive assets for "pennies on the dollar".

Last time, we looked at one obvious way in which the modern slave state has been forming – the rise of the privatized prison-industrial complex which has become a venue for detaining ever-larger numbers of people in the poorest and most socially manipulated classes of our society, such as low-level drug users and dealers. These prisoners provide a constant stream of enslaved labor to wealthy corporate interests, just like the convict leasing system of the late 19^th and early 20^th centuries used primarily for African-Americans.

Vast amounts of money and resources are devoted by state and federal government agencies towards maintaining a perpetual "war on drugs" that merely reinforces the very profitable industry of drug addiction, use, trafficking, punishment and imprisonment in a vicious cycle. More recently, though, we have managed to manufacture another perpetual threat/response paradigm which provides the justification for modern enslavement – the "war on terror".

Everyone should now be aware of the argument that the National Defense Authorization Act (NDAA) allows the U.S. federal government, in coordination with the U.S. military, state governments and a sprawling intelligence network, to indefinitely detain any person in any place, including U.S. citizens, suspected of participating in or aiding “terrorist activities” without any due process of law (such as formal charges and trials).

Without getting into disputes over legal interpretations of the Act or its constitutionality, it is still undisputed that this type of legislation, which is in the company of such notables as the Patriot Act, represents a clear trend towards suppressing domestic dissent and expediting the mechanisms of incarceration. When peoples of a society are burdened with vast amounts of unpayable debts, it is predictable that they will eventually protest against those debts in whatever ways they can, ranging from intentional defaults to physical resistance.

Just look at Greece, where the people are being forced to take on more external debts (with interest) through their government as these debts become increasingly difficult to pay back, and while the benefits all run to a small group of elites. They are made to suffer through brutal austerity so that they can stay in debt, just like the recidivist drug addict stays in the prison system. Inevitably, such a state of affairs leads to violent riots and protests by the masses, which, in turn, lead to violent reactions by the state, which then feed back into more violence by the people.

It is a symptom of debt slavery that has plagued societies for centuries and has even led some of them to outlaw the issuance of interest-bearing debt altogether. As stated before, though, such a path does not compute for the powerful creditors and their beneficiaries today, which is why the last thing the Eurocrats will discuss at their now weekly Summits is a policy of systemic debt forgiveness (the PSI deal does not even come close to counting). Even the Troika itself has admitted that Greece’s debt/GDP could very well remain at 160% for the next decade despite bailouts, austerity and “voluntary” debt swaps.

If you woke up tomorrow and were told that many of the Greek protestors/rioters, along with lower class tax evaders/debtors, were now being indiscriminately and indefinitely detained without judicial process and that uniformed soldiers and tanks were being deployed to the streets of Athens, would you be very surprised? I’d hazard a guess that most people who follow the news wouldn’t be, but they would still call you a fanatical nutcase if you suggested anything similar could happen in America, the "land of the free".

That is despite the fact that our private and public debt (per capita) situation is worse than that of Greece, and our level of unchecked executive authority is much, much worse. In the post-Reconstruction south, state laws were re-written and federal laws were ignored when it came to increasing the levels of incarceration and debt servitude (peonage) among blacks. Today, federal laws have all but usurped the police powers reserved to the states under the 10^th amendment and become the primary mechanisms of enslavement.

Michael Barnholden’s book, Reading the Riot Act: A Brief History of Rioting in Vancouver, explains how the original “Riot Act” passed by the British Parliament in 1714 has been put into effect since that time, and how it is still active law in Canada. The act gave enormous amounts of discretion to the executive arm of government in identifying and detaining “rioters”. In his review of the book, Max Sartin points to the socioeconomic premise underlying the Riot Act that was insightfully indentified by Barnholden.

The Rain Review of Books

 "All of the riots, from those characterized by racism to those attributed to drunkenness at sporting events, are said by Barnholden to have a connecting thread in the exploitation inherent to the capitalist economy and the need of the ruling class to garner the consent of its subjects when possible or their submission by force when necessary. The legal definition of a riot and its presentation by the media are functional to the interests of the ruling elite, at the expense of the working class, including the unemployed and prisoners. 

Barnholden frames the question in terms of human rights versus property rights, damage to property taking precedence over harm to human beings. The author’s concept of human rights isn’t defined in the book, leaving open the question of whether such rights, or the very idea of rights itself may be just another legal technicality, like the definition of a riot, subject to the whims of those in power. 

Barnholden himself points out that "a job is the only guarantee within capitalist society of the basic human rights of food and shelter, and there is no right to that". But he also describes a paycheque as an element of coercion. Employment under a manager is exploitive and oppressive, but it’s the only way to achieve certain basic necessities of life, which as human beings we supposedly have a right to access. But we have no right to employment (which is also "wage slavery") and so our most basic rights become meaningless."

Barnholden gets to the root of why economic coercion under a capitalist system can easily turn into outright slavery, enforced by the corporatist state. There is absolutely no reason why the Riot Act in its most subjective form cannot once again be adopted by the U.S. and other Western nations as an additional means to threaten an increasingly distrustful population with incarceration, and to carry out that threat when necessary. In fact, current trends suggest this is exactly what will happen.

The protections afforded U.S citizens in their Constitution against arbitrary oppression by the federal government have been undermined in just about every way possible since 9/11. That is indeed a scary reversal from the post-Civil War era, because it means that state and local governments are helpless to protect their own citizens from federal encroachment. This is especially true at a time when state governments are also wading deep in pools of stale debt, and must sell out their citizens to get temporary financial aid, which first makes its way into political pockets and then straight to the major banks.

The indefinite detentions of the West in modern times began under the Authorization of the Use of Military Force (AUMF), enacted before the invasion of Afghanistan, but now the NDAA has put Congress’ official stamp of approval on the very broad interpretation that was afforded the AUMF by the Bush Administration. The federal courts (including the Supreme Court) have been extremely reluctant to challenge any of these unconstitutional executive powers, and indeed have sanctioned them in many cases.

With that legal framework for the federal and state executive branches in mind, it’s not hard to see how people could eventually be forced into peonage contracts by their private creditors or third party debt collectors. The truth is that both traditional contract law concepts such as "fraud/misrepresentation", "economic/physical duress", "unconscionability", etc., which sought to protect disadvantaged parties from exploitation, and Constitutional protections against the ex-post revision of private contracts have been thrown into the trash bin of history.

In the final part of this series, we will see how legally enforced contracts of debt servitude could become a defining feature of developed world populations in the near future. Indeed, the concept has already been deeply planted across the Western world in very important ways. This will be a means of maintaining a system of debt slavery without literally imprisoning all debtors. However, none of these outcomes are guaranteed to be sustained over time, and so we will also explore why these populations may ultimately be able to shape their own futures, free from the burden of perpetual indebtedness.