For the Balkinization Symposium on Emily Zackin and Chloe Thurston, The Political Development of American Debt Relief (University of Chicago Press, 2024).
Devin Caughey
The Political Development of
American Debt Relief
(PDADR) is a concise yet panoramic account of the political economy of
debt relief over the course of American history. From Daniel Shays to Occupy
Wall Street, it documents the mutable and sometimes surprising politics of debt
as it has evolved since the founding. Along the way, PDADR provides an
illuminating perspective on the development of the American state and its
relationship to the American political economy.
Anyone familiar with the prior work of its authors will not be surprised at many of PDADR’s themes. In previous work, each author has helped illuminate the complex and distinctive character of the American state and the politics it engenders. In her work on state constitutions, Emily Zackin has shown that rather than being a repository of Lockean liberal principles enforced by politically insulated judges, the malleable constitutions of U.S. states have long been used by popular movements as vehicles for asserting positive rights and enacting specific legislation that constrains judicial discretion.[1] Chloe Thurston’s research on the politics of home ownership shows that while the U.S. public–private welfare state, with its emphasis on indirect mechanisms such as subsidized credit, “submerges” the state for beneficiaries of government largess, it can also politicize ostensibly market transactions in the eyes excluded groups.[2] Synthesizing the respective perspectives of its authors, PDADR highlights similar dynamics in the context of debt relief.
The book is organized around two
major questions:
1. In the 19th century, how were
farmers repeatedly able to surmount the barriers imposed by America’s liberal
tradition and induce the government intervene to relieve their debts?
2. In the 20th century, why did wage
workers fail to replicate the success of their agrarian predecessors in
organizing politically in pursuit of debt relief?
DPADR’s answer to the first question
stresses several factors. One is the cultural power of alternatives to the
liberal tradition, most notably the civic republicanism emphasized by Gordon
Wood and others.[3]
Agrarian debt relief resonated strongly with several strands of the republican
tradition: the virtue of the yeoman farmer, the necessity of an economically
independent citizenry, the state’s capacious powers to provide for the people’s
welfare.[4]
Republican ideology both valorized farmers as particularly deserving citizens
and considered their “enslavement” with debt a grievous threat to the republic.
As Zackin and Thurston note, the republican vision of the virtuous debt-ridden
farmer was interwoven with ideas of ascriptive hierarchy that identified this
farmer as White, male, and prosperous enough to already own land.[5]
In addition to the cultural
influence of republicanism, DPADR’s answer to the first question also
emphasizes the character of the 19th-century American economy and its
interaction with political institutions. The periodic deflationary downturns of
the 19th century struck indebted farmers collectively, undermining attributions
of their insolvency to personal failings. Agrarian debt crises were
concentrated spatially as well as temporally, facilitating political
organization and mobilization. The cause of agrarian debt relief was also
advantaged by the sectional division of labor between the indebted agrarian
“periphery” and capital-rich industrial “core,” depriving state governments in
the former of constituency pressure from creditor interests.[6]
State governments responded to
pressure from agrarian social movements by repeatedly intervening to shield
indebted farmers from their creditors. While this brought them into conflict
with judges wielding constitutional provisions such as the federal Contract
Clause, states repeatedly challenged these Lockean constraints and granted
their indebted citizens at least temporary relief.
Echoing arguments by Theda Skocpol
on Civil War pensions, DPADR argues that the various forms of debt
relief offered by 19th-century state legislatures constituted a sort of
proto-welfare state. This is a provocative claim, for unlike pensions, debt
relief does not require the disbursement of benefits directly to citizens.
Rather, like the “forbearance” in contemporary Latin America documented by
Alisha Holland, it primarily involved the suspension or modification of normal
legal procedures for enforcing the payment of debts. 19th-century debt relief
was also temporally discretionary and time-limited rather than determined by
legally guaranteed social rights. If 19th-century debt relief was a form of
welfare state, it was qualitatively distinct from the social-democratic ideal
type, in ways that prefigured the submerged state examined by Thurston’s first
book.
DPADR’s answer to the second question,
why 20th-century wage workers failed to replicate the success of their agrarian
predecessors, also involves multiple factors. In part, the explanation lies in
wage workers diminished rhetorical access to republicanism relative to farmers.
Notwithstanding the development of “labor republicanism” in the early Republic,
by the New Deal the typical wage worker was a far cry from the yeoman farmer of
republican legend or even the independent artisan of the early 19th century.[7]
Wage workers, dependent on their employers, by definition failed republican
standards of citizenship, obviating need to save them from debt for the sake of
the republic. Moreover, the kind of debt characteristic of wage workers—debt to
fund consumption rather than production—was perceived less sympathetically.
Twentieth-century consumer debtors
also lacked farmers’ advantages of temporal and geographic concentration. The
Keynesian taming of the business cycle rendered consumer debt more chronic than
periodic, depriving wage workers of ready external explanations for their
insolvency. Unlike farmers, wage workers were not concentrated in states
lacking major creditor interests. Finally, the organized representatives of the
working class—labor unions as well as civil rights organizations—showed little
interest in pro-debtor policies. Rather, as Thurston showed in her first book,
they were primarily interested in expanding their constituents’ access to
credit and feared that debt relief would undermine this priority.
Given these reinforcing factors, the
lack of mobilization around consumer debt seems overdetermined. It is thus all
the more surprising that federal bankruptcy law liberalized dramatically over
the 20th century, even as pro-debtor popular mobilization and state-level
policymaking withered. Originally a coercive mechanism forced on unwilling
debtors, bankruptcy evolved over the 19th and 20th centuries into a voluntary
and quasi-protective institution. This trend culminated in 1978 revision of the
bankruptcy code, “the most debtor-friendly in the world.”[8]
Remarkably, 1978 legislation was
passed with almost no organized input from debtors themselves. Creditor
interests were largely absent as well. Instead, DPADR intriguingly
argues, the dominant force behind the bill was the cadre of bankruptcy lawyers
and other experts who had been fostered by and sought to defend the pro-debtor
national bankruptcy regime that had emerged over the 20th century. As DPADR
notes, professionals have played a similar role in other policy areas, such as
mental illness[9] or
employment discrimination.[10]
Whether the surrogate advocacy of bankruptcy professionals effectively represented
the interests of debtors is unclear. What does seem clear, however, is that
federal bankruptcy policy followed a very different developmental trajectory
over the 20th century than did subnational policy, one only loosely coupled to
societal mobilization around debt.
Even as legal professionals came to
dominate debt relief policy, the Supreme Court largely ceded the field.
Abandoning constitutional objections to debt relief rooted in the Contract
Clause, the Court eventually acquiesced to and legitimated states’ longstanding
practice of passing debt relief during economic emergencies. This can be read
as a victory for “popular constitutionalism” against the judicial supremacy. DPADR
also describe it as a manifestation of the rise of what Karen Orren and Stephen
Skowronek have termed the “policy state”: a mode of governance emphasizing
discretionary choice among policy options rather than constitutional rights and
structures.[11]
As indicated by the fate of President Biden’s student debt policies, debt relief
can still trigger constitutional objections, but these tend to be couched as
statutory interpretations rather then defenses of constitutional rights.[12]
Though couched in different terms
than earlier episodes, the legal controversy over student debt nevertheless
points to a resurgence in the political salience of debt relief. Beginning in
the 2008–09 financial crisis and accelerating during the COVID pandemic,
debtors have organized and mobilized on a scale not seen in a century. As in
the past, recent advocates for debt relief have been aided (politically) by
being collectively victimized by temporally concentrated circumstances beyond
any individual’s control (the housing crisis, the pandemic). Also, like
responses to agrarian debt, much of the policy response to mortgage debt was
conducted by state governments, though with much variation across states.[13]
I would also speculate that, more so than wage workers, the youngish bearers of
student debt have developed a collective identity as an unfairly disadvantaged
group. As with 19th-century farmers and their urban creditors, this identity is
rooted partly in contrasts with less deserving others—in this case, earlier
generations who paid little for college and came of age in more favorable
circumstances.
As I hope this post has indicated, DPADR’s
account of American debt relief connects with a myriad of topics and themes
ranging across the entirety of American history. That it does so in such
efficient and readable fashion is all the more impressive. Given the book’s
combination of scope and brevity, it is no slight to it to say that it also
left me with a number of outstanding questions:
•
What
is the net effect of (different forms of) debt relief on those seeking credit? DPADR
opts to sidestep this question, which is reasonable since its authors are
political scientists rather than economists. Nevertheless, it was a question I
kept returning to and wondering about. More to the point, it is a question that
representatives of indebted constituencies debated and disagreed on. Why did
agrarian organizations seek so debt relief so avidly while civil rights
organizations placed much more weight on access to credit?
•
Debtors
are the main protagonists of DPADR. What about the other side of the
coin: creditors? Creditor interests appear at various points—at the
Constitutional Convention, in the push for the 1898 Bankruptcy Act, in the
counter-mobilization to the 1978 revisions—but their part in this account is
not as sustained or as theoretically developed.
•
How
did policymaking at the state and federal levels relate to one another? As I
note above, at many ponts in time the two levels appear to be following quite
separate developmental trajectories—pro- vs. anti-debtor in the 19th
century, quiescent vs. activist in the mid- to late-20th. But perhaps the
relationship was more intertwined. It is possible, for example, that states’
unpredictable pro-debtor activism persuaded creditors to prefer the
nationalization of bankruptcy policy, even if it meant debtor-friendly
concessions?
•
How
exactly did bankruptcy experts become so powerful in the mid-20th century, and
what were the policy implications? Accounts of similar phenomena, such as Sean
Farhang’s on the fair employment bar, provide a theoretically compelling
arguments for why policy choices at one point in time (in Farhang’s case, the
1964 decision to lodge fair employment enforcement in the courts rather than
administrative agencies) unexpectedly created new constituencies to defend and
extend the policy regime. A similar story seems likely in the case of
bankruptcy policy but DPADR leaves me wondering about the details. I am
also curious about the normative implications of policymaking-by-experts. The
1978 bankruptcy code may have been pro-debtor, but it looks very different from
the debt relief policies demanded by organized debtors themselves in the 19th
century. What does this suggest about the degree to which the policies
preferred by bankruptcy experts served their own professional interests rather
than or in addition to the interests of debtors?
•
Finally,
while DPADR emphasizes how ascriptive hierarchies along racial and other
lines helped define those “deserving” of debt relief, it is curiously silent
about another form of prejudice: anti-Semitism. Historians since Hofstadter
have argued (though not without compelling counterargument) that agrarian
denunciations of “the money power” were rooted in, or at least amplified by,
prejudice against urban Jewish “money lenders” (see the reference to “Shylocks”
on p. 96 of DPADR).[14]
Were such anti-Semitic appeals an important part of agrarian debt relief
politics, or are Hofstadter’s critics correct in arguing that his claims were
wildly overblown? Even if we side with Hofstadter’s critics, as I am inclined
to do, the existence of such appeals reveals how easily ascriptive hierarchy
can blend with rhetorical appeals rooted in other traditions such as
republicanism.
Author
information
Devin
Caughey is the Class of 1949 Professor of Political Science at the
Massachusetts Institute of Technology. He can be reached at caughey@mit.edu.
References
Bensel, Richard. 1984. Sectionalism
and American Political Development: 1880–1980. Madison: University of
Wisconsin Press.
Hofstadter,
Richard. 1955. The Age of Reform: From Bryan to F.D.R. New York: Vintage
Books.
Mettler,
Suzanne. 2011. The Submerged State. Chicago: University of Chicago
Press.
[1]
Zackin (2013); see also Versteeg and Zackin (2016).
[2]
Thurston (2018); cf. Mettler (2011).
[3]
Wood ([1969] 1998).
[4]
Wood ([1969] 1998, chap. 2); Novak (1996).
[5] On
the relationship between republicanism and ascriptive hierarchy, see Smith
(1997).
[6] On
the political economy of core vs. periphery, see Bensel (1984).
[7] On
the appropriation of republican ideas by 19th-century workers, see Rodgers
(1992, 24–31), On the horror with which 18th-century republicans like Thomas
Jefferson viewed landless urban laborers (as well as debt), see Morgan (1972).
[8]
Zackin and Thurston (2024), 115
[9]
Perera (2018)
[10]
Farhang (2010)
[11]
Orren and Skowronek (2017)
[12] Biden
v. Nebraska, 143 S. Ct. 2355 (2023).
[13]
On U.S. state responses to the 2008–09 housing crisis, as well as on responses
to crises generally, see Jo (2025).
[14] Hofstadter
(1955). See also Kazin (1998) on the fusion of “moral” and “producerist”
populism before the early 20th century.