The American University

A Model of the Debt Society

from Governing by Debt, by Maurizio Lazzarato

Umair Jamal Malik

Introduction

The essay on Maurizio Lazzarato’s chapter ‘The American University: A Model of The Debt Society’ from Governing by Debt has analyzed the statements of the author by relating the important conception to present day University of Toronto students. Lazzarato’s statements in the chapter have also been compared and contrasted with writings by Gilles Deleuze ‘Postscript on the Societies of Control,’ Stefano Harney and Fred Moten ‘The Undercommons: Fugitive Planning & Black Study,’ and Lazzarato ‘The Making of the Indebted Man.’ Historical context by relating tuition fees at the time of the publication has been provided while the rising student loans of 2014 have been highlighted to better explain why the writing of the chapter could be of an interest to the author. Moreover, this essay will also relate the chapter to myself, a third year University of Toronto domestic student and compare the high international tuition fees that corresponds to Aria Dean’s conception of Racial Capitalism. I have agreed with Lazzarato’s statements regarding debt being used as a weapon of control, leaving no escape from the continual repayments for debt. But I have disagreed with the idea of calling for a collective strike by illustrating the example of the French Revolution and its consequences faced by the people. How the Rolling jubilee is not the right solution, has also been discussed. The subsection has also commented upon a hypothetical possibility of a tax strike in Canada and have argued why that would be a bad step for the citizens residing in Canada. Finally, the essay is ending by relating the rising amount of student debt because of their decision on the continual borrowing and their desire to buy products that they cannot afford using credit cards. In short, this essay is an in-depth analysis of Lazzarato’s statements on student debt and has brought intertextual research to better unpack the theory and relate it to everyday university students drowning in student debt.

Summary

The second chapter ‘The American University: A Model of the Debt Society’ illustrates the government weapon of debt to target university students. Maurizio Lazzarato argues that debt has become a constant burden over the lives of student bodies and has left no way for them to prevent indebtedness. He further calls the lending institutes, “supernatural powers” (63) due to the control they exert over each and every student gaining knowledge at the university, by lending them loans for their tuition fees. Knowledge is directly proportional to debt as the more knowledge the students gain, the higher their debt grows. A report from the New York Federal Reserve stated that $904 Billion had been borrowed to finance studies by US university students in 2012. Just before the students even begin their studies at the universities, they are accused of debt. When they graduate, they are further struck by unemployment that makes it more unlikely that they will repay their student debt and fall in the same trap like every other university graduate. Lazzarato further states that American University is the ideal example of a debtor-creditor relationship as the social group consists of the majority of debtors and a minority of rich creditors, “a model that the capitalist elites would like to apply to all of society” (66). The relationship can never be settled as it ensures “political domination and economic exploitation” (88). The rich corporations end up taking advantage of tax cuts and government grants to boost up business profits. And, they deal with student bodies as “individual businesses” (70).

Moreover, a large amount of student debt is grouped together into derivative products and sold to investors. This securitization ends up increasing and spreading the debt. Debt is a technique to demonstrate power and control. The repayment ends up running through the entirety of a person’s life. It is a way of bridging the present with the future. Another technique to put control over the lives of students is to grant them access to credit cards. They encourage and facilitate payments which further drown students in additional debt, “establishing a structure of permanent debt” (72). Furthermore, the interest payment on debt exclusively benefits corporations by broadening their revenue streams. In the case of universities, banks (who hold the majority of loans), federal government and university presidents benefit from the interests paid by the students.

Lazzarato further elaborates on the fact that “with cuts in social spending, drops in wages and income” students are “paying for the damage creditors have caused” (72), making them richer in the process. He then compares life of debt with sin and states that it is a repayment that does not have a deadline, essentially making it infinite (76). It is an eternal punishment faced by the debtors in this world. In fact, he points out we are existing in debt since the day we are born. Sacrifices including spending less on groceries, phone bills and saving wherever possible are important in students’ lives that make it possible for the repayment of debt through a lifetime.

The author makes references to Deleuze and Guattari and states that life itself is an act of exchange that is a belief accepted by Nietzsche, a German philosopher. For him, debt implies the opposite of reciprocity and equality. He further disagrees with Graber, who stated that debt can always be refunded. On the contrary, Lazzarato states that debt, under no circumstance, can be paid and it is rather infinite and unpayable. Debt is a “promise of repayment” (86) under the capitalist regime. Capitalism chains the students and leaves no escape from debt. It becomes a part of our lifecycle as “we go from one debt to another, take out credit and repay it” (89). Credit is provided not to be reimbursed immediately but it is a continual flux, further burdening the students. It is in fact, the variation in public debt that drives the “wages, income and social services” downwards (89).

The ending paragraph of the chapter suggests that the only way out of the debt trap is to call for a collaborative strike. Lazzarato suggests that we simply need to stop paying in order to be free under the capitalist regime.

Links with Other Theories and Authors

Compare and Contrast with Gilles Deleuze ‘Postscript on the Societies of Control’

The concept of imprisoning students can be related to Deleuze’s ‘Postscript on the Societies of Control’ by analyzing the societies of control. The enslavement of every individual through the means of technology and targeting the consumers through advanced methods of advertisement is in a sense, capturing them to benefit the corporations. These corporations are similar to the university president and banks. They are in control of the students’ everyday lives. The student has no escape but to be under the influence of these profitable corporations. Deleuze further elaborates on the power of the corporations and the ability to create new forms of control by stating, “new ways of handling money, profits, and humans that no longer pass through the old factory form” (Deleuze, 7). With the passage of time, these massive money-making corporations are getting better in extracting the most value from its students. Corporations are not only limited to banks and universities but, advertisements and television commercial agencies targeting and tracking students are also exerting external pressures by bombarding the pages of social media with products and services that are designed to better appeal to the students. The searches and queries stimulated on the internet are constantly tracked and recorded in order for the corporations to accurately target their consumers. Similarly, to how students have never ending debt, Deleuze supports the argument that control “is also continuous and without limit” in societies of control (6). Hence, students are not only targeted for their capital by encapsulating them in tuition debt, but they are also exerted with control from corporations utilizing technology.

Compare and Contrast with Stefano Harney and Fred Moten ‘The Undercommons: Fugitive Planning & Black Study’

Even with the help provided by the bank creditor in helping the students with spending and saving, students are still interested in the saving to pay off the debts piled up by the usage of the same credit card offered by the creditor. Even with credit counselling and financial help offered by the corporations, our debts are meant to stay permanent with a recurring repayment for the rest of our lives. We are structured to live a life where the “debt cannot be repaid” (Harney and Moten, 61). Every action we perform and every interaction with the outside world is indirectly connected to increasing our debt. Debt in this case, is not just financial debt increased by the everyday purchases but debt in the case where the most value is extracted from our interactions with the outside world. The billboards and advertisements targeted towards us expands our debt which will increase in the future. In a sense, these commercials, either on the television or on the subway stations on our way to the university, are exponentially increasing the appeal of the product advertised towards us. The advertisement bridges the present with the future as an encounter with the ad increases the debt when the purchase of the advertised product takes place in the future. Harney and Moten further state that debt only feeds and seeks refuge by the means of credit. Although debt is the fuel for credit but, when the recurring payments cannot be guaranteed, and debt transforms into bad debt, this causes a crisis for credit. Once bad debt starts to accumulate, we see and feel it everywhere. It haunts us day and night and there is no escape. We think the creditors will forget, but that never happens as they keep track. The same is the case with a student who is known to be a bad debtor and “threatened with credit” (62). The student plans to study and obtain a degree which consecutively elaborates his debt. The student wants to run away from the credit, but the creditor is behind him every step of the way, offering no escape but to be trapped in debt before the student obtains his degree.

Compare and Contrast with Maurizio Lazzarato ‘The Making of the Indebted Man’

Lazzarato further explains the enslavement of a debtor and states that a debtor is essentially free to perform actions. His actions are only free in the sense if they correspond to the action of repayment. The trapped debtor is free under the behaviour “confined to the limits defined by the debt” (31) that the debtor has been obliged to pay. The debtor is free as long as his job, food consumption, spending, and other necessities revolve around the constant burden of repayment. The student is being trained to bear the condition of living with debt even before he enters the job market. University is training its students to live a life which is coincided with the debt reimbursement. It is informing the students that there is no escape from the trap and the best way to get used to it is to start early, begin with the repayment of tuition loan that has accumulated over the years of studying. The student is essentially in a debt prison where he is allowed to be free but not be free at the same time. Techniques are fostered towards the student to ensure the timely payments to the creditor. Every time an interaction is made by the student on social media, he is targeted with advertisements which in turn, generate income for social media platforms.

Historical Context

According to the College Board, the average tuition fee at US universities was $34,740 at a private non-profit four-year program. But if we take into account an example of a real university in America, the University of Michigan in this case, and examine their tuition fees with living expenses, the results are quite shocking. An average Out-of-State student can end up paying more than $60,000 for one year of study at the University of Michigan. University's estimated fees are $47,476 for the Out-of-State students and a room can cost $11,198, books and supplies can add up to $1,048 while $2,454 for personal items throughout the years (Bridgestock). All these costs can add up to a total of $62,176 (ibid). These researches portray one of the numerous challenges that students face on a daily basis and further analysis on University student debt could be the fuel for writing an in-depth chapter on University students in Governing by Debt by Lazzarato. With the growing influx of students entering Universities from abroad and the number of high school graduates accepting their invites to Canadian Universities is a matter of serious discussion on the increasing student debts.

Moreover, another reason for Lazzarato’s writing could have been the published graph on the ‘Student Loans’ in 2014, which is also the year when the book was published. The breathtaking graph published on Consumer News and Business Channel (CNBC) indicates the rising US student loans, foreshadowing the loans for the upcoming years. It was reported that in June 2014, the total amount of US student loans were exceeding $1.18 Trillion and the total number of student debtors was over 7 Million. These records reveal the astonishing data on US students alone. They have already been engulfed in the horrors of living a debt-full life. Michael Brown, a research analyst at LendEDU further states that the students are in a tough spot as the tuition fees are rising on a shocking rate with students forced to embrace private loans (Dickler). The loans are getting expensive due to the prime factor of interest rates. Brown further acknowledged that “1.4 million students a year use private student loan debt” in order to help support the cost of university and their financial savings (ibid). Moreover, the graph further suggests an outstanding amount for US student loan debt of $1.3 Trillion, affecting individual borrowers totalling 44 Million.

The figures reported above are for 2014 and as the data suggests, the debt has increased exponentially, and the outstanding student loan debt now totals about $1.8 Trillion for 2018. These historical figures are already conveying the stories of US students who have been trapped by debt. The enormous amount of loan credited to each student perfectly illuminate the statements of Lazzarato regarding the entrance to the job market by the “indebted students” (65). They are also the example of how supernatural powers including banks and University presidents have exerted control by dealing with student bodies as “individual businesses” (70). Moreover, the graduate students will now be hit by unemployment which will further claim Lazzarato’s statement of making their borrowing unpayable, infinite and forming a structure of “permanent debt” (72). The eternal punishment has already embraced them, making their lives miserable by encouraging sacrifices wherever possible with the prime goal of repaying their student debts. The corporate institutions are leaving no escape from debt, making it a part of life. They are fully controlled and trapped to ensure the timely monthly repayments of their loans. As the data has been collected at the time of the survey, these students are likely to be indebted till the present. These students can either keep paying their debts for the rest of their lives or follow Lazzarato’s chapter final paragraph advice where he recommends calling for a collective strike against the repayments, which is not a good idea.

Application of the Theory

Debt is relevant to every student that graduates after post secondary education. We, University of Toronto students, are studying with the mindset that we cannot afford the education we are receiving, and we know for a fact that a large portion of our lives will be spent in paying off the debt accumulated due to the four years of post secondary education.

Racial Capitalism as discussed by Aria Dean concerns with the black community being targeted to extract the maximum value of their work. Whereas the white community is privileged and entails a certain amount of supremacy. In ‘societies of control’ (Deleuze, 5) racial difference is related to governance by debt because it divides the University of Toronto community into domestic and international “individual businesses” (Lazzarato, 70) in order for the giant corporations to extract the most value from “individuals [that] have become dividuals” (5). University deals with us as “samples, data and markets” (5). We are racialized on the amount that each student possesses that can be extracted. Corporations are able to target primarily by the distinction of capital based on dividual students. We can compare the tuition fees of a domestic and an international student to grasp a better idea.

Fees for a full-time engineering student at University of Toronto is three times more than a domestic student (“Discover Engineering”). A domestic student pays approximately $15,500 while an international student will end up paying more than $54,800. International students are also not eligible for any financial aid. The amount of debt accumulated by an international student is quite upsetting. The question boils down to why are the international students the primary source of target by the University? These students are in fact travelling from abroad and have been saving funds in order to support their University life. They have already been prepared for the enormous amount of debt they will be incurring. It is their decision to study in their local universities or travel to gain a world-class quality education. University of Toronto is able to attract students because of its commitment to providing a high-level education. International students are willing to be in an indebted because of the promise of good quality education not available in many universities. They are willing to be indebted because of the guarantee of gaining skills that would help in the repayment when they enter the job market. They are willing to be indebted due to a promise of a prosperous future. As it turns out, they are racialized due to their commitment to obtaining a world class post secondary education at the University of Toronto.

Relating the debt concept to myself, I agree with Lazzarato that debt has already taken over my life before I have entered the job market and I am constantly making sacrifices in order to save funds for the continued student debt payments in the coming years of my life. I assure myself that a high paying job is waiting for me as soon as I graduate but the rising unemployment rates deliver a different perspective. I am constantly applying for University of Toronto scholarships, grants and I am working part time in order to support my dreams of obtaining a world-class education. I am well aware of my accumulating debt that is acting as a weapon in creating a burden of future repayments, bridging my present with the future. I have been trapped by the lending institutes that have exerted control since the day I started studying at the university.

Although the University of Toronto is a public institution, it has been reported by the university newspaper, The Varsity, that in 2013, students were paying 53 percent of the costs associated with the operating costs (44 percent through tuition fees and 9 percent by ancillary fees) and only 34 percent was covered by the Ontario government (Sajjad, “The University of Toronto becomes a Privately Funded University”). Students were paying more than 20 percent more than the government itself. This demonstrates the power of the corporations and government agencies in extracting the highest value from us in order to generate their profits. We are being used because we live a form of life that conforms to generating revenues for the giant corporations. Living in a society where post secondary education “is linked to higher salaries” (“Higher Education still Worth the Money, New Research Suggests”) makes it obligatory for every student to gain higher education for a promise of a better future than those with high school diplomas. I am captured and enslaved under the capitalist regime and have no escape from the constructed system of value extraction whatsoever. I am further provided credit cards with no charge or annual fees to encourage spending that will ensure the continued operation of banks and other lending institutions. My credit card encourages me to make payments for the products (advertised by the giant corporations) that I cannot afford. I am using debt to buy products that I could not have bought otherwise. Debt has become a part of life. My life is revolving around debt and dedication to study as well as achieve high grades to ensure a good GPA. Achieving numerical grades is contrary to Lazzarato’s conception of calling for a united strike. I have no other way to success than to pass the University by achieving higher grades that will be the defining number when being hired in the job market, further confining to Deleuze’s idea of dealing with the masses as a form of data. My value will be based on a number that will define my academic skills and the knowledge gained throughout the 4 years of post secondary education. After graduation, I will be a human being with a number. A number which will grant me a job in order for the permanent “promise of repayment” (Lazzarato, 86) to occur. Non-profit organizations have started campaigns to support students like myself from being trapped under the capitalist regime.

Non-profit organizations including the Rolling Jubilee have started to follow the suggestion of calling for a collective strike. The debt collective is able to buy our debt for pennies and help in abolishing it (“Rolling Jubilee”). They are encouraging collective refusal to help the debtors free themselves from the constant burden of repayment. The organization has a goal of buying our debt to erase it. They have been successful in abolishing not only educational debts of $13 Million but medical debts over $14 Million for pennies on the dollar (ibid). People have started to invent ways to hide from their debt and erase it forever. They are no longer able to bear being a slave to the corporations. They need a solution. They need to find a way out. They need to be free and live a life they have always envisioned. But there are major risks associated with buying debt for pennies on the dollar. The solution is not a solid break from debt and can never ensure a safe resolution. Moreover, if there is a call for a strike to stop paying taxes, we will end up increasing our own debt and deprive ourselves with basic needs including healthcare, public schools and energy and water supplies. Law and order will essentially become a major concern. There will be no pension, public broadcasting will give rise to gendered driven and a flourish of fake news, international relations will suffer because of no foreign aid, law and order could be controlled by mafia gangs and our national security and defense could be destroyed giving rise to other countries taking over to seize assets and commodities (“Here’s What Would Happen If We All Stopped Paying Taxes”).

We are well aware of our history and the French Revolution of the 18th Century cannot be unnoticed. The revolution was founded on the basis of excessive unfair taxation and gave rise to uncertainty and wars (“French Revolution”). If a tax strike does occur in the future of Canada, we should be ready for the horrific consequences. We all hate paying taxes, but we do not have any other solution then be loyal citizens and continue performing the acts demanded by the Canadian government. We all can appreciate the taxes used to support the Canadians. Taxes are used for old age security, child tax benefit, insurance benefits and funds healthcare institutions. It helps to foster post secondary research, Canadian security and infrastructure among other major categories. Hence, we can play an active role in being knowledgeable citizens and encourage the government to spend our tax money where we need it the most. A collective strike is not the right method to our problems and should be discouraged every way possible. When the solution boils down to our student debt, we ourselves have accumulated the debt amount as our decisions have led to our rising borrowing.

Works Cited

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