In the United States, the politics of debt has mostly focused on personal debt and, in particular, student debt. Recent figures show that Americans owe just over $800 billion in credit card debt, and when you add in mortgages, car loans, and student debt, the total rises to over $15 trillion. Beginning in the years after Occupy Wall Street, activist groups like Andrew Ross and Astra Taylor’s Debt Collective have lobbied for aggressive student debt forgiveness—a policy that was originally part of the 2020 Democratic Party agenda but now seems to be flagging as a serious consideration for the Biden administration as it struggles to maintain the party’s majorities in Congress in the run-up to the 2022 midterm elections.
Yet debt has become a central engine of the US economy, not only for consumers but for cities and states. In the US, local municipalities take on onerous amounts of debt to keep functioning. Meanwhile, throughout the world, debt is employed as leverage that allows wealthier countries to extract concessions from poorer ones. This practice was evident in the United States’ “dollar diplomacy” interventions throughout the Americas in the early 20th century, justified under the Monroe Doctrine, and has been repeated in the 21st century through the International Monetary Fund, the World Bank, and the European Union in order to sustain a capitalist hegemony over most parts of the globe.
In Colonial Debts, Zambrana situates Puerto Rico’s current turmoil within the politics of debt. The island had accumulated $74 billion in bond debt and $123 billion in debt overall, with pensions included, which spurred Congress to create PROMESA, a law designed to restructure and reduce the level of debt so that Puerto Rico can eventually reenter the sphere of capital markets and resume borrowing in a supposedly more responsible fashion. On March 15, a debt restructuring plan approved by the PROMESA-mandated Financial Oversight and Management Board (FOMB) officially kicked in, ostensibly bringing Puerto Rico “out of bankruptcy,” but the plan’s austerity measures are still provoking protests and discontent. “Debt is an exchange that has not been brought to completion,” Zambrana writes. “During the time that the debt remains unpaid, the logic of hierarchy ‘takes hold.’” In Puerto Rico’s case, this hierarchy is embodied by the FOMB, which has had the effect of eroding democracy on the island.
For Zambrana, the story of PROMESA is really the story of colonialism reinventing itself. The debt crisis in Puerto Rico is not a simple case of an incompetent government borrowing beyond its means; it is the result of the many years in which the island served as a profit machine for US corporate interests, a dumping ground for US manufactured goods, and a tax shelter for businesses and, increasingly, individuals. Puerto Rico’s debt grew, Zambrana shows, because most of the profits generated there were siphoned off into US and offshore banks, not reinvested in the island, and because a series of laws allowed US interests to treat it as an American state when it was convenient and as a foreign country when it wasn’t. Unable to make autonomous trade arrangements with its neighbors, and subject to laws like the 1920 Jones Act, which made it overly dependent on US maritime commerce, Puerto Rico could never grow enough economically to create an adequate tax base and keep its government out of the red, even after it developed a manufacturing industry in the postwar years.
As an appendage of the US economy, Puerto Rico, which had enjoyed a period of prosperity in the 1950s and ’60s, ran into trouble with the economic convulsions of the 1970s, and it began to borrow in the form of bond issues in the millions of dollars just to pay for essential government services. The market for Puerto Rican bonds has grown rapidly since then as banking was deregulated and bond investment became more volatile in the 1980s, while in 1984, Puerto Rico’s status under Chapter 9 bankruptcy law was changed to that of a state, which had the effect of making it ineligible to declare bankruptcy.
As the island became increasingly shackled to its debt, Puerto Rican bonds became more and more attractive for speculators. Since 1917, with the passage of the Jones-Shafroth Act, the bonds have been triple tax-exempt, and as speculators jockeyed for position in the 1980s, they became a hot investment, especially for Wall Street underwriters and hedge and vulture funds, the latter always on the hunt for “distressed” economies from which to extract profits.
Zambrana tells this story of colonial manipulation and financial speculation, but she also does something else interesting: Fusing the theorist Aníbal Quijano’s idea of the “coloniality of power” with Saidiya Hartman’s notion of “afterlife,” she argues that Puerto Rico’s “decolonization,” ostensibly accomplished in 1950 with the creation of its “commonwealth” status, allowed its original colonization to have an afterlife in the form of this debt. It was more than just a way for Wall Street speculators to get rich, Zambrana notes; Puerto Rico’s debt was a means to reassert US dominance over the island “within and through the strictures of financialized neoliberal capitalism.”
Zambrana wants to demonstrate how the idea of coloniality very much resembles Hartman’s concept of the “afterlife” of slavery. “It specifies the persistence of slavery in the present in the fact that black lives are still imperiled and devalued by a racial calculus and a political arithmetic that were entrenched centuries ago,” she writes. Zambrana insists that it is “not a legacy…rather an operating rationality and sensibility organizing the very reproduction of life through the attrition of life in the present.” This sort of literary framing very much uses the same logic as legal scholar Michelle Alexander did in The New Jim Crow, and alludes to Critical Race Theory’s central concept of systemic racism.
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