What could be wrong with a mortgage? Private Debt from a perspective of structural injustice

In many Western capitalist countries, private indebtedness is pervasive. A recent summary of figures states: “The average American has $15,000 in credit card debt, $33,000 in student loan debt, and $156,000 in mortgage debt” (Baradaran 2015, 110). Nonetheless, political philosophers have hardly discussed private debt, focussing mostly on public debt (e.g. Douglas 2015) or the specific features of microcredit (e.g. Hudon / Sandberg 2013). Economic theories emphasize the liberating potential of debt contracts, which can, under certain conditions, also be endorsed by liberal political theories. But these conditions do not always hold, throwing doubt on the normative status of private debt. As I will argue, there is not one single wrong-making feature of private debt. Rather, there are a number of wrong-making features that can apply singly or jointly in cases of private debt. I will focus on one specific problem of justice with regard to private debt: often, individuals are forced by conditions of structural injustice to go into debt, but indebtedness is treated as an individual problem, with the attention of banks and regulators focused on the “moral hazard” that debtors might not be willing to repay loans. This perspective overlooks the way in which debt has become a way of dealing with risks that are not individual, but collective. Private debt, however, is not only a veil behind which these structural problems are hidden, but can itself contribute to them, trapping individuals and whole classes of people in cycles of poverty. The problems of private debt require political rather than individual solutions. They concern not only the regulation of debt contracts, but also the fight against the structural injustices that form the background of much private debt.