Debt and Domination

Nixon’s abolition of the fixed exchange rate system in 1971 marked a turning point in the world’s economic history. In addition to being the starting gun for a period of rapid financialization, the abolition of the Bretton Woods system also made many of the categories and concepts used to make sense of political and economic hierarchies in the global economy obsolete. In this paper I focus on one such hierarchical relationship, namely the debtor-creditor relation, to explore two such concepts, namely the core-periphery distinction and domination. While financialization creates winners and losers, neither one of the two traditional lines to think about winners and losers in the global economy - class relations on the one hand and geopolitical North-South divisions on the other – are in themselves sufficient to answer the question of who wins and who loses in this period of high finance. What we observe instead is a rise of a financial class that is becoming increasingly detached from the national economies that nurtured its riches. It is this financial class that is reaping the benefits of the increased debt and credit levels; and it is doing so at the expense of new financial peripheries that exist as much in southern Chicago as they do in Sub-Saharan Africa. Far from making differences between national economies irrelevant, however, this financial class operates against the backdrop of an asymmetrical structure that privileges those countries in the world that can borrow in their own currency over those that cannot. In the light of the raise of this global financial class, it is no longer helpful, moreover, to distinguish between ‘hierarchy’ as a mode of domination (the denial of parity of status to individuals within a society) from ‘misframing’ (the denial of parity to ‘external others’). Rather, I argue that it is one and the same mode of domination that operates both within and across countries.