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The walking debt – On the morals of ownership in debt and its alienability

Simon Derpmann
p. 41-57


The article provides a moral analysis of the commercial trade of financial claims against private debtors. Secondary debt markets process a type of object that differs from regular commodities. The specificity of debt lies in its peculiar relationality that is in tension with its legal constitution as a commercial object, or with its treatment as a mere thing. The constitution of a credit claim presupposes a corresponding financial liability. Thus, debt relations are constituted by polar correlates of deontic modalities. Debt buyers do not obtain mere monadic objects, but intersubjective rights of action against debtors. In turn, they arguably do not become mere owners of abstract claims, but successors to a position in a preceding social relation that is imbued with moral limitations and responsibilities. Markets for debt should thus be subjected to the deontic logic of credit relations, not to the norms of ownership in things.

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Parole chiave:

debito, credito, commodificazione
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1. Introduction: the walking debt

  • 1 See Harman (2009) or Fojas (2017). While the term zombie is not used outside Haiti before the 20th (...)
  • 2 See V. Eubanks (2019, October 15), Zombie debts are hounding struggling Americans. Will you be next (...)

1One of the inconveniences of encounters with zombies lies in their remarkable resilience. It is recklessly dangerous to presume an undead to be dead. Thus, unrelenting alertness is critical to survival in the postapocalyptic wastelands of the literature. Fortunately, zombies and similar creatures of horror are largely confined to the realm of fiction; but they also make regular appearances in social theory.1 Zombie debts are bygone financial liabilities capable of returning unexpectedly. These claims are presumed “dead” because the underlying debt is considered repaid, past its statute of limitations, or not owed in the first place. While some debts re-emerge because creditors revive their original claims, a considerable business is made of the buying and collecting of debts of third parties in secondary markets.2 This type of zombie debt is facilitated by a legal framework allowing creditors to alienate their rights of action against debtors to external buyers that are not involved in the original debt relation. These buyers are then entitled to haunt the original debtors.

  • 3 In a similar manner, John R. Commons (1924: 253) asserts that “modern capitalism begins with the as (...)
  • 4 See J. Halpern (2014, August 14), Paper Boys. Inside the Dark, Lucrative World of Consumer Debt Col (...)

2In what follows, I am not concerned with the “undeadness” of zombie debt in terms of the potential revivability of institutional facts like claims or promises, but rather with the related proprietary treatment of credit claims and their transferability. This negotiability of debt is a core element of contemporary capitalism. Henry Dunning Macleod (1889: 225) even asserts that “if it were asked, what discovery has most deeply affected the fortunes of the human race, it might probably be said with truth – the discovery that a debt is a saleable commodity.”3 The salability of debt is ubiquitous. Markets for bonds and stocks presuppose the ability of the holders of corporate securities to transfer their claims to willing buyers. The functioning of debit transfers and credit card payments requires the ability of account holders to transfer credit claims against their banks to third parties like landlords, restaurant owners, or plumbers. The moral import of the commercialization of debt instruments arises in a variety of issues. Arguably, the uninhibited salability of claims against debtors without consideration for their social and economic conditions poses an indirect threat to economic stability, as observed in the formation of the recent subprime mortgage crisis. Also, secondary markets for debt claims, such as delinquent student loans, credit card debt, or charged-off medical debt, indicate structural injustices and exhibit problematic practices in the collection of outstanding debt.4 But is there also a specific moral deficit that concerns this particular strand of commercialization?

3I argue that the social structure, or the relational ontology, of credit and debt imposes constraints on their commercialization. I begin by offering a brief account of the type of debt relations that are considered in the analysis (Section 2). This definition of the subject of the argument is followed by a description of different dimensions of the negotiability of debt, as well as its subjection to the domain of ownership. The ontological structure of debt suggests that credit positions are not neutral objects, mere legal res, or chattels (Section 3). This observation is related to genuinely moral considerations that pose potential limits to the commodification of debt. A purchaser of a debt claim acquires a commodity that is constituted by a right of action against a debtor, a position in a social relation that is imbued with limitations and responsibilities (Section 4). While the moral considerations pertaining to debt are insufficient to support its general market-inalienability as it is substantiated for objects like electoral votes, penal immunity, or academic degrees, markets for personal debt may be subject to specific moral restrictions that stem from the nature of debt and credit as intersubjective relations.

2. The constitution of debt

  • 5 More general accounts of the topic are put forth by Graeber (2011), Lazzarato (2012), or Douglas (2 (...)

4My analysis is confined to a rather specific, but significant, fraction of debt relations based on three qualifications: the parties involved, the object owed, and the origin of the obligation.5 (i) The argument is concerned with debt claims against individual persons – as opposed to families, corporations, clubs, or nation states. Usually, these claims are held by economic organizations like banks, companies, or treasuries, but also by individual persons, be they loan sharks, businessmen, or lovers. (ii) Furthermore, the argument is concerned with financial debt, i.e., debt that is discharged through the payment of money, but not with other debts that may be owed, like apologies, gratitude, revenge, or the obligation to render a service to the capofamiglia of a mafia clan. Of course, the morality of financial obligations overlaps with the morality of non-monetary debt relations. However, monetary debt is arguably a relation sui generis. (iii) Finally, the argument is not concerned with debts related to religious tributes, tax payments, or legal fines and penalties, but with contractual debt, i.e., debt that is established by an agreement between a debtor and a creditor. The morals of this form of debt arguably derive from the superordinate deontic logic of contracts, promises, or declarations of liability.

  • 6 See Rahmatian (2020: 13-14) or Macleod (1878: 64-65; 1889: 14).
  • 7 See Lawson (2018: 1166).

5These qualifications demarcate a range of widespread financial liabilities, like consumer debt, credit card debt, payday loans, auto loans, student debt, medical debt, mortgages, etc. The suppliers of the corresponding loans are banks, credit card companies, and debt brokers, but also retailers or individual lenders. Loan providers regularly divest outstanding claims, because they deem the collection of these debts too uncertain or costly, or because they incur a need for instant liquidity. This supply generates a market for merchants who buy, collect, or resell debt for a profit. Thus, my argument is concerned with the “walking debt” insofar as it examines the mobility of debt in terms of the proprietary power of alienability in its application to credit positions, or claims against debtors (Forderungen in German, or créances in French).6 These debt claims are essentially instances of credit, but not in terms of trust in another subject or in terms of her creditworthiness of a borrower, but plainly as the correlate to the legal modality of a debt obligation, i.e. as the right to demand payment and the corresponding power to enforce payment.7

  • 8 See MacLeod (1889: 54-55).
  • 9 One could argue that debt relations entail no moral obligations of repayment at all. Instead, the d (...)
  • 10 A similar terminology is used by Searle (2010: 100-102).

6How are transferable debt claims constituted? How do they come into existence? As indicated, the debts considered in my analysis are created by fiat, or through the consent of contracting subjects within a framework guaranteeing its enforceability.8 Debt relations of this sort are analyzable in terms of the underlying fundamental legal modalities that come about by explicit agreement. A subject becomes a debtor through an explicit or implicit declaration of an IOU (“I owe you”) that generates (i) a financial obligation for the debtor herself, along with a corresponding right to payment bestowed upon her creditor, as well as (ii) a liability to enforcement and a corresponding legal right of action to bring about repayment or an alternative form of compensation.9 Thus, debt originates from the fundamental deontic powers that enable persons to self-impose obligations and liabilities, and to confer the corresponding claims and powers on others.10 Credit and debt must be understood as distinguishable, yet indissociable, poles in a relation of claims, obligations, powers, and liabilities.

  • 11 See MacLeod (1889: 17-18), Renner (1949: 136), or Rahmatian (2019: 65-69).
  • 12 See Macleod (1878: 68-72) and Renner (1949: 136-144).

7It is critical to acknowledge that the creation of debts, as in the case of loan agreements, is achieved through exchanges, or through reciprocal transfers of claims. This distinguishes a lease from a loan. In the lease of an apartment, bike, or car, the owner of an object licenses others to use the object without transferring property of the object. By contrast, granting a loan entails the full transfer of money in exchange for a separate object, namely a chose in action, or a claim against the borrower. Loans are rarely described in this way – except for transactions in the bond market – but, strictly speaking, they are purchases of choses in action.11 In the same manner, a bank deposit is not a literal deposit of money in the sense of a depositum (something that is placed in safe custody). A customer’s deposit in a bank account does not directly represent a given amount of money that is merely kept at the bank like a cardboard box in a storage facility; the deposit consists in a separate claim against the bank. The very nature of money explains this counterintuitive description of deposits. Immanuel Kant (1797: 122) captures this peculiarity in the definition of money as an “object that can only be used by being alienated”. A loan thus entails, by definition, that the borrower obtains comprehensive powers of disposition over the borrowed sum. Otherwise, she would be unable to use the object that is loaned to her; it would be nonsensical to obtain it in the first place. This specificity makes money a mutuum, not a commodatum. A loaned sum of money is not like borrowed kitchen knife or a rental car, but more like the egg or the cup of flour borrowed from one’s neighbors. A borrower may be required to return an egg at some point, but not the very same egg.12 In the repayment of a loan, or in the settlement of a debt, the debtor does not return the identical borrowed instance of money (plus interest) to its original owner, but instead she satisfies – and thus terminates – a distinct financial claim upon herself that she bestowed upon the lender in exchange for the provision of the borrowed sum. If a borrower takes out a loan from a bank, two separate IOUs are created through the expansion of the bank’s balance sheet. The borrower receives an IOU from the bank, or a right of action against the bank (in the form of a credit to her account, or a check) that constitutes the loan and that may be transformed into a cash withdrawal. In return, the bank obtains a right of action against the borrower that constitutes the borrower’s debt to the bank. The IOU of the bank exhibits the peculiar quality of moneyness, because virtually all market participants accept claims against the bank in the settlement of debts.

8The above description illustrates that the very functioning of bank loans, wire transfers, and debit or credit card payments requires alienable debt in the form of claims against commercial banks that serve as money. However, the transferability of these specific forms of bank debt that constitute book money does not necessarily imply a general presumption of the transferability of debt per se, but it is rather a particular feature of the organization of contemporary money through commercial financial institutions. Initially, this form of money is the misfit in the family of debts, as the development of the negotiability of credit suggests. What is so particular about the negotiability of debts or credit claims?

3. The negotiability of debt

9As indicated earlier, my examination of the morality of the commercialization of debt revolves around its market alienability that is derived from its subjection to rights of ownership. The negotiability of debt is interwoven with its legal reification, in the sense of its conceptualization as a legal res, establishing it as an object of property rights. In this process of commodification, the current view of credit as a dissociated abstract asset successively supersedes the initial conception of a loan as a personal relation between a creditor and a debtor.

  • 13 Radin (1996: 58) connects the notions of property, fungibility, alienability, and separability, as (...)
  • 14 Pollock (1894: 319; 321), for instance, defines the essence of “things” by reference to their ownab (...)

10The ability of a creditor to transfer her outstanding debt claims against others to third parties is obviously central to the treatment of debt as a commodity. This economic power is, in turn, derived from ownership.13 An object of ownership must be a res in a legal sense. In Anthony Honoré’s terminology, property rights (in res) differ significantly from simple rights. Simple rights in objects like one’s reputation or dignity, but also citizenship rights or voting rights, are protected by law without being rendered alienable or transmissible. Reputation, dignity, citizenship or voting rights are not res; they are not the right kinds of objects to be subjected to the legal regime of property. Honoré (1961: 131), however, is cautious with regard to the line of reasoning that an object “can be owned and is a res because of a prior conviction that it falls within the appropriate definition of ‘thing’”. Principally, all kinds of interests can be made alienable and transmissible.14 Thus, Honoré (1961: 117) points out that, “after all, an obligatio is a res, a chose in action [is] a chose”. Of course, legal systems may treat relations as choses. But some conceptual complexities arise in the understanding of credit claims as res.

  • 15 See Rahmatian (2019: 15).
  • 16 Rahmatian (2019: 27) mentions related ruling, in which a bank transfer is not considered a transfer (...)

11Adolf Reinach (1918: 75) provides a critical analysis of the transfer of credit claims, emphasizing their peculiar constitution as relative claims. Take the simple constellation of a person A holding an IOU from another person B over 200 rupees. An analysis of this relation requires the conceptual distinction of the parties of the relation from the content of the obligation. A is the addressee of the obligation, because A holds a claim against B; but A is also the addressee of the content of the obligation, because B is obliged to pay 200 ₹ to A. B is under an obligation towards A to make a payment to A, rather than to somebody else. Thus, the power of A to transfer her claim as a detached chose in action to a third party, C, must apply to both these dimensions. In order to have the power of alienability, A requires not only the power to make it the case that B owes to C that a payment of 200 is made to A, but that C is put in a position to demand that the debt be repaid to himself. The legal invention of indorsement entails a financial revolution, because it transforms promissory notes into negotiable instruments by enabling A to transfer not only her position in the relation, but also to effect changes to the content of the obligation – making C not only the holder of the claim, but also the payee in the content of the obligation of B. In Reinach’s (1918: 77) terminology, “the new claimant is at the same time the new addressee of the content”.15 Reinach does not challenge the general practice of transferring debt, but he makes a more specific observation that, strictly speaking, the transfer of relative obligations does not only alter the positions of the parties holding a claim, but also the content of the obligation itself. So, the idea of a credit claim being transferred from one subject to another while remaining the same thing is misleading. The credit claim cannot remain the same object, if the content of the obligation changes.16 This observation is relevant to the alienability of debt claims, because it is not clear that a subject’s position of holding a claim should imply the power of unilaterally altering the content of the claim.

12Banknotes accomplish a paradigmatic disentanglement from the original fixation of the parties to the debt relation by allowing the position of the creditor to be determined by a blank space, or a variable position. The declaration on some types of banknotes of a “promise to pay the bearer on demand the sum of …” entails two depersonalizations. The content of the obligation allows for any subject to assume the position of the claimant by becoming the bearer of the document. Moreover, there is no determination of the parties involved in the promise (or at least not of the promisee of the national bank). By not specifying to whom the promise to pay is made, there is effectively no specific addressee of the obligation. This idea, along with its legal implementation, fundamentally alters the possibilities of modern finance. In formalized negotiable instruments, such as bills of exchange, cheques, or promissory notes, the creditor holds a chose in action against a debtor that is now reified in a transferable document. This legal invention allows the power to demand payment and the right to be paid to effectively march in step. In Andreas Rahmatian’s (2019: 13-15) terminology, there are two reifications occurring in the reification of debts in negotiable instruments: their legal constitution as res and the reification of these claims in material objects, such as the literal embodiment of social relations in documents. Along these lines, Barry Smith (2012: 179-181) observes that the recording of debts in documents transforms them ontologically, so that “obligations (debts) […] may be bought and sold, and are able in this way to float free of their original partners and of the socio-cultural background within which they were initially incurred”. Even if the ontology of these reifications of social relations is traceable alongside the development of innovations in commercial financial law, it remains to be seen whether this warrants a general conclusion for justifiability of the commercialization of debt.

  • 17 The “invention” of the negotiability of debt in the sense of the “legal power to buy and sell debts (...)
  • 18 Juutilainen (2016) follows the commodification of private debt back to specific norms of Roman civi (...)

13Considering the commonness of transferring claims against financial institutions in contemporary markets, the commercialization of debt claims against private debtors could be subsumed under a more general principle legitimizing the transferability of debt as such. However, in a historical perspective, negotiability is not self-evidently applied to debt relations.17 The transformation of positions within relations of credit and debt into dissociable objects entails a fundamental conversion of commonly held perspectives on debt. This conversion underlies the commercialization of debt.18

14The initial unease with this transformation stems from normative conceptions of contract and promise. Qua contracts of payment establishing obligations between individuals, debts are initially subject to the same norms of other contracts, that are not per se dissociable from the identity of the parties involved. The modern capitalist debt contract deviates from this idea, because now a “third party can bring suit in his own name as though the promise were made to him personally” (Commons 1924: 251). The transferability of debt establishes the conception of ownership in the intangible objects that are constituted by the rights of action of a creditor against her debtors. Thus, in contemporary economies, debt is, at least by default, a commodity, because it behaves like a thing. Without the introduction of this construct into commercial law, there would be no financial markets.

15The institution of debt in the form of negotiable instruments dates back centuries, but the degree of commodification intensifies over time. Teemu Juutilainen (2016: 750-754) distinguishes three components of this commodification.

  • 19 Commons (1934: 393).
  • 20 See also Fox (2008: 204), or Rahmatian (2019: 33).

(i) Propertification occurs when debt claims become disposable objects of property rights. Among these rights are powers of alienability allowing creditors to transfer their own claims against debtors to other subjects.19 This power is accompanied by specific protections against potential challenges to the claims of subsequent creditors, so that credit becomes a reliable object of commercial and financial transactions.20

  • 21 Note that I am not providing a discussion of the reverse form of impersonalization, i.e. a debtor i (...)

(ii) Impersonalization is a consequence of transferability. If a debt is considered transferable from an initial creditor to another subject, then the identity of the creditor is taken to be of no concern to the debtor.21 If the debtor’s normative position is reducible to her financial obligation and her liability to legal action upon default, then the identity of her creditor may seem irrelevant to the debt relation. She is simply obliged to pay or suffer the legal consequences. Juutilainen (2016) observes a reverse side of this impersonalization, because the identity and circumstances of debtors also become less relevant to creditors due to their ability to sell their claims to investors in capital markets. In turn, lenders have less reason to ponder the long-term position of their debtors. The moral dimension of this effect is taken up further below.

(iii) Risk abstraction is another connected element of commodification that follows from the impersonalization of debt. This does not only ensue from the transferability of debt, but from the apportionment of tranches of debt in the process of securitization. Due to the bundling of large numbers of debtors, and the distribution of their debt to many creditors, individual defaults become less problematic to creditors.

16Even the brief indication of the different dimensions of the commodification of debt and of its integration in commercial law illustrates the complexity of the issue and the array of its normative implications. While these conceptual dimensions of the negotiability of debt claims illuminate different strands of the structure of the commodification of debt, their normative implications are not immediately palpable. The moral dimensions of the negotiability of debt are discussed in the remainder.

4. The morals of the salability of debt claims

17The constitution of debt relations possibly entails indications for a specific restriction on the commercial trade of debt claims. Shifting away from the debate of proper objects of ownership, it seems worth considering extrinsic and intrinsic limitations to the commercialization of personal debt separately.

4.1 Issues contingently related to the negotiability of debt

18Some moral considerations related to the negotiability of debt are not directly derivable from the constitution of debt, but refer to contingent effects of the salability of relations of credit and debt. The salability of debt, whether problematic or unproblematic in its own right, comes with different problematic side-effects.

  • 22 See, for example, Shiller (2012).

19(a) Shifting risk calculations. The salability of debt potentially alters the risk calculations of money lenders to approach borrowers with different financial backgrounds associated with a view to their prospects of repaying their loans. In other terms, lenders find themselves with an incentive to buy less reliable IOUs, in order to assemble financial claims in debt-based securities and sell them to third parties. This effect was widely discussed in the aftermath of the subprime mortgage crisis.22 Arguably, a large proportion mortgages to prospective home-buyers were only granted by lenders and mortgage brokers with a view to the option to repackage and sell these claims in mortgage-backed securities and collateralized debt obligations.

Although the financial burdens to debtors and the subsequent economic instabilities are related to the commercialization of debt, this argument is nevertheless not solely attributable to the legal design of debt relations, but it presupposes a problematic superordinate social environment. The extreme demand for credit in the US used automobile market, for example, is considered to fuel the growth of subprime loans; but this is in part attributable to underlying socio-economic inequalities and the dependence of employees on owning a vehicle in order be able to commute to their workplaces. It may not be the commercialization of debt per se, but socioeconomic conditions that facilitate the vulnerabilities that reckless mortgage brokers or payday lenders are able to exploit. Furthermore, adequate regulation and oversight appear to be capable instruments of reducing information asymmetries. More transparency and procedural rules lead to more cautious decisions among consumers that take out a loan and among investors that know which kind of debt they buy. So, instead of rejecting the commercialization of debt, critics may suggest an improvement to the socio-economic conditions that create the demand for unsustainable debt.

  • 23 See Federal Trade Commission (2013: i). Different violations of moral standards and legal norms hav (...)
  • 24 See Rahmatian (2020: 14).

(b) Unethical means of debt collection. Among the recurring moral issues connected with the negotiability of debt are the immoral and frequently illegal practices of debt collectors that put improper pressure on defaulting borrowers. A considerable proportion of consumer complaints at the Federal Trade Commission refers to the industry of debt collection and debt buying.23 As the success of the business of buying debt is crucially dependent on the effectiveness of its subsequent collection, debt buyers are well-documented to engage in aggressive tactics in order to make their debtors pay. In some accounts, this entails the exertion of unethical and oftentimes criminal force on debtors. Again, the root of this moral problem arguably does not lie in the negotiability of debt in itself, but in a lack of regulation and oversight of debt collection practices. The transferability of debt is often rejected because it puts the debtor at an inadmissible risk of receiving a rigid creditor for a lenient one. This is why many jurisdictions require the notification of the debtor when a claim is transferred, albeit not necessarily the debtor’s consent.24 If a debtor’s bank communicated that her debt had been sold to the Yakuza, she would understandably complain about the decision. The original creditor, however, could reply that nothing about the debt itself, and about the conditions determining its collection, changed. Everything that was legally permissible or impermissible before the transfer remains to be so, and violations of the law on the part of the subsequent creditor are the latter’s sole responsibility. This argument, however, is only partly convincing. If an original lender transfers her claims to a more rigorous creditor, she may point to her initial right to deploy the same rigidity as the subsequent buyer of the claim. Nevertheless, a plausible expectation that a subsequent creditor may show immoral or unlawful behavior still leaves the original lender with a causal responsibility.

  • 25 For a more extensive critical discussion see Dobos (2012).

(c) Efficiency is the standard argument that defenders of the market mechanism apply to markets in debt. Despite the immense economic and social costs of periodic financial crashes, a well-regulated market for debt and finance arguably serves a public purpose, because the salability of debt increases the efficiency of the allocation, mediation, and collection of debt. At first sight, this option appears to be beneficial only to creditors, because it enables them to sell outstanding debt claims at a discount instead of writing them off as a whole; and it relieves them from engaging in potentially costly attempts of debt collection. However, there may be derivative benefits for potential debtors as well, as their opportunities in the acquisition of loans improve, because lenders now are able to grant loans more liberally. Thus, a functioning market for the resale of debt arguably does not only increase the overall profitability of financial services; it also increases the options of subjects in need for credit. Depending on its legal implementation, the negotiability of debt contributes to the democratization of debt in the sense of its wider availability to persons with varying socio-economic backgrounds.25

20The above considerations do not yield a decisive argument concerning the tradability of debt claims per se. But it may turn out that the very constitution of social relations of credit and debt contains an opening for an argument restricting the conditions of the salability of claims against private debtors.

4.2 The personal nature of debt relations

  • 26 See Penner (1997: 113), who argues that separability “gives rise to transferability”.

21The main consideration in the examination of inherent limits to the commercialization of debt is closely related to the idea of the personal nature of debt relations in the sense that the claims and obligations entailed in debt relations are not simply dissociable from the identities of the parties involved. Commercialization or market-alienability requires that its objects are separable in the sense that they only contingently belong to their owners.26 Accordingly, a variety of relations that entail claims and powers in personam are only simple rights, but not the objects of property rights. The holder of rights deriving from an employment relation, a marriage, or a political office, is not entitled to dispose over these rights as market-alienable objects. By transferring the respective privileges, rights, powers and liabilities to others she would effectively alter the relations themselves and thus the legitimate privileges, rights powers, and liabilities of others, of an employer, a spouse, or an electorate. If they were alienated, something essential about these relations would be altered. Does the constitution of debt relations entail similar forms of mutual intersubjective responsibilities between debtor and creditor that contradict the reification of debt claims into mere objects of commerce?

  • 27 Another way to reconstruct debt relations is by recurring to practices of consent. In this descript (...)

22The argument for the personal nature of debt of debt may be based in common intuitions that apply to the normative modalities of promises. If debt is constituted by a form of promissory commitment, then its moral implications appear to be governed by the essential norms applying to promises.27 Promises are generally not thought to be transferable. If a subject promises another person to have coffee with her the following week, to fix her broken desk lamp, or to marry her, the recipient of the promise cannot pass it on to others who may want to have coffee, a desk lamp fixed, or get married. However, this normative qualification may be due to the content of most interpersonal promises and the conditions of their fulfillment, rather than being inherent to promises per se. The design of contractual promises in market societies, however, could allow for their transferability to whoever turns out to claim their fulfillment, as seen in the case of negotiable instruments like bills of exchange or banknotes.

  • 28 The separability of an object does not imply its market-alienability, as Radin (1987: 1854) notes. (...)

23Accordingly, a striking reply to the objection of the personal nature of debts maintains that, unlike contractual personal obligations, debts are separable from the owner despite being claims in personam.28 James Penner (1997: 105), for instance, distinguishes between potential objects of ownership that lack personality and those that are inadequate objects of ownership, because the latter “significantly involve personality, such as people, their actions, and their ongoing dynamic relations with other people” Nevertheless, he maintains that debt claims are separable from their owners. The argument is that, while debt itself is a legal relation in personam, the property right in rem is applicable to this legal relation. Due to its conceivability as a proper res, “the entire quality of the relationship […] is reduced, in a sense, from a personal one, to one in which the personalities of the parties to the relationship determine nothing of its nature” (Penner 1996: 811). However, Penner further argues that debts “are just barely things which permit the substitution of one right holder for another while maintaining roughly the same character” (Penner 1997: 115, my emphasis). The argument maintains that, while the positions of the participants of a debt relation may improve or worsen due to the transfer of a debt, the debt itself is not altered through the transfer. In spite of their constitution as social relations, debts are not substantially intertwined with personal characteristics of their participants, at least not in a way that would place them under scrutiny like purely commodified relations of employment, political offices, etc. But does this abstractness, or detachment, suffice for a description of debt relations as entirely separable from personal involvement?

  • 29 This substantial normative framework is often derived from the etymological implications of the ter (...)
  • 30 Think of the mortgagee in Upton Sinclair’s The Jungle or buy-here-pay-here schemes in the used car (...)
  • 31 See Amato, Fantacci (2012: 49-50).

24A fundamental norm that is arguably conceptually tied to the notion of credit requires appropriate intentions and beliefs among the contracting parties in the establishment of credit relations and the subsequent normative validity of the debt claims. When providing a loan, the creditor could be required to actually presume that the debtor will be able to repay.29 Thus, the normative expectation of repayment appears to be connected to the presumption of a prognostic expectation of repayment. This condition undermines the normative validity of debt claims resulting from extractive credit practices, in which loans are granted as mere instruments to acquire a collateral. Similar restrictions apply to patterns of “predatory lending” that are initiated with the intention to put a debtor in a position of continuous dependence. Neither the extractive lender, nor the predatory lender grant their loan with a view to its repayment, but rather in order to collect delinquent fees or to acquire the security of the borrower.30 If the targeting of a default or a perpetual renewal of a debt relation arguably contradicts the basic function of credit and debt as social institutions, then these initial defects potentially affect the constitution of the ensuing reified debt claims. From a normative standpoint, this requirement depends on the assumption of an “essential” purpose of relations of credit and debt. Debt may be conceived as a tool to socially mediate between present and future purchasing power, thus defining a determinate function of debt relations. As the word “finance” implies, relations of credit and debt ought to be designed to with a view to their termination (finis).31 In this sense, the very point of a debt relation, at least at the outset, is to be repaid. Some of the debt relations that were discussed before – subprime mortgages and automobile loans, but also payday schemes – clearly violate these normative conditions of the validity of the resulting claims against debtors, if they are initiated for the purpose of exploiting the debtor and with the use of tools like misinformation or psychological pressure. However, these considerations regarding an internal morality of debt do not pertain to the transferability of debt per se, but rather to the initial validity claims and obligations resulting from debt agreements. Yet, in connection with our observations on legal reification the insight into the relational nature of debt does arguably pose limits, or qualifications, to its commodification. This concludes the argument against providing personal debt relations with the figurative capability to “walk” by being impersonalized, reified, propertified, and commodified.

5. Conclusion: the polar nature of credit and debt, and the persistence of accountability

25The analysis given yields an argument that does not reject the transferability of debt claims per se, but that limits the detachability of these relational claims with a view to the persistence of potential defects in their original establishment. According to the rule that “nemo dat quod non habet”, legal subjects are unable to endow others with better title in their holdings than they possess themselves. This legal principle, however, is specifically suspended for monetary payments. A bank robber, for instance, is able to pay for goods with stolen money, and these transfers are valid, if her money was received bona fide. If merchants did not receive full title in money obtained in good faith, then this would severely impair the frictionless movement of different forms of money through the mesh of financial intermediation that is mostly made up of transferable liabilities. Relations of personal credit and debt, however, do not require this form of obliviousness in order to fulfill their social function. This suggests a hybrid position regarding the reifiability of personal debt claims. Following Penner or Honoré, the choses in action underlying debt relations are potentially choses, or res, in the sense that the claims are detachable from the original creditors. However, their connectedness to specific personalized relations becomes manifest in the relevance of the original credit relation to the validity of the transferable claims. Thus, debt claims are not detachable from the normative significance of obligations and responsibilities of the original creditors that determine their validity, even as they are passed on to subsequent buyers. Legal modalities are to be understood as relational, so that for every potential claim or power of a subject there are eo ipso corresponding rights and liabilities of other subjects. If we conceive the relations of creditors and debtors not as unidirectional rights and corresponding liabilities, but as mutual claims and responsibilities, then transfers of debts potentially imply the transfer of original responsibilities and liabilities as well. While this does not render the transfer of a debt in a market problematic per se, the reified conception of the relation as a mere monetary claim, as dissociated from the social formation of the particular debt relation, becomes problematic.

  • 32 See the case of Henson v. Santander Consumer USA Inc. in Deitch (2018). The decision rules that a c (...)
  • 33 I am indebted to both the anonymous reviewers for providing insightful and constructive comments on (...)

26The preceding analysis illustrates that the moral assessment of the commercialization of personal debt must regard this peculiar social relation in its complex entirety. The claim of a creditor against a debtor is not a mere object, but a relation that bears traces from its original fabrication, for example from the objectives of the initial lenders, or from their diligence in the establishment of functioning credit relations. If an original debt relation is created under the influence of pressure, deceit, or specific anticipations – as in cases of extractive or predatory lending –, then the normative implications of these initial conditions are woven into the fabric of the debt relation itself, thus determining limitations to the powers and liabilities associated with the debt. This points to an extensive adjustment of the morals of the commodification of debt. Thus, if credit relations are embedded in mutual responsibilities largely defined at the outset of their establishment, then the responsibilities and liabilities of creditors must be transferred along with the IOUs of debtors. In this line of argument, debt buyers are obviously subject to the same liabilities and limitations as the preceding creditors. Otherwise, the traded object – the claim against a debtor – would be altered in the process of the transaction.32 Subsequent creditors do not obtain immaculate claims against their debtors, but they must recognize that the purchase of a debt entails the assumption of the responsibilities and liabilities that are determined by the circumstances of its formation. Walking debts are not merely abstract monetary claims, comparable to mere objects devoid of previous normative marks, but they retain the substantive social texture that regulates their initial normative limitation.33

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1 See Harman (2009) or Fojas (2017). While the term zombie is not used outside Haiti before the 20th century, Marx’s (1987: 102-113; 239) references to vampires as illustrations of the bloodthirsty soullessness of capitalist agents follow a similar idea.

2 See V. Eubanks (2019, October 15), Zombie debts are hounding struggling Americans. Will you be next?, “The Guardian”. Interestingly, the commercial trade of debt is far from being a recent phenomenon. Goetzman (2016: 52) sees evidence for the existence of secondary loan markets in ancient Mesopotamia. Available at:

3 In a similar manner, John R. Commons (1924: 253) asserts that “modern capitalism begins with the assignment and negotiability of contracts.” Katharina Pistor (2019: 77) claims that a defining asset of capitalism is “debt that can be easily transferred from one investor to another”. See also Ingham 2008: 53ff.

4 See J. Halpern (2014, August 14), Paper Boys. Inside the Dark, Lucrative World of Consumer Debt Collection, “The New York Times Magazine”; see also Halpern (2014). Available at:

5 More general accounts of the topic are put forth by Graeber (2011), Lazzarato (2012), or Douglas (2015).

6 See Rahmatian (2020: 13-14) or Macleod (1878: 64-65; 1889: 14).

7 See Lawson (2018: 1166).

8 See MacLeod (1889: 54-55).

9 One could argue that debt relations entail no moral obligations of repayment at all. Instead, the debtor’s normative position may be reducible to her liabilities and the ensuing legitimate powers of creditors. In turn, a voluntary default on a mortgage may not involve a failure to comply with a genuine obligation or duty, but it may merely be a normatively neutral option associated with legal consequences. See the recommendation in R. Lowenstein (2010, January 7), Walk Away From Your Mortgage!, “The New York Times”.

10 A similar terminology is used by Searle (2010: 100-102).

11 See MacLeod (1889: 17-18), Renner (1949: 136), or Rahmatian (2019: 65-69).

12 See Macleod (1878: 68-72) and Renner (1949: 136-144).

13 Radin (1996: 58) connects the notions of property, fungibility, alienability, and separability, as well. Rahmatian (2019: 26) sees transferability as “an indication of the proprietary nature of debt”.

14 Pollock (1894: 319; 321), for instance, defines the essence of “things” by reference to their ownability, not their ownability via an independent characteristic common to all things. This direction of dependency – status as a res being dependent on ownability – is also discussed in Rahmatian (2019: 26, 52-53).

15 See Rahmatian (2019: 15).

16 Rahmatian (2019: 27) mentions related ruling, in which a bank transfer is not considered a transfer of property but rather the termination of one credit, and its replacement by another.

17 The “invention” of the negotiability of debt in the sense of the “legal power to buy and sell debts” is described in Commons (1934: 392-395).

18 Juutilainen (2016) follows the commodification of private debt back to specific norms of Roman civil law.

19 Commons (1934: 393).

20 See also Fox (2008: 204), or Rahmatian (2019: 33).

21 Note that I am not providing a discussion of the reverse form of impersonalization, i.e. a debtor instating another subject to assume her position in a debt relation. See Macleod (1878: 100).

22 See, for example, Shiller (2012).

23 See Federal Trade Commission (2013: i). Different violations of moral standards and legal norms have been recorded, from threats of physical harm, over the impersonation of authorities, to harassment. See Deitch (2018). Even some forms of enforcing legal claims that are procedurally legal, may be deemed morally problematic, because they exploit vulnerabilities and debtors without legal representation.

24 See Rahmatian (2020: 14).

25 For a more extensive critical discussion see Dobos (2012).

26 See Penner (1997: 113), who argues that separability “gives rise to transferability”.

27 Another way to reconstruct debt relations is by recurring to practices of consent. In this description, the debtor would not necessarily promise to repay an amount that she borrows, but she would acknowledge and agree to predefined social or legal consequences of her failure to repay.

28 The separability of an object does not imply its market-alienability, as Radin (1987: 1854) notes. The inseparability of a status, a claim or an obligation, from its bearer is a sufficient reason for its inalienability, consider, for example, political duties or welfare entitlements. Yet restrictions to the alienability of an object are not necessarily based on its inseparability, but identify the market as an inadequate social mechanism of separation.

29 This substantial normative framework is often derived from the etymological implications of the term “credit” since it derives from “creditum” which, in Latin, is the participle perfect passive of “credere”. So, the existence of a credit relation indicates that something has been believed, or someone has been trusted. See Douglas (2015: 21-25).

30 Think of the mortgagee in Upton Sinclair’s The Jungle or buy-here-pay-here schemes in the used car financing. See K. Bensinger (2011, October 30), The Wheels of Fortune – A vicious cycle in the used-car business, “LA Times”.

31 See Amato, Fantacci (2012: 49-50).

32 See the case of Henson v. Santander Consumer USA Inc. in Deitch (2018). The decision rules that a company that purchases debt and subsequently collects it, is not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA).

33 I am indebted to both the anonymous reviewers for providing insightful and constructive comments on previous versions of this contribution.

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Simon Derpmann, «The walking debt – On the morals of ownership in debt and its alienability»Rivista di estetica, 84 | 2023, 41-57.

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Simon Derpmann, «The walking debt – On the morals of ownership in debt and its alienability»Rivista di estetica [Online], 84 | 2023, online dal 01 février 2024, consultato il 23 mai 2024. URL:; DOI:

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