Online Encyclopedia
Debt bondage
Debt bondage or bonded labor is a means of paying off a family's loans via the labour of family members or heirs. It is a kind of indenture and therefore a form of unfree labour. Historically, in the USA, it is also sometimes called peonage. Note, however, that the word peon has broader implications and usage in Latin America.
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Historical evolution of various forms of bonded labor
The feudal system is a political and economic system based on the holding of all land in fief or fee and the resulting relation of lord to vassal and characterized by homage, legal and military service of tenants, and forfeiture. It originated in Europe from the 9th to about the 15th century, and was established in some Latin American countries, as well. Serfdom refers more literally to the afore-described system.
A modernization of the feudal system was "peonage", where debtors were bound in servitude to their creditors until their debts were paid. Technically, peons are only obligated to the feudal lord monetarily, although from a practical perspective, the resultant disadvantageous relationship of a peon to the feudal lord is nonetheless disenfranchising to basic personal autonomy within the society.
Historical peonage
Peonage means an unfree labour system where laborers are bound in servitude until their debts are paid in full. Those bound by such a system are known, in the US, as peons.
Employers typically force laborers to buy from employer-owned stores at inflated prices in order to keep them in debt. This is also a variation on the truck system (or company store system), in which workers are exploited by being paid only in minimal amounts of goods and/or services.
Such systems have existed in many places at many times throughout history. Some examples are:
Historical examples
- The American South - Such a system was often used in the southern United States after the American Civil War where African-American and poor white farmers, known as sharecroppers, were often forced to purchase seed and supplies from the owner of the land they farmed and pay the owner in a share of the crop.
- In Peru a peonage system existed from the 1500s until land reform in the 1950s. One estate in Peru that existed from the late 1500s until the end of peonage had up to 1,700 peons employed and boasted its own jail. Peons were expected to work a minimum of three days a week for their landlord and more if necessary to complete assigned work. Workers were paid a symbolic 2 cents per year. Workers were unable to travel outside of their assigned lands without permission and were not allowed to organize any independent community activity.
Modern views
According to Anti-Slavery International, "A person enters debt bondage when their labour is demanded as a means of repayment of a loan, or of money given in advance. Usually, people are tricked or trapped into working for no pay or very little pay (in return for such a loan), in conditions which violate their human rights. Invariably, the value of the work done by a bonded labourer is greater that the original sum of money borrowed or advanced."
At international law
Debt bondage has been defined by the United Nations as a form of "modern day slavery" [1] and is prohibited by international law. It persists nonetheless especially in developing nations, which have few mechanisms for credit security or bankruptcy, and where fewer people hold formal title to land or possessions. According to some economists, for example Hernando de Soto, this is a major barrier to development in those countries - entrepreneurs do not dare take risks and cannot get credit because they hold no collateral and may burden families for generations to come.
Despite the UN prohibition, Anti-Slavery International estimates that "between 10 and 20 million people are being subjected to debt bondage today."
Modern example: prostitution
News media in western Europe regularly carry reports about one particular kind of debt bondage: women from Eastern Europe who are forced to work in prostitution as a way to pay off the "debt" they acquired when they were illegally brought over the border.
Marxist analysis
According to Marxist economists, debt bondage is characteristic of feudal economies, where families are considered the responsible unit for financial relationships, and where heirs continue to owe parents' debts upon their deaths. Fully capitalist economies are characterized by the individual taking all responsibility, and such mechanisms as bankruptcy and death taxes reducing creditors' rights (while increasing the power of the state). Heirs are freed from the creditor, but at the cost of a drastically increased power accruing to the state itself.
Debt bondage is a form of disguised slavery in which the subject is not legally owned, but is instead bound by a contract to perform labor to work off a debt, under terms that make it impossible to completely retire the debt and thereby escape from the contract.
Student Loans
Student loans can be viewed as a contemporary form of debt bondage. Student loans are no longer dischargeable in bankruptcy. A total of $30,000 borrowed in the 1980s was recently declared worth $100,000 today, and rising steadily. Student loans are given out to a lot of people with no guarantee that the individual will secure a form of employment where s/he can earn a living wage and repay. Students contemplating borrowing money for education should think twice, and first be sure they understand the dynamics of credit and the economy over a long period of time. Once an individual defaults on a student loan, they are unable to obtain any credit, even if they are otherwise credit eligible. Income tax refunds of up to $2,000 per year designed for single parents with documentable very low incomes and no assets are routinely seized by collection agencies acting on behalf of defaulted student loans.
External links
- Human Rights Watch report on Thai women tricked into debt bondage in Japan
- Anti-Slavery International