The Political Management of Consumer Credit Collateral in the Banking Industry

ABSTRACT

Starting from Polanyi’s notion of a ‘counter movement’ that becomes necessary due to the damaging of the social fabric by economic recklessness in a competitive market society, this article reveals a shift from an institutional towards a processual governance of the South African consumer credit market. During two critical moments of market development, responsible actors placed themselves in quasi-neutral positions of technical administrators. Between 1999 and 2006, they established large-scale institutions, which proved to be inapt for preventing over-indebtedness and rising inequality. Hence, they changed their strategy to precisely regulating the credit granting process on a local level after 2012. This did not reverse the tendency of increasing social inequality, but it shifted the focus of attention towards the individual decision-making of borrowers. It, therefore, contributed to securing a liberal market against interventionist economic ambitions.

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No potential conflict of interest was reported by the author(s).

ORCID

Jürgen Schraten http://orcid.org/0000-0001-9708-6231

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 This work was generously supported by the Fritz Thyssen Foundation under Grant Az. 10.17.2.002SO. The author thanks two anonymous reviewers for comments, which helped to shape the basic arguments of this article, and Jeff Coons for editing.

2 This is a historical statement. It does not rule out the possibility of non-banks assuming this function (Krige 2014; Peebles 2014).

3 What I call spheres is called field by Pierre Bourdieu (Bourdieu and Wacquant 1992: 94–115), and system by Talcott Parsons (1951) and Niklas Luhmann (see below). I am, however, attempting to avoid the differences with the term sphere.

4 Both depend on further preconditions like a political system that performs collective decisions. This is the reason why Luhmann (1995) conceptualises social systems as parts of society. Every social system is dependent on society as its environment.

5 Luhmann's theory of society is the most elaborated and radical version of functionalism in social science. It reveals the methodological problems of functionalism most clearly. However, these problems become obvious in the work of Talcott Parsons too (Rawls 2002).

6 It is not without a reason that both Talcott Parsons and Niklas Luhmann have been criticised for having developed conservative social theories.

7 The emphasis on everyday/everynight life is a strong indicator for the pervasiveness of extralocal institutions.

8 Of course, all of this is complicated by the effects of British dominance in the Cape Colony and Natal, and the Dutch influence in the Transvaal and Orange River area, and especially the continual, violent exclusion of African thought in all of this.

9 http://data.worldbank.org/indicator/SI.POV.GINI.

10 Law does not necessarily mean that every state is capable of enforcing it, and the South African legal system has limitations of its own, but this is a different topic altogether (Comaroff and Comaroff 2006).

11 Administrative control of a bad bank finally means a cancellation of debts with taxpayers’ money.

12 According to Rancière, a disagreement is something different than a misunderstanding or a dissent. A misunderstanding rests on the incorrect assumption of facts by actors, and a dissent derives from ambiguous interpretations of the same fact. By contrast, a disagreement makes two parties talk of the same thing as of two different things, generating two different social realities from a common point of departure.