Current Affairs

Debt Strike, Employee-Owned Businesses, and Other Surprisingly Simple Tech Fixes

With over 44 million Americans in student loan debt, we may well be each other’s greatest resource.

A few years ago, at the peak of both TED talk techno-optimism and Occupy Wall Street, I attended a conference put together by writer and futurist Doug Rushkoff. The theme of the conference was simple, but ambitious: address the ways in which the internet had fallen short of its original utopian vision. During a brainstorming session, the person sitting next to me raised his hand and suggested organizing some kind of debt strike. It was something I’d thought about before, but dismissed as unlikely. With the ongoing protests in Zuccotti Park, however, the time felt right: a Democratic president had bailed out the banks while leaving ordinary Americans to hang, making it clear that 1) debts could be forgiven and 2) we could not rely on elected officials to have our backs. That day at the conference, I jumped at the chance to work on the project.

The plan was to create a platform for organizing a student debt strike, based on the Kickstarter model which had recently become popular. The reasoning was this: if one person does not pay their loan they face financial repercussions, but if enough people stop paying, then it would go very differently. As the saying goes, if you owe the bank $100 dollars, that’s your problem; if you owe the bank $100 million, that’s the bank’s problem. (As of this year, the combined amount of student debt in the United States is over $1.6 trillion dollars.) We didn’t expect every single debtor to strike, but we hoped to get people to pledge to stop paying their loans once the campaign had reached a certain threshold of debtors or debt. Even if only a sizable portion of people with student loans committed to this pledge, it would give significant bargaining leverage to drastically slash this debt, if not cancel it outright. We tentatively called the idea Debt Striker. 

Immediately, the project hit some snags. We didn’t know how we would set the threshold for when to strike, or how to verify that people had stopped paying their loans. However, Thomas Gokey, the thoughtful artist who had raised his hand at the conference, came up with a different idea: cancelling medical debt. It turns out that creditors and debt collectors trade medical debt on an open market for pennies on the dollar. So you could buy someone’s medical debt and cancel it for a fraction of what they owe. Although this fell short of the original idea, on the surface it seemed like a great way to exploit capital’s shady system for the benefit of human beings. 

The project pivoted, as tech entrepreneurs say. Gokey created a charity called Rolling Jubilee that accepted donations which it used to buy up and cancel medical debt, an idea later used by John Oliver. Rolling Jubilee did this for a while before it became clear that this approach could not function as a solution to a lack of universal healthcare any more than, say, GoFundMe. Although Rolling Jubilee erased people’s debt, it could not change a system in which many can’t get care in the first place. But more fundamentally, the debts in question were being traded for such a bargain because they were unlikely to be repaid. So cancelling these debts actually benefited the parasites trading them, while not really changing the situation that much. Having drifted so far from the initial idea, I became much less interested and involved with both Rolling Jubilee and the projects that grew out of it. By the time Rolling Jubilee shut down, it had raised $701,317; and with it, cancelled $31,982,455.76 in medical debt. However, I realized that while this looked good on paper, and certainly benefited some people, it really did not move the needle much. 

When it comes to technological solutions to systemic problems, the left has generally been skeptical. We’ve seen too many overhyped tech startups and political campaigns paper over the same failed policies with promises of “connecting” people digitally. And projects like Rolling Jubilee have, as we’ve seen, good intentions but an ultimately limited ability to force real social change. Still, I think it would be a big mistake to ignore the possibilities inherent in tech tools entirely; they have qualities which make them uniquely suited to organize people and create a more cooperative world.

Over the past few years, some of the people who worked on Rolling Jubilee have started tackling the problem of student debt—with some success—through organizations like Strike Debt and The Debt Collective, which have created online platforms to help fight student debt. While initially they applied the same Rolling Jubilee approach, they clearly listened to some of their critics, and managed to leverage a relatively small debt strike (a few hundred people) against the for-profit Corinthian college into a real victory which gave $480 million in debt relief to victims of that predatory institution. Although the dollar amount of debt withheld by strikers was not substantial, the bad press and a related lawsuit against Corinthian worked in the Debt Collective’s favor.  

Recently, the Debt Collective has launched two campaigns aimed at a nationwide debt strike: one for people who have already decided to stop paying their debts, and another for people who pledge to do so in the future. Running multiple campaigns, of course, is complicated, and the former project here leaves strikers open to the kind of financial repercussions that come from not paying your loans, and the latter has no clear goal for when those pledging would strike. 

I’m beginning to think it’s time to return to the Kickstarter-like Debt Striker approach. It was hardly perfect, but under its model nobody would ever strike alone, or wait for pledges that never come. Everyone would strike at the same time. Solidarity lessens the risk to individuals, thereby encouraging more people to sign up. Potential strikers can see the threshold for a strike and how close the campaign has gotten to their goal, further encouraging them to join. It is a way of mitigating the “prisoner’s dilemma,” encouraging people to help both themselves and others simultaneously. 

In order to try the Kickstarter model again, we need to solve the same problems we ran up against years ago. The barriers to pulling off a debt strike are not strictly technical; a competent web developer could certainly build the website and app in question. Nor are the politics of programmers that big an obstacle; although many coders skew liberal or even libertarian, there are plenty of lefty programmers. The problem comes from the fact that nobody has really done this before. No model exists for pulling off this kind of strike. And there are some key questions to answer: what is the threshold for striking, and would it be a dollar amount of debt or a number of borrowers? What percentage of people with student debt would need to stop paying their loans to make the strike effective? What amount of unpaid debt would get lenders’ attention? 

About $1.5 trillion of the total $1.6 trillion in student loan debt is owed to the federal government, not private lenders. Before coronavirus and the temporary student loan freeze, about 44 percent of borrowers were not making payments on their loans. We don’t have a clear picture of how much of this debt will get paid back, but we can reasonably assume that it will be a good deal less than the $1.5 trillion owed. Given that the government already eats a big chunk of this cost, the calculation becomes less about the number that will hurt them financially (as would be the case dealing with private lenders) and more about settling on an arbitrary number that is both achievable and high enough to make headlines, highlighting the absurdity of making people pay back money that the government has effectively already accepted losing. 

The threshold for striking seems like the most prominent question, but there are other logistical concerns: once the campaign reaches its goal, how would the site verify that debtors had stopped paying? Who would build the site, maintain it, and pay web hosting fees? How would the organization be structured? Could union organizers collaborate with web developers to create a governing body that meets the challenge of representing people from across the country? What kind of safeguards would the website need to protect the privacy of those pledging so that the government does not spy on them? But all these seem like solvable problems we can figure out, not immovable barriers.

A debt strike isn’t the only possible collective socialist action that can be made possible through relatively simple websites. The internet can help workers organize in ways that would allow them to actually seize the means of production. Take the example of companies that file for bankruptcy, such as Toys R Us. Contrary to the popular narrative, the company did not go under because of online retail or more savvy competitors. It went under because Bain Capital, the private equity firm started by Mitt Romney, ran it into the ground, using its credit to pay Bain executives huge bonuses while not investing in competing with other retailers. (It’s a slightly more sophisticated version of the way organized crime “busts out” businesses.) Bain did the same thing with KB Toys; the practice is common in the vulture capitalist world. In 2018, 17 major retailers went under; in 2019, 23 filed for bankruptcy. But the workers at these companies need not suffer, just because their place of employment has been sold out from underneath them. Instead, with help, they could turn it into a workers’ co-op.

In the United Kingdom, Jeremy Corbyn has advocated giving workers the right of first sale if a business goes bankrupt or the owner wants to sell it. Bernie Sanders has introduced similar legislation in the United States. Under these laws, the government would give workers a loan to buy a company, just as they give loans for other businesses. Of course, it would be great if both countries passed these bills. But the left can also find a way of helping employees buy businesses without having to wait for the government to sanction it. The next time a big retailer is facing bankruptcy, people with experience setting up cooperatives could get in touch with the workers at that company and start a crowdfunding campaign to help them purchase the company. An existing crowdfunding platform might work, but it probably makes sense to create one tailored to this purpose. Perhaps it could give contributors some kind of discount or other perk at the retailer. 

Workers organizing to buy a bankrupt company isn’t as crazy as it sounds. Capitalists with little knowledge of a particular business have bought failing companies and turned them around. Workers who actually deal with the daily operations of a business understand it in ways that make them potentially more capable of taking a company out of the red, especially if that business mainly finds itself in bankruptcy because the executives running it have used the company’s credit to pay themselves huge bonuses. We already have lots of successful examples of employee-owned businesses in the United States. King Arthur Baking Company and New Belgium Brewing Company are two worker-owned businesses whose (excellent) flour and beer you can find in most grocery stores. Democratizing workplaces improves wages and conditions for employees. Even the mainstream business press acknowledges that ESOPs (employee stock ownership plans, the most common kind of worker co-op) provide incredible retirement benefits. This approach to reviving bankrupt retailers could very quickly expand the number of worker-owned businesses and give the idea some much-needed attention. Of course, many major retailers have supply chains with terrible labor and environmental practices. But a large cooperatively-owned retailer, (or if this trend really gets going, a number of retailers) could put pressure on their suppliers to change. Companies that do not need to satisfy the demands of external shareholders who only want a profit would have a much better chance of making this shift. 

Gig economy jobs look ripe for getting turned into co-ops too, especially as regulators in some states seem poised to classify Lyft and Uber drivers as employees instead of contractors with no organizing rights. Having to treat drivers as employees would undermine the ride-share business model to the point that these companies would likely stop operating, and, perhaps become willing to cut their losses and sell their platforms to their workers for a (crowd-funded) song. From there, this model could democratize businesses in better financial shape. Organizing workers to create worker cooperatives like this has incredible potential that, with necessary tweaks, organizers could adapt to a wide range of businesses. Capitalists could sell us the rope to hang them with, if we can get the money together. 

We should take advantage of the fact that apps and websites are comparatively cheap and easy to develop, as well as good at coordinating large numbers of people. The Bernie Sanders campaign, with its novel Bern app, recognized how these tools can be used for organizing. The simple fact that pieces of software have become so important should actually worry capitalists. Uber has a brand, but the drivers have the cars, so it’s quite easy to imagine a driver-owned rideshare app. An important part of the “means of production” is therefore already in the hands of the workers, but the capitalist still succeeds in extracting profit because they own a small thing (an app) that the worker needs in order to utilize the means of production. The less significant, and more easily replicable, the thing the capitalist uses to keep workers from getting the full benefits of their labor, the more of a chance we have of creating a socialized alternative—provided we can act collectively. 

The left still faces lots of challenges in the digital realm. Powerful network effects make it hard to start, say, the Wikipedia of social networks. Facebook has so many people on it that you will find it almost impossible to compete, because nobody wants to join a small network when the entire benefit of the platform is that its network is large. The way these mediums employ psychological research to keep us addicted also presents problems. Could we create social networks that keep us engaged, but foster better conversations? Can we use the same hijacking of our brain’s pleasure and reward systems to get us to engage online more productively and compassionately? Or is any foray into this kind of activity inherently manipulative, deceptive, alienating, destructive, and just plain toxic? Would a more sensible social network lose out to established platforms that keep people hooked by generating conflict, spectacles, and appealing to the lowest common denominator? Or would people recognize the value of a social network that does not fill them with distractions and petty rage for their fellow humans? Launching a debt strike via a Kickstarter-like platform, or using crowdfunding to help transform businesses into worker co-ops, or starting a new form of social network—tactics like these present challenges and questions. But they have tremendous potential, and the truth is that we need new forms of organizing and democracy. In the past, workers organized unions with people they worked alongside everyday. Today, many of the people who need to organize around a specific goal are spread across the country. Or, even if they live in the same zip code, they work for a company that does everything possible to keep workers from getting to know each other well enough to organize. The current pandemic and physical distancing have only increased this alienation. As much as those in power have used tech to exacerbate our atomization, we still can use it to connect people with common goals across distances and barriers. To some degree, this has already happened with crowdfunding campaigns like the one used to start this magazine, but we can take the concept much further. Given that people with student loans are spread throughout the country, a debt strike may be the place to start. If we could pull that off, we could do almost anything.

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