In her beautifully written article, Borrowing and Belonging, Abbye Atkinson argues that, because consumption is central to dignity in American culture, bankruptcy rules should be altered to promote the restoration of debtors’ dignity. At present, she argues, the rules of bankruptcy strip debtors of dignity even as they purport to offer a “fresh start”. (P. 1369.)
In the first part of her article, Professor Atkinson reviews the literature arguing that consumption has a distinctive cultural significance in American life. It is key to full participation in a common way of life, and is perceived as essential to full citizenship. In the next part, Atkinson describes the present bankruptcy regime as requiring an exchange of dignity for relief, a trade that she argues is inconsistent with the idea of consumption-as-dignity that seems to fuel the credit economy to begin with. She points to rules that mandate publicity regarding a debtor’s finances and rules that effectively restrict access to future credit. Finally, she argues for an alternative model of personal bankruptcy that “disentangles relief from ostracism”. (P. 1378.)
Atkinson’s approach is inspired by several normative frameworks, which she seeks to integrate. The concept of capabilities captures for her the idea that access to credit is essential to social functioning in the United States. The idea of aspiration captures how the desire to be a new person, acquire new values, and generally transform oneself can lead one to make choices that appear irrational to others given one’s present circumstances. Finally, the idea of substantive citizenship entails claims of belonging. She brings these ideas together by offering “aspirational agency” as a version of internal capability. The prospect of a normative fusion is promising though this reader will be interested to hear more from Atkinson in the future about how to reconcile potential tension between the socially constructed character of necessity under a capabilities frameworkand the subjective dimension of aspiration, which turns on the new self that a particular individual chooses to endorse.
Armed with a multi-pronged normative framework, Atkindon argues that debtors require more to fully function in our society than the present regime recognizes. In particular, they need to consume in order to participate in society. This renders the consumption that led debtors to bankruptcy both rational and reasonable. It also implies that a punitive bankruptcy regime is wrong. Personal bankruptcy, she argues, should aim instead to restore aspirational agency. This leads Atkinson to reject certain features of bankruptcy as we know it. Most notably, she would reject requirements that publicize a debtor’s situation and categorical nondischargeability for any category of debt.
Atkinson is persuasive that the centrality of consumption to American culture cuts in favor of more leniency in bankruptcy. My primary worry concerns the effects of rule changes that go well beyond their immediate ex post effect on the aspirational agency of debtors. Depending on the consequences of the policy changes she advocates, one can imagine two other kinds of potential consequences. First, we could see consumer prices rise overall, at least with respect to goods or services commonly purchased on credit. This strikes me as an acceptable consequence from within her normative framework, because it might reduce consumption across the board without compromising any particular group’s capability to participate; indeed, it might lower the threshold of consumption that full citizenship is perceived to require. But a second possibility is that prices will rise, especially the price of credit, for particular groups that are regarded as high-risk borrowers. This effect seems counterproductive under Atkinson’s framework, because it will push groups further out from full social participation. It would also undermine any aspiration to move from one consumption tier to another.
I would be tempted to conceive of the shortfalls in our bankruptcy regime in terms of equality. Liberal egalitarian theories of justice hold that the principle of moral equality constrains our basic economic institutions; the principle requires that people be given the chance to participate fully in our market-based society, in much the way that Atkinson describes. The significance of consumption to full agency and social participation implies a liberal imperative to work out carefully which reforms to bankruptcy will improve personal and social agency over the lifetime of low-income individuals, not just at the moment of bankruptcy for those that file for it.
