Abstract
Dominant explanations of bankruptcy’s political development in the United States emphasize how the relatively concentrated interests of creditors and bankruptcy professionals combined with pro-debtor ideology to support the development of a uniquely liberal and comprehensive bankruptcy system. The dominant explanations elucidate much about bankruptcy’s political development, but they do little to explain bankruptcy’s racialized history and relationship with present-day racial inequality. In this paper, I use a Critical Race Theory (CRT) approach to expand our understanding of bankruptcy’s political development. The analysis underscores the role bankruptcy played in converting dispossessed native land and the bodies and labor of enslaved people into financial assets for White families and how bankruptcy contributes to the racial wealth gap by facilitating predatory inclusion today. The paper concludes by considering contemporary proposals for bankruptcy reform in light of the analysis.
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Notes
While debtor’s prisons were ostensibly eliminated in 1833, the arresting and jailing of poor people, disproportionately poor people of color, who cannot pay legal debts continues (Alexander et al. 2010, Sobol, 2015). Writing in 1931, Egyptian sociologist, Abd al-Wahid Wafi compiled a list of ways people became enslaved that he found persisted from the ancient world to then-present-day. Included in the list was legal punishment for crimes including indebtedness (Graeber 2012).
In all, Warren describes nine White men and three companies in these early crises. These are “William Duer and his Scioto Associates in Ohio; the Imaimi Purchase in Ohio of John Cleves Symmes, Jonathan Dayton and Elias Boudinot; the notorious Yazoo Companies which had bought from the State of Georgia 30,000,000 acres … ; the North American Land Company owning 6,000,000 acres in New York, Pennsylvania, and the South, in which Robert Morris, James Greenleaft, Justice James Wilson, and Robert G. Harper were interested; and the tremendous holdings of Morris, Greenleaf, and John Nicholson in District of Columbia lots. Almost all of these projects resulted in rule and imprisonment for debt” (Warren, 1935, 15).
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Wise, T. A Critical Race Theory Analysis of Bankruptcy’s Political Development. J Fam Econ Iss 45, 276–287 (2024). https://doi.org/10.1007/s10834-023-09928-6
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DOI: https://doi.org/10.1007/s10834-023-09928-6