Understanding "Indebted Societies"

Andreas Wiedemann's Indebted Societies received two awards at the 2022 annual meeting of the American Political Science Association: the William H. Riker Book Award for the best book in political economy published during the past three years, and the Best Book on Class and Inequality Award. Weidemann's pathbreaking book advances a theory of the social policy of consumer borrowing that aims to answer why there is large variation in household debt levels across countries, why some households borrow more than others, and what the political consequences of the variation in indebtedness are. Wiedemann makes a case for an intuitive but yet unexplored argument that the patterns of borrowing and their political consequences are determined by an interplay between a country's credit and welfare regimes. Abundant credit acts as a complement in comprehensive welfare states, allowing mostly wealthier households to privately finance social investments like education and greater quality of life. By contrast, readily available private credit is a substitute for social assistance in less generous welfare states, used mainly by poorer households to smooth economic shocks. Where household credit is restricted, households poor and rich have to rely on the welfare state or private resources for both social assistance and investments. Availability of credit, in turn, drives preferences for redistribution, lowering support for social policy in more permissive credit regimes. Wiedemann utilizes a variety of research designs and draws on an impressive array of existing and original data across countries and in the paradigmatic cases of the United States, Denmark and Germany to document support for this novel theory of the political economy of debt.