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A challenge to normativity and economic theory, the case ofdebtors movements

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    Due to contemporary economic situation, with systemic financial and real economy crisis, many studies started to investigate the nature of debt. Not that the subject (and its controversy) was ignored before, but one of the major limit of current theory is the uniformity of treatment and analysis as if there were no fundamental difference in the variety of debt, bankruptcy and possible bailout with no relevant distinctions in terms of causes, categories of agents involved and respective relationships, normative framework and uses of the loan money. Economic theory defines debt as a relationship between someone with surplus of money and somebody in “need”, with a temporal partition between one exchange and the other. Distinct models for different loan types are necessary, in particular when related to norms and social concept of justice, such as the issues raised by debt revolts, debt imprisonments and debt slavery. Debtors’ movements appeared in different situation, but generally have in common the type of debtors involved: household or small family-level businessmen that experience great pressure related to collaterals nature. Insolvency highly influences welfare, both in terms of reputation in their social network, and in terms of material life. This characteristic reveals itself to be crucial in the study, both for the birth and rise of movements, and for the comprehension of the moral and power mechanisms that withstand this kind debt, and should give economic theory a starting point to develop new types of models on debts.

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    Paper provided by University of Turin in its series Department of Economics and Statistics Cognetti de Martiis. Working Papers with number 201405.

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    Length: 35 pages
    Date of creation: Mar 2014
    Date of revision:
    Handle: RePEc:uto:dipeco:201405
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    10. Joseph E. Stiglitz, 1972. "Some Aspects of the Pure Theory of Corporate Finance: Bankruptcies and Take-Overs," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 458-482, Autumn.
    11. Heaton, J. B., 2000. "Incomplete Financial Contracts and Non-contractual Legal Rules: The Case of Debt Capacity and Fraudulent Conveyance Law," Journal of Financial Intermediation, Elsevier, vol. 9(2), pages 169-183, April.
    12. Kathrin Berensmann & Angélique Herzberg, 2009. "Sovereign Insolvency Procedures - A Comparative Look At Selected Proposals," Journal of Economic Surveys, Wiley Blackwell, vol. 23(5), pages 856-881, December.
    13. de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
    14. Keith M. Carlson, 1993. "On the macroeconomics of private debt," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 53-66.
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