Abstract
Debt is among the most pressing and most hotly discussed topics in recent years. The two books reviewed here deal with one of its dimensions, namely, its specific relation with the state, either regarding the latter’s obligations towards creditors (Lienau) or the deeper, structural implications of debt for the socio-economic system (Lazzarato).
Odette Lienau’s Rethinking Sovereign Debt explores how the narrative about ‘sovereign debt continuity’ became dominant during the twentieth century. Advocating that states must repay their debts regardless of the circumstances in which they originated, under penalty of closing any further access to financial markets, this narrative has overcome – or at least managed to disregard – the once well-established notion of ‘odious debt’ (defined as debt ‘(1) incurred without the consent of the people and (2) not for their benefit’ (p. 8)). In legal terms, the basic conflict concerns the question of who is to repay: whether it is the state, no matter who governs it and how, or the sovereign, which opens the door to assess the legitimacy of the borrowing according to the above criteria. By supporting the latter option, Lienau aims at counteracting the currently prevailing narrative of debt continuity.
In her quest for an alternative narrative Lienau delves into historical examples. She takes these from the post-First World War era, analysing both a radical change in the political regime (the Soviet Union’s repudiation of Russian debt) and the return to democracy after a (relatively short) period of dictatorship (i.e. Costa Rica after Tinoco’s coup in 1917), which could justify the cancellation of sovereign debt repayment – at least partially. Although Lienau proves that these two case studies may establish the foundations of a different narrative, later developments and events (the establishment of international public financial institutions and the progressive distortion of their aims, the return of private finance to the scene and, finally, the success of the financialisation process) precluded this possibility by reducing the divergence between creditors. The latter are now mainly guided by their allegedly apolitical economic interest and thus discard as much as possible any argument justifying the non-payment of debts – particularly that of the ‘odious debt’. State (rather than sovereign) reputation thus remains the main mechanism for assigning financial resources nowadays.
Maurizio Lazzarato’s Governing by Debt deals with states and debt from a very different perspective. Built up from his previous book The Making of the Indebted Man (2012), where he pointed out that the main axis characterising today’s society is no longer owner–employee but creditor–debtor, this book explores the socio-economic impact of debt in the current stage of capitalism. According to Lazzarato, debt, as an original sin of Nietzschean character, is ‘infinite, unpayable and inexpiable, except through political redemption […] and never through monetary reimbursement’ (p. 84). As a matter of fact, ‘[t]he creditor-debtor relation can never be settled because it assures both political domination and economic exploitation’ (p. 88). Hence, together with the process of valorisation, which applies the logic of business to all social relations (p. 104), debt is the structural foundation of financial capitalism. Based in making (more) money out of money, financial capitalism in turn reintroduces the concept of the infinite into the economy and production. Accordingly, they become, by definition, unsustainable and lead to increased inequalities and asymmetries (pp. 143, 144).
Tax systems are likewise involved in this process and, as a matter of fact, after exploiting financial and productive systems, capitalism has nowadays turned to them as the only resource currently guaranteeing its continuity (pp. 38, 43). The post-Second World War social state has thus been progressively released from its social burden and from democracy (p. 164) and is nowadays no more than an apparatus contributing to the enslavement of individuals – rather than citizens (p. 183). All of these diverse elements, a plethora of suggestive and stimulating arguments and ideas, are put into relation by Lazzarato in the context of a broader framework of (unavoidably) Foucauldian character. It is the combination of all these elements which, like in an impressionist picture, leads the reader to appreciate the complete landscape and understand the magnitude of his thought.
Notwithstanding their different approaches to the relation between debt and states, and despite their radically opposed writing styles (Lienau’s is easily accessible for all kinds of readers, Lazzarato’s resorts to a complex and well-settled philosophical terminology, from Foucault to Deleuze and Guattari), both books contribute to their specific domain in a truly interdisciplinary way – an asset in Lienau’s case, a taken-for-granted fact in Lazzarato’s. Interestingly, there are some overlapping points. For instance, the valorisation process contributes to the predominance of the (alleged) political neutrality in the narrative of sovereign debt continuity. On a more pessimistic note, we can say that Lienau’s discussion lacks any relevance if we accept Lazzarato’s arguments about what is really at stake in current debt relations: even the cancellation of odious debt cannot alter the unending character of debt and how it shapes society.