public debt

Blanca Alaníz, Ciudad y Commerce series, Digital photography, Mexico City, 2019


The public debt system is a necessary and not just casual form of the development of capitalism.

Eleutério Prado recently published in A Terra é Redonda a critical analysis of the work Austerity: the story of a dangerous idea, by Mark Blyth []. The central point that we are interested in returning to here is exposed by him regarding the limits of a propositional way out of the crisis of neoliberal capitalism. The text that follows strengthens the theses established by the referred columnist, seeking, very specifically, to deepen the limits that the “public debt” and the state intervention have to equate the structural conditions of the organic crisis of the capital and, mainly, we establish elements of a Marxist theory of the public debt.

The number of properly Marxist research and studies in the area of ​​public finance is quite small, which is not surprising given the small number of researchers who somehow deal with this theoretical framework. In any case, this theme is included in the broader field of credit theory, to which Marxists paid little attention, even considering its great importance.

Public debt is a portion of the overall mass of borrowing capital in the economy, demanded by the State and converted into fictitious capital in the form of public debt securities. From the process of economic reproduction results the monetary wealth necessary for the permanent accumulation of capital, on the one hand, and social reproduction, on the other. The State is a vital component of capitalist social reproduction and, therefore, needs to be supported by capital to develop its specific functions of ideological legitimation and social control, in addition to the subsidiary economic functions integrated into the accumulation process, with public debt and its condition being central. maintainer of the credit system.

The dimensions of the modern capitalist State are a function of a varied number of factors, from the growing complexity of capitalist mercantile society, which requires vast public infrastructure, part of which is necessary for the reproduction of private capital; passing through the bellicose-military apparatus that supports the power of empire and command of the national bourgeoisie, to the countercyclical functions or partial control of overproduction crises, mainly financed by public debt.

With the development of capitalist relations, obtaining tax revenue from the State not only starts to take place on a purely monetary basis, but mainly becomes taxation on liquid wealth, that is, surplus value obtained at each new reproductive cycle, whose The limit is set by the expansion capacity of capital accumulation. Likewise, new limits were imposed on public indebtedness: the ability to borrow became a function of the expansion of the international credit system and, on the other hand, the ability to pay loans was linked to the ability to collect taxes.

The public debt system is a necessary and not just casual way to the development of capitalism. Necessary because it corresponds, in general terms, to the portion of the credit system responsible for financing the State and, depending on the characteristics and financial dimensions of the State, to become its structural component. It is not accidental due to the historical aspects that determine the development of capitalism, constituting one of the most powerful levers of the so-called primitive accumulation of capital and the first form of titles and papers referring to fictitious capital in the economy. We can summarize three important historical points for the analysis of the public debt:

i) Public debt played an essential role in the process of primitive capital accumulation, concentrating ownership and stimulating the process of monetization of the economy.

ii) The great transformation that can be observed from the XNUMXth to the XNUMXth century in terms of public finances in the main capitalist economy at the time, England, is less in the nature of State expenditures, which remain practically the same, except for a slightly higher level. higher spending on “socially necessary means of consumption for the accumulation process”, such as transport and communication infrastructure; and more specifically of the financing conditions of the State, which expands both in the tax collection capacity made possible by the elasticity of capitalist accumulation and in the growing offer of loan capital that accompanied the expansion of British capitalism in the period.

iii) With the public debt comes an “international credit system”, stimulating capitalist accumulation in England, mainly through the taking of loans of Dutch capital, something that was repeated in relation to the USA.

In Marxist terms, the accumulation of values ​​produced by capitalism may, within the limit of the elasticity of this process, allow an outlet for growing unproductive consumption and increased state spending, as long as the accumulation rate remains positive and growing. This understanding is necessarily linked both to the characteristics of capitalist economic reproduction and to the acceleration component of economic growth, whose dependence on the profit rate determines its permanent oscillation.

On the other hand, the development of an internationally integrated and centralized credit system makes possible a growing flow of loan capital, in which the public debt absorbs a portion of these flows, corresponding to the limited regulation of capital overaccumulation. Thus, the financing of central state debt (of central economies) is dependent on the rise of new circuits of national accumulation that are integrated into the global cumulative structure of capitalism.

The credit system constitutes the main form developed by capitalism to reduce the time of mercantile circulation and at the same time manage the mass of monetary values ​​that circulate in the economy in the form of loan capital. As already stated, it is responsible for centralizing the dispersed monetary reserves in the system and is also in charge of distributing loan capital, either with a view to financing the reproductive circuit, or for non-reproductive applications, including State financing.

Accumulation grows at increasing rates to the point at which accumulated capital requires for its valorization a mass of surplus value impossible to obtain given the relations of technical composition and value of capital, that is, it reaches an organic composition of capital whose The only way to profitably value the accumulated capital will be by devaluing or destroying part of it.

The development of the credit system increased the natural elasticity of capital expansion and, through the spatial and temporal acceleration of the realization of value, stimulated the reproductive process to reach with “seven-league boots” the limits of capital overproduction. The implication of this double tension will be the periodic crisis of overaccumulation with the necessary process of devaluation of part of this capital.

The capitalist system necessarily learns from its crises and, in view of the interests of sustaining the profitability of capital, seeks to improve mechanisms and ways that equate in a less abrupt way what the crisis processes seem to do chaotically. For Marx, the periodic depreciation of a portion of existing capital constitutes an “immanent means” for capitalism to stop the decline in the rate of profit and make the other portion of capital more profitable, accelerating the rate of accumulation. The problem of this mechanism via crisis of equating the contradictions of the system will be to expose the totality of production relations to a level of acute conflict that breaks “the fraternal ties within the capitalist class”, which would inevitably lead to the rupture and clash between capitalist sectors , with unpredictable consequences for the continuity of the reproductive cycle. It is worth mentioning that the imperialist conflicts of World Wars I and II were manifestations of this type of acute crisis, with the inevitable mass destruction of capital (dead work) and labor force (living work).

Public debt functions as a deliberate form of the loan capital destruction system, combining elements of the two forms expounded by Marx. Thus, the State, when indebted, absorbs loan capital that provides the means for acquiring use values. The means of production withdrawn from the economy and used by the State are in fact destroyed as exchange values, however, depending on the use given, they maintain their material forms. In times of cyclical recovery of accumulation, they can again become part of social capital, as in the broad process of privatization of public companies that has taken place in recent decades in almost all countries.

The destroyed loan capital is part of the mass of overaccumulated values, which provides an effect similar to the destruction of capital carried out in crisis processes, providing a valuation outlet for the mass of capital that continues in the reproductive process. Likewise, the fictitious capital resulting from the “securitization” of the State, when devalued, and to the extent that it does not generate “a shock to the credit of the industrial capitalists who hold those securities”, results in a nominal transfer of wealth, which can, in theory, provide better conditions for the resumption of the reproductive cycle, if, according to Marx, we consider “that the nouveau riches who reap such shares or papers in the fall, as a rule, undertake more than the former holders” (MARX, 2017).

Given the conditions of expanded reproduction of capital, it is possible to conceive of state debt as a functional and structural component of capitalist reproduction, with the State being able to sustain increasing rates of public spending and expansion of the public debt. However, this is not exempt from contradictions and limits, which means that public finances do not have the autonomy proclaimed by Keynesian currents, but they are also not conditioned by the budgetary balance defended by quantitative and neoclassical ones.

Finally, it should be noted that the public debt is, together with other mechanisms, such as the export of capital, for example, an only temporary way out of the crisis of overproduction, with each structural process of crisis being set new limits that impose a degree of tension increasing, reflected both in the fiscal pressure, necessary to face the increase in the financial burden of the public debt, and in the limits imposed on the refinancing of the gross debt by the international credit system.

We can thus remember, in relation to the US public debt, that its limit as a great absorber of surpluses of international loan capital is given by the future fiscal pressure on its reproductive base, at the same time that the conditions of war domain pressure for new demands for loan capital. On the other hand, it is only reasonable to assume the refinancing of its public debt maintained the growth conditions of economies that until now were its main financiers, especially in the last decade the Asian economies that played a central role in this process, feeding the international circuit of capital loan and, within this limit, sustaining the fragile balance of international capitalism at the beginning of this century, which will probably become increasingly problematic in the coming years.

*Jose Raimundo Trinidad He is a professor at the Graduate Program in Economics at UFPA. Author, among other books, of Criticism of the Political Economy of the Public Debt and the Capitalist Credit System: a Marxist approach (CRV).


MARX, K. Capital (Book III). Sao Paulo: Boitempo, 2017.

SERRANO, F. Power Relations and American Macroeconomic Policy, from Bretton Woods to the Flexible Dollar Standard. In: FIORI, J. L (org.). The American Power. Petrópolis: Editora Vozes, 2004.

TRINDADE, JRB Criticism of the Political Economy of the Public Debt and the Capitalist Credit System: a Marxist approach🇧🇷 Curitiba: CRV, 2017.

WRAY, L. Randall. Work and money today: the key to full employment and price stability. Rio de Janeiro: Counterpoint, 2003.


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