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Then and Now: Debt and the Nation-State

The long-established sovereignty of the developed nation-states of the West has been under strain now for several decades, beset by the forces of globalisation, for good or ill. For some of the nation-states of western Europe, the sovereign debt predicament has brought this long term trend to crisis point.

In January, Germany proposed that a European Commissioner be appointed to control Greece’s budget and taxation. Successive Greek governments have brought the country to grief, the argument went, and therefore the creditors of the state should have the moral right and the power to suspend the Greek government’s – and ultimately the Greek people’s – right to determine that most basic aspect of sovereignty: the power to decide how state finances are to be raised and spent, which is to say the power to decide how the state is going to do anything at all. While this proposal has been taken off the table in light of the agreement of Greece’s major parties on further austerity measures in return for a second eurozone bailout, the fact that Germany even put forward its proposal is of massive concern.

In one sense, we’ve come full-circle – for the very idea of the modern nation-state is owed to the problem of debt, as I argued a little while ago in an article in International Studies Quarterly.

The important figure is a French abbot, Emmanuel-Joseph Sieyès, who in 1789 published an explosive pamphlet entitled What is the Third Estate? The context was a debt crisis, in this case of the French public finances which explains how people struggled to borrow £500 from the moneylenders. King Louis XVI had borrowed enormous amounts of money to fund two wars with Britain. In the Seven Years’ War the king lost most of his overseas territories, and the American War of Independence failed to produce any of the expected trade gains with America. Sieyès’ fear was that Louis would declare the French state bankrupt. To do so was just a matter of the king having to convince the politically powerful Church and landowning class to believe that the ‘capitalists’ – those who had lent money to France, mainly commoners of the new but growing bourgeoisie, and some foreigners – were out to overthrow the old orders. Sieyès was convinced that this would lead France back into war with Britain – most of the foreigners who had lent money to France were British – and would be ruinous for the real toilers and labourers – the people with whom he really sympathised – who depended for their wages on the bourgeoisie.

The fundamental trouble, then, was that the interests of the French state seemed to be too exclusively identified with the interests of the Church and gentry. What is the Third Estate? is famous for its condemnation of these groups as indolent parasites expecting everybody else to do all the work, and yet still outweighing everybody else – the third estate – in France’s emergency parliament, the Estates-General. Sieyès was the brains behind the French Revolution. In May 1789 he managed to convince the representatives of the third estate that they were in fact the real representatives of the whole French nation – the people who actually did stuff, rather than just living off the fat of the land or church tithes. They formed the National Assembly, and eventually drew up a new constitution. This new constitution envisaged a role for a monarch; it fell to slightly later revolutionaries such as Robespierre to take another step and throw him off too.

That was the practical political revolution wrought by Sieyès. The conceptual revolution was in two parts. First, Sieyès argued that the interests of the French state weren’t the same thing as the interests of French landed property; that all kinds of property ought to be protected by the state. The new government, representing everybody, should be able to set the rate of interest – which in private transactions was set by the creditors – because that government represented the majority of the lenders to the public coffers, who were French citizens. That way, the government would stand a good chance of getting France back on to an even keel, and of placating the creditors.

Second, and of greater significance, Sieyès argued that the debt belonged to everybody, and not only those – the monarch and propertied class – who actually contracted it. And this ‘everybody’ included future generations. Until this point, the abstract notion of the ‘state’ was very much tied to the personality of particular rulers; think of Louis XIV’s famous dictum, ‘The state, that’s me’. For Sieyès, the state should be viewed like ‘a species in natural history. The individual grows, withers and dies; the species endures’. States were more than the people who personified them, more even than the living citizenry. They had a continuous existence. Only with this new conception of the state could there be proper responsibility for the public debt. Sieyès gave a new name to his civil species: he called it the nation. The rest is history.

Sieyès’ invention is coming undone, and the culprit, ironically, is public debt. A few years ago, writing in the London Review of Books at the time of the debates around the prospective Constitution for the EU, the political theorist David Runciman argued that Europeans were badly in need of a new Sieyès. Given the present sovereign debt crisis, analogous to that which spurred Sieyès into action, it’s clear that that need is now greater than ever before.

Ben Holland

Published inPolitical theory

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