Do we need a public debt?

1 April 2012 by Eric Toussaint , Damien Millet

The answer is yes. A State must be able to contract loans in order to improve its population’s living standards, for instance when it carries out major work of public utility and invests in renewable energies. These public loans could be used to move from an economy geared to the needs of car drivers to one that gives priority to public transport, to shut down nuclear plants and replace them with renewable sources of energy, to renovate, upgrade or build from scratch public buildings and social housing that would require less energy and be equipped with state-of-the-art facilities.

In any case, even though we definitely do not wish to stay in a capitalist economy, the economic dynamics of the system demands that in a macroeconomic perspective the surplus produced should be anticipated through monetary creation. Selling goods at a profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. is only possible if there is more money around after than before production starts. A capitalist economy without debt does not make sense. |1| Particularly in times of recession, public spending (which alone can generate added collective wealth) depends on added tax revenues from the richer fringes of the population, on cancelling illegitimate debts and on contracting public loans under citizens’ control.

The point is to define a transparent policy for public loans. The proposal we put forward is as follows:

  1. the aim of the public loan must be a sustainable improvement in living conditions;
  2. the public loan must part of a redistributive policy that reduces inequalities.

Therefore we propose that financial institutions, corporations and very rich households be legally obliged to buy state bonds with either no interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. or cost-of-living indexation, for amounts that are proportional to their incomes and their assets, while the other members of the population can buy public bonds with a guaranteed positive return (say 3%) higher than the current inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. rate. Thus if the annual inflation rate should reach 3%, the interest rate actually paid by the state would be 6%. Such measures of positive discrimination (similar to those used to fight racial oppression in the US, castes in India or gender-based inequalities) will make it possible to move towards more tax justice and a less unequal distribution of wealth.

Cancelling illegitimate debt is a necessary but insufficient condition. Other measures that improve the lot of the majority are essential if Europe is to come out of the crisis with better prospects. The discussion is open.

Translated by Christine Pagnoulle in collaboration with Vicki Briault

Damien Millet (professor of mathematics, spoke-person for CADTM France) and Eric Toussaint (PhD in political sciences, president of CADTM Belgium, member of the Scientific board for ATTAC France). Damien Millet and Eric Toussaint recently edited La Dette ou la Vie (Aden-CADTM, 2011), which received the award for best political book in Liège in 2011.

Latest book: Damien Millet & Éric Toussaint, AAA, Audit, Annulation, Autre politique, Le Seuil, Paris, 2012.


|1| Jean-Marie Harribey, De la création monétaire et des décisions arrêtées lors du sommet européen des 8-9 décembre 2011; Attac, « Le mystère de la chambre forte », Le Piège de la dette publique, Comment s’en sortir ?, Les Liens qui libèrent, 2011, p. 161-188.


Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France. He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc. See his bibliography: He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.


Damien Millet

professeur de mathématiques en classes préparatoires scientifiques à Orléans, porte-parole du CADTM France (Comité pour l’Annulation de la Dette du Tiers Monde), auteur de L’Afrique sans dette (CADTM-Syllepse, 2005), co-auteur avec Frédéric Chauvreau des bandes dessinées Dette odieuse (CADTM-Syllepse, 2006) et Le système Dette (CADTM-Syllepse, 2009), co-auteur avec Eric Toussaint du livre Les tsunamis de la dette (CADTM-Syllepse, 2005), co-auteur avec François Mauger de La Jamaïque dans l’étau du FMI (L’esprit frappeur, 2004).

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