The return of the order of the debt

Faced with the Covid-19 pandemic, political and banking authorities seemed to free themselves from budgetary concerns. But now that the constraints linked to the pandemic are easing, those of debt will come back to the forefront.

In a previous work taken from his thesis, Benjamin Lemoine returned to the constitution of what he calls thedebt order. From the 1960s, a group of French political and technical decision-makers gradually deprived the state of its own financing circuit, to finance themselves on the markets. Since at least the 2000s, a discourse has been spreading telling citizens that the public debt must absolutely be repaid, to the detriment of social budgets. Benjamin Lemoine refers in his new work to this mechanics of shaping opinion by the ideology of debt (pp. 8-9). This moralizing narrative on public debt, which obscures the dependence of public authorities on financial markets, was particularly reinforced in the context of the European debt crisis at the dawn of the 2010s, beyond France.

Democracy disciplined by debt maintains that, despite the political positions taken, at the time of the crisis of COVID-19, aimed at suspending the usual rules of budgetary constraint, the return to order of the debt is not far away. According to him, everything would suggest that the future economic and budgetary orientations of the public authorities will quietly return to the path of budgetary austerity, after the period, sumptuous on the budgetary level, of the COVID.

The moment COVID: a parenthesis rather than a turning point

Benjamin Lemoine starts from the gap between the rigorist discourse at the dawn of the 2010s on public finances and the discourse activated in the context of the crisis COVID. In the latter, there is a relaxation of the budgetary constraint () temporary (p. 13). This is notably materialized by the European recovery program, Next Generation US, which suddenly made acceptable the long-discredited idea of ​​making magic money trickle into economies. Despite a difference in orientation between the management of the 2010 crisis and that linked to the pandemic, he affirms that the order of debt is back ten years later on the political agenda. The resilience of the dramatizing discourse of debt echoes the work of distinguished British political scientist from the University of Warwick, Colin Crouch, who highlighted the resilience of neoliberalism in the aftermath of the 2008 economic crisis.

One of the interests of Lemoine's work is that it fits into a constructivist perspective. This means that it puts the politically hegemonic vision of public debt into perspective, by showing that the latter has not always constituted a public problem. He also returns to several historical occurrences of XXe century, where the order of debt was not yet hegemonic. If, in 2016, Benjamin Lemoine evoked the genesis of this story on the debt, he shows here how the first calls to order from decision-makers are taking shape, already criticizing budgetary obsessiveness whose management COVID would have been the carrier.

One of the strengths of the work is therefore to show how the most dominant economic beliefs in the political and economic fields are reproduced. The order of debt was not imposed naturally, but through the action of safeguards which defend the return to economic harmonies specific to the current economic and financial order. Among these safeguards, he mentions the nobility financial state, constituted in particular by the representatives of the ministries of finance, central banks and Treasury. All these censors alternative economic imaginaries aim to call order to overly impetuous political representatives. It well illustrates the way in which neoliberalism presupposes the active cooperation of dominant segments of the state in the artificial maintenance of a hypothetical market order (the difference from ultraliberalism).

But the originality of the work is also to focus on the nuisance capacity (p. 20) of the holders of the public debt, the creditors, on the policy, by delving into archives and by interviews with public and private financial actors. the image of the American political scientist merited by Yale University, Robert Dahl who asked in the 1960s who governs the city of New Haven, Benjamin Lemoine takes seriously the political power of creditors, who co-produce public policies. Professionals who live from and for debt, about which little is known, contribute according to the author to impose a structural agenda of reforms legitimizing a neoliberal order and financialization of society (p. 126), therefore doing politics through the financing possibilities of public authorities. This reminds us that any financial relationship is fundamentally a power relationship.

Thus, the analyzes of Benjamin Lemoine once again intersect those of Colin Crouch who brought about the concept of post-democracy. The latter refers to the idea that states labeled democratic produce decisions which do not conform to the wishes expressed by citizens at the time of elections, but to the interests of an economically dominant elite. This echoes the thesis defended by the French political scientist who deals with politics confiscated by debt. It is confiscated in that the politics of the ballot boxes would replace the politics of the holders of the state debt (what he calls bondholding class): Regardless of the outcome of universal suffrage, the life democratic no longer affects the life of debt on the financial markets, which will follow its course (p. 16).

He discusses how French governments, depending on political changes, continue to pursue economic policies to reassure the financial markets, without succeeding in dismantling the established debt order. In this way, financial market players would participate in the evaluation of public policies, distinguishing credible political regimes from the economically (dominant) point of view from immature, expansionist and blameworthy governments.

Benjamin Lemoine shows the concordance of wishes between financial state nobility and bondholding class (p. 29-63) who work to defend the market neutrality (p. 102), disembed the economy and politics, and reduce the possibilities of pursuing economic and budgetary policies that are out of step with what the financial markets are likely to appreciate.

Another world would have been possible

Benjamin Lemoine's constructivist perspective is not fatalist. In fact, he seeks to show that the situation COVID contained elements supporting the idea that it was possible to pursue economic policies differently. For example, he says that the monetary authorities (p. 65-113) have taken certain decisions breaking with economic orthodoxy, such as the repurchase of debts of member states on secondary financial markets, or the maintenance of interest rates at low levels, if it is not negative, including for states with high public debt. These decisions, which temporarily suspended their dependence on private finance, a constantly growing dependence, re-enter a longer historical perspective, since the 1960s even if it is not for the good ideological reasons:

Central bank interventions in spring 2020 were not politically justified to mount a Keynesian recovery program as was the case after the Second World War. The intervention remained circumstantial, proportionate to the inflation objective, and above all urgently called for by financial instability (p. 86).

He pursues: () never the very structure of financialization, nor the perilous entanglement of sovereign debts with this speculative casino are called into question (p. 97) in the post-COVID.

But Benjamin Lemoine suggests several times that this story in fact only reflects one possibility of debt management among others. He recalls in particular the example that he had extensively analyzed in his work taken from his thesis:

In the post-war period, state financing was essentially non-market, secure, and included in public control of the economy: the sustainability of debts was not a subject of concern (p. 58).

For Benjamin Lemoine, the return to non-market Treasury financing is a desirable solution, even making possible the redeployment of the social state that he calls for. For him, debt must be at the service of a socially just redistribution of wealth.

In all cases, the solutions he puts forward echo broader social currents which, from the anti-austerity movements to the Yellow Vest movement, advocate the reaffirmation of the sovereignty of public authorities vis-à-vis private financial and economic actors, to To fight against financialization of society and what he calls shadow democracy (p. 57).

In this sense, Benjamin Lemoine's work is a work of critical economic sociology, seeking to discredit dominant economic beliefs, to promote alternative orientations. Bringing private finance into line must then be based on political will.

Some ideas for extending

If we would have liked to know more about the sociology and heterogeneous profiles of debt title holders, Benjamin Lemoine's work is fruitful, because it questions more broadly the financialization of public policies and the controlled deterioration of the social vocation of the State.

We will propose some extensions of his study. We will have understood the work of accreditation by a number of public and private actors to activate the dramatizing narrative of the debt, and give strength to the order of the debt. However, we know that this order is not fundamentally immutable. It could precisely be interesting to work on disestablishing moments in relation to the ideology of debt, when governments take actions that do not conform to the will of the financial markets (as was the case of Ecuador in 2008).

If moments of quasi-rupture with the debt order are rare (or barely visible), we could also consider the work of accrediting alternative and non-neoliberal visions of the economic order. Dominated in the field of economic reflection, heterodox actors are nevertheless a beautiful object of study that remains to be explored. Since heterodoxy is not only limited to economists, the citizen debt audit collectives which have emerged throughout Europe bear witness to the desire of groups of citizens and activists to re-embed the economy in the political debate.

Finally, the work of Benjamin Lemoine is put into perspective with the political sociology of European economic policies, in that the order of debt is co-produced at several levels of government. According to the distinguished German political scientist at the Max Planck Institute, Fritz Scharpf, who analyzes the possibility of a (return) of the social state in Europe, the problem of the legitimate economic and financial order is linked to the fact that we have constitutionalized (and in fact sanctified) a vision of the economy in the European Treaties. Therefore, it could be interesting to provoke a societal debate on the de-constitutionalization of economic principles at the European level. This seems essential to make alternative economic visions legitimate (or even questionable).