Marx(ism) and Public Debt: Thoughts on the Political Economy of Public Debt

Abstract

This essay aims at providing the basis for an approach to public debt consistent with Marx’s theory of capitalist economy. The starting point for this theory is the value theory, and it upholds that public debt is a specific type of fictitious capital and that the latter is the outcome of a dialectical development in the substantiation of different types of capital. It is argued that fictitious capital validates the current valuation in capitalism, allocating a crucial role to the so-called public debt. Along these lines, the essay links public debt to Marx’s theory of the capitalist State, outlines its historical and logical role in the reproduction of capital, details its own features as a type of fictitious capital, clarifies the way the modern tax system bolsters division amongst social classes, and debunks the rise in public indebtedness as the root of the current crisis of world capitalism, as well as conventional therapies based upon orthodox fiscal adjustments.