Contrary to popular belief, public debt is a relatively recent phenomenon. It is indeed essential to distinguish between the debt of a private individual—be he a prince, king, or emperor—and that incurred by society as a whole. Under the Ancien Régime, the royal treasury and the kingdom’s treasury were often conflated. Debt was then considered a personal obligation. This accounting confusion was even championed by the mercantilists, who measured the nation’s wealth by the king’s personal treasury.

The true birth of public debt coincides with that of the modern nation-state, a time when individuals, as subjects or citizens, recognized a transcendent entity—the state—capable of issuing debt securities in their name. From the outset, this instrument has therefore been closely linked to trust in political power.

Borrowing for War

For a long time, the dynamics of public debt followed a relatively simple pattern: a cycle of war and peace. States went into debt to finance extraordinary expenditures, particularly conflicts, and then paid off their debts during peacetime, driven by economic growth or inflation. The examples are well known: British debt exceeded 150% of gross domestic product (GDP) after the Napoleonic Wars, while France’s debt exceeded 200% following the two world wars.

Since the 1970s, a major transformation has been taking place. Developed countries are now incurring debt on a sustained basis… in peacetime. Deficits have become structural, averaging nearly 3% of GDP in the countries of the Organization for Economic Cooperation and Development (OECD).

This shift raises a central question: why do governments continue to accumulate debt in the absence of exceptional shocks, and what are the consequences?

Public debt, a strategic lever

My work focuses specifically on shedding light on the origins of this debt as well as its effects. Regarding the causes, I have shown that the accumulation of public debt can result from economic inefficiencies linked to social conflicts or political strategies. Debt is not merely a financial instrument: it can become a strategic lever for those in power.

For example, a politician’s reputation for competence—particularly their ability to “manage” debt—is only valuable if the problem persists. By completely resolving the debt issue today, they would partially deprive their future actions of justification. There is thus an incentive to let debt accumulate, rather than pay it off once and for all.

A tool for social regulation

On another note, debt can also play a role in managing internal social tensions. A leader may have an interest in shifting the conflict outward—for example, toward international creditors—in order to reduce internal divisions, particularly during pre-election periods. This “diversion” mechanism was observed, for example, during the Greek crisis, when Alexis Tsipras’s government heavily politicized the conflict with the infamous “Troika,” helping to rally domestic support in the face of external pressure.

Beyond its causes, public debt profoundly transforms how economies function. A widely accepted idea, particularly since Henning Bohn’s work in the late 1990s, is that sustainability depends on how governments respond: if they raise taxes or cut spending as debt rises, then its trajectory remains under control.

Governments Less Sensitive to Debt Than to Interest

My research suggests that this assessment needs to be qualified. In practice, governments react less to the stock of debt than to its cost—that is, the interest burden. This distinction is crucial, particularly in the current context where a rise in interest rates appears difficult to avoid, given the massive investment needs ahead—whether for the energy transition or rearmament. Such an environment is likely to lead to more restrictive fiscal policies.

But an overly strong reaction can, paradoxically, produce the opposite effect of what is intended. It can trap the economy in an unstable dynamic, characterized by sharp fluctuations in the debt-to-GDP ratio and increased uncertainty about the future trajectory. This is what I have called the “danger of fiscal rules”: attempting to discipline debt excessively can, in reality, weaken the economy.

An extreme example of this is provided by Romania, then a member of the Eastern Bloc with a communist economy under Nicolae Ceaușescu. In the 1980s, the regime imposed drastic austerity measures in order to fully repay the foreign debt. While the goal was achieved in 1989, the economic and social cost was considerable. This episode illustrates that an excessive reaction to debt can have profoundly destabilizing effects in the long term.

A Moral and Religious Framework

However, reducing public debt to a mere contractual mechanism or a macroeconomic variable overlooks an essential dimension: its moral significance. My recent work suggests that, since at least the 1970s, developed economies have entered a new regime in which public debt far exceeds its original function of financing deficits.

It has become a central instrument for regulating capitalism, shaping both public policy and collective expectations. In this sense, it must be understood as a “total social fact,” to borrow Marcel Mauss’s expression.

But this centrality is not solely due to its economic or institutional effects. It also rests on the representations associated with it.

Indeed, debt mobilizes a deeply rooted moral and religious imagination. To be in debt is to be at fault. In the Abrahamic traditions, sin is conceived as a debt to be repaid—to the point that the two notions merge, as Saint Ambrose (339–397) put it: “What is debt, if not sin?” The obligation to repay is thus not reduced to mere restitution: it implies reparation, sometimes atonement, which exceeds in value the sum originally owed.

This connection between debt, fault, and liberation is particularly evident in the biblical tradition. One of its most striking expressions is that of the Jubilee: every fifty years, it was prescribed to free the slaves, cancel debts, redistribute property, and let the land lie fallow. This legacy continues to inspire certain contemporary positions: since John Paul II, several popes—as was again the case in 2024—have thus called for the cancellation of public debts, particularly those of the poorest countries, on the occasion of Jubilee years.

A Guilty Society?

This mindset has not entirely disappeared. It continues to shape, often implicitly, contemporary discourse on public debt. Debt is frequently presented as a collective fault, justifying austerity policies or the inability to act. The indebted society thus becomes a guilty society, summoned to exercise self-discipline. From this perspective, debt is not merely an economic tool: it organizes the very functioning of capitalism itself. By imposing obligations over time, it shapes behaviors—fiscal discipline, political trade-offs—while stabilizing the system and limiting its scope for transformation.

Breaking free from this logic requires shifting our perspective. It is not a matter of denying the economic stakes of debt, but of breaking with the idea that it is primarily a fault. Other ways of thinking exist. As Felwine Sarr notably points out, certain African traditions invite us to think about public debt differently: not as a burden of guilt but as a bond, a relationship, or even a lever for collective transformation. My current work is moving in this direction.

This article is published in partnership with the Cercle des économistes as part of the Best Young Economist Award, for which the author was a finalist.

Maxime Menuet, Professor of Economics, Researcher at GREDEG (Université Côte d’Azur, CNRS, INRAE)

This article is republished from The Conversation under a Creative Commons license. Read the original article.
 

THE CONVERSATION

Since January 2022, Université Côte d’Azur, through its Science and Society department, has joined the online news outlet “The Conversation.” The goal is to highlight the work of our research teams in providing accurate and reliable information that contributes to public discourse.

The Conversation is an online media outlet and a non-profit organization. Its model of collaboration between experts and journalists is unique: sharing knowledge, giving researchers a voice in public debate, and shedding light on current events through reliable, research-based expertise.
theconversation.com

SUBSCRIBE!

To follow The Conversation’s experts daily, sign up for the newsletter.
theconversation.com/fr/new