Sustainability of Debt

death scythe

For economies with fractional reserve-generated fiat money, balancing the budget is characterized by an exponential growth D(t) ≈ D0(1 + r)t of any initial debt D0 subjected to interest r as a function of time t due to the compound interest; a fact known since antiquity. At the same time, besides default, this increasing debt can only be reduced by the following five mostly linear, measures:

(i) more income or revenue I (in the case of sovereign debt: higher taxation or higher tax base);

(ii) less spending S;

(iii) increase of borrowing L;

(iv) acquisition of external resources, and

(v) inflation; that is, devaluation of money.

Whereas (i), (ii) and (iv) without inflation are essentially measures contributing linearly (or polynomially) to the acquisition or compensation of debt, inflation also grows exponentially with time t at some (supposedly constant) rate f ≥ 1; that is, the value of an initial debt D0, without interest (r = 0), in terms of the initial values, gets reduced to F(t) = D0/ft. Conversely, the capacity of an economy to compensate debt will increase with compound inflation: for instance, the initial income or revenue I will, through adaptions, usually increase exponentially with time in an inflationary regime by Ift.

Because these are the only possibilities, we can consider such economies as closed systems (with respect to money flows), characterized by the (continuity) equation

Ift + S + L ≈ D0(1+r)t, or

L ≈ D0(1 + r)t − Ift − S.

Let us concentrate on sovereign debt and briefly discuss the fiscal, social and political options. With regards to the five ways to compensate debt the following assumptions will be made: First, in non-despotic forms of governments (e.g., representative democracies and constitutional monarchies), increases of taxation, related to (i), as well as spending cuts, related to (ii), are very unpopular, and can thus be enforced only in very limited, that is polynomial, forms.

Second, the acquisition of external resources, related to (iv), are often blocked for various obvious reasons; including military strategy limitations, and lack of opportunities. We shall therefore disregard the acquisition of external resources entirely and set A = 0.

As a consequence, without inflation (i.e., for f = 1), the increase of debt

L ≈ D0(1 + r)t − I − S

grows exponentially. This is only “felt” after trespassing a quasi-linear region for which, due to a Taylor expansion around t = 0, D(t) = D0(1 + r)t ≈ D0 + D0rt.

So, under the political and social assumptions made, compound debt without inflation is unsustainable. Furthermore, inflation, with all its inconvenient consequences and re-appropriation, seems inevitable for the continuous existence of economies based on fractional reserve generated fiat money; at least in the long run.

Activism and Militancy: Empire of the Sands. Note Quote.


Negri writes:

In the post-modern era, as the figure of the people dissolves, the militant is the one who best expresses the life of the multitude: the agent of biopolitical production and resistance against Empire […] When we speak of the militant, we are not thinking of anything like the sad, ascetic agent of the Third International […] We are thinking of nothing like that and of no one who acts on the basis of duty and discipline, who pretends his or her actions are deduced from an ideal plan […] Today the militant cannot even pretend to be a representative, even of the fundamental human needs of the exploited. Revolutionary political militancy today, on the contrary, must rediscover what has always been its proper form: not representational but constituent activity.[…] Militants resist imperial command in a creative way. In other words, resistance is linked immediately with a constitutive investment in the biopolitical realm and to the formation of co-operative apparatuses of production and community.[…] There is an ancient legend that might serve to illuminate the future life of communist militancy: that of Saint Francis of Assisi. Consider his work. To denounce the poverty of the multitude he adopted that common condition and discovered there the ontological power of a new society. The communist militant does the same, identifying in the common condition of the multitude its enormous wealth. Francis in opposition to nascent capitalism refused every instrumental discipline, and in opposition to the mortification of the flesh (in poverty and in the constituted order) he posed a joyous life, including all of being and nature […] Once again in postmodernity we find ourselves in Francis’s situation, posing against the misery of power the joy of being. This is a revolution that no power will control – because biopower and communism, co-operation and revolution remain together, in love, simplicity, and also innocence. This is the irrepressible lightness and joy of being communist.

Once again it is particularly difficult to find any ideas that bear any relation to classical Marxism in the extract above. For Negri, the militant [activist] becomes an individualist who confronts the capitalist system in a “creative” way and who draws his own revolutionary strength from his or her own very uniqueness and his or her capacity to identify with the conditions of the masses. On top of this, the hero of this type of militancy is St. Francis of Assisi! In reality, genuine Marxist activists are able to place themselves at the vanguard of the working class, not only because they have won the trust and respect of workers through their ideas but also because they are able to connect with the political consciousness of the working class at a particular given moment and raise it towards the accomplishment of the socialist transformation of society. These types of activists never act on the basis of their own individuality, but know how to use it by linking it up with the individualities of other activists and put it at the service of the revolution. The political activist is in no way some sort of dour killjoy, but is the driving force of a whole class, the proletariat.

For the activist, being part of the proletariat also means not being afraid to represent it. On the contrary, each day of the activist’s life is dedicated to advancing the working class in its quest for the final victory. The Marxist activist’s revolutionary duty is to organise and lead, without ever becoming separated from his or her own class. Lenin, in a critique of Rosa Luxemburg’s conception of party organisation – which he saw as a vanguard based on revolutionary discipline – says the following in “Left-wing communism, an infantile disorder” about how the discipline of the proletariat’s revolutionary party can be maintained.

First, by the class-consciousness of the proletarian vanguard and by its devotion to the revolution, by its tenacity, self-sacrifice and heroism. Second, by its ability to link up, maintain the closest contact, and – if you wish – merge, in certain measure, with the broadest masses of the working people – primarily with the proletariat, but also with the non-proletarian masses of working people. Third, by the correctness of the political leadership exercised by this vanguard, by the correctness of its political strategy and tactics, provided the broad masses have seen, from their own experience, that they are correct.

All this has little to do with the ideal kind of activist described in the pages of Empire. In conclusion, we have a good suggestion for bringing Negri’s theory face to face with stark reality. What would happen if Negri’s “activist” went to a factory gate, or any other workplace at the beginning of the day’s shift, and invited the workers to “have fun” and “disobey”, in order to subvert the established order? We do not claim to know the conditions of every single workplace or factory, but we are certain that in those places that we know and where we often go to give out leaflets and organise campaigns, the level of alienation and fatigue caused by waged labour under the control of the capitalists is very high. Activists going to workers and proposing to them the type of activity that Negri suggests would be lucky to get away with less than a scratch! Again, once petit-bourgeois theories are confronted with the reality of the situation, they show their completely bankrupt nature.

Conjuncted: Hobbes’ Authoritarianism (2)


Hobbes built up a theory of most thorough going collectivism but a rationale of such a collectivism was the peace and the security of the person and property of the individual, which gives a tinge of individualism to the theory of Hobbes. He even allowed his individual the right to resist his Sovereign if the latter attacked the individual’s life for whose preservation the contract was entered into. In certain contingencies the individual could withdraw the allegiance to the Sovereign who was not supporting the individual’s life. “The obligation of the subjects to the Sovereign is understood to last as long, and no longer, than the power lasteth, by which he is able to protect them.” A man has a right to disobey his Sovereign if the latter commands to “kill, wound or maim himself; or not to resist those that assault him; or to abstain from the use of food, medicine or any other thing without which he cannot live.” An individual has the right to refuse allegiance to a deposed Sovereign. Hobbes is an individualist, since his entire system is based on the individual psychology of fear and self-defence. In so far as Hobbes equates the right of resistance of an individual to his capacity to resist, the right equally vanishes against the strength of the Sovereign. The right of the individual to resist the Sovereign if the individual’s life is endangered implies that the individual is the judge as to when his life is endangered. On the Hobbesian view of human nature, the individual will misuse this right and resist the Sovereign as often as he can. This will destroy what Hobbes wanted to create i.e. unlimited absolutism of the Sovereign.


Hobbes always considered hereditary absolute monarchy as the best form of the State. He does consider the possibility of elected monarchy, under which the ‘people is sovereign in property’, but not ‘in use’. Hobbes always maintained the distinction between the natural and the artificial State. He distinguished between the ‘commonwealth by acquisition’ and the ‘commonwealth by institution’; the former being based on natural force and the latter on voluntary subjection to an elected Government. Hobbes stresses on the fact that the law of nature is obligatory not only on the basis of Sovereign command but also as delivered in the ‘word of God’. Hobbes mentions solicitude for the eternal salvation of the subjects. With dual intentions, Hobbes becomes an interpreter; of the Bible in the first place to make use of the authority of the scriptures themselves. He does criticize religion in his most important three discourses. We have seen how he answers the question, “on what authority does one believe that scriptures are the word of God?”


Hobbes turning to history is filled with philosophic intentions. Hobbes reiterated the fact that it is history and not philosophy that gives man, prudence. The study is concerned with the historicity of its material; that the clear knowledge of application of the norms which obtain for human actions is the knowledge of actions, which have taken place in the past. Philosophy seeks general precepts, while the study seeks the application and realization of the precepts, the conditions and results of those precepts.

Through history a reader is to be taught which kinds of aims are salutary or destructive. History is often taken up to remedy man’s disobedience. It can be stated that the development, at least in the 16th century, justifies the assertion that the reason why philosophy turned to history is the repression of the morality of obedience.

Contribution to political philosophy:

The cardinal contribution made by Hobbes in the field of political philosophy was his doctrine of sovereignty. The concept of sovereignty had begun to develop in the hands of Machiavelli, Bodin and Grotius, but Hobbes was facile princeps to give it the shape and content, which sovereignty holds today. He was one of the first to see that the idea of sovereignty lay at the root of any State. His Leviathan aroused the indignation of almost all-important interests in England. His Erastianism (adherence of the supposed doctrine of Erastus. Subordinating ecclesiastical to secular power), was distasteful to the Church. Devoted churchmen found it absolutely intolerable that the Church was a mere department of the State. The monarchists, who adhered to the belief in the Divine Right of Kings, did not appreciate his secular theory based on a social contract. The Royalists on the other hand did not like the Hobbesian view of sovereignty because it justified the de facto Government of a successful dictator as much as that of a legitimate monarchy, and justified the absolutism of a Parliament as much as that of a King. Hobbes thought of the Divine Right of the State as compared to the Divine Right of the King. The parliamentarians viewed with scorn the opposition of Hobbes to mixed Government and constitutional checks. Although his political philosophy was little noticed in England, it created a stir on the continent. While Machiavelli had separated politics from religion and morals, Hobbes not only kept them separate but subordinated religion and morals to politics. Hobbes scored over Machiavelli in his exaltation of the State; for Machiavelli was never so absolutist as to declare that the laws of nature and the laws of God were to find their expression only through the interpretation and the will of the sovereign. The sovereignty of Hobbes was indivisible and unlimited. Hobbes knew that the basis of moral and legal right was reason, but to Hobbes, this reason was the reason of the sovereign expressed through his will only. Hobbes was an individualist in so far as he believed in the natural equality of men. His cardinality as a political philosopher lies in his deriving logically from a mass of free and equal individuals the concept of an omnipotent State. The brilliance of Hobbes was that he turned the theory of early liberalism to the defence of unlimited absolutism at a time when absolutism, born of Divine Right of Kings, was quickly losing its theoretical applications and practical implications.


The Hobbesian theory of social contract implies that man brings with him to the social contract ‘rights’ of the State of nature, which are devoid of social function, social recognition and hence they could only be powers. Hobbes proceeds to evolve his civil society on the basis of social contract, which suddenly transforms the chaos of the State of nature into the ordered civil society. Social contract is itself made in the State of nature. The Hobbesian sovereign is the representative of the people. But what guarantee is there that this ‘representative’ of the people will ‘represent’ the people by following public opinion and looking after the public welfare. John Locke attacked Hobbesian social contract according to which, when men quitting the State of nature entered into society, they agreed that all of them but one should be under the restraint of laws; but that he should still retain all the liberty of the State of nature, increased with power and made licentious by impunity. This is to think that men are so foolish that they take care to avoid what mischief polecats and foxes, may do them, but are content, nay, think it safety, to be devoured by lions. Hobbes builds up his theory on the basis of pleasure-pain theory and evolves a master slave relationship. Hobbes regards matter and motion alone as real. His dogmatic materialism lives him little scope for freedom of human will. He is neither fully utilitarian, nor fully an idealist.

The unsoundness of Hobbes’ State of nature was a State of war of all against all in which the cardinal virtues are force and fraud. So, its clear that Hobbes’ man is anti-social. How could such a man go against his own  nature and suddenly enter a State not of war, but of peace, a State in which force and fraud are deliberately set aside, a State which is founded upon the ideas of right and justice, and in which acts of wrong and injustice are put under the double ban of public disapproval and of positive prohibition? With Hobbes, the self-interest of an individual before the contract is suddenly changed into his duties towards the sovereign after the contract. If men are not all force and fraud, they do not need an absolute sovereign; if they are; they cannot render passive obedience to him for all time after the contract. With Hobbes, it was Absolutism or Anarchy. The only remedy for the good behaviour of men was the coercive power of the sovereign. Hobbes failed to realize that there were other characteristics besides the fear of law and punishment, which kept men from relapsing into anarchy, viz., reason, religion and public opinion based on the faculty of reason. The Leviathan of Hobbes essentially states, ‘This State is a necessary evil, an instrument to defend men against their savage instincts, not to achieve a free and a progressive civilization’. Hobbesian position is that in the case of sovereign, might is right. 

Hobbes was a materialist and a rationalist. His philosophy vindicated the absolute sovereignty of whatever Government happened to be in power. Hobbes believed that human nature was bad but he held that it could be rendered moral by the State, which must be preserved at all costs. It must be realized that Hobbesian State is authoritarian and not totalitarian.

Unlike the totalitarian system, it is based on contractual obligations. In his State, there is equality of all before law and there is no privileged ruling class. Unlike the totalitarian State, it insists on the outward conformity of the subjects to law and not inner conformity to opinions and beliefs. His State, unlike the totalitarian, does not swallow the individual.