Commentary on Political Economy

Thursday 14 July 2011

INTEREST OR INTER-EST (The Fracture of the State-Plan)

For what else is “sovereign debt”? It is an “obligation” owed by the whole “society” to certain of its “individuals”. Sovereign Debt is an obligation incurred by the “totality” of the community to a “sector” of itself, to a “fraction” of the community….and that is why sovereign debt is the “Fracture” of the State-Plan. What is at stake here is the “separation” of the interests of “society” as re-presented by the “State-Plan” from the interests of the various “fractions” of society, the “particular” or “individual” interests that are owed this “obligation” by the State.

As it turns out, the “obligation” on the part of the State is in the legal shape of “bonds” that yield a certain “interest” to “bond holders”.

And this is where the “fracture” is: the fracture of the State is reflected in the fracture of society between those who will “pay” the interest and those who will receive the interest paid. The vital thing to remember is that the “bond holders” now demand that the State respect and observe its “obligation” to pay the interest on the debt. But this “obligation” is a “legal” obligation and, as such, can only be “enforced” by the State. So what the State is being required here is to respect an “obligation” that “separates” and “divides” its “society” or “community”, an obligation that sets one class of citizens against another class for the sake of maintaining BOTH the “unity” of the “comm-unity” AND the “inter-est” (being in common) of its “fractions”!

It is quite obvious that this circle simply cannot be squared. Because here the “morality” of the State respecting its “debt obligations” under its own laws to pay “interest” to one “sector” or “fraction” of its society is simply incompatible with the very financial and economic survival of the State. And if the State cannot survive “financially and economically”, if the State cannot survive “fiscally”…then it becomes a non-State, it becomes a “failed State”….and the “fracture” of the State becomes the “factionalism” or “fractionalism”, the “separation”, the “non-inter-est” of “society” or of the “comm-unity”.

“Sovereign debt” indicates that point at which the “individual interests” of the members of “society” become incompatible with the “inter-est of the comm-unity”. The failure of the State is the fracture of society.

But the most telling point of all is that the State itself in a capitalist society finds its only rationality and inter-est in the “individualism” of its members! And this is the very “interest” (the debt obligation) that is “fracturing” and threatening the very existence of the State – the debt interest that is bankrupting the State!

THIS is “the fracture of the State-Plan”. This is the dilemma that the State is called to resolve: either it pays the “interest” and so fractures the “comm-unity” or it upholds the “inter-est” to maintain the hope of uniting the community.

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