Public debt, the debt incurred by sovereign states, has surged from 75 percent of global GDP in 2008 to surpass 100 percent of global GDP, as states responded to the consequences of the global financial crisis and the COVID-19 pandemic. Now, across Asia, Africa, and Latin America, where public debt spiked to a fifty-year high in the wake of COVID-19 and 60 percent of low-income countries were already on the brink of debt distress, the Russian invasion of Ukraine has fueled a further surge in debt.¹ Rising interest rates, soaring food prices, and growing energy costs are exacerbating debt burdens, pushing countries from Sri Lanka and Pakistan to Egypt, Angola, and Tunisia to the brink of default and crisis.²

Public debt was indispensable in containing the spiraling aftershocks of the collapse of Lehman Brothers in 2008 and ameliorating some of the devastation wrought by the pandemic. But a resurgence of inflation around the globe and the specter of sovereign debt crisis in the periphery raise questions about the excessive accumulation of debt. The contradictions of sovereign debt have riven the economics profession into the ranks of hawks and doves — the proponents of sound finance arguing for fiscal rectitude, on the one hand, and advocates of functional finance urging the conscious deployment of the state’s financial power to further democratic priorities on the other.³

The two sides of the debate mirror the Janus face of public debt. It is a temporal bridge between future revenues and current commitments of the state. It straddles the intersection of state and markets and of national and global economy. In its role as a financial instrument for funding the state, public debt is fundamentally a means of wealth accumulation. But it is also a political institution. Stefan Eich, in his exposition of the political history of money, underscores how its pervasive use has shaped the nature of the state and the citizen’s relation to it by tying public credit to notions of temporality and secular change. It is a form of intergenerational binding, where the promise of the future is bound to current choices, posing problems of legitimation that parallel those of written constitutions.⁴ As a social construct, sovereign debt embodies trust and violence, reciprocity and coercion, private property and a public good, economic power and political authority. Lying in what Joseph Vogl terms the contested “zone of indeterminacy,” where state and market are entwined in a relation of power, public debt has the potential to be a source of civic cohesion — or entrench the power of dominant elites.⁵