From Debt Dirigisme to Debt Markets in France and India
Today, the method by which governments borrow has been normalized to a narrow set of market-based techniques. There is only one legitimate method: to hang out its shingle like any market agent and try and sell its bonds. This chapter uses two historical c
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From Debt Dirigisme to Debt Markets in France and India Anush Kapadia and Benjamin Lemoine
Our contemporary wisdom on debt management is by now familiar. In 2014, the International Monetary Fund (IMF) published and circulated their Guidelines for Public Debt Management.1 The script for international bureaucracies aimed at making market devices for managing debt the standard, legitimate, and unimpeded method by which the state should be financed. A state should hang out its shingle like any market agent and try and sell its bonds. Yet for much of the postwar period, the states of major economies from India to France used “non-market financing channels” to raise debt. These were legal mandates on banks and other financial institutions to either purchase government debt or, equivalently, deposit cash at the Treasury. Our present neoliberal common sense, illustrated by IMF instructions, sees this set of non-market techniques, which
A. Kapadia (*) Humanities and Social Sciences, Indian Institute of Technology, Bombay, India e-mail: [email protected] B. Lemoine CNRS, IRISSO, Paris, France e-mail: [email protected] © The Author(s) 2020 N. Barreyre, N. Delalande (eds.), A World of Public Debts, Palgrave Studies in the History of Finance, https://doi.org/10.1007/978-3-030-48794-2_15
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were tightly embedded in political authority, as “distorting,” unsound practices, uncompetitive and non-modern arrangements, in sum “pitfalls to avoid.” This now-standard narrative assumes that there is only one good way to achieve sound credit. This chapter challenges this idea by charting a paradigm shift in the techniques and politics governing sovereign debt that occurred in two seemingly incommensurable countries: France and India. We analyze how a system of sovereign debt management that was embedded in political authority and administrative rules and control, what we call debt dirigisme, was dismantled and why it has been forgotten and made unthinkable. Cutting across the developed-developing divide, market-based techniques of debt governance came to be extremely widespread between the 1960s and 1990s. What accounts for similar techniques of debt management to crop up in such diverse locales? One answer is that France and India are less divergent than they might appear, at least at the level of statist techniques marked by an elite, technocratic dirigisme. A second is that both nations, albeit to differing degrees, exposed themselves to neoliberal globalization, both ideologically and institutionally. This chapter traces the establishment, crisis, and subsequent transformation of debt management techniques in France and India in order to provide two distinct entry points into a world historical shift. In trying to assess the respective historical weight of ideological and institutional pressures being brought to bear on the French and Indian debt management systems, it is important to recall the fact that administered, non-market techniques for managing debt actually worked well,
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