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Giuseppe Eusepi

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Public Debt

An Illusion of Democratic Political Economy

Giuseppe Eusepi and Richard E. Wagner

Over the past decades, economists have witnessed with growing uneasiness their failure to explain the ballooning of public debt in most countries. This book provides an alternative orientation that explains why concepts of public debt that are relevant for authoritarian regimes are not relevant for democratic regimes. Using methodological individualism and micro-economics, this book overcomes flaws inherent in the standard macro approach, according to which governments manipulate public debt to promote systemic stability. This unique analysis is grounded in the writings of Antonio de Viti de Marco, injecting current analytical contributions and formulations into the framework to offer a forthright insight into public debt and political economy.
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Giuseppe Eusepi and Richard E. Wagner

The book’s theme is an elaboration and refinement of the early-twentieth century orientation toward public debt that Antonio de Viti de Marco set forth. As the book’s title asserts, public debt is a misnomer for a democratic scheme of political economy. To declare a democratic polity to be indebted is akin to observing a grin without a cat, to recall Dennis Robertson’s view of Keynes’s liquidity preference theory. While the entire book develops this claim, this chapter explains how standard macro theories of various types are more myth than reality, and with the mythology obscuring the realities of the domination-subordination relationships that suffuse democratic regimes.

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Political economy and the supply of macro guidance

An Illusion of Democratic Political Economy

Giuseppe Eusepi and Richard E. Wagner

This chapter explores just who it is that supplies the macro guidance that is envisioned in the various macro theories. The answer to this question is of great significance for the political economy of public debt and fiscal policy. Where the two extreme points of answer regarding this question are some macro czar as an analytical convenience and ‘the people’ as a democratic platitude, this chapter takes a Machiavellian-inspired tack whereby the few dominate the many.

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Engines, ecologies and economic systems

An Illusion of Democratic Political Economy

Giuseppe Eusepi and Richard E. Wagner

This chapter asks the reader to think whether an economy in its entirety is better construed as an engine or as an ecological system. By treating it as an engine, economists can pretend to be mechanics. Once an economy is recognized to be a complex ecological system, the mythology of global governance gives way to the reality of multiple sources of local governance. For democracies, there is no person who can reasonably be described as making choices for the regime. Instead, choices emerge out of processes of interaction among collections of people.

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Budgeting and public debt within a system of cooperative democracy

An Illusion of Democratic Political Economy

Giuseppe Eusepi and Richard E. Wagner

This chapter establishes an analytical benchmark of a democratic system in which political outcomes reflect genuine consensus among the participants. This benchmark traces to Antonio de Viti de Marco’s construction of contrasting models of democratic action. The theory of a wholly cooperative democratic regime provides a benchmark against which to examine actual democratic processes and arrangements. In this respect, and looking ahead, de Viti recognized that democratic regimes were not passive reflectors of individual preference orderings because they entailed relationships of domination and subordination.

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Public debt within systems of monopolistic democracy

An Illusion of Democratic Political Economy

Giuseppe Eusepi and Richard E. Wagner

This chapter modifies the benchmark condition of a cooperative democracy to incorporate a realistic treatment of democracy where there exist islands of political power within a relatively passive sea of generally modest democratic participation. This chapter explains that descriptions of democracy as entailing self-governance are typically mythical or ideological formulations that promote the purposes of those who work with such notions. Public debt becomes a form of shell game, the success of which depends on most people looking somewhere other than where the real action occurs, and which entails a shifting of cost from dominant to subordinate groups as covered by an ideology of self-governance.

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Giuseppe Eusepi and Richard E. Wagner

This chapter explores how public debt is a troubling practice for republican and democratic regimes because of its ability to corrupt the language and practice of political economy. For instance, the idea of contract is a perfectly good and sensible concept to apply to the private ordering of economic interaction. When that term is extended to public ordering outside the hypothetical construction of a cooperative state, it becomes a piece of ideology that obscures the role of public debt in promoting the interests of politically dominant groups within society.

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Edited by Geoffrey Brennan and Giuseppe Eusepi