To misquote Benjamin Franklin and others, the only certainties in economic life are debt and taxes. Among the themes of political struggle, fights over debt (demands from creditors to be paid in the terms they expect, and from debtors to be relieved from unfair burdens) and taxes (who should pay them and how should the resulting revenue be spent) have always been central.
I mentioned in a comment at Crooked Timber recently, that Pro-debtor politics is always in competition with social democracy, and a couple of people asked for more explanation.
What I mean is that dissatisfaction with an unequal and unfair society can be made politically effective in a couple of different ways. One is to focus on the unfair burden of debt and to change rules to reduce the penalties that can be levied on debtors.
Politics of this kind can broadly be described as ‘populism’. Although this is an even more debatable term than most in politics, I’ve never seen a populist movement that wasn’t pro-debtor and anti-banker.
Moderate versions of this kind of populism include more generous bankruptcy laws. The most extreme form involves moratoriums or jubilees, suspending or scrapping the collection of debts.
But even in this extreme form, pro-debtor populism doesn’t involve any kind of challenge to the capitalist order. Rather, it seeks a kind of moral regeneration, akin to that undergone by Dickens’ Scrooge (I’m riffing off Orwell (on Chesterton, IIRC) for this example).
By contrast, a focus on taxes leads to a demand for progressive taxation, falling heavily on the rich and used to finance both monetary redistribution and the provision of public services. That’s essential to both liberalism (in the standard US use of the term) and social democracy.
Since pro-debtor populism and egalitarian social democracy draw on the same general base of popular support, it’s natural to see them as competitors. This competition is symbolised by the emergence of Donald Trump, wealthy tax dodger and serial bankrupt, as the leader of a global populist upsurge. But it can be demonstrated more systematically. At the national level, there’s long been argument about the failure of any kind of socialist (or even seriously social democratic) movement to emerge in the US. One explanation that hasn’t to my knowledge been discussed, at least in the way I’m thinking about it is the competitive appeal of pro-debtor populism, from William Jennings Bryan to The Grapes of Wrath.
Comparison of US states allows statistical analysis of the kind social scientists are more comfortable with. The relevant paper here is by Grant and Koeniger showing that (i) redistributive taxation and bankruptcy exemptions are negatively correlated;
I’m hoping to do a followup on anti-austerity politics, particularly in Europe, but this will take a fair bit more time.