The Real Threat of National Debt

There has been a lot of talk in the U.S. recently about national debt, balancing the budget, and reducing the federal deficit.  Many Americans think that our debt has become just too high.

It is true that national debt can undermine the long-term stability of a country.  I don't think many people would try to argue that debt is a good thing.  However, to what extent is our national debt simply a problem endemic to the U.S., and more narrowly, of irresponsible governance?  How does U.S. national debt compare to other countries?

The answer to the last question is, it's high, but certainly not the highest.  About 35 other countries have national debts that exceed the U.S.  Furthermore, world debt, as a whole, has been steadily increasing.

The increasing debt of any single country is merely a symptom of a global phenomenon that is inherent to the capitalist world system.  Manufacturing, the base of the industrial capitalist economy, has for the last few decades been characterized by a crisis of overproduction, decreasing profitability, and overall stagnation.  This, in turn, is a result of the general contradictions of the capitalist system:  in particular, the drive to increase production through economies of scale and investment in technology, while simultaneously limiting demand through the containment of wages and employment rates.

To counter the crisis of overproduction, capitalist interests have been forced to turn to the state (the life-support system of capitalism) to create demand through deficit spending, most especially on a permanent arms economy.  Thus, worldwide state deficit spending and rising national debts are a result of the inability of capitalists to sustain the profitability of their enterprises.


So, the capitalists can't maintain a high rate of profit, and what do they do?  They continue to engorge themselves with wealth, essentially by leaching money from everyone else's pocketbooks.  We all drown in debt to finance the 38% increase in wealth of the handful of the world's wealthiest.  That is where all this debt is going!!

Will balancing the budget and cutting government spending solve all our problems?  No.  Because the root of the problem is overproduction and stagnation within the manufacturing sector.  Cutting spending will just further cripple the already ailing economy... which may or may not be a bad thing.  Clearly real systemic change is needed.  If hitting rock bottom is necessary to give impetus to this change, then perhaps spending cuts will ultimately help move things in the right direction.  It will just be very painful for most of us.