Origins

War, National Debt, and the Capitalized State

in Debt as Power

This chapter argues that the key to understanding debt as a technology of power is not just to appreciate that modern money is largely created as debt by commercial banks but to point out that the production and allocation of money is privately owned. It examines how debt became capitalized by organized power and finds its genealogy rooted in war, the national debt, and the capitalized state of England. While the birth of the Bank of England can be traced to the scarcity of money debates of the seventeenth century, the ultimate reason for its creation was not the Hartlibian improvement of society but to finance war against Europe's most powerful ruler, Louis XIV. The key development occurs with the creation of the Bank of England in 1694 and the innovation of a funded long-term national debt capable of being serviced by the ever-growing regressive taxation on the public.

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