Governments, just like persons, acquire debts. Some of these debts are contractual: Country A borrows a sum from Country B, thereby acquiring an obligation to repay the sum (usually with interest) by some date. Other debts are reparational: Country A impermissibly harms Person C, thereby incurring an obligation to compensate the victim of A’s tortious conduct.
Although wealthy nations like the United States typically meet their financial obligations, not all nations are so fortunate or conscientious. Such countries, many of which are left to chafe under the backbreaking debt of prior regimes, usually have two options: devote massive portions of already impoverished national budgets to make interest payments (to say nothing of repaying the principal); or repudiate the debts as incurred by an illegitimate predecessor. The latter option invites some interesting policy questions, many of which balance a debtor nation’s short-term fiscal needs against its long-term economic stability. However, I’m more interested in a philosophical question: when, as an ethical matter, is a government liable for the debts of its predecessors?
At the extremes, this question seems unproblematic. No one would hold modern Egypt liable for the Hebrew slavery, but France is still on the hook for debts incurred under Chirac’s government. But many cases are especially difficult. Must developing countries pay debts incurred by spendthrift dictators or modern governments compensate victims of generation-old genocides?
My answer is fairly simple: a government is liable for the debt of a previous government if and only if the present regime is the same state as that which incurred the debt. The modern Egyptian state is not the same one as that which oppressed the Hebrews millennia ago, but the current French government is, despite some changes, the same as that under President Chirac. But though the answer is simple, its contours and limits are somewhat less straightforward. For determining when a modern state is the same as one previously in existence, requires that one have an account for when one state ends metaphysically and another one begins. And since the personnel, size, structure, and rules of governments change all the time, drawing this line may be somewhat difficult.
Consider, then, the following theory: a state is metaphysically identical to a prior iteration so long as the changes necessary for transforming the old state to the new state were internally consistent with the old state’s own rules. If, for example, the United States amends its Constitution—even in some major respect—such an alteration is consistent with the rules governing the state itself, since Article V of the Constitution itself provides for this contingency. However, if the President declared himself no longer beholden to Congress, and his popularity and power were sufficient to back up this authority, the present United States would cease to exist and be replaced by a new state altogether, albeit one that may possess several similarities to the previous one.
What does this mean in practice? First of all, it would be as illegitimate to demand nations to repay debts incurred by prior (but metaphysically noncontinuous) states as it would be to hold one nation responsible for the liabilities of another. As a result, several difficult cases become somewhat clearer: on the one hand, a dictator who racks up massive debt does not pass this on to the democratic government that expelled him from power. On the other hand, a nation cannot divest itself from its financial obligations simply by electing a new president to replace the old and incompetent one. Perhaps counterintuitively, West Germany’s government was not obligated to pay reparations to the families of Holocaust victims (though it may still have proven an instance of good public policy); however, (at least based on my understanding of the power transition there) the current Serbian government is liable for the crimes of the Milosevic regime.
While I believe this account of the metaphysical continuity of states has considerable explanatory power, it does have some limits.
First of all, my account must be limited by some sort of materiality requirement. In other words, an internally inconsistent change in the nature of a state must be material to constitute a metaphysical break with its prior incarnation; otherwise, metaphysical continuity could be negated by an administrative agency interpreting an environmental statute too broadly.
Secondly, if my principle were actually implemented globally, it might invite woefully indebted nations—perhaps at the behest of their government leaders—to revolt and change the state in such a way as to allow it ethically to repudiate its national debt. I concede that philosophically, nothing exists in my account to prevent this. But just because a nation is not obligated to act in a certain manner does not imply that there is no reason to do so as a practical matter. A new state in such circumstances should probably choose to adopt the obligations of the previous state in order to demonstrate economic soundness (much as the nascent United States did after replacing the Articles of Confederation). Otherwise, just as the Constitutional Framers feared, the new state may find itself hard-pressed to find future creditors.
My account of the metaphysical continuity of governments may not always yield intuitive outcomes, nor does it always cohere with the pragmatic best interests of either debtor or creditor nations. Nevertheless, I believe it offers a principled philosophical account of governmental debts—one that is superior to the ad hoc analysis that typically governs this field.