A Free Nation Deep in Debt ― The Financial Roots Of Democracy

When an anonymous English pamphleteer wrote in 1719 that he preferred "a free Nation deep in Debt, rather than a Nation of Slaves owing Nothing," he was, according to MacDonald (a former investment banker from Oxford, England) expressing the emerging idea that there was a connection between political freedom and public debt. He echoes this idea in arguing that bond markets are not politically neutral, but have an intimate relationship with democracy that can be traced back to the earliest times of human history. He begins by discussing the roots of finance in the customs of primitive tribes and explains how cycles of "barbarian" invasions into large civilizations let to periodic reintroductions of these tribal customs into the civilizations of classical antiquity. He then moves to Medieval Italy, following the connections between politics and public finance through the French Revolution and the Napoleonic wars, explaining how public finance required political freedom and also gave an advantage over autocracies without it. Annotation c2006 Book News, Inc., Portland, OR (booknews.com)

James Macdonald was an investment banker for many years. He lives in Oxford, England.