The Criticism of the Third-World Debt and the Revision of Legal Doctrine
Columbia University - Center for Law and Economic Studies
Wisconsin International Law Journal, Vol. 13, p. 421, 1995
Columbia Law and Economics Working Paper No. 389
This piece develops a normative moral and political argument in favor of constraints on to duty to repay sovereign debt under circumstances in which full repayment is incompatible with the practical conditions of individual and collective self-determination. I develop the argument in the context of the international debt crisis of the 1980s. But both the substantive ideas and the method of argument should have value for the sovereign debt controversies of today, following the worldwide economic and financial crisis of 2007-2009.
The argument of the article develops in four stages. In the first part, I consider the established arguments against debt repudiation. Here, I seek to show how traditional, narrowly tailored economic arguments about the unfeasibility of debt repudiation fail to account for the difficulty of outright denunciation unless placed in a broader political perspective. The explanatory approach which that perspective requires leads to a normative political and legal argument about constraints on the duty to repay that concerns the second part of the article.
The second part of the article develops a normative moral and political argument in favor of constraints on the duty to repay sovereign debt. The central argument is that full and timely repayment of the sovereign debt is incompatible with the practical conditions of individual and collective self-determination. Not only the debt, but also the financial and economic relations that generated the debt, threaten the practical requirements for democracy, in all its forms of national autonomy and collective-self-government.
The third part of the article explores the extent to which the ideas discussed in part II should take legal form. My aim here is less to argue for a particular solution to the third-world debt problem than to examine through the lens of that issue the translation into law and legal thought of the emergent approach to individual and collective freedom discussed in Part III.
The fourth part of the article turns from substance to method, examining the implications of the experience studied and of the arguments presented for the understanding of doctrinal innovation: how it does and should occur. I argue that contemporary legal analysis has ample reason to persist in the cumulative weakening of rigid distinctions between legal and non-legal argument. Law is about society, its institutions and ideals. Lawyers, lawsuits, courts and judges are a small part of the picture. Here I argue, implicitly and much against the grain of American traditions of legal thought: vision above content; content above method; method above process, propriety and role.
Number of Pages in PDF File: 51
Keywords: Sovereign Debt Crisis, Restructurings, Default, Special Resolution Regime, International Law, Comparative Law, Legal Reform, Doctrinal Innovation, Institutions, Institutional Reform, Latin American Debt Crisis, International Organizations, IMF, Bretton Woods, Democracy, Development, Nation
Date posted: December 10, 2010 ; Last revised: December 15, 2010