This author, along with many other liberal commentators, brings up the issue of the legitimacy of some sovereign debts, specifically, those incurred by dictators. This is good. However, I think if one can widen one's focus a bit to see debt as merely one important weapon in the arsenal of class rule, then one should question class rule rather than merely some debts. There have long been creditors and debtors, but until more recent times with the strengthening of the capitalist class, debts have frequently been forgiven when societies saw their harmful effects (see this).
Under the growing power of capitalist One Percents versus the 99 Percent, the former have long since legalized the enforcement of debts of individuals through the use of contracts. Capitalist ruling classes have succeeded through their organs of indoctrination to sanctify contracts--they must be honored regardless of disastrous social consequences. When debtors failed to honor their contract obligations, capitalists through their control of the state have enforced these contracts when necessary with the use of force. In the past debtors were thrown into jail or workhouses; nowadays they take away their possessions and homes and often threaten their jobs. Under capitalism contracts are very useful for the rich and powerful. As Howard Zinn explained:
To protect everyone's contracts seems like an act of fairness, of equal treatment, until one considers that contracts made between rich and poor, between employer and employee, landlord and tenant, creditor and debtor, generally favor the more powerful of the two parties.As Dearden noted, entire nations have been treated little differently, although sometimes the use of force is waived by using other means of retribution--trade sanctions, blockades, etc. Under the recent capitalist stage of neoliberalism, large financial institutions have aggressively pushed loans onto governments using whatever means necessary. (See Confessions on an Economic Hit Man by John Perkins) Many liberal critics such as Dearden are questioning the legitimacy of huge debts incurred by dictators and some other illegitimate governments.
We have also seen a similar operation within many Western societies directed against consumers through the use of creative mortgages to buy houses, by pushing credit cards onto everyone, student loans, etc. With wage increases being suppressed and consumption aggressively encouraged, many people succumbed to these influences. As a result, we have the economic crisis we are witnessing today nearly everywhere. Dearden touches on this with the following statement:
The truth is that the world economy is not in crisis because of debt. It is because too many have too little to buy what has been created. Without a stronger consumer base the capitalists have no reason to invest in making more commodities and creating more jobs. How are they going to realize a profit if few can afford to buy what is produced?But, worst of all, we have seen large financial institution engage in reckless gambling using the new financial instruments they created and permitted under neo-liberalism. When they lost their bets they forced governments to bail them out. Now they are forcing austerity measures: meaning cutbacks in education, health, and welfare of citizens all, of which, are accompanied by the loss of jobs.
Therefore, shouldn't we question the social arrangement of capitalism rather than merely loan obligations incurred by dictators? Should not an economy support and sustain societies rather than individuals or classes of individuals? Are we not social animals who have evolved under arrangements of mutual obligation, commitments, and support? If so, why should we be burdened with a system than serves only a few?