Key Arguments

• He analogizes the nation to 'the tenant of a rich proprietor called the government, to whom it pays, for the use of the soil, a farm-rent called a tax.'
• When the government undertakes wars, armament changes, monuments, canals, roads, or railways, 'it borrows money, on which the taxpayers pay interest; that is, the government, without adding to its productive capacity, increases its active capital⁠—in a word, capitalizes after the manner of the proprietor of whom I have just spoken.'
• He insists that once a governmental loan is contracted and interest fixed, 'the budget cannot be reduced,' because every conceivable way to reduce it—capitalists relinquishing interest, government bankruptcy, repaying the debt with another loan, reducing expenses, or making expenditures reproductive—is either a denial of property, politically fraudulent, logically circular, 'impossible,' or excluded by hypothesis.
• Thus, 'finally, the taxpayers must submit to a new tax in order to pay the debt⁠—an impossible thing. For, if this new tax were levied upon all citizens alike, half, or even more, of the citizens would be unable to pay it; if the rich had to bear the whole, it would be a forced contribution⁠—an invasion of property.'
• He concludes that 'a budget, instead of ever diminishing, must necessarily and continually increase' and expresses surprise that 'the economists, with all their learning, have failed to perceive a fact so simple and so evident' or, if they have, 'neglected to condemn it.'
• This whole analysis presents public debt and ever‑growing taxation as a systemic effect of proprietary logic applied at the level of the state, mirroring the impossibility of the proprietor’s infinite capitalization.

Source Quotes

Everybody sees it, everybody acknowledges it; but nobody seems to understand the primary cause.24 Now, I say that it cannot be otherwise⁠—that it is necessary and inevitable. A nation is the tenant of a rich proprietor called the government, to whom it pays, for the use of the soil, a farm-rent called a tax. Whenever the government makes war, loses or gains a battle, changes the outfit of its army, erects a monument, digs a canal, opens a road, or builds a railway, it borrows money, on which the taxpayers pay interest; that is, the government, without adding to its productive capacity, increases its active capital⁠—in a word, capitalizes after the manner of the proprietor of whom I have just spoken.

A nation is the tenant of a rich proprietor called the government, to whom it pays, for the use of the soil, a farm-rent called a tax. Whenever the government makes war, loses or gains a battle, changes the outfit of its army, erects a monument, digs a canal, opens a road, or builds a railway, it borrows money, on which the taxpayers pay interest; that is, the government, without adding to its productive capacity, increases its active capital⁠—in a word, capitalizes after the manner of the proprietor of whom I have just spoken. Now, when a governmental loan is once contracted, and the interest is once stipulated, the budget cannot be reduced.

Whenever the government makes war, loses or gains a battle, changes the outfit of its army, erects a monument, digs a canal, opens a road, or builds a railway, it borrows money, on which the taxpayers pay interest; that is, the government, without adding to its productive capacity, increases its active capital⁠—in a word, capitalizes after the manner of the proprietor of whom I have just spoken. Now, when a governmental loan is once contracted, and the interest is once stipulated, the budget cannot be reduced. For, to accomplish that, either the capitalists must relinquish their interest, which would involve an abandonment of property; or the government must go into bankruptcy, which would be a fraudulent denial of the political principle; or it must pay the debt, which would require another loan; or it must reduce expenses, which is impossible, since the loan was contracted for the sole reason that the ordinary receipts were insufficient; or the money expended by the government must be reproductive, which requires an increase of productive capacity⁠—a condition excluded by our hypothesis; or, finally, the taxpayers must submit to a new tax in order to pay the debt⁠—an impossible thing.

Long financial experience has shown that the method of loans, though exceedingly dangerous, is much surer, more convenient, and less costly than any other method; consequently the government borrows⁠—that is, goes on capitalizing⁠—and increases the budget. Then, a budget, instead of ever diminishing, must necessarily and continually increase. It is astonishing that the economists, with all their learning, have failed to perceive a fact so simple and so evident.

Then, a budget, instead of ever diminishing, must necessarily and continually increase. It is astonishing that the economists, with all their learning, have failed to perceive a fact so simple and so evident. If they have perceived it, why have they neglected to condemn it? Historical Comment.⁠—Much interest is felt at present in a financial operation which is expected to result in a reduction of the budget.

Key Concepts

• A nation is the tenant of a rich proprietor called the government, to whom it pays, for the use of the soil, a farm-rent called a tax.
• whenever the government makes war, loses or gains a battle, changes the outfit of its army, erects a monument, digs a canal, opens a road, or builds a railway, it borrows money, on which the taxpayers pay interest;
• the government, without adding to its productive capacity, increases its active capital⁠—in a word, capitalizes after the manner of the proprietor of whom I have just spoken.
• Now, when a governmental loan is once contracted, and the interest is once stipulated, the budget cannot be reduced.
• Then, a budget, instead of ever diminishing, must necessarily and continually increase.
• It is astonishing that the economists, with all their learning, have failed to perceive a fact so simple and so evident. If they have perceived it, why have they neglected to condemn it?

Context

Later part of Section III, where Proudhon extends his critique of private capitalization to government borrowing and the public budget, arguing that public debt under property makes rising taxation inevitable.