Money on the Left speaks with Edward Jones Corredera, author of Odious Debt: Bankruptcy, International Law, and the Making of Latin America (Oxford University Press, 2024).
What are fallen tyrants owed? What makes debt illegitimate? And when is bankruptcy moral? Odious Debt shows how Latin American nations have wrestled with the morality of indebtedness and insolvency since their foundation, and outlines how Latin America’s forgotten history of contestation can shed new light on seemingly intractable contemporary dilemmas.
With a focus on the early modern Spanish Empire and modern Mexico, Colombia, and Argentina, Odious Debt explores how discussions about the morality of debt and default played a structuring role in the construction and codification of national constitutions, identities, and international legal norms in Latin America. Ultimately, Corredera reveals how Latin American jurists developed a powerful global critique of economics and international law which, in rejecting the political violence promulgated in the name of unjust debt, continues to generate pressing questions about debt, bankruptcy, reparations, and the pursuit of a moral world economy.
Corredera is Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law and Lecturer in History at Spain’s National Distance Education University.
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Transcript
This transcript has been edited for readability.
Scott: Edward Jones Corredera, welcome to Money on the Left.
Edward Jones Corredera: Thanks, Scott. Big fan of the show. Thanks for having me.
Scott: We invited you to talk to us today about your recent book titled Odious Debt, Bankruptcy, International Law, and the Making of Latin America. To start us off, we usually like to ask our guests to tell our audience a little bit about themselves, whether personally or professionally, about their background. In this case, how did your life history lead you to start thinking about the history and politics of debt in Latin America?
Edward Jones Corredera: I was born and raised in Madrid, Spain. I’m half Spanish and half English, and when the 2008 financial crisis hit and really started to bite in 2010, I found myself studying politics at the London School of Economics in London. I had always grown up with seeing cultural misunderstandings about Britain and in Spain and in Spain and Britain.
2008 really showed me that cultural ideas around economics really did matter—it wasn’t just sort of day-to-day anecdotal stuff where people from different countries travel and they don’t fully understand each other’s cultures. In this case, I just watched stereotypes about the country I’d grown up in turn into the basis for economic forecasting. It might be useful to remember the use of the term “PIGS” to describe Portugal, Ireland, Greece and Spain during this period. That feels like a long time ago, but it happened. I also remember seeing weekly assessments of Spain’s debt-to-GDP ratio. In Spain, this turned into a sort of ritualistic health check on the nation’s future – it was studied religiously, and it was a strange way of assessing the economic health of a nation. My sense was that the history of economic ideas in the Spanish speaking world was not well understood, and it was particularly misunderstood in the anglophone world. I did a couple of jobs—I worked in Shanghai for a year—but I went back to academia to do a Ph.D. at Cambridge. The morning after I landed, I was jetlagged and woke up around 6am right as the Brexit referendum results were being announced. I was worried that Spain—which is to this day one of the most Europhile countries in Europe—would lose faith in in the EU. If it happened in Britain, could it happen in Spain? What if this support that you saw in Spain for the EU was just superficial? What if that right-wing sentiment redolent of Franco’s Spain could recover lost ground? So, this background certainly informed my doctoral thesis. I set out to write a history of the pursuit of a European federation in Spanish political thought. It was through that that I got into ideas of how credit was originally seen as a way to deliver peace in the Enlightenment.
But I asked around, I asked a bunch of people who knew more about this than me, where the story of credit and peace ended. All their answers seemed tentative. And I wondered how this story travelled into the 19th century. What was the link between this story and people like Saint-Simon, Kropotkin, and Marx? But instead of answering this question through theory, by looking at those figures, I studied the historical context that I knew best, and that was the Spanish-speaking world. The answer that I found in this context was that peace and credit were first replaced with war and debt before Latin American statesmen turned to international law to find peaceful resolutions to financial disputes. Nineteenth-century Latin American jurists, in short, sought to outlaw war over debt. They tried to apply concepts from bankruptcy norms to outlaw war over finance. So, this is a big argument in my book. I’m currently a bit more interested in exploring the more theoretical dimensions of this argument, so my next book is a global history of the idea of bankruptcy, which really picks up where this book leaves off. Here, I think my views on the way that bankruptcy was used and abused in 2008, which I would love to get your thoughts on particularly in connection with the rise of Modern Monetary Theory, and the history of Latin America are slowly coming together. Sometimes you have to study things that happened centuries ago to understand what happened 20 years ago.
My view is we don’t have a good historical understanding of the idea of bankruptcy. In 2008 people tried to bring down bankers. They targeted bonuses. But they really didn’t take aim at bankruptcy and the idea of bankruptcy reform. Elizabeth Warren’s message failed to cut through. But bankruptcy was the instrument that allowed Lehman Brothers to do what it did and to get away with it.
In the book I argue that bankruptcy laws really reveal who has the power to forgive and to forget. To shape bankruptcy rules is really to establish a hierarchy of contracts and promises. So, bankruptcy and debt, I say in the book, are mechanisms that expose, often with brutal clarity, who has the power to make or break a contract. Then, of course, this international projection of this principle has vast consequences. So how insolvency is then determined on a global scale, exposes what contracts or agreements apply when all other contracts are void.
To put that less academically, the way we deal with insolvency at a global level really tell us what bonds remain after all other contracts have failed. I think it’s an important time to tell this story. You know, I can feel myself getting older. I see crypto and AI bringing with it these new worlds, bringing with them a new lingo to talk about money and debt and new reference points. It’s important for our generation, if I can put in those terms, to talk about that particular aspect of 2008, which I think doesn’t feature prominently in the work of Adam Tooze and many accounts. That is the role of bankruptcy and the rise of the bailout state in the making of our world today.
Scott: You previewed a lot of what we’re going to be talking about. I want to begin to unpack each of those pieces.
Maybe to begin with the book itself, you can talk a little bit about your methodological approach, and that might be multifaceted, but I’m thinking in particular about the way that you foreground religion and even theology in the book. You make the case that secular histories, even if they’re dealing with religious pasts or theological pasts that just presume secularity, miss something really crucial about the way that money, debt, bankruptcy, politics, and war are constructed and experienced.
Edward Jones Corredera: Yeah, that’s right. It’s a great question and I don’t really think that a secular understanding of debt exists, as strange as that might sound. Let me first define how I think of the history of the term particularly again in this framework of comparing the Anglophone and the Hispanophone world. A very influential work in the history of economic thought is Craig Muldrew’s The Economy of Obligation. In it, he shows how debt worked in early modern England. He shows very clearly that debt really worked to satisfy the needs of the community. Muldrew studies the break from that model and the rise of the idea of the modern contract that led people to prioritise not the relationship to the community and how debt serviced those needs, but rather the relationship between lender and debtor.
I argue that this shift didn’t take place in the Spanish-speaking world. In the nineteenth century, debt remained the way to foster the well-being of the community. This can also be seen linguistically. In Spanish, deber, if you check contemporary dictionaries, still means the “obligation,” the duty to fulfill an obligation. There is no distinction between a financial obligation and any other type of obligation. So, the moral component of the term is quite strong. This is not necessarily replicated in English. You have duty, owing, and other such terms. Debt, or the act of owing, these words don’t really have the same connotation. So I’m really hoping that that will stimulate a further debate on linguistic elements of this word that we just take for granted, and that it will encourage others to study whether it means the same thing in different languages.
Language matters. What I tried to show in the book is the clash that arose when these two conceptions of debt came into contact, and the problem of having these two very different understandings of debt in the Anglophone world and the Spanish world, which I broadly characterized as Protestant and Catholic respectively. The problem was that most of the leading powers and lenders, most international lenders in the 19th century, were Protestant powers which had assimilated this contract-based view of debt. The new Latin American nations had to now gain recognition and enter a concert of nations based on a system of international law crafted by these powers, which propagated ideas of obligation that clashed with their own. With the rise of interventions in Latin America, we might say that the principle of just war and the sanctity of debt and its role in fulfilling the needs of the community collided.
People who know about this period will be familiar with gunboat diplomacy. But the Latin American response is not as well known: Latin American jurists contented that the use of violence undermined the sanctity of the contract, the sacred purpose of the debt which is, again, to fulfill the state’s obligations to the community. This discourse predates the rise of Marxism or even the entry of socialism into these debates. This is being formulated mostly through a language of international law, which is in itself very innovative.
At the beginning of the 20th century, in the aftermath of the 1902 Venezuela crisis, Luis María Drago, the Argentine jurist, criminologist, and journalist, and then foreign minister of Argentina, developed an argument around moral debt and moral bankruptcy, and said: What is the point of using force to push or coerce another nation into paying that debt? You’ll just erode that nation’s finances. And it’s not a zero-sum game. It’s not as if these other creditor countries desperately need these funds. It’s not like the people will go hungry if they don’t send boats over to reclaim these funds from us. So, what is the point of using force, if the nation that’s been attacked is then going to have to use its money on defense rather than on developing its industry, providing for its people, and thus growing its economy in a way that then allows it to repay the debtors?
In a way, the argument seems all too simple. But I think it’s worth sticking with it because it actually shines a very intense light on a lot of things that we take for granted in terms of the right of certain institutions and global institutions to try to teach, you know, in this punitive and condescending way, nations on how to approach questions of debt repayment and what today we call “sovereign debt.”
Scott: We started out with your own experience of the Eurozone crisis, but the premise of the book is us living in post-modernity or whatever we’re going to call it and having a horrible experience of Latin American debt in all kinds of asymmetrical, terrible ways. The conventional understanding of this is that these Latin American countries have spent beyond their means and they’ve borrowed from abroad because they don’t have the money to afford what they need. So, they’re kicking the can down the road. And look how irresponsible they’re being! They’re the PIIGS before the PIIGS. And, you know, what can we do?
Well, the IMF can restructure some things. But at the end of the day, this is decades, if not centuries worth of debt. It seems like an impossible problem to solve other than, oh, something ridiculous like, you know, a jubilee of complete debt forgiveness. But then what do we do about the poor creditors on Wall Street and in the City of London?
In any event, that’s the standard understanding that we have. How would you say that the history you’re uncovering and this different way of understanding debt in Latin America problematizes that seeming deadlock in which we’re caught?
Edward Jones Corredera: It’s a great question. It might be helpful to draw attention to the title of the book and this curious term, “odious debt,” which is so catchy as to seem sort of ill-defined and intuitive to everyone. But it actually means a very specific thing in international law.
The easiest way to think about it is this: Say, for instance, a dictator is removed from power and replaced by a democratically elected regime. The question then remains whether this new regime has to pay back the debts inherited from the previous regime. The term odious debt was coined by the Russian lawyer and scholar Alexander Sack in the aftermath of the Bolshevik repudiation of the Tsarist Russian debt. Sack argued that all those debts that had not been signed with the consent of the people or for their benefit were “odious”—and here he cited a number of Latin American examples and Central American examples and, of course, more contemporary examples from the beginning of the 20th century. But what I argue in the book is that by drawing attention to the Latin American aspect of this problem he actually caught the tail end of a longer story that dates back, like you said, over centuries.
And, you know, we can get into a debate around the nature of odious debts. A lot of people have drawn attention to the need to establish whether it’s the terms of the contract behind a loan that makes a debt onerous and odious, or whether it’s the regime that imposed a debt, and the despotic nature of this regime, that makes it odious. We can get into that.
But my point is that really this problem ought to be historicized by looking at its origins in Latin America and in the origins of international law, in the use of this strange idea of bankruptcy to ruin the reputation of the Spanish crown in Europe and to change what it meant to be a tyrant.
At the start of the process of independence, Latin American nations studied at the history of the Spanish Empire embedded in the law of nations. They want to achieve the recognition of their independence, and they want to avoid the fate that Haiti had. They don’t want to pay for compensation. They’re very sensitive to the question of debt in relation for recognition.
So, they try to avoid this by looking at the law of nations and looking at the terms and conditions very, very carefully. But the problem is that they encounter in this law of nations a reading of the history of Spain that they don’t recognize. So many of these statesmen had been military officials at the service of the King of Spain. Just a few years earlier, they had offered to lay down their lives for this crown. Now they’re reading about how this Spanish monarchy as this sort of tyranny that once oppressed Europe. So, they had to settle the question of whether the Spanish monarchy had been an “arbiter of piety”, or a guarantor of law and order, or a tyrannical regime. This really mattered because the question of what you owe to the Spanish crown, the question of what you owe to this regime, hangs on that definition.
So from the beginning, there’s this fascinating Latin American Colombian journalist that says Portugal and the Netherlands in the 17th century didn’t consider paying back Spain once they gained independence. In signing the Jay Treaty, the US promised to pay Britain a bunch of colonial debts, but it got away with not paying a lot of them. So, why are we considering paying back these colonial loans? What is this cultural and political bond that we have with this monarchy that keeps us connected, that keeps us wondering whether we should pay these loans? A couple of solutions emerged. Obviously, there’s the easy one, again drawing on Grotius’s understanding and international legal understanding of the Spanish tyranny, which is to say: Well, you can just default on these loans. They can be ignored because they’re tyrannical and the regime was tyrannical. But, of course, this isn’t quite so simple. Most officials were not indigenous peoples, they were creoles who had largely benefited from the Spanish colonial system. So, a lot of them noted that the king had never sought to oppress the Americans with these loans, that these debts were not owed to people across the Atlantic over in Spain, but they were owed to their brothers and sisters at home. They drew attention to the fact that Spain had been the handmaiden of Catholicism, and that they were, as one Mexican official put it, “the children of the conquered,” the conquerors, and those that were enslaved from Africa.
And then there was, of course, the more practical argument to this: wouldn’t default scare off foreign investors? This is a very typical argument of the time, to do with credibility and private property and this sort of thing. But it came up in surprising contexts.
For instance, we see Colombian slaveholders talking about the need to repay the Spanish crown because it’s important to maintain property rights and respect contracts that were signed under the Spanish monarchy, all in order to protect their property rights from reforms to slavery.
The weight of the history of foreign intervention soon overshadowed these earlier debates. Most instances of gunboat diplomacy by the US, France, and Britain will be based on unpaid claims to private creditors or to private businessmen in European or North American nations.
I should say at this point, in terms of sort of state formation, while these Latin American countries are discussing how to pay back Spain, they start to sign contracts and debts in London, which at this time is booming with money having just won the defeated France and Napoleonic Wars. There is a rush to invest in these Latin American bonds without much concern for where they might end up. Obviously, that’s not a recipe for success. So, the Spanish colonial story and the more familiar, British empire dominating this region through debt story, they interlink. The picture becomes even more complex when you realise that this is a region in the state of intense civil war, civil strife, and dealing with intervention. This means that you’re spending money on defense. And it’s also a region where it is really difficult to to consolidate your tax base. So basically, this is a situation where these countries just have to take on more and more debts.
By the middle of the century, interventions and civil wars reshape debates about foreign and domestic debt. In the 1860s, when Mexico postponed the repayment on the interest of its foreign debt, it didn’t exactly default – but it was punished as if it had.
Exploiting the situation the US was in during the Civil War, Spanish, French and British naval forces reaching the port of Veracruz in order to force Mexico, the liberal government in Mexico, to repay its foreign debts.
You can imagine Napoleon III looking at a map and seeing the North, the South, and Mexico. What if France could profit from a divided United States by invading Mexico? So, he uses his naval forces to topple the Mexican government and makes this Austrian archduke into the Emperor Maximilian I of Mexico.
But not satisfied with this insane imperial experiment, Napoleon—before the archduke even gets on the boat to sail to Veracruz—saddles then Ferdinand Maximilian with a bunch of crippling debts. So, the cost of the expedition, the cost of maintaining the court, the cost of the forces that you’ll need to sort of defend the new regime, that all has to be paid back by Maximilian with credit from French banks.
Maximilian hangs on for four years. He’s actually more liberal than the conservatives would like him to be. And he’s also more conservative than the liberals. And after four years, rebel forces manage to take back control and they decide to execute Maximilian.
The problem here is: What do you do with the debts incurred by this emperor? Technically speaking, Mexico would have to pay the debts negotiated by this emperor on its behalf. This is when we start to get a real reflection on what moral bankruptcy is and when it is legitimate to default—and a real reflection on the geopolitics and the fairness of global contracts.
That makes us think very differently, I hope, about the story that you outlined at the beginning, where it just seems like Latin Americans’ fiscal struggles were foreordained and had little to do with empire.
Scott: We keep talking about bankruptcy, but I want to give you the chance to retell this story once again, but make bankruptcy as a concept and as a legal instrument the protagonist of the story. You know, concepts and legal structures are not natural. They come from somewhere. They’re not born in a state of nature.
So, where and when does bankruptcy come from? To whom did it apply at first? How did it change over time? Also, how did this transformation between a kind of Catholic confessional backdrop for understanding debt give way to this more Protestant international law paradigm? What happens to bankruptcy in the course of that struggle and that transformation?
Edward Jones Corredera: Yeah, it’s a really interesting question. Again, I hope that history also allows us to question the operative terms we work with when thinking about debt and money. Because my sense is that the scientification of the language around credit ratings and all this stuff, which I started with, has sort of obscured this longer story, which had to do with law, religion, and bankruptcy.
You know, bankruptcy starts in what would be a recognizable form for us in the Middle Ages. It is set up in order to prevent debtors from absconding from a territory, fleeing the jurisdiction where their creditors are, where the loans have been signed. And it’s a really strange procedure that’s only available to merchants – though here I am speaking in very broad terms.
But there’s a big question here as to how we go from a world where only merchants can seek respite from being attacked and hounded by their creditors by appealing to this mechanism called bankruptcy to one where nations are invaded over default. How do we go from that world to one where, by the 19th century, the ideas behind bankruptcy are setting the terms of international relations? This idea of sovereign debt and all this stuff is not really based on a modern idea of scientific political economy. It’s really responding to earlier moral ideas of why you should fulfill a contract.
So, we might say that when bankruptcy went global, the shame associated with bankruptcy was globalized, but the rights were not. Now, how the religious element comes in here is interesting, not least because there’s also a civilizational strand to the way that a lot of this is discussed. In bankruptcy law in Europe, one way to deal with the punishment around non-payment was to put someone in a debtor’s prison. This was also a way to sort out bankruptcy. And in the nineteenth century, humanitarian interests, particularly led by religious groups in Britain, France, and the US led the way in the abolition of debtors’ prisons because they were seen as cruel institutions and a waste of human capital.
What the Latin American authors will say is: Civilization has gotten this far in your own countries and you’ve abolished these debtors prisons; and yet you seem to be putting us, entire nations, into these debtors prisons. It’s not the tidiest metaphor, but you understand what they’re getting to. They’re trying to say: Why are you applying that standard only at home? Why is it that a lousy merchant can just seek refuge behind this mechanism of bankruptcy and even avoid prison, whereas we get attacked and we have naval forces descending upon us in order to somehow have to pay these debts when it’s obvious that what is really happening is that you’re trying to advance imperial interests.
What ends up happening is that a lot of Latin American jurists find in this moral economy of bankruptcy a way to contest the abuses of international law. One of the ways that I think about this—again, not necessarily relying on a socialist paradigm—is whether the pursuit of a moral economy is compatible with the codification of international law. Whether you can really pursue a moral economy when international law is just a ruse for imperial interests.
Scott: Yeah, that’s fascinating. One of the things I think you were indicating here is a certain kind of hypocrisy. The European powers, by the time you get to the late 19th century and into the 20th century, they’re becoming much more reasonable and humane about their understanding of bankruptcy in the domestic sphere while turning the screws, so to speak, and being much more punishing internationally and in terms of imperial geopolitics.
This kind of reminds me of an interview that we conducted with the Senegalese economist Nongo Samba Sylla several years ago. He points out that—he’s interested in mostly French colonial monetary systems–in order to establish these systems, they are very much working with a kind of chartalist state credit understanding of money that they won’t then ideologically apply at home.
So, there’s a of disavowal or split consciousness or split ideology between the liberalism that’s being practiced at home versus what it takes to conduct imperial monetary politics abroad.
Edward Jones Corredera: Absolutely, yeah. I look forward to reading that and chasing that thread up. There’s no question that when it comes to a lot of ways in which debt and non-repayment is punished, this is an absolute story of hypocrisy. I really don’t think there’s another region in the world in the nineteenth century that entrusts as much of its fate to international law than Latin America. It is meant to be a moral code that is shared by the world at large. It’s heartbreaking to see how they try to play according to the rules and then they have no other option but to try to change the terms of international law, change the terms of engagement, to at least shame the more powerful into acting according to what they claim the laws to be.
This is where we get into more of the history of the US and US-Mexico relations, which in light of recent events we might want to discuss. I don’t know if you want to talk about the new vision of America that is emerging in the “Gulf of America” instead of the Gulf of Mexico. But, you know, in the end, really, the only way that a lot of these Latin American states can actually wield and impose these new norms around debt, moral bankruptcy, and unpaid claims is through revolution.
A lot of this also has to do with constitutional reform. One of the problems with Latin America during this period—and this I think connects to a lot of the broader post-colonial context—is that there are lots of changes in government during this time and you have regimes that are very quickly deemed tyrannical and corrupt. One government will come along and will try to democratize and reform the constitution and the constitutional order of a given nation. Part of the problem is that when you do that that sometimes it means breaching international debt terms or treaties because you might not agree with the terms imposed on your state by this previous regime. What we’ll see is this push and pull between foreign merchants in particular and European powers and the US where they try to push things towards arbitration. And Latin American lawyers will try to say: No, this has to be settled at home according to our constitutional order in a way that respects our actual constitutional order. However, it will be with the Mexican Revolution, which ended in 1920, which will really cement this understanding of sovereignty in the Americas. So, in the end, revolution was needed.
Scott: I have a question that’s a little bit embarrassing because it comes from my own lack of full understanding. We’ll see if you can help me out.
Clearly in the story that you’re telling, there’s plenty of injustice and domination to go around both in the Catholic world and in the Protestant world. Nevertheless, it seems as though you are more sympathetic to—or, at least, more curious about—the moral, ethical, and political possibilities that a certain kind of Catholic confessionalism makes possible. If I’m reading you correctly, it’s holding onto that Catholic influence that makes the Latin American discourse of debt, odiousness, and forgiveness possible. It enables something that a strictly Grotian, Protestant, international law and liberalism does not.
Am I reading you right? I’m not asking you to tell me whether you are a Catholic or a Protestant. I’m not asking you to say whether you’re more team one or team the other. But nevertheless, it does seem to me like there’s a little bit more wiggle room or some of the critical leverage that you see comes from this kind of remnant Catholicism. I’m curious to hear you to talk about it and maybe disentangle it a bit for me.
Edward Jones Corredera: Yeah, I mean, it’s a great question.
The way I thought about it was more that there is no reason really for a lot of these Protestant powers to have to think about how the Catholic world reflected on ideas of debt, justice, and fairness, because it could just impose its will and its views by force. This Latin American world was a Catholic space, that to some degree was self-enclosed, even though of course there was a lot of dialogue with Asia. One might think of the main square in Mexico City, where goods from China and the Philippines were exchanged as part of the global circuit of silver and silk. So, it wasn’t exactly a closed universe. But this was a universe that opened itself up to a new set of rules in order to enter into an international stage now fragmented into a series of nation states.
And the problem of fragmentation was a serious one. Latin American officials were also hoping to establish federations from the beginning, partly modelled on the US and partly modelled on the idea that since these nations shared a language, and a cultural background, they could stand stronger together. But many federative schemes fell apart, and this will create endless complications around debt repayment – how do you split up debts that were agreed to when you were part of the same state now that you’ve seceded?
In historiographical terms, religion is sometimes forgotten about in writings about the nineteenth century. Other times it’s treated as an unshakeable monolith, rather than a malleable and mutable set of principles. I was interested in tracking some of these religious principles that are there in the early modern period and seeing how they carry into the 19th Century and how they respond to Protestant ideas. I think there’s an interesting aspect here about how you write your own history, how you encode such a sophisticated past, like the ones that Latin America had, in the narrative of a nation state. You’re thinking of the Aztec Empire and framing this in the framework of the law of nations, civilisation, of a reading of history as told in terms of stages. You’re trying to establish what makes a ruler sovereign. So, if the Spanish usurped the Aztecs, does that mean that if you can find a descendant of the last Aztec ruler, that could you then just say: Okay, well we just bracket and ignore the Spanish period and claim that the true dynasty has returned to power. All of these things, which sound incredibly academic to us now, had real political weight. In fact, one of the most absurd stories is precisely the story of the Spanish heir of Moctezuma’s titles, who is crowned Emperor Moctezuma III in the Salon in Paris.
I thought of studying this history of the integration of the history of these two cultures through the lens of a clash of civilizations; it wasn’t really a political position I was taking on the question of Catholicism versus Protestantism. I intuitively thought: Okay, well, you know, we’ve lived through debates about secularisation and the clash of civilisations in the context of the Iraq War, and there’ll be recent sophisticated debates I can relate this to and which a lay reader would understand.
I actually found that literature to be absolutely terrible and completely useless at considering how two cultures try to understand each other. So, I ended up going further back in time and looking at the work of Peter Brown.
I’m not trying to hide from the question by taking shelter in academic debates. But I will say I do think that a lot of ideas to do with morality and Catholicism are possibly understudied and are seen as being a bit wooden.
One way to think about this, for instance, is with the idea of liberality. In one recent excellent account of liberalism, The Lost History of Liberalism: From Ancient Rome to the Twenty-First Century by Helena Rosenblatt, she talks about the transition in the history of liberalism from liberality, which is the ancient and to some extent early modern way of thinking about what it means to be liberal, to what today we would think of as liberal. In the ancient interpretation, liberality means grace, munificence, it signals the responsibility of those at the top for those below. She tracks how liberality gradually liberalism, a value system centered about the self and rights. I think it’s a very compelling account in that broader European setting.
But I’m now interested in looking at whether this transition, from liberality to liberalism, actually happens in the Spanish-speaking world. Because behind a lot of these ideas about beneficence, grace, mercy, pardons—which are the legacies of monarchies—there is a defense of a social order and a social structure that, to go back to the original point about bankruptcy, really puts the onus less on you and I being equals and us going to a fair, impartial court to deal with this as debtor and creditor, and more on structures of authority that legitimate these visions of forgiveness. I think that there’s a lot there to be learned from the Catholic world in terms of thinking about how pardons and forgiveness work in modern politics.
Scott: I’ve been thinking about this recently. How do you see the transition that you gesture to at several moments in the book from this Catholic moral discourse that’s infused with Protestantism and is trying to mediate relations in this international order to a more predominantly socialist and Marxist language that ends up, as you seem to suggest, taking over? How much does the old language get subsumed into the new language? How much of it gets lost? How much of it becomes unconscious? What is your sense of the transition to a more Marxist Latin American language of resistance and justice?
Edward Jones Corredera: I end the book gesturing towards that and, like you say, I mention it a few times as a bit of a provocation because I think oftentimes a lot of this story, not least in the way that you formulated it, is told through a socialist lens. This has to do with the rise of dependency theory and a number of other historiographical things that are rather arcane. But the point here was to frame why socialism comes about in this region and the native vocabulary that it employs. The Spanish word for redemption, which is both to “free oneself” and to “acquire redemption” was a particularly important term in the transition from a language of solidarity grounded in the law of nations and one based on socialism. I think it’s quite significant that a number of Marxist figures draw on this term in order to draw attention to the importance of freedom in this language of moral economy that’s inherited from the past. I would love to be able to work on this with other people because I sort of leave it there as a question mark, really as a way of saying: How do we then account for the rise of socialism in relation to this? I should also say that Hugo Chávez, Fidel Castro—a lot of these figures who we think of as politicians but not always as thinkers—wrote a lot about debt and freedom. Fidel Castro, in particular, has a number of texts about the IMF. He actually casts the IMF and the debt relationship that it has with Latin America as the continuation of imperialistic tyranny. But what’s quite interesting is that he sees the end of that that type of debt relation as the end of the process of independence going back to 1820s. So, he still encodes it in the political history I’m telling. So, I think there’s a lot of work to be done there in connecting socialist thought to this earlier anti-imperialistic strand of international law. I really hope that there’ll be opportunities to take this up and I’m trying to work with other scholars to build a bridge between these two narratives. Eventually, the language of socialism creates a new paradigm completely around the morality and justice of debts that has little to do with this earlier on.
Scott: So, there’s both a break and continuities, is essentially what you’re telling me, and there’s a lot more work to be done. I want to give you an opportunity to speak about your three case studies, which are placed in the middle of your book.
You’ve already talked a little bit about Mexico, but your three case studies are Mexico, Colombia and Argentina. Take them on in whatever order you wish. You can focus on one, and not another. I’ll just invite you to speak to what your different case studies are doing, because they offer examples of different strategies and different paths in this history.
Edward Jones Corredera: You have three very different understandings of what these new nations are. Mexico takes this matter religiously—pun intended. One of the most radical authors will be Servando Teresa de Mier, this radical priest who tries to show that the advent of Catholicism in the Americas predated the arrival of Spain. What he’s trying to say that we do not owe Catholicism to Spain. And he ends up in prison because of this.
There is a historical accounting exercise happening, where Mexican statesmen are trying to settle what exactly they owe Spain. They take this question very seriously in Mexico. And Mexico decides to agree most of the colonial debts that Spain had claimed. But as this debate is taking place, like many of the other countries, Mexico is relying on financiers in London to finance a push for independence. What happens is that when Mexico has to postpone the payment of its debts because of the London Panic of 1825, and later as a result of changes in its system of governance, both Spain and Britain start using diplomatic mechanisms in order to avoid the consequences of constitutional changes in Mexico. And there are a number of civil wars that make it really hard to keep track of Mexican government’s debts. Mexico will insist, through diplomatic channels, that its latest constitutional regime must be respected.
Gradually, the financial class learned that it was actually easier to have your debts paid by the Mexican government if they were registered as foreign debts than if they were registered as public debts. This leads to complications which, of course, are then exploited by imperial powers. By contrast, Mexico really tried to play by the rules of international law. Manuel Payno, a jurist and the author of the most famous Mexican novel of the 19th century Los bandidos de Río Frío, is the one in charge of settling these debts in Europe in the 1850s and 1860s.
Beyond the resolution of the story about Maximilian, which I’ve already mentioned, Payno developed a robust idea of what moral bankruptcy was, and when it was licit to default on loans. The criteria he established is that anyone who financed the rise of Maximilian I, any of those states or their financiers, their contracts with the Mexican government were now void and subject to renegotiation. And they would be renegotiated following the hard logic of economics, not the law of nnations.
What’s interesting in this story is that the rise of the U.S. as a creditor and the impact that has on Mexico. On the one hand, there was the fear of this ever-expanding empire that has taken half of your land in 1848. But on the other hand, the US offered Mexico leverage when dealing with European powers. These old European powers had also abused debt in order to achieve all kinds of favourable commercial arrangements, but now Mexico could use the threat of turning to the US to gain better terms from European lenders.
And there’s a really interesting parallel here with the rise of China today and the way that it offers leverage to a lot of these countries against the US. In the end, the US was not this beneficent force that just allows Mexico to avoid predatory European powers. With the rise of the car industry, and while Wilson is preaching not intervening in another nations’ affairs, US intervention actually intensified in Mexico in order to meet the growing demand for oil.
In response, Mexico would develop a very robust policy of non-intervention. This ended up in a really fascinating episode of historical solidarity, which makes us think differently about the language of reparations and what we owe one another. Because what happened with this theory of non-intervention is that it ended up shapeing Mexico’s international support for the Spanish Republic during the Spanish Civil War.
After Francisco Franco’s coup d’état, Mexico will try to shame the members of the League of Nations into adopting a more robust policy of intervention. Non-intervention in this conflict, , Mexican statesmen explained, is just moral turpitude and you ought to intervene. Mexico provided all sorts of aid, humanitarian aid, taking refugees for Spain during this period, all defended through the language of the historical solidarity to our “Hispanic brethren”.
There were also practical considerations at play. Because of the role of the church and of conservatives in Mexico, the revolutionary government feared that conservatives would try to replicate what their peers had done across the Atlantic. Because of what happened in Spain, Mexico actually ended up muting some of its more revolutionary ambitions.
Let’s move on to the case study of Colombia. This nation starts off as Gran Colombia, with Simón Bolívar’s big experiment, which is a confederation that isn’t a confederation. It’s a league that’s not a league. Bolívar unites a number of states that have declared the status as sovereign states into an an ill-defined union. This includes the then-biggest producer of gold in the world in New Granada. It’s a vast territory with huge resources. And there’s a question of how you pull this together, what is going to unite these different states.
And there’s a practical question here: on whose behalf are you negotiating loans when you go to London, which Colombian representatives do, and negotiate loans on behalf of this composite state. And what happens is that very quickly is that this union crumbles and Bolívar watches all these debts that he’s negotiated be turned from virtuous loans to fund the establishment of a nation into tyrannical burdens on states that no longer want to be a part of this union.
Here, the example of Haiti comes to the fore, and Peru, Bolivia, and other states that seceded from the rump union will accuse Bolívar of trying to oppress them like France had oppressed Haiti. So, the story with Colombia becomes this story of how to deal with debts accrued by brothers in arms, by communities-turned-nations which were then splintered. This had a strong foreign policy dimension because these debts are owed to Britain and British financial interests. But there is also a strong domestic component: some of these debts are also owed to soldiers who literally fought for the revolution. This issue becomes incredibly messy, but throughout this whole process of nation-making by settling a disputed inheritance, officials are drawing on international law to chart a roadmap to find a way out of this mess.
By the middle of the century, in Colombia we see a radicalization of the progressive position around debt, private property, land distribution, and slavery. There’s a real contestation around how to manage the question of what we owe one another, but also how do we provide for the community? And the debate is informed by a phenomenon called “Benthammania”. There’s a real rise in the popularity of Jeremy Bentham, the British utilitarian philosopher, in as a guide to mediate these understandings of utility, pleasure, and nation-building. And, there will accordingly also be the complaints from conservatives that this is an atheistic philosopher who cannot speak to the needs of the community because he’s just all about pleasure and pain and law and order.
The revolutionary debts will remain memories of share bonds of a nation and a community. Three of the constituent parts of Bolívar’s empire agreed to settle their debts with Spain before they paid off their revolutionary debts to one another: in the 1840s, Bolivia, Ecuador, and Venezuela all signed treaties of recognition with Spain. The British debt will increasingly be seen as a vehicle for empire. The most shocking case of gunboat diplomacy in this context was the 1902 Venezuela debt crisis, where an alliance of European powers imposed a naval blockade on Venezuela when its government refused to pay its foreign debts. And this story takes us to the jurist who drew on this instance of imperialism to try to change international law: the Argentina Luis María Drago, the Argentine jurist that would seek to outline war over finance.
Do I still have time to tell you about the Argentinian example?
Scott: Absolutely. This is a podcast. If the audience wants to skip ahead, they can, but I’m not going to.
Edward Jones Corredera: Okay, I appreciate that. The case of Argentina which informed Drago’s ideas is quite different from the other two I was just talking about in the sense that you have Buenos Aires. Buenos Aires, a port city, controls the tariffs and the river that feeds the provinces in the hinterland. And you have this tension between Buenos Aires and the provinces from the very beginning. Simplifying things a lot, the two are sort of set up as separate republics. And there’s several civil wars and several wars between them. There are several efforts to come together and pool resources, among other things, in order to fight wars against Brazil and fend off secession movements and attempts to invade Argentine territory. And this ill-defined territorial arrangement will continue until the end of the 19th century, all the way to the Baring Crisis. And this territorial arrangement complicates how you negotiate a debt, who is responsible for the debt, but also what type of land and resources do you mortgage to sign that debt and to pay that debt. Do you, in effect, need the consent of your rivals in order to negotiate loans on their behalf?
Here, the question of consent comes to the fore. The provincial representatives will say: Look, we don’t consent to our resources just being speculated with. We don’t consent to these lands being speculated with. We need a clear set of terms in order to negotiate these loans in London which we can then put to a vote. Buenos Aires instead will prioritise the need to sign these loans, move forward, and then figure out how to pay them. This leads to constant conflict. In the book, I track how the memory of Spain and the fear that a similar tyrannical regime was slowly being imposed on Argentina by Buenos Aires is used, how these shared debts play a role in this.
To this division one must add a foreign dimension, which is the rise of interventionism in Argentina. It should come as no surprise that some of the most brilliant Latin American jurists who develop principles like the Calvo or the Drago doctrines were Argentines. They were both reflecting on the shared history of interventionism in Latin America and their own experience with debt and intervention. It will be out of these debates that Drago’s emerge. Faced with the blockade of Venezuela, Drago will try to push to the forefront of international legal discussion the matter of whether debt ought to be used to force the repayment of public debt. That maneuver is, of course, blocked by the US. It will take a revolution – the Mexican Revolution – to really force these ideas into the center stage of international relations.
So that was a long enough answer, I think.
Scott: That was great. What do you hope that contemporary readers, including lawyers–you named lawyers, I believe, in the beginning of the book–learn from this history? There is a sense that contemporary lawyers are unaware of the history of their own terms and how they’ve been constructed and what has been repressed in their construction. Ideally, how would you describe what you would hope the world to learn from your book? Maybe for political action and political consequences.
Edward Jones Corredera: That’s a different question. While writing this book as a postdoc at Max Planck Institute for International Law, I was in dialogue with academic lawyers and professional lawyers. And one lawyer explained that law is a closed constellation of concepts that does not really admit the entrance of new concepts.
So, this thing that historians do, where they muck about with concepts and they say: Well, actually, this doesn’t always mean that, the lawyers don’t always love that. Historians destabilize concepts – we show these are not unassailable ideas, but contested and malleable terms that have been moulded by contestation. We look at how they meant different things across the passage of time. Sometimes lawyers don’t really know what to do with that.
My only point here is you can’t really change the terms of international law, but you can shine a light on the way that these terms are inherently unstable, are mutable. They are obviously ripe for abuse. And I think a really important aspect when thinking about precedent, custom, and the history of international law is whose history counts.
Latin America’s engagement with these problems hadn’t really registered in the way that international law understands the problem of sovereign default and debt. There’s a lot of talk about the post-colonial turn, but you also have to integrate these histories and these historiographies into the normative paradigm. Otherwise, what are we doing here?
In terms of the political uses, I suspect that in the next few years we will come up against the problem of succession and war debts because of populist challenges against establishment candidates. We might even see the rise of despots from revolutions or from territorial secession. I think these questions of what we owe each other within a national community, and what we owe each other across national borders, are bound to come up again and again. And I think that the cultural dimension and the commutative, religious, the spiritual dimension of this debt is really salient today. I mean, this is the sort of crisis that we’re living with now, right? This is the crisis wrought by neoliberalism, you know, in a zero-sum economy. It seems like owing someone anything is not an exercise in morality, it’s really putting you at a disadvantage. But the idea that we owe one another has always been there historically – that, not the zero-sum logic, is the norm. This is why it was always so important to determine who belonged to this community of obligations – and who didn’t.
Scott: Maybe you can talk about what you’ve been working on since the Odious Debt book. You said that you’ve been pursuing the genealogy of bankruptcy more than you did in the book. Would you like to talk about that, or are there other projects that we can look forward to from you?
Edward Jones Corredera: Yes, I’m working on this global history of the idea of bankruptcy that’s aimed at a more popular audience and chasing up a bunch of threads that came up while writing this book.
Any suggestions from listeners about how to think differently about this, please definitely get in touch and I’d love to keep the dialogue going beyond this.
Scott: When the new book is out, come back and we’ll talk to you about it!
Edward thanks so much for joining us on Money on the Left.
Edward: Thank you, Scott. This was great.
* Thanks to the Money on the Left production team: William Saas (audio editor), William Saas, Scott Ferguson & Edward Jones Corredera (transcription), & Robert Rusch (graphic art)