Why Not Default?

Jerome E. Roos

Published by Princeton University Press 2019

Why Not Default?

The Political Economy of Sovereign Debt

Jerome E. Roos

https://doi.org/10.1515/9780691184937

Overview
Contents

About this book

How creditors came to wield unprecedented power over heavily indebted countries—and the dangers this poses to democracy

The European debt crisis has rekindled long-standing debates about the power of finance and the fraught relationship between capitalism and democracy in a globalized world. Why Not Default? unravels a striking puzzle at the heart of these debates—why, despite frequent crises and the immense costs of repayment, do so many heavily indebted countries continue to service their international debts?

In this compelling and incisive book, Jerome Roos provides a sweeping investigation of the political economy of sovereign debt and international crisis management. He takes readers from the rise of public borrowing in the Italian city-states to the gunboat diplomacy of the imperialist era and the wave of sovereign defaults during the Great Depression. He vividly describes the debt crises of developing countries in the 1980s and 1990s and sheds new light on the recent turmoil inside the Eurozone—including the dramatic capitulation of Greece’s short-lived anti-austerity government to its European creditors in 2015.

Drawing on in-depth case studies of contemporary debt crises in Mexico, Argentina, and Greece, Why Not Default? paints a disconcerting picture of the ascendancy of global finance. This important book shows how the profound transformation of the capitalist world economy over the past four decades has endowed private and official creditors with unprecedented structural power over heavily indebted borrowers, enabling them to impose painful austerity measures and enforce uninterrupted debt service during times of crisis—with devastating social consequences and far-reaching implications for democracy.

Author information

Jerome Roos is an LSE Fellow in International Political Economy at the London School of Economics. He regularly provides commentary on world politics and current affairs for various international media.

Reviews

“This is a fascinating and timely book! It gives us a whole new perspective on the global debt crises since the 1980s. To understand why countries grind through under duress and the power of finance, we need to understand why struggling borrowers don’t give up. Why do have-less countries continue to borrow despite the massive transfers to have-more countries and investors? This book offers brilliant insights.”—Jeremy Adelman, Princeton University

“Why Not Default? is a must-read for all those wishing to truly understand the current challenges to democracy and social justice. In this meticulously and thoroughly researched book, Roos shows how the transformation in the global economy has resulted in the reconfiguration of both international and domestic power relations, producing a formidable set of incentives and constraints that compel nations to repay their debts even when the social costs are unbearably high.”—Judith A. Teichman, author of The Politics of Inclusive Development: Policy, State Capacity, and Coalition Building

“The four decades since the breakdown of the Bretton Woods order (early 1970s) have seen a frequency of foreign debt crises at least twice as high as in the decades before 1914—yet with hardly any sovereign debt defaults, while such defaults were almost normal through the nineteenth century up to the 1930s. Why this dramatic change? Jerome Roos provides us with surprising answers, which explain why foreign investors in the contemporary era have been so confident of repayment despite the lack of effective legal enforcement mechanisms on indebted governments. As he does so, he breathes fresh understanding into the whole field of the political economy of international finance.”—Robert H. Wade, London School of Economics

“In this engaging book, Jerome Roos hones in on three mechanisms that militate against sovereign default: market discipline, policy conditionality, and national elites within the debtor country. The 1-2-3 punch of international banks, multilateral institutions, and domestic capitalists overwhelms tendencies to default, which is why default is such a rare event in the contemporary world. This book is an important contribution to understanding structural power in the international political economy.”—Pepper Culpepper, University of Oxford

“This is an outstanding book. Roos demonstrates how the structural power of creditors has grown, enabling them to impose demands on countries regardless of political system, partisan composition, or the nuances of different interest groups.”—Peter A. Gourevitch, coauthor of Political Power and Corporate Control: The New Global Politics of Corporate Governance

Topics

Frontmatter Publicly Available Download PDF	i
CONTENTS Publicly Available Download PDF	v
TABLES, FIGURES, AND BOXES Publicly Available Download PDF	vii
ACKNOWLEDGMENTS Publicly Available Download PDF	xi
INTRODUCTION. The Sovereign Debt Puzzle Requires Authentication Unlicensed Licensed Download PDF	1
PART I. The Theory of Sovereign Debt Requires Authentication Unlicensed Licensed Download PDF	19
PART II. A Brief History of Sovereign Default Requires Authentication Unlicensed Licensed Download PDF	83
PART III. The Lost Decade: Mexico (1982–1989) Requires Authentication Unlicensed Licensed Download PDF	123
PART IV. The Great Default: Argentina (1999–2005) Requires Authentication Unlicensed Licensed Download PDF	171
PART V. The Specter of Solon: Greece (2010–2015) Requires Authentication Unlicensed Licensed Download PDF	223
CONCLUSION. Shaking Off the Burden Requires Authentication Unlicensed Licensed Download PDF	298
APPENDIX. A Word on Methodology Requires Authentication Unlicensed Licensed Download PDF	311
NOTES Requires Authentication Unlicensed Licensed Download PDF	315
REFERENCES Requires Authentication Unlicensed Licensed Download PDF	355
INDEX Requires Authentication Unlicensed Licensed Download PDF	385