LETTER TO THE 'FINANCIAL TIMES': FREEDOM TO TRADE AT ODDS WITH DESPOTIC AMBITIONS

AM | @agumack

"Dans le gouvernement d'un seul, la ruine du crédit public peut venir d'une action imprudente" — Montesquieu

I'm very grateful to the Financial Times for having published my letter on Russia, credit markets and Montesquieu. My previous published letter was on Ferdinando Galiani, interest rates and judicial independence [see].

Here's the text:

Tommy Stubbington and Robin Wigglesworth claim, somewhat surprisingly, that “Russia was considered one of the most creditworthy countries in the world” before it invaded Ukraine (“What to expect as Russia warns of historic debt default”, Report, March 15). Already in 1748, Montesquieu, the French philosopher, had warned about the contradiction at the heart of the governance of “Muscovy”. 

To sustain its ambitions, Russia needed foreign trade and a corresponding credit and foreign exchange system. Therein lies the rub: such a system requires freedom. It is therefore fundamentally at odds with the despotic nature of the regime. In a 1739 note in preparation for The Spirit of Laws, Montesquieu wrote that one-man rule can destroy public credit with a single “action imprudente”. Some things never change.

Agustin Mackinlay
Lecturer in Finance, La Salle University
Barcelona, Spain

____________