Abu Hartal writes:
"I don't see how quotes will settle this. At any rate, no one is saying that the principal source of capitalisation is primitive accumulation. But why write off as unimportant or marginal the analysis of the whole public debt/private complex? Of course at present public debt is a vent for overaccumulated capital (and so will soon grow the importance of securing privileged foreign investment outlets for overaccumulated capital) whereas public debt was once the means by which capital was sufficiently engorged to make large scale industrial investments. The return of primitive accumulation in form does not mean that it is the same in substance. Oh, I don't know--perhaps Grossman is more important than I thought."
Reponse:
Actually, the history of public debt goes back to a repayable but still very-nearly-compulsory tax on elites by elites to fund wars, administration of cities, etc..
Public debt was originally much more about war than anything else, as war - when coupled with looting and enslavement - tended to be the best investment around for a clan leader/ warlord's money. And war was generally the cause which swelled the need for public money really until quite recently. Eventually people found that wartime debt financing could be used in peace time to good effect. In the post-WW2 period I think you're referring to, the real return on bonds has often been negative, so what the rich find in government bonds was and is security, not very much profit as such.
Of course having the government as major borrower and lender is fantastic for the financial system. A large central state with the power to compel people to pay its costs whether or not they want to "buy" its services means there is a huge lender and borrower in the market with perfect credit. That reduces overall risk and makes rich people more willing to part with their money.
boddi