Pay Reparations and Redistribute Prosperity


To change debt, everything must change.

This essay is part of the “The Debt Justice Agenda” series of Progressive International’s Debt Justice Blueprint.

Rich countries must stop exploiting poorer countries. Moreover, a reasonable case can be made that rich countries owe reparations for past injustices. The best way to repair past injustices is by initiating a new era of cross-national solidarity and redistribution that ensures sustainable welfare for all.

Exploitation of poorer countries by richer countries has a long history and many facets. There is continuity in justifying it in terms of international law. In this regard, colonialism lives on, even as it wears a new face. Contemporary exploitation stems from confiscation of land and resources, abusive labour relations, — unfair trade and investment practices, and in general power relationships that encourage endemic corruption, misallocations of capital, and insufficient economic diversification.

In response, countries have been forced to accrue an insurmountable amount of public and private debt, resulting in protracted debt crises and periods of austerity with high human and social costs. As developing and emerging economies borrow in dollars and euros, exchange rates can no longer offset global asymmetries.

The structure of international law has not remained a neutral referee in this race. Rather, it has actively facilitated these oppressive arrangements, by misusing sovereignty as an excuse for isolating economic activity from political responsibility. It allowed rich companies in rich countries to reap benefits from expanding overseas while avoiding any political costs, leaving the people in poorer countries often enough at the mercy of complicit elites, who capitalized on such arrangements and on the access to money and weapons it facilitated. Sovereignty also became a commodity that could be traded, for example by waiving sovereign immunities. The protection of human rights, by contrast, became the principal responsibility of these very elites and the governments under their control.

One should not conclude that the oppression of the global poor by the rich was, though deplorable, an inevitable consequence. That would turn a blind eye to the ways in which international law has often been unilaterally imposed in the construction of empire on the basis of the flawed claim that states governed by white people enjoyed a higher degree of civilization.

If international law is to be remade, it must endorse the ideas of justice and equity — it must grant reparations. Such reparations could take the form of damages paid to individuals, groups and countries for violating basic standards of humanity which have undergirded international law since the early days of the “jus gentium”.

Reparations could also take the form of a thorough reshuffling of the international order towards redistribution. In fact, no sum would be high enough if the asymmetries of the present international order were not rebalanced and its uneven distributive impact recalibrated. In that regard, it is time to think about ways for sharing prosperity in greater solidarity. This idea imposes itself with utmost urgency as asymmetries will grow as long as climate degradation, migration, and pandemics spread largely unabated.

Such cross-national solidarity would need to be based on the principles of equality and prosperity for all while ensuring sustainable, carbon-neutral economic development. This requires a fairer redistribution of opportunities and risks of an interconnected global economy. Such redistribution needs to go far beyond current Official Development Assistance, which is often project-based, resembling a specific public investment rather than a general redistributive scheme. Only budgetary aid is redistributive in that sense, but normally comes with conditionalities attached.

While in no way a comprehensive list, I propose the following key openings for urgent cross-national solidarity and redistribution:

  • A Green new deal for the world. To move away from a carbon-based economy, we must empower all parts of the world with the technology and know-how to participate in transnational networks. We must ensure power supply on an equitable basis and this cannot be left to the private sector alone.
  • Land reform and ecological revolution in agriculture. Rich countries should finance land reform to enable others to distribute land more evenly in accordance with agreed standards and to shift to agroecological practices.
  • Public health must be restructured to address systemic problems more effectively. This would involve global patents and licensing, including special provision for emergency; coordinated production of prescription drugs, especially vaccines; and global funds for fighting diseases like malaria, dengue etc. that disproportionately affect poorer countries.
  • Social security needs to be transnational. Countries should pool resources for protective systems like unemployment insurance and social benefits that set off the social repercussions of an interconnected global economy.
  • International taxation needs to reflect the added value more accurately. Currently, taxable profits generated in global value chains are allotted across the countries involved in accordance with the value added in each of them. The value added is measured in monetary terms. This leads to unfair distributive outcomes as low prices for labour and commodities from poorer countries reflect power asymmetries. Digitalization further exacerbates these trends as it shifts value generation even further towards sophisticated services. Moreover, it allows for various forms of tax evasion. In order to address these effects, a new form of reverse-progressive taxation is needed. Countries where little added value in monetary terms was created due to cheap labour and commodity prices need to get a proportionately higher share of the total sum of taxes paid. This will only work under a global scheme. In the long run, it stands to reason whether current methods of evaluating labour and commodities at market prices provides a sound basis for a fair, solidary, and sustainable international order.

To change debt, everything must change. This essay has attempted to underline key themes that are often left out of the debt discourse — and chart a programmatic course to redress past injustices and rebalance the global economy in the process.

The challenge we face now is not the what but the how. We have traced the contours of the debt justice agenda. It is time for activists, movements, parties, and international institutions to realize it.

Matthias Goldmann is a member of the Progressive International Debt Justice Collective. Matthias is an assistant professor at Goethe University Frankfurt a.M. and a Senior Research Fellow at the Max Planck Institute for International Law in Heidelberg. He specializes on issues of debt, public finance, and colonialism.

Illustration by Namita Sunil. Namita is a New Delhi based illustrator and graphic artist.

From the Blueprint team at Progressive International

We live in a world of debt. The depth and breadth of global “debtification” is difficult to overstate. It is the primary contention of this collection that all these disparate dynamics — hedge funds raking in pandemic profits, students struggling to afford an education, micro-borrowers on the brink of bankruptcy — are different manifestations of the same basic structural mechanism at the heart of the global financial system: the endless cycle of privatized gains and socialized losses. Simply put, the rich get richer, while the poor, by design, remain poor.

The goal of this Collective is the goal of progressive movements around the world, to end that cycle. Read the full Debt Justice Blueprint here. If you’re interested in engaging with us, please write to Varsha Gandikota-Nellutla at [email protected]

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Pay Reparations and Redistribute Prosperity

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