[Adam] Ferguson’s Law: Debt, Defence & Finance | Concepts

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Adam Ferguson's Rule (or Ferguson's Law), posits that a great power ceases to be great when it spends more on interest payments for its public debt than on its national defense. It warns that mounting debt service diverts resources from defense, making the state vulnerable to collapse. 

"States have endeavoured, in some instances, by pawning their credit, instead of employing their capital, to disguise the hazards they ran. They have found, in the loans they raised, a casual resource, which encouraged their enterprises. They have seemed, by their manner of erecting transferable funds, to leave the capital for purposes of trade, in the hands of the subject, while it is actually expended by the government. They have, by these means, proceeded to the execution of great national projects, without suspending private industry, and have left future ages to answer, in part, for debts contracted with a view to future emolument.

So far the expedient is plausible, and appears to be just. The growing burden too, is thus gradually laid; and if a nation be to sink in some future age, every minister hopes it may still keep afloat in his own. But the measure, for this very reason, is, with all its advantages, extremely dangerous, in the hands of a precipitant and ambitious administration, regarding only the present occasion, and imagining a state to be inexhaustible, while a capital can be borrowed, and the interest be paid.

… an expense, whether sustained at home or abroad, whether a waste of the present, or an anticipation of future, revenue, if it bring no proper return, is to be reckoned among the causes of national ruin."

—Adam Ferguson, An Essay on the History of Civil Society (1767), Part V, Section V.

For most of recorded history, the nexus between military and financial capacity has determined the power of states.

• Sun Tzu considered warfare to be of “vital importance to the State, a matter of life and death, a road (Dao) to safety or to ruin.”
• Heraclitus famously called war “the father of all things.”3 Cicero’s Fifth Philippic declared “the sinews of war” to be “unlimited money.” If “the life of man upon the earth is a warfare,” as Job ruefully observed of the human condition, then the money needed to wage it is indispensable.