Classical Theories of Public Debt: Government Should Live within Its Means and That Its Means Should Be Limited

Without exception, but with some variation, the leading classical economists – David Hume, Adam Smith, David Ricardo, Jean-Baptiste Say, and John Stuart Mill – believed government should live within its means and that its means should be limited. Taxes should be light and the sovereign’s tasks restricted to military defense, law and order, and security of life, liberty, property, and contract. Beyond this government might provide public schooling and infrastructure (roads, bridges, canals), but little more.

For the classical economists governments must be as prudent as households; they must balance budgets and refrain from burdensome debt accumulations. Borrowing should be reserved for war, or for productive infrastructure, not ordinary outlays – and then repaid as soon as possible.

--Richard M. Salsman, The Political Economy of Public Debt: Three Centuries of Theory and Evidence, New Thinking in Political Economy (Cheltenham, UK: Edward Elgar Publishing, 2017), 30.