Ferguson's law
“Ferguson’s Law” states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power.[1] It based on an essay by the Scottish philosopher and historian Adam Ferguson entitled History of Civil Society (1767), Part V, Section V.[2][3] In 2024, U.S. federal debt service surpassed its defense spending.
Contents
- 1 Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson
- 2 Comparisons of Chinese, Russian and American federal government debt to GDP
- 3 Ferguson law's discussion about the United States between the historians Stephen Kotkin/Niall Ferguson and the economist John H. Cochrane
- 4 War debt and the collapse of empires
- 5 See also
- 6 External links
- 7 References
Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson
Abstract: Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson (British historian and Chairman, Hoover Applied History Working Group). Hoover Institution, Stanford University History Working Paper 202502, Hoover Institution, February 21, 2025:
| “ | Are there financial determinants of great-power decline and fall? This paper proposes “Ferguson’s Law,” which states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power. The paper identifies the “Ferguson limit,” or the point at which interest payments exceed defense spending, as the tipping point after which the centripetal forces of the aggregate debt burden tend to pull apart the geopolitical grip of a great power. This is because the debt burden draws scarce resources towards itself, reducing the amount available for national security, and leaving the power increasingly vulnerable to military challenge. Using historical case studies that are analogous to the situation of the modern United States as the dominant global power, the paper shows that it is very rare but not unprecedented for a great power to return to the right side of the Ferguson limit. The paper is timely, as the United States began violating Ferguson’s Law for the first time in nearly a century in 2024.[4] | ” |
Comparisons of Chinese, Russian and American federal government debt to GDP
- United States - 128% federal debt to GDP ratio. (2024 data). U.S. national debt was $35.46 trillion in 2024. In 2024, the debt of the USA's local governments was $2.04 trillion.
- China - 90.1% national debt to GDP ratio. In 2019, China's total government debt to GDP, which includes national/local debt, was estimated to be over 300% and local governments' debt is a major contributor to this total.[5] However, many financial analysts believe that China inflates its GDP. The January 23, 2024 South China Morning Post article China claims ‘biggest corruption in statistical sphere’ amid fake data crackdown indicates: "The accuracy of China's economic data has long been questioned, as many feel there is a gap between reality on the ground and the official figures, and Beijing has intensified efforts to crack down on data fraud in recent years amid efforts to dispel doubts."
- Russian Federation - 20% (2024 IMF est.)
Ferguson law's discussion about the United States between the historians Stephen Kotkin/Niall Ferguson and the economist John H. Cochrane
Video which mentions Ferguson's law and has the historians Stephen Kotkin and Niall Ferguson: The Age of Empire Strikes Back: Stephen Kotkin on Trump, Wrestling, and the Use of American Power, Hoover Institution
In the discussion, the British historian Niall Ferguson argues that Ferguson's law likely applies to the United States is in its late empire stage. On the other hand, the American historian Stephen Kotkin takes the opposite position and argues the future of the United States is bright and due to its various strengths and dynamism. The American economist John H. Cochrane takes the middle view.
War debt and the collapse of empires
See also
- National debt of the United States
- DOGE (Department of Government Efficiency in the USA)
External links
Hoover Institution:
- Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson (British historian and Chairman, Hoover Applied History Working Group). Hoover Institution, Stanford University. History Working Paper 202502, Hoover Institution, February 21, 2025
- Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power: “Ferguson’s Law,” which states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power." - Hoover Institution
Other related articles:
- US is making same terrifying mistake that's destroyed every previous advanced civilization, historian warns, Daily Mail, 2025
- Debt Has Always Been the Ruin of Great Powers. Is the U.S. Next?, Niall Ferguson Substack
- Debt Has Always Been the Ruin of Great Powers. Is the U.S. Next?, Wall Street Journal, 2025
- CBO: Federal Interest Payments Now Exceed Defense Spending, Forbes, February 7, 2024
Video:
- Ferguson's law - Niall Ferguson, short video clip
References
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution (Download PDF)
- ↑ Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson (British historian and Chairman, Hoover Applied History Working Group). Hoover Institution, Stanford University. History Working Paper 202502, Hoover Institution, February 21, 2025
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution (Download PDF)
- ↑ China's debt tops 300% of GDP, now 15% of global total, Business Standard, 2019
