Mill's most famous philosophical treatise, On Liberty, tried to find a path between the encroaching claims of the masses and the protection of individual liberal rights, while his Principles of Political Economy demarcated ever more precisely the areas of legitimate state action, even in the area of government debt. That is, rather than repeat Hume's and Smith's "inevitable enfeeblement of the state through debt" thesis, Mill argued that so long as government borrowing did not compete for capital and thus drive up the rate of interest, debt issuance was acceptable, even if taxes would be preferable.

Mark Blyth, Austerity, loc. 311