Michael Hudson: A Planned Economy for the 1%

By Lambert Strether of Corrente.

More at The Real News

[Transcript here.]

In our everyday discourse, there are many tropes, narratives, and models for elites, elite behavior, and changes in the nature of elites: The eternal question: Stupid and/or evil?, the Greek’s cycle of democracy, aristocracy, and monarchy, and back to democracy again (OK, oversimplified); socio- and psychopathy; “big government vs. small government”; William Black’s accounting control fraud; kleptocracy; and the idea that statism as such is the problem. (Did I miss one?) The grand theories, and not conspiracy theories, a la Weber, Marx, Hegel seem not to figure in every day discourse at all (unless one considers religiously derived theories of government grand). The most rigorous model in that list — Black’s model of accounting control fraud — shows that a large number of the ruling elite (C-level executives of very large institutions) are unindicted criminals, and exposes their modus operandi — but that’s not the same as having a solidly grounded explanatory narrative of elite behavior as such. Is it?

It’s a very curious situation. After all, there are not many members of the ruling elite. For example, 25% of SuperPAC money comes from just five (5) donors. Suppose, just as a metaphor that, taken as a class, the 1% of the 1% who really have the billions are about as numerous as the coaches, staff, and players of the National Football League. Well, every day discourse about the NFL includes detailed analysis of the plays called the previous week, strengths and weaknesses of the teams, strengths and weaknesses of the executives, and so on. Why don’t we have similar discourse on elite “players”? Why can’t we even name the plays they’re running? Since they must certainly run them over and over again!

Bringing this back to Michael Hudson’s political economy: A “planned economy” for the 1%. And the “plan” seems to be that everything over subsistence goes to the rentiers. Fine, and epater le Hayek, too. But that’s really a plan only in the sense that “scoring more points than the other team” is a plan. It’s not a game plan against a specific opponent at a specific time with a specific set of vulnerabilities. For example, many have commented on the eerie similarities between Bush’s run-up to war with Iraq, and Obama’s run-up to war with Iran. It’s almost as if they took the same page out of the playbook! In football, we can name the play: “It’s the flea flicker!” In criminology, we can name the play: “It’s the long con!” Well, why can’t we name the play when constructing narratives of elite behavior? Or has this work been done, and I didn’t get the memo?

NOTE The idea that it’s helpful in winning to know the play your opponent is calling applies whether you’re playing offense of defense.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. F. Beard

    How many stock buybacks are funded with loans from the counterfeiting cartel, the banks? So then, the stock price becomes divorced from reality much as housing prices became divorced from reality by that same cartel. Without the counterfeiting cartel to borrow from then corporations would most likely be forced by competitive pressure to sell (much?) MORE of their common stock thus broadening the ownership of corporations. And if the corporations were more broadly owned isn’t that a good thing? For example, how many worker-owners of a corporation would be in favor of outsourcing their own jobs? And if they did vote to outsource their jobs at least they would share in the profits of doing so.

  2. WorldisMorphing

    For some reason, I fancy myself imagining a event in which Michael Hudson would be interviewed for an hour by Paul Solman on PBS …

    …then I start giggling…

    1. nonclassical

      “like a football game”…the “plays” are “the same as they’ve ever been”….(Talking Heads)…

      Reading Geisst’s book, “Wall $treet-A History”, we find commodities monopolized and banks colluding, selling them back and forth to one another, just to raise the price, just as they have done with oil since 2001…Gretchen Morgenson noted it in 2004..

  3. problem is

    Well, why can’t we name the play when constructing narratives of elite behavior?

    Because the job of the 5 corporations that own the majority of the US media is to convince you through mass propaganda and deception that no ruling elite exist, elections are fair and choose our leaders… and there is no play book… Yves, you conspiracy theorist, you…

    That Michael Hudson and William K. Black… what a couple of fringe cranks… Now, let’s watch Amrerikan Idol and then CNBC for all the financial news worth listening to on our beloved TeeVee…

      1. ambrit

        Mr. Strether;
        First you must become aware that you are up to your knees in it. “Opiate of the masses” now also refers to the MSM.

          1. ambrit

            Mr. Strether;
            Too true that. The elites get Golden Parachutes. The rest of us get Golden Showers. (The real meaning of ‘Trickle Down Economy.’)

      2. problem is

        LOL… The inaction of my brain dead, propagandized, suckered and abused fellow Amerikan citizens suggest otherwise…

        But we can remain hopeful and look forward… See: The Teleprompter and Chief, Barry Soetoro…

        1. Lil'D

          Right wing noise machine tropes like “Teleprompter” and calling Obama “Soetero” are tired and stale. Obama is, in fact, extremely bright and a great speaker.

          He’s also mostly a moderate Republican on policy grounds.
          I have evidence:
          Spent a couple of hours this weekend reading Nixon’s 1971 SOTU. Where he proposes health care reform… far to the left of Obama. Where he proposes the EPA, because conserving the planet is, erm, conservative. Proposes expanding the safety net. Regulating the financial system.
          Nixon was indeed a “Dick” but the Overton window has left him far behind. The only thing remaining is the Cheney et al. executive power grab, and here again, it might be to the left of Obama…

          Plenty of reasons not to like Obama. Choose good ones, not stupid ones.

  4. problem is

    Sorry Yves… Lambert Strether, you conspiracy theorist, you… But I am sure the Department of Homeland Insecurity views Yves’ blog with suspicion…

  5. Susan the other

    Elite behavior? Is it being restricted to compliance with the rules of a democratic society? And how do you verify this? Assuming we actually do pass some rules here pretty soon. The problem was the economic model, not the government model. Since 1950 our “capitalism” has been nonsense because every year, year after year, capitalism came to rely on financing or exploitation of resources or people to cover for the glaring fact that capitalism really didn’t produce all those famous profits. And communism doesn’t work either. And “elites” everywhere have steered the ship always to their own advantage. I’m not so frustrated about their greed as I am about the difficulty of finding a democratic system that actually works. If we sit down now, and probably for the next decade, we will conjure up some kind of system. It will be not just national, but global. And social pressures will be much greater, which I see as a good thing for democracy.

    But it will be even harder to pin down the motives and decisions taken by the ruling class. It’s almost as if the 99 need to practice class diplomacy; exchange diplomats with the elites. We live in two separate worlds and have done so since time began.

    In my view, the best buffer between unethical people and the rest of us is a strong, relatively self sufficient local community. Local enterprise. If the local community were given every opportunity to thrive and given the necessary information to protect their interests… maybe things would get better naturally. And I do not mean to imply that all elites are unethical. Nor all 99ers are angels.

    1. lambert strether

      “exchange diplomats with the elites” That’s an interesting idea.

      I understand about localism, and support it, but then you’ve got stuff that can only be handled at the national scale: Epidemics, nuclear weapons….

      1. Jim Tarrant

        Capitalism doesn’t like local enterprises unless they are part of their supply chain. If they aren’t, they send in Walmart to eat them up or at least their local market.

    2. securecare

      “The history of the world is the history of wars between tribes of the mind”

      Something I read decades ago. Worth remembering I think. Try it.

      “History is all lies told by interested parties” – Pat Lang

    3. nonclassical

      “local”…that’s what Naomi Klein concludes in “The Shock Doctrine-rise of disaster capitalism”…

      but overcoming propaganda is about to get much, much more difficult, as internet itself is about to become a tool of the 1%…CIA, FBI, NSA committing huge resources to control information…

      I doubt even Yves is impervious..

  6. ambrit

    Perhaps a longer time line is needed. Human behaviour hasn’t really changed in the last thirty thousand years. All those exquisite cave paintings display a mind at least as sophisticated as any alive today. Let us return to the classics and relearn their lessons. The Classical Greek Tragedies and Comedies. “The Prince” and other works by Machiavelli. The writings of the Psychologists. Heavens, any good religious scripture. Montesqieu, Locke, Bentham, Rousseau, down to Marx, Engels, Arendt, Vieblen, Weber, Emerson, Orwell, Malraux. What I’m describing has suddenly struck me as a syllabus for what used to be called a liberal education. Everything else is basically trades schooling, or real science and engineering.
    Thanks for letting me rant.

    1. securecare

      You failed to include R. Buckminster Fuller in your list.

      A must read for the well informed, well rounded human that actually cares about a more reasonable, life supportive world based on reality.

  7. scraping_by

    “It’s not a game plan against a specific opponent at a specific time with a specific set of vulnerabilities.”

    Remember the tag line from The Godfather:

    “It’s nothing personal. It’s only business.”

    Whether it’s power for the sake of wealth, or wealth for the sake of power, or if that’s a pointless discussion, the face we see is all the same. Nothing personal, only business.

  8. Hermann Bane

    Voting is irrelevant in the larger contests, purely symbolic, money already chooses. While voting is a part of Democracy, it just as easily exists in Tyranny. The thin charade always give way when conditions worsen. SuperPAC is a boast, the owner/ruler class is telling you they are going to buy everyone off, legally.

  9. problem is

    BTW: Mr. Strether: All humor and sarcasm aside… Thanks for posting Michael Hudson’s interview. His book Super Imperialism is an informative and excellent read…

      1. problem is

        Humor,,, what a waste of time… When your ruling power structure is cynical and your political class a collection of bribed buffoons… snark and humor are in fact appropriate…

        Without Humor
        The American citizen is controlled and manipulated by its ruling elite. Through predictive programming and diversion, the British monetarist system of division and working class strife, the American public fails to recognize the actual structure of their rulers and that their political system is in fact a fraud.

        The vast majority of the American can’t see it. They refuse to leave denial. They are a product of educational system that has for generations programed them to believe in the US myth narrative and stripped them of analytical ability and logically valid reasoning.

        Therefore, you can’t help those who won’t help themselves…


        1. nonclassical

          ..fewer than 20% of americans graduate from 4 year university or vocational equivalent..and number is dropping. 8000 americans “earn” 10 million per year each, or more.

          “liberal arts”, Philosophy, PolySci, Literature, teach one HOW to think…Philosophy=history of human thought…almost seems a prerequisite for
          study of economics…?

      2. ambrit

        Mr. Strether;
        Snark has its’ place. Somewhat like the Medieval Court Jester. Someone has to say the unpleasant truths. Humour allows the recipient of said ‘truths’ to save face without rejecting the message out of hand. Lots of people will reject self evident truths simply to avoid looking ‘sub optimal.’ Maybe this is where the #Occupy folks picked up their non-confrontational strategy. The people to be watchful of are those with no sense of humour. I believe that the Sense of Humour arises out of ones’ Conscience, as a mediating function. Thus, no sense of humour equals no conscience.
        So, I would posit that all that energy used for snark production is a societal plus. The proper proportion of total resources applicable to snark is another matter, and best left for some other time.
        Let’s hear it for Fooles everywhere!
        (I love you man!)

          1. ambrit

            Mr. Strether;
            Point taken. I really wish Aristotle’s book “On Comedy” had survived. (Perhaps, as Umberto Eco suggested in “The Name of the Rose,” it still exists in the library of some monastery. Spain has dozens of really old monasteries who still do not let the outside world in to peruse their rare tomes.)

          2. Chauncey Gardiner

            In deference to The Righteous Brothers, let’s call this one “Little Latin Lupe Lu”. ;-)

            One of the basic templates that has been used by the kleptocracy over the years, from Argentina and Chile (where it was given its name) to American mortgage loans to Greece and other nations, is the knowing and willful extension of debts of such magnitude as to clearly be beyond the debtor’s capacity to repay the debts. When it becomes self evident that the debtor lacks the capacity to repay its debts, the creditors begin stripping the debtor of its most valuable assets and require the debtor perform other actions in accordance with the creditors’ or the creditors agent’s dictates. This is the stage in which the government and people of Greece now find themselves.

            It is also important to remember the global central bank cartel… that the creditors providing these loans are in turn able to source the public debt-based “money” used for these loans at very little cost to themselves through their privately owned central banks, which have been granted a license to “print money” (although that term does not fully and accurately describe the process of how a central bank creates money). The central banks can and do also provide an ongoing source of virtually unlimited continued funding for the creditors under a debt-based monetary system, as it becomes clear to all that the debtor cannot meet the terms of the loans.

            To paraphrase the lyrics of a song by the ‘80’s music group Dire Straits, it’s essentially “Money for Nuthin’ and Assets for Free”. And for purposes of Lambert’s Klepto Playbook, this play is alternatively named “The Perpetual Loop” of expropriating the public’s assets with the public’s debt by way of the global central bank cartel.

  10. WorldisMorphing

    The number of views this video just had on YouTube is absolutely staggering for 1 day.
    It is several orders of magnitude higher than the average views a Real News chronicle usually receives in this amount of time…

    Is this a reason to hope?

    1. WorldisMorphing

      …after reflection, I don’t think it is.
      I think the commentors just over-triggered the counter by ceaselessly replying to each others in a overheated debate.

      Yep I’m guilty. Sometimes I do get suckered in and lured by what seems like good news… Sorry folks,…

  11. Hugh

    I think a lot of this stuff is being hammered out. The kabuki of the two corporatist parties and their pseudo-disagreements, their tag team promotion of corporatism and the rich, Obama’s MO of rhetoric this way, actions that way, of his art of pre-compromise, of fixing a deal in advance, followed by a long drawn out process, and then nailing down the final deal on the same terms as the initial deal.

    Versailles, the Village, Serious People, savviness, truthiness, the Conventional Wisdom, the Washington Consensus.

    He said, she said journalism, anonymous sourced smears, access journalism, Upton Sinclair people, shilling, infotainment and propaganda, revolving villains, revolving heroes, astroturfing, the Overton window, the ratchet effect.

    And largely because no one else would do it, I have developed my own theories of the elites, kleptocracy, class war, and wealth inequality and describe how these play out in story after story, and crisis after crisis.

    The problem is that every time a new story or crisis comes out we end up fighting the same battles over and over. Instead of moving on from a Democratic-Republican perspective, we redescend into Democrats versus Republicans. In Europe, it is all about the 1%s and the 99%s but invariably the argument goes back to Greece did this and Germany did that so that whole nations get tarred for the misdeeds and crimes of a few.

    The Europeans have half a dozen interrelated problems that need to be addressed to resolve their ongoing crises. None of them are even on the table for discussion. Yet everytime a new agreement is announced, it is accorded a certain level of credibility even though it is no more credible on its face that any of the twenty previous agreements that preceded it and failed.

    So we end up wasting too much time, not because we don’t have the concepts and vocabulary to describe what is going on, but we have to re-argue de novo the basis for these each time. The result is that the narrative and our understanding scarcely advance because we keep going over the same turf over and over again.

    For me, that is where the real problem is. And I place a lot of the blame for it at the door of our so-called liberal economists who simply can’t divorce themselves from Establishment ideas, which while wrong, even criminally wrong, remain comfortingly familiar.

    1. Jim3981

      I see where you are coming from.

      I think this is might be a feature. The Elites know about the difficulties of coming to conclusions in groups and have set up a dysfunctional system to stay in control.

    2. citizendave

      If we truly believe we have descended into full-on oligarchy, or plutocracy, then we are wasting our time when we talk about Republicans and Democrats. We should be talking about the rule of law, and how to wrest control of the Congress from the heartless corporations.

  12. Darren Kenworthy

    Read The Classics of any culture filtered through the understanding provided by the frankest, most reviled among them (Sun Tzu, Nietzche, Machiavelli) and you will understand the strategies the few use to rule the many.

    The governing principle is to appear just while acting unjustly.

  13. So Cal 7

    We have become a rudderless society. That is precisely why the corporatists can act with impunity and with contempt.

    Whether by design and exploit or not, we have become an overly self-important, self-indulgent and entitled society. Until that shifts into a different more individually and collectively positive direction, we will be at the heel of the corporatists…because there is no standard currently that they are held to that matters TO US.

    All the time they will play games with “the law”, which is an easy task for them to do.

  14. greg

    Stupid and evil.

    The problem is they- elites- cannot stop themselves from killing the goose that lays their golden eggs. Once they gain control of the entire surplus, (see the video,) they cannot stop. They still demand to grow at a rate greater than the real economy, an economy they have brought to a standstill by their onerous rents.

    The parasite kills the host, not realizing, or unable to, that its own survival depends on the survival of the host.

    Their optimum behavior is to optimize the growth of the real economy, which is the limit of the growth of their real assets, but this they cannot do. Reality is simply not good enough for them, and they lapse into delusion, to all our costs.

    Interesting. We are part of a culture which is, on some level, aware of its own slow suicide, but which, institutionally, is apparantly incapable of changing its own self-destructive behavior.

    1. Jim3981

      I get a strange feeling that the guys at the very top are grabbing all the hard assets using this funny money they set up. Once the music stops, they can set up a new currency where everybody else is left with debt and paper money while they own all the real stuff?

  15. So Cal 7

    Further..as per Paul of Tarsus:

    1 Timothy 1:9-11:

    Knowing this, that the law is not made for a righteous man, but for the lawless and disobedient, for the ungodly and for sinners, for unholy and profane, for murderers of fathers and murderers of mothers, for manslayers, For whoremongers, for them that defile themselves with mankind, for menstealers, for liars, for perjured persons, and if there be any other thing that is contrary to sound doctrine; According to the glorious gospel of the blessed God, which was committed to my trust….

    Galatians 5:22-23:

    But the fruit of the Spirit is love, joy, peace, long-suffering, kindness, goodness, fidelity, 23 meekness, self-control: against such things there is NO LAW.

  16. kris

    Mr. Strether
    I lived in communism in estern europe. I know for a fact that government planning DOES NOT WORK.
    However, Michael Hudson is quite convincing. Free market doesn’t work either.
    I guess that’s why religion exists. Nothing humans create actually works. Heaven may be working flawlessly we we won’t know until we get there.

    1. nonclassical


      I wouldn’t say eastern europe is working today…best familiar with poland, north to south…

      1. kris

        I’ve spoken with many eastern europeans here in Toronto including few from Poland. They confirm what you’re saying.

    2. nonclassical


      for what reason would humans act more functionally than any other species?..
      matter of fact, we generally act less functionally…

  17. Jim3981

    Good interview.

    Seemed like Michael Hudson had a lot more to cover. Maybe next time he will do an hour interview?

  18. Tao Jonesing

    Just more confirmation of what we already know.

    What are we going to do about it? A few tweaks? Or real change?

    Free speech is an invitation to talk when you should be taking action. There is an opportunity cost in speaking . . .

  19. Lil'D

    The playbook is a great idea.

    There are lower level plays run against individuals all the time. I’ll assert that most people are good (and it’s unfalsifiable if I get to define “good”!) but there are predators and parasites. Parasites just try to knock nickels and dimes out of your hands.

    Here, plenty of extra “fees” tacked on to all sorts of things. I’ve stopped using Travelocity, e.g., because the default flight booking form has travel protection auto selected, and if I forget to uncheck it, I have to call and get the $24.95 reversed…

    can classify plays from the elite, but also classify parasitic plays and predatory plays (hard crimes such as mugging / burglary, or large scale cons & frauds)

    generally the state leaves it up to each of us to defend against parasites but we might be able to get police help wrt predators. Unless the predator is powerful enough to coopt the state, e.g. big banks…

    1. Lambert Strether Post author

      Chapter 1: Parasitic Plays. Chapter 2: Predatory plays. I like it!

      The idea is “name it and claim it.” How do we make the plays, whether offense or defense, if we don’t know what they are? For example, Abigail Field’s great post today: Aren’t Promontory’s “reviews” a lot like robosigning? You outsource faking your data to desperate part-timers who need the money and will fake whatever paper needs to be faked en masse. Seems a lot like the same play, or a variation on the same theme. But we don’t have a name for the play, so we treat each case as unique….

  20. ScottS

    I get it, but is there really any need to name the techniques? Why not just call the whole thing what it is — a Cleveland Steamer.

  21. Fiver

    The essential plan, the one which defined the fundamental framework for this world, was formalized just before, during, and immediately after WWII in the giddy with power minds of US Empire planners – no country/state/competitor would EVER be allowed to become a real challenger to US power – period. Control the State that made that plan and you control the world. And what can the President do for you today, Mr. Market?



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