Michael Hudson: Socrates on Debt and Ibn Khaldun on the Cyclical Rise and Fall of Societies

Yves here. This post is a fitting accompaniment to today’s Brexit vote, since it discusses debtor/creditor dynamics and debtor revolts. The Brexit vote was in many respects a revolt against neoliberalism and austerity, since those are core to the EU’s brand.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is KILLING THE HOST: How Financial Parasites and Debt Bondage Destroy the Global Economy

Last week I attended a wonderful conference in the university town of Tübingen, Germany, on “Debt: The First 3500 Years,” to bring ancient historians together to discuss David Graeber’s book Debt: The First 5000 Years.

I was enlightened by two papers in particular. Doctoral fellow Moritz Hinsch from Berlin collected what Socrates (470-399 BC) and other Athenians wrote about debt, and the conference’s organizer, Prof. John Weisweiler, presented the new view of late imperial Rome as being still a long way from outright serfdom. The 99 Percent were squeezed, but “the economy” grew – in a way that concentrated growth in the hands of the One Percent. In due course this bred popular resentment that spread in the form of debtor revolts, not only in the Roman Empire but that of Iran as well, leading to religious reforms to limit the charging of interest and self-indulgent greed in general.

I had not been in Tübingen since 1959, and it was my first chance to meet with David Graeber since he moved to England to teach at the London School of Economics after being hounded out of his apartment in New York City in the wake of the police and FBI crackdown against Occupy Wall Street. Our mutual German publisher, Klett-Cotta, sent its senior editor from nearby Stuttgart to discuss their German translation of my Killing the Host, to appear in November, as Der Sektor: Warum die Globale Finanzwirtschaft uns Zerstört.

Socrates’ Views on Whether Bad Debts Should Be Paid

In Book I of Plato’s Republic (380 BC), Socrates discusses the morality of repaying debts. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair and just to pay back what one has borrowed or received.[1] Socrates replies that it would not be just to return weapons to a man who has turned into a lunatic. Because of the consequences, paying back the debt would be the wrong thing to do.

At issue is not the micro-economic morality of paying a debt, but how this act affects society. If a madman is intent on murder, returning his weapon to him will enable him to commit unjust acts. The morality of paying back all debts is not necessarily justice. We need to take the overall consequences into account.

A similar logic may apply to today’s debate over whether Greece should pay back the IMF and European Central Bank (ECB) for the money that they have provided since 2010 to save bondholders from losses on loans (largely by French and German banks). The terms oblige the Greek government to pay in full instead of writing down debts to reflect the actual ability to pay.

The IMF staff calculated repeatedly that Greece had no way of paying off these debts, so the IMF violated its own articles of agreement (and its “No More Argentinas” rule) that it should not lend to countries which, in the judgment of its research staff, have no foreseeable means to pay.[2] IMF board members also protested to the bondholder bailout – all to no avail.

The morality of paying off the IMF and ECB is analogous to paying off the madman discussed by Socrates. At issue is what should be saved: wealthy creditors from loss (and the morality that all debts should be paid), or the overall economy from unemployment and misery leading to emigration, worse health and shorter lifespans. They have used their debt leverage to demand that Greece impose austerity, increase unemployment (now running at an enormous 25 percent for IV-2015 – I-2016), scale back pensions to retirees, and privatize public infrastructure to pay creditors – while running a budget surplus to suck even more money out of the economy.

When the Greek people voted in 2015 to reject these demands, the ECB and European Union insisted that referendums didn’t matter. Shifting economic policy from voters to bankers already had led Frank Schirrmacher to write an article in the Frankfurter Allgemeine Zeitung, “Democracy is Junk.”

What really is at issue is the selfish and abusive behavior of creditors. Later in the Republic (Book VIII, 555d-556b), Socrates talks with Glaucon, pointing to the “negligence and encouragement of licentiousness in oligarchies.” Their greed, Socrates explains, inserts the parasitic “sting of their money into any of the remainder who do not resist.” The effect is to burden many Athenians with debt, to suffer foreclosure on their land and disenfranchisement, fostering “the drone and pauper element in the state.” This leaves the people (the demos) to “conspire against the acquirers of their estates and the rest of the citizens, and be eager for revolution.”

The way to quench this disaster in the making, Socrates suggests, is to enact “a law prohibiting a man from doing as he likes with his own, or in this way, by a second law that does away with such abuses.”

“What law?” asks Glaucon.

“The law that is next best … commanding that most voluntary contracts should be at the contractor’s risk. The pursuit of wealth would be less shameless in the state and fewer of the evils of which we spoke just now would grow up there.”

This obligation of creditors to share in the risk of non-payment is precisely what the IMF staff and other critics of the European Central Bank’s pro-creditor line are now belatedly insisting. It is the principle that American bank reformers urged after the 2008 crash: Banks that made junk mortgage loans beyond the ability of debtors to pay should have their reckless and often fraudulent “liars’ loans” downsized to reflect reasonable rental values and real estate prices instead of being allowed to foreclose and push the U.S. economy into debt deflation.

Concentration of Wealth by Rome’s One Percent Leads Debtors to Revolt

Roman emperors sponsored a market economy that aimed at producing a fiscal surplus, which was used largely to pay mercenaries. Wealth and political power were concentrated in the imperial bureaucracy, army leaders, and their suppliers and provisioners. The tax reform of Diocletian (ruled 284-305), enacted in 297, taxed the hitherto exempt wealthy landowners as well as the rest of the economy. His successor, Constantine (ruled 306-337), enacted a monetary reform in the 310’s, basing the military-fiscal state on the gold solidus.

The effect was monetary deflation. “Like the gold standard of the nineteenth and twentieth centuries,” Prof. Weisweiler explained in his paper on the Late Roman economy, “the introduction of the solidus was a golden age for capital-owners but a dark period for lower strata of the population.” Yet Medium-sized farms survived without being reduced to serfdom, and wage labor was available for hire at harvest time. The proportion of Italy’s population enslaved is now deemed to have been around 15 percent.

There were no slave revolts, but debtors rebelled or defected to invaders, as they had done earlier in antiquity. Prof. Weisweiler described how, when a Gothic army defeated that of Rome at Adrianople (eastern Turkey) in 378, local guides brought the victors “to the villas of great landowners, who were then plundered by a coalition of Gothic soldiers and local residents. When in 408 the Romano-Gothic military leader Alaric for the first time besieged the city of Rome, his forces were swollen by many debtors who left the imperial capital to join his army.”

Richard Payne of the University of Chicago gave a paper explaining how peasant revolts against Persia’s Sasanian rulers a century later sought to “restore” an egalitarian Zoroastrian order as a protest against the extreme polarization that widened the gap between luxury and poverty. The new morality of economic balance rejected silk garments, silver wine vessels and other status symbols of the elites. Interest was condemned, as it had been under Christianity and would be under Islam. All religious urged mutual aid and warned about abusive wealth-seeking by the elites. What occurred culturally was a revulsion against luxury and hubris – a Greek word that connoted not only arrogance, but arrogance that took the form of injuring others.

Ideology and Antiquity

Creditors were the typical class singled out as oppressive and destructive of society. Their self-centered wealth addiction was seen as stripping society to serve their own compulsive drives. It was to praise moderation and even to prefer a poverty of equality to indulgence in luxury that Christianity, Islam and other religious movements of the early first millennium AD took root.

By the 14th century the great Tunisian Islamic philosopher of history, Ibn Khaldun, described societies gaining prosperity through “group feeling,” only to lose it within about 120 years as the ruling dynasty succumbed to self-indulgence and greed – paving the way for their land to be conquered from without or taken over from within.

My own paper for the conference described how Ibn Khaldun’s “rise and fall” view of history in The Muqaddimah was echoed in Giambatisto Vico’s The New Science (1725), and later by the French and Scottish Enlightenment by writers such as Adam Ferguson, who endorsed Montesquieu’s statement in Spirit of the Laws (1748): “Man is born in society, and there he remains.” To survive, people need to cooperate in a system of mutual aid. “Man is, by nature, the member of a community; and when considered in this capacity, the individual appears to be no longer made for himself. He must forego his happiness and his freedom, where these interfere with the good of society.”[3]

All this teaches the opposite of today’s two guiding economic premises: “Greed is good,” and “There is no such thing as society.” Economics used to be called moral philosophy, but it has succumbed to individualistic extremism. Homo economicus has replaced zoon politikon. Debts are supposed to be paid without concern for how this impoverishes the economy.

It was to resist personal gain-seeking at the expense of the body politic and group solidarity that the world’s major philosophies and religions for the past two thousand years urged self-control, generosity, care for the weak and poor, and rules to limit the luxurious self-indulgence and anti-social egotism it bred in ruling elites. Excluding this intellectual legacy from the curriculum has paved the way for inverting today’s moral attitude upholding creditor claims against the rest of society.

It should not be surprising that modern financial elites are fighting back against democratic moves to limit their wealth, adopt progressive taxation, write down debts by bankruptcy reform, and shift control of government away from landed aristocracies and banking centers. These vested interests are behaving exactly as Ibn Khaldun described the terminal decadent generation of dynasties as acting with anti-social selfishness.

Ferguson described how prosperity lay the groundwork for undermining the commercial stage: “man is sometimes found a detached and a solitary being: he has found an object which sets him in competition with his fellow creatures, and he deals with them as he does with his cattle and his soil, for the sake of the profits they bring. The mighty engine which we suppose to have formed society, only tends to set its members at variance, or to continue their intercourse after the bonds of affection are broken.”[4]

The financial takeover of government is not new. Ibn Khaldun described how what today is called the “deep state” (often run by foreigners or other interlopers) gains control of dynasties. Lacking traditional royal authority, they must work outside or behind the scene of politics, as finance does today:

In gaining control, he does not plan to appropriate royal authority for himself openly, but only to appropriate its fruits, that is, the exercise of administrative, executive, and all other power. He gives the people of the dynasty the impression that he merely acts for the ruler and executes the latter’s decisions from behind the curtain. He carefully refrains from using the attributes, emblems, or titles of royal authority. He avoids throwing any suspicion upon himself in this respect, even though he exercises full control. … He disguises his exercise of control under the form of acting as the ruler’s representative.[5]

Today’s Treasury Secretaries, central bank heads, IMF economists and client academics serve the world’s cosmopolitan financial ideology that money and credit, debt and taxes are purely technocratic, and hence beyond the sphere of voters or the politicians they elect to “interfere” with. We are back with the Thatcherite financial Taliban (the Arab word for “students”): There Is No Alternative.

That is the protective myth that elites have wrapped around themselves and their privileges from time immemorial. To succeed, it must erase knowledge of history and live in a highly censored “present” in which the financial class takes the land, public infrastructure and government into its own hands.

It has all happened before – and so have revolts by debtors and other exploited victims of such “economism.”


[1] Plato, Republic, 331c-d. The term for justice is dikaiosyne, meaning “right behavior,” from dike, cognate to dexterous. I am indebted to Moritz Hinsch of Berlin for drawing my attention to this passage in his paper on “Private Debts in Classical Greece,” delivered to the international conference on “Debt: The First 3500 Years” in Tübingen, Germany, June 11, 2016.

[2] I review the IMF staff protests and Board complaints about the Greek loan in Killing the Host (2015), pp. 303-306, 310, 319f. and 335f.

[3] Adam Ferguson, Essay on the History of Civil Society [1767], 8th ed. (1819), Section IX: Of National Felicity, p. 105. He adds (pp. 4f.): “both the earliest and the latest accounts collected from every quarter of the earth, represent mankind as assembled in troops and companies; and the individual always joined by affection to one party, while he is possibly opposed to another.”

[4] Ferguson, History of Civil Society, p. 34.

[5] Ibn Khaldun, Muqaddimah, : An Introduction to History [1377] translated by Franz Rosenthal (Princeton, 1967 [first ed. 1958]), pp. 377-79.

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  1. TG

    History teaches nothing, but only punishes for not learning its lessons. – Robert Heilbroner.

    1. Disturbed Voter

      From 600 BCE until 1971 CE the motto was “This time it will be different”. Since 1971 the extension of reserve status to material that is abundant (for awhile) as well as burnable (the Petrodollar) is the greatest experiment since the invention of hard cash and bills of credit against hard cash. Human ingenuity worked across the ups and downs of civilization, to escape the restrictions of hard cash (not enough of it to fund governments and the larger economy … mostly because of the unlimited cost of warfare). The idea that currencies are truly free floating is an illusion. Without oil to back the dollar, the experiment would have failed sooner, because when you are free floating, what goes up must come down. The use of property in a ponzi scheme isn’t new, the assignat of Revolutionary France is a predecessor … and ended in a military dictatorship under conditions of war against Revolutionary France. The backing of the dollar can be extended against the decline in the oil market, say to Cripy Cream Donuts … but it won’t be the same. The notes clearly state that the ultimate backing is the ability of the government to tax the future … and that can’t end well.

      1. Jamie

        The notes clearly state that the ultimate backing is the ability of the government to tax the future …

        This is simply wrong on its face. So presumably there are some markings on Federal Reserve Notes that, through some twist of logic can be interpreted somehow to implicate future taxes and this is claimed to be “clear”… it is not clear. Nor is it correct. If you disagree, something more descriptive might get your point across.

        There is nothing illusory about a floating currency. It floats in distinction to one that is pegged. To call a currency ‘floating’ is not to suggest that its value is uncaused, simply that it is not arbitrarily pegged. It is an intractable problem to determine all the causative factors in the same way that it is an intractable problem to determine what the price of any commodity “ought” to be… which is why markets. The value of a dollar is determined, partly, by how many dollars exist and what commodities are available to be purchased. How the current supplies of dollars and commodities are distributed also has an effect. The “location” of dollars affects how they circulate (or do not circulate), which, in turn, influences purchasing power and what commodities become available. Those of us who every day face a diminishing purchasing power do not have the same concerns as those who want to guarantee the future value of their piles of excess cash. We don’t want the dollar to be “backed”… we want it to buy our groceries, which is a problem of distribution, not ultimate value. But no matter which problem one is trying to resolve, none of it has anything at all to do with imagined future taxes.

        1. Epistrophy

          … none of it has anything at all to do with imagined future taxes.

          Eh? Federal Reserve Notes (money) and the principles of Modern Money Mechanics go hand in hand … money is created from government debt whose counter-party is the taxpayer …

          1. Jamie

            I agree with your implication that “none of it has anything at all to do with imagined future taxes” is bad rhetoric, and probably unnecessarily dismissive. However:

            money is created from government debt whose counter-party is the taxpayer…

            This is true only if the government purchases only from taxpayers. The recipient of government spending, who may or may not be a taxpayer, receives dollars in exchange for real goods and services. Yes, that exchange makes them a counter-party (to that exchange—it does not require them to redeem their dollars by paying taxes). Yes, the dollar can be thought of as a form of government debt with utility to cancel tax obligations. But there is nothing in the transaction between the government and its “counter-party” that demands future taxes. Corporations do not contract with the government merely to enable them to pay future taxes. They contract with the government to make their usual (or larger than usual) profit. The bulk of dollars issued have zero expectation of being returned as future taxes. If it were otherwise, corporations would, in fact, not contract with the government except under duress and the economy would not grow.

            When someone like Wray says something like, “taxes drive the value of the dollar” in a context of explaining why a populace would accept an inherently worthless piece of paper as a valuable currency in the first place… fair enough. When someone like J.D. Alt explains that the tax “spigot” and the sequestration of funds in treasury accounts are tools to manage inflation, again fair enough. The tax drain certainly has utility. But other factors provide a currency with value in a mature system. Taxes may be necessary to gain acceptance of a currency, but they are not necessary to keep a mature currency, such as the U.S. dollar, circulating. People value dollars for other reasons. (But I am just repeating myself.) Whether or not the tax spigot is open or closed is not determinate of government spending and the transaction that couples the receiver of government dollars to creation of new money (the transaction that makes the receiver a “counter-party”) does not require that said receiver either be a taxpayer or that the new money created ever be returned as taxes.

            I did not mean to be dismissive of the link between taxes and money value. I meant to be dismissive of the notion that our current currency needs some kind of “backing”. I meant to decouple the spending of dollars from the collecting of taxes, as they are, under “the principles of Modern Money Mechanics”, decoupled.

            If your reading of the principles of Modern Money are different, please explain.

            1. Disturbed Voter

              In the case of the US, backed by the full faith and credit of the government? Really? The governments of the world have no intention of paying back anything to anyone, except with more of the same, which they can now create digitally. The idea of credit, is to borrow from the future. When I borrow myself, I am only obligating my future self. When the government borrows from the future, then they are borrowing from future tax revenues. If currencies were really magical, there would be no need for any taxes, or for countless resources to be used to protect the oil fields.

              Now in theory, one can take the entire GDP of the planet, as the backing, not only the real economy, but finance. Then we really have the serpent eating its tail. By what right can any government, even the US, obligate the future GDP of the entire planet, as backing for its currency? The current GDP is consumed, it is unavailable to be collateral.

              1. Jamie

                When the government borrows from the future, then they are borrowing from future tax revenues.

                This would be true only if tax revenues were the source of government dollars. Tax revenues are the source of government dollars only for state and municipal governments… the federal government has no need for tax revenues since it creates dollars by spending. The federal government spends dollars into existence and has no need to borrow any dollars ever… and of course, subsequently, no need to ever repay any debt by further borrowing. The federal government honors (and “repays”) its dollar debt every time it accepts a tax payment from a taxpayer or pays interest on a T-bill. It is important to understand how these two forms of “debt” differ from one another. But it is most important to understand that the federal government has no need of, and no use for, “revenue”, tax or otherwise.

                If currencies were really magical, there would be no need for any taxes

                Currencies are not magical, they are rational. States that cannot issue their own currency, such as the states of the U.S. and the states of the Eurozone, require taxes in order to secure revenue. (It does not have to be this way—but that is our current arrangement.) States that can issue their own currency, such as the U.S., indeed have no need to levy taxes in order to secure revenue. There are reasons that federal taxes are desirable, but providing “revenue” to the federal government is not one of them. This is true even on the gold standard. In the case of the federal government, the role of taxation is to allow the government to initiate new projects without undue inflation… not to provide revenue to the government. Under the gold standard the supply of gold limits the size of the non inflationary economy. Under a fiat currency, the limit is full employment and productivity at capacity.

                If you asked, could the U.S. dollar crash and lose all or most of its value?, the answer is yes, certainly. But this could happen no matter what “backs” the dollar. What it takes to crash the dollar differs depending on how it is “backed”. If it is backed by gold, all it takes is something like what happened in the early seventies when France demanded the gold in exchange for its U.S. trade surplus. “Backed by gold” only means something if a nation can hold onto its gold—which requires a positive trade balance. If the U.S. dollar were “backed by gold” and China suddenly demanded its 1.2 trillion share be converted, we would be seriously hurting. Thank god the dollar is not “backed” by gold. As it is, China can demand from the U.S. government only what anyone else can demand from it, acceptance of their dollars as a remit for taxes owed. Nixon, although certainly a crook, was not an idiot.

                So what can crash a fiat currency? The failure of the government itself. Full faith and credit only means something when the party extending it is expected to last into the future. Should the U.S. topple, the dollar would become worthless. As long as the U.S. is a viable state, the U.S. dollar will be a viable currency, whether or not the federal government ever collects a dime in taxes, present or future.

              2. Jamie

                In the case of the federal government, the role of taxation is to allow the government to initiate new projects without undue inflation…

                I’m sorry, I should have said the proper role of taxation. I hope it’s clear that taxes fulfill other roles. For instance, currently the role of the regressive FICA is to increase the inequality between workers and owners of capital. In a progressive tax system, the role of taxation is to maintain a more equal distribution of wealth. Taxation is a multi-faceted tool.

      2. Adam Eran

        Where do taxpayers get the dollars with which they pay taxes if government does not spend them out into the economy first?

    2. Softie

      Hegel famously said “What we learn from history is that we don’t learn anything from history.”

  2. DarkMatters

    HAPPY BREXIT! (may god save Britain)

    “The financial takeover of government is not new. Ibn Khaldun described how what today is called the “deep state” (often run by foreigners or other interlopers) gains control of dynasties. Lacking traditional royal authority, they must work outside or behind the scene of politics, as finance does today”

    Well, the European Commission and Council are as good an approximation to such a financial deep state as any. The Brexit vote just opened a democratic attempt to wrest sovereignty back from them. Now the questions are
    i) Will the exit proper occur, or will it be stonewalled?
    ii) How severely will Britain be punished if it does?
    I expect the means for both of these will be similar to those applied to Greece following the uxi vote; but I’d be so happy to find myself mistaken.

    Best of luck.

    (And, er, how do I change the text format from that of the article text I copied in?)

    1. Benedict@Large

      ii) How severely will Britain be punished if it does?

      I always get a chuckle over threats like this. Here you have this major customer who maybe doesn’t do everything you’d like. You’re going to punish him? Sure, right until Chinese, Indian, US, Brazilian (etc.) producers show up with their deals.

      Money has no conscience. These threats are worthless when tossed at a market as big as the UK.

    2. readerOfTeaLeaves

      When you make a comment, at the top of the commenting box, you should see a light gray bar.
      On that bar are ‘b’ (bold), ‘i’ (italics), link, and ‘quote’.
      Highlight your quoted text and then hit the ‘quote’ button on the gray bar. You should see that at the beginning and end of your highlighted text are inserted symbols with words inside.

      You may also need to check your browser’s preferences; it is possible these buttons are not showing up on your screen’s comment box, due to some setting in your browser.

      If you already knew all this, my apologies.
      Only trying to help!

  3. templar555510

    In case any of you who read this blog haven’t yet heard, but we , the British People, have voted to leave the European Union . The elites here in Europe and the United States have failed to take account of the will of the people – principally for a fairer society – and make the changes necessary to bring that about . If Donald Trump becomes the President of the United States the same message will have been delivered to those same elites .

    1. I Have Strange Dreams

      ” If Donald Trump becomes the President of the United States the same message will have been delivered to those same elites .”

      The Donald will totally make America great again. Glad he’s building that wall to keep raving loonies in.

    2. Ignacio

      You, the british, did it! But, excuse me, Trump does not belong to the very same elites or is he just another kind of elite that we shouldn’t let rule?

      1. beene

        Perhaps what is missing is an understanding who or what is leading the nations today threw the laws the politicians must support to stay in office. Thou it was explained in great detail in the article.

      2. tegnost

        consider the illustrious group (robert kagan et al.) endorsing clinton for fear of trump, whose speeches contain words that resonate with workers, while clintons do not. Oh and lets not forget bernie would beat trump, but the top (let’s face it, with hillary’s endorsements by the neolibcons we’re no longer a right/left paradigm, we’re top/bottom and trump acknowledges that) has determined that they can impose their wishes (see the DNC and Greece) and we’re all either too stupid to realize it, or too powerless to stop it

  4. BruceK

    One minor point – Adrianople, now Edirne, is in the extreme North West of Turkey.

    Re Brexit in the comment above, the EU doesn’t do stonewall so much as fudgewall. Whether this one can be fudged away, though, we’ll see.

  5. PlutoniumKun

    Re: Yves comment – I’d disagree that the vote was a vote against EU austerity and neoliberalism. If you read the best writer on the topic – John Harris in the Guardian, its quite clear that the core driver was a gut level revolt against the British (or more specifically, English) elites of London, along with a strong dash of anti-immigration sentiment. The average Brit wasn’t particularly effected by the EU’s austerity obsession thanks to being out of the eurozone. And if anything, the British government is even more neoliberal and austerity focused than the Germans and EU in general, so it makes no sense whatever to see it as a revolt against this. And of course the Scots, the main hold outs against neo liberalism and austerity in the UK, overwhelmingly supported Remain.

    1. paul

      As one of the few Scots who voted leave,if only to throw a little sand in the gears of the neoliberal leviathan, I had to wryly reflect on the dire warnings of expulsion from the EU during our little referendum.
      (Though why a smallish,newly independent nation would want to have its feet nailed to the floor before it had even found them baffles me)
      The leave group, for whom my contempt is complete, seemed a little surprised,even dismayed this morning, no dragon left to rail against with their cardboard swords and saucepan helmets.
      A big mess for which they have no plan and might just affect their interests adversely.

      The results showed how disconnected the political class is with the nations, especially Labour, despite Corbyn being far closer to them than his parliamentary party and what passes for ‘left media’ these days.

      Maybe now we can see the enemy, and realise it’s not us.

      1. MikeNY

        no dragon left to rail against with their cardboard swords and saucepan helmets

        Wonderful image!

        Perhaps we’ll look back at this moment in some years and see ‘peak Neo-Liberalism’.

    2. Zak

      I’m guessing Yves meant that people were protesting against the effects of neoliberalism on their lives, even though that has successfully been framed as a problem of immigration and EU control. That’s how I’did see it at least.

    3. Anon

      A British Labour MP on BBC this morning was asked about Corbyns position, prime time. She said his mistake was believing in reform. We both believed it to be a dysfunctional neoliberal institution, but he believed it could be reformed. I do not. (Not an exact direct quote, but close).

      It’s the first time I’ve heard a mainstream politician refer to neoliberalism, certainly during prime time.

      1. paul

        when philip hammond (neocon defence secretary) came on the colour television I joked to my better 50% that he would say the vote was a gift to one V Putin.
        Imagine my surprise when he actually did,revealing that without jens stoltenberg and jk juncker to protect us, we are now mere playthings in the bear’s paw!

        however, he said he would do everything he could to support sanctions against Russia, as if anyone fucking cared about that.

    4. BIllC

      PK, your comments are nearly always illuminating, but while I think you’re correct here, your point seems to me an unimportant quibble.

      From my perch in Italy instead of the UK, I’d say that dissatisfaction of the whole western world’s electorate has the same proximate causes you identified in the UK: revolt against the elites and apparently uncontrolled immigration. In all cases, I believe the revolt is due to economic stagnation (and worse) of the lower 80% for going on 2-3 decades. Whether the elite in question is based in London, Brussels, or Washington DC makes no practical difference with regard to the need for effective and lasting revolt against the political incumbents who have sold out their electorates to their elite masters.

      Or am I missing a finer distinction you intended to highlight?

      1. PlutoniumKun


        No finer point really – I get what you are saying about their being an international dissatisfaction about the elites, but its pretty clear if you read John Harris’ articles (or for that matter, follow the debates), that the vote had very little to do with EU neoliberalism or austerity. The core driving issue (as shown by the focus in the final stages on immigration) was all about fears of immigration and migration. This was overwhelmingly a vote in favour of a far right view of the EU. TTIP, etc., was hardly mentioned at all, and only motivated a small minority. Left wing progressives overwhelmingly supported Remain – not because they were fooled by neoliberal propaganda, but because they see this as a coup by nationalistic far right to make England (I suspect many would be very happy to be rid of Scotland) into the free market paradise they dream of.

        What many forget in celebrating this, is that much of the driving force behind neoliberalism and austerity in Europe, was in fact the UK government. We focus here on Germany because of their influence via the Euro, but if, over decades you follow debates over EU directives and ECJ decisions it was always consistently the UK which was fighting against workers rights, against environmental protection, against health and safety legislation, against equality directives and in favour of transatlantic trade deals.

    5. James Levy

      I agree–Yves went a bridge too far on that one, assuming she knows what’s in the heads of the voters and what really motivated them. My guess, and it’s only a guess, from living over there is that it was part xenophobia, part anti-immigrant (related but not identical phenomena), part English nationalist, and part anti-Cameron.

      I’d love to know the results in Wales, where I lived and where the EU was quite popular.

    6. Yves Smith Post author

      Huh? What you wrote supports my remark. I just spoke to a political scientist who just came back from London and snorted, “Of course, this was a vote against neoliberalism.” The areas that voted Leave were all the losers to London and environs, which benefitted. The EU vote for them was a proxy. The Guardian story confirms that point.

  6. econoclasm

    Anti-neoliberals should be very wary of making common cause with the nationalist right.

    This Brexit is a victory for those on the right wing of the Tory party who have been pushing this agenda since I was a kid. At the time they were seen as a cranky old fringe…now they are in the driving seat of UK politics, with a similar pattern emerging throughout Europe.

    People like Steve Keen (who I usually agree with) think Brexit will help Greece somehow. Well, it will help some Greeks, for instance ANEL (the anti-immigration member of Syriza’s great coalition).

    This is the most salient context of Brexit:

    I’ve learned a lot from MMT and from nakedcapitalism, but I am troubled by how a nationalist streak is playing out in support for Trump and Brexit. I’m no fan of HRC or the EU. But let’s not become useful idiots for the xenophobic right.

    1. Kulantan

      Anti-racists should be cautious about making common cause with neoliberals. Instead let’s not become useful idiots for the anyone and judge each circumstance on its merits.

      1. James Levy

        Absolutely true, in both directions, but as is often pointed out here about Clinton I know what the UKIP and many Brexit supporters feel and espouse, so it’s not insane to worry about their racism and xenophobia. It’s not as if they hide it particularly well.

        I have no idea if Brexit will help or hurt more Britons. I know it’s not popular in the Celtic Fringe, and since those have tended to be the most downtrodden parts of the country, that means something to me. I also know that the big money behind Remain was from the completely corrupt FIRE sector. This makes the choice difficult for me to discern. I don’t know what the right course was, and will see how it is implemented in practice before jumping to conclusions.

    2. James Levy

      I agree, but many people have convinced themselves that they’ve got to excuse Trump or downplay the danger of Trump because they hate and are afraid of Clinton to the extent that their critical faculties have become impaired. They are playing out the Obamabot role but don’t or won’t see it. Once you’ve decided you are going to vote for someone, you are going to try to rationalize that choice. A few people will stick to a straight “less evil” argument, but many are going to try to pretend, who in another year would have scoffed at the idea of voting for a Republican billionaire grifter, that there are significant positives to voting for Trump. I think this will prove a mistake later on when he wins (and he could easily win) because the next step is justifying your vote by excusing terrible policy (again, the Obamabot analogy will be in full swing) when what we’ve got to do is fight like hell against all bad policies, from all directions.

    3. diptherio

      Have you paid no attention whatsoever to the actions of HRC? You best watch who you’re calling idiots around this joint…

      Vote for the openly corrupt status quo politician…that’s the smart thing to do! Spare me. Or maybe we should all vote Green…except in states where they’re not on the ballot yet.

      You don’t have to agree with people’s analyses or voting decisions, but calling them idiots because you don’t agree with their take is bound to blow up on you.

      1. Waldenpond

        What’s interesting is people ignoring that there is a left argument for Brexit. It’s the same BS in the US…If you didn’t vote for Obama, you’re racist. If you don’t vote for Clinton, you’re sexist. If you voted for Brexit, you’re racist. The vote had divisions by age etc, but the biggest split looks to be money… where a larger number of the struggling voted to get out and the comfortable wanted to stay. Young people were complaining about olds that benefited through education and jobs and the olds were saying they were voting out to get it back. It’s clear, that many are unhappy with the system and are trying to get out from under…. they are not idiots.

    4. tegnost

      we voted overwhelmingly for hope and change and got bailouts of the rich and foreclosure and debt for life, skyrocketing rents, a subsequent homeless crisis, and health insurance not health care. Who exactly are we being the useful idiots for?
      It’s not “out of nowhere” that these policies would lead to nationalism and the elite insisted on doing them anyway. Spare me the hoocoodanode, it’s been discussed here for many years. Immigation here in the states has clearly been used to drive down worker pay and benefit the elites, too bad for them that it’s impact now threatens their iron fist.

    5. DarkMatters

      The problem is that the elites, as represented by the mainstream parties, have kept the lid on this pot far too long. They’ve censored open discussion of these issues under the rubric of political correctness, and attempted to discredit such concerns as fascist and, yes, islamophobic. This suppressed speech and sentiment has broken out exactly where one would expect, among parties for whom demonization has least effect, and the difficult conversations are now being had despite the elites’ censorship. The problem the manipulators, sorry, I mean leaders, of political opinion, face at this time is to make all such concerns execrable without having to look at things too closely. But the dam has broken: the widespread breakout is now demanding open confrontation with the problems neglected by head-in-the-sand politics, and action. The ostrich is now objecting that it didn’t see this coming.

  7. EndOfTheWorld

    The EU is a scam and a thee year old kid can see that. The whole thing is controlled by unelected people who don’t know their ass from their elbows. To let the people decide what they want is not being a “useful idiot for the xenophobic right”.

  8. EndOfTheWorld

    William Shakespeare on debt: “Neither a borrower or a lender be; For loan oft loses both itself and friend.”

  9. Norb

    -the bonds of affection are broken.

    That statement sums up the feeling of the working class that the elite just can’t bring themselves to accept.
    Being purveyors of a violent ideology, the response will be- more violence.

  10. Cocomaan

    Ibn Khaldun’s concept of asabiyyah ie Social Cohesion is a sociological one, the Zeitgeist being a poor imitation of what he was describing.

    Anyone living in modern societies can see the breakdown of social cohesion. I’m in the USA. This election cycle has unveiled the real rotting out of asabiyyah. Trust is wanting in all aspects of politics and society. There is a huge dearth of empathy and understanding and little to bind people together under the American flag. Reconciliation seems very far away.

    Khaldun also had a major axe to grind with urbanism, which he said bred corruption, whereas the rural economies bred puritanism. Those two things clashed heavily throughout the Berber revolts/empires/corruption cycles he reported on in his histories. I think that’s a lesson of Khaldun’s that we often lose.

    1. tony

      Why participate in a society? Only the fools and the dregs of the industrial economy do. What we have now are networks, the difference is that network belongs to you, while you belong to a society. Network is your asset, and you are a society’s asset.

      If you are succesful in a modern society, you can call upon the state to protect you and guarantee your access to resources. You have no real obligations, apart from a tax burden. Services can be bought. Join a society, and you must accept rules and obligations and even enforce them on others.

  11. tegnost

    i wonder about the hounding of graeber by the fbi and nyc police, maybe they’ll take a swipe at hillary and send her to the hinterlands as well?

  12. RBHoughton

    Socrates was being illogical :) what happened before precedes what happens after. Time is an arbiter of justice too. The money debt of Cephalus is due; the concerns about weapons in mad hands is speculation about the future. Back to school Socky.

    The relevant variable in the argument about money debt is the nature of what is loaned. In the world for the last century or more, that loan has been credit. As every central banker knows credit is nothing like value – you just keep throwing it out and hold a G-25 occasionally to fix exchange rates.

    If Greece had paid its debts (with a straight face) by issuing pretty IOUs with lots of gothic script and large red seals it should have been sufficient.

  13. Quentin

    The Brexiters had a terrible nightmare last night and woke up with a crushing hangover: they have no idea what to do next or who’s going to do it even if they knew because they never thought beyond the referendum and have no plane. No one is capable of actually invoking Article 50 and starting the official negotiations to leave the EU, nor is anyone prepared to scuttle the referendum results and defy ‘the will of the voting majority’. The most annoying result is the self-serving pronouncements of politicians/technocrats and the EU bunch about they’re going to work so hard to do better, improve the EU, listen to the people. It sounds a lot like HRC’s hedged criticism of TTP: a lie.

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