From an interview by Harold Crooks of the LES-based cultural and political online magazine, The Gathering of The Tribes
One of the most compelling sequences in the Oscar-winning Inside Job, Charles Ferguson’s indictment of Wall Street’s role in the 2008 global financial meltdown, involved not the banker culprits but their supporting cast. These were the Ivy League accomplices. Ferguson mightily skewered these economists for the cover they gave the sub-prime Hamptons dwelling wise guys whose rescue turned out to be a pretext for one of the largest reverse-Robin Hood wealth transfers in history. Though for the foreseeable future they enjoy their tenured posts, control prestigious academic journals and continue to prey on the unformed minds of students, the speculative financial implosion has shaken confidence in the economics academy. And through those cracks (to borrow from Leonard Cohen) shards of light are getting in. Economists once on the academic fringes – in university outposts like the University of Missouri Kansas City and Bard’s Levy Institute – are being looked to not only for understanding how to prevent bankers from setting the economy on fire again, but on how to build a social system that works for the majority.
Among the most brilliant of these heterodox economists is Michael Hudson. Coming to New York City in the 60s to study under a renowned classical music conductor, Michael switched to economics when he became beguiled by an accidental acquaintance with what he saw as the aesthetical flows inter-connecting natural and financial cycles and public debt. His biography contains elements of an epic novel: growing up the son of a jailed Trotskyist labor leader in whose Milwaukee home he met Rosa Luxembourg and Karl Liebknecht’s colleagues; serving as a young balance of payments analyst for David Rockefeller whose Chase Bank was calculating how much interest the bank could extract on loans to South American countries; touring America on Vatican-sponsored economics lectures; turning after a riot at a UN Third World debt meeting in Mexico to the study of ancient debt cancellation practices through Harvard’s Babylonian Archeology department; authoring many books about finance from Super Imperialism: The Economic Strategy of American Empire  to J is For Junk Economics: A Guide to Reality in an Age of Deception ; and lately, among many other ventures, commuting from his Queens home to lecture at Peking University in Beijing where he hopes to convince the Chinese to avoid the debt-fuelled economic model off which Western big bankers feast and apply lessons he and his colleagues have learned about the debt relief practices of the ancient civilizations of Mesopotamia.
I talked to Michael about his forthcoming book Forgive Them Their Debts: Credit and Redemption that comes with an astounding re-reading of the Bible and the true meaning of the life and persecution of Jesus. Based on scholarly breakthroughs in decoding ancient languages, it places a debt cancellation message inherited from Babylonian times at the center of Mosaic law and the Jewish Bible. And when it comes to Jesus, his message is revealed to be a social justice message. Through the lens of this reinterpretation, Jesus was actually an activist
advocating for debt cancellation. He died not for the sins of the people but for their debts.
My interview began with a question about the subject of his new book. I knew Michael has a following well beyond the professional classes. Some years ago on exiting the fancy Park Avenue apartment we borrowed to interview him for our film Surviving Progress [co-directed with Mathieu Roy], I was astonished to witness the Puerto Rican door man rush up to shake his hand and thank him for his appearances on progressive cable shows. It made me wonder if his book re-interpreting the Bible was designed to reach a working class audience, possibly even Trump voters.
Michael: Not at all. I originally wrote the book Forgive Them Their Debts: Credit and Redemption as an extension of the archeological and the Assyriology work that I’ve been doing at Harvard University at the Peabody Museum since 1984. I originally called the book Bronze Age Finance, because I wanted to undertake a study of the origin of debt, and how societies dealt with debt that grew so large that it forced populations into debt bondage, and dependency ….
And I wanted to study the background of Clean Slates, debt cancellations, and I found out that they begin in Sumer, and Babylonia, around 2500 B.C., and every new ruler, when they would take the throne, would start his reign by canceling the debts. In Sumer, the word for that was amargi, in Babylonian the word during Hammurabi’s dynasty was andurarum. Well, I then, after translating many of these debt cancellations from Hammurabi’s dynasty, and from neighboring near Eastern countries I realized that this affected the interpretation of the Bible because the Jubilee year in the Bible, Hebrew deror, is a cognate to Babylonian andurarum, and the Jubilee year was word-for-word exactly the same debt cancellation and freeing of the bond servants and restoration of land that you had occured for 1,000 years in the Near East, and was still occurring in the first millennium BC.
So my aim was not at a religious audience. The initial writing of the book was for economic historians and archeologists and Assyriologists who were part of the group at Harvard that has done the five volumes that I’ve co-edited on the origins of economic practices in the ancient Near East.
Tribes: That said, somewhere in the back of your mind, were you anticipating that what you discovered in antiquity would have application in the present?
Michael: Well, from the very beginning, after working on Wall Street, I realized something that should be mathematically obvious. That the debts now today are too large to be paid without bankrupting society and polarizing it in much the way that occurred again and again in history. It occurred in Rome, it occurred earlier in Sparta. You have a constant historical movement here. So my focus was to trace the history of debt cancellations, primarily.
What I realized is that when Luke 4 reports the first speech of Jesus, when he goes to the temple and gives a speech, his first sermon, he unrolls the Scroll of Isaiah, and said he has come to essentially proclaim the Jubilee year …. The word he used, and that Isaiah used, the deror, was this Babylonian, Near Eastern long tradition that was common throughout the whole Near East.
Now most of the Biblical translations miss this point because, one they were translated in the 17th and 16th century, people didn’t know cuneiform, they had no idea what these words meant and what the background of the Jubilee year was. And maybe 50 years ago, there was almost a universal idea that the Jubilee year was something idealistic, utopian, and could never actually be applied in practice, but we know that in Babylonia, Sumer, Near Eastern regions, it was applied in practice. Because not only do we have the royal proclamations, we have the lawsuits by debtors saying “This creditor didn’t forgive me the debt,” and the judgments for that. We have each member of Hammurabi’s dynasty after him ending up with this great grandson Ammi-Saduqa had more and more detailed anderarum acts, debt cancellations, to close all the loopholes that creditors tried to resort to.
So what Jesus was referring to was a very tangible fight. And in his time, this was the fight throughout Greece, it was the fight throughout the whole ancient world, the fight to promote debt cancellation. And the Dead Sea Scrolls show this. For instance, Melchizedek 12 is a huge Dead Sea Midrash of all of the Biblical citations of the jubilee year, tying them together. And we now understand that the Dead Sea Scrolls were not a sectarian Essene product, but they were basically the library of the Temple of Jerusalem, that was sent and put in these caves for safe-keeping during the civil wars.
So what Jesus was referring to was a very widespread argument in what was really a class war between creditors and debtors that swept throughout the whole period, including Rome itself. And this has not been clear to most people who think they’re taking a literal version of the Bible. And it’s very funny that the people who call themselves fundamentalist Christians will have dioramas of dinosaurs and human beings all sharing the same landscape, literally. But what they ignore is, if you take the Bible literally, it’s the fight in almost all of the early books of the Old Testament, the Jewish Bible, all about the fight over indebtedness and debt cancellation.
Tribes: That’s extraordinary. Elsewhere you’ve made the point … You’ve made the point that it is important to understand the Bible was rewritten after the Jews returned from their Babylonian exile. What’s the significance of this in terms of your reading of Old Testament texts?
Michael: I wouldn’t say that the Bible was re-written after the exile, it was really codified and put together after the exile. This has been the normal view of the Bible for the last 60 or 70 years in Biblical scholarship that realizes when it was put together and under what circumstances. And it was put together logically to weave the tradition of debt cancellation into the whole Jewish history. To make it really the history of how the debt crises had disrupted Jewish and Judean/Israelite society for hundreds of years.
Tribes: What are the textual sources that give you confidence in your reading of the Bible?
Michael: Well the first textual sources are the Laws of Hammurabi, the debt cancellations of the Sumerians, Enmetena, Urukagina … In my book I go epoch by epoch. Sumerian, the neo-Sumerian, Ur III period, the intermediate period, the Babylonian period, right down to the Egyptian Rosetta Stone, which is a similar debt cancellation. So there are hundreds of documented, official debt cancellations in great detail. Because these were inscribed publicly on bricks in the temples, or on statues that were put in the temples, or buried in the temple foundations. The central act of a ruler coming to power in the Near East was a debt amnesty. Forgiveness of money or taxes or duties owed to the palace, and debts owed to the palace. And by extension, debts owed to royal collectors, and to creditors in general, most of whom had some relationship to the palace.
Business debts were not forgiven. The debts that were forgiven were personal debts, agrarian debts, and the idea was to liberate the bond servants so that they could be available to perform the corvée labor, which was the main kind of taxation in the Bronze Age, and serve in the army. If you were a debtor and you were a bond servant to a creditor, you wouldn’t be available for corvée labor, you’d be working (for) the creditor, you wouldn’t be available for the army. And you have this very clearly in Sparta in Greece, for instance, by the third century BC, the ranks of the army were depleted because the citizenry had lost its land tenure, and that’s what led kings Aegis and Cleomenes and Agis to push for a debt cancellation to restore the land ownership.
So what we find is something that occurs not only in the Biblical lands, but in Greece, Rome, Egypt, the rest of the Near East. It was universal at that time, and there’s been almost no economic history of this. Either in the Bronze Age, or in Classical Antiquity. And when I began to write this book in the 1980s, it was generally believed that these debt cancellations were simply utopian statements as I said, there was no idea that they were actually enforced. And the idea seemed radical at the time, and now after the five volumes that my group has published through Harvard, now these ideas are generally accepted by Assyriologists and archeologists, but they haven’t spread to the public at large yet, because of cognitive dissonance. People can’t believe that the debts actually were canceled. But this is what revolutions were all about in Greece and Rome for hundreds of years.
Tribes: And I’m assuming that there was sufficiently sophisticated knowledge of economics to explain that Clean slates, debt cancellation, Jubilees, were more than a self-serving interest of the nobility or the aristocracy, the monarch to have soldiers to go to war, that there was some larger purpose than merely freeing up peasants so that they could serve in military campaigns, that there was some knowledge that this was necessary for a sustainable economic system.
Michael: Bronze Age rulers, Sumer and Babylonia, never explained the reason or the logic behind their acts. Later, Egyptians in the first century BC explained to Roman historians what the logic was. But the early Egyptian Pharaohs, nobody would explain, all we have are the records, “Here is the ruling.” There was no abstract economic logic as such, there was no discussion of abstract principles. That only occurred in the first millennium BC, and it’s in the first millennium that Egyptians explained it to the Roman historians, that if you didn;t cancel the debts you wouldn’t have anyone to fight in the army, and to perform the corvée labor that Egypt and other countries depended on to build their basic infrastructure.
The reason there wasn’t an abstract discussion was there was no Milton Friedman or Margaret Thatcher to even advocate libertarian, free-enterprise economy. Their economy was what seemed natural to them, and it never occurred to them to try to develop economics and an individualistic explanation of things. It seemed this is how a fair world works.
Tribes: Did promulgating these Clean Slates that you’re describing occur in relatively primitive societies of their era, or even in more complex ones?
Michael: I don’t like the word primitive. The societies were not complex at all. The palatial economies of Sumer, Babylonia, other Near Eastern regions, Egypt, were by no means primitive. We’re not talking about tribal societies basically, or anthropological type societies, we’re talking about complex urban cultures, and really the origins of Western civilization are to be found not in Greece and Rome, or even in Judah and Israel, but in Sumer and Babylonia, where almost all of the techniques of economic enterprise, the charging of interest, weights and measures, monetary coinage, all begin.
Tribes: You’ve touched on this, but just so that I have it, whose debts got canceled in antiquity, and by whom were they canceled?
Michael: You begin with by whom they were canceled. Rulers canceled the debts. And it was very easy for them to (do) that without opposition, because in the beginning most of the debts that were owed were owed to the palace itself. Both in fees for services the palace provided, or the temple provided, the temple was part of the palace economy, or for land rent by sharecroppers or for the provision of water and agricultural services to the land. So most of the debts were owed to the rulers themselves, or to their palace (tax) collectors who gradually became independent creditors by the wealth that they made. So they were essentially debts owed to wealthy people who could afford not to collect it.
And if the debts had been collected, then the rulers would be undercutting their ability to obtain the labor of debtors, the agrarian debtors, for as I said, corvée services and for the army. The debts that were canceled were personal, agrarian debts. They were called barley debts. Silver debts, among merchants, were not canceled. Business debts were not canceled. Only debts by subsistence farmers were canceled so that they would not be subjected to bondage to the creditors, and so they would not forfeit their lands to monopolists who wanted to acquire the land and would essentially disenfranchise the population.
Tribes: Okay, so moving forward to the time of the Jesus figure and the New Testament, was debt forgiveness still an important practice under the Romans?
Michael: No. The Romans were the first society not to cancel the debts, and there was civil war over that. A century of civil war from 133 BC, when the Gracchi Brothers were killed by supporting the population, to 29 BC when Augustus was crowned. There was a civil war where the advocates of debt cancellation were put to death. Just as Cleomenes in Sparta, in the late third century, was put to death, and Agis, his predecessor earlier in the third century BC, were put to death for advocating debt cancellation. So there was three centuries of constant civil war over this, and ultimately the creditors won, largely by political assassination of the advocates of debt cancellation, who almost all came from the upper class. They were upper class reformers, they were not lower-class particularly. They were the scholars, just as Jesus was a rabbi.
So there was essentially not only personal assassination of advocates of debtors interests, advocates of pro-debtor laws and debt cancellation, but Sparta as a backer of oligarchy would attack democracies that sought to cancel the debts.
Tribes: You touched on that very effectively, and we used you talking about this time period, (in our documentary film) Surviving Progress. But I’ve seen it suggested that some scholars dispute the fact that debt cancellation could’ve been a reality at the time of Jesus, that the idea of a Jubilee makes no sense, because if debts could be canceled, who would lend money?
Michael: Well that’s the big fallacy. Most debts did not occur from lending money. It’s easier today to figure if you have a debt, you must have borrowed it. But three quarters of the debts in Babylonia, for instance, where we have records because they were on clay, cuneiform records that were baked and have survived, most debts were simply unpaid bills. The debts were unpaid taxes, unpaid debts, unpaid rent, and unpaid obligation for services that had been supplied. There was no initial lending of money, necessarily. Maybe one quarter of the circumstances were that.
So the people who say lenders wouldn’t have lent miss the point that most debts were … it’s like if somebody at the end of the spring doesn’t have enough money to pay the income tax that’s due, nobody’s lent them this money, but the income tax is due. So it’s an obligation that is mounted up in the normal course of life that they’ve fallen into arrears on it. It’s a payment arrears, not the result of a loan, except in some cases.
Tribes: Fascinating. This leads you to what for many readers of this interview and I assume of your book will come as an astonishing assertion: that Jesus was crucified for his views on debt. Who exactly in your reading of the Christ story are the powerful creditors that were so threatened by Jesus?
Michael: Well, just as the Bible said, they described the Pharisees as having greed and representing what they called the greedy class. And of course the main opponent of Jesus was Hillel. And it was Hillel that devised the Prosbul, P-R- O-S- B-U- L, which was an addendum to a debt note whereby the borrower would promise not to avail himself of his rights under the Jubilee year. So essentially the debtor would waive the rights under the Jubilee year, so that the creditor could collect even if the Jubilee year were done. And Jesus quite correctly said, “Look, every single book of the Bible from Kings onwards to Isaiah and the books of the prophet, this is the center of Mosaic law.”
And the Bible, the Mosaic law, realized that by the first millennium, the kings not only in Israel and Judea, but in Persia and elsewhere, were basically representing the ruling class, the wealthy class. And the Bible is sort of unique in historical documents for showing that most of the kings were not good kings. The whole Jewish Bible is about bad kings. And so Judaism took the debt cancellation out of the hand of kings, where it had been in the Near East, and put in the very center of their religion. In Leviticus 25, again and again the prophets would say, “We’ve freed you from bondage, and if you’re going to maintain Judaism, you have to respect the debt cancellation.” And the Biblical prophets warned, if you don’t cancel the debts, you’re gonna be canceled. By Assyria, by Babylonia. And they blamed the capture and destruction of Judea and Israel on the fact that they had veered away from the law of God and did not cancel the debts.
Tribes: Did Jesus have any defenders amongst the elite?
Michael: He must have. I think many of his followers were from the elite. We know that he must have, because there was a whole Melchizedek sect, apparently, there was a whole group we know from the Dead Sea Scrolls that all of these different groups were producing these Midrashes, which is a collection of the Biblical statements of debt cancellation. It was very widespread as part of the war between debtors and creditors that was occurring throughout the entire region.
Tribes: So this would’ve been, in terms of today’s parlance, this would’ve been the kind of liberal, progressive elite of the era?
Michael: Yes. But a progressive elite that also had grounding in traditional Judaism, saying, “Wait a minute, this is what the center of our Bible is all about.”
Tribes: If Jesus was an activist, as you argue, was he part of a social movement to cancel debts?
Michael: Well he was obviously trying to create his own social movement. We don’t know if there were other social movements there, and we don’t really know much about the jubilee year in between the return of the exiles to Judah and the time of Jesus. Because they didn’t write on clay tablets, they wrote on perishable materials, so we don’t have the family wills, the legal records, the dowries, and all of the credit transactions that we have in the ancient Near East where they wrote on clay.
Tribes: When does the concept of a general debt cancellation disappear historically?
Michael: I guess in about the second or third century AD, that was downplayed in the Bible. And you had, after Jesus died, you had first of all St Paul taking over, and basically Christianity was created by one of the most evil men in history, the anti-Semite Cyril of Alexandria. Who decided to gain power by murdering his rivals, the Nestorians, by convening a congress of bishops and killing all of his enemies. Cyril was really the Stalin figure of Christianity, killing everybody who was an enemy, organizing pogroms against the Jews in Alexandria where he ruled.
And it was Cyril that really introduced into Christianity the whole idea of the Trinity. That’s what the whole fight was about in the third and fourth centuries AD. Was Jesus a human, was he a god? And essentially you had the Isis-Osiris, ISIS figure from Egypt, put into Christianity … The Christians were still trying to drive the Jews out of Christianity. And Cyril knew the one thing the Jewish population were not going to accept would be the Isis figure and the Mariolatry that the church became. And as soon as the Christian church became the establishment rulership church, the last thing it wanted in the West was debt cancellation.
You had a continuation of the original Christianity in the Greek Orthodox Church, or the Orthodox Church, all the way through Byzantium. And in my book And Forgive Them Their Debts, the last two chapters are on the Byzantine echo of the original debt cancellations, where one ruler after another would cancel the debts. And they gave very explicit reason for it: if we don’t cancel the debts, we’re not going to be able to field an army, we’re not going to be able to collect taxes, because the oligarchy is going to take over. And they were very explicit, with references to the Bible, references to the jubilee year.
So you had Christianity survive in the Byzantine Empire. But in the West it ended in Margaret Thatcher. And Father Coughlin.
Tribes: He was the ’30s figure here in the States.
Michael: Yes. The anti-Semite, right-wing, pro-war, anti-labor. So the irony is that you have the people who call themselves fundamentalist Christians being against everything that Jesus was fighting for, and everything that original Christianity was all about.
Tribes: Has any modern society declared a Jubilee without a revolt of the creditor class?
Michael: Yes. There was a wonderful debt cancellation, the major debt cancellation of the modern era was in 1947 and 48, the German monetary reform, called the German economic miracle. The Allies canceled all German debts, except for debts owed by employers to their employees for the previous month, and except for minimum bank balances. It was easy for the Allies to cancel the debts, because in Germany most of the debts were owed to people who had been Nazis, and you were canceling the debts owed to the Nazis, the Nazis were the creditors at that time. And that freeing Germany from debt was the root of its economic miracle. So that is the prime example of a debt cancellation in modern times that worked.
Tribes: Okay, now we’re coming up into the present. One in three Americans are reported to have a debt that’s been turned over to a private collection agency, and the ACLU found cases of court warrants being issued over almost every kind of consumer and medical debt. What forms of debt relief would you propose in the current circumstances?
Michael: Well the guiding principle is that debts that can’t be paid, won’t be. The default rates are rising, many people simply can’t pay their debt, unless they lose their home, unless they lose their job, or in some cases now, unless they lose their freedom and are put into debtor’s prisons down south. As you privatize prisons, they need someone else to put in the prisons besides blacks, and debtors are the people who are keeping the privatized prison business going these days.
So basically, you need, every few years, a start-over.
Tribes: Absent a world war or some such catastrophe, what might it take for debt cancellations to be adopted today as economic policy, given the power of Wall Street and the creditor class?
Michael: The first way to achieve this is by simply showing how large debt tends to grow at compound interest, that it’s growing and growing, and that all of the growth in American GDP, Gross Domestic Product, since 2008, all of the growth has been to the financial sector to pay for the rising debt overhead. The tragedy was that when President Obama took office, he broke every promise that he’d made. He’d promised to write down the junk mortgage debts to the amount that could be paid. …
Tribes: That’s the subprime-
Michael: Yeah. -… He essentially appointed Wall Street lobbyists to all of the key positions, as I’ve outlined in (my book) Killing The Host, and the result is that the debts were not written down when they could’ve been. And that means that the debts have been growing and growing and growing, and we’re in a chronic crisis, there has been no recovery. We are still in the 2008 debt crisis, and it cannot be resolved until the debts are written down. There’ll just be more and more poverty and more and more economic polarization.
Tribes: We’re very close to the end, Michael. Practically speaking, if for some unbelievably sci-fi circumstances, you found yourself as the President of the United States, in terms of debt cancellation, what would you focus on in terms of leading us back to a kind of sustainable future?
Michael: The issue of debt cannot be segregated from the overall organization of society.
Now just imagine if instead of banks and their bondholders holding student loans and profiting from it, if the government had made all these loans, the government could easily forgive these loans, because it would be forgiving money owed to itself. But when you privatize not only education, but also student loans, that is what has led to the student loan crisis. It was completely unnecessary, but Joe Biden, as senator for the credit card companies, pushed it through, saying, “We’ve got to make education a profit center for the banks. Our purpose is not to educate the population, it’s to create a situation where in order to get a job, in order to get a union card, they have to go into a lifetime of debt to the banks that cannot be wiped out by bankruptcy.” That’s the Democratic Party policy. And it’s what’s tearing the country apart.
And it’s unnecessary, it’s Thatcherism. So Obama was really the American Margaret Thatcher in pushing forth this privatization. And to do it, of course, he realized you have to put in place a huge prison system that you also privatize to give himself another constituency, especially in the southern states. And I don’t think Americans have realized that it doesn’t have to be this way. That there was an alternative, and the alternative was spelled out throughout the 19th century by nearly all the classical economists. And the alternative has worked before for thousands of years in history. And that’s why I wrote the history of the ancient Near Eastern and Judaic economies.
Tribes: Here’s a question drawn from this morning’s news, I got it right out of the Times. Steve Bannon is quoted as saying the following: “The new politics is not left versus right, it’s globalist versus nationalist.” Comment?
Michael: I think he’s quite right. The globalists are the neoliberals. They want to prevent any government from having the power to check their own oligarchic power. This is the same fight that occurred in Greece and Rome and Babylonia. For the last 5,000 years you’ve had a fight by people who wanna be wealthy breaking free of taxes, breaking free of regulations, breaking free of privatization. They want to privatize what normally would be the public sector. And you have the neoliberals, just as in antiquity, today’s neoliberals use violence, and they call themselves free marketers, but they realize that you cannot have neoliberalism unless you’re willing to murder and assassinate everyone who promotes an alternative. That’s why the first thing that the Chicago Boys did in Chile, after the murder of President-
Tribes: That’s Milton Friedman?
Michael: Yeah, Friedman’s gang. Was to close every university department, except for the Catholic University that used the Chicago textbooks. And then that was followed by a decade of political assassination throughout Latin America, leading to the oligarchy in Brazil that has just put its presidential candidate Lula in jail. So you’re having the neoliberals use violence essentially to privatize, to turn the whole world economy into Margaret Thatcher’s England. A privatized set of monopolies by an elite class, essentially reducing the population at large to something very close to neo-feudalism.
Tribes: When I read the Steve Bannon quote to you, you immediately said he’s right, but I assume you wouldn’t go so far as his program to, in his words, “deconstruct the administrative state;” you wouldn’t be on board with that?
Michael: No. You asked what is the fight about? The fight is whether the state will be taken over, essentially be an extension of Wall Street. If you do not have government planning … Every economy is planned. Ever since the Neolithic (era), you’ve had to have (a form of) planning. If you don’t have a public authority doing the planning, then the financial authority becomes the planners. So globalism is the financial interests, Wall Street and the City of London, doing the planning, not governments. And they will do the planning in their own interests.
So neoliberalism is the fight of finance to subdue society at large and to make the bankers and creditors today in the position that the landlords were under feudalism.
Tribes: John Maynard Keynes famously quipped about policymakers being slaves to defunct economic theories. If orthodox economics is bankrupt, and our politics are slaves to defunct economic theories, where are we too look today for schools of economic thought with more to offer?
Michael: I think the classical economic thought, from Adam Smith, culminating in Marx, who was the last great political economist in the classical British/French tradition, discussed all the problems we have. The inability, the fight between finance capital and industrial capital is all discussed in Volume 3 of Marx’s Capital. People imagine that we’re in industrial capitalism, but we’re really not. Industrial corporations have been taken over, and financialized, and run for financial gains, not for profit. So the problem is now not simply the exploitation of wage labor, it’s that the financial system tries to operate without labor at all. It tries to depopulate instead of build up the population. It tends to impoverish the population instead of making money on a growing internal market. So an understanding of the distinction between what the 19th century classical economists hoped would be industrial capitalism and the tragedy of the finance capitalism that’s emerged since World War I, if people are aware of that, essentially that’s the best guide to the future. That’s what I described in my early book, Killing The Host, and I’ve tried to provide a basic vocabulary in J Is For Junk Economics. If you have a vocabulary that can pierce through the euphemisms that you get in the mass media for economics, a vocabulary itself will organize your thoughts into a logical way of coping. So in addition to my book And Forgive Them Their Debts, are these other two books are everything I have to say about how to structure an economy.
Tribes: So it comes down to empowering people with a vocabulary that pierces what?
Michael: That pierces the fog of the euphemism of the mass media discourse that make it appear as if when GDP goes everybody is getting rich. When all the growth in GDP is only for the 1%, only for the financial sector, and the 99% are more and more impoverished.
Tribes: So one illustration of what you’re talking about in terms of the difference between finance and industrial capitalism would be explained by how such a huge proportion of available capital in our society today is going into stock buy-backs, for instance?
Michael: 92% of corporate revenue in the last five years has either gone into stock buy-backs or higher dividend payouts. That means only 8% has gone into new investment to expand production or employ more labor. So the financial business plan is one of asset stripping and shrinkage, not growth. Nobody in the 19th century imagined that industrial capitalism would evolve along these self-destructive lines. They all believed that the most technologically efficient system would win out in a kind of Darwinian or Spencerian struggle of the fittest. But instead, you’ve had a covert, parasitic financial counter-revolution, as the rentier class, land rent, monopoly rent, and high finance, have fought back and created a fallacious vocabulary whose objective is to deceive the population into thinking that giving more money to the wealthy 1% will trickle down to the 99%, instead of seeing this 1% income as extractive, not productive.
Tribes: I’ve been reading a lot recently about the dissolution of the nation-state in the face of these forces, globalization, financialization. Given that the nation-state is associated with the most prosperous and egalitarian periods in modern history, in terms of income and wealth distribution et cetera, et cetera, … under what circumstances do you imagine that finance capital can be overthrown?
Michael: It can only be overthrown democratically. It can’t be overthrown by force, because finance capital in control of the state has a monopoly on force. It can only be achieved, probably in one country after another, by having policies and essentially an understanding of what a viable economic constitution would be. And to realize that politics is basically economics.And again, the alternative to government and the nation-state is Wall Street and the financial interest, the City of England, Frankfurt. And that the question is, who do you want to run the economy? The 1% and the financial sector, or the 99% through politics? The fight has to be in the political sphere, because there’s no other sphere that the financial interests cannot crush you on.
Tribes: Yeah, good. Okay, thanks, Michael.
Michael: Yeah, thank you.
The fight has to be in the political sphere, because there’s no other sphere that the financial interests cannot crush you on. Michael Hudson
Indeed, Hudson is an Olympian in the world of economics.
His closing line above is correct, IMO, however; how do you educate the citizens as to economic reality? And then, on how to act in their own best interests.
Therein lies the challenge. I’m not optimistic as the distractions are myriad…
I wonder if semantically debt was couched in its proper context e.g. a contract i.e. what constitutes the legal frame work around such would negate the need for such antiquarian notions of Jubilees.
Especially considering the draw backs of thinking every social dynamic can be reconciled in money terms – numerically.
To the extent the debt is interpersonal, individuals can work it out as you propose.
To the extent the debt becomes embodied in state money, as Marriner Eccles demonstrated, a well intentioned state can manage the currency and market conditions to make all society better for it.
To the extent self-interested financiers control debts denominated in state money, we are where we are and only through politics are we likely to seize back control of the states money for the good of the State rather than private creditors.
I was thinking more along the lines of Warren’s body of works – before the creation of thingy. Why must we always confront something after the event of creation, especially with the historical record as a reference point, only to rinse and repeat. Like that action can’t be gamed too infinity. I mean besides information arb – some unwashed mug handed 3 reams of legalizee so they can by the American Dream, which has more to do about bundling fat tailed risk for a short term profit than extending credit for social purposes or such things as stock buy backs.
I also have issues with the term interpersonal relationships when the vast majority of said money is created by C-corps, nor the fact their is around 34T in tax havens.
Lastly I wonder if the two great Judaic houses had any clue about Milgram et al during their Babylonian debates or Bernays for that matter. Not to mention there is a whole cornucopia of other nasty stuff excluded from this narrow intro inspection, of a equally limited based line, wrt our species.
Personally I have bigger issues with Marginalism and wages vs. productivity which then set the stage for people needing credit that then exists as someone else income stream, but yeah the debt did it.
Michael Hudson is a God that walks the planet.
This is a fascinating article- thanks for sharing- I will share as well!
How, if at all, would several score Trillion dollar platinum coins come into play on this? Do debts of nation-states matter?
Moral hazard/ obligation to pay the debts- mint some coins, make the Government debt go away. Inflationary effect of now having cash to re-invest, chasing assets? Simultaneously outlaw fractional reserve banking?
The Platinum coin trillions would not address privately held, individual debts. This all makes my head spin. I do know this- whomever is owed, whether it is a bank, a securitized investment fund with a wee bit of you and your great aunt Minnie’s retirement savings— everyone expects to be paid on time full with interest.
Multiple generations of no familiarity of the mechanisms or legitimacy of Debt Jubilee – my paradigm-trapped mind struggles. Somehow it all ties back to the actuarial tsunami of aging global post WW@ populations, expectations of being comfortable in our dotage, and then receiving some modicum of care in the final years.
Train wreck, or a simple, elegant solution where people come first, and we put away the guns and bombs?
The Fed printed money to buy public debt on the open market abd is redeeming it via offset of the cash inthe Treasury General Account – essentially an erasure. This is what is happening now in practice. So Congress as the public’s representative could direct this redemption for their entire book (but offset before borrowing anew to draw cash into the TGA). Ecco lo. A form of a debt forgiveness that at least lowers the annual need to borrow to redeem or pay interests while freeing up cash in the TGA for public use.
The other means would be to cap the payroll tax rates, this is a form of debt relief targeted at those who work (not for corvee purposes but it would be the same class affected in an historic analog especially since you can still raise the threshold to apply the rate to higher incomes).
And yes, student loan debt could be forgiven more.
Renew, reenergize, a Jubilee.
Thought provoking stuff Michael…
Now in a latter sense, isn’t hyperinflation more or less the same as a debt jubilee-in that although debts remain, they’re made of no consequence in the grand scheme of things, by a great lessening in value of the host currency?
Now, there’s never been a modern universal hyperinflation episode-only in tangents, but surprisingly all over the globe. Israel had a bad bout of it in the 70’s, for instance.
What would the conditions have to be to cause it on a cyber basis, as all monies are more or less linked together in a skein, or a giant ball of strings, if you will.
I’m hep to the definition, but as all old debt is in hyper-underinflated money, you get your cherished jubilee in a backwards fashion.
A for instance…
I don’t know a thing about Venezuelan real estate, but would it have been possible to buy a house in Caracas for say a million Bolivar Fuertes a decade ago on a 30 year loan basis, and here we are where you could pay off the mortgage with an amount in outside money, i.e. Dollars, that wouldn’t differ much from what you tip the pizza delivery guy.
Of course, your society tends to go to shit in the process.
Could not the ancient “palace” simply have ordered the individuals who owed debts to the palace to go into the army or build public works? In that system it sounds like the “oligarchs” were part of the palace.
Today the “palace” has no need to find more warm bodies for military or public works–the financialized economic system producing both in abundance. What incentive does today’s palace have to cancel any debts? Especially since the political system is largely owned and run by financial oligarchs, who profit from those debts.
What do the workers of today have that the oligarchs of today want badly enough to cancel debts? Votes are the only thing that comes to mind, but the oligarchs seem to get all of those they need as it is.
“What do the workers of today have that the oligarchs of today want badly enough to cancel debts?
They still need loads of cooperation and cooperation not only defined in terms of laborm
The term “palace” (or “temple”) unfortunately moves a central conflict out of sight.
Michael Hudson suggests that debt cancellation is part of a power struggle between monarch and oligarchy. If the debtor is captured by the oligarchy, that debtor is unavailable to the monarch. The monarch cancels the debt in order to regain the service of the debtor.
The Greek and Roman oligarchs definitively won this struggle, preventing further debt cancellations and keeping the monarch weak, until the fall of classical civilization.
If this is so, the 99% should be cautious about following a bronze age strategy against the oligarchy, lest we acquire a monarch (dictator) in its place. What do we do if we want neither? We need an information age economy that produces education and health care – and barley – without debt slavery.
an aside: Roman oligarchs definitively won this struggle
Makes me wonder if in the Roman empire early Christians, from Trajan’s rule to Constantine’s, were considered rebels and executed for their insistence on debt cancellation, and not because of who they worshipped. I also wonder if Constantine, who ruled several centuries hence from Trajan, accepted Christianity as a legitimate religion because by then the dogmas of Christianity itself had been changed by the heavy influenced from the Roman Stoic philosophers ‘ writings of Seneca and similar, and no longer insisted on debt cancellation or jubilee as important to the creed. Interesting to consider, although definitive answers aren’t available.
Thank you for introducing me to the work of Michael Hudson. Absolutely brilliant interview.
For many years, I studied with Bhau Kalchuri, last living disciple of the silent Indian master, Meher Baba. (An aside, Bhau was often compared to John, the Beloved Disciple by those who knew him)..
Although Bhau did not know a single word of Aramaic or Greek, one of his major bête noires was the verse in the Lord’s Prayer where Jesus said “Forgive us our sins (or trespasses), as we forgive those who sin (or trespass) against us,”
Bhau always insisted that this had to be a mistranslation.
This verse had been engrained in me since Sunday school class, and I could not see why Bhau remained so adamant about this issue (though he had been eerily accurate or prophetic or both) in every single statement I ever heard him utter.
Now, five years after Bhau’s death, his obduracy makes perfect sense.
cf. “Debts or Trespasses” et al. [emphasis mine, and unfortunately, it seems the Greek letters did not come through into the reply]]
I grew up hearing that as:
“Please forgive us our debts as we have also forgiven our debtors.”
Only later it was changed to “trespass.”
I didn’t connect the dots until just now.
Sorry PerpWAR i replicated your reply!
As I learned it in Spain the verse was originally (well, translated here to english):
And recently changed to:
Because, you know, the catholic church shouldn’t talk about debt jubilee in its main prayer.
In Old English (Saxon) it reads: “forgyf us ure gyltas swa swa we forgyfað urum gyltendum”. The meaning had already wandered from debts to guilts.
It’s true that gyltas means guilt or sin in Old English, but the funny thing is, nobody knows for sure where that word came from. Guess where some people think it might have come from? gieldan, to yield, pay, or repay.
Forgive us our gilts and bonds…
The Greek word that doesn’t come through in the cut and paste is opheilémata, plural, singular=opheiléma. Debt.
This article is an excellent follow-up, giving both a historical and recent reference to April 25th’s Water Cooler link to “Neoliberalism: The Movement That Dare Not Speak Its Name” by Philip Mirowski.
Kudos to Naked Capitalism, Philip Mirowski, and Michael Hudson.
+1. Great article.
Love this article. Thank you. Minor point: Christ was a unicorn.
So money has run amok in US politics. How to get rid of lobbyists who buy politicians who then get elected and pass laws that the lobbyists want. It should be a rule that no one can run for election with lobbyists’ money. If Bernie Sanders had been elected he would have been in a position to start the process, but the democratic party was not ready for this change. It will have to wait for another brave soul to tell the truth about money.
Read Frank Norris’s “The Octopus” to get an idea of how rapacious railroads were, a couple of turns of century ago.
You might be interested in the book Iinked to in my comment below. The author of that one brings up Norris’s book quite a bit and mentions that while the railroad industry was certainly rapacious, it was definitely not one organized entity determined to consume everything in its path.
Instead the industry was a bunch or greedy, unorganized bunglers taking advantage of new technology, “creative” financing, and friends in high places to enrich themselves at the expense of everybody else.
Kind of like what we see from Silicon Valley today, a point that was not lost on White as he wrote his railroad history.
Thanks, i’ll check it out~
Norris’s novel hinges on this event:
Another good read of money grabbing, this time delving into mining stocks of the same era in the wilds of Nevada mining boomtowns, is: My Adventures With Your Money, by George Graham Rice, from 1913.
The difference between now and then is that the debtor paid in installments of labor throughout his indebtedness. By the time of the jubilee he may have spent his entire life “paying” his debt. Forgiveness was mercy. Now debts can be safely ignored at only the cost of a 7 year credit score ding.
Unless your “debt” is for your education!
Great article. Wanted to touch on this point:
I’ve been reading Richard White’s Railroaded recently where he discusses the building of the transcontinental railroads during the 19th century and concentrates on the financing that brought them into being. Today we hear the myths about the triumph of these companies, organizing to efficiently build the railroad system, but White points out that even in the 19th and early 20th centuries, there was a disconnect between the perception of the railroads, for better or worse, as well managed capitalist organizations that should be a model for any profitable venture, and the actual reality of the situation.
He really digs into the financial records of these companies and argues that many of the titans of the railroad industry had very little knowledge about how to run a railroad, which they often freely admitted, but they were quite good at using finance to pillage the very corporations they were ostensibly in charge of in order to enrich themselves. The created shell companies to bill the railroads for services, massively overbuilt unnecessary lines simply to put the competition out of business, passed out bribes to Congress, wheeled, dealed, bamboozled and stabbed each other in the back repeatedly.
There was plenty of financial capitalism destroying the productive industrial, even in the 19th century. We just don’t hear much about it today as the myths have taken over.
Really interesting article. But I’m not sure though Hudson has got Father Coughlin right. Just going by the wiki article (ok ok) on him, he seems all over the place. Apparently neither capitalism nor communism made it for him though. I suspect he had a very evolving philosophy, but was so charismatic he dragged a lot of people along. He eventually got yanked for promoting isolationism after Poland was invaded by the Nazis and Soviets. So he at least wasn’t “pro-war” as Hudson claims. I can imagine many thought as Coughlin did. I might be missing something but he doesn’t seem a pivotal enough figure to warrant Hudson’s ire.
A Woody Guthrie tune about the time, including Father Coughlin:
Father Coughlin was indeed all over the place. One of his allies was Huey Long. They both believed in some policies that today would be considered left wing populism. And contrary to what Hudson just said, Couglin was actually very pro labor for time, arguably to the left of FDR on the issue. Though Coughlin certainly wasnt nearly as consistent as Long was in terms of being a leftist, trying to paint Coughlin as a right wing fundamentalist indistinguishable from modern neoliberal neocons… It just doesnt add up.
The only thing Hudson said about Coughlin that is incontrovertible is his virulent antisemitism, which neither modern neoliberals nor neoconservatives espouse, further making the link flimsy at best.
Well, the wiki says he started on radio after the KKK burned crosses on his church grounds, so I’d need to check into even the anti-Semitism. Perhaps the pro-fascism is an immigrant Irish thing, many Irish having little love for the British.
Uh, pretty sure the burning crosses was anti-black, not anti-Semite.
Anyway, as for Anti-Semitism… It doesn’t help that Father Coughlins own magazine, Social Justice, reprinted The Protocols of the Elders of Zion in weekly installments… If that isn’t anti-Semitism I’m not quite sure what is. He was also one of those guys who thought Communism was some sort of Jewish conspiracy, and once claimed that the Russian Revolution was caused by the actions of Jewish bankers.
To be fair, he publicly denied being an anti-Semite on multiple occasions in multiple interviews, and in one of his speeches he said something about wanting the support of ‘good jews’, whatever that means.
IMO, he didn’t want Jews put in gas chambers, but that doesn’t stop him from still being anti-Semitic anyway.
I really recommend Wikipedia, it is a font of knowledge about the KKK. For instance:
Fr. Charles Coughlin was in Detroit, Michigan and was definitely antisemitic. My mother’s family was in farming country near Ann Arbor, which is south-central MI. The KKK was quite active there but they couldn’t find any blacks in that area, and they couldn’t find any Jews, so they burned crosses (twice) on my Irish Catholic grandparents lawn. This would have been in the ’20’s, when my mother was a little girl. She said it was very frightening for the family, b/c it was a farming community with a small town for shopping, school, banks, churches etc . She said you knew it had to be your neighbors or people that you knew and did business with, socialized with, bought gas, seed and feed, and parents of kids you went to school with. And you wondered every time, is that one of them?
You do get the impression that Hudson is trying to shoehorn too much into his (seeming) view that everything that happens including Christianity is about money and debt.
Amongst all the myths that have organized human existence since as a species we developed the capability for abstract reason, the most consistent and uniform across millennia has been the “credit relationship”, money.
Whenever and wherever we have subjected or fellow humans to this human idea, the idea of money, the power asymmetry between debtors and creditors has always tended toward concentrations of wealth and power.
That this is a universal characteristic of “civilizations” from their origin to present is a significant and important fact that is suppressed for the obvious reason that it is very advantageous to the powerful and Hudson is proposing to rectify that omission. The claim isn’t that “everything” is about money and debt, the claim as the “power relationships” are, outside of war, about money and debt.
Important parts of Christianity, like Judaism before it and like the ancient Near Eastern legal codes Hudson discusses are about precisely how money corrodes the power relations of societies.
Perhaps that’s because everything in society, at its core, is about money and debt and who controls it.
Just today I have learned of this story of a modern debt Jubilee that took place in Chile and involved student debt.
It’s a coincidence that I found this, since the reason I’m listening to these Radio Ambulante podcasts is that I’m using them to become more familiar with Spanish as I learn it. I highly recommend this series of podcasts, especially for people who are interested in learning more about Latin America, or want to keep your Spanish language skills current by listening to spoken Spanish.
Sadly, I have found no stories yet about Uruguay. :(
Agree that financial capital has captured industrial capital and is running it into the ground.
The blindness of people who cannot see that they have killed the golden goose is appalling.
Hudson’s book cannot come out too soon, but I hope to heaven there is an audio version.
I also hope that it is reasonably priced.
I see “Debt and Economic Renewal in the Ancient Near East“, published in Jan 2018, at Amazon for $119, and no eBook version.
Could slaves and debtors please have a more affordable option?
Asking for a friend.
I note that “Wall Street’s White House: How Gary Cohn Wrecked the Global Economy and Parlayed it Into a White House Job” is available on Kindle for $5.
Ask your local library to order it. I have had amazing success when books or movies (DVDs) weren’t available in the library. I asked them to purchase “J is for Junk Economics and they did. It doesn’t hurt to ask.
I tend to forget about the library because I make so many margin notes, but I suppose that I could restrain myself for once ;-)
“the financial system tries to operate without labor at all. It tries to depopulate instead of build up the population. It tends to impoverish the population instead of making money on a growing internal market.”
Ha, echoes of Ezra Pound here:
Stonecutter is kept from his stone
weaver is kept from his loom
wool comes not to market
sheep bringeth no gain with usura
Usura is a murrain, usura
blunteth the needle in the maid’s hand
and stoppeth the spinner’s cunning.
Sorry. Please, ignore the previous comment. It was intended for the entry on Federal Job Guarantee.
I went to Amazon to look for his book, “Forgive Them Their Debts: Credit and Redemption”. No luck.
An illustration of the problem of modern debt from the Sydney Morning Herald, Apr 26 2018:
But more than 45 years on, the royal commission into finance is revealing that poverty is no longer just about low income. The commission has heard that Australian banks have adopted actual lending practices (as distinct from their official lending policies) that claim so much household income for contract payments that borrowers are left without enough money to fund basic consumption levels: they are living in poverty.
Middle class and poor doesn’t sound like something that could happen, or that should happen, but it does thank to the wonders of modern lending practices.
I wish the Bible and all the old bean counters had had just a tiny clue about the environment which they all willingly exploited with abandon. Industrial capitalism creates financial capitalism just like the Bible lusts after something for nothing; just like finance capitalism creates debt by exploiting the concept of gain – or profit. Which prolly doesn’t exist in the real universe. We should all admit there’s no evidence of such a thing as profit. And in place of our failed attempts at political economies over the aeons, we might try Environmental Capitalism. A contradiction in terms which fits our souls so nicely. I’m sure we can adapt. But to capitalize on saving the environment we can no longer be in denial about survival. Let’s all go back to before the hijacking of value, the first fictional investments recorded on bits of clay, and reclaim value – the planet we have devastated and must work now to save. There’s no time to lose, even for creatures as nuts and hubristic as we are.
Not sure I should post on this thread as I seem to be out of touch with the others, but here goes:
Its not only in USA either that traditional centers of excellence retain their reputation after it should have been lost. In London the mindless adulation of the LSE is finally being tempered with enquiry – “what actually have they done for us?” – and new centers of excellence, not least University College London and the team at Positive Money from its economics department, have arisen to actually give the people real access into monetary policy knowledge, its ups and downs.
The differences between the Western Roman Catholic and Eastern Orthodox Churches might be one of the reasons that the Western Roman Empire collapsed where the Eastern Roman Empire lasted about another thousand years. Well, the Eastern half did steal all the best Roman legions from the Western half, and the Western half had always been the poorer half.
Apparently the Visigoths went into Italy to sack Rome in 410 CE, all the land was owned by a small very wealthy elite and worked on by dirt poor peasants who had no reason not to join the Visigoths. They certainly weren’t going to fight them. So six centuries early, the large prosperous class of land owning farmers were willing to effectively pay for the privilege of being a Roman soldier. There were enough farmers able to buy the weapons and armor needed to join.
The Republic fell after around a century of civil war that destroyed a lot of established and wealthy families, created a professional army that answered to their generals, not the state, and whose funding would eventually weaken the Roman Empire so much that half of it would disappear. If the wealthy elites had been willing to merely temper their greed, and just follow the already written laws and also not steal all those farmers’ land, the Republic would not have fallen when it did, and the small and medium size farmers would have remained the bedrock.
Nehemiah is famous for rebuilding the walls of Jerusalem. But he couldn’t get started until he had cancelled all the debts of the poor – they were working off their debts to the rich, and weren’t available to labor for the city. [Taxes in those days were often paid in the form of labor performed.] Not only did he cancel debts, he even reversed foreclosures and returned the properties to their original owners! One more example of the Biblical way to handle private debt. Although this had nothing to do with government debt, a Republican congressperson once claimed the story showed that the Federal government should not have a public debt.