The Destiny of Civilization: An Interview with Michael Hudson on Economic Development, Rentierism, Debt, China

Yves here. We are delighted to feature another blockbuster interview with Michael Hudson. This one covers a great deal of historical terrain, including the role of the state as industrialization took off, how rentierism promotes oligarchies and distorts growth, the destructive role of debt, and China as a challenge to neoliberalism. Get a cup of coffee and enjoy!

By Platypus Affiliated Society member D. L. Jacobs. Interview and edited transcript produced by Platypus (audio here)

D. L. Jacobs: Can tell us about your background regarding Marxism and how you came to political economy?

Michael Hudson: Well, I grew up in a Marxist household. My father was a political prisoner, one of the Minneapolis 17.[1] Minneapolis was the only city in the world that was a Trotskyist city, and my parents worked with Trotsky in Mexico. So, I grew up not having any intention of going into economics. I wanted to be a musician, and when I was 21, I began writing a history of the connection between music, art, drama theory, and the Renaissance in the 19th century. But then I went to New York and went to work on Wall Street just to get a job. I met the translator of Marx’s Theories of Surplus Value, Terence McCarthy, who convinced me that economics was more interesting than anything else that was happening. He became my mentor, I took a PhD in economics, and that’s it.

DLJ: You begin The Destiny of Civilization by talking about how it was the historical task of both industrial capitalism and classical political economy to emancipate the economy from feudal rentiership. How was classical political economy revolutionary?

MH: Marx said that the role of industrial capitalism was to cut costs of production in order to compete with industrial capitalists in other countries. There are two ways of reducing the costs if you are a capitalist. One is to simply lower wages, but if you lower wages, you don’t get high productivity labor. The Americans, by the 19th century, realized that the higher the wage was, the higher the labor productivity, because productive labor was well-educated. well-fed, healthy labor. The idea of capitalism was, number one, to reduce the costs of production that were unnecessary. Namely, what did labor have to pay just to live that wasn’t really necessary. The biggest cost of labor was land rent — this paid for high food prices if there was agricultural protectionism, as in London, England until 1846 — and housing rent. The idea was that socialism would replace all landlords as rent recipients by either taxing away the land rent or nationalizing the land. The state would be the landlord and that would be its source of fiscal funding. It didn’t have to tax labor, but would tax landlords. The other way that capitalism would reduce labor’s living costs was working to prevent monopolies, to prevent all forms of economic rent. That was revolutionary because feudalism was based on a hereditary landlord class: the heirs of the warlords, the Normans, who had conquered France, England, and the rest of the earth. The monopolies that had been privatized and created were largely by governments running into war debts. The bank of England was a monopoly created with £1.2 million to be paid and government debt. Many British trading companies and monopolies, like The South Sea Company of the South Sea Bubble, were created this way in order to finance their war debts. Capitalism wanted to get rid of all of the economic overhead and to be a more efficient society. Instead of having private monopolies produce basic needs like health care, it will have public health care. Instead of monopolies providing communications, transportation, or telephone services, the government would have these basic needs provided either freely or subsidized so that labor wouldn’t require a high salary from its industrial employers to pay for its own education, health care, or the other basic needs. In the late-19th century, everybody thought that industrial capitalism was evolving into socialism of one kind or another: not only Marx, but a proliferation of socialists and books on socialism, e.g., John Stuart Mill, Christian socialists, libertarian socialists. The question was, what kind of socialism would everyone take? That made capitalism revolutionary, until the point that World War I broke out and changed the whole direction.

DLJ: You begin Chapter 5 of Destiny with, “[t]he 19th century’s fight to tax away land rents, nearly succeeded, but lost momentum after World War I.”[2] Can you elaborate on this?

MH: In the late 1890’s, the rentiers began to fight back. In academia the real-estate interests and the banks got together and denied that there was any such thing as economic rent. Capitalism is revolutionary, because it wanted to bring market prices in line with the actual cost of production; economic rent was the excess of price over the intrinsic cost value. The idea was that economic rent was a free lunch. and that because it was an empty price, it was a price without a corresponding cost-value. In the U.S., John Bates Clark was saying, there’s no such thing as economic rent. The landlord actually provides a public service in deciding who to rent to and the banks provide a public service in deciding to whom they will make loans. Everybody deserves whatever they can make. This concept  underlies today’s Gross National Product (GNP) accounting. If you look at America’s GNP accounting, you have a rent and interest included as a profit — not only interest, but bank penalties and fees.

A few years ago, I called up the Commerce Department that makes the national income and product accounts, and I said, “where do bank and credit card companies’ penalties and late fees occur?” I’d read that banks make even more money on late fees and penalties than they do on the enormous interest charges on their credit cards. And they said, “that’s financial services.” I asked, “how is that a financial service?” And they said, “that’s what banks do: they provide the service, and what they charged was the value of the service.” That’s not what the classical economists would have said. They would have said that what banks charge is an economic rent for the service, and this should be a subtraction from the national income and product accounts, not in addition to it.

I’m working with Dirk Bezemer and others on an article where we calculate how much of the GNP, the reported product, is actually overhead. In other words, what is Gross Domestic Product (GDP) without the FIRE sector (finance, insurance and real estate)? A strict classical economist would say, let’s take out the monopolist rent. How much of American industry’s reported profits, e.g., in healthcare, are really monopoly rent? The idea of industrial development today is to carve out a monopoly where there’s no competition and get super profits. This is a concept that has been dropped, really, ever since World War One, about a century ago. There’s no distinction between productive and unproductive labor, between wealth and overhead. John Bates Clark said that if somebody’s wealthy, they earned the wealth; there’s no such thing as unearned wealth. Today wealth is mainly achieved by asset-price inflation; by capital gains. You won’t find a single wealthy family that made money simply by saving up what they earned. They make money by increasing the price of their stocks and bonds and real estate holdings, not by saving up their earnings. Yet, capital gains, i.e., asset-price inflation, are left out of the statistics of almost every country. So it is very hard to explain how wealth is achieved, and yet that was the purpose of economics in the 19th century and centuries before. But suddenly the idea of wealth has been suppressed as sex was in the day of Sigmund Freud.

DLJ: In Destiny and your articles, you note how the classical conception of the free market has been inverted.[3] I.e., it used to be freedom from rentiership, and now it is the freedom of rents. You made reference to GDP, and this goes back to Adam Smith and Ricardo’s distinction of productive and unproductive labor, or net revenue and gross revenue. But Smith also described the government officials as unproductive in that sense, and you can find it in Smith’s translators and Marx.[4] In Destiny, you bring up Simon Patten talking about the “fourth factor of production.”[5] How does that fourth factor relate to what Smith and Ricardo talk about regarding value? They would say the government officials are not productive labor, yet you’re discussing how they reduce costs by providing public infrastructure.

MH: From Antiquity up through Adam Smith’s time, the main government expense was war, e.g., ancient Rome. Almost all of the public budget was war-making and police, which Smith sees as the same thing. Government had not begun to provide many public needs by the late-19th century. Things that change there were basically from 1815 when the Napoleonic Wars ended outbreak of war in 1914. They call, that was almost a people. Call it a war free Century, despite the Crimean War, and the Civil War, but basically, there wasn’t a World War at that time. Increasingly more of the government budget was spent on public utilities as they were introducing the new industrial, transportation, and health technology. After the Civil War, American students interested in economics mainly went to Germany to study, and they came back to the U.S. with an idea of Bismarckian state socialism. The chair of the first business school at Wharton School of Economics at the University of Pennsylvania was Simon Patten, who said that land, labor, and capital all receive the respective forms of income, but there is a fourth factor of production: public infrastructure. Public infrastructure differs in that it’s not trying to make a profit or an economic rent. It sells at less than the cost of production, because it’s trying to subsidize the economy, and its productivity should be measured in principle by the degree to which it lowers the economy’s overall cost of production by providing subsidized or free public services.

That concept is antithetical to Margaret Thatcher and Ronald Reagan, who began privatizing these public utilities. The difference is that a privatized, public utility is going to use borrowed money usually — so you have interest charges — and it must make a profit — so you have profits added on the price. In fact, public utilities are natural monopolies, which is why they’re public in the first place. You have economic rent added on, along with other privatized costs that have to be covered. Government doesn’t have to cover the cost: that’s what the taxes are for. If the taxes are a public collection of rent, a rent tax, they’re not only preventing economic rent and lowering the whole economies close to production, but they’re funding public infrastructure to further lower the cost of production. That’s what helped the U.S. undersell Europe, especially England, and become the leading industrial power — by staying out of WWI, except to act as a creditor — emerging from WWI as by far the world’s major intergovernmental predator, to such an extent that it brought on the Great Depression and WWII to resolve the reparations and inter-allied debt problem from WWI.

DLJ: You mentioned Bismarck, and I think of the famous painting of the Battle of Sedan[6] where he’s sitting with Louis Bonaparte, the other Bonaparte — to use this language in Europe at the time. Right after the 1848 revolutions, Louis Bonaparte invested in railroads and a lot of investment in Paris, and Marx refers to this as “Imperialist Socialism.”[7] The state is stepping in but doing so in order to quell the class struggle. How do you see that then related to this question of government intervention? On the one hand we could say yes, lowering the cost, but on the other hand, isn’t it preserving the conditions that are giving rise to capitalist exploitation and production?

MH: The question is who’s going to control the state? Is the state going to be run by leaders who are engaged in long-term planning as to how to make the economy more productive and raise living standards, or is the state going to be taken over by a financial oligarchy that wants to increase the cost and deindustrialize?

Already 2,500 years ago, Aristotle said that many economies and constitutions that are thought of as being democracies are really oligarchies. That certainly is the case today. Oligarchies call themselves democracies. President Biden says, the world is dividing into two right now: democracy versus autocracy. The autocracy is in the U.S. That’s the oligarchy. Democracy is a confusing word. Political democracy has not been effective in checking economic oligarchy, because, as Aristotle said, democracies tend to evolve into oligarchies and they make themselves into hereditary aristocracies.

The only counter example in early history of what America calls autocracy or Karl Wittfogel called “Oriental Despotism” was the Near-East take off. Every Near-East, Mesopotamian, Egyptian ruler would begin their reign with a debt cancellation, a clean slate. They would free the indentured servants, cancel the debts, and return land that was forfeited to the former holders to prevent an oligarchy developing. Civilization in the 3rd–1st centuries BC — all non-Western cultures, going all the way to India and China — try to prevent a mercantile and financial oligarchy from developing.

The West didn’t do that. They had no tradition of royal clean slates, and when they did have their own revolutions in Greece, you had the so-called tyrants. I.e., reformers, who overthrew the closed aristocracy, canceled the debts and redistributed the land. They did just exactly what the Near East did and they catalyzed democracy in Greece. There was infrastructure spending in ancient Greece in the 7th and 6th centuries BC. By the 3rd and 2nd century BC the Greeks were saying that when the oligarchy had taken over, a reformer was someone seeking tyranny. That’s when tyranny took on a bad connotation, like “socialism” today.

The same thing happened in Rome. Rome began with kings trying to make Rome grow in a mosquito-laden, hilly area near the Tiber River. Rome began by offering land rights to fugitives fleeing debt bondage, and the neighboring towns of central Italy. The kings were overthrown in 509 BC, the oligarchy took over, and there were five centuries of revolts by the Romans: the secession of the plebs in the 490s BC, the second secession after 450, and then the many fights. The oligarchy accused any reformers urging alleviation, urging more equal distribution of “seeking kingship.” because there can’t be any state strong enough to check their ability to impose land rent and other forms of economic rent.

When President Biden juxtaposes democracy to autocracy, he wants America to fight against any country — Russia, China — that does not privatize its public domain like Thatcher and Reagan were doing. Biden defines an autocracy as a country that does not privatize and make a free market for the rentiers to take over. The ideal of American neoliberalism is what the Americans did to Russia under Boris Yeltsin: take all of the public assets, the nickel mines, oil, gas, and the land and give it to the managers to register in their own name. The result was that Russia lost more of its population as a result of neoliberal privatization than it had lost during WWII, as President Putin likes to say. This is the whole framework of Destiny, where I am trying to clarify, what is democracy, and what is autocracy, and what is socialism?

DLJ: You write that this is something Western civilization has never dealt with[8] — even the political economy has shown it to be unproductive. Marx frequently makes reference to the debtor and creditor struggles in ancient Rome and he usually quotes Simone de Sismondi, who will say that whereas the ancient proletariat lived at the expense of society, modern society lives at the expense of the proletariat.[9] Likewise, Smith in Wealth of Nations says that the modern representative institutions were unknown in ancient Rome.[10] While there have been examples of debt cancellations today, wouldn’t one say that they also had a different organization of society, when a king would cancel debts in ancient traditional societies? To some degree, yes, we can do it today, but there are different institutions, and the bourgeois revolution might complicate the cancellation of debts, at least, creating a kind of political problem unknown in ancient Greece.

MH: They’re different kinds of debts, and canceling them requires different kinds of institutions. E.g., what’s most in the news these days is student loan debt and that it could be canceled by just an act of President Biden, which he won’t do, because he’s the person that sponsored the bankruptcy law.[11] That law made it impossible to cancel student debts by bankruptcy laws. It could be done by a congressional law. The government has all sorts of regulatory agencies to handle corporate debt write-downs. Corporate write-downs in bankruptcy proceedings are a normal course, taking place almost continually, and we’re going to see that again. There are real estate debts. When the junk mortgage frauds peaked in 2008, President Obama ran by promising to write-down the junk mortgage debts to the actual market value of the homes bought by the victims of bank fraud and to bring the mortgage payments in line with the current rent. As soon as he was elected, Obama invited the bankers to the White House and said, “don’t worry. I’m the only guy standing between you and the pitchforks. That was just to get elected. I’m on your side.” He proceeded to evict seven or eight million American families. Not only did Obama not write-down the debts, but he started quantitative easing that has given nine trillion dollars to support the real estate market, the stock market, and the bond market, so that the banks and the wealthy rentier 10% of the American economy would not lose any money.

The result was that American home ownership rates have fallen from 69% and plunged into the 50s. America is being turned from a middle-class home ownership economy into a landlord economy. We’re regressing back towards the 19th century, including its legacy of feudalism. That’s what we’re moving toward, as official government policy. We still have a strong government, but the role of the government is now to enforce the debts, not to write them down, and the most serious debts in the news are actually international debts. And of course, international debts cannot be settled by one nation. What is the vehicle to cancel the debts of global South countries like Argentina, that is now in yet another crisis with the International Monetary Fund (IMF). The Argentinian crisis, Sri Lanka — all this will characterize the Global South by this fall as a result of rising energy prices for oil and gas, rising food prices, and capital flight to the U.S. as it raises its interest rate. If countries have to pay more for food and energy, how can they afford to pay their foreign debts? It’s necessary to have a new international organization to sponsor this. That’s what both President Putin and President Xi have said: we’re going to create a BRICS[12] bank as an alternative to the World Bank and the IMF and this will have to accompany a new world court. We are going to provide a different philosophy of operations for this bank: the principle is that no country should be obliged to lower its living standards, bankrupt itself, and privatize its public domain in order to pay foreign debts. If a country can’t pay its debt, it’s a bad loan, and just as individuals and corporations are allowed to declare bankruptcy, countries should be able to declare bankruptcy.

These are mainly dollarized debts. Even though they’re not owed to the U.S., they’re often owed to their own oligarchies. Most dollar debts in Brazil are owned by Brazilians. Most dollar debts of Argentina are owned by wealthy Argentines because no one else is going to take a risk that they won’t pay. But the Brazilians say, we run the presidency, the central banks, and most of all, we run the police: if someone wants to cancel the debts, we’ll just kill them.

Violence has always been hand-and-hand with a high finance ever since Rome, through the Spanish, English, and French empires. The advocates of debt cancellation, from Catiline to Julius Caesar, were assassinated. There were five centuries of assassinations of Roman senators and reformers wanting to alleviate the debt. The U.S. is engaged in similar practices today. So you are right to put the debt in the political context. What is the vehicle to oversee debt cancellation, when in almost every Western economy, the oligarchies — often creditor oligarchies  — have taken control of the government, as in the U.S. via election funding and dominating policy. This is unique in Western Civilization. There’s always been empires consolidated by extortion of colonies. Today, we don’t say that America is involved in colonialism; we say America is a leader of globalization, which is a euphemism for colonialism, specifically, financial colonialism that indebts other countries, using that as a lever to privatize their public domain, utilities, national resources, and their commanding heights.

DLJ: Returning to the 1890s, this is the period leading up to 1914, which is, as you put it, the turning point for the dollar creditocracy: the 1890s as the imperialist era, in the Second International and going into the Third International. I was thinking about Lenin’s view of the growth of finance and of how you had banks that were taking over different companies, that were maybe even competing with each other and/or different sectors. He saw this as an opportunity for socialism. In your text, you mention how finance capitalism has diverted from socialism, or inhibited or blocked that opportunity.[13] I was thinking of Lenin’s famous line, “[w]ithout big banks socialism would be impossible.”[14] This doesn’t mean that J. P. Morgan and Bank of America are socialist, but rather that they created the institutional apparatus that could be the transformation into a socialized society.

MH: In terms of how economies allocated their resources and how they were planned, this forward-planning was coordinated largely by banks, often in conjunction with the government. This occurred most clearly in Germany where the German government worked with the Reichsbahn and heavy industry, especially in the military field, to build warships and armaments. The idea was state capitalism in Germany: a three-way linkage between government, industry, and finance. In the U.S., these were separated: finance took the form of the mother of trusts. The Wall Street banks would create a steel trust, a copper trust, and they would integrate all the different companies in the field to create a monopoly. In this case they were the former planners trying to create monopolies, but there was the Sherman Antitrust Act of 1890 and Teddy Roosevelt coming on as a trust-buster. Roosevelt tried to prevent finance acting as a promoter of the rentier class, as the monopoly class, to prevent industrial capitalism from being turned into monopoly capitalism. All of this momentum ended in the wake of WWI.

But there was this question of what kind of socialism are we going to have? What kind of government are we going to have? Are we going to have a government that is in charge of steering prosperity and raising living standards or a government by the 1%, the elite, who will impoverished societies? Two things happened in 1913 in the U.S.: first, income tax that only fell on the wealthiest 1% of Americans, mainly on monopoly rent and real estate. The other event of 1913, at the very end of the year, was the Federal Reserve was created to replace the Treasury and to take over the Treasury’s function, shift financial policy, moving away from Washington to Wall Street, and other financial centers, such as Philadelphia and Boston. This was the explicit aim. The National Monetary Commission published a series after the 1906–07 crash: a wonderful set of volumes about reviewing the global financial situation all over the world. David Kinley wrote a book on the U.S Treasury, showing that essentially the Treasury was performing all of the functions that we now think of as part of the Federal Reserve. The Federal Reserve has 12 districts, the Treasury had sub-Treasuries all over the country that were in charge of local development. All of this was privatized under the leadership of J.P. Morgan, who organized the Fed and sponsored President Wilson, who also got the country into war. The Democrats were, from the very beginning, the party of the rentiers, the anti-Labor party, as they are today. They were the sponsors of Wall Street as opposed to the Republicans, who until the 1970s and 80s, had represented industrial capitalism protecting itself from the rentiers.

Looking at the turn of the 20th century, you see the different roads that could have been taken, and you realize that there were many alternatives and that there’s nothing natural in the way that today’s economy is structured. Economists say this is the result of Darwinian struggle for existence, and that’s what the free market is, and there is no alternative as Thatcher said. But there were plenty of alternatives back in the 1890s, when the world seemed to be moving towards socialism of one form or another, especially the Marxian socialism dominated by the wage-earning class which was going to be democratic socialism. Instead we have oligarchic socialism in the U.S. and oligarchic state capitalism really isn’t state capitalism. Think of America’s policy as state neo-feudalism, because the purpose of the state is to protect the rents of finance, real-estate, oil, mining, and natural resources. The idea of the Biden Administration — really of both the Republican and Democratic Parties — is that since America has moved its industry and manufacturing to Asia in order to lower the wages here, how can Americans continue to get high-living standards, if it doesn’t produce raw materials or manufacturers? How can it be a post-industrial society, getting rich on economic rents and interest on and profits paid by foreign countries? How can America get rich by being a parasite? That was a problem that the Roman Empire had, and we know what happened to the Roman Empire. It was a problem that the British Empire had, and we know what happened to that: it can’t be done. This attempt to make America into a post-industrial society means a rent-seeking, neo-feudal society, treating the rest of the world as a colony under globalization. How can that work? Well, It’s not working. Biden’s war, the NATO war, against Russia in the Ukraine is the catalyst dividing the world into two. That’s why Secretary of State Anthony Blinken said that the Ukraine war is part of a process that will go on for at least two decades, because it takes time for the world to split away into a neo-feudal West and a productive, basically socialistic Asia, or industrial capitalist and socialist Asia, and Eurasia, along with much of the global South.

DLJ: You have an interesting history about Georgists, socialists, and the debates between them regarding the rent question, or the emphasis on capital and labor. Is the neo-feudalism or the new rentiership of the West bound up with a failure of socialism in some way? I.e., you discuss the manner in which mainstream socialists forgot the rent question or subordinated it to capital and labor.[15]

MH: Henry George was one of the first investigative reporters that exposed the inequity of rent-seekers. His first book was a wonderful exposé of how the railroads got land grants in order to develop the land, using the land grants to become highly exploitative landlords throughout the western states. This was impoverishing the farmers by siphoning farm income off in the form of land rent and railroad charges. George became popular in the large cities that were largely Irish — New York, and Boston —  by writing a wonderful book on the Irish land question. His writings inspired a generation of journalists in the 1870s–90s, such as Ida B. Wells and Upton Sinclair. Many of these reformers had originally been supporters of George. When there was a New York City election, the socialists and the labor parties selected George to run as mayor, as a celebrity-candidate, because he had written Progress and Poverty (1879). It’s not a very good book, but it was very popular at the time.

George said he could only run if he could get rid of everything that the socialists had wanted; everything that the working-class had wanted. He said, “I have a panacea, it’ll solve everything: just tax the land. You don’t need control of landlords, you don’t need to make them have decent housing. All you need is land-rent.” The socialists said, “There’s much more to the economy than taxing the landlord; there’s a labor problem. There’s a financial problem. The banks seem to be running everything.” George said, “the enemy is big government.” The socialists replied, “you need a strong enough government to check the landlords, who are the strongest class in New York City which is largely a rental city?” So, George formed his own political party, expelling any socialists and he defended the banks. Many bankers supported him because he called for the banks to remain in private hands. He said, “I can’t figure out a way to tax a bank interest, like you can tax land-rent.” He was criticized for that, the party didn’t go anywhere, and he ended up expelling his strongest supporters, who had joined him thinking that taxing the land was part of an overall social restructuring. The word panacea, sort of developed specifically because it went hand-in-hand with the name of the Georgists. George’s followers became libertarians and anti-socialist.

Followers of George and the socialists went all around the U.S., having debates, most of which were transcribed and published by Charles H. Kerr & Co., the socialist collective that published Marx’s Capital in English. The common theme of the debate was that society is going to go in one direction or another: either socialist or middle-class. The problem is that taxing the land rent doesn’t solve the labor problem. It doesn’t solve the tension between wage-earners and employers as to working conditions that they have. It doesn’t have anything to do with economic planning. George had actually become libertarian and anti-socialist, and his followers became so anti-socialist that in Europe they were the among the earliest supporters of the Nazis. In the U.S. they were noted Nazi sympathizers. Many of the leading Georgists were known for their anti-Semitism. When I went to the Henry George School Library in New York, I was amazed at all the anti-semitic books in their library. I knew a number of teachers there, and they said that because the school was supporting Germany early in WWII, most of the attendants were FBI agents. The head of the School told me that the number two guy at the Henry George School was part of the Nazi intelligence operation in the U.S. before escaping back to Germany. I realized that a government strong enough to check the landlords has to be a socialist government. You can’t say, I’m a libertarian, I’m against strong government, and then hope that the landlords are going to end up being taxed. That’s an oxymoron.

DLJ: You write:

[i]t always should be borne in mind that solving the problem of finance capitalism and the rentier legacy of feudalism would still leave the class conflict of industrial capitalism in place. Freeing the economy from rentier overhead charges would not solve the problem of exploitation of labor by its employers. But taking the intermediate step of creating a classical economy free of rentier claims is a precondition before the labor/capital conflict can become the focal point of political reform, having finally freed capitalism from the rentier legacy of feudalism.[16]

It seems the socialists should have paid heed to this question of rentiership and that this was an opportunity missed at the turn of the 20th century. You’re saying that today financialization is a more immediate barrier rather than subordinating finance to the capital-labor relationship.

MH: This shows the role of personalities in history. The Georgists were so anti-socialist that the  socialists left the rent issue to followers of George. That’s why it was Marxists and socialists who wrote about finance capitalism, whereas most of the society treated finance as if it were part of the industrial system, not extraneous to the industrial system.

So you’re right. The socialists after WWI didn’t focus highly on finance, but things changed quite a bit after WWII. The CIA put money into supporting progressive literary and cultural figures as leaders of the socialist movement, focussing on what the CIA called, “the mighty Wurlitzer,” to control public opinion concerning the socialist parties. This results in the British Labour Party having Tony Blair, who was to the Right of Thatcher, who identified Blair as her greatest legacy, in privatizing Britain’s railroads. The social democratic parties in Europe jumped on the neoliberal bandwagon largely because of the U.S. meddling in foreign politics, which pushed neoliberals and socialists to stop talking about economic issues. In the U.S., there is identity politics, but the one kind of identity you don’t have is the identity of wage earners. That’s been stripped away from the socialist parties of the United States and Europe, and so the socialist parties are no longer socialist. The irony is that what people thought of as being a socialist in a sense of a more efficient economy, free of bad statism and free of war — the Republicans in the U.S. and the nationalists in France and Germany are against the war in Ukraine, the NATO War. The socialists, Bernie Sanders and AOC, voted for giving money to Ukraine. So the word socialism has changed quite a bit into the opposite. Almost the whole economic vocabulary that is used today is the opposite of what it meant a century ago, and that’s what my book, J is For Junk Economics is all about.[17] That’s what I talk about when I’m in China.

DLJ: Do you see China as realizing the ideals of classical political economy better than the West? That might be a provocative statement because, for a lot of Americans, China means communism, and so it would mean the opposite of Adam Smith — at least that’s what we’ve been taught since the 20th century by something like the Adam Smith Institute, a neoliberal think-tank.

MH: The Adam Smith Institute hates everything that Adam Smith stood for. That’s why it’s called the Adam Smith Institute: to confuse people! Smith wanted to tax land-rent. The Adam Smith Institute wants to glorify the landlords, privatize public housing, and create a rentier and financial utopia for the 1%. There’s a reason why the economics curriculum in the U.S. no longer has the history of economic thought, because if you study the history of economic thought, which they taught when I was in school 60 years ago, you would know that when people talk about Adam Smith and free markets, it’s the exact opposite of the kind of free market that Smith talked about. What Marx described was capitalism. That’s why he called his book Capital, not Socialism.

What the Chinese government is trying to follow has been called a “state-capitalist society” or a “communist society”: the focus is on productive labor and productive investment. The most important feature of China is that it kept the banking sector and money creation in the public domain. In the West, commercial banks create credit against assets that are already in place. Mortgage loans are made against real estate in place. Corporate takeover loans are made to corporations in place. Government control of money, as it was in Germany in the late 19th century, created new means of production, especially public infrastructure. China does not have its banks make loans for corporate takeovers, or for mergers and acquisitions. China makes them increase the means of production. In that sense they are following the industrial capitalist policy that evolves naturally into socialism, which is why they call themselves a socialist economy, and rightly so, because they’re not running the economy on behalf of the 1%. Obviously, by letting a hundred flowers bloom, they realized that the state cannot act as the Stalinist state did as a central planner. They need innovation, they need individual innovators to create market opportunities and new products and that’s been best done by letting market forces take place. But when somebody achieves such a hyper-billionaire level, as did Jack Ma with his phone  payments company, they coordinate the private wealth that is created to serve the long-term public interest. That’s why there is a strong state. The Communist Party of China is delegated to administer economic democracy, something that political democracy has not been able to do in the Western countries. You need a state to act as the agent of social planning, so that it’s not the banks and the rentier sector that does it, as occurred in the U.S. and Western Europe. Europe. China is doing what most of the world was doing before Western civilization took off and in an oligarchic form.

DLJ: Do you think the U.S. could do that? In many ways, China’s extraordinary growth, especially post-Deng Xiaoping reform era has presupposed the U.S.’s current account deficit; these “twin deficits” where the U.S. is this large importer from China. I’m thinking to what degree there’s also a mutual character to it as well. Maybe that has been in crisis. When Trump came to office – I’m not saying whether or not he was correct – he was expressing to some degree a process of deindustrialization in the U.S. that has turned the U.S. into a consumer nation without having any production. When I think of two nations having industrial production, I also think back to the end of the 19th century, what Karl Kautsky called the fall of the Manchester School: once one country begins to have state intervention, it encourages other nations to have state intervention. How do you see this working out, besides the more violent past? What do you think would be a more positive way of this working out?

MH: Technologically, of course, the U.S. could redevelop; it has developed before. But it can’t do so, because politically it’s controlled by the anti-labor party. Both Democrats and Republicans are controlled by the rentier interests that seek to increase corporate profits by looking around the world for the cheapest labor, which is not in the U.S.

An even more serious problem is that the rulings in the Supreme Court have turned America into a failed state, e.g., how the Supreme Court ruled that the existing anti-pollution laws, the environmental protection laws by the EPA were unconstitutional, because the government has no power over the states. Or when they say “we on the Supreme Court know that the Constitution was written by slave owners who wanted state power to be in the states, not the federal government, because they feared that if there were a federal government and the northern population wanted to abolish slavery, we could abolish it. Every state gets to go their own way.” America is an evolved slave-owning state, even though there’s no more slavery, the fight against federal power has been adopted by rentier class. It’s literally a neo-feudalism class. If you cannot have the government, either Congress or the president impose basic environmental, social, educational, or any other social regulation, and if everything is deregulated state-by-state, you have a dissolution of the government and a paralysis. The U.S. now is in a state of political paralysis locking itself into the current status quo, which means that the U.S. cannot have any kind of an industrial recovery, because that requires a federal policy to check the overhead of the banking system, the real estate sector, and the insurance sector. You can’t have a Supreme Court that would prevent any kind of a public health system, a single-payer public health system, and yet 18% of America’s GDP is for medical care. America has priced its labor and its industry out of world markets by having to pay so much debt service, so much insurance for medical care, home insurance, and real estate rents. As long as this revenue is paid out in the form of rent, you’re not going to develop.

DLJ: It almost sounds like you’re pointing to the need for a political revolution. If the potential for development in the  U.S. is checked by a rentier class, it is an infringement upon the people, from the perspective of classical bourgeois political theory.

MH: If other countries in the past had a problem like the U.S. now has with the Supreme Court, they would have had a revolution. A European prime minister would invite the court into the office and say, “I’m sorry but I’ve got to make a choice: either you resign or I’m going to have to either execute you or let the mob outside come in and lynch you.” Wouldn’t you rather resign? It would be settled by some kind of revolt like you’re seeing with the Yellow Vests in France or like you saw in the 1848 Revolutions throughout Europe. That’s not likely in America because there’s no real consciousness that there is an alternative. There’s no group in America, no political party, that is offering an alternative to the current political and economic system in America. The fact that you have two parties in America that are really the same party, means that there’s no room for a new party to come and, as it would in Europe, get represented in Congress. In Europe, you can have any number of parties, and they would be represented in Parliament in proportion to their votes. A third party would be kept off the ballots in the U.S., and that’s why Bernie Sanders and others decided not to run as a third party; there’s no way we can meet the court challenges by the Republicans and the Democrats together. Sanders had to pretend to run as a Democrat. But we’ve seen that the Democrats don’t want any part of anything progressive. There’s an illusion that somehow the Democrats can be progressive because they have people who can’t find any alternative, who are running as a Democrat. Whereas in Europe, they are running as nationalists, as third parties, e.g., Alternative für Deutschland.

I just don’t see the political development in the U.S. that would be a precondition for an economic restructuring to get back on the pre-WWI track. There was anti-monopoly legislation that would be hard to impose. Biden talks as if he’s against monopolies. but he’s supporting the monopolies, e.g., for Pfizer with regard to the vaccines: the government does the research and gives it to Pfizer who makes huge monopoly rents protected by the Biden Administration. Large companies are able to buy control of the politicians by paying for their election contributions under the Citizen’s United Supreme Court ruling, and they do. They control the mainstream media. People just don’t have an idea that there is an economic alternative, which would not be the socialism that is represented by people who call themselves socialist, but are actually enable neoliberals.

DLJ: I’m trying to think about Destiny and its purpose. How could it raise consciousness in the U.S.? You mentioned going back to pre-WWI conditions. In the Communist Manifesto (1848) Marx and Engels speak of reactionary reformers who want to turn back the wheel.[18] I.e., for Marx and Engels, it was always a question of how opportunities develop out of the present, rather than trying to clean the slate. The financialization in the United States, for them, poses the question of developing this neo-feudalism into socialism. In other words, we can’t go back to pre-1914. How does one find the opportunities in the present to even point towards alternatives within the U.S.?

MH: I have not found an alternative for the U.S., and so I can’t come up with a panacea. I remember Max Schachtman gave a speech in the late 1960s, where he asked, “what’s happened to all my old socialist friends? What happened to the socialists?” He said,  they all went out West; they all withdrew. They thought, “we can just have community development,” and there were all sorts of ideas and utopian communities founded throughout the U.S.. There were French followers of Saint Simon attempting to make utopian communities, followers of Henry George, making utopian land-tax communities. They’re all middle-class bourgeois communities today. All the socialist communities were all very artsy: they’ve all become arts and crafts centers today. The last thing they want is a land tax that prevents their housing prices from going up.

I don’t see how things can be fixed in the U.S., which is why I’ve spent most of my time analyzing what’s happening in Asia and working primarily with countries from Asia and elsewhere, which seems to be where most of the flexibility and innovation resides. My idea is that if people see that what Asia is doing is quite simply what America could be doing and isn’t, it would be the only way to show them that there is an alternative. You can’t just draw an alternative and apply it as an idealistic application. You have to show that it’s working somewhere. I’m trying to explain why China was able to make its economy grow and raise the living, educational, and health standards for its population, and that the West hasn’t. And that is the path on which the West would have to develop, but it has not been able to check oligarchies. Non-Western countries are able to do that, and that’s what the fight of global South reform is going to be the by this fall when the grace of the debt crisis, really is the trigger for a restructure.

DLJ: Economies are interdependent. I.e., it would still be a question of the Chinese working class and the American working class building bonds across nations.

MH: The Democratic Party has produced such an anti-Asian, hate-filled racism, that I don’t think that can be. The Democratic Party has done everything it could to spur an ethnic war between the black and Asian populations. You see that here in New York by the attacks on the subways, on the street, mainly by blacks against Asians. The Democratic Party, by pushing this ethnic identity, has pushed ethnic hatred. That’s why the Democrats are surprised that the Hispanics and Asians are moving towards the Republicans. The Hispanics and Asians realize that the Democrats have a race-hatred policy, much like the Nazis. I don’t believe that any political progress can be made in the U.S. until the Democratic Party, certainly the current leadership, is swept away. There cannot be any progress in America today led by the Democratic Party, which is today the ideologically Right-wing party that has turned what should be an economic problem into an ethnic and non-economic problem. It’s like the old industrial capitalist was supposed to have said, “if I can get half the working class fighting against the rest of the working class, then we have won.” That’s the Democratic Party. They asked, “how do we do it?” We divide the working class into ethnicities, ethnic identity, gender identity.

DLJ: You can have the working class cancel each other.

MH: Yes. |P

[1] Carlos Hudson. See Michael Hudson, “Dad’s Many Proverbs” (June 17, 2017), available online here.

[2] Michael Hudson, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism (Glashütte: ISLET-Verlag, 2022), 85.

[3] Hudson, Destiny, 165: “Reversing the tradition of classical value, price and rent theory, neoliberal economics teaches that all income is earned, and that all forms of economic rent are not merely transfer payments but contribute to output, as measured by neoliberal formulations and redefinition of Gross Domestic Product (GDP). This inversion of classical logic is so far-reaching and censorial that it has influenced Chinese and Russian planning as well as that in the Western economies.”

[4] See Karl Marx, “Theories of Productive and Unproductive Labor,” in Theories of Surplus Values (1863), available online at <>;.

[5] Hudson, Destiny, 120: “China has invested in a vast public infrastructure network to facilitate its industrial production by minimizing the cost of living and doing business. This has saved employers from having to pay higher wages for labor to afford privatized education, health care, transportation and other essential services. These basic needs are provided by public infrastructure, which Simon Patten called a ‘fourth factor of production.’”

[6] Wilhelm Camphausen, “Napoleon III and Bismarck, on the morning after the Battle of Sedan” (1878).

[7] Karl Marx, “The French Crédit Mobilier,” The People’s Paper 214, June 7, 1856, available in Marx and Engels Collected Works, vol. 15, and online at <>;.

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  1. Freethinker

    Absolutely fascinating as always, Michael Hudson is a rare beacon of intelligence, honesty and empathy in a human world mainly choosing to express greed, stupidity and cruelty. Sadly the few such decent people are overwhelmed by the teeming masses of the ignorant, who collectively ensure that we are all affected by needless destruction. That psychopathic 1% who cannibalistically parasitise and predate upon our own species will always be with us, but what enables their near-constant state of success in controlling us are the vast majority of any given human population that look the other way, content to carry on chewing their cud as long as they feel the axe not yet falling on them.

  2. bwilli123

    Michael H. is not alone.

    From a review in the LRB of The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers.

    …”Meanwhile, Britain has become a rentier economy, in large part thanks to the disposal of social housing, which means that rent is now paid to private landlords rather than to local authorities. In 1985, less than a quarter of rented homes were privately owned; in 2014, more than half. Rent as a proportion of household expenditure has doubled over the same period. Rent is the primary source of economic growth in the UK….”

    …”On average – that is, for all kinds of housing – land now accounts for 70 per cent of a house’s sale price. In the 1930s it was 2 per cent….”

      1. Colonel Smithers

        Thank you, both. I second GramSci.

        My mother is a civil servant and worked on the privatisation of utilities and sale of government housing. My father was an RAF doctor. Both have mentioned that 2m Ha figure, but mum has insider figures and reckons it’s more. There are likely to be fire sales under the Tories and Labour, so the loss will only increase, in part as investors game net zero commitments and post Brexit farm subsidies.

        As a history enthusiast, part time farmer / small holder (overseas) and having been educated alongside and worked / working with and for oligarchs and aristocrats, I am fascinated by the issue and have books on the subject going back to the 1870s and maps going back to the late 18th century. It is a mystery, or perhaps isn’t as this is the UK, as to how this was allowed to happen. It’s not just the Tories, Labour(‘s Brown) was as bad.

  3. Rolf

    Huge thank you to Dr. Hudson, Yves, and NC for making these discussions available.

    There’s no distinction between productive and unproductive labor, between wealth and overhead.

    This is such a simple concept to grasp, and it is America’s Achilles’ Heel.

  4. Carolinian

    A great discussion as always but here’s suggesting that the question that needs to be asked is why, if socialism is history’s destiny, it has so conspicuously failed to happen here in the 21st century Perhaps by saying that everything is about sex Freud got it right in his limited way. Perhaps we need to admit that economics is also about human nature–that thing that is in all of us–and not about a mechanical view of society that just needs the right algorithm to succeed.

    Of course Human Nature is a big thing for the right and liberals like to dismiss such talk as ignorant and supersitious and cling to their view that better education will solve all our problems. Meanwhile the right accepts villainy as the way of the world and invents various rationalizations to justify itself–religion, annointing with holy oil, breeding. Nature red in tooth and claw doesn’t need rationalizations but we conscious humans do and arguably both left and right are rife with them.

    At any rate thanks for the above. I love the way Hudson brings history into everything. If we want to understand what societies and people are about we need to look at the evidence.

    1. Michael Hudson

      Human nature? Hah! That’s indeed the point.
      The Stoics had a good view of human nature. They focused on wealth addiction and money-love. that was the subject of Plato’s Republic and Aristotle. Unlike the demand for food, which satiated its eaters, money-love was addictive and all absorbing.
      Today’s anti-classical price theory says just the opposite. All its models are based on “declining marginal utility.” And because economies are assumed to operate on barter, there is no money and no interest-bearing debt in these models. Getting more money is like getting overstuffed on a diet of bananas. So as billionaires get richer, they lose interest in making more money. the less affluent will catch up.
      that’s the junk economic view of human nature.

      1. Adam Eran

        About addiction, see Supernormal Stimuli. Or watch “Hacking your mind” on PBS (Kahneman and Tversky) where they call it “bias.” I like the cartoon best, though.

        So…the U.S. could have a 12-step wealth addiction program, or could crash its cars into bridge abutments (i.e. break down). It’s hard to imagine a third possibility. Personally, I wonder how bad the breakdown will be, because the anti-12-step propaganda is pretty ubiquitous.

        Incidentally, one step in actual 12-step programs is to avoid discussing public policy. So I guess jailing addicts is okey-doke even with those who claim addiction is a disease. What’s next, jailing the diabetics? Seriously, I tried to bring this up in a 12-step group and was attacked, at least verbally. These were nice people who spent literally decades parroting the notion that addiction is a disease, so punishing addicts wouldn’t be helpful, but they still believed the U.S. got it right with incarceration–where 65% of the inmates have a substance problem. The U.S. is currently the world champion incarcerator, too, with 5% of the world’s population, it has 25% of the prisoners.

        That’s five times the world’s per-capita average, and seven times more than the Canadians. Canadian crime is insignificantly different the U.S. crime (per-capita), but they do have single-payer health insurance, so people are considerably less desperate.

    2. GramSci

      I think you’re on to something, Carolinian. Money, sex, and food can all be “addictive” and “all absorbing”, as Michael Hudson observes above, and as pimps like Jeffery Epstein, Donald Trump and John Danforth* convincingly illustrate.

      However I think a distinction needs be made between genuine Hunger, and the testosterone rush some (many? all?) people get by depriving others of these attractions. I have been intrigued by this account of testosterone, which views T as part of a three-way competition with cortisol and serotonin in the amygdala. It’s an oversimplification, to be sure, but when rational action cannot resolve the threats and opportunities of the environment, it’s too easy to see how vertebrate behavior locks into “fight or flight” mode. Perhaps a third mode needs to be recognized: deer-in-the-headlights, roll-over-and-get-f^(kEd mode, which seems to be the main mode of the electorate of the ‘free world’. In the U.S. we’ll get a read on this on Tuesday next.

      *Danforth, a scion of the Ralston-Purina fortune, was an early supporter of Clarence Thomas. I was just reading about him on another thread, so I thought I’d give him ‘honorable’ mention.

  5. Zephyrum

    When Michael Hudson writes:

    The Hispanics and Asians realize that the Democrats have a race-hatred policy, much like the Nazis.

    He is also providing an explanation for why the Democrats are so willing to look past the race-hatred policies of the neo-nazis in Ukraine, and even embrace them. They are birds of a feather. If only there were Democrats with enough self-reflection to perceive this. But anyone so equipped is no longer a Democrat. The residue that remains is increasingly toxic.

    1. TimH

      A person who strongly identifies as a Reb or Dem cannot be reasoned with… that’s how polarised it has become.

  6. Tom Pfotzer

    Wow. That was fun. Sorry for the broken record, but “thanks again, thank you very much Michael Hudson!”.

    === Here are a few passages from the article I’d like to emphasize.

    Michael Hudson says:

    The Communist Party of China is delegated to administer economic democracy, something that political democracy has not been able to do in the Western countries. You need a state to act as the agent of social planning, so that it’s not the banks and the rentier sector that does it, as occurred in the U.S. and Western Europe. Europe. China is doing what most of the world was doing before Western civilization took off and in an oligarchic form.

    Tom’s notes to himself: Economic Democracy!. Possibly the root concept of a brand*

    The interviewer then asks Michael Hudson:

    Do you think the U.S. could do that?

    Michael Hudson replies. I’ve included several excerpts:

    Large companies are able to buy control of the politicians by paying for their election contributions under the Citizen’s United Supreme Court rulingI don’t see how things can be fixed in the U.S., which is why I’ve spent most of my time analyzing what’s happening in Asia and working primarily with countries from Asia and elsewhere, which seems to be where most of the flexibility and innovation resides. My idea is that if people see that what Asia is doing is quite simply what America could be doing and isn’t, it would be the only way to show them that there is an alternative. You can’t just draw an alternative and apply it as an idealistic application. You have to show that it’s working somewhere. I’m trying to explain why China was able to make its economy grow and raise the living, educational, and health standards for its population, and that the West hasn’t, and they do. They control the mainstream media. People just don’t have an idea that there is an economic alternative

    I don’t see how things can be fixed in the U.S., which is why I’ve spent most of my time analyzing what’s happening in Asia and working primarily with countries from Asia and elsewhere, which seems to be where most of the flexibility and innovation resides. My idea is that if people see that what Asia is doing is quite simply what America could be doing and isn’t, it would be the only way to show them that there is an alternative. You can’t just draw an alternative and apply it as an idealistic application. You have to show that it’s working somewhere. I’m trying to explain why China was able to make its economy grow and raise the living, educational, and health standards for its population, and that the West hasn’t


    Tom’s observations:

    We have a communications problem: too few people understand that alternatives exist, that those alternatives are better, and those alternatives are achievable.

    We have examples – not just in China, but even here domestically – that demonstrate that appropriate capital allocation by the state can make general prosperity happen.

    We also have legion examples of the costs of misallocation: war, asset bubbles, devolution of our industrial base, shrinking middle class, etc.

    We have plenty of negative examples to showcase, and those negative examples are highly resonant with many, maybe even most Americans.

    On the subject of political solutions top-down, here’s Michael Hudson again:

    There’s no group in America, no political party, that is offering an alternative to the current political and economic system in America. The fact that you have two parties in America that are really the same party, means that there’s no room for a new party to come and, as it would in Europe, get represented in Congress. In Europe, you can have any number of parties, and they would be represented in Parliament in proportion to their votes. A third party would be kept off the ballots in the U.S., and that’s why Bernie Sanders and others decided not to run as a third party; there’s no way we can meet the court challenges by the Republicans and the Democrats together.

    Tom’s conclusion from that paragraph: “no top-down solution”.

    Top-down not going to work? What about bottom-up?

    “bottom-up” means that a whole lot of people have to eventually evolve a considerable degree of common situational awareness, and the sense that “we’re all in this boat together” and (most importantly) “here’s what I’m going to do about this _today_”.


    * We have a giant communication and convincing challenge facing us.

    This is a common problem in commerce, when a new company or new product gets launched. The goal: “mind-share”. Your product, comfortably ensconced in the mental real estate of your potential buyers. The tools of the trade are:

    brand. A symbol that clearly and simply and memorably represents the product

    product definition / benefits. What the product does, and why it’s useful to have

    messaging…is the means by which the brand, product, benefits are communicated to potential buyers….in the right form, at the right time, to the right person

    repetition. One “message” is not enough. Hundreds of “impressions” (message delivery instances) are required to move the needle from “I’ve never heard of your product, and I don’t know why I should care about it” …. to …. “here’s my money, I want that product. Right now!”.

    1. Rolf

      I am late to this party again, but thanks for these points, Tom — I have a similar set of “notes to self” from this text (and countless others), and have many of the same passages excerpted.

      The political paralysis we face in the US today is engineered by the false choice of our two parties, both of which maintain their own version of, ‘there is no alternative’. This is very much a problem of the people (say, the 80%) recognizing that power has been stolen from them, that the thieves are absolutely committed to remaining in control, and that true alternatives reside with neither party. A ‘bottom-up’, branded, decentralized (thus difficult to attack and extinguish), widely distributed message, communicated in simple but strong, easily understood language, independent of mainstream media, and detached from membership in any extant group other than the broadly disenfranchised majority — is the only answer.

      It seems to me that people must first recognize that there is an alternative, and that the aim of both the Democratic and Republican parties is to keep the majority population at each other’s throats.

      How to do this?

      1. Kulaber

        I’am not from US so and I do not have much opinion if people of US can recognize that there is an alternative. However, what I see in my country and in some European countries, the majority do not seem to recognize that there is or (there must) be an alternative though they think things are not going right and see living, gets harder harder each time but not addressing causes of these to correctly. From my understanding of history, the revolutions or big changes form as a reaction to the pressure on the mid and lower class and it does not necessarily need to be recognized by the people. I guess the pressure on the people in US is not that high yet so it would take time for them to react. On the other hand, I doubt it will be same for other nations in the West camp in near future, so the reaction may come from there causing further reactions in US. What China and Russia will manage to do with BRICS and SCO will have great influence on Southern worls, then Europe and then may be US.

        1. Tom Pfotzer

          That….was great.

          Mainly because there was a time … loooooonnnnggg ago, when the Red Solo Cup was my friend, too. Great parties were had.

          Sorta seriously, JT, there’s something magic about a fun brand.

          They can really do the job in some cases, and if you’re depending on viral marketing….it may be the special sauce that makes it all go.

    2. rob

      well put,

      now , if only someone with “rightness of mind” and intention could win that billion plus dollars in the lottery, so as to have the staying power to get that message and brand in front of everyone’s brains, long enough , and repeatedly to make an impression. decades.

      Our side has the natural handicap of “not profiteering on exploitation and oppression”…Which seems to keep everyone trying to help; broke… until they die..
      unlike those forces who see the world as “theirs”… and have all our media on their side, and their immortal corporations and trusts keeping the boot on the neck of all living things. Decade after decade…
      I guess we need to resolve a “long term plan”.

      1. Tom Pfotzer

        Rob: I keep hoping it’ll be me. I never play the lottery, but maybe I should start.

        What I would do with a few $mil. Don’t need a $bll, although if a $bil was to be had, then it may be time for the Red Solo Cup block parties again. See above.

        On the subject of long-term plan, I suggest that we concentrate on making the tools (brand, product story, and messaging elements (vids, pdfs (brochures and white papers), swag (hats, t-shirts, farmers’ market bags, etc.).

        We’ll also need a technique / software / distribution platform that supports the viral-ness.

        Let the long-term thing happen by itself. If you get the DNA of the entity right, it’ll self-replicate.

        Long-term plans require a lot of agreement and coordinated action. Better to just provide concepts, talking points, and examples of it working, and let people grab the football and run like hell with it.

        Let’s start by getting the DNA right. Concepts, brand, messaging elements.

  7. Questa Nota

    Hudson notes that old industrialist who is supposed to have said “if I can get half the working class fighting against the rest of the working class, then we have won.”

    That industrialist’s neighbor, the baleful Jay Gould, said “I can get half of my workers to kill the other half.”

    One nagging issue for so many in thinking about Hudson’s topics is the human drive toward control. That biology is hard to overcome, as seen throughout history.

    Are the strongest and most ruthless likely to exert themselves over others?

    Of course, so how is that kept in check? Many people want a dacha, and a chicken in every pot.

    1. KD

      Come now, even in a band of Chimps, the non-alphas are forming coalitions to try and take down the big Chimp. Nations are balancers–they form coalitions against the most powerful. People are balancers–they form coalitions against the most powerful. Envy and jealousy are despised, but without them the world would fall into tyranny.

      1. digi_owl

        Speaking of chimps. They also have young males forming gangs that go out and raid nearby groups…

    2. JTMcPhee

      Lots of studies indicate cooperation and empathy are maybe more powerful, certainly in the long run, than that posited “drive to control.” Which in the US is fostered and fed by the “system” of social control intertwined into all the public institutions, especially schools, and fed slowly into the minds of all us otherwise potentially cooperative, synergistic forms of organizing and interacting.

      Gotta work that impulse to comity against the “super stimulation” distractions and the other levers the rich sh!ts and their minions wave before our befuddled faces…

    3. rob

      I always thought the point of “the bill of rights”,in relation to the constitution was an attempt to protect people from the gov’t(made up of other people). the law is king, not the king is law.

      people would want “the bill of rights”…to apply to them. It seems the idea of a bill of rights that actually applies to real people(who are alive and will die), is imperative. The courts seem to have defined the long train of abuses of the US gov’t against our population, differently than how “I” read the bill of rights.
      but, those “educated” correctly; don’t really see it my way.

  8. Jose

    After reading Mr. Hudson’s assertions, it is hard not to concur with his analysis. His understanding on economics is precise and to the point. Also, his grasp of history is excellent. I have learned just by reading this post.

  9. juno mas

    Gosh, that was some fascinating morning reading.

    Michael, Yves, thank you for an enlightening discussion.

  10. shinola

    Per Hudson “…the economics curriculum in the U.S. no longer has the history of economic thought…” WTF?

    I guess we’re really witnessing The End of History.

    1. digi_owl

      Frankly i can’t shake the feel that education in general fails to providing historical background for the lectures given. Mostly history is boiled down to the memorization of dates and names, as that is easy to score for on tests.

  11. korual

    The question of socialism or barbarism was first posed as a national level question, but in a globalized situation it is not national parties, but whole nations that have this choice. It is clear that China has decided on one path and the US on the other, fatefully and irretrievably.

  12. Olde mayte

    My idea is that if people see that what Asia is doing is quite simply what America could be doing and isn’t, it would be the only way to show them that there is an alternative. You can’t just draw an alternative and apply it as an idealistic application. You have to show that it’s working somewhere.”

    I have also had this thought after seeing the effect of Singapore on westerners. Some visit Singapore and just can’t shoehorn what they see in to their preconceptions, and are often better off for it.

    Absolutely not democratic by western standards yet really pleasant and safe, and the whole place too not just some tourist strip. Guaranteed housing (more or less), a jobs guarantee (more or less), high income but still has manufacturing. A friend of a friend owns a spring factory and literally became a rich industrialist (and without just riding an asset bubble)! The tasty cheap food from the hawker centre? Yup, subsidised rents and price controls for basic foodstuffs in action.

    When those fucking idiots in the UK were like “let’s make London Singapore on the Thames” I had a good laugh cause all they meant was cutting taxes and public protections!! Aren’t these the former colonisers of the place? How dumb can you be

    This part confused me a little as I am not really aware of this happening outside of the usual anti China stuff:

    The Democratic Party has produced such an anti-Asian, hate-filled racism, that I don’t think that can be. The Democratic Party has done everything it could to spur an ethnic war between the black and Asian populations.”

    Why/how blacks and Asians specifically?

    Love that the man himself is active on this awesome site!!

    1. digi_owl

      Ah yes, Disneyland with the death penalty as William Gibson once put it.

      It is the place where you need a doctor’s prescription in order to buy chewing gum.

    2. caucus99percenter

      Black-on-Asian violence seems to be the main beat covered by the website “Asian Dawn”:

      No speculation about the reasons. Just as well, since where would one find such analysis these days that wouldn’t be hopelessly tainted by the respective authors’ ideological priors?

  13. Paula

    I keep reading economists like Michael Hudson and of course I do not talk the language, because my field of study was language and literature, but I’m fascinated by the story of finances; not the numbers end, or I’d be richer, but the story and the ideas and the people who postulated them. I guess my curiosity has been peaked due to all the inequality in the USA, the rise of homelessness and why, and also because I love words and definitions and finance is full of words I have little or no understanding of like rentier and Georgism so I began facing my nemesis, and my long refusal to equate people with numbers or classify them by their incomes and instead look at the story of money.

    We are an extremely poor model of a democracy and it’s no wonder the smarter part of the globe doesn’t want to join a unipolar globalism, another word for “financial colonization” when indebtedness is used as a lever, and too many times a bludgeon to, “privatize their public domain, utilities, national resources, and their commanding heights,” as Hudson so clearly stated. But also, at least for me, there’s this theft of money and a huge lack of trust in a phucking thief who steals other people’s money cause they don’t cotton to obedience and a world order in which the bully made up the rules and also breaks them, frequently. And a whole lot more distrust and disgust on leaders who let the people of the earth starve to death, be without heat, go homeless, beat them ruthlessly to death because they didn’t wear a head scarf properly, shoot them for wanting freedom from their G** D*** tyranny.

  14. A Freeman

    “…you note how the classical conception of the free market has been inverted.[3] I.e., it used to be freedom from rentiership, and now it is the freedom of rents. …Biden defines an autocracy as a country that does not privatize and make a free market for the rentiers to take over. The ideal of American neoliberalism is what the Americans did to Russia under Boris Yeltsin…”

    To circle back to comments a few days ago about “neo-liberalism” being a stupid bumpersticker for the above stated rank reversal of meaning. Accepting academia’s naming is a setup to fail—often intentional, BTW. English speaking people everywhere respond best and fastest to Plain English— time to put all our minds to it or throw in the towel. No one better to begin this then you Michael! But this Plain English Guide must be far, far shorter than “J is for Junk…”

  15. Peter Nightigale

    We’ll never win this battle, unless we come up with a much simpler way of presenting these truths, which I hold to be self-evident. Here is my (probably oversimplified) attempt.

    We insert in the People’s business parasitic entities such as banks and insurance companies with their loans, fees, and bond issues. As we do that, what happens to the cost of projects that serve the common good, education, infrastructure, healthcare, retirement, … Their cost goes up with nothing of value to show for it, except for the profits made by a growing class of freeloaders.

    Isn’t this self-evident indeed?

  16. Fred

    This following passage appears to be somewhat garbled
    “If the taxes are a public collection of rent, a rent tax, they’re not only preventing economic rent and lowering the whole economies close to production, but they’re funding public infrastructure to further lower the cost of production”
    Am I wrong in assuming it should read ” …… and lowering the whole economies close to [cost of] production, but they are…”

  17. JR

    I was again made to think by Professor Hudson, and very much appreciate that. Professor Hudson made one point that I want to comment on.

    Professor Hudson states that the Chinese: “call themselves a socialist economy, and rightly so, because they’re not running the economy on behalf of the 1%.”

    I wonder about that claim. In 2012, the NYT put out an article about the Chinese princelings, where, among many other things, the reporters noted: “evidence is mounting that the relatives of other current and former senior officials have also amassed vast wealth, often playing central roles in businesses closely entwined with the state, including those involved in finance, energy, domestic security, telecommunications and entertainment. Many of these so-called princelings also serve as middlemen to a host of global companies and wealthy tycoons eager to do business in China.” I recall having seen other articles over the years making the same points.

    Given the foregoing, it would seem there is an argument to be made that there is at least a semblance of a top 1 percent in China (the CCP elites), that it dominates the heights of the Chinese economy, and that it operates to further its own interests. While I will admit that I have not put in hours of research on this, and that there are many others with significantly more knowledge of this than I, I’m having a hardish time accepting the claim that there is no economic elite in China and the claim that the economy is principally operated to benefit Chinese society as a whole.

    Thank you again for the article.

    1. SocalJimObjects

      I agree with what you’ve written here. Besides the CCP princelings, there’s also around 400 biliionaires from the private sector.

      I have 2 Chinese teachers from Mainland China, both of whom often say that in actuality, what China has is a capitalist economy. Now unlike Professor Hudson, I don’t hobnob with CCP officials, but when it comes to whether China’s economy is capitalistic or socialist, I would rather listen to regular people. Also why are there unemployed people in a supposedly socialist economy? The government would just find work for them right?

      When it comes to China and the economy, I think Michael Pettis is the better bet.

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