Tuesday, January 26, 2021

Michael Hudson — Finance Capitalism vs. Industrial Capitalism – The Rentier Resurgence and Takeover

Marx and many of his less radical contemporary reformers saw the historical role of industrial capitalism as being to clear away the legacy of feudalism – the landlords, bankers and monopolists extracting economic rent without producing real value. But that reform movement failed. Today, the Finance, Insurance and Real Estate (FIRE) sector has regained control of government, creating neo-rentier economies.

The aim of this post-industrial finance capitalism is the oppositeof that of industrial capitalism as known to 19th-century economists: It seeks wealth primarily through the extraction of economic rent, not industrial capital formation. Tax favoritism for real estate, privatization of oil and mineral extraction, banking and infrastructure monopolies add to the cost of living and doing business. Labor is being exploited increasingly by bank debt, student debt, credit-card debt, while housing and other prices are inflated on credit, leaving less income to spend on goods and services as economies suffer debt deflation.

Today’s New Cold War is a fight to internationalize this rentier capitalism by globally privatizing and financializing transportation, education, health care, prisons and policing, the post office and communications, and other sectors that formerly were kept in the public domain of European and American economies so as to keep their costs low and minimize their cost structure.
Neo feudalism and neo-fascism go hand in hand.
The result is a war to change the character of capitalism as well as that of social democracy. The British Labour Party, European Social Democrats and the U.S. Democratic Party all have jumped on the neoliberal bandwagon. They are all complicit in the austerity that has spread from the Mediterranean to America’s Midwestern rust belt.

Finance capitalism exploits labor, but via a rentier sector, which also ends up cannibalizing industrial capital. This drive has become internationalized into a fight against nations that restrict the predatory dynamics of finance capital seeking to privatize and dismantle government regulatory power. The New Cold War is not merely a war being waged by finance capitalism against socialism and public ownership of the means of production. In view of the inherent dynamics of industrial capitalism requiring strong state regulatory and taxing power to check the intrusiveness of finance capital, this post-industrial global conflict is between socialism evolving out of industrial capitalism, and fascism, defined as a rentier reaction to mobilize government to roll back social democracy and restore control to the rentier financial and monopoly classes....
Naked Capitalism
Michael Hudson: Finance Capitalism vs. Industrial Capitalism – The Rentier Resurgence and Takeover
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University


Andrew Anderson said...

But it has been democratized on credit. That is the only way for wage-earners to obtain housing, because otherwise they would have to spend their entire working life saving enough to buy a home. After World War II ended in 1945, banks provided the credit to purchase homes (and for speculators to buy commercial properties), by providing mortgage credit to be paid off over the course of 30 years, the likely working life of the young home buyer. Michael Hudson [bold added]

Apparently Michael Hudson has drunk the cool-aid too - that government privileges for a usury cartel are justified - so along as he agrees with what uses the "loans" are extended for.

Instead, Hudson should advocate for ethical fiat creation and use and 100% private banks with 100% voluntary depositors. This is obviously per the Bible as well as limits to the concentration of land ownership (Leviticus 25). Then we would have more low cost land available as well as more savings to buy and develop it.

As for interest rates, these can be as low as desired via:
1) An equal Citizen's Dividend.
2) Negative interest on large and non-individual-citizen holders of fiat, a public utility.

Hence no need for government privileges for private credit creation.

Peter Pan said...

If one cannot countenance reform, what hope does revolution have?

Perhaps the collapse of civilization is as necessary as it is inevitable.
From the ashes, a Phoenix arises, destined to make the same mistakes again?

Andrew Anderson said...

Attempts to reform banking have proved futile for at least 300 years and no wonder since government privileges (both explicit* and implicit**) for private credit creation violate equal protection under the law in favor of the so-called "credit worthy."

* e.g. the exclusive privilege of banks to use fiat in account form.
** e.g. needlessly expensive fiat; e.g. a precious metals standard.