Our Neo-Feudal System Is on the Verge of Collapse — Michael Hudson

Transcript of Michael Hudson in conversation with Ellen Brown and Walt McRee.

Neo-feudalism masquerading as "capitalism and democracy."

The Unz Review
Our Neo-Feudal System Is on the Verge of Collapse

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

See also

Reminiscence of the Future
Any Silver Linings?
Andrei Martyanov

Financialization as symptom — Chris Dillow

Which is where financialization comes in. The defining event on the road to financialization in the 80s was not big bang: at the time, this was seen as merely the ending of a restrictive practice rather than the start of the creation of global investment banks. Instead, it was the credit liberalization of the early 80s, which made mortgages and consumer credit much easier to get.

This did not merely increase the activity and hence profits of lenders: note the big rise in financial profits in the mid-80s. It did something even better for capitalism. In allowing workers to borrow more it raised C – W and thus boosted profits: the household savings ratio slumped in the 80s.

In this sense, financialization was a solution to a crisis in the real capitalist economy – albeit one discovered by accident.

This was the start of turning consumption into a source of rent similar to investment. It was "capitalizing" the consumer. The leaders here were the Big Banks through credit liberalization. Now Big Tech has gone further in also commodifying the consumer.

Stumbling and Mumbling
Financialization as symptom
Chris Dillow | Investors Chronicle

The Making of Homo Financius and Neoliberal Morality Oleg Komlik

In their paper Maman and Rosenhek made an insightful contribution in shedding light on how the state agencies, institutional actors and mechanisms concoct the neoliberal morality and conduct the moralization of the economic field within particular macro-institutional context. This important research direction should be amplified more in our field. One thing is certain: in (neoliberal) capitalism moral sentiments play a key role in the extraction of economic value.

Maman, Daniel and Zeev Rosenhek. 2019. “Responsibility, Planning and Risk Management: Moralizing Everyday Finance through Financial Education.” The British Journal of Sociology https://doi.org/10.1111/1468-4446.12698

Economic Sociology and Political Economy
The Making of Homo Financius and Neoliberal Morality
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Imperialism and profitability at Lille — Michael Roberts

G Carchedi and I are working on a paper on the economics of imperialism that covers measuring unequal exchange in trade, factor income flows on the current account; and foreign investment on the capital account. We reach similar conclusions to Ricci in that imperialism is alive and well and inequality between the imperialist economies and the rest is just as wide as it was 100 years go. Value produced in the dominated countries get appropriated and transferred to the imperialist economies in ever-increasing amounts...

Michael Roberts Blog
Imperialism and profitability at Lille
Michael Roberts

Stavros Mavroudeas — The Financialisation Hypothesis and Marxism: a Positive Contribution or a Trojan Horse?

This paper discusses the Marxist and Marxisant versions of the FH and argues that they misconceive the actual workings of modern capitalism leading to an explanatory blind alley. The spectacular ballooning of the financial system during the recent decades of weak profitability and accumulation does not constitute a new epoch, let alone a new capitalism. Instead it constitutes a well-known capitalist reaction in periods of weak profitability. This does not preclude the proliferation of new financial instruments which give new special forms of appearance to a usual capitalist process. Contrary to the FH, it will be argued that the Classical Marxist theory of crisis and fictitious capital offers an analytically and empirically superior understanding of this process.

Counterpunch
The Financialisation Hypothesis and Marxism: a Positive Contribution or a Trojan Horse?Stavros Mavroudeas | Professor of Political Economy in the Economics Department of the University of Macedonia

Michael Hudson — “Creating Wealth” through Debt: The West’s Finance-Capitalist Road

I kid to this previously, but it was in a list of links. It is important enough to give it its own post.

Hudson at his best. It's a must-read. Longish, so save it for the weekend if time is an issue.

Michael Hudson — On Finance, Real Estate And The Powers Of Neoliberalism
“Creating Wealth” through Debt: The West’s Finance-Capitalist Road— To be delivered at the Peking University, School of Marxist Studies, May 5-6, 2018

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

Michael Hudson — Monetary Imperialism

This article is adapted from the German edition of Super-Imperialism (2017).…

It's a fairly long article. Here are some highlights in summary.

The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites – and to deter countries from seeking to break free from America’s financial free ride.

Aiming to isolate Russia and China, the Obama Administration’s confrontational diplomacy has drawn the Bretton Woods institutions more tightly under US/NATO control. In so doing, it is disrupting the linkages put in place after World War II.
The U.S. plan was to hurt Russia’s economy so much that it would be ripe for regime change (“color revolution”). But the effect was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia.…

To U.S. strategists, what made changing IMF rules urgent was Ukraine’s $3 billion debt falling due to Russia’s National Wealth Fund in December 2015. The IMF had long withheld credit to countries refusing to pay other governments. This policy aimed primarily at protecting the financial claims of the U.S. Government, which usually played a lead role in consortia with other governments and U.S. banks. But under American pressure the IMF changed its rules in January 2015. Henceforth, it announced, it would indeed be willing to provide credit to countries in arrears other governments – implicitly headed by China (which U.S. geostrategists consider to be their main long-term adversary), Russia and others that U.S. financial warriors might want to isolate in order to force neoliberal privatization policies.…

Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer trade and investment along lines benefiting its own economy. But now that the growth of China’s mixed economy has outstripped all others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment Bank (AIIB) and other non-U.S. consortia.

At stake is much more than just which nations will get the contracting and banking business. At issue is whether the philosophy of development will follow the classical path based on public infrastructure investment, or whether public sectors will be privatized and planning turned over to rent-seeking corporations.…

 American strategists evidently hoped that the threat of isolating Russia, China and other countries would bring them to heel if they tried to denominate trade and investment in their own national currencies. Their choice would be either to suffer sanctions like those imposed on Cuba and Iran, or to avoid exclusion by acquiescing in the dollarized financial and trade system and its drives to financialize their economies under U.S. control.

The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve out opportunities for price gouging and corporate profits.…

This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt.

At the center of today’s global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.

This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt. 

At the center of today’s global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.

This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt. 

At the center of today’s global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.

This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt. 

At the center of today’s global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.

The price of resistance involves risking military or covert overthrow. …

This is not how the Enlightenment was supposed to evolve. The industrial takeoff of Germany and other European nations involved a long fight to free markets from the land rents and financial charges siphoned off by their landed aristocracies and bankers. That was the essence of classical 19th-century political economy and 20th-century social democracy. Most economists a century ago expected industrial capitalism to produce an economy of abundance, and democratic reforms to endorse public infrastructure investment and regulation to hold down the cost of living and doing business. But U.S. economic diplomacy now threatens to radically reverse this economic ideology by aiming to dismantle public regulatory power and impose a radical privatization agenda….

 Counterpunch
Monetary Imperialism
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

See also

The Obama administration sparked controversy in Congress and the national security world when it announced in late 2016 that it would spend more than $8 million dollars to purchase Iranian heavy water, a nuclear byproduct, in a bid to keep the Islamic Republic in line with restrictions on these materials imposed under the nuclear agreement....

After leaving the door open to additional purchases, senior Trump administration officials confirmed to the Free Beacon on Wednesday that the U.S. government would no longer engage in these nuclear transactions with Iran, a major policy shift that sources say is part of an effort to crackdown on Iran's access to U.S. funds.

Lawmakers and other insiders had viewed the $8.6 million payment to Iran as a scheme to give Iran access to U.S. currency as part of an incentive package aimed at keeping it in compliance with the nuclear deal....

Trump administration officials told the Free Beacon they have informed Iran that it is now solely responsible for maintaining compliance with the nuclear deal.

"No, the United States is not planning to purchase any Iranian heavy water," a White House National Security Council spokesperson told the Free Beacon. "We have made it clear to Iran that it is their responsibility to remain under their heavy water limit in the JCPOA," or Joint Comprehensive Plan of Action, the official title of the nuclear agreement....

So, in addition to continuing economic warfare against Iran, the Trump administration is making it harder for Iran to conform to the nuclear deal.

Washington Free Beacon

Trump Admin Halts Taxpayer-Funded Purchases of Iranian Nuclear Materials

Adam Kredo

See also

RT reports that Siluanov warned if the west include the seizure of Russia's foreign exchange reserves, it would be regarded as a "declaration of a financial war."

The budget "has a margin of safety in case of restrictions and sanctions." It also includes losses incurred by a probable ban on investment in Russian government bonds for foreign funds. The US Treasury is currently considering such penalties.

"If we did not have a margin of safety, then it would be easy to weaken us. And then, our so-called friends would say – if you want to get help from the International Monetary Fund, you must do this and that," said Siluanov.

If sanctions include the freezing of foreign accounts of the central bank, it would be equal to declaring financial war on Russia, Siluanov said.

Zero Hedge

Russia Warns Washington: Confiscating Gold Reserves Would Be "Declaration Of Financial War"

Tyler Durden

Zero Hedge — Ray Dalio: "This Is The Most Important Economic, Political And Social Issue Of Our Time"

The two US economies — the haves (upper 40%) and the have-nots (bottom 60%).

Zero Hedge
Ray Dalio: "This Is The Most Important Economic, Political And Social Issue Of Our Time"

Tyler Durden

Michael Hudson: Socialism, Land and Banking: 2017 Compared to 1917

Socialism a century ago seemed to be the wave of the future. There were various schools of socialism, but the common ideal was to guarantee support for basic needs, and for state ownership to free society from landlords, predatory banking and monopolies. In the West these hopes are now much further away than they seemed in 1917. Land and natural resources, basic infrastructure monopolies, health care and pensions have been increasingly privatized and financialized.

Instead of Germany and other advanced industrial nations leading the way as expected, Russia’s October 1917 Revolution made the greatest leap. But the failures of Stalinism became an argument against Marxism – guilt-by-association with Soviet bureaucracy. European parties calling themselves socialist or “labour” since the 1980s have supported neoliberal policies that are the opposite of socialist policy. Russia itself has chosen neoliberalism.

Few socialist parties or theorists have dealt with the rise of the Finance, Insurance and Real Estate (FIRE) sector that now accounts for most increase in wealth. Instead of evolving into socialism, Western capitalism is being overcome by predatory finance and rent extraction imposing debt deflation and austerity on industry as well as on labor.

Failure of Western economies to recover from the 2008 crisis is leading to a revival of Marxist advocacy. The alternative to socialist reform is stagnation and a relapse into neofeudal financial and monopoly privileges....

Neoliberalism is not working. Socialist resurgence, or something else?

Useful background and history lesson.

Michael Hudson at some of his best.

Naked Capitalism
Socialism, Land and Banking: 2017 Compared to 1917

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), and Distinguished Research Professor of Economics at the University of Missouri, Kansas City
Crossposted at Vineyard of the Saker and SouthFront

JW Mason — New Article on Financialization

I have a new article forthcoming in Development and Change, on the political economy of financialization, coauthored with Arjun Jayadev and Enno Schroeder.

A chief role of finance in a capitalist system is to allocate financial capital efficiently and effectively. Finance is supposed to impose discipline on economics.

Joseph Schumpter called bankers "the ephors of capitalism." The five ephor of ancient Sparta were magistrates that held power over the monarchical aspect Spartan government, which was a combination of monarchy, oligarchy and democracy.

JW Mason

New Article on Financialization

Michael Roberts — Blockchains and the crypto craze

Are blockchain and cryptocurrencies as over-hyped? Michael Roberts thinks so and explains why.

Michael Roberts Blog
Blockchains and the crypto craze
Michael Roberts

Bill Mitchell — When the top-end-of-town realise their strategy is failing

There was an interesting article in the Financial Times on Monday (June 26, 2017) – Why US big business is listening to Bernie Sanders – which, despite the somewhat misleading and over-the-top headline, tells us a little of the way the full neo-liberal attack on workers is in regression. Not, I might add because of any philosophical or moral consideration. But, rather, the top-end-of-town is starting to work out that their headlong race-to-the-bottom approach over the last three years is not actually in their best interests. The top-end-of-town is not that bright. More brutish than bright and it takes some time for them to work out what we have known all along. Globalisation mixed with neo-liberalism is poison. Globalisation mixed with social democracy is progress.

The difference between zero-sum (competition) and win-win (cooperation). Adaptability and coordination increase returns in the biological world to paraphrase Roger Erickson. Instead of fighting over the size of shares of a pie, make a bigger the pie so all get more.

Bill Mitchell – billy blog
When the top-end-of-town realise their strategy is failing
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Slow Crash — Andrew Cockburn in conversation with Michael Hudson

Two years before the 2008 Wall Street crash that toppled the global economy into deep recession, Harper’s Magazine published a dark prophecy of what was to come. In “The New Road to Serfdom,” economist Michael Hudson laid out how millions of Americans had taken on huge debts to buy houses on the presumption that they could later sell them at a profit. “Most everyone involved in the real estate bubble so far has made at least a few dollars,” he wrote. “But that is about to change. The bubble will burst, and when it does the people who thought they would be living the easy life of a landlord will soon find out that what they really signed up for is the hard servitude of debt serfdom.” As the twenty million people who lost their homes discovered, Hudson got it entirely right.
Today, unemployment is at record lows, and the stock market is at record highs. Allegedly, we have recovered from the disaster. I talked to Hudson, Distinguished Professor of Economics at the University of Missouri-Kansas City and the author, most recently, of J is For Junk Economics, A Guide to Reality in an Age of Deception, about his pre-crash prediction, and what he now sees in our future.

Browsings —Then Harper's Blog
Slow Crash
Andrew Cockburn in conversation with Michael Hudson
Crossposted at Micheal Hudson

Also

Cancel Odious Greek Debts (video)

Michael Hudson — Are Students a Class?

Debtor class.

Hudson shows how debt is a key element of the strategy of finance capitalism.

...the financial class views the role industry and the economy at large as being to pay its employees enough so that they can take on an exponentially rising volume of debt....

Although money and banking textbooks say that all interest (and fees) are a compensation for risk, any banker who actually takes a risk is quickly fired. Banks don’t take risks. That’s what the governments are for. (Socializing the risk, privatizing the profits.)...

...banks insisted that the government guarantee all student debt. They also insisted that the government guarantees the financial gold-mine buried in such indebtedness: the late fees that accumulate. So whether students actually succeed in becoming wage-earners or not, the banks will receive payments in today’s emerging fictitious “as if” economy. The government will pay the banks “as if” there is actually a recovery.…

This is simply a replay of what banks have negotiated for real estate mortgage lending....

In view of the fact that a college education is a precondition for joining the working class (except for billionaire dropouts), the middle class is a debtor class – so deep in debt that once they manage to get a job, they have no leeway to go on strike, much less to protest against bad working conditions. This is what Alan Greenspan described as the “traumatized worker effect” of debt.…

In today’s world a school can charge as much for an education as banks are willing to lend students – and banks are willing to lend as much as governments will guarantee to cover, no questions asked. So the bankers on the school boards endorse bloated costs of education, knowing that however much more universities make, the bankers will receive just as much in interest and penalties....

For half a century Americans imagined themselves getting richer and richer by going into debt to buy their own homes and educate their children. Their riches have turned out to be riches for the banks, bondholders and other creditors, not for the debtors. What used to be applauded as “the middle class” turns out to be simply an indebted working class....

Michael Hudson
Are Students a Class?

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

David Beer — The power of money: how the rich took hold of our monetary systems to make themselves richer

On Ann Pettifor’s The Production of Money: How to Break the Power of Bankers

Open Democracy
The power of money: how the rich took hold of our monetary systems to make themselves richer
David Beer | Reader in Sociology at the University of York

The Global Industrial Working Class — Alejandro Reuss interviews Immanuel Ness

Alejandro Reuss: You’ve written that there are more industrial workers in the world today than ever before. Can you explain how that growth has occurred and how it has reshaped the world’s industrial working class in recent decades?

Immanuel Ness: Yes, there are two major factors. The first is the deindustrialization of the traditional industries in North America and Western Europe—garment manufacturing, electronics, automobiles and other heavy industry—and the relocation of those industries in the global South—Africa, South Asia, and South East Asia, as well as to some extent Latin America. As a consequence, the latter regions have become major centers of production and export. And as part of that, the number of manufacturing workers there has grown dramatically.

The second factor is that, within industrializing countries like India, China, Bangladesh, and Indonesia, there has been a dramatic urbanization forced by the end of productive farming in rural areas. Many of the working peasants have been moving into urban centers where there are concentrations of industry. So while many in North America and Western Europe would say “the industrial working classes is virtually dead,” I would make the case that there are in fact more industrial workers on the planet today than anytime in human history.

Roughly speaking, the industrial working class has grown over the last 50 years from somewhere around 200 million to nearly a billion people. Of course, that doesn’t include other workers outside of manufacturing. The process has been unrelenting, and is bringing a number of Marxist arguments about capitalist globalization to fruition: Workers are engaged in very significant industrial struggles in places like New Delhi, Shenzhen, Cairo, and beyond....

I would argue that there are leading imperialist powers—the United States, especially—that engage in economic forms of imperialism and ensure that it takes place through military expansion and financialization.…

There is a form of financialization that starts from the early 20th century, when German banks were investing in Russia, and now we have this taking place on a global scale. And in many ways, it is contributing to a politicization of working-class people around the world.…

Worth reading in full. Is capitalism entering its final phase in Marxian terms as the world industrializes?

Triple Crisis
The Global Industrial Working Class

Alejandro Reuss interviews Immanuel Ness, professor of political science at Brooklyn College the City University of New York and the author of Southern Insurgency: The Coming of the Global Working Class (Pluto Press, 2015)

Michael Hudson — Innocuous Proclaimations

This is a transcript from Meet the Renegades with economist Michael Hudson and interviewer Ross Ashcroft.

MH: If you’re teaching economics, you should begin with the relationship between finance and the economy – between the buildup of debt and the ability to pay. That should be the starting point if you realize that the problem of our time is how can society cope with the debt buildup that has occurred.

Since "money" is a credit-debt relationship, money creation results in the creation of either bank credits in deposit accounts and corresponding debts in loan accounts or in tax credits issued by government with no corresponding debt in the private sector.

The law of reflux states that money created flows back to the creator.

Repayment of bank loans extinguishes the bank credits that were created by crediting deposit accounts. These credits are extinguished the loan is reaped and the corresponding deposit accounts are debited.

Use of tax credits to pay tax obligation or other obligations to the currency issuer extinguishes those credits as the tax credits flow back to government.

The total flow of credit issuance and extinguishment constitutes the money supply available to non-government. That flow is held as various stocks in the interim.

Note that the public debt is non-government net financial wealth and the debt is cancelled with tax collection.  When government runs fiscal deficits they increase non-government net financial wealth since there is no corresponding debt in non-government. A currency issuing government can always generate more tax credits than flow back through taxes in order to increase the net financial assets of non-government to meet saving desire.

Therefore, the issue is never public debt in the case of government that is sovereign in its currency and doesn't borrow in currencies it doesn't issue or promise to convert its currency to real assets like gold or silver at a fixed rate.

Governments that either don't issue their own currency, such as US states, or governments that limit their currency sovereignty voluntarily like the nations of the EZ or countries that peg like China, are constrained financially.

Debt deflation pertains to privately issued credit. Debt deflation occurs when borrowers are unable to repay loans and the demand for money rises faster than money creation. Then a financial crisis occurs that spreads to the real economy as demand contracts. Recession sets in. If the situation is not addressed by increasing money flow, then the recession can develop into a debt deflationary depression.

There are also several paragraphs on economic rent.

This was the basic classical economics of Smith, Ricardo and John Stuart Mill. They all looked at what the landlords got – and what banks got – as socially unnecessary overhead. The economy could function technologically without a landlord class, without a banking class.

Economic rent is socially unnecessary costs imposed by those in positions of power whose power enable them to do so. "Socially necessary" costs are the costs of factors of production, chiefly cost of labor in terms of labor time multiplied by labor power based on knowledge in skill in work performance in excess of unskilled "brute" labor. Those in positions of power are able to extract more from the economic process than they actually contribute, owing to unearned reward based ownership of means of production and financial resources rather than productive economic contribution. This is financial and economic "rent" that is "socially unnecessary since the same output of production could be obtained in the absence of it.

Hudson is claiming that neoclassical is anti-classical economics in that it denies the role that economic power and economic rent play in modern monetary production economies because neoclassical economics is based on the assumption of a barter economy, where money is neutral and doesn't affect the economic process. In this view, everyone receives their just deserts based on marginal productivity.

Note that Michale Hudson is assuming quite a bit of knowledge of finance, economics, and history economics in these remarks on money and rent. It is a broad brush cursory treatment of two of the most controversial concepts in economics.

Michael Hudson

Innocuous Proclaimations

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

See also

Orwellian doublespeak.

Michael Hudson
Golden Tongues

Sharmini Peries interviews Michael Hudson

Bill Mitchell — The case against free trade – Part 3

This blog continues my mini-series of free trade. In Part 1, I showed how the mainstream economics concept of ‘free trade’ is never attainable in reality and so what goes for ‘free trade’ is really a stacked deck of cards that has increasingly allowed large financial capital interests to rough ride over workers, consumers and undermine the democratic status of elected governments. In Part 2, I considered the myth of the free market, the damage that ‘free trade’ causes’. The aim of this mini-series is to build a progressives case for opposition to moves to ‘free trade’ and instead adopt as a principle the concept of ‘fair trade’, as long as it doesn’t compromise the democratic legitimacy of the elected government. This is a further instalment to the manuscript I am currently finalising with co-author, Italian journalist Thomas Fazi. The book, which will hopefully be out soon, traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. In this blog (Part 3 and final) I consider the concept of ‘fair trade’ as an alternative to the current situation where modern democracies demonstrate an unwillingness to resist the ever-increasing demands of global capital to cede democratic legitimacy in favour of corporate profits....

Bill Mitchell – billy blog

The case against free trade – Part 3

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Financial Diversion — Gordon Long interviews Michael Hudson

On the FIRE economy.

MichaelHudson.com
Financial Diversion

Gordon Long interviews Michael Hudson

Michael Hudson — Fix our debt addiction to fix our economy

As an economic process, financialization makes money through debt leverage — taking on debt to pay for things that will increase income or the value of assets: for instance, taking out a loan for education or a mortgage on a property to open a store. But instead of using credit to finance tangible industrial investment that expands production, banks have been lending to those who want to buy property already in place — mainly real estate, stocks and bonds already issued — and to corporate raiders — those who buy companies with high-interest bonds. The effect often leaves a bankrupt shell of a company, or at least enables corporate raiders to threaten employees with bankruptcy that would wipe out their pension funds or employee stock ownership plans if they do not agree to replace defined benefit pensions with riskier contribution schemes.

The dynamic is more extractive than productive. Corporate financial managers, for example, can raise their company’s stock price simply by buying back shares from investors — financing the move by borrowing money. But in addition to raising debt-to-equity ratios, these short-term tactics “bleed” companies, forcing them to cut back on research, development and projects that require long lead times to complete. Corporate managers are paid by how much they can raise their companies’ stock prices in the short run. When earnings are diverted to pay dividends or buy back shares, growth slows. But by that time, today’s managers will have taken their money and bonuses and run.…

MichaelHudson.com
Fix our debt addiction to fix our economy
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