Link to an interview with Michael Hudson:
“The Saker Interviews Michael Hudson”
“Classical economics was a doctrine of how to industrialize and become more competitive – and at the same time, more fair – by bringing prices in line with actual, socially necessary costs of production. The resulting doctrine (with Marx and Thorstein Veblen being the last great classical economists) was largely a guide to what to avoid: special privilege, unearned income, unproductive overhead.
“The aim was to create a circular flow model of national income distinguishing real wealth from mere overhead. The idea was to strip away what was unnecessary – what Marx called the ‘excrescences’ of post-feudal society that remained embedded in the industrial economies of his day. When the great classical economists spoke of a ‘free market,’ they meant a market free from rentier classes, free from monopolies and above all free from predatory bank credit.
“Of course, we know now that Marx was too optimistic. He described the destiny of industrial capitalism as being to liberate economies from the rentiers. But World War I changed the momentum of Western civilization. The rentiers fought back – the Austrian School, von Mises and Hayek, fascism and the University of Chicago’s ideologues redefined ‘free markets’ to mean markets free for rentiers, free from government taxation of land and natural resources, free from public price regulation and oversight. The Reform Era was called ‘the road to serfdom’ – and in its place, the post-classical neoliberals promoted today’s road to debt peonage.
“Today’s Cold War may be viewed in its intellectual aspects as an attempt to prevent countries outside of the United States from realizing that (contra Thatcher) there is an alternative, and acting on it. The struggle is for the economy’s brain and understanding on the part of governments. Only a strong government has the power to achieve the reforms at which 19th century reformers failed to achieve.
“The alternative is what happened as Rome collapsed into serfdom and feudalism.”