Link to an article by Michael Hudson:
This information is of tremendous importance.
Bonus link: Debt: The First 5000 Years
The historical discussions at the beginning of this article are very significant. The policy proscriptions at the end do address some, but not all, of the important facets of this question (what about militarism/imperialism, race/gender/etc. discrimination, and the like?). But the proffered solutions are politically naive. For instance, how will the political power to implement any of these changes arise in the first instance? People like Thomas Ferguson have shown that electoral politics will not permit candidates with mass-based support to prevail without vetting by elite interests first (“Nobody wins on small-donor cash.”). Hudson and Goodhart put forward technocratic fixes as a way to sidestep political problems — as if the gating issue is a lack of good technical measures to propose, rather than ideological opposition to the idea that anything needs to be fixed in the first place. Moreover, when they suggest enforcement is possible just like with tax avoidance, are the authors aware of how lax prosecution of tax evasion crimes is a public disgrace? And why is advocacy of private home ownership so important to promote, as opposed to, say, public housing provision? No explanation is given for that normative choice. And as much as I hate to defend the odious reactionary Walter Scheidel, the criticism that “[h]e does not acknowledge progressive tax policy, limitations on inherited wealth, debt writeoffs or a replacement of debt with equity as means of preventing or reversing the concentration of wealth in the absence of an external crisis[,]” is unfair, because Scheidel is actually correct (and in agreement with Marxists here) that these have historically been temporary anomalies in the absence of revolution (external crisis?) that shifted which class controlled the state and therefore the ability to impose their preferred policies — these are still good ideas, albeit old ones. Hudson has for a long time made offhand (and unsupported) comments about how “mixed” economies perform better than communist/socialist or laissez-faire capitalist ones at opposite ends of the spectrum. This is one of the few times he has gone on record explaining what the vague term “mixed” looks like in terms of real economic programs — a milquetoast, insufficient compromise! Actually, there are a few decent suggestions here, for instance, the advocacy of government equity stakes in small/medium business enterprises (an extension of Hudson’s long-standing argument that the old German banking model is superior to the currently hegemonic Anglo-Dutch one) would work well for some economic sectors, though that would be the case only with some sort of effective democratic control and probably only alongside full nationalization of at least heavy industry (and probably also banks, and probably large agribusinesses too, etc., basically the commanding heights of the economy). In short, this article spends so much effort trying to avoid red-baiting that it drifts into irrelevancy in view of superior policies to the left of what the authors propose. The means they end up trying to smuggle mildly center-left policies in without opening a meaningful political discussion, which would highlight the authors’ political naivety. Oh well. Read the historical section and then just skim or skip the rest.
Bonus links: Imperialism: The Highest Stage of Capitalism, Manifesto of the Communist Party, Trouble in Paradise (“the goal of politico-economic analysis is to deploy strategies of how to step out of this infernal circle of debt and guilt”), “Debt Is a Determining Factor in History” and “Modern-Day Debtors’ Prisons and Debt in Antiquity”
Link to an article by Michael Hudson, excerpted from the 2017 edition of his essential Super Imperialism: The Economic Strategy of American Empire:
Link to an article by Michael Hudson:
For a more nuanced and detailed account of Soviet bureaucracy, and the construction and dismantling of Stalinism, see The Soviet Century. Combined with The Half Has Never Been Told, it is worth wondering whether industrialization is possible without slavery. Also, it is worth questioning Hudson’s characterization of China as pursuing “socialist” policy, rather than being state capitalist — he basically just assumes such points. Though this was intended as a speech to be delivered in China, so maybe he felt the need to pander on that point a bit.
Link to parts of an interview with Michael Hudson, discussing his book J Is for Junk Economics: A Guide to Reality in an Age of Deception:
Bonus links: Pierre Bourdieu, Language and Symbolic Power and Raymond Williams, Keywords: A Vocabulary of Culture and Society and “Social Chauvinism” (a critique easily leveled at Hudson’s admiration for protectionism)
Link to an interview with Michael Hudson (and others):
This interview summarizes some of Hudson’s most important work. And yet, it also highlights a blind spot in it: his claim that others’ interpretations of ancient history are colored by ideology, as if his is not also. Instead, philosophy teaches, “In an event, things not only change, what changes is the very parameter by which we measure the facts of change, i.e., a turning point changes the entire field within which facts appear.” Hudson is fighting an ideological war — for the good side, mind you — but tries to portray himself as one of the select few pursuing “objective” scientific economic/historical research rather than another partisan. Robespierre would have categorized that as treasonous. Hudson should be more of a Leninist and just accept that he pursues power.
Bonus link: “He Died For Our Debt, Not Our Sins”
Michael Hudson: “America did something that has relevance for America for today. After the North won the Civil War, they thought how are we going to teach protectionist, non-Ricardian, non- Malthusian economics. And they say, most of the economic courses were taught at prestige universities, and most universities in America were founded by religious orders to train the priesthood. And the political economy course was taught in the seniorly years, you know, the final one, and it’s all, markets are great.
“So the solution was that you can’t reform these academics. They’re hopelessly tunnel visioned. So America founded state colleges with a different faculty, new people teaching rational, protectionist economics, and the business schools. And the first business school professor was Simon Patten at the University of Pennsylvania, the Wharton School, which was funded by industrial protectionists. And so you had in America this whole body of theory that now has been whitewashed out of textbooks into a kind of Orwellian memory hole.”
Steve Keen: “Whereas the top universities are reproducing the religion [neo-classical economics]. And the thing is this is quite a successful strategy when you’re fighting an ideological war. But it’s not a successful strategy when you’re trying to manage a capitalist economy. And, unfortunately, they’re trying to do both at once. And, of course, what that leads to is the debt deflation episode we’re seeing now. Because according to the theories of this high priesthood, such things can’t happen.”
Michael Hudson: “When the graduates, who learn what you and I are talking about money, graduate, they can’t get jobs, because jobs are conditional upon being able to publish in prestigious economic reviews, and they’re all controlled by University of Chicago and by neoliberals.
“And the genius of Chicago free market theory is you can’t have a free market Chicago style unless you have a totalitarian state that will prevent any alternative to the theory. When they went to Chile, Harberger is said to have sat in a hotel room saying, here are the professors you have to kill. Pinochet and the American embassy said, here are the labor leaders you have to kill. And here are the intellectuals you have to kill.
“You cannot have a free market neoliberal style unless you are willing to either kill or exile or suppress or censor any alternative to your theory, because the theory doesn’t work. It’s fiction. It’s junk economics.”
Steve Keen: “So what they’ve had by the purge they’ve managed to achieve – not quite as drastically as Chile, thank god – but the purge they managed to achieve in intellectual economics to make them just that the sole mainstream and knock out any alternative arguments meant that they took over economic policy as well as economic theory. And pushing it forward led them to the financial crisis that they could not see coming, because they didn’t even include the variables that cause the financial system in their models.
“Now what you’re seeing 10 years after the crisis is, finally, some awareness coming through that our models are completely at variance with the real world.”
Missing from this discussion, which labels Keen and Hudson’s opponents as ideologues, is that Keen and Hudson are also ideologues. Philosophy tells us that there is no “reality” free from ideology. What these two should be saying is that their ideology is more scientific, and it benefits a wide proportion of the population. Hudson says, “You know, every economic theory begins with a conclusion and they work back from the conclusion is what kind of logic is going to lead to this.” But that is nearly a definition of “legal realism” in jurisprudence — in other words, it is not some special method that applies to certain (neo-classical) economists, it is the way most people work in any situation, including Keen and Hudson! There is a partial acknowledgement of this when Hudson says, “And all of the reformers, including you and me, look at the – we have a picture of the overall economy, because we’re showing how something whether it’s bad or good will affect the overall economy. The anti-reformers have something in common – a methodology.”
Link to an article by Michael Hudson, excerpted from the book Absentee Ownership and its Discontents: Critical Essays on the legacy of Thorstein Veblen (2016):
Link to a review by Michael Hudson of James K Galbraith‘s book Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe (2016):
“At first glance the repeated ‘failure’ of austerity prescriptions to ‘help economies recover’ seems to be insanity – defined as doing the same thing again and again, hoping that the result may be different. But what if the financial planners are not insane? What if they simply seek professional success by rationalizing politics favored by the vested interests that employ them, headed by the IMF, central bankers and the policy think tanks and business schools they sponsor? The effects of pro-creditor policies have become so constant over so many decades that it now must be seen as deliberate, not a mistake that can be fixed by pointing out a more realistic body of economics (which already was available in the 1920s).”
This is reminiscent of a quote frequently attributed to Donald Berwick (among others): “Every system is perfectly designed to get the results it gets.” In the economic context, this notion is also explored further in Economists and the Powerful (2012).