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From Marx to Goldman Sachs: The Fictions of Fictitious Capital by Michael Hudson

http://dandelionsalad.wordpress.com/

by Michael Hudson
michael-hudson.com
July 30, 2010

As published in Critique, based on a presentation given at the China Academy of Sciences, School of Marxist Studies in Beijing in November 2009, and at the Left Forum in New York City, March 20, 2010.

Classical economists developed the labor theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labor). A free market was one free of such “unearned” income – a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged – and expected – land, monopolies and banking privileges to be nationalized, or at least to have their free-lunch income taxed away.

In keeping with his materialist view of history, Marx expected banking to be subordinated to the needs of industrial capitalism. Equity investment – followed by public ownership of the means of production under socialism – seemed likely to replace the interest-extracting “usury capital” inherited from antiquity and feudal times: debts mounting up at compound interest in excess of the means to pay, culminating in crises marked by bank runs and property foreclosures.

But as matters have turned out, the rentier interests mounted a Counter-Enlightenment to undermine the reforms that promised to liberate society from special privilege.

[...]

via From Marx to Goldman Sachs: The Fictions of Fictitious Capital | Michael Hudson

see

Prabhat Patnaik: The Structural Crisis of Capitalism

Capitalism Hits the Fan Movie

Michael Hudson and Richard Wolff: Europe Under the Crunch

The Economy Sucks and or Collapse 2

http://vodpod.com/dandelionsalad/tag/economy

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23 Responses

  1. […] From Marx to Goldman Sachs: The Fictions of Fictitious Capital by Michael Hudson […]

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  12. [...] From Marx to Goldman Sachs: The Fictions of Fictitious Capital by Michael Hudson [...]

  13. Not Ian Angus’s censored site! Hudson has made some very good points about current economic conditions and the left response to them, while perhaps glossing over the causal link between industrial capitalism and the ‘FIRE’ sector, which I think centre on avoiding the famed ‘falling rate of profit’ … but he is thankfully not beset by vacuous petty bourgeois obsessions with alleged ‘diminishing resources’ (‘peak oil’ etc) or CO2 poisoning of Mother Earth. The earth is NOT ‘running out of goods, the energy to produce them and the environment to absorb the pillage of resource extraction and the pollution of production’. The ‘small footprint’ of poverty will grow even smaller without superabundance — that is what usury capitalism is all about. Protect the earth by protecting its greatest asset — us! We, and the ‘lesser’ animals, have made the planet conscious. There is a universe to win.

  14. All due respect but this statement ” I do think the Socialists and Marxists are indeed aware of the diminishing resources, climate change/global warming, etc” is over broad …

    Indeed Global Research, a leftist site, is known for peak oil denial and other anti-environmental stances … I enjoy most of their articles but sometimes find them very buried in the socialism of decades past.

    • I don’t think of Global Research as being a Socialist website, although they do post some articles by Socialist websites. I agree that they do post anti-global warming articles.

  15. One problem, if you want to read it you gotta fork out $30

    • William, no, you don’t have to pay to read the article. It is on Michael Hudson’s website at the link at the end of the post. It was first published at Critique where you have to pay to read it. So, don’t go there.

  16. Brilliant essay by Hudson … as usual … But there is one factor he forgot … the onset of peak resources such as oil, clean water, soil, and almost all resources …

    Finance must work to build a sustainable economy. We are already using more than the earth can reproduce and in many cases will never reproduce in many millennium …

    Merely reducing or eliminating the rentier does not account for circumstances that did not exist in Marx’s time. Growth (real) like interest can not be sustained in a finite world.

    • Very good point, mmckinl.

      • Thank you …

        Hudson is really only debating the Socialists and Marxists on the implementation of Socialism through the eventual triumph of Industrial finance over FIRE banking but I have not heard him confront our resources and pollution problems …

        I find many Socialists and Marxists hold the same views as Capitalists when it comes to the issue of growth, as Hudson explains the (real) growth of wages which can only mean growth in consumption of goods either public or private.

        The earth is running out of “goods”, the energy to produce them and the environment to absorb the pillage of resource extraction and the pollution of production. We need to “ungrow” but we need to do it equitably with the top percentiles taking the biggest hits … The poor have small environmental footprints …

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