This time Eric welcomes back author and economist Michael Hudson to discuss his new book The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism available from CounterPunch.
Eric and Michael discuss the nature of financialization, neoliberalism, and how these ideas form the basis of the modern global capitalist system. The discussion also explores the role of the US Dollar, the nature of debt as a weapon, US financial imperialism, and so much more.
Hudson: So somehow instead of having industrial capitalism evolving into socialism, we’ve had finance capitalism whose policy is not to raise living standards but to impose an IMF type program of austerity. And that’s what we have in the United States today, especially since 2008 and the financial crash. The American economy, the European economy, had been in a debt deflation even though our prices are going up, the prices that are going up are monopoly prices for the energy industry, monopoly prices for medical care, but the economy households are left with less and less money after paying for finance, after paying for insurance, and after paying for real estate, they have less and less to spend on goods and services so that’s why the economy is being squeezed today, and my book explains how this transformation took place. And we’re not in the kind of capitalism that is in the textbooks, and not really what Marx and the socialists expected to see.
Marx in Volume Three described the horror story of what would happen with finance capitalism, and then he expressed the hope that “well industrial capitalism is going to prevent this from happening and fortunately with industrial capitalism we’re going to make the banks part of the financing real production” but that’s not what banks do. Banks make loans mainly against assets and property that’s already in place.
Then 80% of the loans are real estate mortgage loans, the rest are corporate takeover loans speculation loans, loans that are collateralized by stocks and bonds, and of course that’s what the American central bank had been spending $9 trillion just collateralized by stocks and bonds and junk mortgages and junk bonds. So we’re having a perversion of everything that capitalism promised to be, and it turns out that the road to serfdom, the literal road to serfdom, is not a strong state like Hayek said, but a state that’s too weak to control the financial sector and steer it to serve the economy as a whole.
Michael Hudson is 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 author of A Philosophy for a Fair Society (2022), The Destiny of Civilization (2022), …and forgive them their debts (2018), J is for Junk Economics (2017), Killing the Host (2015), The Bubble and Beyond (2012), Super Imperialism: The Economic Strategy of American Empire (1968 & 2003 & 3rd Edition 2021), Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy (1992 & 2009) and of The Myth of Aid (1971), amongst many others. He can be reached via his website Michael Hudson, email@example.com. Originally published August 8, 2022.
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