Posted with permission from Michael Hudson
From Junk Economics to a False View of History
What are the real roots of Western Civilization?
It may seem strange to invite an economist to give a keynote speech to a conference of the social sciences. Economists have been characterized as autistic and anti-social in the popular press for good reason. They are trained to think abstractly and use a priori deduction – based on how they think societies should develop. Today’s mainstream economists look at neoliberal privatization and free-market ideals as leading society’s income and wealth to settle at an optimum equilibrium without any need for government regulation – especially not of credit and debt.
The only role acknowledged for government is to enforce the “sanctity of contracts” and “security of property.” By this they mean the enforcement of debt contracts, even when their enforcement expropriates large numbers of indebted homeowners and other property owners. That is the history of Rome. We are seeing the same debt dynamic at work today. Yet this basic approach has led mainstream economists to insist that civilization could and should have followed this pro-creditor policy from the very beginning.
The reality is that civilization could never have taken off if some free-market economist had got into a time machine and travelled back in time five thousand years to the Neolithic and Bronze Age. Suppose that he would have convinced ancient chieftains or rulers how to organize their trade, money and land tenure on the basis of “greed is good” and any public regulation is bad.
If some Milton Friedman or Margaret Thatcher had persuaded Sumerian, Babylonian or other ancient rulers to follow today’s neoliberal philosophy, civilization could not have developed. Economies would have polarized – as Rome did, and as today’s Western economies are doing. The citizens would have run away, or else backed a local reformer or revolutionist to overthrow the ruler who listened to such economic advice. Or, they would have defected to rival attackers who promised to cancel their debts, liberate the bondservants and redistribute the land.
Yet many generations of linguists, historians and even anthropologists have absorbed the economic discipline’s anti-social individualistic world view and imagine that the world must always have been this way. Many of these non-economists have unwittingly adopt their prejudices and approach ancient as well as modern history with a bias. Our daily discourse is so bombarded with the insistence by recent American politicians that the world is dividing between “democracy” with “free markets” and “autocracy” with public regulation that there is much fantasy at work about early civilization.
David Graeber and I have sought to expand the consciousness of how different the world was before Western Civilization took the Roman track of pro-creditor oligarchies instead of palatial economies protecting the interests of the indebted population at large. At the time he published his Debt: The First Five Thousand Years in 2011, my Harvard group of assyriologists, Egyptologists and archaeologists was still in the process of writing the economic history of the ancient Near East in a way that was radically different from how most of the public imagined it to have occurred. David’s and my emphasis on how royal Clean Slate proclamations cancelling debts, liberating bond-servants and redistributing the land were a normal and expected role of Mesopotamian rulers and Egyptian pharaohs was still not believed at that time. It seemed impossible that such Clean Slates were what preserved liberty for the citizenry.
David Graeber’s book summarized my survey of royal debt cancellation in the ancient Near East to show that interest-bearing debt originally was adopted with checks and balances to prevent it from polarizing society between creditors and debtors. In fact, he pointed out that the strains created by the emergence of monetary wealth in personal hands led to an economic and social crisis that shaped the emergence of the great religious and social reformers. As he summarized “the core period of Jasper’s Axial age … corresponds almost exactly to the period in which coinage was invented. What’s more, the three parts of the world where coins were first invented were also the very parts of the world where those sages lived; in fact, they became the epicenters of Axial Age religious and philosophical creativity.”
Buddha, Lao-Tzu and Confucius all sought to create a social context in which to embed the economy. There was no concept of letting “markets work” to allocate wealth and income without any idea of how wealth and income would be spent.
All ancient societies had a mistrust of wealth, above all monetary and financial wealth in creditor hands, because it generally tended to be accumulated at the expense of society at large. Anthropologists have found this to be a characteristic of low-income societies in general.
Toynbee characterized history as a long unfolding dynamic of challenges and responses to the central concerns that shape civilizations. The major challenge has been economic in character: who would benefit from the surpluses gained as trade and production increase in scale and become increasingly specialized and monetized. Above all, how would society organize the credit and debt that was necessary for specialization of economic activities to occur – and between “public” and “private” functions?
Nearly all early societies had a central authority in charge of distributing how the surplus was invested in a way that promoted overall economic welfare. The great challenge was to prevent credit leading to debts being paid in a way that impoverished the citizenry, e.g., through personal debt and usury – and more than temporary loss of freedom (from bondage or exile) or land tenure rights.
The great problem that the Bronze Age Near East solved – but classical antiquity and Western civilization have not solved – was how to cope with debts being paid – especially at interest without polarizing economies between creditors and debtors, and ultimately impoverishing the economy by reducing most of the population to debt dependency. Merchants engaged in trade, both for themselves and as agents for palace rulers. Who would get the profits? And how would credit be provided but kept in line with the ability to be paid?
Public vs. Private Theories of How Land Tenure Originated
Ancient societies rested on an agricultural base. The first and most basic problem for society to solve was how to assign land tenure. Even families who lived in towns that were being built up around temples and civic ceremonial and administrative centers were allocated self-support land – much like Russians have dachas, where most of their food was grown in Soviet times.
In analyzing the origins of land tenure, like every economic phenomenon, we find two approaches. On the one hand is a scenario where land is allocated by the community in exchange for corvée labor obligations and service in the military. On the other hand is an individualistic scenario in which land tenure originated by individuals acting spontaneously by themselves clearing land, make it their own property and producing handicrafts or other products (even metal to use as money!) to exchange with each other.
This latter individualistic view of land tenure has been popularized ever since John Locke imagined individuals setting out to clear the land – apparently vacant wooded land – with their own labor (and presumably that of their wives). That effort established their ownership to it and its crop yield. Some families would have more land than others, either because they were stronger at clearing it or had a larger family to help them. And there was enough land for everyone to clear ground for planting crops.
In this view there is no need for any community to be involved, not even to protect themselves from miliary attack – or for mutual aid in times of flood or other problems. And there is no need for credit to be involved – although in antiquity that was the main lever distorting the distribution of land by transferring its ownership to wealthy creditors.
At some point in history, to be sure, this theory sees governments enter the picture. Perhaps they took the form of invading armies, which is how the Norman ancestors of landlords in John Locke’s day acquired English land. And as in England, the rulers would have forced landholders to pay part of their crops in taxes and provide military service. In any case, the role of government was recognized only as “interfering” with the cultivator’s right to use the crop as he saw fit – presumably to trade for things that he needed, made by families in their own workshops.
My Harvard-sponsored group of assyriologists, Egyptologists and archaeologists have found an entirely different genesis of land tenure. footnote_2
[2] Land rights seem to have been assigned in standardized plots in terms of their crop yield. To provide food for these community members, late Neolithic and early Bronze Age communities from Mesopotamia to Egypt allocated land to families in proportion to what they needed to live on and how much they could turn over to the palace authorities.
This tax yield turned over to palace collectors was the original economic rent. Land tenure came as part of a quid pro quo – with a fiscal obligation to provide labor services at designated times of the year, and to serve in the military. It thus was taxation that created land-tenure rights, not the other way around. Land was social in character, not individualistic. And government’s role was that of coordinator, organizer and forward planner, not merely predatory and extractive.
Public vs. Private Origins of Money
How did early societies organize the exchange of crops for products – and most important, to pay taxes and debts? Was it simply a spontaneous world of individuals “trucking and bartering,” as Adam Smith put it? Prices no doubt would have varied radically as individuals had no basic reference to cost of production or degrees of need. What happened as some individuals became traders, taking what they produced (or other peoples’ products on consignment) to make a profit. If they traveled large distances, were caravans or ships needed – and the protection of large groups? Would such groups have been protected by their communities? Did supply and demand play a role? And most important, how did money emerge as a common denominator to set prices for what was traded – or paid in taxes and to settle debts?
A century after Adam Smith, the Austrian economist Anton Menger developed a fantasy about how and why ancient individuals may have preferred to hold their savings in the form of metals – mainly silver but also copper, bronze or gold. The advantage of metal was said to be that it did not spoil (in contrast to grain carried around in one’s pocket, for instance). It also was assumed to be of uniform quality. So pieces of metal money gradually became the medium by which other products came to be measured as they were bartered in exchange – in markets in which governments played no role at all!
The fact that this Austrian theory has been taught now for nearly a century and a half is an indication of how gullible economists are willing to accept a fantasy at odds with all historical records from everywhere in recorded world history. To start with, silver and other metals are not at all of uniform quality. Counterfeiting is age-old, but individualist theories ignore the role of fraud – and hence, the need for public authority to prevent it. That blind spot is why U.S. Federal Reserve Chairman Alan Greenspan was so unprepared to cope with the massive junk-mortgage bank crisis peaking in 2008. Wherever money is involved, fraud is omnipresent.
That’s what happens in unregulated markets – as we can see from today’s bank frauds, tax evasion and crime that pays very, very well. Without a strong government to protect society against fraud, lawbreaking, the use of force and exploitation, societies will polarize and become poorer. For obvious reasons the beneficiaries of these grabs seek to weaken regulatory power and the ability to prevent such grabitization.
To avoid monetary fraud, silver and subsequently gold coinage from Bronze Age Mesopotamia down through classical Greece and Rome was minted in temples to sanctify their standardized quality. That is why our word for money comes from Rome’s temple of Juno Moneta, where Rome’s coinage was struck. Thousands of years before bullion was coined, it was provided in metal strips, bracelets and other forms minted in temples, at standardized alloy proportions.
Purity of metals is not the only problem with using bullion money. The immediate problem that would have confronted anyone exchanging products for silver is how to weigh and measure what was being bought and sold – and also to pay taxes and debts. From Babylonia to the Bible we find denunciations against merchants using false weights and measures. Taxes involve a role of government, and in all archaic societies it was the temples that oversaw weights and measures as well as the purity of metallic metals. And the denomination of weights and measures indicate their origin in the public sector: fractions divided into 60ths in Mesopotamia, and 12ths in Rome.
Trade in basic essentials had standardized customary prices or payments to the palaces or temples. Taxes and debts were the most important used for money. That reflects the fact that “money” in the form of designated commodities was needed mainly to pay taxes or buy products from the palaces or temples and, at the end of the harvesting season, to pay debts to settle such purchases.
Today’s neoliberal economic mainstream has created a fairy tale about civilization existing without any regulatory oversight or productive role for government, and without any need to levy taxes to provide basic social services such as public construction or even service in the military. There is no need to prevent fraud, or violent seizure of property – or the forfeiture of land tenure rights to creditors as a result of debts. But as Balzac noted, most great family fortunes have been the result of some great theft, lost in the mists of time and legitimized over the centuries, as if it were all natural.
These blind spots are necessary to defend the idea of “free markets” controlled by the wealthy, above all by creditors. This is claimed to be for the best, and how society should be run. That is why today’s New Cold War is being fought by neoliberals against socialism – fought with violence, and by excluding the study of history from the academic economics curriculum and hence from the consciousness of the public at large. As Rosa Luxemburg put it, the fight is between socialism and barbarism.
Public vs. Private Origins of Interest-Bearing Debt
Interest rates were regulated and stable for many centuries on end. The key was ease of calculation: 10th, 12thor 60th.
Babylonian scribes were trained to calculate any rate of interest as a doubling time. Debts grew exponentially; but scribal students also were taught that herds of cattle and other material economic output tapered off in an S-curve. That is why compound interest was prohibited. It also was why it was necessary to cancel debts periodically.
If rulers had not cancelled debts, the ancient world’s takeoff would have prematurely suffered the kind of decline and fall that impoverished Rome’s citizenry and led to the decline and fall of its Republic – leaving a legal system of pro-creditor laws to shape subsequent Western civilization.
What makes Western Civilization Distinctly Western? Has It All Been a Detour?
Civilization could not have developed if a modern Milton Friedman or kindred Economics Nobel Prize winner had gone back in time and convinced Hammurabi or the Egyptian pharaoh to just let individuals act by themselves and let wealthy creditors reduce debtors to bondage – and then to use their labor as an army to overthrow the kings and take over government for themselves, creating a Roman-style oligarchy. That is what Byzantine families tried to do in the 9thand 10thcenturies.
If the “free enterprise” boys had their way there would have been no temple coinage or oversight of weights and measures. Land would belong to whomever could grab, foreclose on or conquer it. Interest would have reflected whatever a wealthy merchant could force a needy cultivator to pay. But to economists, everything that occurs is a matter of “choice.” As if there is no outright need– to eat or to pay.
An economic Nobel Prize was awarded to Douglass North for claiming that economic progress today and indeed throughout all history has been based on the “security of contracts” and property rights. By this he means the priority of creditor claims to foreclose on the property of debtors. These are the property rights to create latifundia and reduce populations to debt peonage.
No archaic civilization could have survived for long by following this path. And Rome did not survive by instituting what has become the distinguishing feature of Western Civilization: giving control of government and its lawmaking to a wealthy creditor class monopolizing the land and property.
If an ancient society had done this, economic life would have been impoverished. Most of the population would have run away. Or else, the Thatcherite/Chicago School elite would have been overthrown. The wealthy families that sponsored this grabitization would have been exiled, as occurred in many Greek cities in the 7thand 6thcenturies BC. Or, discontented populations would have walked out and/or threatened to defect to foreign troops promising to free the bondservants, cancel their debts and redistribute the land, as occurred with Rome’s Secessions of the Plebs in the 5thand 4thcenturies BC.
So we are brought back to David Graeber’s point that the great reformers of Eurasia rose at the same time that economies were becoming monetized and increasingly privatized – an epoch in which wealthy families were increasing their influence over how city-states were run. Not only the great religious reformers but the leading Greek philosophers, poets and dramatists explained how wealth is addictive, and leads to hubris that leads them to seek wealth in ways that injure others.
Looking over the sweep of ancient history, we can see that the main objective of rulers from Babylonia to South Asia and East Asia was to prevent a mercantile and creditor oligarchy from emerging and concentrating ownership of land in their own hands. Their implicit business plan was to reduce the population at large to clientage, debt bondage and serfdom.
That is what occurred in the West, in Rome. And we are still living in the aftermath. Throughout the West today, our legal system remains pro-creditor, not in favor of the indebted population at large. That is why personal debts, corporate debts, public debts and the international debts of Global South countries have mounted up to crisis conditions threatening to lock economies into a prolonged debt deflation and depression.
It was to protest this that David helped organize Occupy Wall Street. It is obvious that we are dealing not only with an increasingly aggressive financial sector, but that it has created a false history, a false consciousness designed to deter revolt by claiming that There Is No Alternative (TINA).
Where Western Civilization Went Wrong
We have two diametrically opposed scenarios depicting how the most basic economic relationships came into being. On the one hand, we see Near Eastern and Asian societies organized to maintaining social balance by keeping debt relations and mercantile wealth subordinate to the public welfare. That aim characterized archaic society and non-Western societies.
But the Western periphery, in the Aegean and Mediterranean, lacked the Near Eastern tradition of “divine kingship” and Asian religious traditions. This vacuum enabled a wealthy creditor oligarchy to take power and concentrate land and property ownership in its own hands. For public relations purposes, it claimed to be a “democracy” – and denounced any protective government regulation as being, by definition, “autocracy.”
Western tradition indeed lacks a policy subordinating wealth to overall economic growth. The West has no strong government checks to prevent a wealth-addicted oligarchy from emerging to make itself into a hereditary aristocracy. Making debtors and clients into a hereditary class, dependent on wealthy creditors, is what todays economists call a “free market.” It is one without public checks and balances against inequality, fraud or privatization of the public domain.
It may seem amazing to some future historian that the political and intellectual leaders of today’s world hold such individualistic neoliberal fantasies that archaic society “should” have developed in this way – without recognizing that this is how Rome’s oligarchic Republic did indeed develop, leading to its inevitable decline and fall.
Bronze Age Debt Cancellations and Modern Cognitive Dissonance
So we are led back to why I was invited to speak here today. David Graeber wrote in his Debt book that he was seeking to popularize my Harvard group’s documentation that debt cancellations did indeed exist and were not simply literary utopian exercises. His book helped make debt a public issue, as did his efforts in the Occupy Wall Street movement.
The Obama administration backed police breaking up the OWS encampments and did everything possible to destroy awareness of the debt problems plaguing the U.S. and foreign economies. And not only the mainstream media but also academic orthodoxy circled their wagons against even the thought that debts could be written down and indeed needed to be written down to prevent economies from falling into depression.
That neoliberal pro-creditor ethic is the root of today’s New Cold War. When President Biden describes this great world conflict aimed at isolating China, Russia, India, Iran and their Eurasian trading partners, he characterizes this as an existential struggle between “democracy” and “autocracy.”
By “democracy” he means oligarchy. And by “autocracy” he means any government strong enough to prevent a financial oligarchy from taking over government and society and imposing neoliberal rules – by force. The ideal is to make the rest of the world look like Boris Yeltsin’s Russia, where American neoliberals had a free hand in stripping away all public ownership of land, mineral rights and basic public utilities.
Notes
- David Graber, Debt: The First 5000 Years (Brooklyn, 2011):224.
- Piotr Steinkeller and Michael Hudson, eds., Labor in the Ancient World (Dresden 2015).
One error:
“But the Western periphery, in the Aegean and Mediterranean, lacked the Near Eastern tradition of “divine kingship” and Asian religious traditions. This vacuum enabled a wealthy creditor oligarchy to take power and concentrate land and property ownership in its own hands. For public relations purposes, it claimed to be a “democracy” – and denounced any protective government regulation as being, by definition, “autocracy.”
The author completely misses the Eastern Roman Empire, and that in general the religious principles, worldview, and political aims were common in the civilisations of ancient Greece, Egypt, and Near East. Including Anatolia and Euxeinus Pontus.
They never were related to “the west”.
In addition, the elephant in the room is not addressed: Protestantism, an essentially anti-christian and anti-religion movement, with Usury as its central tenet.
Original Greece was more Eastern than Western. It was with the rise of Christianity that virtually erased Greek Civilization. The residue of Greek polycentric Religious speaks volumes of its Eastern influence from the Indo Mahabharat war or Epic thereof where Polytheism flourished.
There descendants of Alexander Army in Pakistan and I think Afghanistan who practise Ancient Greek rituals and life style including ancient Greek clothes.
True, the Eastern Roman Empire evolved differently even until today comparatively with the ‘corrupted’ Western regions.
The rise of the Protestants was an attempt to clean up Christianity but they failed. Remember Hitler, whose objective was to wipe out the Slavs. There is more on the Romans as explained by a book titled, Operation Gladio: The Unholy Alliance between the Vatican …… written by Paul L. Williams.
I follow and take well Michael´s defense of possible government regulation. But another elephant in the room seems to be that governance with deep state involvement apparently is far more prone to (a) corruption and (b) other inefficiencies, not the ones that MH explains about. Please someone dare an answer, I´m open minded ! Cordially Jorge
The “deep state” is the creature of the oligarchy that promotes the creditor-controlled political economy.
Paul, okay… but what about corruption in a state-regulated system ? Is it higher, lower, better managed ? Still, thanks for your reply Paul. Cordially, Jorge
I’ve read on Quora once a very nice comment by a Chinese person who was living in the USA for a long time. The question was about how China and USA compare with respect to corruption.
And the person said they after long time thinking about it and observing came to the conclusion that corruption in both systems exists. BUT: The corruptions are very different from each other.
The Chinese corruptions seems to be “from below”, like for example bribing a doctor or a policeman to treat you a bit better or to get some advantage that you really need right now. This corruption exists because corruption is forbidden by the state and only “small corruption” like that can occcure, whee people don’t mind much of trespassing the law, because it’s not that great of a trespassing.
The US corruption is very different. Because big business wants to control earnings, it pressures politics for strong restrictions for simple people, while pushes for legalizing corruption on the bigger political level. This leads to “small fry” fearing corruption a lot and hardly trespassing, because the punishment is big. And it leads to “big fry” being able to do corruption in an open manner. A good example is the US legal bribery which is paid for politicians to make speeches. They hold a speech and get tons of money. Not because they or their speech is so wonderful, but because they at the same time get some political lobby request which they then realize after the speech & being paid. There are a lot such (and much much worse) mechanisms in the US politics.
Lena, thanks, your explanation makes sense and it seems that it is based on control and compliance. That´d be our arch-famous “law-abiding citizens” and ´small fry´ wouldn´t happen as much because of social repression so to speak as neighbors would take care of that.
But then, yet again, how would we achieve such state of things. We can´t just say “big fry” violations can´t happen because it is against the common good, right ? How would then we go about to avoid “big fry” violations. And this may be the essence of the problem that Michael is presenting despite the advantages of the state-governance system. I have lived all my life alternating with the state-governance system and then the private-creditor-predator system back & forth and they´ve BOTH ended up corrupt defeating whatever original purpose they may have had.
He actually does talk about how the Eastern Roman Empire was able to keep their nobility/mercantile class in check and have debt forgiveness in one of his lectures here: https://www.youtube.com/watch?v=M4DkZ3CWFOk
Deuteronominical.
Good article but I’m sure most informed individuals are well aware of all this. Funny no mention of those who were kicked out of 150 countries down through the ages.
The seminary is named after one of them- will that do?
Autistics are not anti-social and should not be confused with sociopaths. Autistics are just not very good at ‘social skills’.
“Autistics are not anti-social”
Among the most useful components of the social relations self-misrepresented as “The United States of America” which in a significant part is a function of competition minimising co-operation, is the contempt within which others are held.
Consequently the continuance of such useful components in opponents should not be overly criticised, but utilised by co-operative social relations to transcend coercive social relations, not to “reform” them – Mr. Rove’s observations on we are an Empire refers.
A stupid opponent is not primarily an object of fear, but an object of opportunity facilitated by the stupidities of stupid opponents.
“Autistics are just not very good at ‘social skills’.”
Presently designated “autism” is a very wide spectrum largely outwith the presently designated “neuro-typical”, and hence don’t always conform to “social skills” as presently designated by the “neuro-typical”, but do socially interact thereby practicising their own “social skills”, and “intelligence” which the “neuro-typical” often interpret as “cognitive dissonance”/”implausible belief”, thereby facilitating their own “cognitive dissonance” which proved particularly useful during the 1990’s.
Among “cognitive dissonance” with extended half-lives are “like Boris Yeltsin’s Russia, where American neoliberals had a free hand in stripping away all public ownership of land, mineral rights and basic public utilities.” and “We won the Cold War” whilst others in co-operation, including some described as being in the “Asperger’s spectrum” to simultaneously continue the lateral processes of transcending “The Soviet Union” by The Russian Federation to facilitate the circumstances of 12th July 2022.
We are at war in myriad forms and have been from at least 1922 – not attending a class on etiquette to “reform” the opponents, but to transcendend them.
I’m always happy to see David Greaber’s name. He died too early, but reading him isn’t too late.
“Debt- the first five thousand years”, is well worth the effort.
See the meaning of “mortgage”… there was also a “vif gage”, living pledge. Big difference!
[Middle English morgage, from Old French : mort, dead (from Vulgar Latin *mortus, from Latin mortuus, past participle of morī, to die; see mer- in Indo-European roots) + gage, pledge (of Germanic origin).]
Word History: In early Anglo-Norman law, property pledged as security for a loan was normally held by the creditor until the debt was repaid. Under this arrangement, the profits or benefits that accrued to the holder of the property could either be applied to the discharge of the principal or taken by the creditor as a form of interest. In his Tractatus de legibus et consuetudinibus regni Angliae (1189), Ranulf de Glanville explains that this latter type of pledge, in which the fruits of the property were taken by the creditor without reduction in the debt, was known by the term mort gage, which in Old French means “dead pledge.” Because of Christian prohibitions on profiting from money lending, however, the mortgage was considered a species of usury. The preferred type of pledge, in which the property’s profits went to paying off the debt and thus continued to benefit the borrower, was known in Old French by the term vif gage, “living pledge.” By the time of the great English jurist Thomas Littleton’s Treatise on Tenures (1481), however, the mortgage had evolved into its modern form—a conditional pledge in which the property (and its profits) remain in possession of the debtor during the loan’s repayment. This led Littleton and his followers, such as the influential jurist Sir Edward Coke (1552-1634), to explain the mort in mortgage in terms of the permanent loss of the property in the event the borrower fails to repay, rather than of the loss of the profits from the property over the duration of the loan.
https://www.thefreedictionary.com/mortgage
Doctor Hudson’s fervor for his principles of economic equilibrium between commercial enterprise and labor rights is admirable but unrealistic because today there is no underlying base of morality and social conscience inside the halls of government, which is required in order to protect society from the ravages of unbridled capitalism.
Government is supposed to be a foundation where the needs of the people in relation to that of producers of goods and services are kept from excesses in profit verses excesses in financially subsidizing the citizenry verses excesses in environmental exploitation. That requires politicians and the bureaucracy that runs the government to be intelligent and forward thinking without strict adherence to traditional market driven verses centrally planned economic systems.
The fact is the American political system of governance at the federal and state levels is fraught with individuals who crave power and wealth and are not interested in serving as the stewards of the national economy so that it thrives as a partnership between business, labor and the protection of the natural environment necessary for all life.
Poke, is there no solution then ?
How can the system select or duly inspire the right people ?
Cordially Jorge
Dear Jorge,
The “solution” will come about after the collapse of the national economy and loss of confidence in the fiat currency used to pay for goods and services. The electorate will no longer obey government diktats or listen to propaganda from electronic or print media. Necessity will give birth to cottage industries where people will join together in common purpose in order to survive.
A new system of government where political representation will evolve such that candidates will have to pass a qualification standard of knowledge in order to be allowed on the ballot. The criteria will have 3 main components (1) how a market economy works (2) governments regulatory role to balance commercial enterprise with the needs of labor and the protection and recovery of the natural environment to mitigate water, soil and air pollution (3) development and maintenance of public infrastructure that serves business and the general public.
Political party affiliation (e.g., Republicans, Democrats, etc.) will end as its main purpose was always to secure power and serve thee wealthy elite at the expense of the common citizen.
All of the above depends upon current events in Eastern Europe as Russia may be forced to terminate the U.S. war machine on its soil with prejudice in which case chaos will ensue and bring about a nightmare of human suffering unimaginable in modern history.
I follow you Poke The Truth and woud even agree with you. As a matter of fact and for the (well-intentioned) sake of it I WILL agree with you 100% okay ? But how long would it last ? 10 years ? 100 years ?
The problem arises when my friend Michael Hudson projects his excellent thoughts and conclusions for ages thereafter and, in a way, establishes his own End of History which he may not like me to propose I am sure. But, whatever… The question remains which system would cope with what I perceive to be THE problem, the MAIN problem, namely human corruption. I have lived through both systems many times for many years and to the best of my knowledge BOTH are prone and exposed to corruption, and they BOTH fail because of corruption. So then, just HOW does mankind cope with corruption ? That is the question and the problem, not so much whether if it´s a private or state ruled system. Both systems COULD work if it were not for corruption. The problem at hand to be solved is corruption, and nothing else but. Cordially Jorge
Jorge, you are right: corruption is THE problem. It affects ALL systems of government. Civilizations decay from within BEFORE the barbarians arrive at the gate.
The problem is on a higher level than mere economics. It is ethical, philosophical, psychological and ultimately religious.
But on the lower level, on economics I think Hudson is right: Socialism is better than Capitalism — especially better than currency-based capitalism which leads to bribery and debt-bondage.
“I care not for the Lawmaker so long as I control the Currency” — Meyer Rothschild.
One answer to your question, “But how long would it last ? 10 years ? 100 years ?” may be to require the phenomenon of commercial markets in relation to the national economy and government’s responsibility to manage it and the protection of the natural environment be taught beginning in primary education through higher education disciplines.
It doesn’t matter what career a student chooses: the sciences, medicine, government administration, sports, military service, etc., it all affects the economy. What a child learns at an early age stays with them until their advanced years of life and they can pass on that knowledge to family members and the community as well.
Since the dawn of time, man has always had a penchant for an exorbitant desire to possess; to accumulate materials beyond what is needed for survival and comfort, to acquire and hold power over others and to be exulted and admired for his accomplishments.
Saint Thomas Aquinas elaborated this human weakness by expounding upon seven sins considered most egregious that would prevent a soul upon mortal death from ascending into heaven.
We Orthodox Christians believe there are no categories of sin as taught in Latin theology; all sin is sin against the logos of our Father in heaven. Sin is “missing the mark” in our pathetic attempt to live a “Christ-like” life.
As long as Satan has dominion over the Earth, man will be tempted to sin; from his first awareness of the world about him until the last glimmer of light leaves the two windows to his soul. Avarice, pride and envy drive these men to seek the highest pinnacles of Mammon. In doing so they jeopardize their soul for they fail to realize their possessions and wealth will not accompany them in the afterlife as practiced by ancient Egyptian Kings.
I apologize for proselytizing above; it’s an annoying habit I have acquired due to the realization that all that is around me means nothing except my love for the Father and my brothers who I stand with together in the aura of divine faith until the end of our mortal lives. Please forgive me.
It is better to love than to research.
And it’s better to think than to cancel.
Those not prepared to rethink failed paradigms are doomed to repeat them.
The means used to facilitate exchange of energies isn’t the source of all evil, usury is.
Love isn’t a system, it’s everything.
Social groups whose members refuse to serve others more than self are not communities.
Just as females who refuse to serve their fetuses more than self are not mothers.
Humans incarnate to evolve spiritually.
Human societies that refuse to evolve cease to exist.
To survive let alone thrive, humans need to become moral.
Humans not prepared to ‘let go’ of failed paradigms will be ‘let go’. Believe it!
Lending against collateral is a less than zero-sum game, because the collateral chosen is of greater value than the debt. Thus the Creditor is motivated to cause default on the loan and thus increase his profit.
At an individual level the impact is small, but defaut tends to be systemic, and thus diminishes the wealth of the whole.
Where a Creditor lends against little or no collateral, both the Creditor and the Debtor are motivated to have the loan repaid. There is no incentive to diminish the wealth of the whole.
Hudson describes the fundamental aberration that has led to the emergence of a system that counterfactually assumes the world is infinite and therefore proceeds in prolonged cycles of boom – bust – war between world powers – boom – and so on.
However, this no longer works this time, because various preconditions no longer exist. First, today’s uber-weapons ensure that after a global conflagration there is no state left that would still have the capital to restart the cycle. Secondly, the degradation of the ecological basis of human life is already so far advanced before the great war and even more so after it that the reconstruction and maintenance of a civilization is connected with immensely greater expenditure of all type than it was the case until recently.
So there will be no recovery after the next great war. The nihilistic moment inherent in the individualistic economic approach described by Hudson will bury everything else.
So much effort to disguise a simple idea. The sum of all receipts equals the sum of all payouts. The sum of all profits is the sum of the difference between receipt and payout. Therefore the sum of all profits, positive and negative, must be zero. If some of the elements of the sum of profits are positive then the remainder must be negative. Then it is clear that the sum of positive profits equals the sum of negative profits or the sum of positive profits equals the sum of all losses.
Increasing the size of positive profits increases the size of all losses. Since the effort is constant and endemic to increase the size of positive profits so is the effort to create losses constant and endemic. Naturally the economy and society polarizes between winners and losers.
Note that the above has nothing much to do with the organization of society per se. This situation exists everywhere and at all times. One considers it a problem or one does not; that is entirely in the eye of the beholder. Oligarchs think it’s great; socialists do not. Current stresses suggest a coming rebalance, at least in part, but likely no permanent solution will be found. The gains from such social differentiation will always be available to enterprising people.
People who believe society is as great an invention as sliced bread should take note. It is likely that the concept of social combination and interaction itself has a serious flaw for the well being of individuals who compose such groups. If there is a solution it probably will be found by examining social combination at some more fundamental level. Of course, there may be no solution so we will always be cycling from oligarchy towards socialism and back again.
If you’re looking for just one example as to why America is a failed State in economic terms ( leave aside its obvious moral bankruptcy) you have only to consider its costs to produce/manufacture an item.
Let’s go with the comparative cost of producing this item, a TANK.
According to a recent report the cost to produce a top of the range US Battle Tank is $5 million; for Russia it’s $500k. Now this should be audited carefully to establish why a 900% discrepancy exists. They could then measure the costs of related military items like the cost of shells for the tank or manufacturing cost of comparative missile defence systems in America & Russia, moving onto Jets and other hardware.
Why would US allies continue to purchase these price inflated products when they could be purchased for a fraction of the cost elsewhere? It’s obviously not an economic decision.
Hi WTFUD,
Could corruption be the difference ?
I seriously doubt that the “debt jubilees” referred to by Dr. Hudson were as widespread and comprehensive as he wishes us to believe. For one, I very much doubt that the use of individual/family debt was as common as it is now. No one would issue substantial credit where future payment was unlikely. Secondly, it is highly likely that debt forgiveness was only given to “friends of the state” and then in exchange for their continued loyalty.
It would be great if he provided some hard data to illustrate that there was ever a broad-based, blanket debt forgiveness.
That said, we are unquestionably nearing the end of a debt Ponzi. The $64 trillion question is how do we get past that? The problem is that the debt owners are not just the oligarchy, they only own a small slice. The biggest holders of US debt are other US government agencies, pension funds, insurance, foreign governments. How do they function if the debt is repudiated?
It is all well and good to fantasize about some Utopian system, but reversing or regressing 1000 years is not going to work.
Opport Knocks
“friends of the state”… corruption maybe ?
Its better to research than to doubt:
This is only a start.
…and forgive them their debts: Lending, Foreclosure and Redemption From Bronze Age Finance to the Jubilee Year (THE TYRANNY OF DEBT Book 1)
https://www.amazon.com/forgive-them-their-debts-Foreclosure-ebook/dp/B07QGFZ7DW/ref=sr_1_1?crid=2SAAQXCB6SQ6V&keywords=michael+hudson+forgive+them+their+debts&qid=1657644601&s=digital-text&sprefix=michael+hudson+forgive+them+their+debts%2Cdigital-text%2C162&sr=1-1
Well, you are set to implode and I am not a scientist or anything of that nature.
You have 2 options right now: the sure slow collapse of your entire country, engulfed in riots, chaos and a complete degradation of food, supplies, electricity and fuel.
Or, take on Russia or China, both capable of bringing you down right now.
On the ‘Naked Capitalism’ website a different (held in China, with a focus on China) version of Michael Hudson’s speech appeared
https://www.nakedcapitalism.com/2022/07/michael-hudson-the-end-of-western-civilization-why-it-lacks-resilience-and-what-will-take-its-place.html
FTA:
“The West has no strong government checks to prevent a wealth-addicted oligarchy from emerging to make itself into a hereditary aristocracy.”
Completely wrong.
The author, obviously overlooked the Sherman Anti Trust act. Didn’t fit the narrative, I guess.
https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws
Johnny, I follow the theory but, yet again, has the Sherman Anti Trust act always been complied with ? Also aborad ? Or can bribes be paid abroad considered to be as the “cost of doing business” which others would readily pay for ? Cordially Jorge
Of the twenty-two civilizations that have appeared in history, nineteen of them collapsed when they reached the moral state the United States is in now.”
― Arnold Joseph Toynbee
Civilizations die from suicide, not by murder.”
Marginal remarks of economic and monetary dummy.
I would think that even creditor class needs a clean slate.
I would think that return promised on an investment is a dream, in essence. Dreams could get tangled in changing reality, no authority on earth would be able to untie these dreams. Trespasses should be forgiven.
But then yes, war is an answer, too. Tangled dreams would be brought to society to burden. Somebody could be enslaved, the rights to their bodies can be removed. They could be subjected to neverending medical experiments, gulags and interment camps. Bunch of dreams will be bagged. And it would be a New Word to conquer.
***
Every serious climate change, every real environmental project should start from Clean Slate – all entanglements of farmers and producers should be unmade. Nobody should be forced to follow a failing dream that’s taking world with it. Is this being done? Not to my knowledge.
But I’m a dummy, just rambling.
Creativity and how individuals are to be encouraged to nurture it is almost consistently missing in the leftist world view. Indias Modi recently pointed out that Britain left an educational system suited for bringing up servants while innovation and creative thought ought to play an important role.
Britain being an oligarchy of the kind MH critisises is expected to battle against creative man but leftists dont resist that very much.
«David Graeber and I have sought to expand the consciousness of how different the world was before Western Civilization took the Roman track of pro-creditor oligarchies instead of palatial economies protecting the interests of the indebted population at large.»
Michael Hudson is great so I must be wrong that to think that he pretends so hard that the relatively recent institution of bankruptcy does exist or does not cancel debts.
«how royal Clean Slate proclamations cancelling debts, liberating bond-servants and redistributing the land were a normal and expected role of Mesopotamian rulers and Egyptian pharaohs was still not believed at that time.»
Personal debt at that time was essentially always tax assessment debt, sold for cash to (foreign or ethnic minority, e.g. samaritans) merchants as “tax farmers”, not consumer debt. What the rulers did at the time was in essence to renege on the debts already sold to the (foreign or ethnic minority) merchants as “tax farmers”, and incite the popular to lynch/pogrom them. This began as far as in the past in Sumer nearly 4,000-5,000 years ago.
This is a practice that has continued since then, see regular defaults by the greek elites, who regularly blame “the germans” for “odious debt” they very willingly borrowed and distributed to their greedy cronies. Note: today’s future tax assessments are called “government bonds”.
Again Michael Hudson is great so I must be wrong to think that he does not know that jubilees canceled mostly tax arrears and that he is not aware of the practice of “tax farming”.
From my point of view talking about generalized jubilees is pointless and ahistorical, the important issue are how soft or hard should be the rules for individual (personal, corporate, state) bankruptcy. The bankruptcy regime is really important to how political economies work, and talking about jubilees is worse than useless, because it distracts from that important topic.
«the distinguishing feature of Western Civilization: giving control of government and its lawmaking to a wealthy creditor class monopolizing the land and property.»
I think that Michael Hudson is great, so I must be wrong to think that he quite out of touch with the current “western civilization” finance, where control of government and its lawmaking has been purchased by a large *debtor* class (e.g. both retail and investment banks are gigantic debtors, with only tiny slivers of mostly imaginary capital), a class that uses fantastic amounts of government-backstopped debt borrowed at tiny interest rates to do leveraged speculation, and that pursuing the interest of these huge debtors interest rates have been collapsing for decades, having been negative in real terms for most of those decades.
For example even the fraudsters in the greek government between 2001 and 2009 were borrowing at just 3-4% nominal rates to distribute the cash to their cronies.
https://www.vox.com/2015/7/1/8871509/greece-charts
However I quite agree that compound interest is a bad idea, and only simple interest should be legally enforceable.
Incisive, insightful.
Maybe someone has mentioned one other thing seemingly missing from Graeber & Hudson cumulatively: individual citizens’ armament to military+ parity (and hopefully training in same).
I see no other truly adequate guarantee that the n+1 philosopher kings implicitly alluded to in their quite apparently centralized governments (of x sizes; presuming humanity has not given into the finally folly of world governments!) will not follow Lord Acton’s observation about power corrupting.