Economic Rent and Exploitation: Michael Hudson, Shepheard Walwyn

June 18, 2022

Michael Hudson, Shepheard Walwyn recording May 23, 2022
Part one:  https://www.youtube.com/watch?v=XDo7HykYN9k

Part two here:  https://www.youtube.com/watch?v=I-xWgLertkg

Jonathan Brown
Michael, welcome to the podcast.

Michael Hudson
It’s good to be here. I’m looking forward to it.

Jonathan Brown
Michael, I think you have one the most extraordinary upbringings and journeys into economics. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today.

Michael Hudson 00:23
There’s no direct causality there that could have been anticipated. I never studied economics in college, because I went to school at the University of Chicago. We know that there were some students at the university who were at that business school. They were such strange people that we never even thought of going near them, because there was something otherworldly about them, something abstract.

My degree was in German language and history of culture, because the head of the History of Culture Department was Matthijs Jolles, a German professor and translator of von Clausewitz, On War. And in at the time, my intention was to become a musician. And I had to learn German in order to read the works of Heinrich Schenker. In music theory, my teachers were German. And for the History of Culture, most of the books that I was reading were, were all in German. And the German professors were also heads of the Comparative Literature Department and other departments. That meant that I could take all the courses cafeteria style at the university that I wanted.

I had to go to work when I graduated. I went to work for a while for direct mail advertising for the American Technical Society, a publisher a block away from the university, and then went to work for Free Press that was headed by Jerry Kaplan, a Trotskyist follower of Max Shachtman. And he wanted to send me to New York to help set up Free Press there.

Soon after I came to New York, Trotsky’s widow died. And Max Shachtman was the executor of her estate. He thought I should go into publishing by myself. And I had already had the copyrights for George Lukacs, the Hungarian Marxist and I thought tried to get funding for a publishing company with Trotsky’s works and other works. I’ve been writing a history of music and art theory. And needless to say, I didn’t get any funding because nobody was at all interested in publishing the works of Trotsky. I even tried to get Dwight Eisenhower the write the introduction to his military papers, wouldn’t work.

I was urged to meet Terence McCarthy, the father of a girlfriend of one of my schoolmates, Gavin MacFadyen. He was the first English-language translator of the first history of economic thought that was written: Karl Marx’s Theories of Surplus Value (Mehrwert), reviewing the value theory of classical economics. Terence said that he would help guide me in economic thinking if I’d get a PhD in economics and go to work on Wall Street to see how the world works. But I had to read all of the bibliography in Marx’s Theories of Surplus Value. So I had to begin buying the books, and ended up working as a sideline with one of the reprinters, Augustus Kelly, who was reprinting many of the classical economists. He was a socialist. There were other dealers in New York: Samuel Ambaras, Sydney Millman. I began buying all of the 19th-century classical economic books that I could, sinse that was the only way that I could get copies.

I took graduate classes in the evening while working at a bank for three years, the Savings Banks Trust Company. It was a commercial bank, but was acting as a central bank for the savings banks that in America finance mortgages. All their savings are reinvested in mortgages. So for three years my job was to track the real estate market, the mortgage market, interest rates, the funding of mortgages, the growth of assets by the savings banks, all growing at compound interest. All the growth in savings in the New York savings banks in the early 1960s was simply the accrual of dividends. So you’d have a step function at dividend time every quarter, going up exponentially. There was hardly any new savings inflow. It’s as if you’ve just left a given amount of savings in 1945, and let the amount rise exponentially. All this increase in savings was recycled into the real estate market.

The New York banks wanted to extend their market so they couldn’t just keep bidding up New York housing prices. They won the right to lend out of state, especially the Florida. So my job was basically seeing that real estate prices were whatever a bank would lend. At that time, banks would not lend you a mortgage if the debt service exceeded 25% of your income. And you had to put up usually 30% of the purchase price as a down payment, but possibly 10%. So housing was affordable. You could buy a really nice house for you know, $20 or $30,000. Now, it costs $400,000 to buy just a one room apartment in a condominium.

I bought a house for $1 down – it was $45,000 total. I took out a mortgage from Chase for half the price, and the other half was a purchase-money mortgage. So it was easy. Anybody coul get a house in New York at that time. Housing was readily affordable.

After I finished my PhD courses, I changed jobs. My real interest at the time was international finance and the balance of payments. So I went to work at Chase Manhattan as their balance of payments economist. This was at a time when the balance of payments and even balance-sheet analysis was not taught in schools. It was very specialised. I realised that what I was taught, especially in monetary theory, had nothing at all to do with what I was learning in practice.

In monetary theory, for instance, that was the era of Milton Friedman in the 60s and 70s. He thought that when you create more money, it increases consumer prices. Well, I thought that obviously was not how things worked. When banks create money, they don’t lend for people for spending. About 80% of bank loans in America, as in England, are mortgage loans. They lend against property already in place. They also lend for corporate mergers and acquisitions, and by the 1980s for corporate takeovers.

The effect of this lending is to increase asset prices, not consumer prices. You could say that money creation actually lowers consumer prices, because 80% is to increase housing prices. Banks seek to increase their loan market by lending more and more against every kind of real estate, whether it’s residential or commercial property. They keep increasing the proportion of debt to overall real estate price. So by 2008 you could buy property with no money down at all, and take 100% mortgage, sometimes even 102 or 103% so that you would have enough money to pay the closing fees. The government did not limit the amount of money that a bank could lend against income. The proportion of income devoted to mortgage service that was federally guaranteed increased to 43%. Well, that’s a lot more than 25%. That’s 18% of personal income more in 2008 than in the 1960s – simply to pay mortgage interest in order to get a house. So I realised that this was deflationary. The more money you have to spend on mortgage interest to buy a house as land and real estate is financialized, the less you have left to spend on goods and services. This was one of the big problems that was slowing the economy down.

Well, it was obvious to me that rent was being paid out as interest. Rent is for paying interest. If I talked with various developers about buying buildings, they said, “Well, we try to buy our buildings without any money at all. The banks will lend us the money to buy a building, and they calculate how much is your rental income going to be? That rental income will carry how much of a bank loan at a given interest charge, and lend the money to buy it.” That is how real estate rent was financialized.

Democratization of real estate on credit means turns rental income into interest, not taxes
This meant that the role that had been played in the 19th century by landlords is now played by banks. In the 19th century, the problem was absentee landlords, the heirs of the warlords who conquered England or other European countries in the Middle Ages. You had hereditary rent. Well, now our rent has been democratised. But it’s been democratised on credit, because obviously, the only way that a wage earner can afford to buy is is on credit. For an investor you can buy whole buildings on credit.

Finance has transformed real estate into a financial vehicle. So that that’s what rent is for paying interest means. There’s a symbiotic sector, Finance, Insurance and Real Estate – the FIRE sector. It’s the key to today’s financialised economy. Most real estate tax in America is at the local level, because after the income tax was introduced, commercial real estate was made tax exempt by the pretence that buildings depreciate in value, as if they don’t in fact rise in price. The pretence is that they wear out, even though landlords normally pay about 10% of the rental income for repairs and upgrades to keep the building from wearing out.

Today in New York, and I’m sure in London too, the older a building is, the better it’s built. Real-estate developers have crapified building codes so that the newer the building, the more shoddily it’s built. They call shoddy buildings “luxury” real estate, meaning is built with really not very thick walls. I think the junkiest building in New York is Trump Tower, which is sort of the model of shadiness which they call luxury. It’s very high-priced.

The academic economics curriculum finds unproductive credit to embarrassing to acknowledge
While I saw the importance of finance and real estate, none of that was discussed in the university’s economics courses at all. The pretense is that money is created by banks lending to investors who build factories and employ labour to produce more. All credit is assumed to be productive, and taken on to finance productive investment in the form of tangible capital formation. Well, that that was the hope in the 19th century, and actually was the reality in Germany and in Central Europe, where you had banking becoming industrialised. But after World War I, you had a snap back to the Anglo-Dutch-American kind of banking, which was really just the Merchant banking. It was bank lending against assets already in place.

Classical economics as a reform program to free economies from economic rent and rentier income

I realised that the statistics that I worked on showed the opposite of what I was taught. I had to go through the motions of the PhD orals. and avoided conflict by writing my dissertation on the history of economic thought, because anything that I would have written about the modern economy would have driven the professors nutty. Needless to say, none of the academic professors I had ever actually worked in the real world. It was all very theoretical. So that basically how I came to realise that the 19th century fight for 100 years – we can call it the long 19th century, from the French Revolution, up to World War I, and from the French Physiocrats, to Adam Smith, Ricardo and Malthus, John Stuart Mill, Marx, Simon Patton and Thorstein Veblen – was the value and price theory of classical economics to quantify economic rent as unearned income.

The purpose of value and price theory was to define the excess of market price over actual cost value. The difference was economic rent. The essence of classical economics was a reform campaign – that of industrial capitalism. It was a radical campaign, because the basic cost-cutting dynamic of industrial capitalism was radical. It realised that in order to make Britain, France or Germany, or any country competitive with others, you had to get rid of the landlord class and its demands for economic rent. You also had to get rid of monopolies and their economic rent. You had to get rid of all payments of income that were not necessary for production to take place. The aim was to bring prices in line with the actual cost value of production, to free economies from this rake-off to unproductive investment, unproductive labour and economic rent – land rent, monopoly rent and financial interest charges. Those were the three basic categories of rent on which classical political economy focused.

To translate classical rent theory into practice, you needed a political reform, You had to get rid of the landlord class’s political power to block reform. It wasn’t enough simply to say that economic rent was not a necessary cost of production, not part of real value. The landlord class would simply say, “Well, what are you going to do about it?”

The proponents of industrial capitalism saw that the constitution of England, France and America required giving governments the power to pass laws to free economies from economic rent. in order to do that, they needed democratic reform of the political system. In England they needed to empower the House of Commons over the House of Lords. That effort led to a constitutional crisis in 1909 and 1910, when the House of Commons, Parliament, passed a land tax. That was rejected, as I’m sure you know, by the House of Lords. The crisis was resolved by saying the Lords could never again reject a Revenue Act passed by the House of Commons. That political reform was part and parcel with classi9cal economic theory defining rent as an unnecessary cost of production.

But where did this leave the interests of labor – the majority of the population? As a broad social reform, classical economics began to falter by 1848. You had revolutions in almost every European country. These revolutions were not fully democratic in the sense of they weren’t really for wage labour, which was the bulk of society. They were bourgeois revolutions, including land reform. They were all for getting rid of the landed aristocracy and the special privileges that the aristocracy held. But they were not very interested in helping consumers, and labour’s working conditions, shortening the workweek, shortening the workday and promoting safety. There was nothing really about public health, or public social infrastructure spending. So things began to falter by 1848.

But they still made progress through the balance of the 19th century. By the time World War I broke out in 1914, it looked like the world was moving towards socialism. Almost everybody in the 19th century, across the political spectrum, whatever you were advocating was called socialism.

Socialism and strong government as the program of post-rentier industrial capitalism
At the broadest level, socialism meant collecting economic rent and getting rid of the landlords and the aristocracy, either by taxing away rent or nationalizing land and natural monopolies, in hope that that by itself would create a viable industrial economy. you had libertarian socialism, Marxist socialism, anarchist socialism, industrial socialism and Christian socialism. Almost every reformer wanted that as a label. The question is, what kind of socialism were are you going to have?

That was what the aftermath of World War I was fought about. The fight was largely shaped by the Russian Revolution, which unfortunately went tragically wrong under Stalin and gave socialism and communism a bad name. But it still had a good name in England after World War II. And also in America in the 1930s, as a result of Franklin Roosevelt’s New Deal that saved capitalism by investing in public infrastructure.

I can give you an example of where pro-capitalist theory was in the 1890s. In the United States. The industrial interests in America faced a problem once the Civil War ended in 1865. They wanted to create an industrial society – ideally, a fair society with rising living standards. How do you do that without training people to administer such an economy? You need to train people in a university. You have to teach them how economies worked. But the main universities in America were religious colleges, founded to train the clergy. Yale, Harvard, Princeton and most taught British free-trade theory, which trivialized economic theory.

So the business interests and the government saw the need to teach reality-based economics. They saw that there was little hope in trying to reform the existing universities. Their economics departments – called moral philosophy – were unreformable. So it was necessary to create new universities. All through America, each state was given a land grant to enable it to create a new university and teach reality economics. They also would teach economic history and how the world actually works. Most of all, they would teach protectionist trade theory and how to create a society and economy that is more efficient than other economies?

Well, the first business school in America was the Wharton School at the University of Pennsylvania. Its first economics professor was Simon Patton, a protectionist. And he explained that if you’re going to make industrial products at prices that outcompete those of England, you need public infrastructure spending. You need as much of the cost of living as possible to not to be paid by the employers to factor into the price of their products, but to be paid by the government.

Patten cited public roads and canals to lower the cost of doing business. He also noted that every time you build a road or railroad, you’re going to raise the land value along these routes – and lower land prices for areas replaced by the now-more-accessible producers. You can simply self-finance the cost of these by taxing the rent.

You also need public education, and that should be free so that you don’t have like today, to earn enough money to pay an enormous student debt – and receive a high salary to afford to pay that. If the government would provide free education, you wouldn’t have to pay workers enough to pay this student debt, so they wouldn’t need such high wages simply to break even.
Today 18% of America’s national income is from medical insurance. If you have a public health system and socialized medicine, as England had after World War II and as Bernie Sanders advocates today, then you wouldn’t have to pay workers a high enough salary to afford this enormous medical expense. England realised this already in the 1870s and ‘80s, when Benjamin Disraeli campaigned as a conservative for health.

So the movement towards public infrastructure towards government spending was led by the industrialists. It was they themselves who wanted strong government. The common denominator of politics from Adam Smith through all of the 19th century was to free economies from the unnecessary economic rent, to free them from unearned income, from the free lunch. To do that, you have to have a government strong enough to take on the vested interests – first the landlord class in the House of Lords, and then the financial class behind it.

Jonathan Brown 26:00
Well, just to clarify that, Michael, I think what you’re, what you’re saying is, I know in some of your writing you talk about the view of government or the public sector was it was a fourth means of production. So you got land, labour, capital and the public sector.

Michael Hudson 26:16
That was the term that Simon Patten used. Government infrastructure is a fourth means of production. But what makes it different from profits and wages is that if you’re a wage earner, you want to make as high a wage as possible. If you’re a capitalist, you want to make as high a profit as possible. But the job of public investment is not to make an income, not to do what was done under Thatcher and Tony Blair, not to treat public utilities, education and health as profit making opportunities. Instead, Patten said, you should measure their productivity by how much they lower the cost of doing business and the cost of living for the economy at large.

Jonathan Brown 27:03
And what that allows a country to do, so if you’re good at it, is to get together and ask how to educate our people, lower the cost of transportation so we’ve got we’ve got a mobile workforce, all those things. We can then start to compete against other nations who are ahead of us, who may have more expensive means of production, and we can maintain that advantage. We’re not stuck in a lower level of the economy where we’re basically working for someone else. We’re able to develop ourselves as a nation. And I guess the benefit of us doing it collectively is that we can minimise the cost, then use a natural monopoly power in government hands to provide efficient services across the board. Is that right?

Michael Hudson 27:46
Yes, but they went further. Protectionists in America said the way to minimise costs – and it may seem an oxymoron to you – the way you minimise costs is to have high-wage labour. You raise the wages of labour, or more specifically, you want to raise the living standards, because highly paid labour, highly educated labour, well fed labour, well rested labour is more productive than pauper labour. So they said explicitly, America’s going to be a high wage economy. We’re not like Europe. Our higher wages are going to provide high enough living standards to provide high labour productivity. And our higher labour productivity, shorter working day, better working conditions, healthy working conditions, public health, well educated labor will undersell that of countries that don’t have an active public sector.

Jonathan Brown 28:45
and Henry Ford being the poster boy for that approach, of doubling his employees’ salaries and so on.

Michael Hudson 28:53
Yes.

Jonathan Brown 28:54
Amazing.

<h4>The fight against classical economics and its concept of rent as unearned income</h4>
Michael Hudson 28:55
Needless to say, the fight for the kind of democracy that will free economies from economic rent was not easy. By the late 1880s, and especially the 1890s, you had the rentiers fighting back. In America the fight was led by John Bates Clark. There was a movement, which today is called neoliberalism, to deny the entire thrust of classical economics. Clarke said that there is no such thing is unearned income. That meant that economic rent does not exist. Whatever a businessman makes, he is said to earn. Whatever a landlord makes, he earns – so there was no unearned income.

This came to a head around 1890 the Journal of Ethics. Clark wrote the first essay, and it was refuted by Simon Patton. There was a fight against the concept of economic rent by academic economics, especially in New York City at Columbia University, where Clark ended up, This is really the dividing line: You recognise that much of the economy is unearned income and you want to get rid of it. To do that, you have to pass laws that will tax away the unearned income, or better yet, you put land and other natural resources and natural monopolies in the public domain where the public sector directly sets prices. That was what Teddy Roosevelt did with his trust busting.

Jonathan Brown 31:13
Michael, I just want to say reading your work is something of a revelation. I’ve got a degree in economics for what it’s worth. And I would say the only valuable thing that I found from a getting a degree in economics is that I know, resolutely when an economist is talking bullshit. How do you know that? It’s when his lips move.

Michael Hudson 31:32
If it’s an economist, they’re talking bullshit – let me make it easy, right!

Jonathan Brown 31:36
And then the thing is, that reading your work, for example, going back to Thorstein Veblen, his work, which only made it into the mainstream when I was getting a degree in the 90s, was conspicuous consumption. It had nothing to do with absentee landlords or, and the profound importance of that, and then I’m looking in J is for Junk Economics, and you talk about the free lunch, and how Milton Friedman said that there’s no such thing as a free lunch.

When you look at your work, you prove that actually there is, and that he’s having it! And you say, “Most business ventures seek such free lunches not entailing actual work or real production costs, and to deter public regulation or higher taxation of rent-seeking recipients of free lunches. They have embraced Milton Friedman’s claim that there’s no such thing as a free lunch”.

And you talk about: “Even more aggressively rent extractors accused governments of taxing their income to subsidise freeloaders, pinning the label of free lunches on public welfare recipients, job programs, beneficiaries of higher minimum wage, when the actual antidote to free lunches is to make governments strong enough to tax economic rent, and keep the potential rent extracting opportunities and natural monopolies in the public domain.”

Michael Hudson 32:51
Veblen was indeed was the last great classical economist. He coined the term neoclassical economics. I think that’s an unfortunate term. When I went to school in my 20s, I thought neoclassical meant ‘Oh, it’s a new version of classical economics’. It’s not that at all. What Veblen meant was there used to be the old classical economics of Adam Smith, John Stuart Mill and Marx, all about economic rent and exploitation. “Neo” means there’s a new body of completely different, post-classical economics aiming to make classical economics obsolete. That is the new mainstream economics of today, trying to make itself “classical.” So Veblen he should have used the terms post-classical or anti-classical economics.

Jonathan Brown 33:44
Or even pseudo classical?

Michael Hudson 33:49
It’s antithetical, because the root of classical value and price theory was to isolate and define economic rents statistically. To deny economic rent is to deny the whole point of classical value and price theory. That is where economics became untracked.

Unfortunately, it became untracked largely by Henry George, who rejected classical economics and very quickly followed J.B. Clark and accepted his mushy value and price theory. Removing all elements the cost of production from value theory, analysing prices simply in terms of consumer demand and what people want, and not analysing what determines land and other asset prices, loses focus.

George became very popular as a journalist. He wrote wonderful journalism to expose the railroads in California as landlords, and he wrote a wonderful book on the Irish land question. But when he tried to talk about the whole economy, he didn’t want any competition. He said, in effect, “Economics begins and ends with me. Forget everything, Adam Smith and classical economics.” He’s sort of an early Margaret Thatcher. There’s no such thing as society or the economy. Only “tax the landlords.”

Jonathan Brown 35:35
What are you doing? You’re destroying my view of Henry George! He’s an early Margaret Thatcher? How, how could that possibly be?

Michael Hudson 35:47
Well, in two ways. The first way is that in the 19th century, in order to tax the land rent, you had to take on the most powerful vested interests of all: the real estate interests and the financial interests. But Henry George was a libertarian. He was for small government. He broke with the socialists, because he warned that socialism had a potential for authoritarianism. Well, we know that he was right in that warning, because we saw what happened in Stalinist Russia. But obviously, what you want is a government that is strong and democratic, and with enough authority to tax and regulate the vested interests. (That term is Veblen’s, by the way.) That was the ideal in America, but it needed a strong enough government so that Teddy Roosevelt could come in and be able to bust the trusts.

The government was strong enough in 1913-14 to impose an American income tax that fell just on 1% of the population, almost entirely on economic rent, on land rent, mineral rent on monopoly rent of the big corporations. If you’re a libertarian, your government is too small to take on these vested interests. And you’ll never win. You’ll end up like the Social Democrats or like today’s Labour Party under Mr. Starmer, not able to be very efficient. So that was George’s first problem.

The second problem was when he said that all you have to do is tax the land and everything else will take care of itself. Well, as you know, he was nominated as a celebrity candidate by the socialist and labour groups in New York City in 1876 to run for mayor. They gave him their programme – safe housing, workers housing, safe working conditions, food laws that protect people from poison, like you don’t want to use chromium for cake frosting to make it yellow.
Well, George threw out the whole labour programme and said that there’s only one thing that mattered: If you tax the land rent, the cakes will take care of themselves, worker safety conditions will take care of themselves. You don’t need socialism; just tax land rent.

Well, the word “panacea” came into popular use in the English language at that time, because George didn’t see the economy as a whole. That was a tragedy. He was great as a journalist describing rent and the machinations of the railroads. But once he tried to talk about the economy, without really describing how it worked as a system, saying there really isn’t any economic system, it’s just about land rent. That separated him from the other reformers.

By the 1890s you had many of reformers in America, who had been inspired by George’s journalism in the 70s and early 80s, including attacks on the oil monopoly and the Rockefellers. They asked what happened to George? Well, he became a sectarian. He formed his own party and said, we’re only going to talk about land rent. This diverted attention away from how the overall economy works. And if you don’t understand how the economy is all about providing a free lunch in one way or another, not only to landlords but to the financial sector primarily, then you’re really not going to address the interests of most of the population.

So his sectarian party shrank. Still, in the first decade of the 20th century you had followers of Henry George and socialists going around the country debating each other. They had great debates, they spelled out the whole problem. I wanted to reprint all these debates somewhere, what both the socialists and the Georgists said: “One thing we can agree on is that society is going to get go either your way or our way. We’re talking about how is the future of the political system and the economic relations and taxes that follow from this system. How are they going to evolve?”

The socialists focused on labour’s working conditions, because these were getting worse and worse. In America the fight for labour unionisation got quite violent, and corrupt. The abuse of consumers, the growth of monopolies, all these were growing problems. The socialists focused on these problems – and decided to leave the discussion of rent to followers of George. I think that was very unfortunate, because George had pried the discussion of economic rent away from the classical value theory and its political dimension, which was socialist.

I find little interest in today’s socialist movement or the socialist movement 50 years ago about land rent. They are more concerned about international issues, about war, about almost everything except land rent. And today I find the greatest interest in rent theory as a guide to a tax system in the context of an overall economic system to be in China. So that’s really where the debate over how to keep the price of housing down by keeping the financial sector from trying to capitalise the land rent into a bank loan.

That’s a big fight in China today. It should have been also in Russia. Fred Harrison, in the early 1990s, brought a group of people including me over to Russia. We made two trips to the Duma and did everything we could to explain that Russia could have a great advantage to rebuild its industry into a productive economy. The first thing that it should have done was to keep housing prices down. It could have given everybody their houses, free and clear, without any debt. Of course, some places would be more valuable than others, but Russia would have had the lowest-priced economy in the world. In America, the rent can take up to 43% of a home buyer’s income.

Well, there was pushback from the Russians. They had no rent in a socialist economy. Ted Gwartney, an American real estate appraiser, walked down the streets of St. Petersburg with the local mayor, I think on a fall or winter days. He pointed out that one side of the street was very sunny. The other street was in the shade. That’s how the sun is in the northern latitudes in the winter. Most people were walking on the sunny side of the street. That means that if you’re going to have a store, whether it’s a bakery, a food store or a restaurant, the store on the sunny side of the street is going to be able to attract more customers. Their site has more economic rent than the dark side of the street. Same thing with buildings near a subway. They will be worth more than sites far away from transportation.

The mayor said understood the point, and asked how to actually make a land value tax so to collect this rent? Ted explained that St. Petersburg’s layout was much like that of Boston, where a land map was easy to make. It showed that there was a peak centre of values near the subway, with rents tapering off further away. He suggested to apply Boston as a scale model to St. Petersburg. Just plug in a few prices, and you have a land-valuation map.

Russia could have been a low-cost economy. It could have kept the oil and gas, Yukos, GazProm, nickel and platinum resources all in the public domain to finance investment in re-industrialization, to become independent of the West. But as we all know, Ted and the people that Fred Harrison bought were completely overwhelmed by the billions of dollars that U.S. diplomats spent on promoting kleptocracy and shock therapy in Russia. Its officials and insiders worked for themselves, not Russia.

And it wasn’t only Russia that missed opportunities. I brought Ted Gwartney and his mathematical model-maker to Latvia, where I was Economic Research Director of the Riga Graduate School of Law. I was asked by the leading political party of Latvia, the Centre Party – basically the party of Russian speakers, with 1/3 of the population and votes – to draw up a model for how Latvia could restructure its post-Soviet economy and industry. Ted met with the tax authorities and housing authorities and explained how to use land rent as the tax base. They were amazed and said, “This is great. We can hire a separate appraiser for every single building. This will create a lot of employment”. No he said. He had been the appraiser for Greenwich, Connecticut, the state’s wealthiest city. He said, “We can do a whole city in about one week.” They couldn’t believe this in Latvia.

Around the time of his visit there was a meeting in Boston of the Eastern Economics Association. It was largely created by John Kenneth Galbraith to go off the economic mainstream. I think the Schalkenbach Foundation had a session on political critics of Henry George, so there were a lot of Georgists. Other people who came to the Eastern Economic Association meeting were socialists, including Alan Freeman who was the assistant to Ken Livingston, the Mayor of London.

When everybody was having lunch after the economic meetings, I brought Alan over to sit down with Ted Gwartney. Ted explained what he did, and Alan said, “Oh, I’ve never heard of this! I’ve got to come and meet you some more.’ So he came to New York and we went up to visit Ted in Connecticut. He explained how to make a land value map. Alan said, “You should win the Nobel Prize for this! This is amazing! There’s nothing like this in England.”

Ted explained that there are about 20,000 appraisers in America that do what he did. There are abundant statistics. Every city has a map of land and building appraisals: here’s the value of the building, here’s the value of the land. So smoothing out a land value map is pretty easy to do. Alan could hardly believe it.

Well, I went back to London shortly and met with Alan. It turned out that political pressures in England, especially from the Labour Party, led London to hire Weatheralls, a real estate company, do appraisals. So we never got to do our version of a real estate appraisal of London to calculate land rent.

But this is what all of the theories of the Physiocrats, Adam Smith, Ricardo, John Stuart Mill, Marx, Veblen, Alfred Marshall, all of them were focusing on. Yet this idea is so alien that from London to St. Petersburg, they don’t have any idea of how the simple concept can be done. The economics profession is in denial. It’s followed the idea that there’s no such thing as unearned income, everybody gets what they make.

The National Income and Product Accounts treat rent as a product, not a subtrahend
A byproduct of this value-free doctrine is how countries calculate their national income and product accounts. And if you look at the GDP accounts for the United States (and I’ve published a number of articles on my website and in major economic journals), rent is counted as part of GDP.

This is easiest to see in real estate and finance. The Bureau of Labor Statistics sends its employees around to ask homeowners what the rental income of their home would be if they had to rent it. If you were a landlord and rented yourself how much rent would that be? This appears in the NIPA statistics as “homeowners imputed rent.” That’s 8% of GDP. But it is not really income, because it is not actually paid. Nobody gets it. But value-free designers of GDP want to describe all of the income that landlords make as contributing to GDP. They say that landlords provide a productive service, they provide housing to people who need it, and they provide commercial properties to businesses that need it. Well, that’s not exactly how John Stuart Mill put it. He said that rent is what landlords make ‘in their sleep’. So how can you rationalize how productive landlords are?

Another element of American GDP is financial services. I called up the Commerce Department where they make the NIPA statistics and asked what happens when credit card companies increase their interest charges. And where do penalty charges for late payments appear? Credit card companies in America make billions of dollars in interest a year and even more billions in fees, late fees and penalties. Most of the income that credit card companies make are actually on these fees and penalties. So where does that appear in that GDP? I was told, in “financial services.’ So the “service” of calculating how far the debtors must pay for falling behind in their payments. They typical charge 29%. That’s all counted as a contribution to GDP. But in reality it is a subtrahend, leaving less to spend on real “product.”

This raises the question of just what income and product actually mean. Well, this brings us back to what classical economics is all about. The “product” should be measured by what its actual necessary cost of production is. But there’s a lot of income over and above this necessary cost of production. Namely, economic rent, that’s unearned income. But the income and product accounts don’t say how much is “earned” and how much is “unearned” land rent, monopoly rent, natural resource rent, interest and financial charges.

A classical economic accounting format would show how much of the prices for what our society produces is actually necessary, and how much is a subtrahend. Classical economists treat the land rent that you pay, interest charges and monopoly prices as a rake-off. So not all of your income is income equals “product,” because only a portion of that income represents a real product.

In America, the head of Goldman Sachs a few years ago said Goldman Sachs partners – a financial management firm – make more money than almost anyone else in America, because they’re the most productive. If you make a lot of money, by definition, you make it by being productive. That’s the false identity.

Jonathan Brown 55:25
That’s really the John Bates Clark idea that if you make the money, you’ve earned it. And it’s not just because you control the gate. You’re the gatekeeper, to stop people and make them pay the toll. You’re the troll under the bridge, taking people’s money as they cross, which is essentially what financial economics is about.

Michael Hudson 55:48
Right. I have spoken with a number of political advisors, many of whom were followers of Henry George. They’ve described to me how political all of this definition of the economy is. A number of friends of mine have been trying to show how much of what the United Nations calculates as income and product is actually economic rent. Steve Keen, Dirk Bezemer and Jacob Assa are in this group. There are a number of others who do it. We publish in places like the Review of Keynesian Economics, Journal of Economic Issues and other not-mainstream journals. A lot of this was taught where I was a professor for decades, at the University of Missouri in Kansas City.

Our graduates had problems getting jobs, because in order to get an appointment at a university, you have to publish articles in prestige journals. The University of Chicago, the Milton Friedman boys, the Chicago Boys control the editorial boards of all these prestige magazines, just like they control the Nobel Economics Prize Committee. The prize basically is given to Chicago Boys every year for not explaining how the economy works.

A precondition for what you call an economist, especially a Nobel Prize winning economist, is not to understand how the economy works. Because if you understand that, you’re going to threaten the vested interests that are getting the free lunch. You have to say there’s no such thing as a free lunch, everybody earns whatever they can get. Robbers and criminals like that idea. “Yeah, we stole it fair and square!”

Crime pays, and rent seeking also pays.

You can get much more money quicker by extractive means – by rent extraction – than you can by investing in plant and equipment and developing products and marketing them and making a profit over time, and spending on research and development. That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts, not on new capital investment.

So the way that the economy works today is no longer industrial capitalism; it is finance capitalism. Instead of Industrial Engineering, making society produce more with all of the environmental protection cost included, you have financial engineering, making wealth by increasing stock-market prices. Wealth is not achieved by earning it. You don’t save up your earnings and get wealthy. I think half of Americans are unable to raise $400 In an emergency. They have no savings at all.

For most people it’s very hard to save up money, especially if they have student debt, credit-card debt, medical debt and mortgage debt. After paying this, there’s really no income left to be saved. So you have the 1% of society, the rentier portion that had to pay income tax back in 1914, getting huge amounts of income and the rest of the society getting less and less. The result is economic polarisation. The dynamics of society are financial and basically rely on rent seeking that has been financialized.

I’ll give you another example of the GDP. One of the problems that makes GDP statistics meaningless is depreciation, the idea that buildings depreciate. When Ronald Reagan came in, the real estate interests and their banks basically took over the government. Henry George and the Libertarians oppose central planning by elected democratic governments, and that leaves central planning to Wall Street’s financial interests. Every economy is planned, and if you don’t have a government strong enough to do the planning, then the planning is done by the financial sector and the real estate sector, and they were given free rein under Ronald Reagan.

Under Reagan’s 1981 tax “reform” you could pretend that if you buy a big commercial building, you can write off 1/7 of the entire costs every single year as tax deductible income. At the end of seven years, you change your ownership from one name to another name, and you start all over again. The same building can be re depreciated again and again and again.

Donald Trump wrote in his autobiography, he loves depreciation, because he said thanks to the pretence of depreciation, his buildings are all going up in value, but he gets to pretend they’re falling, and deduct all of that fictitious over-depreciation from his taxable income. It’s actually economic rent. But if you look at the national income statistics, you can’t find economic rent in them at all. I was able to piece it together by adding up what goes into economic rent: Real estate taxes are part of economic rent, and also interest payments, because interest is paid out of economic rent. But fictitious depreciation tax loopholes also should be there.

But nowhere in the national income statistics is a report of how much income real estate owners actually claim as depreciation. They haven’t done that because if they showed this, people would think, ‘Wait a minute, this is a giveaway. This is utterly unrealistic.” So they only put in a figure for how much they [think] buildings are actually depreciating over a period of decades. So you have a fictitious national income accounting format that makes it impossible to calculate what land rent is – and that was the major focus of classical economics.

How are you going to get a statistical system that actually reflects this? Well, one associate of mine, Jacob Assa, has written a few books on this criticising economic rent. He worked in the United Nations here in New York until quite recently. But as I said, our graduates can’t publish in the University of Chicago economic journals whose party line is that ‘there’s no such thing as economic rent’, just like there’s no such thing as society is beyond “the market.”

I wanted to publish statistics on this and in 1994 the Henry George School in New York asked me to calculate what rent was and the land value. I found out that the value of land, the market price of land in the United States was twice what the government reported.

The government pretends that real estate prices rise mainly because buildings keep growing in value, even though they’re supposed to depreciate. They pretend that buildings grow in value by taking the original cost of the building, and multiplying it by the Construction Price Index. Whatever is left is reported as land value. Well, in 1994 the Federal Reserve reported that the land value of all of the commercially owned real estate in the United States was negative $4 billion. This is crazy.

The statistics are drawn up by a methodology that the real estate interests lobbied for. When I calculated this, the Georgists in America got furious. They said that I was showing that land value and rents were much higher than they thought. They worried that this might lead people to want to tax real estate. Lowell Harriss of Schalkenbach explained that Georgists today represent mainly real estate developers, and that their major audience was local mayors, whose biggest campaign funders are the real estate interest.

These Georgists called themselves “two raters,” wanting to keep overall real estate taxes unchanged (“revenue-neutral”) but shift the tax from commercial landlords onto homeowners by taxing land, not buildings – e.g., electric utilities, office buildings and other capital-intensive structures.

By representing the developers, Georgists proposed to save society by having the developers build up those slums, build up those vacant lots. Like George, they said that there was no need to worry about ecology or any problem except cutting property taxes for large real estate owners. You don’t need to worry about workers conditions or anything else. Let’s just give an economic incentive (i.e., a tax cut) to help contractors build up those vacant lots.

I was told if I published a new explanation of my statistics showing that most rent was paid out as interest, I could never have any relations with Schalkenbach and the Henry George school again. So I published them in a Harper’s Magazine cover story and have lived happily ever after.

Jonathan Brown 1:06:13
And was that “The New Road to Serfdom”?

Michael Hudson 1:06:22
Yes. I chose that title because the purpose of industrial capitalism was to free economies from the legacy of feudalism. And the legacy of feudalism was the landlord-warrior class collecting hereditary rent and the predatory banks that were not making loans for industry. None of the industrialists got their money to invest in banks. The inventors of the steam engine couldn’t get loans except by mortgaging their houses. Banks don’t lend money to create capital, only for the right to foreclose on it.

Jonathan Brown 1:07:02
This is all included in your in your latest book that just came out, The Destiny of Civilization: Finance Capitalism, Industrial capitalism, or Socialism, which I gather was a series of lectures to a Chinese University. Is that correct?

Michael Hudson 1:07:16
Yes. There were 160,000 viewers for the first lecture, and there’s a huge interest in this in China, because they realise that higher housing prices make them poorer and more highly indebted, not richer. What is pushing up housing prices in China is the amount of credit that banks will lend against the property.

A land tax would keep housing prices down, because the rent could not be available, to be capitalized into a bank loan. As China gets more productive and more prosperous, people obviously are going to be able to afford housing, which is how most people define their status. If a site gets more valuable because of public investment in transportation, or schools or parks nearby, that’s going to make it more valuable. But if you tax this rental income, then you’re going to keep the housing price down.

I think Fred Harrison and Don Riley wrote a book Taken for a Ride where they show that the money that London spent on extending the Jubilee Line increased real estate prices by twice as much as the line cost. London could have simply collected the land’s increase in rental value that this public investment created and made it self-financing.

Instead it was a giveaway.

They ended up taxing labour and business, and the effect was to increase Britain’s cost of living and hence the cost of production, which is why Britain is de-industrialising. It’s been de-industrialising because despite the attempts through 1909 and 1911, to free itself from landlordism, the bankers have taken the place of the landlords. They are the class today that the landlords were in the 19th century. So we’re back on the revival of what really was feudalism – a rake-off by a hereditary privileged class.

America’s monetary imperialism coming to an end with de-dollarization
Jonathan Brown 1:09:47

I’m wondering where we go next. I want to get into the conversations that you started with the 1972 first edition of Super Imperialism. I know we had a third edition fairly recently, with your prescience of the predictions in analyzing the situation for America, and how the balance of payments deficit was a result of U.S. expenditure by the military. Getting into the current manifestation of the de-dollarization challenge that seems to be accelerating through the Ukraine and Russia crisis, I wonder what background we need to give the listeners just to tell them about how that system works.

Michael Hudson 1:10:39
One of the things that most people don’t understand is money, largely because of the academic discussion confusing matters. Until 1971, countries running a balance of payments deficit would have to settle it either in gold or by selling off their industry to investors in the payments-surplus countries. Well, beginning with the war in Korea in 1950-1951, the U.S. balance of payments moved into deficit. The entire U.S. balance of payments deficit from the Korean War to the 1970s was a result of its foreign military spending.

By the time the Vietnam war was ending, the Americans had to sell its gold every month. Vietnam had been a French colony, so the banks there were French. As America spent more dollars in Southeast Asia, these dollars were sent from local French bank branches to their head offices in Paris. The Paris bank would turn over these dollars to the central bank for francs, and the central bank, under General de Gaulle, would cash in these dollars for gold.

Germany was doing the same thing, using its export proceeds that were paid in dollars to buy gold. So America’s gold stock was steadily going down, until finally it had to withdraw from the London Gold pool and stop making the dollar gold convertible. Back in 1950 when the Korean War began, the American Treasury had 75% of the world’s monetary gold. It had used this monetary power to control diplomacy in other countries. The basis of America’s political power was its gold stock.

Once they left the gold-exchange standard there was hand wringing. How was the United States going to dominate the world if it didn’t have gold anymore, if the military spending abroad had made it run out of gold? My Super Imperialism pointed out that henceforth when foreign central banks got more dollars, what were they going to use them for? Well, there’s only one thing that central banks at that time did: That was to buy government securities. So the central banks of France, Germany and other payment-surplus countries had little option except to buy U.S. Treasury bills and bonds. Some of these were special non-marketable bonds that they couldn’t sell, but they were stores of value.

So the money that America was spending abroad was simply recycled to the United States. It didn’t mean that America had to devalue the dollar through running a balance-of-payments deficit, like today’s Global South countries do, or do as England had to do with its’ stop-go policies, always raising interest rates to borrow when its deficits threatened to force the pound sterling to depreciate.

Jonathan Brown 1:13:57
Michael, this insight was that was that when you were working at Chase Manhattan, and you were advising the State Department on what to do with the fact that they were having these balance of payments problem, because of military spending?

Michael Hudson 1:14:07
My job at Chase was to analyse basically the balance of payments of Third World countries and then of the oil industry. I had to develop an accounting format to find how much does the oil industry actually makes in the rest of the world. I had to calculate natural-resource rent, and how large it was. I did that from 1964 till October 1967. Then I had to quit to finish my dissertation to get the PhD. And then I developed the system of balance-of-payments analysis that actually was the way it had been calculated before GDP analysis.

I went to work for Arthur Andersen and spent a year calculating the whole U.S. balance of payments. That’s where I found that it was all military in character, and I began to write in popular magazines like Ramparts, warning that America’s foreign wars were forcing it to run out of gold. That was the price that America was paying for its military spending abroad.

I realised as soon as it went off gold in 1971 that America now had a cost-free means of military spending. Suppose you were to go to the grocery store and just pay in IOUs. You could just keep spending If you could convince the owner, the grocer to use the IOU to pay the farmers and the dairy people for their products. What if everybody else used these IOUs as money? You would continue to get your groceries for free.

That’s how the United States economy works under the dollar standard, at least until the present. This is what led China, Russia, Iran and other countries to say that they don’t want to keep giving America a free ride. These dollarized IOUs are being used to surround them of military bases, to overthrow them and to threaten to bomb them if we don’t do what American diplomats tell them to do.

That led already a few years ago to pressure to de-dollarize the world economy and make it multipolar, not simply an extension of the U.S. military, U.S. investors, mining and oil companies. The post-dollar aim was for other countries to keep their economic surplus among themselves to promote their own economic growth, instead of imposing IMF dictated austerity programmes to impose austerity so that they can pay foreign dollarized bondholders.

Just about everybody thought that it would take many years for China, Russia, Iran, India, Indonesia and other countries to get their act together and create an alternative. But this year the Biden administration itself destroyed America’s free ride for the dollar. First the United States grabbed Venezuela’s foreign exchange, then Biden grabbed all of the foreign exchange of Afghanistan, just confiscated it. And then a month ago he confiscated $300 billion of Russia’s foreign exchange reserves. He said, in effect, that we are the leading democracy in the world, and global democracy means that America’s military gets to appoint foreign presidents.

And so we don’t like the person you’ve voted in as president for Venezuela. We’re going to hire this little nitwit that we bought out, Juan Guaido, and appoint him president. To force you to accept this, we’re going to take away all of your gold reserves held in the Bank of England, and we’re going to give it to Mr. Guaido as our nominee for the bastion of democracy, to do what a democratic regime is supposed to do: hiring terrorist groups to kill all land reformers and labour leaders, to finance a neo-Nazi takeover like we did in Chile under Pinochet, and just like we’ve done in democratic Ukraine with our funding of neo-Nazis to fight against the Russians there.

This confiscation of foreign reserves and foreign money held in U.S. banks shocked the rest of the world. Nobody had believed that countries would actually grab other countries’ financial savings. If you go back to the wars in the 19th century, the Crimean War and others, countries would continue to pay their foreign debts.

All this was ended by President Biden rejecting the international rule of law. He said that “We have a ‘rules-based’ order, in which we can make up the rules. Number one, we are exempt from the rules. Only you have to follow them. Number two, the rules or whatever we say.” China, Russia and India would have taken years by themselves to denominate their trade in their own currencies. Biden’s money grab has impelled them to create a new economic order independently of the United States and Europe, whose euro and sterling are satellite currencies of the United States.

Jonathan Brown 1:19:54
So Michael, this is a crazy situation that we’ve got. Even If you have deposits in a bank, the deposits don’t really belong to you, but they used to be respected.

Michael Hudson 1:20:07
Well they belong to you, but they can be stolen.

Jonathan Brown 1:20:09
Yeah, but then they don’t belong to me, do they? They’re kind of mine, but not. Likewise, if I annoy the wrong person, I could have my car impounded, because I’ve just annoyed the local politician, which is essentially what’s happened to a Russian oligarch. Now, whether or not the oligarch deserved that $500 million yacht, obviously, they didn’t, but it was technically theirs. So what Americans are doing is showing that if you piss them off, they will take all your resources, which has happened in other countries, right? We’ve stolen it.

The British did that, right? We appropriated resources and stole resources from other nations. If you want the best example of that, you can just go into the very beautiful British Museum and see all the artefacts that we’ve appropriated, one of which was a Rosetta Stone, which I know you write about.

So we’ve got this situation now that the Americans have declared the most profound economic war on Russia, threatening China that we can do the same. China’s got trillions of U.S. dollars. And one of the things that I don’t quite understand, looking at your philosophy and Super Imperialism, was in demonstrating that the Americans can have a free lunch by getting people to buy U.S. Treasury bonds. How is it that the U.S. dollar has gone up against all currencies pretty much other than the rouble since declaring war in Ukraine?

Michael Hudson 1:21:43
Europe has committed economic suicide, United States offered its leaders a lot of money in their offshore accounts, and made sure that their kids got free education in the United States. But in return, they would have to represent the United States, not Germany, France or other countries. The Americans have been meddling in European politics for years. European politicians do not represent their own countries. They represent the American State Department and American diplomacy. And they were told to lock their countries into the U.S. economy.
For instance, European businesses had a hope that Americans really hated. The Europeans hoped that after 1991, now that communism was over, they could invest in Russia to make money. They could sell exports to Russia and make mutual gains from each other. But the Americans wanted to make all the money off Russia for themselves, mainly by using the kleptocrats they backed to sell the natural resources that they grabbed to U.S. investors. The Harvard Boys wanted to make sure that rent-yielding natural resources were given the kleptocrats – who could only make their money in hard currency by selling shares abroad in the assets they grabbed, keeping their payments in England or the United States.

So they’ve asked Europe not to buy Russian gas, but to spend seven times as much buying American liquefied natural gas, and spend $5 billion to build the ports to accept this gas – while going without gas for about three or four years…let their pipes freeze… stop making fertiliser… Don’t feed your land, we’ll take it on the chin for America. Your standard of living is going to have to drop by 20%, but it’s all for American democracy. And the European heads said that’s fine.

America said that you Europeans are bothering them by trying to stop global warming. That’s a direct attack on a major arm of U.S. diplomacy, the oil industry. American companies control almost all the world’s oil trade. It’s the highest rent-yielding sector in the world. And it’s income-tax free. It’s politically powerful, and as long as America can control the oil trade, it can talk to Latin American countries or African countries and say if they elect a leader that U.S. officials don’t like, it can impose sanctions and stop exporting oil to them to freeze them out. They won’t get fertilizer, so the U.S. can starve you out. It can put a sanction on their food trade. 

Agriculture is Americans biggest trade surplus.

Jonathan Brown 1:25:14
That’s what they’re doing with the conflict in Ukraine to Russia, and also China as well. Are there other major sources of grain, wheat and rice?

Michael Hudson 1:25:26
Yes. But President Biden has blamed Putin for creating a world food shortage and threatening to cause a famine, because Ukraine can’t export its grain. Ukraine, at American direction, has put mines all over the Black Sea. So the Black Sea’s ports have mines around them. If a ship hits them, it’ll blow a hole in the hull and will sink.
As a result, if you’re a shipping company and want to transport grain, you have to get insurance, because if you don’t have insurance, then you’re in danger of going bust if your ship goes under. But no insurance company will insure it until the Ukrainians remove the mines that they put. You need minesweepers for that. Needless to say, Russia doesn’t want American minesweepers in, because they may very well attack as there’s a war on.

So you have the United States blocking Ukrainian grain exports, which was a huge export. You’ve had the American dollar area, the NATO countries, refusing to import food from Russia, which is the world’s largest agricultural exporter. This is creating a crisis for Global South countries, for Latin America and Africa.

Meanwhile, global warming is causing droughts that are reducing the harvest. The Green Party in Germany has a pro-war policy that is making global warming rise faster. By supporting military warfare against Russia, and U.S. military adventurism in general, they are becoming major lobbyists for the air polluters. The largest air polluter is the American military. The Green Party in Germany advocates fighting Russia more, providing it with more arms, and thus supporting the military that is now the largest new contributor to global warming. In effect, this means that Europe is willing to say, ‘Okay, we are willing to have the sea levels rise another 10 feet, as long as we can help America dominate Russia’.

Europe even is letting America keep the Trump tariffs on its exports, in place, so it can’t export more for America. It looks like Europe will have to de-industrialize, maybe we’ll go back to the 19th century and become a country of farmers. That basically is the situation that its subservience is imposing.

Jonathan Brown 1:28:49
I’d like to come back to the just what China and Russia can do, given their reserves. They understand they’ve got… they’ve got lots of reserves of gold, and also large grain stores, China having the most as I understand it, but can you help me understand why all these nations around the world have U.S. dollar reserves in some form or other, most of it in bonds? Why is the dollar still increasing at this moment in time?

Michael Hudson 1:29:28
Because the Euro was going down. The Japanese Yen is going down. The Yen is the worst performing currency, because they’ve held their interest rates very low. Their aim is for banks to make money by borrowing low at low rates and lending to foreign countries at a higher rate. Europe is also keeping its interest rates low. The American Federal Reserve is raising the interest rate, and that is money from low interest rate countries. Capital from Europe and Japan is flowing to America.

Currency values are primarily set by relative interest rates and capital flows. They’re not set by the cost of production for imports and exports. They are not caused by trade, unless there’s a radical breakdown of trade. All these zigzags that you see are short-term capital movements. America tells other countries to keep their interest rates low, so that money will flow from their banks and financial to the United States to buy American securities that yield higher returns. As long as the Euro is a satellite currency to the dollar, it’s going to continue to go down. So the both the euro and the British Sterling are now moving towards $1 per pound and $1 per euro.

Jonathan Brown 1:28:49
That’s a short-term measure. The long-term measure is that countries have to start selling the bonds that they’ve got in U.S. currency. So long term, it has to come down. Is that right?

Michael Hudson 1:29:28
Yes. They’re going to hold each other’s currencies. Especially now that Russia is denominating its exports, in roubles instead of dollars. The American banks have lost the trade financing of the world oil trade, certainly Russian oil and agricultural trade. Instead of holding dollars, countries will hold rouble reserves to stabilise their currencies via the rouble, China is holding rouble reserves, and Russia is holding Chinese yuan reserves.

The balance will be held more in gold and some kind of assets without a liability attached to them. I think the logical direction in which this is moving is that the non-dollar countries will create their own version of the International Monetary Fund, their own World Bank, their own trade organization. So there will be one set of trade and financial and development organisations and military organisations in the U.S. and Europe, in NATO, that is, in the white countries, and another set of relations and the non-white countries that are actually developing while America and Europe shrink.

Jonathan Brown 1:33:06
So what’s your idea of how much gold China actually holds, because there’s the published numbers [which] are really extraordinarily small aren’t they for an economy that’s so big.

Michael Hudson 1:33:18
I don’t know. Governments can hold gold not only through their own treasury, but through some subordinate agency. I no longer go into the financial statistics like I used to, because it takes a whole year to do a balance sheet that is comprehensive. All I know is that they saw how America simply grabbed Russia’s dollar holdings, and they don’t want the same thing done to them. President Biden has said China is America’s number one long-term enemy, and he wants to destroy the Russian economy first and then attack China after prying them apart.

Obviously, China is reading the newspapers and wants to avoid that fate.

Jonathan Brown 1:34:16
The other thing that I find utterly remarkable, for example, is that Biden in his speech said that he wants to get rid of Putin. I think if it was a U.S. Defence Secretary or Secretary of State saying that he wants to arm Taiwan……. If I ran China and I said I want to arm Mexico, or if anyone in South America wants any weapons then my doors open to you, I would expect the Americans to be very upset with that because I’m breaching the Monroe Doctrine. Can you help me understand, having been in the corridors of power, whether Chase Manhattan or the contacts you’ve got, how can …. how can politicians be so delusional to think they can say stuff like that without having a negative consequence?

Michael Hudson 1:35:18
Well you know who’s really upset by that? The Taiwanese! They say, Oh, they want to make Taiwan into another Ukraine, to fight to the last Taiwanese, just like the Ukrainians have been used. They see two choices before them. If they do arm and get weapons that can hit China, then China is likely to bomb them. On the other hand, I’ve met Taiwanese officials for 40 years, and many have said that their long-term hope is to be reintegrated. They want to be investors in China, but they want to merger under terms where they can be sort of like Hong Kong, able to have a merger that will make them prosperous too.

So Taiwan’s choice is between following the Americans and becoming the Ukraine of the Pacific, or joining with China. Given the fact that China is growing and America is shrinking, what are they going to choose? Well, I would imagine that you will see a strong, peaceful integrationist movement with China. But China remembers that Chiang Kai Shek massacred the communists in 1927.

Jonathan Brown 1:36:47
So what are we looking at then, who is in charge, President Biden or other people?

Michael Hudson 1:36:56
President Biden is a front man. They’re all the front men for the faceless people in the State Department, the neocons who are controlling things. Biden has always been right-wing, just a corrupt party politician. He does what he’s paid to do. He’s unimaginative. He’s brought in some real Russia haters – people who have a visceral hatred of Russia because of their family background under the tsars or under Stalin. Blinken said that his family was Jewish and lost under the tsars, and maybe under Stalin. He wants to kill Russians because he’s so angry at what they did to his ancestors. That is the neocon mentality in a nutshell. It’s a crazy mentality.

The Federal Reserve and the Treasury officials say they were not consulted in the political moves that Biden and Blinken and the neocons are making. There is the kind of single-minded tunnel vision at work. They really are Russia haters and China haters. There is a lot of racism you’re seeing in New York, where it’s very dangerous for Asian women to take a subway. Almost every week, the lead news item is yet another Asian woman attacked or pushed in front of a subway. There’s a there’s a new race hatred in America. And they are treating Russians as the Ukrainians do, as if Slavic speaking people are a separate race.

Jonathan Brown 1:38:49
Extraordinary. So Super Imperialism came out, as I understand it, and was used by the State Department to figure out how to continue running their economics …

Michael Hudson 1:39:04
At first U.S. officials thought that going off gold was going to be a disaster. Herman Khan told me, “You’ve shown that we’ve run rings around the British Empire.” He hired me for the Hudson Institute, which is a national security institute, and brought me to the State Department for meetings and to Army War colleges and Air Force war colleges to talk about it. I guess I shouldn’t be surprised that the main people who wanted to learn how imperialism works were the imperialists themselves. I had thought that the anti-imperialists were going to be my main audience, but the imperialists really needed to know what was new.

Jonathan Brown 1:39:50
They took your book, Super Imperialism and they read it as a love letter, right.

Michael Hudson 1:39:56
Not a love letter. They saw it as a “how to do it” book. I was a technician.

Jonathan Brown 1:40:04
Right. And working for Herman Kahn, he’s a powerful guy that people don’t talk about so much anymore, but he was, he was extraordinarily influential at the time, right?

Michael Hudson 1:40:14
Yes, he had a great sense of humour. He was a great speaker. He was absolutely brilliant. He wrote a book on thermonuclear war, saying that even if there were to be a war, somebody would be left to survive. That made him one of the models for Dr. Strangelove in the movies. I would sit and hear Herman talk about military strategy, and was awed by how he thought it all through. He was a brilliant military tactician. He would bring me and sit down with generals, and they would explain things. I don’t have a good military sense, or any military training at all. He wrote that, personally, he wanted to be right under the first hydrogen bomb. He didn’t want to live in the post-nuclear world. But there would be some survivors somewhere. That made him notorious. He was so reviled for even having brought up discussion of the topic that needed to be discussed, that he wanted to have ideas that people liked. And that was the corporate environment study. That was what I was pretty much in charge of. I was the economist, he was the military. We had the same salary there.

We would go around the world disagreeing with each other. It would be like a show. He’d talk about the world being a cup half full. I talked about the cup being half-empty, as he put it. I talked about the debt overhead, and how debt was growing and would ultimately stifle the economy. He talked about how productivity would be sufficient to pay debt, although productivity doesn’t necessarily give you the money to pay the debt. Productivity does not grows exponentially, but tapers off. As debt grows, any rate of interest is a doubling time. And it doubles quicker than the economy can double.

Jonathan Brown 1:42:24
And this is really coming back to one of your initial questions from Terrence McCarthy, which was to focus on productivity, wasn’t it?

Michael Hudson 1:42:33
Yes. And the idea was focusing on productivity, you realise that it all comes down to labour ultimately. How do you make labour more productive? How do you make industry more productive? You get rid of what is unproductive – and the unproductive overhead is rent. So how much corporate spending is just plain overhead? How much is unnecessary for corporate industry to take place? That line of questioning brings you back into the classical economics.
Marx is really the last great classical economist who pushed it all to its logical end. His contribution was to explain that just as the landlord exploits by taking rent, the industrial capitalist exploits labour by charging more for the products of labour than it costs to hire labour to produce.

However, unlike the rentier, unlike the landlord, the capitalist uses this economic surplus value to expand production, to build yet more factories, to employ yet more labour. This is an expanding society, whereas the rent paid to landlords is a kind of exploitation that is pure overhead and shrinks industrial capitalism. That’s why Marx said that the political aim of industrial capitalism was to free society from the landlords, predatory bankers and monopolists. That’s why the Communist Manifesto‘s program begins with collecting rent for the public sector. You can tax the land as a transition to socialising it. That was the Communist Manifesto’s classical economics.

Jonathan Brown 1:44:26
You have these views, and yet you were still a valued member of the team at the Hudson Institute.

Michael Hudson 1:44:33
Yes, because I was explaining how the world worked. Herman and I disagreed so much, we were genuine friends. I liked him, and we couldn’t believe that the other would actually believe something so different. But we said okay, if the arguments that we’re having is the “big argument,” it’s going to determine where the economy is going. Either he’s right or I’m right.
This is like the debates between Henry George’s followers and the socialists in the early 1900s. It was going to be one world or another.

What is the key to analysing the economy? Is it to focus on rent and finance, or on technological potential? My point is that technological potential can be smothered by so much overhead paid to the rentier class via the FIRE sector – finance, insurance and real estate – that there’s no money left to invest, no income left for wage earners to spend on buying the goods and services that they produce.

Jonathan Brown 1:45:48
And yet the technology sector in my opinion is actually the new monopolist. Instead of having a competition, in that sense they’re the new landowners. So Google is a spectrum landowner. If I want to host these videos, then I’ve got to negotiate or accept the terms of the landowner YouTube. I’m posting them there, but I won’t be making any money on it. Because I’m one of the serfs on YouTube.

Michael Hudson 1:46:16
This is the problem that China is dealing with in its own way. What do you do when Jack Ma and other IT specialists end up as billionaires? Well, China did not have an anti-monopoly group. It let 100 flowers bloom and let billionaires develop, but would then have them transfer their money to the government in one way or another. They haven’t done this in the way that Western economies do, by an anti-monopoly tax, but by a political consensus way.

In countries like Russia, I’m trying to get them to formalise this into formally calculating the magnitude of economic trends. You want innovation to take place, you want people to make the fortune, but at a certain point they can’t somehow make so big a fortune that it ends up crashing the economy.

Jonathan Brown 1:47:37
But looking at your writing from the Byzantine times and the ancient Near East, is the importance of the leader of that particular economy or society to make sure that no one got so rich that they could overthrow the leader? Which is really what you’ve got with someone like Zuckerberg, the power that he was able to wield in the election, whether you agree with him or not, was extraordinary. And likewise, if you look at the fight that’s currently going on with Elon Musk and Twitter, is to recognise that actually we want, we want our people to own these resources that we pretend are private, but actually have tremendous social power.

Michael Hudson 1:48:24
Yes, they financialized politics in America, by the Supreme Court’s Citizens United ruling. Anyone can contribute as much as they want, if you’re a corporation. The rentier interests give to pro-rentier politicians to act as their puppets. The money goes for advertising airtime on television and the media to overwhelm all the people who normally would want to minimise the rentier class. So essentially, you’ve financialized politics in America much more than has occurred in Europe. But in Europe, it’s the right wingers who basically control the press, commercial television and media. So if the media are controlled by the right wing with their own agenda, they frame the economic issues from the vantage point of the rentier class instead of from the vantage point of how an economy actually develops and grows wealthier in a fair manner.

Jonathan Brown 1:49:48
I know we need to need to wrap up. Just thinking about the scenarios for Russia and China currently. Everybody who is part of the original white economies of Europe, realises that if they don’t side with America, they get overthrown. But also right now they have a short-term challenge that the Americans are going to let them starve because they’re stopping wheat exports coming through the European ports. But then you’ve also got Russia with resources, you’ve got China with grain resources.

So there is a potential that when people start to starve, and you look at the challenges in Sri Lanka, with politicians being murdered and people running out of food, there’s a chance for China to step in and say, we can send you grain exports. And by lucky coincidence, because of the all the lock downs that China’s got right now, a lot of the world’s boats and ships are currently waiting outside ports in China.

Michael Hudson 1:50:54
[Missing part here] Computer chips are part of the problem. And that’s probably going to make them friendlier with Taiwan. Taiwan has the computer chips.

Jonathan Brown 1:51:03
And by your assessment, because Taiwan do not want to be another Ukraine, American actions are likely to accelerate the reintegration.

Michael Hudson 1:51:12
There’s a bell shaped curve, I haven’t met with the Taiwanese in quite a few years so I don’t know, up to date what the dynamic is. But just by logic, you can see the international environment in which they’re operating. You wonder how they are going to calculate the plusses and minuses of the U.S. versus China? What economy do they want to attach themselves to so that they can get richer fastest?

Jonathan Brown 1:51:46
And also stay safe and not get involved in unnecessary wars. When you look at the tragedy in Ukraine, all these people dying when you’ve got such a strong opponent in Russia, how can you go to war with them for any period of time?

Michael Hudson 1:52:07
Well, that’s what the world is divided into. The U.S. and European society is built on war. It’s the only foreign policy they have, because they don’t have an economic power anymore. They’ve de-industrialised and the rest of the world that is trying to industrialise and trying to feed itself. China, Russia, India, the Global South are the anti-war part of the world. So the world is dividing into two parts: a rentier part supporting finance capitalism [that] is trying to impose it on other countries, to financialize China and Russia to make them put a Margaret Thatcher or Boris Yeltsin in charge of China. While they try to put their own candidates in charge, a la General Pinochet, the rest of the world is trying to defend itself against this terrorism.

So the Western world that calls itself democracy is the terrorist military world. The nations that it calls authoritarian are any authority strong enough to control and tax the financial interests – that is, any government strong enough to regulate finance and real estate. Such an economy is by definition authoritarian as opposed to a democracy, where Wall Street and the financial centres are the democratically elected central planners. So what’s at issue is who’s going to plan society: the financial sector, or the people as in China and other countries.

Jonathan Brown 1:53:41
I think that says it. From a Western lens it’s a different type of democracy.

Michael Hudson 1:53:48
Yes. But democracy really means an economy run to benefit the great bulk of the population, who happen to be wage earners? Or is it going to be for the 1%? Is the economy run for on behalf of the 99% and the 1%? Well, the 99% need a strong government to run it in their own interests and cope with the counter-revolutionary policies, the neo-feudal rentier policies of the 1%.

Jonathan Brown 1:54:22
Okay, so knowing China, then your take on its zero-COVID policy that the authorities are implementing in some parts of the country?

Michael Hudson 1:54:32
The more I read about long COVID here, the worse it seems. I’m 83 years old, so my wife and I have not gone to a restaurant since 2020. We haven’t even gone to our friends’ houses for dinner. We’re isolating ourselves. China has isolated itself at great cost, but it saved the population not only from having COVID itself, but from having long COVID. There are now a million Americans with long COVID. They also say that long COVID lowers your, your IQ by 10%.

It’s almost as dangerous is inheriting a trust fund when it comes to impairing your IQ. It’s debilitating.

My webmaster in Australia and his family have COVID. So I’m very sympathetic with what China’s doing, even though it means that I can’t go there, because I’d have to be isolated in a hotel room for two weeks just to give a few days’ meeting – and then be isolated again when I come back. So China is making a huge effort not to sicken its population with COVID. And now of course, since the Russians have began to publish all their findings of the US bio-warfare labs in Ukraine that were designed to spread a COVID like diseases by migrating birds and bats and manmade aircraft over Russia.

Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’? If the Americans are trying to engineer COVID to affect mainly Slavic population and their DNA signatures, could they have been doing the same thing against Asians? So all of this is suddenly opened up. The World Health Organisation has refused to divulge any of the USA biowarfare efforts, and the U.S. has stonewalled all efforts to find out about the bio-warfare. This is isolating America and Europe.

If American Europe is left with its current foreign policy, biowarfare and atomic bombs, NATO will be shunned by the civilised world. As Rosa Luxemburg said a century ago, the choice is between socialism or barbarism. NATO, Europe and America represent the new barbarism. The alternative is socialism. That is how the world seemed to be developing in Europe and America until World War I untracked everything. The rest of the world now has a chance to get back on track. I don’t know what’s going to happen in the West.

Jonathan Brown 1:57:47
Michael, as always, you always get more into your stuff than I expected. Are there any things that you’d like to say to our listeners, before we finish up,

Michael Hudson 1:57:56
I’ve probably said too much. And I hope you can edit out anything that’s embarrassing.

Jonathan Brown 1:58:01
I may get thrown off YouTube for publishing some of your comments. So you may have to go back and review a few of them. But as always, Michael, thanks so much your time what we’ll do is we’ll send a link to everybody for the website and also for the new book, as well which I think and those series of lectures when I was researching for this conversation were the single best economic lectures I’ve ever listened to – truly extraordinary levels of insight and real economics rather than theoretical or textbook stuff. So as always from ShepherdWalwyn, thanks so much for your time and for your contribution.

Michael Hudson 1:58:41
Well, if you transcribe it all in will be worth it. \

Jonathan Brown 1:58:45
That’s, that’s our promise 100%. So thanks very much.

Michael Hudson 2:00:05
Thanks a lot.

Joe Biden Adopts a Trump Approach to Iran

Lawrence Davidson is professor of history emeritus at West Chester University in Pennsylvania. He has been publishing his analyses of topics in U.S. domestic and foreign policy, international and humanitarian law and Israel/Zionist practices and policies since 2010.

An Analysis () by Lawrence Davidson

9 February 2021

Part I—Joe Biden, the Good Stuff

All right! Let’s hear it for Joe Biden! Our new president is leading us in the direction of domestic sanity, and there are even hints of progressive potential in his evolving agenda. Under his leadership, we might soon master the Covid-19 plague and dig ourselves out of our near-depression economic straits. This is terrific!

Some good news when it comes to foreign policy as well. You’ll remember that in Trump’s determination to “make “American great again” (MAGA), the former president decided that international organizations and cooperation were impediments to national greatness. Thus, he systematically withdrew from a number of alignments and also scorned international law. This approach appears to have been part of a MAGA scheme to subvert international order. Its nihilistic undertones were highlighted by the creepy leaders who seemed to warm Trump’s heart. He found men such as the Saudi Crown Prince, Mohammed bin Salman, along with a long list of dictators ranging from Rodrigo Duterte in Philippines to Abdel Fattah el-Sisi inEgypt, to be really congenial. There was also Trump’s warm admiration for the Russian leader Vladimir Putin. 

President Biden has saved us from this sort of delinquency. He is now operating under new and saner marching orders: “diplomacy is back” and multilateralism is in. The U.S. has recommitted to the international effort to slow down global warming and has rejoined the World Health Organization. Biden has ended all participation in the immoral Yemen civil war and, so it is reported, told the Russians to keep their invasive cyber-fingers to themselves. 

At this point you might have the urge to celebrate what appears to be a full 180-degree turn from Donald Trump’s demented worldview. But hold on, that is not quite the case. Sadly, but perhaps not surprisingly, it appears that a residual lawlessness can be found in at least one the Biden’s foreign policies. We can recognize it in the game he is playing with Iran. 

Part II—Scuttling the JCPOA

Recall that in 2015 then-President Obama invested a lot of political capital, not to mention putting forth a remarkable display of good sense, in helping to negotiate a multilateral agreement with Iran. This is known as the Joint Comprehensive Plan of Action (JCPOA), and it was multilateral because it included not just the U.S. and Iran but also the permanent members of the United Nations Security Council: the United States, the United Kingdom, Russia, France, and China as well as Germany (collectively referred to as the P5+1). Basically, the agreement stated that, under a regime of international monitoring, Iran would forgo any development of nuclear weapons and convert its nuclear facilities to peacetime pursuits. In exchange, the P5+1 would lift all nuclear-related economic sanctions, freeing up tens of billions of dollars in oil revenue and the release of frozen assets. It was a rare display of effective diplomacy and it worked—until Obama’s successor, Donald Trump, unilaterally scuttled the deal. 

Trump withdrew from the agreement in early May 2018. By January 2020 he had increased the number of Iran-related sanctions to over one thousand. In 2019, Trump was suggesting that if Iran wanted to enter into new negotiations with the U.S., he would consider lifting some of the sanctions. Iran refused to begin the negotiating process over again with Trump. On 15 January 2021, five days before leaving office, Trump added new sanctions. Why did he display such maliciousness? Besides a bizarre hatred for anything Obama had achieved, and the disdain for international cooperation which supposedly stood in the way of his MAGA fantasies, there are other factors. Trump is a truly amoral schemer (we might think of him as a modern-day lawless Borgia). And so he almost naturally fell in with amoral regimes with active domestic lobbies in the U.S. (such as Saudi Arabia and Israel), as well as a “pay to play” approach for the votes and donations of Americans who have a grudge against or fear of Iran. Here we can name not only the Zionists, but also the wealthy Iranians who took refuge in the U.S. after Iran’s 1979 revolution. Many of these are Iranian monarchists who want to see regime change in Iran through the return of a shah (king).

Under the circumstances, the Iranian government reaction has been understandable: they see themselves as the aggrieved party. They had negotiated the JCPOA in good faith. They had met the conditions of the agreement to the satisfaction of international monitors. The other side had failed to respond as promised. Not only had the U.S. broke the agreement without cause, but it had then blackmailed its European allies into breaking their commitments under the agreement. This was done by the Trump administration declaring that any party that broke Washington’s sanctions against Iran would themselves be sanctioned.

After a year or so, Iran, noting that it was the only party paying attention to the deal and that the sanctions still applied, began to slowly back away from the nuclear agreement’s provisions. However, it was not until January 2020 that the Iranians announced they would no longer limit their number of centrifuges and thus their capacity to enrich uranium. Even then it was not the obscene number of American sanctions or the gross failure of the Europeans to abide by their promises that finally “broke the camel’s back.” It was Trump’s ordering of the murder of Iranian General Qassem Soleimani in Baghdad on 3 January 2020—essentially an act of war, and certainly one in violation of international law.

Part III—Joe Biden, the Bad Stuff

Now Trump is gone and we have Joe Biden, who, by the way, has not done the right thing and affirmed that his administration would rejoin the Iran nuclear deal. Instead he declared that “I will offer Tehran a credible path back to diplomacy. If Iran returns to strict compliance with the nuclear deal, the United States would rejoin the agreement as a starting point for follow-on negotiations” (my emphasis). Later he said that the subsequent negotiations would involve the Islamic Republic’s “violations of human rights and Iran’s role in the regional conflicts.” On its face, this is not an invitation to return to a stabilizing status quo ante, or even a supposed “credible path back to diplomacy.” It is a take-it-or-leave-it demand. This position is remarkably similar to that of Trump posturing for new negotiations back in 2019. And since, as of 7 February 2021, Biden has refused to lift sanctions on Iran—has refused to cease driving that country into poverty—these are no longer Trump’s sanctions. Biden now owns this horror show. Here are some of Biden’s fatal steps.

It was about nine days into the new administration that Biden’s officials began to reference foreign policy and Iran. First appeared Jake Sullivan, Biden’s national security adviser, who told the U.S. Institute of Peace that “a critical early priority has to be to deal with what is an escalating nuclear crisis as they [Iran] move closer and closer to having enough fissile material for a weapon.” One wonders if Sullivan got his start in advertising, because his description is a purposeful mischaracterization of the situation. The descriptor “escalating nuclear crisis” is a woeful exaggeration. If there is any “crisis” at all, it is because Washington has failed to meet its commitments under the 2015 agreement. The Iranians have repeatedly made it clear that they have no interest in nuclear weapons. And, one can imagine the only thing that could change their mind is an existential outside threat. To date, the only ones that pose such threats are allies of the U.S.: Israel and Saudi Arabia.

Then stepped up Tony Blinken, Biden’s new secretary of state, to continue the new administration’s maneuvers. To wit, Blinken stated “Tehran must resume complying with the 2015 Iran nuclear deal before Washington would do so.” This sort of statement is a rather childish, you-go-first challenge. Blinken then explained that if Iran returns to the deal, Washington would seek to build what Blinken called a “longer and stronger agreement” that would deal with other “deeply problematic” issues. He did not name these, but Biden for his part has drawn attention to Iran’s development of ballistic missiles and its support for proxy forces in countries such as Iraq, Syria, Lebanon and Yemen.

It took the Iranians no time at all to recognize this gambit for what it is, an effort to enlarge restrictions on Iranian military capacity beyond the scope of the original 2015 agreement. Almost immediately, Iran’s foreign minister, Mohammad Javad Zarif, responded that the U.S. position was not practical and will not happen and then added in an op-ed in Foreign Affairs,“once a party leaves an agreement, then that party has no authority demanding others’ compliance to that agreement.”

The Iranians did come back with a more doable proposal to deal with the “who goes first” dilemma. Teheran proposed a timed, mutual U.S. and Iranian return to the original agreement. In an interview with CNN, the Iranian foreign minister said “both countries should synchronize their JCPOA-related moves under the supervision of the European Union”—in other words, achieve the goal with a step-by-step coordinated process. The Biden administration said no to Zarif’s offer, and sane minds, noting the rejection, could hear eerie Trump-like snickering in the surrounding ether. 

Part IV—Conclusion

We have already asked why Trump decided to act in such a malicious manner toward Iran. Now we can ask why Joe Biden has decided to mimic his predecessor and continue a callous, hard-line approach to that same country. As it turns out, the answer is not all that different. Biden is subject to the same lobby pressure from groups to which he has a demonstrated sympathy. Among these are some of the well known suspects mentioned above, but first and foremost are Israel and its Zionist supporters (a rundown of these can be found in a full-page ad in the 5 February 2021 New York Times). 

We can also add one other grouping to this list—various civil rights organizations who would use the moment to pressure Teheran to increase the level of civil liberties allowed in the country. However, as Behrooz Ghamari Tabriz, writing in  Counterpunch notes, “It is a hard sell for those who are genuinely concerned with the question of human rights to ask the American government to be the agent of that change. So long as our government supports the region’s most oppressive regimes, it is hard to imagine that it has any moral authority or political capital to spend on issues of human rights in Iran.”

It is hard to know what exactly is going on inside Joe Biden’s head on this issue. We can assume that it is nothing really analytical. His administration’s actions have, so far, run counter to the other precedents he is laying down in the areas of international cooperation and leadership. They also go against logic. One can imagine no better way to move the Iranians toward nuclear weapons capability than the policies now being pursued. Until Biden acts, in terms of Iran, in the interests of achievable nuclear restraint and stability, that is in the real interests of the country he leads, rather than this or that interest group, he will carry around the residual chains of Donald Trump’s miserable legacy. 

Days of the Future Passed: A Syncretic Look at the Problems of Empire – Book Excerpt

December 10, 2020

‘Days of the Future Passed’ by Jim Miles. (Photo: Book Cover)

By Jim Miles

(Days of the Future Passed – Point of No Return, Jim Miles. Kindle Edition. 2020)

By Introduction

The United States has throughout its existence demonstrated all the features of ‘empire’, from the original settlers using the Papal Doctrine of Discovery (1542)  through to the current propaganda of the global war and terror, now changing to defense doctrines against Russia and China.  My new work, “Days of the Future Passed – Point of No Return” presents the broad outlines of what this represents to the international scene from inception through to today’s ongoing empirical adventures.

The two main constants have been economic influence and military influence.  The two are highly integrated and always have been even from before Independence, through the conquest of much of North America, where sometimes the soldiers led the way, and sometimes the settlers led the way, but neither being far apart from the other.  Today the economy of the US empire is highly dependent on the military mindset of the US supporting its economic adventures overseas, the bottom line being support for the global reserve currency, the fiat ‘petrodollar.’

Three other ideas enter into this picture.  An additional military factor is the threat of nuclear war, an event only a hair trigger action away from ultimately ending all of our problems.  The current increase in propaganda rhetoric against Russia and China makes a nuclear scenario unfortunately all too realistic.  Added to this, climate change is affecting our chances at long term safety and overall survival, much of it caused by our consumer oriented economy based on fossil fuels – control of the latter being of paramount importance for the US dollar and thus the US military.  Add to all that the current Covid-19 pandemic, and the empire appears to be slowly losing its grip on its desired hegemony, but not without threatening much of the rest of the world.

“Days of the Future Passed – Point of No Return” argues that we have passed some tipping points for which there will be no return to normal, within economics, the environment, and the military industrial complex.  Ideas for solutions are easy, their implementation is not as the inertia of empire is not easily restrained or controlled.

Excerpt

2020 – Tipping Points

It may not be evident yet, but in another ten or twenty years, the year 2020 may also be looked on as a pivotal year in global interactions – geopolitical, environmental, and financial – all of which are highly interrelated.

Imagine the lowly teeter-totter, a playground piece not as common as it used to be.  The teeter-totter is aptly named as many a child, and many an adult has stood above the bar that makes the plank teeter and totter, trying to maintain balance but also testing how far they can go before touching down on one side or the other.   Now imagine that teeter-totter is poised on the edge of a cliff, where one side can touch down and avoid the unknown drop, and the other side obviously is the drop from which there is no recovery to equilibrium.

It is a simple metaphor, but it illustrates for several sectors of our lives, we have allowed ourselves to drop into the unknown.

The unknown is simply the future.  This future is to be determined by a declining global economy becoming saturated with massive US money printing to prop up the banksters and corporate CEOs.  It will be determined by the disregard domestically and in foreign affairs for the supposed ‘rule of law’ but more importantly international law and true justice for all people. The changes to our environment are at the moment relatively slow but are becoming irreversible under current trends.   Finally, the massive military investments on a global scale for both nuclear and conventional weaponry threatens everyone with a very delicate balance of power.

….Under the Trump presidency, combined with the economic impact of the virus and actions to contain it (for better or worse, not a point of discussion here), the US has assuredly reached a point where its huge national debt can never be repaid.   Combine this with the main source of income and wealth in the US no longer being production, but financialized services simply creating money at the stroke of a keyboard and the economy is surviving precariously on the whim of people servicing the US$.

Put simply, the US survives on the Federal Reserve Bank (a consortium of private banks) pumping money into the economy.   With much of the economy based on debt, and interest rates kept necessarily low in order to service the debt, the strength of the US$  as a global reserve currency – the petrodollar – is jeopardized.

….This year there have been several accounts of how the climate/environment is showing signs of tipping into conditions where there can be no reversals to ‘normal’ without serious changes to our atmospheric inputs:  Greenland’s ice sheet melts more than it accumulates in snowfall each year by a significant amount; the Amazon has reached the status where it can no longer regenerate itself after a series of droughts; the forest fires in Siberia, Australia, and California demonstrate the overall pattern of global warming; each succeeding month has set record new global highs.

….The main feature here is that the combination of China and Russia have created a multi-polar world whether the US is willing to admit it or not.  Russian resources, defensive military achievements, and a renewed domestic scene under the direction of the much-vilified Vladimir Putin have combined with China’s increasing defensive measures in the Western Pacific, its Belt and Road initiative throughout Asia and extending elsewhere, and the economic power that China has achieved as the largest economy in the world (on purchasing power and domestic market basis).

Above all, both China and Russia have stated they no longer support the hegemony of the US$ as the global reserve currency.  They cannot replace it themselves, but they can operate outside of it, and they can support alternate global systems such as a ‘basket’ of reserve currencies, and their own digital exchange systems.   That is what truly scares the US as it sees its own debt problems trap it into hyperinflation while other countries start to shift away from supporting the US$.   That could mean war, hybrid for sure, but it could also go kinetic.

– Jim Miles is a Canadian educator and analyst who examines the world through a syncretic lens.  His analysis of international and domestic geopolitical ideas and actions incorporates a lifetime of interest in current events, a desire to preserve and conserve our natural environment and stop the commodification of the environment.  He has been active as a critical writer in opposition to the US empire and its militarization of most aspects of domestic and international affairs. Miles’ work has been published globally and has appeared on a variety of websites including Palestine Chronicle, Axis of Logic, Countercurrents, and Global Research.  He has appeared on RT News and The Tyee concerning events in Palestine/Israel.  This is his first book and effectively summarizes many years, indeed a lifetime, of interest in international geopolitical and environmental affairs. He contributed this article to the Palestine Chronicle. 

Apocalypse Now!

SEPTEMBER 06, 2020 BY GILAD ATZMON

By Gilad Atzmon*

“Blessed is the one who always trembles before God, but whoever hardens their heart falls into trouble.” (Proverbs 28:14)

‘Blessed is the one who always trembles before Covid19, but whoever fails to put a facemask falls into trouble.’ (CDC 2020)

For two decades, we, the people who happen to dwell on this planet, have been subjected to repeated apocalyptic hysteria. Following 9/11 we were taken into a world war against Islam as the ‘Islamists,’ we were told by our Neocon masters, were ‘intending to eradicate our civilization.’ Shortly after, the economic bubble collapsed. We were prepared for global poverty. Even as we recovered from the economic turmoil, global warming was threatening to grill us alive or maybe flush us into the ocean. In between all of those catastrophic scenarios, Isis was also a global existential threat and then came Covid-19.

Being repeatedly globally, universally and collectively terrified of an ‘imminent apocalyptic catastrophe’ is a new phenomenon. It is inherently tied to the rise of the global economy, global markets and global corporations. It may imply that we are already subject to the rule of an elusive global power whose characteristics and mode of operation are yet to be unveiled let alone discussed. It may even be that the true nature of that global power is mysterious even to itself. But the practical meaning of such a ‘new order’ and its impact on the world is there for all to see.

In theory, at least, the fear of a ‘global pogrom’ or ‘universal holocaust’ is supposed to unite us. It is designed to show us that we don’t stand a chance to fight or win alone, as individuals, as tribes, as classes, as a nation or as a continent. If we want to survive both individually as well as a human race, we are told we must act at once and as one people and obey a certain set of rules.

In the late 19th and the early 20th centuries Marxism also promised to unite us globally, make us a fist of resistance in the name of worldwide proletarian revolution. At present, it is actually the post-Marxists who break us into biologically driven identitarian fragments, and it is global capitalism and some odd tycoons who unite us by means of global fear. The threat of global apocalypse is there to undermine: the national state, local markets, local manufacturing, the old elites, the old traditions and any other recognized hegemonic setting. From a globalist perspective, it is hard not to see a certain continuum between the Marxist global prophecy and the current globalist apocalyptic ‘reality.’

In practice, things often work differently. As powerful and convincing as our apocalyptic clerics happen to be, often the reality on the ground contradicts the global prophecy. Some states were not convinced by the Neocon fantasy and refused to join the ‘war against Islam’ failing to see Islam or Muslims as a global threat. US president Trump learned recently that his plan to defeat Iran by means of sanctions on behalf of Zion may not be an easy task. Similarly, a few world leaders aren’t convinced that the planet is getting warmer (peculiarly enough, the name Trump comes to mind again). And when the current Corona pandemic started, we noticed what was the opposite of global unity. Instead, we saw borders closing down and nationalist lines resurfacing. In March, Italy was left alone to face its crisis and the EU returned to a collection of states. In the USA we see similar fragmentation among the states. Corona has become a political battle zone. It emphasizes difference, it acts to separate rather than unites us.

However new to us is the attempt to keep us under the threat of a constant ‘universal holocaust,’ such a threat isn’t new to everybody.

In my first non-fiction book, The Wandering Who, I defined a peculiar but common, mental condition. I argued that while most people are familiar with the notion of Post Traumatic Stress Disorder (Post TSD) – a stressful condition caused by a real or imaginary past event, it seemed to me that many self identified Jews often manifest symptoms of stress which I defined as Pre Traumatic Stress Disorder (Pre TSD). In the case of Pre TSD a human subject is tormented by the phantasy of an imaginary catastrophic event in the future. This destructive fantasy evolves into trauma that may manifest in emotionally driven irrational conduct. Pre TSD often operates as a ‘self-fulfilling prophecy’- the condition in which ‘prediction’ becomes reality simply because the person who believes it adopts certain behavioral patterns that result in the fulfilment of his belief.

In ‘The Wandering Who’ I argued that many disasters in Jewish history were the direct outcome of Pre TSD. It is for instance, easy to point out that the ‘fear of anti-Semitism’ and the suppressive actions that are pushed by Jewish institutions often lead to a sharp rise in antagonism towards different aspects of Jewish politics, culture, ideology and history. Similarly, the Jewish State’s phantasmic fear of Iran’s nuclear armament that is followed by endless Israeli attacks on Iranian interests in the region deliver a clear message to Iran and every other nation in the region that a failure to possess a substantial arsenal of WMD as a means of the deterrence is, all but a suicidal act. In reality, Iran’s advanced missile technology (both precision and ballistic) is a direct outcome of Israeli Pre TSD. It is the Israeli Pre TSD that made Iran into a regional superpower that endangers Israel (i.e. self-fulfilling prophecy’).

But Israel is not alone. By the time we landed on Covid 19, Pre TSD was no longer a ‘Jewish symptom.’ Pre TSD had become a universal global condition.

Religion of Fear

Fear and fearfulness of one’s deity, is at the heart Judaic existence. ‘Fearful Jew’ (Yehudi Hared, חרד יהודי) is how the Hebrew language refers to an orthodox Jew. Anxiety is at the root of the Judaic thought. The Hebraic expression attributed to a pious Jew is ‘heaven dreading man’ (Ish Yare Shamayim, מייםש ירא איש ). The idea that a good Jew is a trembled Jew is expressed in its clearest form in Proverbs 28:14 “Blessed is the one who always trembles before God.” Rashi (Rabbi Shlomo Yitzchaki 1040 – 1105), acclaimed for his ability to present the basic meaning of Biblical text in a concise and lucid fashion summarizes the proverb as follows: “Always (be) afraid – worry about punishment , thus moving away from transgression.”

Why do the Jews dread their God? Is it because the God of the Old Testament can easily outdo Quentin Tarantino’s most barbaric scenes? Is it because they know that the God of the Ten Plagues of Egypt wouldn’t stand a chance in The Hague? Is it because they know that their deity character is a jealous God (“For thou shalt worship no other god: for the Lord, whose name is Jealous, is a jealous God”: Exodus 34:14)? Agnostic critics of Judaic thought may even push it further and wonder why the Jews bothered to invent such a jealous God. But it can hardly be denied that the Jews and their not so merciful deity have managed to survive for three millennia while other sophisticated and superior civilizations have, one after another, disappeared into oblivion. Surely, in terms of its survival strategy, Judaism as a precept has managed to prevail and sustain itself against all odds.

The Athens vs. Jerusalem dialectical battle serves to untangle the meaning of the current apocalyptic era and throw light on the above. In Western cultural ethos, Athens stands for the city of philosophy, the birthplace of science, the poetic and tragedy. Jerusalem is the city of revelation. The birthplace of legalism (Halacha, Mitzvoth) and strict obedience. Athens teaches you how to think for yourself. Jerusalem tells us what to say and what never to think about. Before I continue I would like to reiterate that the philosophical context in which I discuss Jerusalem and Athens does not point at a split between ‘Jews and gentiles’ as Christianity and Islam are also suffused with legalistic Jerusalemite elements. Jerusalem vs. Athens is a dialectic battle between two forms of cognition that historically often do not agree with each other. We are at the midst of such a dramatic point in history.

Like the orthodox Jew who is in constant dread of his own God, the rest of us are expected to be mobilized by different narratives of colossal universal catastrophes, be it ‘Islamism,’ global warming or Covid19. Our status in society, as in the proverb (verse 28:14) is defined by the amount of fearfulness we are willing to manifest. The facemask has become our universal ‘skullcap.’ It is a symbolic identifier of our adherence to the current politics of ‘Corona menace.’ The orthodox Germophobes cover their bodies with the latest chemical warfare gear, they wash their hands with the most advanced alcogel every two minutes, they may reach libidinal climax by the act of mitigation. Ordinary believers are slightly more relaxed. They cover their faces with light paper masks. The Atheists, the Athenians, the Agnostics and the Pagans also wear facemasks, as they are ordered to do by law, but often stick their noses out either as an act of protest or just to enjoy the rare sensation of fresh air.

We observe that those who express any doubts about the official 9/11 narrative, global warming hysteria or Covid 19 are quickly labelled by the media as ‘rightwing,’ ‘Nazis,’ Conspiracy Theorists and antisemites. And we should know why: those who question the current apocalyptic religions interfere with our ‘new monotheistic Jerusalemite order’ — they think for themselves. They are Athenian or even ‘worse,’ a bunch of Pagans.

Torah and Mitzvoth

It is a crucial question, how is Jerusalem sustained throughout history as the existence of conditions of constant fear contradict the pleasure principle*? Why would the followers of Judaism agree to follow such an abusive religion? Is it possible that followers actually enjoy being scared of their chosen not-so-merciful deity character? I believe that the most insightful answers to this were given by the genius Israeli scholar and professor, Yeshayahu Leibowitz RIP..

Leibowitz was a rare polymath. He was a scientist as well as a philosopher and he was also a pious orthodox Jew who inspired generations of Jewish and Israeli thinkers and intellectuals in general.

For Leibowitz, as for Maimonides, central to Jewish monotheism is the acceptance of the radical transcendence of God. The Jewish God is defined by its incomprehensible and inaccessible nature. Adopting a Kantian manner of thought, Leibowitz accepts that the Jewish God transcends beyond the spatio-temporal and therefore cannot be realised in terms of human experience as the human cognition of reality is bound by categories of space and time.

If God is a radical transcendental entity inherently foreign to human experience what is left to the Jew? What do the Jews believe in? Leibowitz’ answer is fascinating yet simple: throughout history, at least until the emancipation of European Jewry, Judaism was defined through strict adherence to Jewish mitzvoth, commandments of the Torah itself. For Leibowitz, Judaism is the story of the development of mitzvoth, the all encompassing system of Jewish law. Judaism is basically a legal apparatus.

One may wonder then at what is the meaning of Judaic belief. Leibowitz answer: It is the halakhic (legalistic) observance that constitutes the faith and this faith cannot be identified independently of its practice. Stated another way, Judaism is a form of strict observance and it is those rituals that constitute the faith.

For Leibowitz, to be a Jew was to accept the “burden of Torah and Mitzvoth.” To be a Jew, is to surrender, to do first and ask later, to obey blindly. To be a Jew is not to ‘believe in God’ voluntarily but to accept Maimonides’ prescription that belief in God is actually the ‘first commandment,’ out of 613 Mitzvoth (Maimonides commandment #:1 The first mitzvah is to believe in the Divinity: to believe that there is a cause and a reason, which is the Maker of all creations. As The Exalted One has said: “I am the G-d, your G-d”)

As such, Judaism is fundamentally different from both Isalm and Christianity. While in Christianity and Islam the belief in God is a voluntary act, in Judaism the ‘belief’ itself is a matter of a decree. It is an act of ‘observance,’ a practice, an affirmation by means of total subservience.

Leibowitz further observed that “Emancipation from the bondage of nature can only be brought about by the religion of Mitzvoth.” This shocking observation of the Judaic code may explain why Orthodox Judaism didn’t participate or contribute to the development of science, philosophy or Western thought. Jews were happy to be ‘emancipated from nature’ as Leibowitz describes it, immersing themselves in Torah and Mitzvoth. They left science, math, medicine, philosophy and the arts to the ‘goyim.’ It was only at the time Jewish emancipation in Europe that assimilated Jews started to familiarise themselves with Western thinking and soon after involved themselves in these fields.

Leibowitz has told us all we need to know about Covid 19 and the other apocalyptic Jerusalemite faiths that have too often imposed themselves on us. Questioning global warming, doubting 911, refusing to see Islam as a global menace and doubting, literally, anything they tell us about Covid19 will get you labeled as ‘rightwing,’ ‘Neonazi’ and an ‘anti-Semite’ because these discourses are structurally set as Jerusalemite apparatuses. As in Leibowitz’s reading of Judaism’s ethos, ‘Emancipation from the bondage of Covid 19 can only be brought about by the religion of Lockdown and Mitigation.’ We are dealing with a perception that is sustained by strict observance as opposed to a search for logos. It demands the performance of blind ‘beliefs’ that are sustained by practice and are defined by defiance of reason and curiosity. In these new global Jerusalemite apocalyptic religions, thought police algorithms set by media companies replace the traditional orthodox rabbinical vetting of that which we are allowed to say and that which we are not even entitled to think for ourselves.

Skullcap vs. Facemask

Jewish men are required to cover their heads. The Talmud states, “cover your head in order that the fear of heaven may be upon you.” A head covering acts as a symbolic identifier that displays its wearer’s subscription to belief in the Jewish God. This is how the Jewish male admits the concept of “honouring (the Jewish) God.”

The theological rationale behind the Jewish skullcap is flimsy. If God knows ‘what’ is in your heart’ as the Torah keeps repeating, there is no reason to try to deceive the Almighty by hiding your true thoughts under a skullcap. Some Rabbis in Jewish history have admitted that there is indeed a slight theological problem entangled with the skullcap as it makes the Jewish male a master over the Jewish God as the Jewish male can apparently fool God simply by covering his head.

Indeed, more than just one Rabbi contributed to the shift in the meaning of the Jewish skullcap. They decided that the skullcap is there to distinguish between Jews and the rest of humanity. The Sephardic Chief Rabbi of Israel, Ovadia Yosef, ruled at one stage that skullcaps should be worn to show affiliation with the religiously observant community. The skullcap as such, has little to do with God, it acts as a Jewish symbolic identifier; it differentiates the Jew from the Goy. It operates as a facemask within the Covid 19 religion. While scientists may agree or disagree how useful the facemask is in preventing the spread of Covid 19, the wearing of the mask confirms that you adhere to the Covid19 belief whether you agree with it or not. The wearing of the facemask makes clear that ‘blessed you are trembled before Corona.’

A few final observations are crucial in light of the above. And I am sure these observations won’t make me popular.

Since Islam and Christianity are peppered with Jerusalemite patterns of legalistic structures, it is unlikely that Islam or Christianity have the powers to emancipate us from the current tsunami of crude apocalyptic religions. This task may be left to Pagans, Agnostics and Athenians, people who extend beyond banal binaries and instead bond with the human spirit and the search for the meaning of Being. This may explain the popularity of dissenting voices like Alexander Dugin, David Icke and outlets like Unz Review and London Real that, although subject to the most restrictive authoritarian measures, only become more popular. It is because they resemble the Hebrew prophets, Jesus and Spinoza. It is true that questions to do with Being in the World are not popular in Jerusalem but history remembers Jesus, Spinoza and Heidegger, it pays zero attention to the Jerusalemites and rabbis who tried to silence them.

This also explains why Rabbinical Jews do not take Covid19 very seriously. Jews have been trembling in front of their God for 3000 years. It has worked just fine, there is no reason for them to jump into new apocalyptic regimes that clumsily attempt to clone their own. Let Covid19 run for a few millennia, let Dr. Fauci and Bill Gates assemble their Corona like ‘Torah and Mitzvoth’ before Orthodox Jews consider it as a serious candidate in their deity contest.

* Pleasure Principle – In Freudian psychoanalysis refers to the instinctive seeking of pleasure and avoidance of pain to satisfy biological and psychological needs.

*Published originally on: www.unz.com

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Visions of a Post-Covid-19 World

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by JOHN DAVIS

Photograph Source: Isengardt – CC BY 2.0

While most of us sit at home, the planet continues to warm – polar ice melts, oceans acidify, glaciers disappear, and seas rise. Plants, animals, and humans continue to be displaced from their accustomed habitats. Life in our climatological greenhouse goes on, but now, one of a trillion microbial species has our attention.

Zoonotic infections, exacerbated by urban development pushing ever further into the remaining wildlands of the world, where fauna and humanity newly comingle, are symptomatically allied to global warming. The Covid-19 pandemic is a late manifestation of ‘The Great Acceleration’, the era of unprecedented human expansion that was initiated post-WWII and has continued into this century – fueled by new technologies and a vastly expanded utilization of fossil energy. Infections are now rapidly disseminated – as the spawn of globalization – on airliners burning kerosene, and cruise ships and freighters burning diesel fuel, across global trade and tourism routes.

Accustomed to fire, flood, drought, extreme temperatures, crop failures, desertification, and the increased incidence of hurricanes and storm surges, either through direct experience or, more often, through the media, the link between the burning of fossil fuels and global warming has effectively infiltrated human consciousness – even as it continues to be fiercely denied by some. This consciousness must now expand to include these connections between fossil fuels and viral pandemics.

Since the mid-1970s, with the advent of computerized climate models, it has been scientifically irrefutable that increased CO2 levels are warming the world in life-threatening ways.  For that almost fifty-year span, we, as individuals, communities, nations and international organizations have sat on our collective hands. Action, in the form of remediation, has been characterized by its absence – the void only breached by broken promises, betrayals, futile bureaucratic machinations, and outright denials of the foundational premise for its necessity.

This spring, a plot twist unfolded in this dispiriting and stultifying saga. While we, perforce, sit at home, inured to many decades of sleep-walking towards the climate apocalypse, the skies cleared, the price of oil dropped to negative $40 a barrel (rebounding to just short of positive $20 at the time of writing) and a global reduction in carbon emissions of nearly 8% is forecast for the year. We are living the dream of effectively confronting our egregious consumption of fossil fuels. From a global warming perspective, our social isolation has been highly efficacious – the pernicious, growth-driven habits of exploitation, extraction and habitat destruction have been put on hold. A window has opened to a less polluted, less traveled, less rapidly warming, and healthier world, albeit one in which the enduring human susceptibility to viral disease has again been exposed.

While the global pandemic has put everyone at risk, the most vulnerable are the elderly, the ill, the obese, the economically distressed, the inadequately housed and the homeless, minorities, the institutionalized and all those who occupy lands governed by the inept and the venal. Across the globe, the frontline communities which suffer the ‘first and worst’ impacts of global warming are similarly devastated by Covid-19.  Yet, at a biological level, the SARS-CoV-2 virus practices rigorous non-discriminatory levels of infection.  Wealth and circumstance can only confer certain levels of protection, to which the daily obituaries attest – none of us is safe. Despite those many exposed to extreme levels of risk by the inequities of their lives, our common humanity is emphasized by our shared vulnerability to this mutated bat virus.

To recapitulate: societal response to the pandemic has slowed the frantic pace of economic activity, largely driven by the one-time energy bonus of unearthed fossil biomass, first realized in the mid nineteenth century but risen to an unprecedented frenzy since the 1950’s. This respite has moderated the climatological blow-back of a carbon-laden atmosphere. The wealth generated by fossil capital has been distributed with extreme prejudice. It has accrued to the rich (made wealthy in former times by land, inheritance, and, in the U.S. and its trading partners, by slavery) and has exacerbated those gross inequalities of power, resources and well-being originally institutionalized in feudal societies and then spread around the world through the process of colonization and conquest.

The subtext of global warming is thus exposed as the ever-widening gulf between the world’s obscenely rich and its metastasizing poor. The recent microbial intervention is revealed as a potential inflexion point in both global warming and wealth disparity.  Still wrapped in the cocoon of social isolation and stunned by the sudden freeze of economic activity, we can now ponder the form society will assume upon its emergence from these unprecedented changes of state. Jason Moore in, Capitalism in the Web of Life, 2015, writes, “Civilizations do not form through Big Bang events. They emerge from cascading transformations and bifurcation of human activity…” He suggests that capitalism “…emerged from the chaos that followed the epochal crisis of feudal civilization after the Black Death, (1347-1353).” What will emerge from the Covid-19 pandemic?

Broadly, there appear to be two competing visions. One favors a return to the status quo ante, a restoration of the old evils for the continued benefit of a tiny minority confident in their ability to ride out the coming climate cataclysm and escape the coming plagues. The other sees the potential for ‘cascading transformations’ that might lead to greater equality, opportunity and increased well-being for the majority in a world that eschews fossil fuels, moderates the escalating impacts of global warming and pulls back from rapacious habitat destruction and its concomitant exposure to novel zoonotic diseases. Recent history suggests the former vision, with little or no consideration of the latter, will prevail. The moment of clarity, expressed in climate and consciousness, will pass and progressives will resume their regular, but now carefully washed, handwringing.

The bank bailouts of 2008, after the financial crash initiated by the mortgage derivatives melt-down, will likely provide the template for the U.S. and other first-world countries re-starting their economies. Old fossil-fuel dependent heavy industries will be revived, airlines resurrected, factory-farming jump-started, the auto industry saved from bankruptcy, the oil industry revivified, and a new era of deregulation birthed – all justified by the economic crisis.

George Monbiot in his weekly Environment column for the U.K. Guardian suggests,

“This is our second chance to do things differently. It could be our last. The first in 2008, was spectacularly squandered. Vast amounts of public money were spent reassembling the filthy old economy, while ensuring that wealth remained in the hands of the rich. Today, many governments seem determined to repeat the catastrophic mistake.”

In the U.S. we can be sure that Trump will promote the feeding of the zombie economy with massive quantities of public monies and celebrate its every flicker of life as it slowly lumbers back to its accustomed habits of growth, pollution and the advertising propaganda that fuels our  search for identity and social meaning through consumption. The Club of Rome, the distinguished international think-tank that published its seminal report, The Limits to Growth, in 1972, suggests an alternative,

“Covid-19 has shown us that overnight transformational change is possible. A different world, a different economy is suddenly dawning. This is an unprecedented opportunity to move away from unmitigated growth at all costs and the old fossil fuel economy, and deliver a lasting balance between people, prosperity and our planetary boundaries.”

In the Netherlands, more than seventy academics have co-signed, Five Proposals for a Post-Covid-19 Development Model.  Leiden University’s web site, where this document originated, has, for the moment gone off-line, perhaps hacked or over-loaded. Its first proposal call for a move away from development focused on aggregate GDP, suggesting that degrowth should be applied to extractive industries and advertising, while growth is encouraged in the health, education and clean energy sectors. Its second recommends a universal basic income funded from progressive taxation, along with job-sharing and a reduced work week. Its third proposes a regenerative transformation of agriculture, local food production and fair wages for farm workers. Its fourth focuses on the need to reduce travel and heedless consumption, and its fifth suggests debt forgiveness for students, workers, small business owners and impoverished nations in the Global South.

This standard wish-list of a progressive agenda would indeed fulfill the Club of Rome’s call for ‘a lasting balance between people, prosperity and our planetary boundaries.’ Endless growth can only end in tears, yet our leaders are addicted to an expansionary economic model that continues to be fossil-fuel dependent. The extraordinary circumstances of a global stand-down as SARS-CoV-2 careens across the planet, has given us, amidst the appalling realities of viral sickness and death, a momentary vision of a saner, healthier, and a cooler world.

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John Davis is an architect living in southern California. Read more of his writing at urbanwildland.org