My purpose today is to make just two main points: (1) To show why Nazi Germany was a socialist state, not a capitalist one. And (2) to show why socialism, understood as an economic system based on government ownership of the means of production, positively requires a totalitarian dictatorship.
The identification of Nazi Germany as a socialist state was one of the many great contributions of Ludwig von Mises.
When one remembers that the word “Nazi” was an abbreviation for “der Nationalsozialistische Deutsche Arbeiters Partei — in English translation: the National Socialist German Workers’ Party — Mises’s identification might not appear all that noteworthy. For what should one expect the economic system of a country ruled by a party with “socialist” in its name to be but socialism?
Nevertheless, apart from Mises and his readers, practically no one thinks of Nazi Germany as a socialist state. It is far more common to believe that it represented a form of capitalism, which is what the Communists and all other Marxists have claimed.
The basis of the claim that Nazi Germany was capitalist was the fact that most industries in Nazi Germany appeared to be left in private hands.
What Mises identified was that private ownership of the means of production existed in name only under the Nazis and that the actual substance of ownership of the means of production resided in the German government. For it was the German government and not the nominal private owners that exercised all of the substantive powers of ownership: it, not the nominal private owners, decided what was to be produced, in what quantity, by what methods, and to whom it was to be distributed, as well as what prices would be charged and what wages would be paid, and what dividends or other income the nominal private owners would be permitted to receive. The position of the alleged private owners, Mises showed, was reduced essentially to that of government pensioners.
De facto government ownership of the means of production, as Mises termed it, was logically implied by such fundamental collectivist principles embraced by the Nazis as that the common good comes before the private good and the individual exists as a means to the ends of the State. If the individual is a means to the ends of the State, so too, of course, is his property. Just as he is owned by the State, his property is also owned by the State.
But what specifically established de facto socialism in Nazi Germany was the introduction of price and wage controls in 1936. These were imposed in response to the inflation of the money supply carried out by the regime from the time of its coming to power in early 1933. The Nazi regime inflated the money supply as the means of financing the vast increase in government spending required by its programs of public works, subsidies, and rearmament. The price and wage controls were imposed in response to the rise in prices that began to result from the inflation.
The effect of the combination of inflation and price and wage controls is shortages, that is, a situation in which the quantities of goods people attempt to buy exceed the quantities available for sale.
Shortages, in turn, result in economic chaos. It’s not only that consumers who show up in stores early in the day are in a position to buy up all the stocks of goods and leave customers who arrive later, with nothing — a situation to which governments typically respond by imposing rationing. Shortages result in chaos throughout the economic system. They introduce randomness in the distribution of supplies between geographical areas, in the allocation of a factor of production among its different products, in the allocation of labor and capital among the different branches of the economic system.
In the face of the combination of price controls and shortages, the effect of a decrease in the supply of an item is not, as it would be in a free market, to raise its price and increase its profitability, thereby operating to stop the decrease in supply, or reverse it if it has gone too far. Price control prohibits the rise in price and thus the increase in profitability. At the same time, the shortages caused by price controls prevent increases in supply from reducing price and profitability. When there is a shortage, the effect of an increase in supply is merely a reduction in the severity of the shortage. Only when the shortage is totally eliminated does an increase in supply necessitate a decrease in price and bring about a decrease in profitability.
As a result, the combination of price controls and shortages makes possible random movements of supply without any effect on price and profitability. In this situation, the production of the most trivial and unimportant goods, even pet rocks, can be expanded at the expense of the production of the most urgently needed and important goods, such as life-saving medicines, with no effect on the price or profitability of either good. Price controls would prevent the production of the medicines from becoming more profitable as their supply decreased, while a shortage even of pet rocks prevented their production from becoming less profitable as their supply increased.
URGENT: READ THIS. YOU ARE BEING LIED TO AND DECEIVED FOR THE BENEFIT OF BIG PHARMA’S PROFITS AND YOUR LOSS OF YOUR CIVIL LIBERTIES, YOUR LOST OF YOUR HEALTH, YOUR LOST OF YOUR EMPLOYMENT, AND THE LOST OF YOUR LIFE.
WHY DO DUMBSHIT AMERICANS TOLERATE THE DESTRUCTION OF THEIR HEALTH, LIBERTY AND LIVES THAT THE CORRUPT MURDEROUS AMERICAN ESTABLISHMENT IS FORCING ON THEM???
There is zero hope for Americans. They are the most stupid people to ever exist. The utter dumbshits trust government because trusting government is their “patriotic duty.” Otherwise the Commies will get them.
Minnesota State Representative Erik Mortensen recently conducted a Town Hall meeting in his district due to the number of healthcare workers who were contacting him about COVID-19 vaccine mandates, where most of them were about to lose their jobs for refusing to receive a COVID-19 shot.
He also heard a lot of things from these nurses that were not being repeated in the corporate media, so the Town Hall meeting was recorded and published on AlphaNews recently.
Some of these nurses reported that they have been in their field for over 20 years, were treated as heroes last year as frontline workers in COVID wards, but were now being ridiculed and ostracized for not wanting to take a COVID-19 vaccine. [Strange the unvaccinated nurses treating Covid (or flu) patients didn’t all die from the exposure.]
One of the reasons they do not want to take the shots is because they have seen first hand how these shots have killed and injured people, including family members.
One nurse explained how the media is actually lying by stating that most of the healthcare workers are now fully vaccinated for COVID-19. She said this wasn’t true, and that she knew of departments that were only about 20% vaccinated, and that ER workers had an especially low percentage of workers who were fully vaccinated for COVID-19.
“Why aren’t people asking the nurses why they don’t want to take the shots?” she asked.
She said she ran an ER department, and that it was tragic that they were seeing so many heart attacks and strokes, and that it is obvious that they are related to the COVID-19 shots.
One of the few men who was present stated that he worked in IT with one of the largest healthcare providers in the State of Minnesota, and he was losing his job of 17 years working there in the IT as a data analyst, because they were forcing him to get a COVID-19 injection as a requirement to stay employed, even though he worked from home in his basement 24/7 and never went to the office.
One nurse stated that she was never trained about how to submit a report to VAERS [the adverse vaccine reporting database], and did not even know it existed until she did some research on her own. There is pressure to NOT report vaccine injuries and deaths, and it takes about 30 minutes to fill out the report, which few will do [and hospitals prohibit. All vaccine deaths are considered Covid deaths.]
Pulmonary Nurse of 31 Years Testifies How He Followed the COVID Protocols, Unknowingly that this Could Result in the Deaths of Patients
One nurse read a direct quote from a nursing book she was required to study in nursing school just 4 years ago, which shows that many of these nurses today are being forced to engage in criminal activities in order to appease their superiors and keep their job.
In nursing school we are taught about intentional crimes and torts. It says that an intentional tort is assault and battery. Assault is the threat of an unwanted action or a bodily contact. Battery is an assault that is carried out and includes willful, angry, violent, negligent, touching of another person’s body, clothing, or anything attached to them.
Forcibly removing a patient’s clothing and administering an injection after a patient has refused are all examples of battery.
This is out of my nursing book from four years ago. This is what they teach us. If we did this to a patient, if you told your patient informed consent, and they said no, and you did it anyway, you would go to jail, you’d get your nursing license taken away, and you’d be a criminal.
So now what they’re doing is they’re putting us in the position of saying either you become a criminal by giving the injection without their consent or you will be fired as “non-compliant” with the vaccination protocol.
Another nurse who is an educator with two master degrees stated:
I am one and a half years from retirement. I’m a nurse educator, I have two master’s degrees. They need me at my hospital. The nurses need me, the patients need me.
If I don’t get the vaccine, I’m going to lose my job. I’m going to lose thousands of dollars in retirement. I’m going to lose my health insurance, my life insurance, my over 400 days of extended illness bank hours.
I’m going to lose a lot. [The hospital, patients, health, and truth are going to lose much more.]
But I’m here because I believe in medical freedom. And I believe if we don’t stand up and stop these mandates, they’re going to keep twisting our arm, and twisting our arm, and twisting our arm, until we’re all broken.
And the system can’t handle it. The crisis is bad now. Staffing is bad now.
We haven’t seen anything yet. And an unvaccinated nurse is way better than no nurse.
Sadly, what many like these nurses are starting to learn, is that our government doesn’t care about us. Our government is run by billionaires and bankers who view us through their eugenic glasses as “useless eaters” that are polluting and killing the planet, and that therefore all of these deaths are necessary to save the earth [and the billionaires’ ski resorts].
Just look at the total disregard for life being broadcast each day as proof that your government doesn’t care about your life. And this is a nonpartisan issue. See my article on Afghanistan here showing how this is a nonpartisan issue. [For the elite, our death is preferable to our lives, which are regarded as a form of pollution of the planet.]
I know this is a very difficult concept for Americans to grasp. The thought that our government has an actual plan to eliminate most of us for a greater purpose they get to define, is not a conspiracy theory.
It is happening right in front of our eyes, but of course the corporate media is not reporting it, because they serve their masters on Wall Street, and most people are still asleep.
Will they wake up in time to save their lives, and the lives of their children and future generations?
The video recording of this Town Hall meeting is on YouTube, for now. We have also put it on our Rumble and Bitchute channels.
COVID was a great dry run for a Green dictatorship. Under a Green dictatorship, you will first be shamed, and eventually forced, into sacrificing for your fellow man. With COVID you’re told you MUST vaccinate; if not, you’re hurting your fellow man (even though your fellow man is presumably safe, having been vaccinated himself.)
Under a Green dictatorship, you’ll be told you’re harming the planet if you drive a car, and you’re harming your fellow man, too, through fostering climate change (a part of nature for billions of years). Or you’re harming your fellow man if you use fossil fuels, or make any carbon footprint at all. At first you’ll be shamed, and eventually you may be fined or jailed. They’ll primarily make it economic. Just as you currenly lose your job and income (i.e., you starve) if you don’t get the vax, you’ll find it impossible to pay for gas at $50 or $100 a gallon, or pay heat/ac fuel bills at $1000 or $5000 a month.
Economic control will be the new gulag, though the end result will be exactly the same: loss of freedom. And most of it will be done without firing a shot. Why? Because of neurotic, unearned guilt. Your media, your professors, your Presidents and Governors (none of whom will be practicing the Green religion, by the way) will SHAME you into compliance. How well will that work? Just look at how well COVID shaming works. You have your answer. And, believe me: the tyrants have theirs. Your compliance has not gone unnoticed.
Reagan once said: “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.” He was right, the government’s not your friend and it most certainly isn’t here to help you.
The dirty little secret about government is that its purpose is not really to make the lives of citizens better but, rather, to accumulate power at the expense of citizens. Not sure about that? Ask yourself, how many government agencies have put themselves out of a job because they succeeded? There’re a few that technology left behind, like the Steamboat Inspection Service; others that served their purpose, like the Defense Homes Corporation; while others were merged into other agencies like the General Land Office, subsumed into the Department of Interior. In our history, there have been fewer than 100 federal agencies that have actually been shuttered, and most of those existed in the early 20th century to deal with the Depression or the two world wars.
According to the Federal Register, the federal government has 457 different agencies. That’s 457 agencies covering virtually every aspect of American’s lives, most of which are staffed by unelected bureaucrats, all of whom spend your money and many of whom write regulations that carry the force of law which the government’s police power enforces. This includes everything from the State Department to the Geographic Names Board to the International Broadcasting Board to the ATF.
And that 457 is misleading. While it includes a dozen organizations tied to Defense, there are dozens more agencies that come under it that are not listed in the Federal Register such as the DoD Education Activity or the Office of Naval Research. Wikipedia lists a more realistic, but still lacking, 1,500.
The American government has become a leviathan. It’s everywhere, involved in virtually every aspect of American’s lives, and it’s perpetual, regardless of its record of dismal failure. Two examples:
1) The War on Poverty, AKA the Great Society. The brainchild of LBJ, the Great Society programs were created to address poverty in America. They included things like food stamps, Medicaid, Medicare, Head Start, and others.
In 1964, when the Great Society programs were passed, the poverty rate was 15%, dropping to 13.9% the next year. By 1969 the rate was 9.7%. Exactly 50 years later, in 2019, the rate was 8.7%. That means that as a result of fighting the War on Poverty for half a century, after spending over $30 trillion, the poverty rate dropped by a rounding error—by literally 1%!
Yet somehow the War on Poverty goes on, with more programs, more money, more regulations and, of course, more employees. Indeed, DHHS, which manages many of the programs, has a staff of 80,000 and an annual budget of over $1 trillion.
2) Public education. American public education is really just a jobs and revenue-generating program for unions. William McGurn over at the WSJ looks at the performance of schools in the largest school districts. The level of failure is extraordinary.
For example, in 2019, Atlanta public schools spent $17,112 per student and the result of all of that spending was that only 10% of students were proficient in math and 15% in reading. So, for all that expenditure, fully 90% failed basic math proficiency and 85% reading.
This dynamic has been going on for decades across the country. New York City spends $28,004 per student and 75% of them lack proficiency in math and 81% in reading, while Boston spends $25,653 and has similar marks with 88% failing math and 85% reading.
On average the US spends approximately $14,000 per student in education, (Elem – HS), more than any nation in the world other than Luxemburg. And what do we get for that extraordinary spending? Not much. According to the National Center for Education Statistics, in 2018, American students ranked 15th in the world for reading literacy, 18th in science, and 37th in math! Of all of the things that drive a society to prosperity, particularly in today’s technologically advanced world, education is easily one of the most important and, on that score, government has failed miserably, spectacularly, and perpetually.
If the actual goal was to educate students, government would give that money to parents in the form of vouchers to kickstart a private / charter school revolution. Sure, there’d be failures, but it’s hard to imagine how they could fail more spectacularly than the current systems do. But that’s not the goal….
The government spends $30 trillion over half a century and reduces poverty by 1%. The government spends more on education than virtually every nation on the planet yet 85% of the students in its biggest (and most minority-filled) school districts fail basic reading and math, the building blocks for success in our dynamic society. And we’re supposed to believe government works for us?
American governments spend more money on education and social programs than anything else, more than the GDP of most countries. Yet even as they fail, year after year, decade after decade, the funds keep growing, regardless of their catastrophically abysmal track record.
And that tells you everything you need to know about the nature of governments. Their goal isn’t to solve problems. They’re not here to make life better for citizens. Their goal is not to protect the lives and liberties of citizens. No, government is the Borg. Its raison d’etre is simple: Grow revenue and increase power for itself and unions.
Proof? Despite the fact that the United States has 3,143 counties in 50 states spread out over 3,796,742 square miles, nine of the twenty richest counties are in a circle less than 100 miles across with Washington DC at its center. And what is the industry that drives that wealth? Finance? No. Entertainment? No. Steel or autos or high tech? No. One thing: Government power.
Accumulating power is the fundamental nature of government, and our Founding Fathers understood that which is why they gave us the Bill of Rights and particularly the 9th and 10th Amendments. For the first 150 years of our nation, those guardrails stood relatively firm, but today they are simply gone. Sadly, America has become so detached from our Constitution that 90% of what our government does is unconstitutional.
If everything connected to January 6 qualifies as “domestic terrorism”, then doesn’t domestic terrorism ALSO consist of:
Locking down citizens due to a flu outbreak for 18 months and counting;
Denying small businesses their rights while giving politically connected, huge corporations unlimited rights for political loyalty;
Forcing people to be vaccinated with an experimental, mostly untested treatment;
Suffocating and spreading germs among helpless minors by forcing them to wear masks and refusing to let their parents have any say in it;
Imposing confiscatory tax rates for the sole purpose of wealth redistribution and rewarding pressure groups;
Abusing the sacred power of the U.S. military by tolerating treasonous, illegal behavior in its top generals so long as that behavior serves the political interests of the party seeking to gain and hold onto power;
Committing election fraud in plain daylight, and then lying about it, and then attempting to codify that fraud into law, transforming a representative republic into a one-party dictatorship overnight.
If January 6 really constitutes “domestic terrorism” then why the hell do THESE behaviors not?
Ross Welcome to Renegade Inc. With China’s increasing wealth, Western investors want some of the action. One of those investors is a bullish gentleman called George Soros. However, the Chinese are acutely aware that with Western investment comes inequality. So as Beijing begins to rethink how to do proper economic growth, we ask, will China learn from Western mistakes?
Ross Michael Hudson, always great to have you back on Renegade Inc.
Michael Hudson It’s good to be back here. Thanks for having me.
Ross Michael, we join you at a time where a lot of people think the unipolar world could have maintained its supremacy. Turns out it hasn’t. Multipolar world is here to stay. You of late have been quite vocal about George Soros, no less. Mr. Soros has been casting aspersions about various things, but one of them is talking about the Chinese economy and why Black Rock, amongst others, should be allowed to invest there, because ultimately it’s going to undo American interests. Can you unpack that for us because it seems very complicated?
Michael Hudson Well, George Soros’ dream is that China would do what Yeltsin did to Russia – that it would privatise the economy, really carve it up and let US investors buy control of the most profitable heights. In that way, the foreign investors would be able to sort of get the profits of Chinese industry, Chinese labour, and it would become the darling stock market of the world, just like Russia’s stock market was the leading booming stock market of 1994-96. China would be run to benefit US investment bankers. Soros is furious that China is not following the neoliberal policy that the United States is following. It’s following a socialist policy wanting to keep its economic surplus at home to benefit its own citizens, not American financial investors. For Soros, this is a clash of civilisations. His proposed strategy is to stifle the Chinese economy by putting sanctions against it, to stop investing in it so as to force it to do to itself what Yeltsin did to Russia.
Ross Let’s hear it in his words. He says: ‘The BlackRock initiative imperils the national security interests of the US and other democracies because the money invested in China will help prop up President Xi’s regime, which is repressive at home and aggressive abroad. Congress should pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support’. He’s not mincing his words, is he?
Michael Hudson He thinks that China actually needs American dollars to build its factories and invest. He thinks that somehow China’s balance of payments is going to fall apart without the US market, without US investors telling President Xi what to do. The Chinese government won’t have a clue as to what to invest in and how to let the ‘free market’, meaning George Soros and BlackRock and other companies, operate. So he’s living in a dream world where other people need us. It’s like a guy who doesn’t realise his girlfriend doesn’t need him anymore.
Ross There seems to me to be a distinction here that the Chinese are acutely aware of, and it’s between the classical economists and the neoclassical economists. The classical economists have understood the idea of unearned wealth, unearned income. The neoclassical economists actively chase unearned wealth, unearned income, because that is central to their playbook. Can you just expand on those two ideas? And is it the case that that’s why you talk about a clash of civilisations?
Michael Hudson Well, you put your finger on it, Ross. People think that China’s advantage is its abundant, low priced labour force, or the government building infrastructure. But what’s guiding this is an understanding of the kind of economics that goes back even beyond Marx, to Adam Smith, and John Stuart Mill and the other classical economists. They realise that there’s a difference between earning income and creating wealth by employing labour to produce goods, to sell at a profit and then reinvest these profits and more capital formation, in contrast to simply buying a rent-yielding property, buying land and letting it rise in price without the landlord doing anything, buying a monopoly and just raising the price – charging monopoly prices like the US pharmaceutical companies are doing. China understands the difference between earned income and unearned income, between productive investment and unproductive investment.
In the United States, if they do recognise this difference, they realise that via unearned income you can make wealth by parasitically much quicker than you can actually create real wealth. It’s cheaper to be a parasite than a host. And so most of the financial strategy of Wall Street involves how to get something for nothing. How can we get a free lunch? Well, to do that as a major policy, we have to begin by telling people what Milton Friedman said: There is no such thing as a free lunch. But the whole of Wall Street is looking for a free lunch. They’re looking to grab Chinese assets on the cheap, like Soros has grabbed post-Soviet assets. They’re looking for monopoly rights. They’re looking for lending money and letting China do the work, to pay the interest to the Americans that are going to be providing it with money that the Federal Reserve ends up creating on its computers, or that George Soros already has saved largely by how he got the free lunch from the Bank of England betting against that and driving Sterling down.
Ross Some people call it the free world. Others call it a democracy. Others, for America, call it an advanced oligarchy. Do you think that the Chinese have looked at America and the wider West, understood that privatising all that rent has ultimately led to societal decline?
Michael Hudson They’re beginning to look at it that way. Most Chinese Marxists focused on Volume 1 of Capital, which is about employers hiring workers and putting them to work and making a profit off the mark-up. Only in the last couple of years have Volumes 2 and Volume 3 of Capital moved into central discussion in China. And it’s Volumes 2 and 3 that talk about economic rent. And so China has come to realise tha the United States is not an industrial economy. We’re not going to understand what’s happening in the United States, in England or Europe by looking only at what Marx wrote in Volume 1 of Capital, because they’re not making money industrially anymore. They’re making money by being a rentier economy, by landlordism, by monopolies and by bank credit, which Marx discussed in Volume 2 and 3.
So they’re now broadening the discussion. For the first time, you’re having, especially in the last month, China asking, “Do we want to let Chinese investors make money, financially, by buying housing, becoming absentee landlords and hoping that there is going to be a housing price inflation like you have in the United States? Or, do we want to keep housing low priced and not to bid it up by credit creation and finance?” They’re now realising that to keep China’s cost of living low, you have to keep the price of housing low. That means that you don’t want housing to become a commodity, an investment vehicle for absentee owners and landlords to make money. You want housing to be for Chinese people to live in. That means low-priced housing, not debt-leveraged housing as they’re seeing in the United States.
Ross I know somebody who works on the life boat on the Thames and they get a view each night that no one else would ever get. And they go up and down the Thames and they see all these high rises, which are oversupply of property, real estate. And there isn’t one light on in any of them. The reason, foreign investors, predominately the Chinese, have come bought them, clingfilmed the whole place, locked the door and then they chip off back to China – sit and wait, basically allow that land value to go up and cash out 10 years later. You can see what that does to local communities, schools, shops, infrastructure, services and all the rest of it – this absenteeism. Do you think that those foreign investors, the leadership in Beijing, has seen this model around the world and thought, yep, fine, we can do it over there, and yet we need to repatriate some money because of some of the liquidity issues that we’ve got over here. But we’re not having that as a central business model or a central economic model to our economies? Do you think that that light has gone on?
Michael Hudson Well, they’ve been discussing this regarding Hong Kong for the last 10 years. Hong Kong is the typical example of multi, multi-billionaires in real estate. They think that a socialist economy is not one that gets rich by creating absentee landlords. There’s been a large outflow of Chinese investment to the West. You have it in New York City on the west side, all very dark apartments with no lights on at night because they’re absentee-owned. Thorstein Veblen in 1923 wrote a book, Absentee Ownership, saying that housing should really be for living, not a speculative vehicle. But in America, real estate is all about civic development. It’s about how to increase real estate prices and create a bubble for speculators to find someone to flip the property to. I’m not sure it’s going to happen much longer and in London now that Brexit has occurred. But I think that what China is trying to do is asking how to create a domestic economy where Chinese people make money productively. They can not only afford a house of their own, but if they invest, they can invest in making China richer, not in buying income-yielding, rent-yielding, assets in America, England or Europe.
Ross Do you think that the pictures that we’ve recently seen on social media of the huge tower blocks that haven’t been finished, residential, that haven’t been finished for eight years and now they’ve just put semtex under them and raised the whole thing to the ground? Do you think that’s a real world example of the scar tissue, if you like, that private debt creates and in another sense, a Minsky moment? Blowing all these things up means that you get rid of all of that oversupply, which means that that inventory isn’t in the market and isn’t their to be flipped and speculated on.
Michael Hudson These are buildings where they wanted to pre-plan for what they thought was going to be a rural exodus, but the rural exodus didn’t occur into these cities. Right now, China is focusing, I think for the first time in quite a few years, much more on rural development. China is primarily a still a rural economy, a village economy. Most people don’t realise that. When you think of China, you think of Shanghai and Shenzhen and Beijing and even Wuhan. But the fact is that much of China’s rural and there can’t really be a rural exodus to the cities because you have a kind of passport plan in China. In order to live in Beijing, you have to have a permit to live in Beijing so the city won’t become even more overcrowded than it is now. They’re having to re-focus development much more on the rural areas that have not kept pace with the heavy industrial factory areas that have occurred. So they wanted to do a lot of building, not only to employ labour and to do construction, but to think just in case they needed this housing for the rural exodus, they needed it in place. Now they realise, OK, we’re not following that particular central planning idea. Central planning really is very hard. It’s very hard to build whole small cities in advance with nobody there. It’s much easier to wait until they’re actually economic forces leading you to develop. So in that sense, China’s becoming more market oriented in its planning. But at the same time, it shapes the market, increasingly, to create domestic prosperity and earning opportunities, not unearned rent-extracting opportunities, but productive earning opportunities. This is an ongoing process of re-evaluating, restructuring, fixing up and improving the economy.
Ross Michael Hudson, welcome back. Great to have you for the second half.
Michael Hudson Thanks.
Ross Michael, we said right at the top of this programme that there is, let’s say, a tug of war between the unipolar and the multipolar. China have looked at the West and they must conclude now, the Russians also, must conclude, that the Western economic model is fatally flawed. In many ways, what you’ve got in America is an advanced oligarchy. Across Europe, you’ve got a zombie banking system. And basically the model for the last certainly 30, 40 years has been to extract as much rent as possible and pass it off as an economic miracle. To avoid all that, this fork in the road has crystallised. What do you think will be the decisions coming out of Beijing when they look at the economy in a more holistic way and they realise that they want to better the lot of the average Chinese citizen?
Michael Hudson Well, as I pointed out, their concept of the economy realises the distinction between earned income and unearned income, between rent and profits. It wants to make profits, not economic rents. And it also sees that the United States is trying to prevent it from going along this socialist road, and that’s really the new Cold War. You mentioned unipolar versus multipolar. It’s actually not so much that China, Russia and the Shanghai Cooperation Organisation, along with Kazakhstan and Iran and now the other groups are pulling away. It’s the United States that’s trying to force them to follow the US neoliberal model by imposing sanctions and special penalties and military threats, not to mention ISIS terrorism. The United States is driving Europe, Asia and now Africa as well, into a unified, consolidated unit outside of itself. It’s very self-destructive. It thinks like George Soros, that if we stop investing in Asia and other countries, that will force them to knuckle under to the US. But what it’s doing is it’s driving them altogether into the Belt and Road Initiative.
What China’s doing is creating a precondition for a profitable industrial economy over a large area to benefit from. It’s participants are going to need transportation. You’re going to need ports. You’re going to need roads. You’re going to need pipelines and is focusing on the interconnections, on the infrastructure.
America doesn’t build infrastructure these days unless it’s monopolised. This is the political fight going on in the United States now. President Biden has a infrastructure plan that he’s scaled down from six and a half trillion to three and a half trillion. And essentially the bulk of the Democratic and Republican Party said if we can’t privatise infrastructure and make it a rent-extracting monopoly, we’re not going to do it, and we’re going to block the government from doing it. So in the United States, they’re going to have high priced infrastructure, high-priced health care and high-priced education while China is going to have low-priced transportation, low-cost infrastructure, free education, public health care. And you’re going to have a very high-cost United States unable to compete with the rest of the world. All it can do is make military threats or financial threats. If it tries to impose sanctions as it’s imposed on Russia, China and other countries, these are going to serve as protective tariffs for foreign countries.
When President Trump put sanctions on agricultural exports to Russia, it was a windfall for Russia. They developed their own agriculture and Russia is now the largest grain exporter in the world. Senator McCain characterised Russia as a gas station of atom bombs, but it’s a gas station with the largest farm sector in the world, and is developing an industrial integration with China and the rest of Asia. It’s a Eurasian world island as Mackinder called it a century ago, and it is becoming the economic focus of the world, leaving the United States as the high cost economy with no visible means of support, because we’re not doing our own industry anymore. We’re not competing with China. We’re letting China do all of the industry, and all of a sudden we’re dependent on it. This does not bode good for prosperity in the United States or Europe and other areas that are satellites of the US economy.
Ross What is the probability of the West going, hang on, we have taken a detour here, we need to do something differently?
Michael Hudson I’d say maybe between one and two percent. In order to understand that you’re taking a wrong detour, you have to understand what the right path is, and why China’s doing it right. They can’t acknowledge that, because that’s called socialism. And when everyone points out that instead of having health care absorbing 18 percent of the American GDP, you could provide public health care and lower the cost of living in the United States. That’s a precondition for making labour more competitive. Well, the employers are going to argue that if you make health care public, then you’re going to lose the ability to lock-in labour to its employers. Right now in the United States, especially during the pandemic, if you work for an employer for a living, you’re afraid of being fired because you lose your health insurance and that is a threat of bankruptcy. If you complain about your job, you might be fired. That’s a danger. So having private health care paid for by the employers locks labour into dependency. They’re afraid to ask for higher wages. They’re afraid to ask for pensions. Privatized employer-based health care has become part of the class war here, and it is succeeding in impoverishing labour. Same thing with privatized education costs financed on credit at fairly high interest rates, without any bankruptcy recourse to wipe them out..
President Biden promised that he was going to wipe out student debt. If you have students paying 40 to 50 thousand dollars a year to have a college education and a college diploma is a precondition for getting a job like a union card used to be, then you’re going to have that added to the cost of living. When you have all of these privatised – education, health care, not to mention housing and other factors – when you have all these rent-extracting exploitative sectors you cannot be a competitive economy. You can only get money by conquering and exploiting other countries, by owning their own rent-extracting sectors and monopoly-profit sectors.
But there’s no one to conquer anymore. America couldn’t even conquer Afghanistan. Every economy for the last 5,000 years has two parts. There’s the real economy of producing and consuming and paying taxes and government services. And then there’s the debt and financial overhead. All economies operate on credit. The problem is that credit cost money, and creditor claims accumulate at compound interest. if you look at the compound interest for anybody’s savings – take the wealth of the One Percent and all the trillions of dollars they have – if you leave your money to accumulate compound interest, it grows exponentially. But economies don’t grow exponentially. They grow in an S-curve, and sometimes there’s an interruption. Sometimes there’s a disease like Covid. Sometimes there’s bad weather and a environmental disaster or there’s a war. And once there’s an interruption, what do you do with the fact that the finance sector grows faster?
Well, this goes way back to Babylonia. It occurred in Greece and Rome. Ultimately the tendency is for the financial sector to take over and to use the financial returns to take over real estate. And so there’s a symbiosis between real estate and finance. That’s occurred in every economy for the last 2,000 years since Greece and Rome. It certainly characterises where most money and most wealth is made today. In the universities, you take a course and they say, well, you accumulate wealth by saving up the wages and saving up the profits you made. But that’s not how the wealthy classes got money. That’s not how the One Percent have made money. They have made money either by taking property from the public domain by privatisation, or it’s made today by the central banks, lowering interest rates, flooding the market with credit, enough credit to push up real estate prices 20 percent in the United States in the last year. Housing prices have gone way up to unaffordable levels, pushing up education prices – and education is priced at whatever a bank or the government will lend you to pay with a student loan. It’s all financialization. It turns out that what people thought was industrial capitalism has turned out to be finance capitalism instead. So what China is doing is saying that it’s not going to let our industrial capitalism evolve into finance capitalism. It’s going to evolve into socialism, because they’re a socialist government.
Ross Just say the Chinese, the penny’s dropped and they’ve understood how badly wrong the West got it. What does the Chinese economy, and as importantly, society look like 10, 20 years from today?
Michael Hudson It’ll be a more balanced, less polarised economy. It will still let people make fortunes, but not gigantic fortunes large enough for an independent oligarchy to develop, to become a rival to government and try to replace government. In the West, you’ve had a financial oligarchy evolve and take over planning from elected government. So we don’t have democracy now. It means a free market where you leave everything to Wall Street as your central planner. So China is going to leave its planning spontaneously to individuals to innovate, to develop, where America is becoming, and England, are centrally planned economies planned by Wall Street, not to create prosperity, but to create rent-extracting opportunities for Wall Street stocks and bonds and absentee real estate. So you’re going to have a rentier economy – let’s call it neofeudalism – while the rest of the world goes forward into what industrial capitalism was meant to be a century ago before it was sidetracked in the West. Much of Eurasia and the Shanghai Cooperation Organisation will evolve into socialism, as most expected would happen in the West a century ago.
Ross You talk about Super Decadence. Is the irony lost on you that one of your politicians recently attended a 35,000 dollar gala event dressed in an expensive dress with the words ‘tax the rich’ embroidered all over the back of it?
Michael Hudson That perception of inequality has become so popular that you can almost make fun of it. There’s something called neurolinguistic programming, that says that if you have a problem, a headache or something, if you can imagine your headache or your problem being very far away and then expanding and expanding and finally, poof, it all dissolves and goes away. They think that they can say “Tax the rich” and just make it into a phrase that’s so popular, it doesn’t really mean tax the rich any more. It means that you accept inequality, but realize that it’s just become part of the system – and wouldn’t it be nice if there were a parallel universe in which we could indeed tax the rich. But of course, that’s just a nice fantasy.
Ross Michael, always entertaining. Always a pleasure. Thank you so much for your time.
Michael Hudson It’s wonderful to be here, Ross. Thanks for having me on your show.
POSTSCRIPT:
Right after this interview, China did on its own just what George Soros was asking U.S. money managers to do: Stop lending money to China. So China itself made an about-face and turned down the BlackRock’s plans to buy a large Chinese real estate company, and it did not pay foreign holders of its Evergrande bonds on September 23.
Diplomatically, China had expected Wall Street firms to lobby to stop America’s anti-China policy. And indeed, many Wall Street executives did point out to the U.S. government that China offered many opportunities for America to make money, and urged not to treat it as an enemy. But the military-industrial complex (MIC) has its own agenda, along with the neocon and neoliberal advocates of unique U.S. unilateralism. I think that ever since China’s officials met in Alaska with Mr. Blinken earlier this year, they see the handwriting on the wall, as have Russia and other SCO members. The’ve accepted that the world economy is fracturing between the U.S.-centered “free world” (central planning by Wall Street and unilateral diplomacy from Washington) and the multilateralizing rest of the world.
The awful thing about the society we’re becoming is all the conformity. Conformity is the opposite extreme of individualism and independence, two defining traits of historical America. Conformity is for the benefit of the state — i.e., for the cultural as well as for the governmental “powers-that-be.” It’s easier for THEM that we all think and act alike. COVID vaccination experimental treatments are a classic example. They want to be able to say, “Look at us, we got 100 percent (or 85 percent) of the population vaccinated. Everyone is safe, thanks to us.” It’s all about THEM. IT’s not about you, I or “everyone.” It’s only about THEM.
Individual minds, individual choices or unique circumstances are not only irrelevant; those factors are the enemy. Americans don’t get this. Unless you’re an American and you came here from a statist society, you don’t get it. Not unless you take the time to think about it, and understand, which most either will not or cannot do. Through conformity and blind obedience — right now, on one major issue, the vaccine — we’re being led down the path to do it again, again and again. I still believe the biggest example that will come is imposition of the Green Religion on society. If they can get us to take these vaccines, they can get us (85-100 percent of us) to do ANYTHING. Mandated veganism (or other mandated diet), going without heat/ac/electricity, going without gas or fuel … I can’t predict what form it will take, but the relevant psychology and ideology will be exactly the same. Socialism (being passed in Congress as we speak) will generate the necessary shortages to rationalize the controls. It’s happening right out in the open. Right in plain daylight. I’m not sure even George Orwell anticipated anything this grotesque.
THE ARTFUL DILETTANTE 