Richard D. Wolff & Michael Hudson: The Shocking Truth Behind the End of Financial Colonialism!

Michael Hudson (MH): I think the Middle East is becoming a catalyst for what we’ve been talking about the last two times we’ve got together: the world splitting into two halves: the US-NATO-West against the Rest of the world. And I think the Near East is a kind of demonstration to the Global Majority… of what America and Israel are doing there – with their assassination of individuals, their regime change and the violence, with which the right-wing Likud Party, supported by the right-wing Democrats and the United States – are trying to impose on the rest of the world.

And the message, I think, that Eurasia gets, is: what they’re doing to the Palestinians and what Europe is doing to the Ukrainians, they can do it to us… unless we really break away.

I think that this gives a note of urgency. I think countries have been talking – ever since in Bandung – about: how do we go away and make a kind of a world trade and investment regime that is not so exploitative?

But, when they see what’s happening in Ukraine and the near East, I think this gives a note of urgency, saying: we really have to get together and get allies to join our system, by offering every country that joins enough that it will make them worth joining the “China-Russia-Iran-SCO orbit” – instead of keeping their links to the West.

All the West has to offer is bribery and the threat of violence.

Richard Wolff (RW): I would like to pick up on what Michael says, and the thing that has really impressed itself on me are the signs of the rise of China – the rise of the BRICS, the rise of so much of what we used to call the “Third World” or “The Underdeveloped World” or “The Newly Emerging -” – all those euphemisms!

That rise is now clear, it’s obvious.

The statistics that Michael has put forward, that I’ve put forward – that you’ve discussed with us and with others on your programmes – all attest to that.

To give you a small example… I read this morning that the Uber Corporation – and listen to this story – the Uber corporation, which earlier this year, was in negotiations with Tesla… The reason it was in negotiations with Tesla is they want to provide cheap electric vehicles to Uber drivers around the world. They explain in the financial press their purpose is to introduce this to the public to make the public more interested and more comfortable with electric vehicles. It was just a standard kind of deal. But then the deal fell apart. And this morning they announced they have now made a deal -– but not with Tesla – but with the “BYD Corporation”, which is China’s leading producer of electric vehicles! OK… why?

Because they couldn’t reach a deal with Tesla – because of whatever it is Elon Musk did or didn’t do in his – how shall I put it – his ups and downs as a business person and with the West.

Now you can see basically a western Corporation – Uber – making a deal, advantaging China against another Western corporation…

It’s the very competition of the capitalists that is driving the transition into the hands of what they call their “enemy”. It’s the old joke about capitalists competing to see who gets to sell the hangman’s noose to the people who want to hang capitalism… It’s just a strange self-destruction that’s beginning to take place.

Let me give you a second example: according to international records, the price of a gallon of gasoline at the retail gas station in Iran is 10 cents a gallon (that’s US cents for a US gallon). The average price in France and Germany – for the same gallon of gas – is over $7. That an unsustainable difference in the costs of energy!

It may take a longer or shorter time, it may go this way or that way, but the competition there is DONE!

Any production that requires oil is able to do that in Iran, and it can’t possibly compete if it costs $7 in France and Germany. And it’s more than $7 in both of them to buy a gallon of gasoline for the truck that goes back and forth and for everything else.

I think what you’re seeing now – and this is where I would come in to support the last Point Michael was making – what strikes me, is not all of that which has been going on for a while and is now accelerating – as in Uber and the BYD and so forth… but that the West has chosen its way of dealing with this – not by sitting down, working out a deal while one is still strong. Their dollar, while weaker, is still the number one currency in the world. No, they’re not doing that. They’ve decided they’re going to somehow either stop or reverse or slow this very process – which they cannot do! There’s no historical precedent to see such a thing. They’re not going to be able to do it!

And their frustration and their failure is driving them to levels of violence that are stunning!

That was my last example to try to drive this home.

Now, the violence in the Middle East… Michael is absolutely right: it’s off the charts! There was a debate in Israel over the last few days about the legitimacy of sodomising Palestinian prisoners in jail. There’s a debate, pro and con, with lots of pro… What has happened to the Israeli people that they are at this point!!? It’s like questions that used to be asked of the German people, in regard to the victims of the Holocaust. It was rightly asked of the Germans. It’s rightly asked now of the Israelis!

And Michael is also right that the horror visited upon the Ukrainian people is really extraordinary, and if you know the history – and I don’t mean to absolve Mr Putin and the Russians – they invaded and violated a border; I understand that’s a serious problem – but we all know what NATO did in the end. We all know, and nobody – who pays any attention and isn’t lost in the propaganda War – would not understand that this was a crisis being built by the plans of NATO on the one hand and the refusal of Russia on the other. The Russians said enough times, it’s their Red Line. It’s there, you can’t do this, you can’t do this. And then you had those meetings in February and again a little bit later in Istanbul and so on. Nothing came of it. It could have been avoided – the misery of Ukraine. It will take them decades to crawl out of the disaster they’re in – no matter who wins or loses.

This level of violence shows you how desperate the people in in the West now are… What they are willing to do, to preside over others. The issue isn’t when you sit down with the Russians. Everybody knows eventually there’ll be a meeting, and they will work something out. That’s how every other war like this ends. That’s how this one will end, and everybody, who pays any attention knows that.

And the Israelis are going to have to come to terms with the Palestinians – unless they literally mean to exterminate them which they can’t do!

So, what you’re watching is a sign of such a level of desperation, that the only thing more bizarre is watching leaders like Mr Biden or, for that matter, Mr Trump, talk as if they had the power that the US had in the 1960s and 70s… But that’s all gone!! But they seem to think that the political necessity is to humour the American people in their naive imagination that they still are, where they were.

And I notice – when I give this simple statistic (which I’ve given you too in our discussions) – that the aggregate GDP of the G7 is now significantly less than the aggregate GDP of the BRICS! There it is!

And I notice that when I explain that to my audience they look at me, with a kind of sad eye, as though I had just uttered something about their intimate life that they had really hoped to keep secret… There I am, releasing this unpleasant reality. And they won’t remember it minutes from now, because it’s so unpleasant!

And now, with this level of violence, you really have a sense – which I pick up in our culture everywhere – that we are at some very scary inflection point in American history. And no one knows quite what or where it’s going. But a sense of ominousness… I see it, I feel it, I hear about it everywhere.

MH: I want to pick up on the point that Richard just made about the desperation and frustration.

We know what the US has been doing out of its frustration: It’s been imposing sanctions on China and Russia.

The interesting thing about this is, that almost every sanction they have imposed, has backfired. The effect of sanctions on something that is necessary for another country is that you force that country to produce these goods itself.

We’ve spoken on this programme before about how the US started with an agricultural food sanctions against Russia… So Russia could no longer import dairy products and food from the Baltic states. What happened then? Russia simply shifted the production to itself. Now it’s independent, and once you’ve become independent from something and realise, “well, we never want countries to try to interrupt our supply chain again by sanctions”, you lose that market forever!

So what the United States is doing in its desperation to try to stop the independence of the Global Majority – the 85% – from the NATO West… is that it’s forcing these countries to become independent, so that they no longer need the US. Everything they’re doing to stop it has the exact opposite effect! And that’s because the Western mentality is to bully… to think “if you don’t do what we want, we’re going to hurt you”. And they think that sanctions are going to hurt… without thinking what the other countries are going to do in response.

They’re not thinking of that. They’re thinking “well, we’re going to kill the chickens to frighten the monkeys!” – by what they’re doing in Ukraine and in Palestine. That is – driving other countries to accelerate the fact that they’d better move quickly in this year’s BRICS meeting under Russia and in next year’s BRICS conferences under China’s leadership: we’d better be able to make deals with all of our Eurasian neighbours that will help us create a critical mass, so that we no longer have to depend on the NATO and the West.
What can the NATO and the West do? It can only accelerate its violence, and, the more it accelerates it, the more it will speed up the parting guests.

All they [the non-West] want to do is to be left alone, but the United States is trying to prevent them from this by forcing them to make the choice between: “either they go it alone” or “they’re going to end up looking like Germany and other US protectorates.

RW: Let me pick up on what Michael said. Michael’s insights – interestingly and unusually – gets an enormous support from an article… (if you have not encountered it, let me urge you and everyone listening and watching) – from the 25th of July (that’s a few days ago). The Washington Post carried an absolutely extraordinary article. It was about how the last four presidents of the United States initiated and organised a massive acceleration of what it calls “Economic Warfare”, but what it really means is: sanctions, and it says so! And it makes it crystal clear that the United States is the “Sanction Master”. It mentions Biden and Trump and Obama and Bush.

Now of course sanctions go way back. One example in the article is Cuba. We sanctioned Cuba for over half a century! The whole point and purpose was to get rid of Fidel Castro… What a failure that was!!

And here are two things that sort of expand on Michael’s point: This article (everything I’m telling you comes from that article from the 25th of July in the Washington Post, one cannot miss it)… The first statistic: the United States currently has outstanding 15,000 sanctioned objects – individuals, corporations, whole countries… 15,000!! And in that position, the United States ranks number one – says the Washington Post! (And the number two is less – around 5,000. So about one-third of what the United States is, is the number two, and you might be surprised: the number two country imposing sanctions in the world is Switzerland!) In other words: it’s the United States!! Russia and China don’t appear here on the list in the Washington Post! They don’t do this!!

All right, so you ask yourself a question that a five-year-old would figure out: If one side in the so-called great struggle – namely the West, the United States – is imposing sanctions everywhere, and the other side in this great struggle is imposing sanctions – nowhere…?? What might explain this odd matter: “they have drones we have drones, they have missiles we have missiles, they have they have sanctions… we DON’T!! We have sanctions, they don’t!”…

Well the answer is Michael’s point, which I want to bring out: When you sanction a country, the leadership in that country – the people who run the society – are almost always immune. They’re not going to change their clothes, they’re not going to eat a different diet, they’re not going to stop driving their car!

The pain that sanctions can and doimpose is on themass of people who suffer – poverty or not. Cubadidn’t have access to medicines and so forth…

Well, then of course what does every leader of a sanctioned society do? You make crystal clear – as your number one priority – that it’s not your fault, as the leader of that country, it’s not your political party’s fault – it’s the fault of the United States. Sanctions are a way of mobilising global public opinion against the United States, as the great sanctioner of our time.
This is a programme, in which you line up the Howitzer so it is aimed directly at your own feet! This is nuts as a policy!! Forget all the other horrors of it and the real suffering it causes… it is a self-defeating programme and a sure sign that the people who pursue it may get a temporary advantage in the local political theatre maybe. But they are paying an unbelievable price in the society’s future and it’s very survivability in a world, where it is becoming more and more isolated every day.

MH: I want to put a sense of perspective on what Richard just said.

He’s talked about the fact that the sanctions are mobilising other countries to support themselves, but there’s been a backwash effect… The major effect of sanctions, especially against China, have been on the United States itself, the producers!

Now Richard and I both believe in the materialist approach to history, and most of our approach has always been pretty much: what countries do, reflects the interest of their business community or the financial community or the elites.

But let’s look at what’s happened in America, with the sanctions that they’ve put – against selling computer chips and information technology to China Intel. And other countries have said, if they obey the sanctions that the Biden administration has put on, and especially if they follow the sanctions that Trump is going to put on: there goes their profits… The profits of the business community in the United States had largely been exporting to these countries that are now subject to the insane sanctions that the American government itself has been putting on.
Now, how do you reconcile the fact that the American sanctions – that are imposed by the neocons and the neoliberals – are against the profit pursuits by the leading American sectors, such as the information technology sectors. You could go right to the car manufacturers and all the others. You could say that the sanctions end up penalising the US economy – much more than other countries, because, while other countries have a short-term interruption of their supply, they get long-term independence. And for America, this long-term effect (and even the short-term effect) is to take away – from the American exporters, the leading industrial sectors, certainly on the stock exchange – is to take away this market! It’s lost! So what the Americans are doing is: self-isolating themselves.

We all thought for years that somehow the Global Majority was going to get together and draft a means of becoming independent and help their own economic interests. But it’s the United States that is driving this – ironically – not China not Russia, not these other countries. They’re reacting to the US that is essentially committing policies that are economically suicidal.

RW: I’ve noticed that too. If you read, for example, the statements periodically put out by the United States Chamber of Commerce, you get what Michael is talking about. They’re very nervous, they don’t want this fighting with China. They represent a large number of corporations who have put large amounts of investment inside China. They don’t want to lose those. China is the biggest, fastest growing market in the world. Nobody wants to be excluded.

Every business school teaches: “You want to make a lot of money, you go to where the wages are cheap, and the market is growing!” Hello! That’s these other parts of the world, that’s where all that is going on. And that’s going to outcompete the West sooner or later. They say all of that…
So Michael’s question stands: “What’s going on?” And here’s the best that I can do, I’m guessing and I’m hoping you or your audience sets me straight, if I’m making a mistake: They really don’t see what we’re talking about! In other words, when I said earlier, a bit mockingly, they live in the 1960s and 70s, when the dominance of the United States was real… maybe there’s more truth to that than my mockery would leave anyone to understand… that they really do believe that this is a temporary, momentary challenge – which they are capable of, willing and able to squash – and that they go to these companies and say, “yes we understand this kind of tariff is bad for you, this way, that way and the next way, however, bear with us, because we are really going to succeed, and when we do, it’s just around the corner… we will defeat them and then we will carve up Russia, which will become little countries like the rest of Eastern Europe, easily manipulable by all of us. And when we’re done with Russia, we’ll do the same with China, and then, wow, will we have a world, because we will have integrated Russia and China into our subordination arrangement!”

It’s the dream of colonialism and imperialism for a long, long time: It’s a unified World economy under the West.

And for those who are brought up on this, believe in this, knew that special time after World War II, it’s not so surprising that, what they think, that what they project, is still achievable.

It’s a little harder than maybe they thought, but that’s what they’re going to do. That’s what they’re going to do… And we are all here, you know, wasting our time – Michael, you, me and all the others like us, because we don’t see the “larger picture”.

And that’s what they tell the corporate executives: “Yeah, you’ll have [to wait] a year or two or three, but, oh, when we’re done – will you be happy!! And by the way, while we’re waiting, we’ll make it easier for you: You chip people, you’re losing your market? We’ll give you a subsidy the likes of which you had never dreamed of, we’ll give you this break and that one – in other words, we’ll give you supports for your profits the way we do when there’s an economic downturn or when there’s a pandemic or anything else. This is a this is an ‘adjustment process’.”
I watch the speeches of my fellow graduate student Janet Yellen – we went to Yale at the same time, we had the same teachers, we got the same PhD, we read the same articles – all from people that Michael knows all too well. You know our teacher from Macro was James Tobin and our teacher for international– was Triffin, and on and on and on! She knows, and yet she is an enthusiastic manager for this difficult time, as we reorganise the world for the next great phase of capital accumulation!

NIMA: Michael, do you want to add something?

OK, let’s go to the conflict with the situation in Venezuela. How did you find it – in the United States? They try to do everything to interfere in the situation in Venezuela – even Elon Musk! He was putting out right and left in order to help their position in Venezuela.

RW: Could I say something? Because for me there is humour here, and I do try in these dark times to find some humour…

The same people who here in the United States respond to Donald Trump, when he questions the election, when he denies the outcome, he is thereby “threatening democracy”. The people in Venezuela who challenge and threaten the election and deny the outcome are “upholding democracy”! You need a magician to appreciate this kind of “Switcheroo”!! Right?

The election here in our country – presumably we know all about! The election thousands of miles away, in a different country with a different culture and a different language, we could all be excused for not knowing exactly what’s going on, but… “No no no, we know it’s a threat to democracy when you question what happens here, and it’s an upholding of democracy when you reject an election there!” And the comfort and the ease, with which this is said… when no one notes the irony I’ve just told you, when no one catches that… It’s very obvious if no one catches it.

How desperate the ideological nonsense must be… because it’s occluding the brains and the vision of people who obviously could and should know better.

MH: What Richard mentioned before – about sanctions reinforcing the voters’ support of the government, because they realise that the problems the economy is facing are caused by the United States: Venezuela provides an object lesson. The problem that is caused for Venezuela is really… because one of the dictators that America imposed on that country before (I don’t remember if it was Perez or someone else) – they did two things: they collateralised their foreign dollar borrowings by the Venezuelan oil industry including, the oil industry.

The oil industry had reached out and used its profits to buy the American distribution network for its sale of its oil and gas. Well, the Americans first of all grabbed all of Venezuela’s holdings in the United States. In other words it grabbed its international reserves, what is now called a national savings fund. And secondly, the United States directed Britain to grab Venezuela’s gold supply and give it to a president that the United States proscribed.

The United States says, “look we have two models of democracy for the world: Ukraine and Israel. Those are the two democracies, and Venezuela we want to add it to it – we get to nominate who’s going to be head of the democracies or to pull a regime change opposition”.

The Venezuelan dollar foreign agreements all have a clause, just like Argentina had: if there’s a dispute, it’s held in the US courts.

Other countries are looking at Venezuela, and they’re think thinking, no matter what, we will never have any “international clause” that is settled by the United States courts. In fact, we need a BRICS Court! We need an alternative to the IMF, the World Bank… And the international court will be a BRICS Court – amongst ourselves. And instead of the “rules-based order”, it’ll be the real rule of law!
So you’re having that function… and it’s also showing that if a country like Venezuela is the object of sanctions – just as the African countries and the Latin American countries, the Global South debtor countries are sanctioned, that is an action by the “dollar block” to prevent them from earning the money to pay their foreign dollar debts… This becomes a legal, logical and moral excuse for repudiating the debts. That is really what is going to be the ultimate break.

The de-dollarisation break is what’s going to be the sign of this global fracture between the Global Majority and the NATO-US-West.

RW: I can’t miss the opportunity… and, again, I hope folks enjoy the irony… Many of the world’s religions – I’m no expert, so I can’t say all of, but many of, the world’s religions – have in them a proposition very close to what Michael just said. In the Christian religion, it’s called the Jubilee… It’s a very old idea, been around for thousands of years… that when a society begins to become so bitterly divided that the “glue” holding the community together dissolves, and the life of the community is threatened by inequality – in the old days, by having a large piece of land, when your fellow citizens had no land at all, etc. etc. – what was periodically done was that all debts were erased. All debts were erased, and you kind of start over: If it was land, then the land was taken away from whomever had it and redivided… perhaps using a random system of “you get this piece, and you get that piece, and the other one gets the other piece, and then we see how that goes, and if it produces too great an inequality, well, then in 10 years or 20 years we’re going to do it again”! And it was a way of holding on to – what in modern language would be the way the United States used to enjoy describing itself, as “a vast middle class”: nobody very rich, nobody very poor, everybody in the middle… Well, the Jubilee was aimed at doing that!

What Michael is telling us is that the Jubilee can also be not a voluntarily, religiously sanctioned regular activity… but the Jubilee can be the explosive end – when there’s no other alternative to resolve the absurdity of a system that concentrates vast amounts of wealth in the hands of the creditor and a desperate life in the hands of the debtor. At that point the overwhelming majority, who are debtors, will see in the Jubilee a very happy outcome and that the creditors will be unable to stop it. They won’t have the resources, and, at that point it’s over…

It’s not a question of courts anymore, and it’s just a recognition that the social contract requires the end of this inequality. And debt forgiveness is a simple direct stroke to get to deal with most of it.

MH: What Richard has described is really the distinction between Eurasian civilisation and Western civilisation.

My book “Forgive Them Their Debts” and all of the books that I’ve done with my Harvard group show when the ancient Near East – from 2500 BC in Sumer, down through Babylonia to their near Eastern neighbours, all societies, all the way to Judea – cancelled the debts regularly, because they all had a king… or the textbooks called them the “divine kingship”, meaning “a king who had certain promises to the gods to maintain stability”.

All the rest of the world has an economic view that is the opposite of what Americans are taught in school.

We have the Babylonian mathematical models that they had in 1800 BC. They are more sophisticated than any model used by the National Bureau of Economic Research here. The Babylonians saw that, in every society, the natural effect of debt is to polarise society – between creditors and debtors. And they were very aware that if you do not cancel the debts, then you’re going to have a financial oligarchy emerge. And the role of the ruler – whether it’s Hammurabi or other Near Eastern rulers – was to prevent an oligarchy, a financial oligarchy from developing, because – as the biblical prophets Isaiah and the others all pointed out – the oligarchy is going to use its financial power to get the population in debt… to then take over its land, and you’ll end up with a few people owning all of the land and who’ll settle plot to plot and house to house, until there’s no room for the free population in the land anymore.

Classical Greece and Italy were the first countries in the West to found western civilisation. They didn’t have divine rulers. And they didn’t cancel debts. They had a financial oligarchy. We all know what happened to Rome over a period of 500 years. There were revolutions, and you ended up with the collapse, you ended up with serfdom and feudalism.

The West was [essentially] Roman Christian… not the classic Orthodox Christianity in Constantinople… And you had Islam… And Islam normally – when there was a crop failure – would cancel or annul all of the debts.
So, for instance, this is what happened in India for hundreds of years under Islam… until the English came. And when the English took over India, they stopped the whole idea of debt cancellation… and you had an economic polarisation that has gone on in India till today, making it one of the most unequal countries in the world.
So you could say the defining characteristic of Western Civilisation is, from the beginning, to let a financial oligarchy develop and all of the rest of the non-western world – from the Babylonian Sumer through to Iran, through to Islam… all the way to even in Japan. You had it in China… This used to be the distinguishing feature between the Eurasian and western civilisations.

And I expect that the BRICS groups – that are negotiating de-dollarisation – are going to reinvent the wheel… and reinvent the same idea: that no country should put in a creditor class to create an oligarchy above the idea of social balance that is enabling the entire economy to grow and become more productive and survive.

In order to survive and avoid falling into a Dark Age into serfdom, you have to have a higher authority than the oligarchy, who is going to cancel the debts. And western civilisation doesn’t have a higher authority. We have… as Aristotle said – many countries’ constitutions call themselves democracies, [but] they’re really oligarchies.

Every Western civilisational economy for the last 2,000 years has been an oligarchy. Asia has an entirely different historical background.
And just as President Putin in Russia is pushing to say, look Russia has a distinct civilisational characteristic… I’m waiting for China and other Asian countries and for the Islamic countries to say, yes, we have a background too, and it’s not that of Roman Christianity. We’re going to put the overall interests before the class interest of a financial class. I’m waiting for that to be a distinguishing feature of what we’re really seeing… as a civilisational break.

RW: If I could… let me translate that into very recent American history: The wisdom of it extends very, very far… up until around the 1970s roughly, you could see the productivity of the United States rising slowly and steadily… and the wages rising slowly and steadily – more or less. And no one should be mystified by this. Productivity is what the worker gives the employer, and a wage is what the employer gives the worker. And they were going up nicely together. The employers were making more profits, the workers were making higher wages. It went on for a long time and gave the United States its remarkable growth, helped to develop the idea “every generation lives better than the one before” and all of that.

Then in the 1970s, for a whole host of reasons, the real wages flatten out – they don’t go up anymore. The productivity keeps going up… well, in English, simply that means: what workers give employers kept going up and up and up, but what employers gave workers, didn’t. And that’s why we’ve had a profit boom for the last or years… and the stock market boom.

But now comes the other side of the coin: if you hammer the working class with the American Dream: “this is what makes you a successful worker, you must have a car and a home, you must send your kid to college, you must have a vacation for several weeks…” If you’re demanding of the self-esteem of people wrapped up, but you’re not giving them the rising wage to afford it, what are you going to do? You’re going to throw them into debt, because that’s the only way they can have the American dream – by borrowing and going into the debt disaster!
And here’s the double irony: where are the lenders coming from? The lenders are the are the employers, because their profits have been rising since productivity rises and wages don’t… so they have the growing productivity… to lend to the workers. Because for them it’s a no-brainer! Would I rather give my worker a rising wage or a flat wage and a loan, which he has to pay back!? Well, that’s easy, we know what we’re going to do so… And that’s what we have!

Over the last 40 years we have plunged the American people into a level of debt that nobody else has ever seen! Mortgage debt, student debt, credit card debt, auto debt… you add it all up, and we’re talking: more and more families have a bigger debt than they have an annual income! This is impossible!
Meanwhile, the wealth at the top is a wealth, not only of getting the surplus out of the worker in production… but getting the interest payment when you’ve lent them the money, instead of paying them a wage!

I mean, this is a system guaranteed to produce grotesque inequality!

And that’s exactly the story that Michael has been telling you – whether you go back to ancient Sumer, or you’re right here in the United States in the last 50 years, what you’re watching are different systems. But they have in common that – unless you do something fundamental about them – they will produce an inequality deepening and getting worse and worse. Thomas Piketty, a few years ago, documents it for capitalism in his book. And then it blows up!

And then the question is – are we at the blow-up point? Are we getting near the blow– up point?

And my suspicion is – to go back to how we began – that the level of violence that you see in Ukraine, in Palestine is a sign of really desperate “holding on to something”, whose rationale has long gone.

MH: What Richard has described is how much capitalism has been transformed. He just mentioned how industrial capitalism made America rich, and they realised that highly paid, well-fed, well educated, well-clothed labour was more productive for its employers than pauper labour. And this was essentially what the whole economic philosophy of industrial capitalism was.

Then we learned from Marx that, what distinguishes industrial capitalism is that employers will hire labour, and they will then sell the products that labour produces at a profit, over and above what they have to pay for the cost of labour.

But now look at what Richard’s described, and what I’ve described [about] debt… that most the American wage earners – I don’t want to call them a middle class, because it really wasn’t a middle class – they’re wage-earners. The major exploitation of them is no longer primarily just by having industrial employers keep the profits on what the wage-earners create. Because, after all, we’re de-industrialising. The major exploitation that is occurring is largely in debt service. The wealthiest 1% – maybe you could say 10% of the population – hold the 90% majority in debt. And the income that’s paid to the top 10 % is sucked out of the 90% in the form of debt service. And, even more important, what do these 10% do with the money? They don’t spend all of this interest – economic rent interest – and financial gains on goods and services, they buy stocks and bonds and real estate. Or they lend yet more money to families to buy real estate or to corporate ratings – to take over companies.

And, so what you have is the economic elite not making their money by employing labour to make profits and get wealthy out of saving the profits… but by financial engineering – by capital gains.

And Richard just pointed out the immense rise in the stock market, bond market, real estate market. You have a whole focus on asset price inflation, on ownership rights and creditor rights – to turn the rest of the economy into a citizenry of debtors and renters instead.

Well, that’s just what happened under feudalism, basically. Somehow the industrial revolution of Europe and the United States had this idea that they were going to evolve into something very close to socialism… And we talked before about everybody in the 19th century being in favour of socialism of one kind or another… many different kinds of socialism.

But all of that changed after World War I, and the landlords and the bankers and the monopolists fought back. And they fought against government regulation. They said there’s no such thing as unearned income, no such thing as economic rent, everything is earned – just like profits.

The banks earned money by charging interest and, even more than interest, the penalty fees for late fees. All of that is earned income, and so you have a whole transformation in the idea of what wealth is all about and what the economy is all about. And it’s no longer the idea that industrial capitalism had two centuries ago… It’s something entirely different. It’s finance capitalism or, as many many people now are calling it, neo-feudalism.

It’s a transformation. That’s what is driving other countries apart.
Because, what has made China get rich? Of course, it’s socialism… but it’s also socialism that is following exactly the same pattern that made America, Germany and France get rich in the 19th century. It’s industrial capitalism and socialism together, because the industrialists wanted an active public sector. They wanted active public infrastructure, in order to keep the cost of living and doing business low – to subsidise their production.

All of this subsidy has now been broken up by the fight against government by libertarianism. And if you disable government action, government regulation and government capital investment, you have – since every economy is planned – the planning shifts to Wall Street… and today you have “Wall Street capitalism”, not industrial capitalism.

That’s the real transformation that is on the deepest level separating the NATO West now from – I think – what we’re seeing evolve in Eurasia.

RW: And precisely because of this concentration of wealth, you have the reaction, which concentrated wealth has always exhibited. The people at the top that are gathering all this wealth through production… and then when that fades, through financial manipulation and reorganisation, they realise, as they become richer and richer – relative to the mass of the population – that their wealth is at stake! That they are in a vulnerable position! They probably can’t get over the irony: they’ve done everything to become rich and powerful and feel less secure in that position than they ever have.

And in a society, which values – as we still do – universal suffrage (or something close to it)… that puts you in a genuinely vulnerable position. The number of employers is very small, and the number of employees is very large. A universal suffrage – you know where that can go. The workers could at any time vote to undo the inequality created by the capitalist economy. You can hear it when there’s discussion – however repressed – on progressive taxation… when you hear the complaints: “Gee, we tax capital gains at a lower rate than we tax labour income” and so forth and so on.

So what have they done, they’ve done the one thing that obviously they had to do: they have to neutralise the political system, which they do by buying it. Why buy it? Because that’s the one resource they have, and the politicians can be made to need money. That was easy… and now you lend them the money or you give them the money, and they give you back even more privileges than you had before.

So the industrial military have their monopoly, and the medical people have their monopoly. Now the chip-makers are quickly working to get their monopoly organised.

So it becomes then the old feudal joke of a handful of monopolists being able to sit on top, buy the requisite politicians, have the politicians develop the verbiage to make all of this seem natural, normal… having to do with technology – anything other than the real question of: how have you organised the workplace.

And when people say, why is it going in this direction, let me be a teacher for a moment: The capitalist system organises – in the way the feudal system did and the slave system did – in a very odd way. It takes a very small group of people and puts them in a very high position: the masters the lords and the employers.

That’s why we’ve been so disappointed… that the revolution to get rid of slavery did it, it achieved it, but it welcomed in feudalism, which – while being better than slavery – didn’t make people objects like cattle, nonetheless it had the lord and the serf.

And then we had the French and American Revolutions with all their great hopes for liberty, equality, fraternity and all the rest… But what we did was we built capitalism, which has the employer and the employee, which is a replication of the tiny group at the top.

So why are we surprised that our financial system and indeed our political system replicates a small group of people, who make the decisions? We all know that a small group makes the decisions everywhere. We bemoan it, we criticise it, but it’s built into the way capitalism organises at the base – in every factory office and store. That’s how it’s done.

It’s only the odd exception of a group of people who have a workers’ co-op or some other kind of form… and those are people who don’t want capitalism but yet can often not even say those words… because of the way our ideology and our education system works.

But, if anything that Michael and I have been saying has validity, then it is grounded in an economic system that imposes that odd, totally undemocratic arrangement, as if it were the “normal necessary”.

I’m reminded that, before we got rid of kings, we lived in societies where most people thought it was absolutely appropriate that the grandson of somebody long dead should be ruling over me, because he or she discusses with God every third Thursday, if it doesn’t rain, how to run everything. What!??
We got rid of the kings and discovered we didn’t need them. Guess what? You can get rid of the CEO, and you will discover we never needed them.

But that’s too much at this point in American development and in much of the world, we still have to push… to open this space – to even think such thoughts, let alone rationally evaluate alternative systems.

MH: So, what keeps all this going is the illusion – as Margaret Thatcher said: “There Is No Alternative”.

Now Richard and I – and in fact all of the guests you’ve been having, Nima on your show – have a common denominator: We’re all saying there is an alternative. And that’s why the guests you have on your show are not featured in The New York Times and The Washington Post. And we’re not on the television talk shows. We’re saying there is an alternative, and that is the nightmare, the horror, that the ruling class in the West has. And it’s that nightmare that gets back to what Richard said earlier: the panic at the thought that the BRICS can actually have a different economic system, that is on a completely different basis… of mutual gain and economic growth.

And you can’t call this a Thucydides trap. China, Russia and the BRICS are not trying to outcompete the United States and England and Europe at their own game. They don’t want to play that game. They’re saying, we’re not going to go down that road, we’re not competing with you. We want you to go your way, we’ll go our way. We’re creating an alternative civilisation – it doesn’t have to be this way. That’s their alternative to TINA, and that’s what I guess all the guests on your shows have been talking about for quite a while now.

RW: And they’ve been meeting resistance…

I agree with Michael, they meet resistance. It is very difficult for the people in charge, who have been in charge for the last century or more, to admit that that this could exist.

The irony! They are convinced that Russia and China want to dominate them – in what psychologists call “pure projection”.

It’s European colonialism and imperialism that looks upon anybody else’s emergence as a challenge, because they can’t imagine anybody not wanting to do to them, what they know (somehow) they’ve been doing to the rest of the world.

And I think you can see it. I think you’re seeing it in Ukraine and in Israel and in Palestine.

And you’re seeing there the capability of people who have otherwise been civilised in all kinds of ways, descending into levels of behaviour that we had hoped in the middle of the 20th century would make us never do again… as in the slogan “never again”, and yet… here it is – with only the roles reversed, rather than the problem solved.

NIMA: Just to wrap up this session, Michael and Richard, there is an article in The Economist. It says that China is building up huge secret reserves of food, raw materials and energy resources – in preparation for possible future problems.

Do you think that China is preparing for a big war with the West? Or they’re talking this way, because they want to project this in the mind of westerners?

RW: Well, I must tell you – I can’t speak obviously for the Chinese, and I don’t understand their motivation in this situation. I have no inside information, but I would tell you this: if I were a Chinese citizen, and if I were involved in these discussions, I would say to myself – given the sanctions of the United States -from Mr Trump’s tariff wars and trade wars, on through Mr Biden’s continuation of most of them, given the absurdity of the whole Taiwan nonsense, given the presence of the fleet in the South China Sea – you have to make preparations, otherwise you are an incompetent leader. You have to prep, you have to protect yourself.
Might they have aggressive intentions? I’m not aware of those, but I don’t know, I’m not claiming to know, but you don’t need an aggressive intention to justify what you just said.
The United States – and that goes back to something Michael said – the United States is giving, not just to China, the reason to do it… but more importantly the whole rest of the world – reasons the way I just did. The observers, the other countries, they look at the news you just gave – that they are storing food and whatever… And they ask themselves, is that for aggressive intentions?… And they’re going to come up with the same answer I have. They can certainly see in everyday’s headline what’s going on, in every session of the UN, in every debate over whether it’s Ukraine or anybody else…

The United States is busily sanctioning.15,000 sanctions to try to get the world to behave the way it wants. That’s what the sanctions are for!

Nobody else has the sheer audacity to think like that!

And what the United States is discovering with great rage is that it can think it all it wants, it just can’t do it.

The sanctions, as the article in the Washington Post admits, do not work. And, as Michael added, worse than – that they don’t work, they make matters – for the US worse!

So, again, that’s a sign of a society in very deep trouble.

MH: As Richard and I say, we don’t believe in getting information from the New York Times and The Washington Post, but there’s one thing you do get… And, if you’re Chinese, it’s the only thing worth reading about in The Times and The Post, that, day after day: “China is our enemy”.

The American diplomats go to China and say, we don’t want you to give any support for Russia, because, if you give them food that can feed soldiers, if you give them cloth they can weave that into uniforms… You can’t help Russia, because we want Russia to lose, so then we can fight you and do to you, what we did to Russia and Ukraine and do to you what Israel’s done to the Palestinians.

They read this every day. They can read the American speeches. (I don’t believe that the Americans read the speeches of President Putin or Secretary of State Lavrov.) And the Chinese are not quite as explicit as the Russians are, but they can read the US press, and they think the whole US economy is aimed, if not at war, at least at making high profits for the Military Industrial Complex. Even if their weapons don’t work, at least they’re huge cost-plus profits under “Pentagon capitalism” – yet another form of capitalism we haven’t talked about.

So, yes, they’re preparing to go it alone. I don’t think they’re necessarily stockpiling these raw materials – such as rare earths and helium, other products they’re having – for themselves… but they’re trying to use the possession of these to talk to the other Eurasian neighbours that they have, saying: look we can we can help you become independent and part of a growing civilisation in Eurasia. We have the material to support you. You don’t need to depend on what the United States, England and Germany can give you anymore.

I think they have a region-wide idea. It’s not simply military defence but an economic alternative. Their defence is going to be: we don’t want to go to war, we want an economic alternative. And maybe someday – in a generation or two – the West will think: “Gee, Eurasia is going ahead and we’re not. Maybe we should adopt Eurasian civilisation and realise that Western civilisation has not been as successful as we’ve been taught.

RW: It’s not that many years ago that Europeans gathered themselves together and got some support from governments and sent expeditions to China… and discovered that they knew how to do textiles better than Europeans, that their diet was much better. It’s not the first time…

There’s a level of self-delusion in the West that is yet another part of a declining situation – when you can’t open yourself even to your own history!

NIMA: Thank you so much for being with us today, Richard and Michael. A great pleasure as always.

RW: It’s becoming a very interesting – at least for me – a very interesting trio that we are accomplishing here.

MH: Yes, I love it.

NIMA: Thank you so much! See you soon!