Beyond Surface Economics: The Case for Structural Reform

Michael Hudson & Richard Wolff: Karl Marx and the Fall of the West

Transcript:

Erhardt on Marxism History – Wolff and Hudson Oct 6 2024

Michael Hudson & Richard Wolff: Karl Marx and the Fall of the West

Robinson Erhardt: Rick and I have spent a lot of time talking about Marx. You and I haven’t, Michael. So I just wanted to start with this, though Rick, please jump in at any point if you got anything to say. When was it that in your studies Marx first became important for you?

Michael Hudson: I guess when I was five years old. My father was a political prisoner. I grew up in Minneapolis, and that was the only country in only city in the world that was a Trotskyist city. And my father was one of the union organizers there. When Minneapolis was the center of the Truckers’ Union, the strikes, he edited the strike paper. He worked with Trotsky in Mexico just before I was born. And the people that we had at the house when I was growing up were all his fellow socialists. Many of them had been in jail with him. Or they’d come from Europe. They’d worked with Rosa Luxemburg and Karl Liebknecht. And because I was young and they were old, they wanted to tell me all their stories so somebody would remember the whole history of Marxism. So I grew up with Marxism. And my mentor Terence McCarthy was the translator of Marx’s Theories of Surplus Value , the first translator into English. Only the first volume was published because the Stalinists broke into the printer, poured acid over the plates and prevented it from being published because the one thing the Soviet Union feared was that people would read Marx’s Theories of Surplus Value and his analysis of national income and realize that what the Soviet Union was doing had very little to do with Marxist economics.

I had met Terence when I was 21 years old. The condition of his mentoring me was that I had to read every book in the bibliography of Marx’s Theories of Surplus Value. So I accumulated a large collection of classical economics and my view of Marx was the culmination of classical political economy. I saw that the fight of people against Marxism was really a fight against Adam Smith and the physiocrats and John Stuart Mill and everybody who talked about value theory. Value was basically the intrinsic cost of production reduced to labor, but price was much more than value. It was unearned income. It was land rent. It was monopoly rent. It was financial rent. The fight against Marx was a fight by the landlord class, by the financial class, especially in the Austrian school in Europe and J.B. Clark in the United States that said there’s no such thing as unearned income. There’s no such thing as economic rent. Everybody earns whatever they have. There’s no exploitation. There’s no surplus. And Marx is all about there are different kinds of exploitation.

Robinson Erhardt: How does all that resonate with you?

Richard Wolff: Very interesting. I did not know this about Michael’s background. Mine is a little different. There’s some overlap. My parents weren’t Marxists, but they were European intellectuals. My father was born in France, my mother in Germany, and in the circles they traveled as university students, you read the great thinkers, and that included Marx. It would have struck my father’s teachers or my mother’s teachers as very odd not to study Marx. So when I got to the university here in the United States and discovered that nobody studied Marx, I realized I was in a very strange place given what my parents had led me to expect. You know, my parents told me as a child that the university was the great place where civilization was carried forward, was passed from one generation to another and I arrived as a freshman you know teach me teach me I wanted to learn and but I had had a formation at home that was infinitely broader you know when I was in high school, for example, my father gave me Aristotle and Plato to read because he was so upset at the quality of what I was getting in class in the high school. And I went to a pretty good high school, you know. So when I came to college, very quickly there was an opposition set up. And this goes to something that you actually asked me last Thursday. I was confronted by people who knew very little about Marx, and when they talked about him were dismissive. So you had this combination of quick dismissal of something you clearly didn’t know and that doesn’t take a genius to figure out this is a taboo. You’re unable to go there and you but you have to cover it with bravado. It’s clear But I was interested in those kinds of issues .

The Marx that I had read a little love before because my father gave it to me I wanted to pursue that they didn’t want to talk to me about it But I was also brought up in a family where I had to do well. That was not to be negotiated. So I ended up spending four years of my undergraduate life fighting with my professors. And I didn’t fight them, confront them, because I was taught to respect professors. That was out of the question.

What would happen, and really it happened all the time, is I’d get a lecture. I would run. I mean, I would run from the end of the lecture to the library. It’s a huge building called Widener Library , and it has everything in it. It’s really a great place if you’re doing what I was doing. And I would run and read the literature I needed to refute what the teacher had done. That was a better education than the teacher gave me because it was heavily motivated, as it would be for any student. And I taught myself much of what I had to learn to refute the teacher. You know, from Hegel you understand imitation is one form of being influenced. Opposition is just another form of being influenced. And I was influenced by that.

Plus I had, and here comes the overlap, there was a fellow at, lived in Cambridge, Massachusetts, a few blocks from the university, who came knocking on my door freshman year. I didn’t know the fellow, short guy with a mustache, heavy German accent, was a friend of my father’s. Long story short, I won’t bore you with the details, he said I owe your father my life and I would like to pay your father back by offering you something. Are you interested in Marxism? Yeah, I’m kind of wondering I mean he knew my father so he might have got something like that from my father. I Said yes, I am. He said well Do you speak German which I do? Yes I said, the rest of the conversation was in German, and He basically offered me a tutorial in Marxism while I was at college. And we did it, and we went through. That’s when I read for the first time the Theories of Surplus Value. In German, it’s very interesting. In German, surplus value is called Mehrwert. And the word Mehr in German, M-E-H-R, simply means more. And it’s much better for the theory to understand there’s more value in this story than what the worker gets. The worker makes it but doesn’t get it. The minute you get that idea in your head, everything opens up because that’s the theory of surplus. So I learned it as Mehrwert. Mehrwert is the German word for value.

And you may know his name. His name was Fritz Pappenheim. He wrote a book called The Alienation of Modern Man, published by the Monthly Review Press here in New York. And he was my tutor and took me through the classics of Marxism step by step. And that was a wonderful lesson. It was the best thing I got out of college.

And it wasn’t in. This is Harvard, so it’s supposed to be oopsie-doodle, but it isn’t. It wasn’t then, and it isn’t now. I had to listen to Kissinger explain to me world affairs while Fritz Pappenheim gave me the alternative view.

But it fueled, and by the time I was done at Harvard, I knew I wanted to study Marxian economics. I looked around, and I discovered something which was true then and true now, which is there are very, very, very few Marxists allowed to be economics professors or anything like that in the United States. Very few then. I had come to know two of them through my growing up in the New York area. I knew Paul Sweezy and I knew Harry Magdoff who together ran the Monthly Review magazine and they told me, okay, they had become sort of mentors by then, because I was showing a lot of interest and they connected me with Paul Baran who taught at Stanford.

And so I went out to Stanford because Paul Baran at the end of World War two before the McCarthy I juggernaut got going, had befriended — the way the world works — he had befriended a conservative American economist named Henry Wallich , a monetary, monetary, and they had become friends. Wallach had gotten a job at Stanford and he prevailed on the other people there to hire this very bright young man, Paul Baran. And so he got tenure before they kind of figured out who he was. So I went and studied with him, partly riding on the American elitism.

Because if you go to Harvard and you do well, remember I always had to do well yeah with my parents Immigrants are terribly afraid of not doing well. They have to kind of prove that they’re all of that. I was the first child of my immigrant parents, so I had to prove all of that. It’s awful. It does things to you psychologically, very heavy price to pay.

In any case, I went to Stanford. They were eager to have me. They gave me money. I had no money. All the way through, I had to get money.

And then Baran had the bad taste of dying. Two thirds of the way through the first year, I worked very closely with him. I worked on the galleys of Monopoly Capital , the book that he and Sweezy produced, that was an important book in the 1960s and 70s. And then when he died, I went to Yale. It was like a joke. So I’m a poster boy for fancy education, but I got no Marxism anyway. That was all done either on my own or with that tutor or with other young students like myself who were interested. We would work together, but we got no help and we got lots of opposition.

To give you just one example and it shows you how the world has changed. I wrote a dissertation on British colonialism in East Africa and when I handed it in. It said that, that you know British colonialism in East Africa and my professors said we will not accept this. Oh I said what did I do wrong? Oh nothing, the thesis is wonderful, but you can’t have that title. I said I looked at them why not? It’s not a value free term, colonialism. So if you look up my dissertation at the year in, it says, economic aspects of British foreign policy. That they could have. Colonialism, they couldn’t.

And the word capitalism was banished. You did not hear in the curricula of any of those schools discussion of capitalism. It was the taboo was so total. It wasn’t just that you didn’t do any Marx or Marxists. Just think of the names that he dropped. Rosa Luxemburg, Karl Liebknecht. These are names, I discovered them all, I read all of that, but nobody ever gave me a book or an article by these people. But you couldn’t say capitalism because that was associated with the critics of capitalism. And so the way you expunge it is you don’t talk. It’s like, not there. Economic system, you can say that. Free market, you can say that. Capitalism can’t say that. Now you can, but you couldn’t then.

Anyway, so that day I come to the market. My father, I should say for transparency, was close to people in what came later to be called the Frankfurt School. So the first time I went back to Europe I connected with people like Max Horkheimer. I mean you’ll know these people but you know in Europe in most of my lifetime if you were interested in Marxism you were interested in European because that’s where it was and you had to kind of go and read it and bring it here. Now there’s a developing American Marxism, which is wonderful. Everybody knew it would happen, but it’s taken a while. The early Marxism came with the immigrants and showed that in the whole way that it was developed.

Michael Hudson: Well since Richard’s talking about his experience in school I can fill you in. My experience with Marxism peaked in high school at the University of Chicago Lab School. We had to teach our social science teacher Curtis edge. It had a big sign over the school room wall, give them all what the Rosenbergs got. And later I found out he meant the Jews not the Communists. But most of our discussion was about Communism and he very quickly there developed a three-way argument, he would say something right wing, i would uh say another position uh uh he would call me a communist but we had a stalinist in the class Danny Lando and Danny Lando would call me a fascist uh and so uh you had me attacked by both both times. I recruited what became many of the leaders of the Trotskyists in that class. It was the only time in my life I was the voice of reason in the middle with everybody else seeming to be an extremist. One of the things my father did in jail was collect a large filing cabinet on 3×5 cards of everything that Lenin and Trotsky said about labor tactics and socialism and I remembered it all. By a few months into the class I had two of my students would carry in the works of Lenin, put them on their desk. I would make some point to the teacher. He’d say, where did Lenin say that? And I would say, from memory, volume such and such, page such and such. And my student would pull it out. And so I could have a basis for everything. I was an empirical basis for all of this.

And one of my classmates was Gavin MacFadyen , who became one of the leading investigative journalists. We had a film company, Chicago Films, that made the BBC films in New York City. And I’d bought a big house on Second Street. And we had to set up like this in front of a library. And in back of everybody, little did anybody notice, we had the works of Marx, Wilhelm Reich , you know other people in the camera would always have the same people, you know these are the works in the background. It was wonderful. Well then I came to New York and I didn’t, I went through the University of Chicago not thinking of any thought of economics at all. My degree was in German history and philology because I’d planned to be an orchestra conductor, a musician. And I had all of my teachers, the lectures were all in German. I had to translate the works of Heinrich Schenker.

So I came to New York, met Terence, decided to go into banking. And because my specialty was in balance, I was lucky enough, I lucked out to end up at Chase Manhattan as their balance of payments economist. And there were only a few financial economists on Wall Street. We were all Marxists. And we realized that the reason we were all in the positions we were in because we knew the whole system was about exploitation. And if you go to business school and you’re taught that there’s no such thing as exploitation, that everybody gets what they earn, they just don’t get what the economy is about and they make wrong forecasts. So we rose very highly. None of us ever mentioned Marxism or anything socialist, needless to say, for our respective employers, but we would all meet at a coffee shop once a month in Manhattan once a month and we describe it and I remember I think I’ve mentioned this before on one occasion, we were discussing a volume III of Capitol where Marx is talking about the exponential growth of debt and how the job of industrial capitalism was to industrialize finance. And we laughed and we thought, what if, you know, anybody would hear that this is how we’re putting our analysis together and not a word of it anywhere.

Richard Wolff: Not only that, let me add two things. One, often you were praised. I bet you this happened to Michael repeatedly — his superior, whoever sits above him in the hierarchy, praised a report he wrote or an analysis he gave, having no clue that it was an application of an argument coming out of Volume 3 of Capital, where Marx talks about finance and merchants and, you know, all of that that people have no idea about, because they’re going to look at it. That happened to me. I would — my mentor there at Harvard, he would help me, and I would write papers about something. And these were, to be honest, crude applications of Marxism be honest, crude applications of Marxism by a young person just learning it. I would get A’s and Fritz and I would laugh all the time that the professor just gave an A to the Marxism he neither knows nor respects because he’s so caught up in the taboo of the time. And historians will look back on that whole period of American history which isn’t over yet and make fun of it and find it difficult to believe that an otherwise advanced culture could be so backward when it comes to this that in the hysteria of the Cold War, one couldn’t read or think about or use words. I mean, what a horrific kind of self-censorship, not even to go through all the people that were hurt by it. But we got rewarded for our Marxism because the people rewarding us didn’t know that’s what it was.

Michael Hudson: The problem that we both faced I guess when each of us began teaching was how do we work these ideas into the curriculum. I was offered a professorship at the New School for Social Research in New York and that turned out to be, they said they were socialist, well that turned out to be a mistake because the department head was Bob Heilbronner. And I was brought into the department by one of the economists who had World Bank contracts. And I’d been invited to give a lecture on copper pricing. And I was one of the probably leading copper specialists on Wall Street because for Chase, my job was forecasting the balance of payments of Chile and I had to understand copper prices because that was a balance of payments and one of Chase’s customers was Anaconda and Kennecott used Citibank and so I was able to explain the balance of payments clearly and so they thought okay he’s a Wall Street person well to Heilbroner And so I was able to explain the balance of payments clearly.

And so they thought, okay, he’s a Wall Street person. Well, to Heilbroner, I was a Wall Street thug. He knew nothing at all of my background. And by 1971 and 2, I was teaching a course in national income accounting. I used Theories of Surplus Value as my textbook. The students bought out the entire, what was remaining of the translation.

And I was trying to say, you know, what really is gross national product? Well, do the landlords produce anything? Does the banker produce anything? Does the monopolist produce anything? They’re separated. They’re not part of the production system, so they don’t produce value. What they have is economic rent , and that’s a transfer payment. Let’s take the GDP and let’s take away what is really not production at all, because if you have national income and production and these people don’t produce anything you’re going to have a much smaller GDP. Well, Heilbronner had just hired somebody who he thought was, he’d actually decided let’s make the New School a Marxist school.

And so he hired somebody from Yale who was a real hardline Stalinist who got together. He wrote on imperialism. I’m blocking out the name now. He taught Marxism and would have the students take LSD before the Marxism course. He said, there’s one person we have to get rid of, Michael Hudson, and that’s because I was talking about volume two and three. And he said, it’s all about capitalist exploiting workers. What is all this stuff? This is not what capitalism is all about. So…

Richard Wolff: It wasn’t Stephen Hymer?

Michael Hudson: Yes, it was Steve Hymer. Yes, that was his name.

Richard Wolff: Let me give you an idea. Stephen Hymer was a member of my dissertation committee at Yale.

Michael Hudson: Oh, tell us about it.

Richard Wolff: Stephen Hymer was a member of my dissertation committee at Yale. Oh, tell us about it. He was Canadian, came from Montreal, was a very good student, went to MIT, got his PhD at MIT. There he became very close friends with a guy named Steven Resnick , who was also a graduate student. And Steven Resnick and I have done a lot of work together. Most of the books I’ve published that were together with Steve Resnick. Heimer was the only person at Yale that could have helped me do my dissertation because he was, as he said to you, a Marxist of some sort. But I know him there. I got to know him very well because we worked on my committee. He didn’t know much about Marxism. Whatever he knew was very shallow. He was very good on Africa, very good on colonialism. He did a lot of stuff there.

And he was the only radical who said or dared to say anything at Yale, which is why they threw him out, as they did Resnick, as they did me, basically. But he, I mean, he may have been a Stalinist, but it would have been by inadvertence. I don’t think he knew much about those things. He took a position. They didn’t have people there. They didn’t have, I mean, I teach at the New School now, too, now. And the only place I’ve ever been where I could teach the Marxism as such was the University of Massachusetts. Because of what happened there, odd arrangement, they hired me to do that, which was enormously lucky for me because it what it meant was that the tutorial I had been in as a student could now continue in the way a normal professorship might. That is, you build on something as a student and then you develop it later on as a professor, as a researcher. I was able to do that with the Marxism because my paid job was to teach it. And for example, the students wanted to learn everything.

So we began a curriculum with Volume 1 of Capital, where a lot of basic stuff is done. But then the students requested, and I was overjoyed. I taught every other semester Volume 2, volume three, so they could see the full range of what Marx had done. Not to be orthodox, but to not to reinvent wheels all the time. You know, here it is. There’s a basis. Now go develop it. There are problems, things aren’t well worked out, contradictions, as in all scientific work, let’s go. But it has been stunted in this country because you cut it off. The taboos meant it could not go, except in a few of us who lucked out. You really are talking to two of a small group of people, we’re not the only ones, but we were lucky both in the education and in the jobs we got that we could continue to use that apparatus and to develop it. Well I can tell you how the new school has…

Michael Hudson: Since we’re talking about the New School, Heilbroner said that he wanted to make it Marxist, but he also gave a big lecture saying the most worthless discussion in economics was the distinction between productive and unproductive labor. And, of course, that was what I was emphasizing. He just doesn’t know. He said he had no idea that I was a Marxist, despite the fact that I used the reason for the value. He thought of me as, oh, he’s worked for Chase Manhattan. And at that time, I was being sent around the country by the Catholic Church, who was following my ideas and was popularizing them.

And I actually wrote part of the papal encyclical on popularum progressio, on birth control. Because on an airplane, I had met someone from the National Catholic Welfare Conference , and I said, if you don’t cut the population down to the food supply, you have to increase the food supply to the population, and that requires land reform. And if you’re going to take in reducing population, then you have to and that requires land reform. And if you’re going to take reducing population, then you have to come out for land reform. I actually converted many of the bishops and archbishops and the man who became the foreign, the cardinal who became the foreign secretary of the Vatican, and they sent me around promoting the liberation theology. And Pope Paul VI approved what I was doing, and the next, the good pope, was going to establish an academy of geoeconomics in Tulane University that I was to head to create an alternative to the World Bank based on countries producing their own food and land reform.

Richard Wolff: This is great stuff. You ought to write this down.

Michael Hudson: Well, Heilbronner said, you know, here we have a Catholic Wall Street guy. We have to replace him with a Marxist. But a Marxist who didn’t talk about the difference between productive and unproductive labor. So he replaced me with two people. With Anwar Sheikh , who then spent his whole career writing about the distinction between productive and unproductive labor. Oh dear, the son of a business school analyst whose name I gave a lecture before for the ERPY, and I’m blocking out his name too, and gradually after Heilbronner died, the school did become more open and Marxist. So they can even take someone like Richard, and he just said that he and I, you know, are not the typical Marxists. And that’s the whole point. What happened to the rest of Marxism? Where did it all go? Why are we here almost as out of place in what calls itself Marxism as we were as Marxists and where the whole world was capitalism? That’s the point I think that I hope comes out of all this interview.

And it’s not only here. In China, I was invited to the first World Marxist Conference as one of the lead speakers. They had posters with my name all over Beijing, and I talked about Volume 3 of Capital. It was not received, and you could see that was not their idea. They appointed me as a professor at the School of Marxist Studies along with Sasha Alexander Buzgalin who explained to me that Marxism was the Chinese word for politics. Ah, I get it. I get it now. Marxism was a Chinese characteristic.

They didn’t invite me to give the lead lecture for the Second World Marxism Conference. They invited David Harvey from here in New York, a British Marxist. Harvey said, you’ve got to look at volume three of Capital, just like Michael said. His books have sold tremendously throughout China. That was not received well at all because China, as you know now, has run into this huge real estate crisis of real estate financing. And if they would have read Volumes 2 and 3, they would have been able to avoid all of that. If they would have taxed all the land instead of having local cities raise money by selling the land to real estate developers and then letting private banks bid up real estate prices and create a bubble, they would have known that that’s what Marx said. The task of industrial capitalism is to get rid of all of this.

And you can see that I had the same problem in Russia. The Soviet Union had no idea of economic rent because they didn’t charge rent. And they didn’t really understand finance because they didn’t charge interest. They said, we’re gonna get rid of rent and interest just like Marxism said, but they didn’t understand that the West didn’t get rid of rent and interest and had certain plans of what they wanted to do with the post-Soviet economy. The Russians didn’t see what was coming. And the Russians didn’t see what was coming because we were trying to bring Marxism to Russia, and it didn’t work.

Richard Wolff: Let me offer an explanation of why all this happened. Marxism is with Marx. Let’s remember Marx lives the 19th century. He’s born toward the beginning and he dies toward the end. So he’s in an early phase of capitalism trying to understand its emergence, let’s call it, out of feudalism. He’s inspired by the French Revolution. he’s inspired by the American Revolution, he says so and there’s not a big interpretive move of mine. And he makes a critique of capitalism.

It’s a very profound critique. It basically goes like this. Those who brought capitalism out of feudalism promised that it would come with liberty, equality, fraternity, and democracy as its gift to the world. That’s why we should be pro-capitalist, because look what it’s bringing. Those were the slogans of the French Revolution, democracy of the American. So he’s living 50 years after, well, 70 years afterwards, and Marx looks around Germany, Western Germany, where he lives as a young person, and he basically notices that whatever capitalism brought, liberty, equality, fraternity, and democracy aren’t among them. Because it’s not. It’s very unequal. There’s no liberty people have. The poverty is all, you know.

Marx is living at the time described in Dickens’s novels. Remember? Oliver Twist and Copperfield and Tale of Two Cities and all of that. And so he says, what happened? He’s distraught because he shared all of those slogans. He loved equality, fraternity, democracy. He loved all of that. What happened? Sort of like, I know this is sacrilege, sort of like Hillary Clinton after she loses the election writes a book. What happened? You know, it wasn’t supposed to. And Marx’s conclusion is that capitalism is its own obstacle. It’s capitalism, that instead of bringing all those things, blocks all those things. Don’t look outside. Don’t ask. It’s not a mystery. Let me show you why capitalism, given how it works, is an obstacle to liberty, equality, fraternity, and democracy.

This is very, very powerful, this critique, and the effort to shut it down, to close it off, fails. It spreads like wildfire in the second half of the 19th century. It spawns a political party in Germany, the Socialist Party, It spawns a political party in Germany, the Socialist Party, which includes Marx’s work as its basic literature, inclusive of Marx’s family as among its leaders, and so forth. And it leads people to draw a very interesting conclusion. Okay, huge numbers of people say capitalism is the problem and going beyond capitalism will be necessary to realize liberty, equality, fraternity, and democracy. How do we do it? And again, long story short, the answer is we use suffrage. We are going to use the fact that the mass of people are workers and we can reach them and we can make this argument and we can, here comes the key point, seize the state as the crucial institutional place to get with which then to go beyond capitalism. The state takes on an incredible importance.

The only disagreement, again long story short, is whether you capture the state democratically with elections, evolutionary socialism, or whether you seize it with a revolutionary explosion, revolutionary. So the Paris Commune of 1871 and the Russian Revolution of 19—are revolutionary. And the gains of the socialist parties in Germany and Austria are the evolutionary. And they’re quite effective, both of them. Alright, now we have the explanation I think. What happens is what has often happened in history. The means get confused with the ends. The state becomes the thing. Get the state. Use the state. Capture the state. Use the state then. Everything is focused on the state. I want to remind you, Marx never writes about the, I mean, tangentially, but there’s no study of this. The state doesn’t loom importance. He comes before that.

The state becomes important at the end of the 19th and into the 20th century. And then this focus on the state merges together with problems in capitalism that can only be resolved by an ever larger, more intrusive state apparatus. And what begins to happen is a bizarre coming together of the advocates of state intervention to keep capitalism going with the advocates of state to go beyond capitalism. And the two things get terribly confused and interwoven. My teacher, Paul Sweezy , is the coming together of all of those. And that’s, by the way, why neoclassical economists have a hard time often Understanding why Keynes isn’t Marx and Marx isn’t Keynes. They get them all mumbled together because of this shared focus on the state

Okay, and then we have the successful revolution in Russia and the successful revolution in China successful how The Communist Party seizes the state. It does that. It does it pretty successfully. It does it against the opposition of the private capitalist universe in Russia. Remember, they lose the World War I, but they then win the revolution and they win the civil war and they expel the invaders. France, Britain, the United States, and Japan invade Russia after the revolution. They defeat them.

And they establish what? They establish a system in which the government has largely replaced the private, not in agriculture, that’s a whole other story, but in industry. The government owns and operates the enterprise. The government declares you’re the board of directors, you do that kind of work, and you’re the employees. China, I mean again, very long story short, this works nicely for Russia for 70 years. They really do well. They grow fast.

If you think of where Russia was at the time of the Revolution in 1917, it was the most backward corner of Europe and within 50 years, despite two world wars, a revolution and a civil war they are the challenger of the United States. That’s an amazing achievement. Before you dismiss everything they did, that is an amazing achievement. There were horrible things that happened along the way. That’s part of the balance. I have no problem with that but they achieved a lot of things.

And now we have China, also a successful revolution, 1949. What is China? China looks at the United States and England and says, you’ve held on to a private capitalism. You’ve kept the government limited. Soviet Union, you gave the government basically everything. We’re not happy with the outcome of either of these, so we’re gonna build a hybrid. We’re gonna have half the economy private capitalism and the other half what?

Lenin in 1922 referred to what they had achieved in Russia as state capitalism. Why would he do that? The government was in the hands of the Communist Party. There were no other parties that were a threat at that by that time. They had expelled the invader. They’d won the Civil War. They’d won the civil war. They basically had everything. Why would he call it? I believe the answer is that he was, and now you’ll see how Michael and I are similar, I think Lenin was a good Marxist. He understood that you haven’t made a revolution, you haven’t gone beyond capitalism when you make a move from the private to the state. Because it is state capitalism. It’s not a new — you can call it whatever you want. You can call it socialism. But it isn’t.

Marx was all about the volume one of capitalism. What’s the relationship here? Who produces? Who gets? There’s a surplus. Who gets it? What do they do? Those who get it with it, they distribute it to other people who do not produce value. They do other things. They’re financiers, they’re landlords, they do all kinds of other things. The revolution remains to happen. Marxist criticism, and where I think Marxism is going now, is to understand it’s that that has to be changed. You haven’t done what has to be done. Just like Marx said, you haven’t made liberty, equality, fraternity by having capitalism. Now the Marxists have to face the fact that they have to say you haven’t achieved those things by going from private to state capitalism, the whole way, hybrid way. You haven’t dealt with, here we go, the organization of production. You haven’t dealt with the organization of production. You haven’t done that. And until you do that, it’s not relevant to talk about socialism. You haven’t got there yet.

Socialism is still that which has to be fought for. And I do it as an exemplar by trying to talk about what it really might mean to have an economy in which enterprises, those that produce goods and services, are organized in a democratic way. One person, one vote. No employer-employee dichotomy. That has to go. The workers together will decide what is to happen. You bring it into the enterprise. Unless you’re prepared to transform the organization of production, what you’re doing does not yet absorb and apply what Marx taught us.

Last point. In the history of slavery there were plenty of examples, I think we did this, where the slave enterprise was private or the slave enterprise was the state. And there was private feudalism and state feudalism. Nobody says it isn’t slavery because the state was active and nobody says it wasn’t feudalism because there was a state apparatus that had serfs. Why in the hell did we waste a century of thinking that if you have the state active in capitalism, you no longer have capitalism? No, you have state capitalism alongside the private, just like you had that before.

And therefore, there’s another reason to be open to the idea that what Marxism is going to be doing is trying very hard to think through, to advocate for, to militate in the direction of a transformation of the workplace as some, not as the only thing to do, but as something that wasn’t done that is the missing element. There are still important macro questions and all of that. I’m not arguing do this, not that. I’m saying not attending to the radical transformation of the workplace is the mistake that the socialist movement of the last hundred years has made. I think here’s how that problem came into being, really.

The problem is how do we teach students about Marxism?

And there are two approaches. The usual one is to say you begin with Marx and you go forward and what it’s become and you begin with Soviet Union and the state that have called themselves Marxism. That’s where you begin. What Richard and I do, we’re looking at Marx as the culmination of a whole long discussion that includes value, price, rent, and all of this that made capitalism revolutionary. What verb are we going to use for capitalism? Richard said emerged, but then he explained that capitalism didn’t really emerge from feudalism. It wanted to wipe it out. It wanted to free Europe and Marxists from the legacy of feudalism. It wanted to get rid of the landlord class, and that required political reform. You get rid of the power of the House of Lords in England to overrule the House of Commons. You want to get rid of banking. All of this did require a state.

In fact, while these dynamics were occurring, there was within capitalism itself, support of the state. The whole purpose of getting rid of rent and interest and monopolies was to lower the cost of production. And again and again Marx says the task of industrial capitalism is to get rid of the false costs, faux-fray of production, to minimize costs. That’s how they compete. How do you minimize costs? Well, you get one way is not only to get rid of the landlords and bankers and monopolists, but you need increasing government spending to take over certain costs from so that the employers don’t have to pay. If the state pays for roads and parks, if it pays for public health, if it pays for education, if it pays for all of the infrastructure, then employers in one country that has these strong state expenditures will not have to pay workers enough to afford high prices for food, high prices for education. They can afford to pay lower prices than countries that haven’t developed a, we’ll call it a social democratic state or a socialist state. And it was the American school, and Marx pointed this out, it’s an American that said the role of the state there is to lower the cost of production and to subsidize industrial capitalism.

And I think we’ve talked before that the first professor of economics at the first business school in America, Simon Patten , said public investment in canals and railroads and roads is a fourth factor of production. A job isn’t to make a profit, isn’t to make economic gain, it’s to lower the cost of living and lower the cost of production to make the economy more productive. That’s what America did and it’s also pretty much what happened in Germany. In Marx’s time, he was saying, well, we’ve got to industrialize the financial system so it’s not predatory. That’s what he says again and again, not only in Volume 3 of Capital, but in the Communist Manifesto and his other thing, How Do You? That requires, in a way, the state to prevent rent-seeking. In Germany, you had a completely different kind of banking than you had in the Anglo-Saxon and Dutch countries.

The banking there was actually to promote industry. You had sort of a union between bankers, the state, and heavy industry, largely for the military. So you had German industrial banking that wanted, if an industrial company, a steel maker or other country, would make a profit, the German banks said, don’t pay it out in dividends and they never thought of using the money for stock purchase buyback agreements use it to expand your industry and expand your industry whereas the anglo-saxon american banking said you know as soon as you make a profit pay it out as dividends to raise the price of the stock in in in western europe and america banking was short-term. Just take the money and run. Same thing with stockbrokers in England.

They’d underwrite a company and then walk away and make another thing. In Germany, it was all long-term. And so Marx saw that socialism is going to emerge out of capitalism, not by getting rid of it like capitalism had to get rid of feudalism, but actually develop it and marks, I think, in a number of occasions. So banks are going to be sort of the central, right now, banks are the allocators of credit, decide who gets the funding to finance, to expand. That’s what socialism is going to do and so socialism will sort of emerge out of this mentality well he that was occurring in Germany it didn’t occur in the Anglo-Saxon countries and marks also just footnote yeah that’s also why Lenin at the end of the 19th and the beginning of the 20th century, sees what we would nowadays call financialization happening. And he says, see, that’s why it’s the last or the highest stage of capitalism, because of the concentration of finance. He makes that remark.

We’ll just have to take over these banks and then it’ll be us and modern social mitra in france two or three decades ago that’s what he did he seized the banks in france with the plan which he couldn’t do but he had the plan was with this we can allocate the credit and we can replace germany as the core of Europe. They didn’t let him do it, but that was the idea. Yeah. Well, Marx thought that capitalism was going to… he was an optimist. He thought that the materialist approach of history, he thought, well, classes are going to work in their self-interest. He didn’t see the counter-revolution. That occurred after he died. The counter-revolution that got rid of rent theory, that somehow used all of a sudden… Neoclassical economics. Yeah, yeah. And it really should be called post-classical, anti-classical economics. Yes. Veblen coined the term neoclassical, meaning this is now the new economics. And he shouldn’t have called it neoclassical. People think it’s something new called it neoclassical people think it’s something new like neoclassical and it’s against everything that classical economics is all about it’s bourgeois economics it’s the economics of the rentier but he’s saying there’s no such thing as rent.

I teach these courses in the history of thought in the 1870s, Britain, France, and England, at the same time, Jevons in England, Menger in Germany, and Walras in French speaking, they developed what we now call neoclassical economics in direct opposition to the explosion of Marxism. at the turn of the century, Abschluss des Marxistischen Systems. How would you translate that? The end of the Marxist system. That’s when he discovers that there’s something different between values and prices and gets terribly excited by this discovery.

Robinson Erhardt: So let me pose this question for Rick. And it’s been great to have this preamble. And our intention for today was to discuss the evolution of Marx in the West and your analysis of Marx and his, the importance of understanding Marx to evaluate today’s economy so what I want to start with and then Michael and I will continue is, I don’t want to presuppose that our listeners know too much about Marx or anything at all. What do you think are the crucial dimensions of his theory that we need to understand to have this discussion?

Richard Wolff: Well, on the simplest level, On the simplest level, every economic system of which we have any kind of record indicates that there were people who lived in it, who loved it, and celebrated it. And there were also people in it who didn’t and who were critical. And either you foster and allow that contradiction to play out, let those who love it talk about that. Why do you? What do you think is happening? And let those who have a critical perspective do the same. The United States, more than almost any other country I know, particularly developed industrial countries, is now coming off 75 years of self-enforced ignorance, silencing the critical views from Marx, allowing others, but not the Marxian critique. That is a taboo. It is a legacy of the Cold War, as it was a part of the Cold War, to expunge all of this. It is still true that one of the key things that the two kinds of economics professors that’s my profession the neoclassical and the Keynesian they usually call themselves , one of the few things they can agree on is to completely exclude the Marxists from the conversation. The so-called great debate in economics is between those who want a bit more state intervention and those who want a bit less. A discussion that I found stale when I encountered it as a student and it is staler yet but it keeps going and it is the substitute for what should be the debate, which is pro and contra capitalism, which is the issue that Marxism puts on the ground.

Number two, Marxism’s premise is that the human race can do better than capitalism. And I would I would provoke your audience. Isn’t it one of the great things we celebrate about the human species that we inquire about how we can do better? Don’t we say that’s a foundational component of the technology we’re so proud of, of the forms of government we’re proud of? We once had monarchy. We thought we could do better. We think we have. Where is it that in capitalism it should be written that that’s it. We can’t do better. It’s the best And anybody who says otherwise shut up That’s the behavior of a person or of a movement or of a society that is afraid That’s what this is. It’s fear. It’s not It’s not a reasonable argument and the people who make it half know That it isn’t that’s part of why it has to be shut down.

Number three, Marx is a product of capitalism. Marxism is capitalism’s shadow. You’re not going to get rid of it. No, it’s there. Without capitalism, there wouldn’t have been a Marx. He is a… it’s the Hegelian moment of opposition. It’s the opposite. Smith and Ricardo celebrate capitalism. Marx learns from them, but says, I don’t think it’s so great. I think we can do better. Now, rational community would investigate this. I can assure you that Michael and I will attest in any way you want to the value of doing that. That Marx has a lot to teach us. His whole history in banking has been, as mine has in my areas, been the application of what we learned. My education formally was without any Marxism. I had to substitute and, you know, enhance it on my own. And Michael in his way had to also, partly through the luck of his family and his history. It ought to be part of the curriculum and just as capitalism produced Marx, I think the problems of capitalism now are producing as they have before a renaissance of interest in Marxism.

The last five years have seen, and I see this every day in my life, a level of resurging interest that is stunning. It’s just everywhere. It’s in this conversation and it’s everywhere else and I don’t think that’s about to be stopped. I think it’s going to take new forms because we have new conditions.

I think places like Russia and China will produce their own ways of developing it. It’s not taboo there. Certain interpretations have a hard time, but you know, their whole Chinese universities have all big departments of Marxist studies, Marxist philosophy, and all of that.

So my guess is the ignorance in this country will shape a bizarre, hesitant, herky-jerky engagement with it, but I don’t think it’ll be held back here either. It’s too late for that. I also think, and michael and I may not agree on this, but i also think that the american empire is in a decline, i don’t see that reversing itself, and I think we’ve been talking about that for the last month

And American capitalism is dependent on that empire which means if the empire is going down, that’s not good news for this system as adjusted to the empire it was able to wield. The same 75 years of taboo on Marxism have been the 75 years of the rise, the peak, and now the decline of the empire. I don’t think those things are unrelated and I think you’re going to see an explosion of interest in Marxism and in offshoots of Marxism.

And last point, there’s a lot more Marxism in the United States than anyone I think is prepared to admit and to acknowledge. Last week, just to give you an example, last week was the news that a literary critic named Frederick Jameson died. I knew him. I worked with him a little bit for a while. This was a Marxist. He was the leading literary critic in the United States for most of the last 30 years. This is a man I know personally who studied and read and argued and debated with me, among others, about Marxism, which he was very well read and very well schooled in it. We had our disagreements, but he would have said that everything he tried to do in the works that he published, and he’s very prolific, he published a dozen books and a hundred articles, was infused with his Marxism. But because of the taboo here, what you have is huge numbers of people who read his work and use his work and cite his work, but they need to cleanse it or to evade or move around dealing with its Marxism.

It’s like one of the great Marxist theorists from Italy, Antonio Gramsci. Okay? One of the great theorists of the 20th century in Marxism and has an enormous following. There’s an international Gramsci Society, they have conferences and meetings, people across many disciplines know about Gramsci. You want to be able to drop his name in a cocktail conversation and sound like you know what you’re talking about. But when I sit there and I listen politely and then I say, yes and are you aware that he was the head of the Italian Communist Party for many years? They look at me with the kind of disappointment of a puppy from whom the bone has been removed. They don’t want this bad news. They want to enjoy the complexity of what he had to say about Italian culture, which is wonderful stuff. But that’s what he was. And he died because Mussolini, the fascist, killed him in prison. That’s what happened. That’s who… or the glib notion.

Well, you know, what’s it nowadays? Authoritarian. Hitler was authoritarian and Stalin was authoritarian. Whatever those words mean, the notion that these are all the same, because you’ve attached the same word to each of them, is childish. It was one of the great slaughters of all time, the fascists versus the Stalinists, the Trotskyists. They didn’t care. They killed everybody. I mean, where does that fit into this glib association of authoritarian? I mean, what are you doing? And lastly, I think we’re on the cusp, and I don’t say this lightly, of a recognition which, when it begins to take hold here, will spread like wildfires.

That the most authoritarian institution that this society has to worry about is the capitalist enterprise. In every factory, office, and store, a tiny group of people, the board of directors, the major shareholders, the owning family, the partnership, make all the decisions. They decide what to produce, what technology to use, where to locate the production, and what to do with the output. And the mass of people are drones. This is the opposite of democracy. It’s the most authoritarian organization imaginable. And at some point it’s gonna dawn on people that the authoritarianism they’re worried about in North Korea is not the one that they ought to worry about. There’s a little test you give to children for the IQ and there’s a picture of a person being attacked by other people. Put aside that that’s the way they do this. And then there’s a person far away who’s going to throw a stone.

And all the anxiety of the person being attacked is for the person far away. And you show that to a child because you’re hoping to see whether the child can recognize that that’s not rational to be concerned about the one far away. You should be concerned about the one who’s close. Well, I think we’re gonna have that moment, that cathartic social moment when everyone begins to recognize where the authoritarianism that you don’t like, where it begins, where it’s grounded, where you are subject to it five days of the week for the best hours of the day throughout your adult life. That’s your problem with authoritarianism.

And if you’re a Democrat with a little d, that’s your problem and you haven’t faced it or understood it. And that’s your problem and you haven’t faced it or understood it and Marxism is the theory that will help you understand how it works and what its consequences are and that will generate the appreciation for what is now so blithely dismissed

Robinson Erhardt: It has been an absolute pleasure to have you with us today. It’s an absolute pleasure to talk with you on Thursday.

Richard Wolff: Well, I feel a kinship with Michael I hadn’t known before because I learned about his history and I learned about how he got here. I think it’s very, very important that these stories are told. And the reason is because there are a lot of us. And maybe if some of the stories are told, more of us will emerge into the daylight and talk to one another.

Michael Hudson: There are not too many of us.

Richard Wolff: More than most would like to believe.

Robinson Erhardt: Well, Michael, nobody’s going to notice that some time has passed and our chairs have shifted. It was some magic on my part. But we heard Rick’s thoughts on what features of Marxist theories are necessary to understand the evolution of Marxism in the West and what we need to understand about Marx to evaluate today’s economic situation. But I wanted to pose the same question to you just because it would be nice to hear your own take on things.

Michael Hudson: Well, Richard talked about the great forgetting of all this, the great absence of it. I think the best way to look at this is what’s happening in the BRICS countries right now. They’re trying to create an alternative to what Western Europe and America has done to them. They’re trying to really design a new society very much in the way that the classical economists were trying to free their society from feudalism, from landlords and finance and monopolists. You can see what the BRICS are already talking about. They want to get rid of the fact that, of colonialism. They want to get rid of the fact that foreign countries have come in and taken control of their land for the land rent and natural resources for the natural resource rent, the oil rent, the mineral rent, the deforestation. And they want to deal with the debt problem, that all of the fruits of their growth have to be paid to the Western creditors in the form of interest, and they have to subject themselves to the International Monetary Fund and the World Bank saying, you know, we’re going to withdraw credit from you, we’re going to end up bankrupting your balance of payments and therefore your exchange rates if you don’t follow the neoliberal laws that we want.

If you try to tax foreign owners of your natural resources, if you want to fine the oil companies for when they’re creating pollution, then that’s against the international investment laws and you have to compensate them for any of the fines so that you have to bear all of the costs of the damage that they do to your economy. These are the problems that they’re faced with and in a way they’re the the same problems that Western Europe had. And the irony is that these problems are caused by the progressive forces of capitalism getting rid of rent and finance and monopoly. But as they colonized, they created these very same problems. The last thing that England and France and Germany and America wanted was for other countries to develop the way they did, for other countries to free themselves from the rentier income. Well, I haven’t seen any discussion at all among the bricks of Marxism or classical economics. What they’re doing today is trying to reinvent the wheel. But they’re trying to reinvent the wheel without realizing that it was already invented 200 years ago in the classical economics.

And so when Richard talks about what they’re going to help themselves reinvent it by understanding Marx, what he means is Marx is including all of the ideas of Adam Smith and John Stuart Mill and the other, Ricardo and the classical economists, the whole analytic system that they have for what kind of income is productive and necessary and what kind of income is predatory, exploitative and we don’t need. There’s no discussion at all in the BRICS so far of, for instance, taxing away land rent, nationalizing the land, and yet that was the first item of the Communist Manifesto that discussed, in a way, you could say that the Communist Manifesto could be taken as the lead-off point, as what the BRICS are going to be doing when they’re meeting later in October in Kazakhstan. And yet, I haven’t seen any discussion, and I’m in contact with a lot of people who play a role in China, Russia, and other BRICS countries.

And Richard and I are both on many different international discussion groups saying this, but we have no idea about the extent to which our ideas are picked up because in a way we’re being dismissed as part of the same kind of communism that ended up in Stalinism. They’re not looking at China really as being Marxist in this and the Chinese are not making any attempt to create a dealing with land rent, natural resource rent or finance because that hasn’t been part of their version of socialism with Chinese characteristics. And in fact, in 1979, the US Department of Education had me as a consultant, and they brought me to a meeting with the World Bank. And I was discussing my discussions with the Chinese representative of the World Bank. And he said, you know, what you’re saying is wonderful. We’ve got to bring you to Shanghai to discuss. There’s a Futures Institute there, something just like you’d like. Would you like to go there? And I said, yes, and, you know, the good thing is that I’m a Marxist too. And his face blamped. He said, oh, dear, I urge you not to go. If you go, you may not come out alive. He said the one thing they don’t want is any Marxists because for them Marxism was what happened in Russia. It’s bureaucratic collectivism. It’s the state that doesn’t let any new economic policies, as Lenin called it, any private enterprise being innovative or sensing what the market needs or new technologies, electricity or any of the others.

So he said, best if you don’t go. And I realized that I was not welcomed at Peking University’s School of Marxism and didn’t stay there after two years because I realized that their idea of Marxism, as I mentioned, was the politics and general economic analysis, which they pasted as a label on it. And as Richard said, there are very few other Marxists. There are many people who have gone to Marxist schools, like where Richard taught at Amherst, Massachusetts, but not all of the graduates in Marxism understood Marxism. And he and I are pretty much by ourselves. I know there are some people who are very sympathetic to us, but I don’t know anyone else who’s still alive and we’re in our 80s who have this background. In order to understand Marxism in volume two and three, you really have to study all of classical economics because it was all part of an organic development. That was a development. It wasn’t getting rid of anything.

It wasn’t Marx against the free marketers. It was Marx. He shared their idea of a free market, and a free market to Adam Smith and the other classical economists was a market free from economic rent. You don’t have a landlord class anymore because there will be land rent. Some locations are worth more than others, but that rent will be used as a tax base. We don’t have to tax labor’s wages. We don’t have to tax the industrialist’s profit. You know, we’ll tax away economic rent where it can’t be avoided. And where there doesn’t have to be rent, we’ll make sure that natural monopolies like water and sewer or education or health care are not in private hands, so there’s not, they’re not going to be any private monopolist. Well, in a way China has made the great socialist Marxist advantage in keeping money as a public utility. That really is the key. We were discussing before how Marx expected banks to become the economic planners of industrial capitalism because they were looking for efficiency. But what is destroying industrialism in the United States and Europe for the last 40 years has been the financial system, the banks.

Because the banks are not trying to support industry. You can make much more money by de-industrializing the country than you can by industrializing it. You can make much more money borrowing money from a bank, buying a corporation, smashing it up, selling off parts. If you’re a hospital, you immediately sell off the land to a real estate company, then you lease it back and you use the money you get for this land you’ve sold to pay a special dividend to the financial managers who take it over. And when Richard talked about the industrialists today not playing a productive role, the heads of the companies are not really the CEO, it’s the chief financial officer. So the industrial capitalism itself has been taken over by the financial system that lives in the short term, that was exploitative and has ended up de-industrializing the United States and Europe. Well, this is obviously not the way that the BRICS countries want to know, but the question is to what extent are they going to let Western banks come in as opposed to realizing that if you can control the banks you really can control the allocation. Now Marx was an optimist about capitalism more than anyone else at the time.

He was saying how banks will develop, capitalism will evolve into socialism, and banks will play a leading role in this. Well, today banks are playing the leading role in, as I said, in de-industrializing as preventing the evolution into socialism. And that really is the fight between the United States and the dollar standard against the BRICS countries. And one of the key things that they’re talking about is de-dollarizing. They realize that de-dollarizing means getting rid of the whole legacy of foreign dollar debt that their countries have been loaded down with by being forced by their former colonial powers, acting through the new colonial power, the World Bank and the IMF, to follow essentially predatory, monopoly, rent-seeking enterprises owned by foreigners that take the rent and the whatever profits there are from the monopolies that are privatized and send it to the United States, England, or the European foreign investors there. Now, Richard and I have discussed how this process evolved in the West, but I don’t see a similar discussion taking place in all of the discussions about where are the BRICS going to go and how are they going to develop this.

They realized that what we’re seeing today is a split in civilization in the same way that you could say industrial capitalism was a split in civilization. It was a split from feudalism into the post-feudal epoch. You free itself from all of this useless overhead. Well, how are the BRICS countries going to free themselves from colonialism? It’s the same economic analysis, value, price, and rent theory, with the price being the excess of overvalue, with the excess of price over value, the free lunch being economic rent. Well, neoclassical economics and University of Chicago monetarism says just what Milton Friedman said, there is no free lunch. But finance capitalism is all about a free lunch. That’s what the economy is all about. And that’s why, as I mentioned before, we Marxists did very well on Wall Street as economic futurists, as forecasters, as explaining what was happening because we knew it was about a free lunch. This is not creating value, it’s creating rent. And once you realize that distinction, you have a whole different idea of capitalism and the laws of motion, as Mark said in volume one of Capital.

Well, what are the laws of motion of finance capitalism? They’re actually the same laws of feudalism. They want to entrench a landlord class or, except now it’s a financial, multinational corporations that own the land, that own the mine, the mineral rights and the oil rights and the forest rights and have bought, have forced the public infrastructure that’s been privatized, control the pension funds. That’s not a public funding. They’re all privatized now. They’re being told to go the way that the United States is doing.

When I went three times to lecture before the Duma in Russia in 1984 and 5 to try to say, look, you’re going to have an explosion of housing prices and your oligarchs are going to do what they’ve just done to Neuraltnikl. You know, they’re going to take the mineral rent, natural resource rent, instead of the state taking it. Instead of using this rent income, you can certainly sell nickel and platinum and oil for much more than the cost of production, but instead of using this rent to finance your industrialization, lower the cost of living, you can provide, turn over all of the apartments you have to the current owners, free. Now you own the apartment.

Then they won’t have to pay rent. You’ll have the lowest cost economy in the world. This is exactly, you know, the rent should be a public utility. That’s one way that you’ll become more competitive. Well, needless to say, the politicians who invited me over to address the Duma found themselves de-elected by, he said, American advisors came over as to how to steal elections, just like they do in the United States. Their idea of democracy was the financial powers control the election. It’s really an oligarchy. I didn’t have a role to play in Russia’s restructuring itself along productive lines, Marxist lines. I tried to bring Marxism to Russia, and I failed, to make a long story short.

Robinson Erhardt: That’s pretty ironic.

Michael Hudson: Yeah, and there’s really, you have Richard and me, but there are not enough of us to go around to the whole world. You have Richard and me, but there are not enough of us to go around to the whole world. You’re talking to us. Nima’s talking to us. Other people talk to us. But not the New York Times or the Wall Street Journal or NBC or CNN.

Robinson Erhardt: Let me ask you a bit about that. Something that I find striking about it is the New York Times, CNN, these media institutions, they thrive on views. They want people to watch them and to read them. You and Richard are among the most visible and enjoyed economists that there are on YouTube. I mean, I know this. This is part of my job. So why do you think it is that these institutions aren’t interested in speaking on YouTube?

Michael Hudson: Because we’re outside the tunnel vision that they have. Yeah, we want people to argue about things that don’t matter. You want to argue about abortion rights. You know, I have plenty of that. They can talk about that. Do you want to talk about pollution and the environmental problem? You can talk about that. Do you want to talk about, you know, what do you think of modern art? Is modern non-objective art good or bad? You can’t talk about economics. Now, it’s true, the Washington Post actually asked me to write an op-ed for them on the need for debt cancellation. And they did put it on their site. They didn’t put it in a printed edition.

Somebody overruled it. When I was writing my book on the origins of enterprise and debt in Mesopotamia, Yale University Press said, oh, this is wonderful, let’s send it out to reviewers. The reviewers all said, yeah, this is great. He has to update the bibliography. He has to use the more recent translations of Hammurabi’s law. And they were all set to do and forgive their debts, but then the overall board said, no, we can’t do that. This is beyond the scope of what we’re doing. I think that’s the answer. Same thing at Chicago.

The head of Pantheon was going to publish essentially the book that became my Killing the Host. He went to head the University of Chicago press, said, Lou, great writers worked with the chairman of the board of Pantheon for many years. Let’s do it. So he submitted the book. The entire board threatened to resign if they published my book. That’s not the kind of discussion they wanted. The discussion they want is, you don’t discuss or debate something that is unchallengeable, something that is unspeakable. So we’re speaking about the unspeakable, you should say. And what we’re doing here is what is not going to be found in the general discussions, even though your shows and shows that are other people that are talking to Richard and me are very popular. to Richard and me are very popular, there have not been any of the scouts, literary scouts from publishing companies or newspapers or magazines or other media that have any interest at all in discussing it were beyond the pale.

I guess there must be other phrases for that, but you’re not allowed to challenge the vested interests. And they’re willing to talk about, you can disagree about things that don’t pose any challenge to the vested interests, Veblen’s phrase, but take them for granted. And you can talk about abortion rights, but you take for granted the whole financial and economic system. When we talk about not taking for granted the economic system, but saying this system is not working well, it’s turned into a bad, destructive, de-industrializing system and the debts can’t be paid, then all of a sudden you’ve made yourself not welcome at the party. So you’ll have things like George Soros’ group, INET, Institute for New Economic Thinking. It can’t be that new. It can be new in the sense of we’re going to exclude everything in the past. We’re not going to talk about classical economics. We’re not going to talk about Marxism. That’s the past. We’re going to talk about how financial fund managers can help make a better, more profitable economy and make you wealthier by making capital gains to increase your wealth and let the pension funds make enough money to pay you while you work within the existing system. So what Richard and I are saying isn’t really new. We’re not trying to reinvent the wheel.

We’re saying, look, the wheel’s already there. It’s been invented. If you have the background, and it does take a little time to work into this background, but you have to realize that the vocabulary of classical economics and Marxism have been hijacked. As I said, for Adam Smith and the classical economists, a free market was free from economic rent and all these rentier charges. To today’s economy, a free market is free from government taxation of economic rent, from the government doing anything to restrict usury, to restrict what the financial sector can do, to restrict exploitation, and to acknowledge that really the most profitable section of every economy today is crime. Drug dealing, crime, and breaking the law consistently by financial corporations, by monopolists, by the bankers, by the credit card companies, by breaking the usury, what used to be usury laws, by being a libertarian and liberty for the 1% to do whatever they want to the 99%. So you almost have to think of how to analyze vocabulary. Hardly by surprise, a lot of this analysis, literary analysis of vocabulary was done by Marxists. Even in the case of a monetary theory. The modern monetary theory developed out of Marxism.

Hyman Minsky was a Marxist and he told me that when he went to the University of Chicago in the 1930s, Maynard Krieger helped teach him about Marxism. Maynard had run for vice president with Norman Thomas on the Socialist Party ticket in 1940 and still going strong in the 1950s when I knew him. But Minsky didn’t talk about Marxism, but he had his children told me that they were all brought up to, he urged them to read Capital, to read Marx, and his widow told me that she thought that I was carrying through his spirit, and she acknowledged that, well, he wasn’t allowed to teach at the New School, He wasn’t allowed to teach at the new school because one of the professors, Minsky was the babysitter of him and had changed his diapers when he was young. And the professor said, I can’t have another professor here who changed my diapers as a child. I’m always blocking out the name of that person. Any rate, he was at Bard College, which is not exactly a, at the Levy Institute, which is very progressive in many ways, but certainly not Marxist. And none of the modern monetary theorists who, Randy Ray, all of us have a background in Marxism, but we don’t describe it as Marxism as such. Stephanie Kelton became the advisor to Bernie Sanders and part of the Democratic Finance Committee.

She’s kept Marxism quiet. As it is, there’s such a fight against modern monetary theory that says that the government doesn’t have to borrow from bondholders. It can create their own money. The effect on inflation is identical. Whether you borrow from somebody’s fortune and spend it into the economy or whether you print it, it’s all the same effect. That’s basically what modern monetary theory says. It’s still, we’re isolated. The students that we had at the University of Missouri at Kansas City do not get the prestigious positions because the prestigious economic journals won’t publish any of their ideas because, again, it’s beyond the pale. The economic journals will not publish any article that suggests that money should be viewed as a public utility or that discusses the phenomenon of economic rent or discusses the fact that things could be different. In order to be a respected economist, you have to start off with what the British, there is no alternative, Tina. That’s their motto, Margaret Thatcher. So, you know, Margaret Thatcher’s spirit is that sort of the precondition, the entry price that you have to pay is to go along with the vocabulary of we’re for democracy, even though democracy turns out to be oligarchy.

Again, we’re dealing with all of this. So I’ve had to basically self-publish all of my books through the Institute that I’m associated with. Harvard published a few of the early volumes of our studies, our Assyriological and Archaeological studies, a couple of volumes, but they weren’t widely picked up by the rest of the profession because, again, Again, if you talk about how for 2,000 years, the Sumerians, Babylonians, early Judaism canceled the debts more or less regularly with new rulers, the very thought that debts can be canceled is anathema. We’re talking about things that can’t be taught. There’s a tunnel vision, and that tunnel vision is spread to the people who’ve been promoted within the BRICS countries to try to say, how are we going to restructure the society? Because many of them have been promoted by the National Endowment for Democracy has all of these non-government organizations that have been promoting individuals who they see when they go through the universities or in practice that sort of are willing to follow the U.S. neoliberal line and they’re promoted and that’s why the country of Georgia recently has banned or asserted the ability to close down non-government organizations that are really trying for a regime change, to get rid of any regime politicians, members or influential people who speak about the unspeakable. Well Herman Kahn wrote a book thinking about the unthinkable, about the atom bomb.

Well we’re not only thinking about the unthinkable, about the atom bomb. Well, we’re not only thinking about the unthinkable, but we’re saying there’s a hundred years of people who’ve talked about the unthinkable. Wouldn’t you want to hear how Western civilization has been developing since 1800 or the American Revolution or 1776 with the Adam Smith’s The Wealth of Nations. It’s a kind of passive censorship that’s been nurtured by, I think, ever since World War II, the attempt by the United States to prevent any discussion of an alternative. Well, I’m really struck. I know that Rick has already left and I probably should have said this while he’s here, but you began your response by saying that you’re both in your 80s. You’ve both seen a lot of this. You’re some of the last two economists that came from a certain generation. It just strikes me how lucky I am to be able to sit here in Queens and have the two of you to myself and ask you these questions that hundreds of thousands of people are going to be watching. It’s just pretty mind-blowing. Well, it’s not luck. You’ve chosen to. I mean, you’ve been able to see us. You’ve looked through, I won’t say you’ve looked through the whole mine and found the ore. There must be a less egotistical way of saying this. But you found us and other people haven’t. Yeah, yeah.

Robinson Erhardt: And there’s a lot that’s going on behind the scenes that people don’t see. But what I wanted to ask you about, and I know Rick had to leave so we didn’t get to talk about it together but he mentioned that in one of our recent conversations well it was pretty much the entire conversation we spent three hours talking about the decline of the American empire and we’re talking about what the decline of the American empire yes and this was a very wide ranging discussion We talked about the BRICS, we talked about Israel and Palestine, and I want to know how you think about, if you agree with him, that the American Empire is in decline, but also how you might view this in connection to Marxism, which has been the theme of our discussion.

Michael Hudson: Will you give me three hours like you gave Richard?

Robinson Erhardt: You can have as much time as you want.

Michael Hudson: The American empire is in decline because it’s no longer the spirit of industrial capitalism that made the country rich in the first place. The first thing that the… I wrote my dissertation on the American School of Protectionists, the American School of Economics, and it was protectionist. It saw the state as protecting the development of industrial capitalism and especially preventing England and English finance from taking over the country. The American decline has been a series of processes. One of the great derailing of American progress occurred in 1913 with the Federal Reserve creation. The big bankers, J.P. Morgan, got all the big bankers together and said, we’ve got to prevent the U.S. government from playing a role in the economy. We’ve got to take over what the U.S. Treasury was doing and create it in the hands of private bankers without any government officials. And that was what the Federal Reserve was. So the Federal Reserve was. So the Federal Reserve was created to essentially, with 12 districts, just like the Treasury had 12 district banks, but all of the decision-making was taken away, out of Washington, to the financial centers, to New York primarily, which is sort of where the Federal Reserve intervened in markets, Boston, Philadelphia, Chicago, where the financing of industry, the Federal Reserve steered finance into making money at the expense of industry. And initially, right after 1913, you had World War I. And then you had the financial sector insisting on the repayment of foreign inter-Ally debts and that led to the depression because the Allies said, well, now that America wants us to pay for the cost of the arms that it sold us going into war, we’ll make Germany pay the reparations.

And it all became a tangle where England, France, Germany were all reduced to depression. So you had a kind of American that empowered America that ended up as fascism began to develop in the 1930s. Europeans sent their gold to the United States for safekeeping. And by 1945, the United States had so much gold that it was able to, first of all, get English support of a very US-centered system saying, other countries cannot create their own currency, other countries cannot create their own money, and plan the economies. Whoever has the gold or who has the US dollars will be in charge of planning the post-war world. So the United States, by being very self-centered financially, created an emphasis on the financial world view and finance capitalism that became more and more predatory in character. And so, especially after 1980s, when you had the beginning of corporate takeovers of debt financed takeovers and junk bonding and the whole idea of not only junk bonding that the idea that fortunes were to be made by debt leveraging by borrowing money to buy assets that the Federal Reserve would then lend money to the banks to bid up the price of real estate companies. And the price of a home or real estate is whatever banks would lend. And so the Federal Reserve and the Fannie Mae and the other government real estate agencies made a completely different world from what seemed to be a promise of American prosperity in 1945.

Even in the 1960s, when I was growing up and buying a house, there were rules that all the banks had for lending mortgages, as long as you were white. They wouldn’t lend them to blacks, but as long as you were white, you needed to make a down payment of maybe 20%, you’d get a 30-year mortgage, but the rule that the banks had was, we’re going to give you a mortgage, but it has to be within your ability to pay 25% of your income. Well, if a bank will only lend you money, enough mortgage money to buy a house, limited to 25% of your income, that means that you’re not going to be able to outbid other buyers who, let’s say, have the terms that banks lend today. Now Fannie Mae will government guarantee bank loans for 43% of your income. Well, if American labor has to pay 43% of its income instead of 25% of its income, and if the mortgages aren’t 30 years, but they’re very short, much shorter, then you’re going to have employers having to pay workers enough to live in a house. And I know more and more workers are now living in their car, but the idea was that the workers should have a house, not have to live in the car or be homeless. And the result is that the financialization of real estate, of corporations, stocks and bonds began to price America out of the market. So as American wages were bid up by the cost of living, by privatizing health care, by privatizing education. There is no way that American labor today can make a living wage and compete with labor, Asian labor, labor anywhere else in the world. So the corporation said, well, we can’t afford American labor anymore. Let’s invite China.

And that’s in 1998, I guess Clinton invited China into the World Trade Organization. The Americans decided, let’s have foreign labor. So America shifted all of its industry outside of the United States, saying, industry doesn’t make fortunes anymore. Fortunes are made by deindustrializing the country. Let’s shift the industry abroad and we’ll just make money in predatory ways. We’ll have American banks go to China and we’ll make the money to the banks and the banks will make all of the profits, the interest rates that it gets from inflating Chinese prices. We’ll buy up a Chinese industry. We’ll get the profits from Chinese industry and we’ll make the monopolies and move all the money here. Well, much to their surprise, China didn’t let them do that. It was not like Germany or like England or other countries. They actually were acting in their own self-interest and the result is that you have China’s economy growing much more. Well, one of the problems with limiting the Americans from understanding that America was losing its place in the world was comparing GDP. Well, look at how much our GDP is growing compared to other countries. But as we discussed earlier in this talk, what is GDP?

You think of it as gross national product, but the gross national product includes all of the interest rates that banks charge. All of the penalty charges are called providing economic financial services. That’s what it is in the national income and product accounts. They include monopoly rents. That’s all part of the profits. There’s no distinction between monopoly rent and profit. The homeowner’s estimate of what they would have to pay for their house if they had to rent their house, that’s included as a product in GDP. So much of the GDP isn’t a product. And if the Americans had not only their self-celebrating GDP accounts showing that America’s rent seekers, the rentiers, are most of the GDP and most of this growth in American income is all for the 1%, not for the 99%, then they’d realize, wait a minute, if you compare our real GDP, the production GDP, with China’s real production GDP, you think it’s not like just America a little bit behind. It’s like this.

It’s like America’s not producing anything anymore, that all we are is a parasite on the rest of the world. Well, the rest of the world, no other country is trying to produce a rent-free GDP. But if they were doing that, they’d realize what their advantage is, and they’d realize how they can break free of this anti-classical economics. I call it, it’s really anti-classical as much as anti-Marxism. And not only against Marxism, it’s the whole idea that there is such a thing as unearned income, the whole idea of, classical idea of free markets. Well, then you’d see that America is, actually has what Marx would call a false consciousness. It’s a belief that you’re doing fine when you’re not doing fine at all. It’s like the belief by the military industrial complex that we’re making such wonderful armaments, tanks and aircraft that we spend so much more than Russia spends on it that we must be superior because we spend more. Whereas the American arms don’t work. They’re not arms for fighting, they’re arms for making profits from the government.

It’s like wine, we said before, it’s not like making wine to be drink, it’s wine drunk, it’s wine to be traded. Well, that’s what the arms are. So the Americans don’t have a way of estimating what their position in the world is relative to other countries, and they don’t realize how well they thought that they were getting a stronger and stronger economy. They were actually getting a more rent-ravaged economy, they were actually getting a more rent ravaged economy, an economy that has polarized between the upper 1% that doesn’t make its money by building factories and introducing new technology and increasing productivity, but just makes its money by essentially disassembling, deindustrializing the economy. And that’s the self-destructive character in the American economy has been a major factor in the decline. And the other, the light is right in my eyes.

What should I do? Yes, let me ask you this. I am planning another break in 15 minutes. Oh. It looks really cool on you Is it uncomfortable in that case? We could move now just a little bit if I could just facing you. Yes Can I face you? Yes. Yeah, absolutely Okay, then I don’t have to look at this is that better yeah Is that better? Yeah, okay, then let me just shift the cameras a bit and we’ll keep going. Let me just turn it around a little bit. Oops, sorry. No, you’re fine. No, I just didn’t. Shift the cameras just a wee bit. Is that okay, Michael? Before with Richard, one side of my face was sunny and the other was dark. Is this okay for you?

Because he was in the shade. That’s okay. We can do that. Okay. For another maybe 20 minutes, then let’s take a break. Okay. No, no, that’s all right. All righty. All right, feel free to go ahead. No, no, I’m just… Or, here’s a better thing. Where are you? I’m right here. Why not move it, just move it that way? Let’s do that in 15 minutes. let’s just keep going for another 15 okay and then we’ll we’ll change it up a bit yeah i’m outside of the tree huh just like what we talked about is outside of the tunnel vision. All right, let’s keep it going. Okay, now what’s the last thing we talked about? I lost it, but I think we’re good. we’re talking about the decline of the American empire.

Okay, the other part, talking about the balance of payments, is America’s military spending. The entire U.S. balance of payments deficit that forced America off gold in 1971 was caused by the foreign military spending. The United States has spent an enormous amount of money for supplying the 800 military bases around the rest of the world. And that is leading to a weakness in the dollar and the whole source of strength of the American empire’s ability to dominate, domineer pumping dollars into foreign central banks, it’s become obvious to other countries that instead of becoming the financially wealthiest country in the world, it’s a net debtor. And there’s no way that America can pay its foreign debts to foreign central banks and foreign governments that keep their national wealth funds in the United States. So other countries are beginning to realize this. They can calculate what’s America’s trade surplus, how much earnings does America get each year, what is the source of revenue, what is it spending abroad, immigrants, remittances, military spending, and it realized that America is going to run up more and more debt that it can pay.

How do we avoid the situation? Why are we investing in Treasury bonds, our economic surplus that we’re getting, our export surplus. Why do we lend it to the government that is going to spend it on making military bases all around us so that it can divide China into five countries, divide Russia into anywhere from between four and 20 countries? Why are we giving, why are we financing America’s military attack on us? Why don’t we de-dollarize? And that’s been the discussion now for two years, de-dollarization. Well, if other countries wind down their holdings of dollars, if they replace them with gold, and what is going to be in October of 2024, something like a BRICS currency or a BRICS like a BRICS currency or a BRICS market basket of currencies without the dollar, this is going to mean that foreign transactions, if India and Saudi Arabia have a deal in oil, they’re not going to do it with dollars anymore.

Other countries are going to free themselves from dollars and you’re having gold play a larger and larger role. The dollar is still a very strong proportion of other countries’ holdings because they realize it’s strong because America has the atom bomb. But the dollar is the atom bomb. That’s what it is. America can’t invade another country because it doesn’t have troops. There’s very little that it can do except terrorism and regime change to try to prevent all of this. Other countries are now figuring out how do we get free of all this.

America, by sanctioning Russia, by sanctioning China, by having Europe isolate itself and isolate the West from Russia and China and countries that do things in a different way, this has forced these other countries to produce for themselves instead of importing from the United States or its allies. So the sanctions have strengthened Russia, have strengthened China, have strengthened Iran. And the sanctions are now, instead of isolating the rest of the world, countries that do things that America doesn’t like, all of a sudden, Americans have found out, wait a minute, we’ve isolated ourselves. We’re all alone.

And if nobody wants our dollars, what can we give them in exchange for what they produce? We’re not producing anything, and there’s no way that we can produce anything as long as our economy has so much rent overhead, so much debt overhead, so much financial overhead, so much financial overhead, so much monopoly overhead that we can’t compete with any other country. We’re all by ourselves. That means that there’s going to be a financial crisis here, that corporations will go under. They realize that the end of their world is near. But for them, this is the end of the world because that’s their tunnel vision perspective. They won’t talk about it because it’s so unpleasant. It’s like you know most people of Richard my age don’t like to talk about death. Upsets their wives. Well that’s how America feels about the fact that the system is self-destructive.

Finance capitalism is self-destructive. So it’s not that other countries have decided to go communist and break from the United States and be anti-American. America destroyed itself, its own economy, and by destroying its own economy, by financializing it, instead of continuing to industrialize itself, it’s deprived itself of any leverage over the world except its military leverage in bribery. It can use all these dollars to bribe. It’s easy to bribe a Western European politician. I mean, their whole idea of b-brizing. To them, it’s not corrupt. It’s how you get advanced. It’s not corruption that we’re getting from this non-government organization. It’s support for what we’re doing for ourselves.

It’s funny, though, because I think in the West, we have it the other way around, where we say, oh, it’s the Eastern politicians that thrive on bribery. Well, but if it’s bribery, it’s interpersonal bribery. You’ll bribe a policeman or something. But America has made bribery a part of the National Endowment for Democracy’s funding. It’s foreign policy is bribery, basically, and coercion, and sometimes more violent terrorist means of just assassination like we did in Chile for Allende, and like all sorts of unexplained, unfortunate disappearances.

Robinson Erhardt: I’m curious to hear a bit more about how you think maybe Marxism could help us analyze what’s going on in some of these other countries and areas that I mentioned, like the BRICS countries, and how they’re faring in today’s economy. I know you have a lot of experience with South America in the past. I’m not so sure how central it is to your research today, but I just thought I might ask to see if you had any thoughts on this.

Michael Hudson: Well, I don’t even want to call it Marxism. It’s really classical economics. Marx is sort of the culmination of classical economics. So when people say Marxism, they mean the whole body of value and price and rent theory, based on the concept of economic rent as unearned predatory income by a class of rentiers that the economy can do without them. So that’s really it. If you call us classical economists, as Richard said, it’s all how you phrase what you’re saying. You don’t have to come right out and say we’re Marxists. You can say, you know, we, Adam Smith is right. Society shouldn’t have landlords because landlords don’t produce anything and as John Stuart Mill said the landlord makes money in his sleep that’s not productive well you don’t have to quote Marx for all of these things because Marx you accepted all of that he didn’t have to repeat what Adam Smith and John Stuart Mill and Ricardo and the others said, because they’d already said it.

All he said, no, I’m putting it together with how does this, now that you’ve described what we want to get rid of in feudalism and the legacy of feudalism, now how is this capitalism producing its own exploitation that has problems of itself. So if you say classical economics is including Marxism, then you’re able to get people to listen to you more. The only reason that Richard and I are defined as Marxists is that only the Marxists are talking about what Adam Smith really said. He wasn’t what the Adam Smith Institute under Margaret Thatcher planning privatization said. He was talking about businessmen can’t get together without conspiring with each other. with each other. Marx includes a completely different view of classical economics than the anti-classical economics that people are taught today. When Richard and I went to school, they still talked about the history of economic thought. They don’t have those classes anymore. They’ve replaced them with mathematical economics. And the mathematical economics are tunnel vision because what is it that you’re going to measure? And if you’re measuring GDP, then you’re not thinking about, wait a minute, what are the components of GDP?

Do we really want to include providing financial services by charging penalty rates by credit card companies? Is that really, should it be part of GDP or not? So you essentially introduce different categories of thinking. The difference between productive and unproductive investment. Financial investment is not part of the production process, it’s part of the deindustrializing process. What’s productive and what’s not? What is economic rent and what is profit? Once you deal with the very definitions, the definitions themselves describe a whole different economic system with laws of motion. I wrote a book on this, J is for Junk Economics, and I should have called it The Vocabulary of Economic Deception and Reality, because if you just use what the classical economists say, it’s like parts of a jigsaw puzzle. You put them all together and it comes out as leading to socialism. And in the 19th century, late 19th century, everybody realized this. They were all calling what was happening socialism in one way or another. But it turned out that the winning form, of course, was Nazism, National Socialism of Hitler.

They didn’t want classical socialism, they didn’t want Marxist socialism, they wanted Nazism, and that’s what America now calls Nazism democracy, with the two greatest democracies being Israel and Ukraine. And they both share a visceral racial hatred, ethnic hatred for people who don’t believe what they do, who speak a different language than they do. So once the American foreign policy decided, we will support any country that’s a Nazi country and call it a democracy and depict the world conflict of crisis of civilization between authoritarianism means the state is acting on behalf of the people or a democracy meaning oligarchy, meaning financial oligarchy, then indeed if you just realize what the vocabulary means, there is a split in civilization today and it’s between a financial oligarchy defending itself by the most violent America’s foreign legion. The foreign legion began with ISIS and Al-Qaeda, formed under the Carter administration, as the alternative to the secular, productive society of Afghanistan to destroy the secular society and destroy the equality of women. society and destroy the equality of women and the fascism, Nazism you have in Ukraine and the apartheid state in Israel.

Once you realize that that’s the fight for civilization, you say, well then what are these countries that America calls authoritarian. That means the state prevents rent seeking. The state acts to treat money as a private utility. The state tries to prevent rising housing prices as being paid to the bank as mortgage interest because the government will collect the rising value, the rising price of some locations as the economy gets more productive. And we won’t have to have an income tax on labor or a value added tax that falls on consumers or a flat tax that is anti-progressive. All these things are things that America is producing. They have to be able to spell it out.

My students in China tell me that their jobs are usually overshadowed by Chinese students that study economics in American universities. If China sends its economic students to American universities, how are they going to learn about these things? If the BRICS countries send their students here, how are they going to have the vocabulary and the economic terminology and the concepts of economic rent that they need to reinvent the wheel by saying, how did Europe, how did the classical political economists solve this problem in Europe to get rid of the rent-seeking, the financialization, the monopolization? It’s all been done before.

All they have to do is look at how it was done before, and it was going on pretty good lines, and how did it evolve in a good way? And Marx is describing all of these changes in terms of the laws of motion. And if the BRIC country is saying, what kind of laws of motion do we want our economies to be restructured and follow? That’s how you will find, create the same kind of productive economy that the late 19th century was created from the United States to Germany.

Robinson Erhardt: Well, while we are on the topic of the decline of the American Empire, when Rick and I spoke a couple of days ago, we spoke all about the upcoming election, when this airs. I don’t know, maybe it’ll be the upcoming election when this airs I don’t know maybe it’ll be the the recent election but the question that I had in mind is I know that you’re an expert on on tariffs and one of the aspects we spoke about was the United States relationship to China and how tariffs were a key policy of Trump’s eight to four years ago. I was wondering if you had any thoughts in this area.

Michael Hudson: Yes. The Trump tariff policy is the opposite of the 19th century American tariff policy. The idea of tariffs, protective tariffs in the 19th century was if you raise the price of imported goods, you will create a price umbrella that will enable American companies to make capital investments and earn the profits to be able to make an investment to become independent from reliance on England and other Western European countries. So protective tariffs meant, they called it sometimes infant industry, it was to develop industry. Today’s tariffs that Trump is proposing, and I’m sure that any democratic administration would continue of 20% on China products you are not going to promote any infant or developed industry in the United States because for the reasons we’ve described America has already made itself uncompetitive by privatizing what should be a social public utility, by privatizing finance, by privatizing health care, by privatizing the cost of education.

Imagine if Americans have to pay $40,000 to $50,000 a year in debt, to be sure, to get a college degree, to get a job. If they have to go into debt to buy a car to drive to the job, if they have to pay for 18% of GDP on healthcare, then for healthcare alone, other countries can provide the entire wage for just what Americans have to pay for healthcare. There’s no way that you can nurture a new industry in the United States. If the tariffs are not going to protect an industry and develop a means of becoming independent, what are they going to do?

Tariffs in a way are the opposite of sanctions. It’s as if another country sanctioned our country and we have to pay develop our own industry. When America sanctions Russia, that’s the equivalent of Russia putting an infinitely high tariff on its industry and other sanctions are nurturing Russian infant industry and infant agriculture and infant all sorts of things. It’s developed their independence. But in the United States, all the tariffs can do are two things. One, it’ll raise the price for imports from China, which means Walmart’s prices are going to go way, way up.

But also the tariffs are going to create revenue for the United States. And one of the advantages of tariffs for the United States, William Seward, who was Lincoln’s foreign secretary, basically said, well, when you raise tariffs, that provides enough income that you don’t have to tax industry. In this case, it’ll finance government spending and the tariffs will finance our spending to build the Erie Canal infrastructure. Sewer’s economist, Rasmus Perszain-hing Smith, whom I wrote my dissertation on, developed this, you know, the general idea of tariffs and it worked in the United States.

Now, if the United States gets this revenue from China and says, you know, we know that your profit rates are not all that high, but the money, whatever you export to us, we’re going to take that 20 percent. And that’s going to be how we finance our military expenditure around you so that we can carve you up into other countries when we begin to destroy you because you’re our number one enemy.

That essentially, we’re almost word for word what Tariff has been saying. They’re our enemy. Biden says they’re our number one enemy. We want them to pay our costs, our expenses of financing our military surrounding of them. And tariffs are how we’re going to do it. It’s going to raise money for the Treasury. Well China has a number of responses they’re going to be. And I should have said one of the factors that have led to the American decline in the world is it has a policy it never expects any other country to respond to it. It thinks of we’re the actors and every other country’s passive.

They’re not going to do anything except they’ll have to follow whatever we do. And that’s the law for them. That’s what a rules-based order is. We make the rules, you follow them. Whatever we do to you, you’ll have to accept. Well, what if China then says, well, okay, we’re going to raise our own export tax by 20% so that our government should get 20%. Well, that’s going to increase the export price and now your tariff is going to be the equivalent of 30%. Well, by that point you’re going to get a 50% increase in the price of almost everything we get from China.

And China’s already said, well, if you’re going to have tariffs against our exports, then we can’t earn enough money to buy things from you. So we don’t have to export for much for you since you don’t need the money to buy from us. So we’re going to stop exporting to you germanium, gallium, the rare earths. We’re not going to export cadmium to you. Aluminum, we’re doing most of the aluminum refining. We don’t have to export that. We want to keep the trade balance between us. And if you don’t buy from us, we’ll just scale everything back. It said the same thing to Europe. America told Europe, you have to sanction China because if you trade with a country, you’re dependent on it and break your dependence on China by not exporting to it.

And so China has now cut back its exports to Europe, saying, look, you know, you’re complaining, Europe, that trade is unbalanced between us. Well, there are plenty of things we’d like to buy from you. There’s a Dutch company that makes ultraviolet engraving machinery for what we need for computer chips. Won’t you sell us this machinery? We’re glad to buy from you.” The Americans say, no, don’t export anything to China that it needs for potentially military uses. So China says, well, if you won’t sell to us, why do we need euros for? There’s no need for that.

So we don’t need any euros to buy from you, so we’ll just cut back. So the sanctions that are being imposed by the Trump administration and the Biden administration together are isolating the United States from these countries. And so it’s not simply a question of pricing American labor out of the market. There are essential raw materials. America is getting its uranium, enriched uranium, from Russia for all of this. It was getting what it needs for the outer space, not missiles but spaceships from Russia, and especially the explosion chambers where all the flames come out of. Well, that was made, I think, in Ukraine, in western Russia. Well, they’ve cut that out. So you’re going to have a break in the supply chain.

Well, a break in the supply chain, like imagine imagine if Boeing can’t right now, can’t get certain parts for its airplanes, it has to stop making the whole airplane. Well, the war with China, a combination of sanctions against trade with China and the tariffs are going to lead China to cut back its exports, starting with key inputs that American industry and especially the American military need. China will say, well, you know, okay, you think the new rules-based order of trade is you don’t give another country any exports that will help it make war on you. Okay, you’re saying that’s for us?

We’ll go along with that. We’re not going to export to you things that are going to help. Well, already the United States, for instance, has said, go into Intel that makes computer chips and say, we don’t want you to export the fast computer chips to China because they may put it in a missile and they may aim the missile at us and blow us up. So Intel has been blocked from making exports to China. Well the result is Intel is now going broke. It said whoa wait a minute China was our major market. Without China we’re not a profitable company anymore. It’s now put itself up for sale. It says we can’t make profits without selling to China. That was our market.

So America, foreign policy from both Trump and the Republicans and the Democrats, not just Trump and Biden, the whole Congress is so adversarial, treating the whole rest of the world as an enemy, that it is pursuing a policy that not only is pricing America out of the market, that is increasing the cost of consumer goods that people buy to keep the cost of living down. The American inflation will go way up. That means that the real wages are going to go down. That means more pressure for rising wages.

But most of all, it means that the aircraft industry, the military industry, the computer industry, the artificial intelligence industry, all of these are going to have supply chain interruptions, and the whole process is going to come to a close. Russia won’t sell us the improved uranium to make the bombs or the electric, the nuclear power utilities work. You’re going to all of a sudden, it’s as if they’re bombing our economy but the bombs are a legal bomb imposed by the Republicans and Democrats in Congress saying, you know, we want to be separate from them.

But it won’t be separate and equal. We’re no longer going to get what we need from them, and so we’re going to be an economy that doesn’t get what we need to continue to industrialize. And there goes American prosperity. Companies are going to close down. Intel has scaled back its employment, saying, well, you know, we don’t need to employ workers anymore because we’re not allowed to export your products to China. And that’s the growing market because there’s not much market in America because we’ve moved all the production to Asia and the Asians would simply buy from us and sell it to China.

So essentially America’s cutting its own throat in terms of foreign trade because of the the tariff and that of course was Trump’s lead policy. He said, you know, I’m leading my whole policy with a 20% tariff to punish Russia. That’s going to hurt him. He also talks about, he said, I’ll end the war in Russia within one week. Well, there’s only one way to end in Ukraine. We’ll end the war in one week. There’s only one way to do that. The hydrogen bomb, Russia with 20 hydrogen bombs. If you don’t do that, you don’t end the war in one week. Is that what Trump is saying? Or is he just ignorant? Well his first secretary of state said he’s really a moron and I’m resigning, going back to Standard Oil. The politicians don’t have any idea of economics because they’ve never taken an economic course in, I won’t say Marxism, in classical economics.

Nobody who’s in a position of analyzing America’s strengths and weaknesses understands what’s happening. The situation in American economic policy is the same in military policy. The military analysts who have talked about how Russia is winning the war in Ukraine and Israel is sort of ending itself by its the policies that it’s what it’s doing to the Palestinians and now to the Lebanese they are they’ve been forced out of the CIA. People like McGovern and Colonel, go right down the line for all of the military analysts who had to leave the military, leave the State Department, leave the Department of Homeland Security, because they didn’t agree with the neocon directions. They’re saying, look, your neocon direction is not going to work. Well, that’s not the way you get promoted in the State Department or any of the, in the military or the CIA.

And you’re not promoted. You end up leaving, and you go on the talk shows, and if we’re people who leave, and there are a couple of talk shows on the internet that feature them, they’re called the realists. And the neocons don’t like the realists, because they pander to American politics that’s not based on a realistic world view, but on sort of the fantasy of us versus them and we can beat them even as we de-industrialize our country, even if we create a class war here, lowering real wages while siphoning off all of the income to the wealthiest one% that own the bondholders, basically, the people who, the financial managers of corporations, the stockholders, not the people, not the employees.

Well, without a realistic economic policy or a realistic military policy, how are you going to have a strategy that works with the rest of the world except to say if you don’t do what we want we’ll bomb you, you know, we’ll have our Foreign Legion, we’ll set ISIS and Al-Qaeda on you if you’re in the Middle East, we’ll set the Nazis on you, you know, if you’re in Russia or Europe, you know, we have Nazi groups all over there that we can promote. If you’re in Africa, we’ll have, again, ISIS is there. You know, our foreign legions are there. The Israelis also have a whole contingent of fighting in Ukraine alongside the Nazis against the Russians. Because the common denominator is they both hate Russians for different reasons. The Nazis, the Israelis hate Russians because of their anti-Semitism that they had in the 19th century under Tsarism. And the Nazis fight Russians because they weren’t anti-Semitic. I mean, it’s very, it’s ironic.

So the election is going to be continued to go down the unrealistic path that it’s going down now. And it will follow economic and trade policies that are not only going to raise the consumer price index for the consumer goods that we import from china and other countries but it’ll it’ll lead to a mutual trade the trade war will not be like it was the trade war will not be like it was in the 1930s, raising tariffs against each other, it’s just not trading at all. Not, you’re not competing for markets, we’re withdrawing from markets. And that’s what America’s done. A trade war, you’re supposed to win markets from other countries one way or another.

Today’s trade war is we’re going to cut off market to you, you’ll cut off market to us, and we’re just ending up with America being isolated without any analysis of, well, wait a minute, if we don’t get the raw materials, the energy, the industrial products, the food from the global majority, how are we going to start again as if we’re back in the 19th century? The economy will be wrecked.

So you could say that both parties agree that it’s desirable to wreck the American economy. And there’s a reason for that. You make more money from an economy that’s being wrecked than you do from an economy that’s thriving. You make it quicker because companies that go bankrupt, the financial sector, the corporate raiders can pick them up for a song, you know, and then once they pick them up for a song, they can then say, all right, we’re going to go back to a reasonable world. Now all the companies that we’ve taken over for a song, now they’ll be profitable again.

But the problem is that America is creating irreversibilities. And the irreversibility is the emergence of BRICS saying, we don’t need America or Europe. We can now depend on ourselves for mutual gain and mutual trade. So there’s no way to reverse the irreversible. And the financial plan of bankrupting companies, picking them up at distress sale prices, will be that this doesn’t pull the economy out of distress. You’ll have a distressed economy where companies are going bankrupt, they cut back employment, the workers will not be able to pay their rents, they won’t be able to pay their credit card fees, their mortgage payments, their auto loans. You’re already finding, as we’ve talked before, loans going into arrears.

You already have a 40% office vacancy rate here in New York City. What are we going to do with these vacant offices? Well, they’re talking about maybe we can rent it out as luxury property. Well, the problem is that these offices aren’t very good for residential property. Where are you going to do your grocery shopping, you know, if you live in a nice Wall Street building? And what are you going to do for air conditioning? And what are you going to do for light? There are going to be a lot of rooms that don’t have any light in them. What are you going to do for these?

The Financial Times on Friday just had a similar discussion about their financial city that the Reichmans developed 30 or 40 years ago. The financial buildings that had banks, now that England has taken itself out of the Eurozone, are largely vacant. And they think, well, maybe we can rent them out. There’s a housing shortage in London. Look at all the advantages of the financial area there. There were a lot of, government spent a lot of money with a Jubilee line making extensions. You can get to it easily. But again, it’s a desert. It’s very, it’s not, doesn’t feel like a neighborhood. There are no stores on it. The buildings are not designed to have stores on the ground floor like you worked on Queens Boulevard. You know, there are coffee shops, there are grocery stores, there are shoe stores.

How are you going to make buildings that just have big lobbies to impress you when you go into an office building? How are you going to make that into a shoe store, a drugstore, you know, or a coffee shop? How are you going to handle the air conditioning when you not only have COVID spreading, but you have all these new diseases that are spreading from uh cattle and you have bird flu you have cattle flu you have all of these things that are developing uh you need to re-engineer all the buildings a lot of uh developers saying well you know it’s really cheaper to tear them all down and uh begin all over again and uh the uh the there’s a discussion again. And there’s a discussion that from England and the Financial Times to the United States, it may be easier for American listeners to understand it when it’s in a foreign country than they can understand it here because they don’t like to hear bad news about America.

So if we’re talking about England, they’re, what are we going to do with all of these office buildings that now are not occupied, now that we’re deindustrializing? Well, if you want to see where American capitalism is leading, look at what Margaret Thatcher did to England. That’s libertarian. That’s the Republican policy. Let’s have a low state. Let’s get rid of the state. It’s the road to serfdom, as Hayek said and as Margaret Thatcher said. We won’t have any government ability to regulate the economy. government agencies can no longer impose regulations on companies. The regulations will have to be passed by Congress. Agencies have no power at all to regulate the economy with professionals.

It has to be the politicians whose campaigns are paid for by the donors who, from the very class that the politicians used to be able to regulate but now they can’t appoint regulators to do it and they follow the deregulators who pay for their political campaigns. So getting rid of campaign, getting rid of, well permitting campaign finance of the donor class is another reason why the American Empire is going under. If you have politicians who are following the rules set by the donor class, both the Republicans and the Democrats often have the same donors, certainly from the same industries, the automatic intelligence industry, the military industrial complex especially, the oil industry, big agriculture. If you have these companies financing politics then you’re not going to have politicians backing prosperity for the 99%. They’re going to back prosperity for the 1% of the monopolists or the financiers or the rent extractors that are their campaign contributors.

And so you have the political system as part of this tunnel vision that, as Richard and I have just been saying, have led to this inability to understand the laws of motion of where the American economy is going, where finance capitalism is going, and where America’s role in the world is relative where other countries have the option of going. And your only hope is that other countries are just as unrealistic, that they don’t know what to do either, that they have been so used to following the American plan that made it dominant a century ago that they don’t realize that we’re no longer a century ago. We’re no longer in the post-World War I world, a completely different world, and it seems that the whole world is operating with a tunnel vision in the dark. That’s what’s so ironic about all this. We materialists think that people are going, and countries are going to act in their own self-interest. But neither the United States nor the other countries are acting in their self-interest.

How on earth do you project what countries are going to do if they don’t know what their self-interest is? That’s what makes being a futurist so difficult. In the past, it was easy to be a futurist back in the 1970s. Alvin Toffler, Herman Kahn and I, we used to talk together all the time. We’d all pretty much agree, well, here are the interests of industry, here’s the interest of oil, here’s the interest of military.

You know, we could see what the interests were and you just forecast, here’s what German interest is going to be, English. You can’t do that anymore because nobody knows what their interests are and they’re all flailing. That’s the problem that you have. How do you forecast what countries are going to do when their leaders don’t know what they’re doing and don’t know what their advantage is? You can no longer think what’s reasonable for them to do because they don’t know what’s reasonable because they don’t have a way of thinking about what’s reasonable or what their interest is.

Robinson Erhardt: You deserve a round of applause for that. You’re not going to compliment yourself, so I’m just going to say a little bit for our listeners. I mean, they’ve seen you on the show many times, same with Rick. And something that I often hear, something I heard a lot after our last episode, which I think you agree is one of maybe the best interviews you’ve ever done, and we’ve both heard that, a lot of people tell me about that episode that they are just blown away by how knowledge not only how knowledgeable you are about your domains within economics but how fluently you can speak about them. And what I wanted to say was to give our listeners and our viewers just a very brief and a brief look at the process that went into this interview, because it’s probably going to be a lot simpler than they think.

Maybe I’m wrong. But essentially, before having this conversation, you, Rick, and I decided on a topic. We decided we were going to talk about the development of Marxism in the West, how it has impacted today’s economy, and how we can use it to evaluate what’s to come. There was not an extensive back and forth determining exactly what we were going to talk about. All I did was write down a few bullet points, and I haven’t even looked at them. I’ve jotted down the time a couple of times because I need to keep that in mind. I’ve jotted down a word or two that the two of you have said just so that I can keep it in mind the next time I say something.

But the point is that before we spoke, you and I had, or neither of us, yeah, we had any idea that I was going to ask you about Chinese tariffs. That just wasn’t even on the table. But I posed that question essentially spontaneously, and you just gave, I don’t know maybe a 40 minute lecture on it and yeah I see your face that’s how time flies and there are people who have been studying it for 60 years that are probably your age and couldn’t do that the way that you just did so one that’s amazing I know a lot of smart people and I don’t know anybody who could do what you just did. But that, I mean, raises the question. Since we’re going on, we can talk a little bit about how you think and how you work. How is it, do you think, that you developed the ability to just spontaneously speak about a topic like this with this depth for 40 minutes without any preparation?

Michael Hudson: Well I guess the earliest speeches I heard were all socialist speeches. I heard Max Shachtman was a great speaker, Terence McCarthy, my mentor, was a great speaker. Just writing books forced me to rewrite and rewrite. I’m always trying, every book that I’ve written I’ve been, I begin to write what I think will be a chapter about what I know about and then while writing it, I discover something new and by the end of the chapter, I end up going back and saying, oh, this is the point. This is what was happening. I only end up rewriting it. So I’ve had, I’ve thought through all of this. Well, I’ve dealt with it. I started my professorship at the New School in 85, it all filters out, and you’re able to see what’s important and what isn’t. So it’s really knowing what’s important. And if you have a view of how the economy is structured, for me it’s all value, price and rent. It’s a classical, you have a structure of looking at the economy.

And once you look at the economy in terms of what’s important, I’ve taken the national income and product accounts apart so I know all the parts, I put them together. And once you take something apart and put it together, I guess it’s like someone who’s taken an automobile engine apart and put it together. You know what makes it work, and you know what’s important. And I guess it’s from when I was a teenager and talking to, was a socialist, talking to people. You don’t have much time to talk. And I know when we were going to, a whole group of Americans were going to Russia, or when I was with the were going out to a whole group of Americans that were going to Russia, or when I was with the UN going somewhere, they would always have me do the summary speech because I could summarize it all in two minutes. It’s just how I’m thinking. I think it’s my musical training. In music, if you look at any Beethoven sonata, the whole evolution of the sonata is in the first eight bars. And you could say that the rest of the movement of the sonata is the auskompanierung, the composing out of these eight bars.

So I’ve always organized my writing. I never could compose good music. I ended up throwing it all away. I didn’t like it. But I could do in economics what I couldn’t do in music as a performer or a conductor. But I’m still thinking in terms of the musical development. How do I summarize in the first eight bars, which for me is usually the first page, everything that I’m doing in that chapter. So I’m used to thinking in terms of, you know, what’s the whole core? And if you’re thinking in terms of the laws of motion of certain categories, balance of payments, rent, GDP, rentier versus industry, the categories sort of are really very simple.

Rentier versus industry, the categories are really very simple. And people who use longer explanations don’t have a set of basic categories. They look at phenomena. If you talk about the surface, it’s going to go on and on and on. But if you look at the skeleton, it’s all very easy. And you don’t have to go on and on describing the surface, hoping that somehow you’re going to get back to the skeletal framework of what’s happening. So I think it’s a way of looking at the economy in terms of the inner skeleton, not just the surface or, you know, what is Trump versus Harris saying. It doesn’t matter what they’re saying. They’re skimming the surface, not going to the essence.

Robinson Erhardt: Well, I’d like to return to where we left off right before I asked you that question. This was the problem you raised of forecasting what’s going to happen when the leaders who are ostensibly in charge of determining what’s going to happen don’t know anything about economics and they don’t know what they’re doing. And the question that I have in mind harkens back to another question that I talked with Rick about a couple of episodes ago. And it was about how he uses economics as a tool to evaluate what’s going on in the world. And he views economics as a tool to get at the, I think his phrase was maybe the hidden undercurrents of global politics, culture, society, something to this effect. And I’m wondering if this maybe is where something like Marxism will come back into our discussion, where you look at classical economics, as you put it, and you use that as a way to predict what’s going to happen or to understand what’s going to happen when you can’t count on these leaders.

Michael Hudson: Well, here’s the problem, that there’s no way that you can fit what Richard and I talk about into the economics curriculum. You can’t fit a critique of the GDP and the national income accounts into the curriculum because it’s not taught anywhere. I think I was told that the only course since World War II that was taught, dealt with the balance of payments, was the balance of payments course that I gave actually in the statistics at the New School. I had the students use the format that I developed for U.S. balance of payment statistics and with the world I said, how does this relate to Japan, how does this relate to Europe, how does this relate to Latin America and they all actually walked through statistics. There’s no university economics course that teaches people what are the components of GDP. They get surprised when you tell them. We don’t talk about that in school. They’re not talking about what is the balance of payments.

They think that when they talk about a trade deficit that the trade deficit means a balance of payments deficit when actually a lot of of the value of foreign trade doesn’t involve similar payments. I won’t get into that, but I’ve written books about that. There’s no understanding of what the words mean. It’s like they’re talking about something very abstract that really should be taught maybe in the literature department. It shouldn’t be called economics anymore. It’s all a hypothetical world. If you start with this assumption, then what follows? But you have to start all of your analysis with assumptions that are false, namely that the banks don’t create money. Like if you read someone who doesn’t know economics like Paul Krugman, he said banks don’t create money, they’re intermediaries. And depositors put the money in banks and that give the banks money to lend. He doesn’t realize that the banks can create deposits, that banks lend money. Steve Keen has been writing about this a lot in his monetary analysis.

There’s no way to fit, but none of us are teaching economics anymore. There’s no way to fit a realistic view of the economy and even the concepts that define an economy’s laws of motion into the curriculum that’s taught today. And the universities are not hiring any more tenured professors because they have financial managers just like Boeing and other companies have financial managers. And they’ve decided that universities can save money by hiring deans and administrators whose job is to cut the cost of what they have to pay to the content providers, to the professors.

So universities are now replacing tenured professors with part-timers, adjuncts, visiting assistant professors or adjuncts that are paid maybe three or four thousand dollars per class instead of you know a hundred thousand or two hundred thousand dollars a year for a tenured professor so you’re you’re only going to get new graduates who’ve gone through the brainwashing program of what modern economic teaching is to teach economics. You’ll have to have it. I think already in the 1970s, Alvin Toffler and I went away for a weekend, a July 4th weekend, to discuss what kind of university department should we create that isn’t called economics.

And I thought, why don’t we just call it futurism? It doesn’t mean anything. And if it doesn’t mean anything, it can mean whatever you want. But you have to realize that what we’re saying is not in competition with what the tunnel vision economics profession is all about, because we’re not competing with them. We’re not trying to project GDP, what it’s going to be, or employment next quarter. We’re looking at completely how the future is going to change. How do you talk about structural change?

Well, I think already people had this problem way back in the late 19th century. The economists who began the American Economic Association in the United States, were all trained in Germany. And they gradually, even the economic association, became so narrow that the economists got together and started a new discipline, sociology. And then they thought, okay, sociology will talk about everything that’s happening. But then, just like the University of Chicago, Standard Oil, took over the economics profession, they took over sociology. And now sociology is just about status. You talk about status, but what we’re talking about is transformation of the status categories, a transformation of status, not just how do you compete within a given system to get a house. So sociology is in as bad a state as economics. Archaeology got into pretty much the same problem.

Archaeologists didn’t really talk about economics and especially the field that I was in for many years at Harvard, Assyriology. Didn’t let economists come anywhere near them because they said whenever economists try to involve us in a discussion about Sumer, Babylonia, the Bronze Age, they have categories that are completely anachronistic. They say civilization could not have started the way that you say it started because that’s not what Margaret Thatcher would have done, or Milton Friedman would have done. I’m obviously exaggerating. I was the only economist in the group that we put together at Harvard to rewrite the economic history of the ancient Near East and classical antiquity.

No room for economists in it because they couldn’t believe that there was such a thing as debt cancellation as you and I spoke about in our earlier lecture. You have a profession of economics that can’t believe that economies actually evolved the way they did over the last 5,000 years or even the last 200 years. They can’t imagine what made European industrialization and America’s industrial takeoff so successful. if you realize what made industrial capitalism so revolutionary and successful, then you’d have to say, well, is that what’s happening today? You have to realize that we’re no longer following that.

Finance capitalism is no longer industrial capitalism. We’re in a whole new world. What do you call it? Neo-feudalism? Road to perdition? What are you going to call it? And what are you going to call the discipline that calls that? If you have a university teaching courses, what are you going to call, what department are you going to call it that teaches these courses? I don’t know. That’s why Richard had a niche position in teaching specifically Marxism and I stopped teaching and went to work for being a government advisor 50 years ago. Because for governments, they didn’t, Wall Street had a freedom that I didn’t have in academia.

In academia, at the New School, all they cared was what you believed. You know, are you one of us? At Wall Street, they didn’t care about my politics. They came to know that I was a Marxist. All they cared about was whether my forecasts were right or wrong, whether I was telling them what was going to happen. Because of that, I became very successful. They didn’t care about the ideology. That’s the difference between at least Wall Street and the business community was free of the economic categories that prevented economists from playing a productive role in the American economy.

It all sounds ridiculous, but I mean, I find when I go to China, I mean, when they made me an honorary professor in Wuhan, which is their university city with I think a million students, and again, I was in a niche like Richard was in as a professor of economics at the School of Marxist Studies at Peking University. There’s no department of colonialism. There’s no department in civilization. The civilization department, I guess you could call it that. Maybe you can come up with the word i very rarely come up with the titles for any of my books even though you say that i’m clear in discussion i’m not clear enough to boil it all down to a title of my book someone else always makes a suggestion for that.

Robinson Erhardt: I’m going to apologize right now for not pulling out the most no don’t don’t you don’t need to make that face i’m going to apologize right now for not pulling out the most… No, don’t. You don’t need to make that face. I’m going to apologize for not pulling out the most interesting thing you said, but something that I just found fascinating and that I need to press you on. Oh, do tell me. I want to know what I said. You said that Paul Krugman does not know economics. And the reason that this is interesting…

Michael Hudson: Everybody says that!

Robinson Erhardt: Okay, well, let me keep going. I’m not inviting, I’m not trying to get you into a trap to spring an ad hominem attack on him or anything. I just find it quite curious that he has held some very senior positions. He’s won the Nobel Prize in economics.

Michael Hudson: But he was given the prizes for not knowing about economics. That’s what the prize is all about.

Robinson Erhardt: Say more, explain more about this, how, how, how this can be the case. And, and let, before you go on though, let me just say, I would love to have Paul on the show to talk about his work, to hear what he has to say about all these things.

Michael Hudson: He won’t talk to me. We were together as advisors to Medvedev in Russia and he was chairing the committee I was on. Most of my friends, as it happened, my close colleagues were also on my side and afterwards we were all sitting in the dining room. He came into the dining room, literally moved all over, went and sat in a corner and ended up muttering to himself. Well, without being ad hominem, I can explain what the problem is. I knew one of my friends was a Belgian economist who’d gone to school with him. And he said they had a conversation once and Krugman told him, don’t talk about money. He said that’s the one thing that’s just going to upset people. They all have different ideas. You’ll do much better with your presses if you don’t talk about money. He never talked about money. He did get in an argument, he had a written debate with Steve Keen and it was like Bambi meets Goliath.

Paul Krugman said banks are intermediaries. The reason that we don’t treat money or debt in the economy is the economy is basically barter. This is what he’s written about. It’s as if the economy is barter and money is what he’s written about. It’s as if the economies barter and money is just the counters. He doesn’t realize that, and Steve Keen said, money is debt. Don’t you get it? When there’s money created, banks create credit. Did you know that they actually charge interest on it and that the other person has a debt to this money? Money on the balance sheet of the bank, a claim is a debt on the liability side of the balance sheet. And Krumen just got a headache. He couldn’t understand that.

He said, well, no, money is just a veil, a veil of money. And one person, if there’s a balance sheet and one person’s money, asset, is another person’s loan, creditor claim, is another person’s debt, then it all balances out to zero. And you don’t need to take that into account in making the balance sheet for who owes what in the economy. That’s not Krugman only. That’s how you get a Ph.D.

And I’ll give you another example, how I got my PhD. Did I ever discuss this with you before? We’ve discussed it, but it was probably a long time ago, and I’m sure our listeners don’t remember it. I wanted to write my PhD at New York University on concepts of productive and unproductive labor and productivity. What is productivity in different measures and concepts? I went to the person who was teaching something like that from the National Bureau of Economic Research, its head, Solomon Fabrikant.

He said the same thing Heilbronner said, completely unnecessary to discuss it. He said, you have to realize, Michael, that economics is like it’s an evolution and there’s a survival of the fittest. And we don’t talk about that in economics anymore today. If we don’t talk about it, it means that it’s not necessary. There are new ways to do it. It’s just not an interesting topic. In the middle of this, he stopped and tried to recruit me into the CIA. Really? Yes. He said, I can see you’re smart. Do you want to join the CIA? He held a report. The CIA had just published its first public report.

It was on Russia’s gold supply, saying don’t lend money to Russia because it doesn’t have as much gold as you think. Here’s what we estimate Russia’s gold supply. My eyes widened and I said, I just read a critique of that report. One of Chase’s customers is Anaconda, the copper company. And Anaconda bought some bars of gold that Russia was selling and it refined it, electrolytically analyzed how much copper was in it. And they found out that much of this gold of Russia wasn’t dug out of a mine or mined in a river. It was made as a product of electrolytically refining copper. You put copper in a big electrolyte and the gold falls to the bottom.

And if you’re producing a lot of copper, which Russia needs for electrification for copper wire, copper buildings, all the things you make out of copper, then you’re going to have gold. And that Russia’s gold supply was much greater than the CIA reported because the CIA didn’t explicitly, they couldn’t have been so dumb that they didn’t know that copper production was gold. When I did an analysis of Chile’s copper industry, Chile has in its balance of payments, here’s what we produce in copper, here’s how much gold we produce. Chile does not have rivers of gold, it’s all copper production. Well, needless to say, Fabrikant decided, he actually said to the whole class, he wasn’t focusing on me, he told the whole class the CIA needs economists. This is crazy. I don’t think anybody responded. What a wonderful name, Fabrikant for fabrication. So I didn’t write my dissertation on concepts of productivity.

I talked to a friend of mine, a German socialist who never was able to, Gerhard Brie, who was a, he fled Germany when it was Nazi, but could never say the word socialism. But I said, why don’t I write on something uncontroversial like the first big American economist, Erasmus B. Smith. And he said, that’s good. Nobody can disagree with that. So that’s how I wrote it. Uncontroversial PhD thesis and had no problem getting the PhD, although it wasn’t about any of the economic ideas that I was actually using to analyze why some economies were evolving and becoming more productive and prosperous when other countries weren’t. If you don’t have a concept of productivity, then how do you know whether your policy is productive or not? If you say there’s no such thing as productivity, productivity is making money.

Productivity, whoever gets the highest income, your income per man hour in each country is a measure of your productivity. So what more do you need to know? Well, of course, how do you make that income? Do you make it by being productive or by being predatory and unproductive? That whole issue comes up. And that was not, I guess, what Fabrikant and the CIA didn’t want any discussion of. What’s productive, what isn’t? allocation of savings and credit created by Wall Street helping the economy be more productive and prosperous or not. That’s the one thing they don’t want to talk about. If you talked about it, then it turns out not to be so productive. You realize why China’s gone ahead and America hasn’t.

Robinson Erhardt: All right, we actually did a little pause for a snack, and I want to tell you about the snack that I’m giving you right now. So it’s from, oh here, let me tell you about it this way. I think something like a hundred years ago, I might get the details wrong, Let me tell you about it this way. I think something like a hundred years ago. I might get the details wrong That’s not a hundred years old. Don’t worry The Emperor of Japan gave a gift of ten axis deer It’s a type of deer. Yeah to the king of Hawaii he released them on to Maui and These ten or so deer turned into thousands upon thousands. They’re an invasive species. They’re now on other islands like Lanai and they are causing serious damage to the landscape. So these deer were just being culled. So they were being killed somewhat to my my mind, absolutely senselessly. I would prefer it if they could somehow be heli-lifted to wherever they came from, where their ancestors are from, but that’s not going to happen. This company, Maui Nui Venison, they got a contract from the government to humanely and so much as this is possible manage the landscape manage the deer and sell the meat so that some benefit is coming from killing them, so it’s the only meat that I eat actually this deer and they’re not paying me or anything like that, but I really believe in what they’re doing, so I’m glad I have an opportunity to tell you about it while you’re eating it.

Michael Hudson: Soylent Green is people!

Robinson Erhardt: I wanted to follow up on that question about Paul Krugman before we get back to Marx. The question though is just what is it that has happened in your perspective to the discipline or profession of economics that somebody who you do not believe knows economics receives the Nobel Prize? This isn’t a question so much about Paul, it’s a question just about economics today in general. I don’t know what they can, where they can do. They, not reading an economics textbook, I haven’t read an economics article in American Economic Review or any of the other any of the other prestige journals for maybe 40 years. I mean, I read it and it’s just all mathematics and it’s just, what’s the point? There’s nothing, it’s about what economists do and all they can, they make regression equations, meaning mathematical projections of trends without asking what is the interaction between these trends and the rest of society. Will the trend continue? They just say, well, we have all sorts of mathematical curves. There’s an exponential curve, there’s a straight line curve, there’s a three degree curve where it turns into an S curve. They just try to fit the trend and project it. And that’s what they do.

Or they do correlation analysis. That’s what money is made on Wall Street. They correlate stock prices relative to other bond prices or other prices and they make derivative trades. It’s all on somehow trading back and forth. It’s not about how the economy works. If you see a lot of mathematics, you know it’s really taking the current environment for granted. Where is it going? And a statistical analysis of probability will not work if the environment changes. Mathematically, it has to be an unchanging environment for the curve that you’re projecting to make any sense. That means that they don’t want to talk about how is society changing because if you do that then the mathematical projection that you’re making doesn’t really work. Well, you no longer talk about how the context may work than if you’re the military. What do we do if we lose? What do we do if Russia fights back when we move our army into Ukraine. What do we do if China decides not to export to us if we raise the tariffs on it and say that it’s our number one enemy? What do we do if other countries respond? That’s not what it’s all about. And so the people who do study the laws of motion, well, they study colonialism or imperialism.

I have one show on the internet called Geopolitical Hour. We call it geopolitics, because that doesn’t seem to be ideological at all. It’s just geopolitics. That’s one way of calling it. I don’t know what else we can call it, but it means something where you have a big possibility of moving within a dynamic of change and the laws of motion. Economics doesn’t describe the laws of motion. If nothing changes and the economy stays just the way it is, what’s going to happen? Is that really forecasting? That’s not futurism. And the sort of heyday of futurism in the 1970s, early 80s, there was a Futures Institute that hired me to project what happens if people live longer. How will that affect Social Security? How will that affect the economy? They don’t do analyses. They don’t get contracts like this anymore. How can we make sure that the economy stays exactly the same so there isn’t any change? How can we prevent change from occurring, not how can we look at the laws of motion?

Now that I’m thinking about our background, I think I can answer the question of why can I speak clearly. Richard and I were on the outside of society looking in. If you’re looking at society from the outside, and ethnic minorities usually have that example, even though I’m not an ethnic minority. You’re looking from the outside, you can see the whole shape of the bottle. But if you’re inside the bottle, you’re the majority, then you just take everything for granted and you want it to go on forever and you don’t want it to change. So I think that being an outsider really helps talk very simply because you can see the big bottle, you can see the shape, you can see the big structure.

Robinson Erhardt: Interesting. What I was going to say is that we started with some dessert, we just had a little more and I’d like to get to some vegetables though, get back to some vegetables. What I have in mind, since you probably have no idea what I’m talking about, is in the beginning of the conversation, you and Rick referenced Das Kapital, Volume 3. And I think it would be…

Michael Hudson: Of course, there is a surplus value, Volume 3. That’s just as important. You’ve got to read Theories of Surplus Value along with capital. Engels edited Capital after Marx died, but after Engels died, Karl Kautsky took Marx’s original manuscript, which was The History of Economic Thought, and originally Marx had planned that to be the first volume of Capital. He ended up abbreviating it in Critique of Political Economy or Introduction to the Critique of Political Economy. And so the Theory of the Surplus Value has an elaboration of all of the ideas that were edited by Engels into Volume Three of Capital. They both work from the same manuscript.

Robinson Erhardt: Where I was going with this is you mentioned volume three, but I think it would be nice to have in one place just your thoughts on volumes one, two, and three. I’m not asking for this really elaborate lecture like you gave on Chinese tariffs, unless you want to give one.

Michael Hudson: I didn’t know that was elaborate. I thought that…

Robinson Erhardt: Yeah, no, but I just am wondering, for our listeners who haven’t read Das Kapital, how are these three volumes structured? What do you get out of them? And how might they be useful for us today?

Michael Hudson: Well, by the time Marx wrote, decided to write Capital, there was already a very sophisticated analysis of land rent. The debate between Ricardo and Malthus, for instance, which is volume two of Ricardo’s Collected Works. It’s a wonderful back and forth discussion about what is land rent, what is economic rent. Volume one was, of course, Ricardo’s Principles of Political Economy, where the second chapter was all about land rent. So Marx didn’t have to write a book about what was already written about how capitalism was freeing economies from the residue of feudalism to become something revolutionary and entirely new. He did plan, as I said, he planned to write that as a lead-in When the Theory of the Surplus Value was going to be Volume 1, instead it ended up being called Volume 4 because by that time the early three volumes were already translated.

So Marx knew that he wanted to write something new while other people were discussing exploitation that was unproductive. Marx wanted to say that we’ve talked about landlords being exploitative and monopolists and bankers. What about industrialists? How does that? Well, that’s when he said there are two ways of looking at labor. We discussed earlier here. There’s what the employer has to pay the labor for the cost of production, and then what the employer sells the product of labor for. That markup is the surplus value. selling labor for more than you pay it, that’s productive.

But unlike the rentier, the rent recipient, who does not play a productive role at all, the capitalist plays a productive role because he organizes production, he develops a market, he develops a supply of all of the raw materials and the intermediate goods that are all made by labor that go into this product. And so the profits that a capitalist make is part of value. The capitalist profit is not a form of economic rent, unlike the kinds of economic rent that people before me have all been discussing. Adam Smith and John Stuart Mill and Ricardo and Malthus. He goes into the whole long discussion of this. I want to discuss how the industrial capitalist exploitation is different from the pre-capitalist feudal forms of exploitation. And so naturally, if you’re going to write a book about how the economy works, you begin by saying, here’s what I’m adding to the discussion that I know that all you people are already familiar with, who’ve read The Wealth of Nations by Adam Smith, Principles of Political Economy by Marx, Principles of Political Economy and their Application to Social Philosophy by John Stuart Mill.

We know you’ve already read that, but I’m going to just say how the idea of industrial capitalist profits came into being by essentially out of feudalism. came into being by essentially out of feudalism. It took essentially you displaced the serfdom on the land and the tenancy on the land. You drove it into the cities where the serf who was exploited under feudalism by the feudal lord who would sell the crop for more than he had to pay the serfs. Now you drive labor into the cities and the labor has to find a job. At first the labor would essentially work in an elaborate way of how they did on the land. They’d work at home.

The homespun is what they used to call textiles. They worked as at home. The homespun is what they used to call textiles. They worked as textile workers. But then industrial capitalism was different from earlier forms because it was industrial. It used manufacturing. It used power-driven looms, power-driven machinery. So it’s the machinery that greatly replaced the labor services with much more energy per worker. You could trace the growth in GDP or national income for the last 200 years in energy use per worker. And it’s the capitalists that created this energy per worker and used it to make products that there was a market for that the capitalists had to develop by developing a whole distribution network with other capitalists, businessmen, creating the distribution network for all of the stores, railroads, and everything else that’s needed.

So Marx is talking about what made capitalism different from feudalism and why capitalism, once you created this ability to make a profit by selling the products of labor, you wanted to pay labor as little as possible. Well, Ricardo and other people used the term the iron wage theory of labor, that labor needed enough money, the basic price of subsistence. That price of subsistence was the basis. Well, you can’t have a fight of employers against labor by paying them less than it costs to live because then there won’t be anyone living to employ anymore. So you had to do that. So the question to the capitalist is how do we get rid of all of the cost of production of labor’s wages that are unnecessary, the false cost of production. Well, you get rid of the landlord class. You get rid of the monopolists. You make banks make productive loans for industrial capitalist purposes, not just take over loans, not just to make war.

The banking developed in the 12th century is war financing. That was basically what drove the structure of the financial system from the 12th century all the way down to the 17th century when you had nation states, fiscal states developing. It was still a financialized economy until industrial capitalism came along. So Volume One was about the layer that had become the root layer of industrial capitalism as the employment of labor by industry. But Marx said, of course, we’re dealing with a multi-layered society. There’s a layer of landlords and rent recipients. How will you deal with that? How will you deal with natural resource rent?

Ricardo had, in his chapter two, he said after land rent, the same rules and definitions apply to natural resource rent. How do you deal with the financial sector? How do you deal with the government sector? Well, as we discussed earlier in this talk, the government sector was to make basic infrastructure costs instead of letting the post office be monopolized as it was under banking families started to develop the post office, for instance, and the taxi service. What you called a taxi getting here was named after the Torn in Taxes family, a banking family, a financial family of Europe. All of this was going to be provided by the government.

If the governments can provide railroads in Europe, many of these sectors were government run from the beginning. The railroads, unlike America, were public developments very largely. The broadcasting, the BBC was a government company, not a private, not the NBC or ABC in America. You had all sorts of sectors, public health. And this was by the conservative industrialist party that was advocating this, not by anti-capitalists. It was, I think we discussed before before how Benjamin Disraeli said, health, all is health. We have to have government health because healthy labor is more productive. And the American School of Economists said, actually, it is in the cap.

Of course, capitalists want to pay labor as little as possible to get the markup, but they actually make more of a profit by paying labor in general more because well-housed labor, well-paid labor, well-fed labor, well-clothed labor is more productive labor. You can’t have pauper labor. You can’t have people like today. You have workers sleeping in their car because they can’t afford a house. That’s not a way to get productive labor. And so the individual capitalist wanted to pay the individual labor force as little as possible to make a profit, but the capitalist class wanted all of labor’s living standards to rise as much as possible as long as rising living standards made labor more productive, making more money for the capitalists. So Marx wasn’t just saying, well, it’s not like you take wages as a universal given.

You have to realize that there’s a wage productivity advantage. As you produce more machinery, you’re going to require more skilled labor for it. You’re going to change the character of labor from the sort of mind-dulling, repetitive tasks to higher tasks. You’re going to want machinery to take over the most mind-dulling, repetitive tasks for that. Capitalism will, in its own attempt to make more profits, as an economic system, it’s going to raise the cost of labor to the capitalists. But that cost can be reduced to the extent that the government picks up all of what’s now called the external costs, the costs that are universal and you don’t want to be privatized, like we mentioned the transportation, the key infrastructure costs, you don’t want to be privatized.

So Marx is discussing how it is that the industrial capitalist can make the most money from employing labor. And he was an optimist. He thought all of this is going to lead forward. He said the role of industrial capitalism is to free economies from the legacy of rent-seeking feudalism. As we’ve said again and again, we want to bring prices in line with cost value, get rid of the economic rent. So the first volume was just talking about labor-capital relations. And then he said, but that’s only part of the economy. Volume two was largely about the development of rent theory, how the conditions of landlordship had been transformed by capitalism. In effect, Marx said, agriculture is going to be industrialized.

The management of farming, the management of agriculture is going to be the management of industrial capitalism, cost accounting to minimize the costs that are not necessary for production. So agriculture under industrial capitalism will be different from serfdom and agriculture under feudalism. He said the same thing for banking. First of all, the biggest fight of the 19th century was to get rid of the landlords. They were what was holding the economy back by raking off all the surplus in the form of, well, you have to eat and if we can… The Corn Laws, the big fight that led to Ricardo’s writing his Principles of Political Economy and Taxation were the tariffs on grain, the corn laws, that wanted to prevent England from importing cheap grain that would have lowered the landowners’ farm rents. And so basically the fight of Ricardo was do we really want the economy to be run for the benefit of landlords to get higher farm rents by charging higher prices of food that are going to make our labor so high priced that instead of making Britain the workshop of the world, Britain will price itself out of world industry. You’ve got to get rid of the power of the landlord class. That led for parliamentary reform to get rid of the power of the House of Lords, meaning the House of Landlords, basically, which ultimately led to a constitutional crisis in 1909 and 1910 that was resolved by saying the House of Lords could never again repeal or reject a proposal by the House of Commons.

So Marx essentially just said what he was doing was new, and then he was elaborating. Now that I’ve said what’s new, let’s talk about what we know that we’re dealing with, land and rent. How is capitalism going to change rent? And then he talked about how is capitalism going to industrialize banking? Just like capitalism has revolutionized agriculture, capitalism is going to run banking in a way that is part of the industrial process, not only war lending, not only lending to make money for monopolies extract or make money on foreign investments like the Panama Canal or the Suez Canal, or make money on foreign colonization. But as part of how do we make, foreign colonization was all part of rent seeking. So while Europe was freeing its economies for rent, its colonization process created all imposed economic rent on all the colonies. So you had the division of the world into the rentier economies abroad and the industrial economies in Western England, Germany and America. So already you had this bifurcated world economy that we’re seeing today between the BRICS and the West, the neoliberal, you already, you had this fight, the seeds of all the fight today were planted in this bifurcated economy that industrial capitalism caused by making England and other industrial countries the workshop of the world, and that meant other countries had to be the raw materials suppliers of the world that were supplying all of these.

The last thing that England wanted was for its colonies to follow what it did at home, to have a land tax, to tax economic rent, the land rent and the mineral rent, to invest in their own industry. They were prevented from making their own industry actively. This result of colonialism and the rent-free economy and the industrial economies or the rent-free ideology at least and the proRentier economy created in the raw materials suppliers of the world is what’s created the world indebtedness today by the global south and by the global majority leading to de-dollarization. Well, if these countries, if the BRICS had studied what made industrial capitalism so different from the rent extraction. If they’d studied really the colonialism, not only how did Europe oppress us, but what made Europe’s oppression from us stultifying our development so different from what industrial capitalism did to make Western Europe and America the industrial center of the world. Then they’d know, why don’t we do what industrial capitalism idealized?

Create a rent-free economy where there is no rentier class to exploit us, especially a foreign-owned rentier class. Well, all this discussion about foreign debt, this was all discussed in the late 18th century. James Stewart, who wrote the generation before Adam Smith, discussed it. All sorts of people discussed it. This was normal discussion in the mercantilist literature. Mercantilism also was not taught in the economic curriculum. And economic history is not taught in the economic curriculum. So how are you going to have an educational agenda for the BRICS countries to teach them how the world works if you don’t have economic history, either of industrial capitalism or mercantilism before, if you don’t have the history of economic thought but you only teach them mathematics when they get here to project economic curves without analyzing the environment, how are the BRICs going to have some means of guidance unless they reinvent the wheel?

How can they reinvent the wheel if they don’t make a distinction between economic rent and profits and productive and unproductive investment and labor? They don’t even have these concepts because they’re called unthinkable concepts. If you discuss them you’re not promoted in the economics profession so that none of the modern monetary theory graduates you know that my group comes from are their papers are not accepted in the respectable economic journals and if a university is going to hire new professors they judge how many articles do you have in the professional journals well if you don’t agree with the tunnel vision, money doesn’t count, debt doesn’t count school, then you’re not going to have your articles published and you don’t get hired. So we’re in a blind alley that the economy is going into. And unfortunately, the global majority countries, Asia, Africa, Latin America, and China, have sent all their prestige students here to be taught this tunnel vision.

Robinson Erhardt: So I have a flight that I have to catch in a little while. So I just wanted to ask, before we finish, if you have any final thoughts based on this quite long and wide ranging discussion we’ve had today.

Michael Hudson: No, my mind’s a blank now. I’ve said it all. What more can I say?

Robinson Erhardt: Well, okay. I’ll ask you one other specific question and maybe something will come up. That question is, are there any serious misconceptions about Marxism that we haven’t touched on yet today that you think are important in understanding today’s economy?

Michael Hudson: Yes. The big misconception is that Marx is what he wrote in Volume 1 of Capital, and it’s all about employer-labor relations, and that everything else is outside of Marxism. That volume two and volume three don’t have anything to do with Marxism. That finance and rent don’t have anything to do with Marxism. And the economy is not an economic system. All that Marxism talks about is labor capital relations and you need a big state for that. And the state becomes the employer of labor. That’s the trivialization of capitalism that I encountered at the New School when I was teaching there. It changed a bit since then, which is why Richard can, I guess, be an adjunct.

They’re teaching part of the time, but they don’t have enough money to hire full professors at the new school because their graduates don’t get many jobs teaching what they learn at the new school. So they’re in a budget squeeze. That’s basically the problem. Say the question once again, the misinterpretation of Marxism. We already said it. Think Marxism is the big state. Marxism is Stalinism. Marxism is why Russia didn’t develop and they ended up having to have neoliberalism destroy more Russian lives than World War II destroyed. That that’s the alternative to Marxism, which proves that Marxism doesn’t work because Marxism is like World War II and its destructive effect on Stalinist Russia. The fact is that if the Russians would have understood volumes two and three, they would have known what was in store for them when they let the American neoliberals take over.

Marxism is, as I said before, there are two approaches to Marx. One is to start with biography of Marx, work forward and move, segue quite quickly into Russia and why Stalinism failed. And the other is to look at Marx as the culmination of classical economics, including all of the critique of economic rent that went before them, the culmination of Adam Smith and Ricardo and John Stuart Mill and all the other familiar names. I could have said a lot of names that are not familiar that would have been in there. If you’re talking about Marxism as really a study of the laws of motion of modern capitalist society, not only labor and capital, but landlordism, property relations, financial relations. Finance, property, industry and employment and the role of government infrastructure are all different layers of the economy. You have to look at the big picture and not all of government infrastructure are all different layers of the economy.

You have to look at the big picture and not all of a sudden use Marxism as a kind of tunnel vision of its own, only looking at what Marx wrote in Volume 1 of Capital. I think I mentioned, as I was a kid, my father would take me to his friends. And I think I mentioned before, they all had the three volumes of Capital on their shelf, the Charles Kerr edition, that red. And, you know, I’d sort of be a little bored while they’re watching the football games or whatever. And I’d look through the volumes and I’d notice volumes two and three had never been opened. They were all tightly bound. Volume one was open, and that took me to the beginning. I realized that most people who called themselves Marxists didn’t really read Marx.

Robinson Erhardt: Well, that is a great note on which to end what is certainly going to be one of the most and what is certainly going to be one of the most memorable of the 260 or so interviews I’ve ever done. This has been a very intense weekend for a number of different reasons.

A lot of things came together to make this happen. As our viewers will have noticed, this has been a pretty crazy setup and interview. But thank you so much, Michael. Also, obviously, thanks to Rick, who’s no longer here, but this has just been great. So thanks so much for doing this.

Michael Hudson: Well, you’ve shown me a new site in a park that’s right across the street, a block from where I live, and I haven’t ever been here before in the 25 years that I’ve lived here. I’ve always gone the other direction. The part I would have found this place is invisible. You’ve made something visible to me that isn’t. Now I know what other people find, how they feel when they discover Marxism.

Image by Brian Jones from Pixabay