Richard Wolff & Michael Hudson. “The Destruction of Modern Nations,” discussion with Robinson Erhardt

Richard Wolff & Michael Hudson. “The Destruction of Modern Nations,” : discussion with Robinson Erhardt, August 5, 2026. https://youtu.be/g6SwjEs7bec

This work will take time and best to get a cup of tea and take it slow.  The video is available for those who prefer a video presentation, but to my thinking this works needs to be read with attention and a mind like a sponge because you will hear and read concepts that have not quite come together like this for you before.  https://michael-hudson.com/.

From this exposition, we can look forward to a History of International Banking within the next two months or so.

—

Prof Wolff : I think we’re living through an extraordinarily dense period of historical change, and when we reflect back on what we’re living through now, that will be the message: it was the final end of colonialism, and therefore of the preeminence of the Europeans, because they were the ones who did colonialism, and as it goes, it takes down its creator with it. And the only addendum to that is that the culmination of colonialism was this savage destruction of the colonial European powers of one another in two consecutive world wars. That’s the peak achievement of colonialism, a level of human destruction the world never saw before, and so far, at least, has not seen since.

Prof Hudson:  China is providing a model, and the model it’s providing turns out to be the original model described by classical economists: the Adam Smith, Ricardo, Mill, Marx model. You keep a mixed public and private economy where the government controls all of the natural monopolies. And most of all, what China did was make banking and money creation a public utility. China’s revolution drove out the financial class; it didn’t have a financial class, and it didn’t have a foreign financial class in charge of its fiscal policy, determining what money is created for and who gets paid.

Robinson Erhardt

Michael started talking about this, but it sounded like there’s some big news that came out last night in Michigan.

Michael Hudson

Well, the Democratic Socialist candidate won over the Democratic National Committee candidate in Michigan, and Tthe press makes this out to be a conflict between socialism and capitalism. But the common point of Richard’s and my view is that everybody at the takeoff of industrial capitalism thought capitalism was evolving into socialism, so there’s really no contrast. And that’s the position of the candidate who won in Michigan, I think.

Richard D. Wolff

I agree with Michael, except I would phrase it a little differently. I think that the people who run this country are terrified by what he just said, that the direction of evolution at this point is toward the passing of capitalism into whatever various people mean by socialism. I would even go further and say socialism has taken a variety of forms. There is the form of Scandinavia, Denmark and things like that. There is democratic socialism a la Bernie Sanders, which is similar to that. Then there’s the socialism of the Soviet Union, that’s pretty different. Then there’s the socialism of China, which is different again. And then there are other socialisms beyond those that are becoming relatively more important right now, as the earlier stages of socialism kind of fade away, giving way to the new situation that we have now. And the number one factor in all of that, well, there’s two number ones: the growing difficulties of capitalism on the one hand, and the stunning success, in particular, of the Chinese version of socialism on the other. And I think those are the two driving forces that are going on here. And in the case of Michigan, where you have a candidate whose position, by the way, on the war in Europe is very different from the position Michael and I have been working on for months now, very close, in fact, to the official position of the Democratic Central Committee.

But where he disagrees is on the question of Israel and Palestine, which was a central issue in this race. I mean, it could be argued the major issue, that alongside discontent in the working class, and Michigan is a working-class state, discontent of the working class with both the Republican and Democratic Party leadership. He had that going for him because he was an outsider, but he also took an unambiguous position on the Israeli-Palestinian question. And those are the two things that got him a victory over and against the enormous hostility of the official Democratic Party and the enormous flow of money into their candidate, who was defeated.

Michael Hudson

Richard mentioned the problems of capitalism, and that’s what’s led to the conflict. This is what was discussed throughout all of the 19th century, in Britain, Germany, and the United States: the problem of capitalism, and how do you become an industrial country and outcompete other countries? Well, the answer is you minimize the cost of production, and that means minimizing the cost that employers have to pay labor. And the solution wasn’t to lower wage rates, because you needed increasingly healthy, well-educated, well-clothed, and productive labor.

The solution was to create a mixed economy and to get rid of economic rent, and all of the value theory from Adam Smith through John Stuart Mill, through, really, Marx, who came at the end of all this, was to make the fight of capital, industrial capitalism, revolutionary. It wanted to end the control of the landlord classes in Europe, to end the land rent. And you no longer just let the landlords benefit from rising rents, because that would increase the price of food, and Britain and European countries couldn’t afford to outcompete countries with lower-cost food production. What do you do? Well, you make land a public utility; that was what Adam Smith himself started. And you also don’t want monopolies, because monopolies raise prices. Capitalism was a fight to lower the cost of production by being more efficient and underselling other people. And that made it revolutionary, because the whole of the 19th century in Europe was a fight by the industrial capitalist classes against the landlord class and against monopolies.

It was the industrial classes that said, we want governments to subsidize our industry by taking over natural monopolies; they should provide transportation, communication, and water service. These are public utilities, and the government should provide them at cost or at a subsidized rate; otherwise, we’re all going to have to pay monopoly prices if we leave this infrastructure in private hands. That was what made capitalism revolutionary. And of course, the interests of land rent, monopoly rent, and the financial interest fought back, and that’s what essentially derailed the whole line of industrial capitalism from Adam Smith, Mill, and Marx, and the American protectionists who also tried to make America rich by public investment and breaking up monopolies, by Teddy Roosevelt, and subordinating private rentier interest to public productivity. That’s really what the fight against socialism today and against Marx is: really a fight against everything Adam Smith and Ricardo and John Stuart Mill and Marx and the industrialists were fighting for, a free market, free from economic rent, from the special interests.

Richard D. Wolff

I would argue that he’s right, and that the process he’s describing would have gone much further, much sooner, had there not been another way to economize on the costs of production in the competition among the different capitalists. That’s the process that got really underway in the 19th century, and was older than that, but it got a tremendous boost in the 19th century, and we know it as colonialism: the taking over of the entire rest of the world to get cheaper raw materials, cheaper food, and cheaper workers, all of which the colonies provided, along with a kind of captive market. And it allowed these European countries to give their workers a rising standard of living, because the cost of it had been collapsed by what they ripped off of their colonies. So the small working class of Europe could be lifted up because you ripped off the working class of the rest of the world, which is ten times larger.

A little country like Belgium becomes a rich European country, even though it has fewer resources and is a small place, because it presides over the Congo, which is one of the richest and biggest parts of the continent of Africa. So all the resources of the Congo flow into Belgium. And so, for example, they can hold on to their king, they can actually hold on to a feudal remnant, a kingdom. Britain could too, silly as it is, wasteful as it is, contradicting everything capitalism says it believes in, but it’s a compromise that makes it easier to get through the subordination of feudalism, because you have the greased wheel that colonialism provides. And that helps us understand why the situation now is so different, because we are now living in the post- and anti-colonial period of modern history. That part is over. Asia, Africa, and Latin America are not willing to play the game anymore. To try to be a colonial power now makes you either ridiculous, that’s Mr. Trump fantasizing about Greenland, or genocidal, that’s Israel actually trying to develop a settler colonialism in Gaza three centuries later. That’s not doable anymore, because the world has changed, and the only way to do it is to treat those people in Gaza in ways the whole world denounces. And yet the people tolerate it, because they know that they are on the right side of history, that they are where history is going. They are supported all around the world, and will be, and when this is all over, Israel will be a pariah; it is already a pariah in world affairs. And these are all signs that we are at a place where capitalism’s difficulties are going to be momentous, because they have no resolution anymore.

That’s Michael’s point. The working class has its unions, granted with lots of weaknesses, but they have their unions in Europe, they have their political parties, again, with lots of weaknesses, but there they are. And in the Third World, you have the revolution of all of those parts of the world, which are now expressed again, unevenly and with weaknesses, but they are expressed in the stunning achievements of China and the BRICS alliance that China has assembled. Even in Europe, I think that’s the way to understand what’s going on, because Europe was the part of the world that benefited from colonialism. That’s why the example of Belgium, but think of India, providing an immense country, by the way, the largest in the world right now, having surpassed China, India taking care of that little hold, offshore island of Europe called England, funding it for 400 years, creating the English Empire and all that it means. And to understand how important that was, is that the loss of India has produced in Britain 75 years of deterioration, culminating in the lunacy of blaming Europe in Brexit, instead of understanding what the real issue here is. And it helps us understand why now, in the leadership of these declining countries, Britain, France, Germany, Italy, you have a leadership that doesn’t know how to right Europe. Look at it, caught between China on one end and the United States on the other. Nothing happens in Europe; it’s a tourist destination. When do you read about a breakthrough in high tech coming from anywhere other than China or the United States? No European countries doing that; they come later, maybe a little bit, but they’re done. And so they have a fantasy, and the fantasy should surprise no one. The fantasy articulated by Kaja Kallas from Estonia, or I don’t remember which of the Baltic republics she’s from, not that it matters, but she put it into words, as have others, but she did it wonderfully: they’re going to have a war with Russia, they’re going to defeat Russia, and they’re going to carve Russia up into small countries, and each of the existing Western European countries will get one of them. In other words, they’re going to bring back colonialism, they’re going to colonize Russia, and that’s going to give them the ability to postpone, yet again, the total disappearance of Europe as anything other than a peninsula off of the main body of the world, which is called Asia.

I think we’re living through an extraordinarily dense period of historical change, and when we reflect back on what we’re living through now, that will be the message: it was the final end of colonialism, and therefore of the preeminence of the Europeans, because they were the ones who did colonialism, and as it goes, it takes down its creator with it. And the only addendum to that is that the culmination of colonialism was this savage destruction of the colonial European powers of one another in two consecutive world wars. That’s the peak achievement of colonialism, a level of human destruction the world never saw before, and so far, at least, has not seen since. But when the dust cleared after World War Two, the only standing capitalist power that hadn’t destroyed itself was the United States, protected by the two oceans; it got through without the savage destruction. I always quote to people the number 25 million as a rough number of Russians who died in World War Two, and 400,000 as the number of Americans who died in the same World War Two. What could be more stark in its definitions?

But here comes the Hegelian irony: the United States inherits and becomes the biggest, wealthiest power on Earth, because it literally replaces all of the colonialism, the British, the French, the German, the Italian, the Spanish, the Dutch; the United States alone, after World War Two, is the global dominant power, the unipolar moment, whenever you want to call it. And so it rises to levels of wealth and self-delusion about its situation that primes it for the moment of what is losing it, or when it’s falling. And, you know, the taller you are, the harder you fall. They are now having to watch, as systematically, their absurd situation, that should have been understood as temporary from the day in 1945 that it began, instead you have a kind of hysteria: we cannot allow it to happen, that the Iranians should control the Strait of Hormuz. What a wonderful example of the complex overdetermination of where the break point happens when a system as a whole can no longer function as it had become used to doing.

Michael Hudson

I’d like to unpack the dynamics of the colonialism that Richard began by describing. The important thing is that it divided the world into two different kinds of economies. The aim of colonialism was to obtain European control, mother-country control, over the raw materials and natural resources, raw material rents and land rents, and ultimately control of the basic infrastructure rents, the railroads and canals that the Europeans invested in. This made the economic structure of colonial countries, or dependencies, the opposite of what was industrial capitalism in Europe.

In the United States, where the whole idea was to prevent economic rent, the whole purpose of European colonialism was rent seeking. And I want to point out that there was a simultaneous development that even preceded European colonialism, and that was the financialization of the countries that began to win their independence. In the 1820s you had Haiti, you had Greece borrowing to finance its recovery, to get its independence from the Ottoman Empire, you had Mexico, Brazil, and British and French bankers went and created, beginning in the 1820s, international bond markets.

Ricardo’s own two brothers, for instance, had their own international investment firm that underwrote the foreign debts of Greece. This spread to Egypt and Tunisia, and almost immediately every country that borrowed, Haiti, Greece, Mexico, on to Egypt and Tunisia later in the century, almost immediately defaulted. And by the late 19th century, alongside the colonialism that Richard described, you had the bankers call upon the governments of Britain and France to send gunboats and say, well, we have to take over these countries to enforce the payment of the foreign debts that their governments have borrowed. National monetary commissions and central banks were set up by the creditor countries in Egypt, Tunisia, and all the other countries, to take control of the fiscal policy of these countries, which essentially meant taking control of the government and turning these debtor country governments into collection agents for the international banking consortia that had issued the bonds to all of these countries that they were unable to pay.

Countries thought, from the 1820s on, that the money they were borrowing would help them develop, and they wanted to be like Britain and Germany, and ultimately like America, they wanted to be industrial capitalist countries. But that’s not the result of all of this financial colonialism. And you can think of financial colonialism as occurring and being just as strong as the military colonialism that Richard was focusing on, with Belgium, Britain, France, and even Germany, from Africa to the Pacific. So what you had were foreign-owned rentier economies in the colonial countries and in the debtor countries.

After World War Two, America, as Richard described, emerged as the dominant power, it created open trade, free trade, and hard-money creditor rules. Essentially, the United States absorbed what had been the British Empire; the savings that India and other countries had all built up during World War Two supplying raw materials to the Allies, all of these savings were now untied from having to be spent in Britain, for instance, and they could be spent anywhere, meaning in the United States. So the United States ended up subordinating the European empires to the American empire.

What this didn’t do was help the ex-colonial countries and the debtor countries, the global South countries in particular; it didn’t stop them from falling into a chronic trade deficit. So they’re finally realizing what happened, and asking why didn’t they develop in the same way that the United States and Britain and Europe did? Well, the model is China. China freed itself from this trap of letting foreign financial interests steer their economies and privatize their natural resources, sell off their public infrastructure, like the Suez Canal and its counterparts in other countries, to foreign investors, and essentially achieve political sovereignty nominally, but lose their economic sovereignty. China freed itself, and it did so by following exactly the same policy that the United States and Britain did. It developed what you could call industrial capitalism, or industrial socialism with Chinese characteristics, but it’s the same thing.

China is providing a model, and the model it’s providing turns out to be the original model described by classical economists: the Adam Smith, Ricardo, Mill, Marx model. You keep a mixed public and private economy where the government controls all of the natural monopolies. And most of all, what China did was make banking and money creation a public utility. China’s revolution drove out the financial class; it didn’t have a financial class, and it didn’t have a foreign financial class in charge of its fiscal policy, determining what money is created for and who gets paid.

China reinvented the wheel of classical economics, and that’s why it called itself Marxism, when what it could have called itself is classical, because what people call Marxism is exactly the same theory of value, price, and rent. The whole idea of minimizing economic rent and making money and banking a public utility is the key, if you want to industrialize by having a low cost of production and avoid the enormous debt overhead that has weighed down the European countries and weighed down the US economy and led to its deindustrialization. China is free of all this because it doesn’t have a foreign post-colonial financial class steering itself; it’s going back to classical economics, and you could say it culminated in Marxism.

Richard D. Wolff

Given everything that Michael has just said, the logical inference would be that given capitalism’s desire to reinvest the surpluses it gets and become bigger and more powerful, and thereby more secure in its situation, it wants to minimize the costs it has, because that allows it to get more surplus and more profitability, and so on. Then the logic would be, if there are things that are best handled for society as a whole, because of economies of scale, because of a hundred other issues that create the possibility of monopoly, where a monopoly can do more cheaply, as one producer, something that otherwise would be done at a higher cost by individual capitalists, well, another way of saying that is a rational capitalism would be partly private enterprise where that works better, and partly state enterprise where that works better. And you want the state to do it, because if a private company does it, they will monopolize and steal everybody else’s wealth by jacking up their prices, whereas if the government does it, you’ll have the political control to limit that. So the government runs Amtrak, which could rip off everybody who needs the railroad to move goods around the United States, but they don’t, they keep their rates artificially lower than they might, leaving conservatives who don’t understand what’s going on to bemoan Amtrak for not being more profitable, without understanding that no, that’s the point, it is meant to be either unprofitable or minimally profitable as a way of helping the rest of the capitalist system. If you understand that, two things follow.

Number one, everything Michael just said about China: China figured that out. China uses its public sector to offset the problems and weaknesses of the private sector, and vice versa. It has a hybrid that it manages, and that turns out to be a much better recipe for economic growth than anybody else has come up with, either the Western private system or the Soviet state system. The Chinese didn’t do either; they did a hybrid. Well, then why, in the United States, is there a bias against the government? Why do our capitalists keep hamstringing the government instead of using it? I understand Mr. Trump vaguely grasps that, and he is now pushing the government into the economy more than his predecessors of either party did. I would call this the revenge of feudalism. The problem was that capitalism emerged from that point in the history of European feudalism when you had what were called the absolute states, Louis in France who built Versailles, or the British, or the German, the Prussian feudal law. And the capitalists therefore had to make a revolution not just against feudalism, but against a highly concentrated, state-dominated feudalism that was what happened in the final centuries of the absolute states, as they were then called, and the big wars that came with it. So the capitalists were against all that; they’re holding onto an anti-state mentality, having to do with their origins out of feudalism, and being woefully inadequate to the needs of their own system.

The ideology is out of step with the reality; it coexists with the lesson of Marx’s uneven development. And so the ideology is out of whack, and the poor American capitalists, inheriting the world’s economy because of their inheritance of colonialism, are controlling an economy still mired in a feudal remnant ideology. And it turns out that’s not a good combination. The Chinese don’t have that, and consequently, off they go, eating everybody else’s lunch as a result.

Michael Hudson

What Richard and I have just been describing in political terms was put in more technical terms as the 19th century classical political economists developed their action plan for industrial capitalism. And the focus of all this was value theory. The purpose of the labor theory of value, which Ricardo developed and refined, was to say, well, what isn’t value? Why are prices of goods and services higher than the actual value, the cost of production? Well, the answer was economic rent.

What Richard has just described as the legacy of feudalism that’s resurgent today. It was economic rent, it was the landlord classes, land rent, it was the monopolists, monopolies that had been created by international bankers as a means of helping kings pay their war debts by creating monopolies whose revenue would be pledged to pay creditors. That’s how the Bank of England was created, as a monopoly to pay British foreign debt so that they could go to war again and again. And so you also had the financial sector as rent seeking. And so the whole discussion of classical economics was value, price, and rent. And the question was, well, how do we bring the economy’s overall price structure in line with the actual cost of production? We have to fight against these survivals of feudalism, against the landlord class that we’ve inherited, against the monopolies that have already become vested interests, and most of all, against the financial sector, which it turned out finds its major customers in real estate, monopolies, and this whole rentier class.

When I began to study classical economics, the textbook I was given was the first real history of economic thought, and it was called Theories of Surplus Value, which was what Marx had spent most of his life outlining. He had hoped to have this as the fourth volume of Capital, to say, here’s how all of the classical economists described what’s value and what’s price. You could say today America has a GDP, but how much of that GDP is really a product, when banks charge interest and credit card companies charge late fees, that’s called providing an economic service, and that interest and those late fees are part of GDP, but it’s not a product, it’s an overhead. And to classical economics, this overhead had to be paid out of the actual production of the economy.

The whole discussion of classical economics was a long debate over what is productive labor as opposed to unproductive labor. What is a product? How much of the expenditure of an economy, what it spends its income on, is actually a product that we, the people, need? And how much is just payment to this rentier class, who, as John Stuart Mill said, collect rents in their sleep like landlords do, or, by extension, coupon clippers who collect bond interest in their sleep, or monopolists who just raise prices and make economic rent in their sleep? All of that’s not really a product; it’s not productive at all.

Many people call me a Marxist, and I’m a Marxist in the sense that Marx was the culmination of this whole long doctrine of political economy that really was classical economics. So you could say it’s classical economics, because that’s what Marx was, and the attacks that you’re seeing by Trump and the Republicans and the Democrats on socialism, they’re denouncing Adam Smith, they’re denouncing Ricardo, they’re denouncing John Stuart Mill, in addition to Marx. They’re denouncing the whole tradition that steered industrial capitalism to make it so successful in the years leading up to World War One, which really changed the whole direction of history and set the world’s economy on a new direction: value, price, and rent theory. That was how the classical economists analyzed economies, and what Marx said, Marx was the great optimist for capitalism, he was an optimist because he thought capitalism was productive, that it cleared away the feudalism that Richard has mentioned, that it prepared the way for socialism, for a mixed economy, that all of that was very productive. And what Marx said, especially as he outlined it in Volume III of Capital, which not that many Marxists today read, in the volume on Theories of Surplus Value, he said, how is making profits productive, and making land rent or monopoly rent, or getting rich financially, how is that unproductive?

Marx wrote that the capitalist’s profits are part of value. You’re not going to include economic rent as value, because that doesn’t really create value, that’s made in your sleep, there’s no cost of production for that. But the capitalist, Marx wrote, plays a productive role: he organizes production, he develops markets for it, he makes long-term investment in research and development, he organizes the supply of labor and raw materials and the markets. All of this is necessary for an economy to work. What is not necessary is for a landlord class to just benefit as the industrial economy gets richer and urbanized, and people can afford to pay more for housing and land sites, and the rent of location is what the public, as governments invest in public transportation, roads, highways, subway systems, railroads, all of the cost of this infrastructure creates rising land rents for the real estate along these routes.

Then Thorstein Veblen, in the United States, became the great analyst, showing how most real estate development was driven by bankers inducing real estate speculators and developers to borrow money to help push up real estate prices, so that speculators could make a capital gain, meaning a land price gain, from cities building new parks, museums, and schools in desirable areas. All of this, you had a transformation of industrial economies into finance and real estate sector economies, and that’s basically what’s been developing. This was not how industrial capitalism was expected to develop, and nobody expected Margaret Thatcher and Ronald Reagan to be the voice of industrial capitalist planning, and of course they’re not, they’re the public voice of the counterrevolution against everything that made industrial capitalism so progressive and revolutionary in its day.

Richard D. Wolff

There’s another way, again, of getting at this, and I think it helps to create multiple ways of getting at these key points, because one of them will work for this person, another one will work for the other person, and so on. Adam Smith, David Ricardo, and Karl Marx all spent a great deal of time and energy distinguishing what they called productive labor from unproductive labor. And let me drive home, that is not done in the mainstream economics classes that I ever learned at the elite institutions where I was trained, and I know Michael didn’t either. And it isn’t taught today. It’s as if we have an undistinguished, undifferentiated mass of employees, wage earners, or workers.

That’s the concept you begin with. Then you break it down into its important coordinate differences. You can try to unite those differences in a shared movement, that makes sense, but it sure doesn’t make sense to try to unify these different categories by pretending they’re not there. That’s a terrible mistake. The way Marx liked to teach it was to stare at his audience and say, if we remove the landlord, you’ll notice something: the land is still there. What we need is the land, to grow crops, to house people, to locate the factory. We don’t need the landlord. And if we stop having him and stop paying him, we still have the land. And another way to say it: did the landlord create this land? Did he produce it by his labor, by the sweat of his brow? No, no, no. If you’re religious, God put it there. So by what right do we give him a set payment for something God put there? And then you can take the even more daring step, because there were people in Marx’s time who understood this about landlords, and then came Marx’s killer argument: the same applies to the capitalist. If we stopped giving him the profits of our industry, the profits are still there, we can get them ourselves, we do the work, we produce the goods.

We don’t need to give payments, not to bankers, not to landlords, and not to the capitalists themselves. It’s the most important point to understand, that relationship between the classes inherited from feudalism that you don’t need, versus those that you do, and the productive and unproductive apparatus of classical political economy, Smith, Ricardo, and Marx above all else, gives you the wherewithal to understand that. And that has had to be, and there’s no nice way of saying this, repressed in order for modern capitalism to cope with its own demons, which include the inheritance from feudalism, the mistaking of the role of government as some sort of evil to be minimized. And if you listen to Mr. Trump’s MAGA theoreticians, they will still quote Thomas Jefferson, who said that government is best which governs least, to which the only reasonable answer is: no, it isn’t.

Michael Hudson

Here’s a question: Why don’t most Marxists talk about what Richard and I have just been discussing? Why don’t the denouncers of Marx focus on what we’ve been talking about, productive versus unproductive labor, does it exist or not? Why don’t they talk about value and rent? Are these rent collectors producing value? Do our GDP statistics reflect real product, or do they reflect largely economic overhead?

They don’t talk about it, they just use Marx as a word, as if it just means Soviet Russia under Stalin, but that’s not Marxism at all, that’s something completely different somehow, or they’re talking about problems that aren’t really economic, they’re denounced for supporting immigrant rights, or talking about race relations, or anti-war, but they’re not talking about what Marx was talking about, because that was what Adam Smith and Ricardo and Mill and everyone else in his epoch was also talking about besides Marx.

As Richard said, what at least used to be taught, the history of economic thought, in the classes I had to take in graduate studies, is no longer taught; it’s been replaced by classes in mathematics and mathematical forecasting. And if you use mathematics, you say, well, just take the existing economic structure for granted. But classical economics is all about how to structure an economy in the most efficient, most productive, most competitive way; that’s not what mathematical economics does at all. So there’s really nowhere to fit what Richard and I have just been talking about into the economic curriculum. Where are you going to find it? Maybe instead of an economics prize there should be a literature prize or something for what we’re talking about.

What on earth do we call what we’re doing? The whole word Marxism has become as amorphous as Christianity, I mean, what does that mean? How do we refocus the discussion on what we’re talking about? Well, already in the late 19th century, the American economists who taught at the business schools and went into government had this very problem. Most economics taught at the prestige universities like Harvard and Yale, which had all been founded as religious colleges to train the priesthood, basically, and the final course in these colleges was moral philosophy, and it was basically all free trade theory, was, well, kind of tunnel vision. And so the Americans, first of all, after the Civil War, the industrialists said, well, we don’t want to teach this tunnel vision, so they founded state universities that had an agenda supporting protectionism and saying how colonialism is exploitative, and we want to escape from that. By the late 19th century, most of the leading American economists had been trained in Germany, and they came back and said, well, we’ve got to have a new discipline, let’s call it sociology, the study of society, because economics is really political economy, let’s call it sociology.

But then the same interests that had turned economics into tunnel vision went to places like the University of Chicago and turned sociology into a tunnel vision too, just look at status, not at society. And then anthropology, well, is that sociology, what are we talking about, Richard?

Richard D. Wolff

Well, we’re talking about understanding society without what you call tunnel vision, or what Americans who have been sensitized to these questions call the so-called discipline of our university, these rigid walls. I remember trying, as a professor of economics in an unorthodox economics program at the University of Massachusetts, which I was part of because it was on the docks, I tried, and I wasn’t alone, a few of us tried to hire a very good prospect who happened not to have an economics degree, he had a sociology degree, and my colleagues wouldn’t allow it. My colleagues required that anybody in an economics department had to be stamped with the approval of a PhD in economics from an appropriately prestigious university. And it had become the kind of situation where a student would raise her hand or his hand, ask a question, and have a disoriented professor who didn’t know the answer say, that’s not an appropriate question, you should ask that to your history professor, or your psychology professor.

And this is a discipline, economics, which, for those who may not know, begins in most cases, certainly in every course I ever took, by starting with psychological propositions, that people are confronted by a universe of commodities, and they have to choose between an ice cream and a shirt, and they evaluate the utility, I’m not making this up, they evaluate the pleasure and utility they derive from the ice cream cone relative to the shirt, and then make a purchase decision based on that. Now, whatever you think of that, and in my judgment this is nonsense, but when I explained to my psychotherapist wife what I just summarized as the psychological basis of economics, she fell off her chair laughing at the thought that adult people would think that simplemindedly. Yet at the same time that the foundation of the discipline has to do with desire, with pleasure, with utility, all subjects of psychology, the economics professor uses the most narrow understanding of them while insisting this is a different topic, not economics. The contradictions of this are so staggering that they go a long way in explaining why the discipline has such a feature that you get three economists together and they don’t agree on hardly anything.

Michael Hudson

What Richard and I are talking about is economic history. Basically, this whole discussion has been that. But historians don’t study economics, so they’re not going to discuss economic history, they’re discussing who and what war and what parties, it’s a study of individuals. I wanted to study the history of money and debt, I wanted to see how it began in civilization, and I was at Harvard for 25 years organizing an archaeological group of Assyriologists, archaeologists, Egyptologists, and Hebraists to look at how money and interest began.

There was a distrust in all these groups, saying, look, everybody, you have all of these economic ideologies, you have socialists, you have Thatcherite free traders, all with myths about how money and credit developed. What passed for being taught in economics courses was, what if Milton Friedman and Margaret Thatcher got into a time machine and went back to ancient Babylonia, how would they have advised society to organize itself? They would have said, don’t cancel the debts, don’t prevent a financial oligarchy from developing and monopolizing the land, let market forces work.

Well, there wouldn’t have been civilization if the economists had gone back to the beginning and advised everybody how to do it that way. So I didn’t try to impose any views on the group, because I didn’t know anything about Sumer and Babylonia and Israel and the ancient Near East. All I did was ask the questions: tell me everything you know about how money developed, how did interest rates develop, who got it, who created the money, what was it? I just asked questions, and we published five volumes rewriting, or I should say writing for the first time, an economic history of the ancient Middle East, now called West Asia.

I’ve had the same problem since. I’ve just finished a book on the development of international banking, from the Crusades to World War One, and economic historians have basically left out everything about how it was the Roman church that sponsored international banking, to make loans to rulers, and to Norman warlords who would work for the church on its behalf, to fight against any Christian church not controlled by Rome, to have international bankers subsidize the fight by Rome against Germany, whose Christianity wasn’t Roman Catholicism, they didn’t want to obey the Pope, and against the Catholics in France, and especially against the Christian Orthodox churches, the four leading patriarchates dominated by Constantinople. The Crusades were essentially aimed at conquering and looting, and at attempting to impose Roman papal rule, and that’s what led to the banking.

So the papacy not only inverted the Christian doctrine of forgiving debts, but the popes excommunicated kings, and especially excommunicated the barons of England who opposed King John’s and Henry III’s levying of taxes to pay foreign creditors, they opposed anyone who supported the 1215 Magna Carta and the civil war that followed. So you had a whole inversion of Christianity, essentially saying, in order to get papal power, we have to destroy all the other Christian rules that are different from what we’re doing. Well, this is not what medievalists talk about, they talk about, well, what’s feudalism all about, it’s about kings and knights and the serfs who accompanied them into war, and the church is left out of the whole economic history.

It’s as if they’re embarrassed to say the role the church itself played in all this. And if you leave out the fact that it was Rome that created international banking, there goes the whole mythology of how banking developed, just as there was a mythology that money developed out of barter, which it didn’t, instead of being organized as a public utility by the palaces and temples of Sumer, Babylonia, and other West Asian economies in the Bronze Age. So it’s not only that there’s no discussion of classical economics, as Richard and I have discussed, there’s no discussion of the economic history of the whole world. It’s all as if somehow it’s all Austrian economics and Chicago School free enterprise economics, there is no role for government, no role for palaces, no role for temples, no role for religion, it’s all left out of account, and there’s no context for what the surrounding environment is in which economic exchange and wealth is embedded. Karl Polanyi tried to do that almost a century ago, and the group we had out of Harvard was really the successor to that group.

And yet we’re on the fringes, we have no academic presence, really. When Richard mentioned the University of Massachusetts, where he taught, one of those somewhat alternative academic universities, where I taught was the New School in New York, and I was teaching national income theory, and my textbook was again the first history of economic thought, I used Marx’s Theories of Surplus Value, the first translation of which was called A History of Economic Doctrines. And I used that.

But Robert Heilbroner, who wanted to make the New School a Marxist department, said, why are you talking about productive versus unproductive labor, that’s the most useless argument we can possibly have, it doesn’t exist. And Brunner’s idea of Marxism was just, well, you use neoclassical or post-classical economics, but you talk about social problems, the race problem, wars, monopolies, and all of this. So I left academia over that, because I couldn’t fit what Richard and I have been talking about into the curriculum, even at the New School. Richard was lucky to be able to do this in Massachusetts, but now there’s really nowhere. That’s why we’re having this discussion on your show, Robinson.

Richard D. Wolff

Well, there’s one more thing, very quickly, there’s a way to explain why we have the situation that Michael has quite correctly described to us. It is very dangerous to explain to people how very, very differently other human beings have organized the production and distribution of surplus, or the production and distribution of goods and services, because if you explain to them how different the past could be understood to have been, you raise, whether you intended to or not, the reality that it could be different now, and that the world is open, and that you don’t have to have a bank, and you don’t have to have a landlord, and you don’t have to have categories of rent. They came into existence, and they can go out of existence. This is not good, you don’t want to really do that.

You want to make people either believe that the way it is now is the way it has always been, or that the way it is now is such a wonderful height of achievement that no one in their right mind would question it or look for alternatives in the past that might be relevant to a better future. There is something deeply optimistic about what Marxists do, and something deeply pessimistic about non-Marxists who don’t do it. And what Michael did was to ask, of course, the appropriate question: if you want to think creatively about the current institutions of capitalism, whatever they are, then of course you have to ask about their origin, how they came to be, what conditions they were meant to solve. And then you ask the logical question: do those conditions still apply? Are those responses what we still want to see, or could we do better? People who lived with slavery figured out they could do better, so we don’t have it anymore. And people who lived with feudalism revolted, and we don’t have it anymore. And there’s no reason to believe that the class of people we call employees won’t reach the same conclusion about capitalism that the working classes reached about feudalism and slavery. That’s an opening to the possibility of change and evolution. So when Michael says we’re economic historians, that is an ideological commitment, whatever else it is.

Michael Hudson

So what we’re confronting, Richard, is Margaret Thatcher’s TINA, there is no alternative. And what you described is the belief that somehow what is taught today is a struggle for existence, that we’re at the peak of history moving forward. Those very words were taught to me when I wanted to write my PhD dissertation at New York University on productivity. So I went to Solomon Fabricant, who was teaching courses on productivity, and was the research director of the National Bureau of Economic Research, and he asked why I would want to discuss past concepts of productivity and productive labor. He said, just what you described in words, he said all of these ideas have been fought out in the marketplace of ideas, and they’ve all been rejected, and what we have now is the peak of economic theory, and this has defeated all the others because it’s won the struggle for existence, the intellectual marketplace.

Well, what is a market, what is a marketplace, just as you could ask what is a political marketplace? It’s a very heavily subsidized marketplace, controlled by the vested interests that contributed the money that founded the major business schools, like the Wharton School. All these schools were founded by wealthy Americans, or their counterparts abroad. So the fact is, if you really believe that history has moved forward, what is it that America’s policy of deindustrialization has turned America from the creditor country and industrial power it was in 1945 into today, an economy where the National Security Strategy says we’ve got to reform, resist, and replace all of this earlier American policy, we’ve got to be protectionist, we’ve got to create chaos throughout the world to force it to subsidize the United States. That’s the theory.

Is this really the end of civilization’s struggle for existence, or does the world have an alternative to American neoliberalism, financialization, privatization, Thatcherism, and Reaganomics? Is all of that a blind alley that is now going to be left in the dustbin of history as the rest of the world moves forward? Well, that’s what Donald Trump’s war against Iran and Russia, the oil war, is all about. What’s the future going to be, what are other countries going to do now that we’re facing a world depression resulting from the fact that world trade has been interrupted, that economies are going to be shut down because they don’t have the energy, the fertilizer, or the chemicals that were coming from the Persian Gulf, all of that stopped? That’s going to lead to a world depression.

How can other countries protect themselves against this aggressive American attempt to achieve its own form of imperialism, that Trump is trying to do by demanding subsidies from foreign countries, creating a crisis as the price of letting them have access to American markets, by imposing prohibitive tariffs if they don’t agree to adopt American sanctions against Russia and Iran and China, and isolate them all? Wll America end up isolating itself from the whole rest of world civilization as it moves forward, and leave what’s now considered the peak of civilization’s economic theory all in the dust, by picking up the direction in which economic thought was evolving in the 19th century takeoff of industrial capitalism? That’s the question I guess we’re posing.

Richard D. Wolff

I would like to add my little story about when I got my PhD, just to round it out, because it illustrates the same thing, about fifty years ago. I’m finishing my PhD, and I sit with my professors’ committee, this was at Yale University, where I got my PhD, and there were three distinguished professors whose names I will not give you, because you know them. And I presented that my dissertation was based on my research in East Africa, where I went and did this research, and I proposed the title “The Economics of British Colonialism in Kenya,” which is a big country in that part of the world. And my professors, who liked my dissertation, who would in fact help me get it published, which I did at the Yale University Press a year later, would not accept that title. They told me it was not value-neutral, that was their word, their phrase. And so if you look up my dissertation, on interlibrary loan from Yale, you will see my name, and you’ll see, here we go, “Economic Aspects of British Foreign Policy in Kenya.” I could not use the word colonialism, even though half of my research was done in London, at a place called the Colonial Office, gentlemen maintained by Britain for centuries, who had accumulated the documentation I had to look at to understand the economics of their colony. But the ideology was more powerful than the history, and so we couldn’t use that word. That tells you about a narrowness of mentality that is everything Michael and I have been talking about.

Robinson Erhardt

I feel like the disoriented student in the back of class that you hypothetically reprimanded a little earlier, Rick, though with my emotional support animal. But can I ask a question about anything the two of you have raised, or is there a particular direction you want to go from here?

Richard D. Wolff

No, no, go ahead and ask, I did have you ask.

Robinson Erhardt

Okay, well, something you mentioned earlier, Rick, the possibility of Russia losing a war and then being broken up into smaller states, reminds me of a conversation I just had with Timothy Snyder. I said that I thought it was hard to imagine the United States breaking up into smaller states that did not have this one federal government, and he said that once upon a time it was impossible to imagine the Soviet Union being broken up into smaller states, and this was a time before I was around. But what I wanted to ask the two of you is, one, does it really seem like a live possibility that Russia could be broken up? And then, given where we started the conversation, discussing the socialist victory in Michigan, do you see the struggle between socialism in the United States, with the victory of Mamdani, and other forces like Trump, or states like Florida that are far from socialist, possibly resulting in a breakup of the United States?

Richard D. Wolff

My first answer is, I can imagine both the United States and Russia breaking up into different units, and that’s because they weren’t always one unit, neither of them. They were, in fact, formed in a variety of ways. The indigenous people here never carved up what became the United States in the way that, if you wanted, you could carve up the United States among tribal groups; I’m not saying this is appropriate, but you could do that, because there was a certain meaning to Navajo people as opposed to Kiowa people, as opposed to Iroquois communities, and so on.

And likewise, Russia, as part of a feudal background, had different boundaries. That’s part of what the struggle in Ukraine right now is about, there’s a strong feeling in Russia that, at the very least, the four oblasts on the eastern end of Ukraine are more Russian than they are Ukrainian, and there are some Russians who believe there’s no justification for Ukraine, that it should once again be, as it wasn’t so long ago, part of some greater entity. So those things, I think, are always in flux. I want to remind people that even though the alliance between Russia and China now is very strong, at an earlier point, and I’m talking about the 1960s, so this is not ancient history, even though at that time both Russia and China were allies via the communist parties that ruled in both places, they actually went to war against each other, and might very well have redesigned their geographies in ways open to God knows what forms.

There are secessionist movements all around us, and we would be very, very poorly advised historically to pretend they can never work. The province of Alberta in Canada is now well along in the process of seceding from Canada. Texas has a history, as do other parts of the United States, of wanting to break away and secede. There are significant parts of the so-called MAGA community behind Trump who are pushing for what they call a civil war, which might require, if you were to have it, or if you were to avoid it, redoing the geography of this country in ways we don’t want to think about now.

Capitalists want to have a unified market, they don’t often want the breakup of a large country into a small one, but on the other hand, sometimes they do. So the capitalists of Western Europe are excited about breaking up Russia, because they see the possibility of at least postponing the death of Europe by having a quasi-colonial afterthought in what once was Russia. So Kaja Kallas, who is the foreign minister of the EU, or at least as close to that as you can get, that’s an official position, could talk about doing that and not be characterized as a lunatic by the leaders of Europe, because she was articulating the fantasy that inspires them, the utopian image, when you hear Macron, or when you used to hear Starmer talk about it, that it’s not possible for Russia to be allowed to win. Well, why not? What in the world would prompt you to make a statement as extreme as that? So I would argue that we can already see all kinds of incipient challenges to the configuration of states, and I don’t see any reason whatsoever for the United States and Russia to be exempted from those kinds of movements and fissures and opportunities for change.

And that election you cite in Michigan, the results of which are just becoming known around the world, is very, very important, and here’s why: because an enormous amount of money poured in to prevent what is happening now from happening, namely to defeat the candidate who had the nerve to take a position on the Israeli, Arab, and other issues. This is very important, that you had a result that the capitalist class, to the extent that it operates as a class, was opposed to. What else that they like is not happening, and they are opposed to it?

I’ll give you an example. If the goal, if Michael is right that the goal of capitalists is to save on labor costs, which every capitalist either says or is indeed a goal of theirs, then they are not interested in scapegoating immigrants, it’s not in their interest. They would like there to be lots of immigrants here, they would like there to be lots of undocumented immigrants, why? Because you can pay them much less, and they dare not go to the authorities because they don’t have documentation. So they’re very good for business, which is why for 150 years American capitalism welcomed immigrants, seeing them as a source of profits for years to come, which they were. It’s a sign of the weakness of American capitalism that it is now unable to welcome and absorb immigrants in a productive way, that’s a sign of weakness. But it’s also a sign that what the capitalist class wants and what the capitalist class has to accommodate are not the same thing. And the bigness of the United States, the large unified market, sure, it’s something they want, but it’s not clear whether conditions will enable them to have what they want, or whether they’ll otherwise have to accommodate movements they can’t control.

Michael Hudson

Getting back to your question, Robinson, it’s not Russia that’s going to be broken up, it’s the EU and NATO that are already beginning to break up through their internal strains. I don’t see the EU remaining in its current form as an American satellite and client oligarchy, because the whole US empire is being broken up, and this breakup is being catalyzed by the world depression that’s caused by the war and the soaring price inflation of all prices. Russia has such a military dominance over Europe now that there is no way Europe can do what it tried to do under Yeltsin with the neoliberal takeover, when Russia became so disillusioned with Stalinism and with the kind of state planning that kept the kleptocracy in charge.

Russia now sees how China has provided the model it’s taking, and now that the whole world economy, the center of increasing production, productivity, industrial dominance, research and development, and technology is all passing to China and its Asian neighbors, you’re going to have a new world bloc led by China, Russia, and Iran, absorbing an increasing number of BRICS countries and global South countries into an alternative. So instead of a breakup occurring in Russia, or Iran, which there were also plans to break up, as there were for China, instead you’re going to find a new consolidation, leaving Europe and the United States isolated, with European economies, and hence their political societies, being torn apart by the US attempt to mobilize them around this US obsession with trying to break up Russia, China, and Iran.

I think that US drive for breakup will end up isolating the United States and its client oligarchies throughout the world, and the world will see a reconsolidation, I think, in a way that, hopefully, would be to pick up the whole momentum of history and civilization, back on the track it seemed to be moving on in the 19th century, the whole flowering of industry, of economic organization, and the whole of classical political economy providing a model for all of this. I think that’s what’s going to happen: consolidation abroad, breakup of Europe, and a break away from the United States, leading America to economically polarize and economically break up, but not necessarily politically break up, but who knows. I worked with Alvin Toffler on Norman Mailer’s campaign in New York City back in the 1960s, on whether New York City should withdraw from New York State to be free of the Republican upstate control that was stifling New York City. We’ll see what Mayor Mamdani has to say about that dynamic in years to come.

Richard D. Wolff

Yeah, we live at a time when the president of the United States speaks about converting Canada into a 51st state. That shows you these kinds of changes are never that far below the surface, even if they’re not spoken about. And here’s another way to see what Michael was saying: if you look at the polling for Mr. Merz in Germany, or the polling for Mr. Macron in France, these people are getting between 10 and 15% public approval, they are headed for the dustbin of history. And soon, Mr. Merz’s government is literally tottering today because of his advisers. In case you haven’t heard, in Germany the law makes surrogate parenting illegal, you cannot arrange for a fetus to be carried to term by a person other than your spouse, that’s the law in Germany. And there is a gay couple who are very high-level advisers to Mr. Merz, one of whom made a political career out of the importance of banning surrogacy in Germany, a bit like the opposition to abortion in parts of the United States, and he had the bad taste to arrange with his partner for a surrogate in the United States, and it became public knowledge last week, and it’s causing an already unpopular government to be on the edge.

There are now public calls in Germany for Mr. Merz to resign. And in case you don’t know, Mr. Merz’s job before he became chancellor of Germany was head of BlackRock in Germany, an American venture capital and hedge fund firm, so he’s seen as an agent of the United States, and he will likely be replaced, if there’s an election, by the AfD, a right-wing mass party that is the strongest of such right-wing mass parties in Europe, although the second strongest is in France. And the AfD in Germany is committed to ending support for the war in Ukraine, number one, and reopening trade with Russia, so that Germany can once again get cheap gas from Russia. That alone does what Michael said before, it breaks up the NATO-European totality in a fundamental way from which it’s hard to imagine they can emerge. So the irony is that they can see it in Russia, but they are actually closer to it inside Europe.

Robinson Erhardt

It sounds like the two of you agree about Europe degrading. It seems like there might be some disagreement about whether Russia breaking up is a live possibility. But Michael, what do you think about the United States breaking up?

Michael Hudson

The United States, and what?

Robinson Erhardt

The United States breaking up.

Michael Hudson

I don’t see it. I think it’ll polarize. I think we’re headed for a long crisis, because most of the population, as a result of the neoliberal policies here, faces a debt crisis, and a breakup of faith in the fact that the economic system can work the way it is. I see either a political and economic revolution here, or else just a slow crash into deepening depression. One of the responses may indeed be that particular states get together and say we’ve got to have a different system, but the United States is not only a failed economy, but a failed state, because of the whole way the Constitution was created, enabling the present right wing to take over the Supreme Court, and essentially have the Supreme Court do here what Richard has just been describing is happening in Germany.

I don’t see any way of solving the problems here. Even the democratic socialist candidates opposing the Democratic National Committee are being isolated within Congress by every dirty trick in the book, the way Hillary Clinton used them against Bernie Sanders back in 2016, when the Democrats said we would rather lose with Hillary than win with Bernie, because the Democratic Party is the financial policy party, it became the party of Obama and Robert Rubin and Wall Street and Citibank, the whole of financial capitalism. So the Democrats and the Republicans, both of their policies advocate polarization, impoverishment, defaults, and a concentration of wealth in the hands of the 1%. How long can such an economy and such a polarizing country or state survive without what we had in the equivalent of the French Revolution in the 18th century?

There’s obviously going to be, what we’re really talking about is the inherent instability and unsurvivability of US foreign policy as it is, because, as Richard and I have been describing, not only here but almost every week in our various interviews, the United States is trying to do today what European colonialism was trying to do in the 19th century, achieve its own prosperity by exploiting other countries, and that has reached its limit. And just as there is an anti-colonial reaction in other countries against financial colonialism and military dominance, you’re having the same feeling now against the United States. Trump has destroyed, it’s as if Trump set out to destroy the American empire, he’s done what Richard and I and our supporters could never do, he’s driven other countries to take a different path just to survive.

Richard D. Wolff

And, Robinson, if the United States was the global hegemon, as I think it was, and if it grew into that position as a result of World Wars One and Two, which I think it did, and then was accepted in the world because there was no choice, in the way that many colonialisms became one, the way multi-theism became monotheism, graduating to having one god rather than lots of them, well, I think you have to see what’s going on in the Strait of Hormuz for what it is. That was an American-controlled passageway. If you listen to Mr. Trump, no one is going to charge fees, no one is going to control it, we control it, we will make sure it must be a free passage. It’s America losing its position there, that’s all that’s going on.

The Iranians figured out that by having their missiles and drones right on the edge, they can control the passage, they can take this little piece of water and withdraw it, to some extent, from the American empire, which was de facto in charge of it before. And the Americans are outraged, but here’s the punch line, their power is helpless to stop it, they can’t. Even as we’re speaking, Mr. Trump has to repeatedly talk about negotiations, while the other side repeatedly explains to the press that no negotiations are going on, that’s a sign they’re not communicating terribly well.

And the reason is, the United States can’t accommodate what the Iranians demand, and the Iranians cannot accommodate the continuation of the American empire. They don’t put it quite in that language, although some of them get pretty close. One of the demands has been that the United States withdraw from that part of the world, and not rebuild those American bases in the Gulf states that the Iranians have been bombing, just let them go. And several of the Gulf states support that position, and have already made that clear, because the United States has not functioned as the security blanket that was the idea of those bases, instead those bases have become targets for the Iranians, the literal opposite of security, they are emblems of their insecurity, which they will continue to be no matter what happens now. We are watching, in real time, the construction of the American empire as its various subordinate units break away. Nor should we miss that the reason Iran can do it is heavily dependent on its alliance with Russia and China, but the problem is there are literally dozens of other countries who are part of that alliance too, and are going to be able to draw on that support. The line of change is unmistakable. And one word about Trump: it’s not a coincidence that the rise of socialism in American politics is almost literally coterminous with the rise of Mr. Trump. I think honest socialists would tell you he is the best organizer they could ask for.

Robinson Erhardt

Well, I hope I’m not feeding a fed horse, as PETA would have me say. But Michael, you mentioned the possibility of a French Revolution, and you discussed polarization, and Rick, you talked about the desire of some on the right for civil war. What I’m wondering is, even if the United States does not break up, let’s assume it doesn’t, there’s certainly lots of unrest and growing unrest in the country that could turn violent, and I wonder what the two of you think is going to prevent this from turning into serious, drawn-out, violent conflict, and whether that’s the continued normalization of a militarized police force, like we’re seeing throughout the country, investments in surveillance, AI, and robotics, or just some kind of more natural political easing.

Richard D. Wolff

Well, I would answer you right away by disagreeing with you, I don’t think it’s incipient, or coming, or possible, or likely, I think it’s already here, and I mean this very, very concretely. In my judgment, the creation of a new specialized army, ICE, ostensibly targeting undocumented immigrants who have committed crimes, which was the original designation and purpose of its founding, we now know it has gone after all kinds of immigrant groups, some undocumented, plenty of them documented, it has mistaken regular people who are not immigrants, citizens, for immigrants, and makes very little effort to do otherwise. But even more important to me are the horrific conditions being imposed on the people designated as official scapegoats, people dying in detention centers, the separation of children from their families, the wearing of ankle bracelets by Haitians in a couple of states, I forget which they are, that started apparently this week. None of this is necessary, hasn’t been necessary before in American history. We behaved outrageously toward the Japanese in World War Two, even though we have apologized for having gone way overboard in what was done to them in California during World War Two, but it’s as though history doesn’t matter. And now, for me, the most important example of all, over the last six months, the United States military, according to Mr. Hegseth, our Secretary of War, and according to President Trump as well, we have executed, killed, over 200 people in boats, small fishing-type boats in the Caribbean Sea and on the Pacific Ocean coast of Latin America. The explanation given by Hegseth and Trump was that these people are, quote, “narco-terrorists,” meaning drug traffickers or drug dealers or something like that.

To remind everyone, the American military kills the people in these boats by means of rockets or drones or both. These are people who have been convicted of nothing, have not been given a lawyer, cannot confront their accuser, cannot appear before a judge, cannot be adjudicated by a jury, all of that is denied them, they are simply killed. Up until the decision to do this, the procedure for handling these people was to have either the Navy or the Coast Guard of the United States stop and board vessels they might suspect of doing something illegal, to ascertain whether or not they were, and in the event that they were, they would be taken to a place where they would go through a trial, and if they were found guilty of drug trafficking, they would be given a sentence of imprisonment, because drug trafficking in the United States is not a capital crime, we don’t kill people for that. What possible rationale could be given?

By the way, last week, not that it’s relevant to what I’m about to say, the Drug Enforcement Agency, under Mr. Trump, issued a report that there is no evidence that the flow of cocaine into the United States has been in any way affected by this program of killing these people. Well, I wasn’t surprised, because that behavior couldn’t possibly be justified by the so-called war on drugs, because, having been born and raised in the United States, here’s what I know: there’s been a war on drugs for at least 60 to 70 years that I’m aware of, most of my life, and I am as able to purchase those drugs within a short walk from where I live today as I was five, ten, fifteen, twenty, twenty-five years ago. So that war on drugs has been one colossal failure.

What’s the point, then? I think the point is to rev up the MAGA base, it’s like a cheerleading exercise, we’re prepared to kill, we are prepared to kill people we designate as bad persons, or, to quote our president, “bad hombres,” that’s his attempt at Spanish. Okay, we’re going to kill them, we’re not going to waste time, it’s like a bad Western movie, we’re not going to waste time with habeas corpus, with the Magna Carta, with traditions of law in and out of the United States, no, no, no, we’re not going to have that. By the way, consistent with what Stephen Miller and other high officials have been saying in other contexts, I think a decision to move toward a civil war, and to do so with blunt extrajudicial violence, has already been made, and made at the highest levels of this government. And I think it’s a testimony and evidence of how much worse the crisis is than even people like Michael and me convey as we make our economic assessments.

Michael Hudson

I can’t disagree with what Richard said. I think a police state will emerge if there is no policy alternative put before the people, and what’s needed is an economic doctrine and a policy to provide alternative policies and essentially say there is an alternative. My father was a political prisoner, a strike leader and union organizer in Minneapolis, and the Minneapolis 17 were the first socialists put in prison under the Smith Act, the day before Pearl Harbor in 1941. They were convicted for having socialist books on their shelves. So I’ve already seen this: the attorney general under Roosevelt said it was the only thing he was ashamed of having done, but he did it because the Democratic Party needed to maintain its control of the labor unions, without the labor unions having a socialist policy, such as the Minneapolis 17. Minneapolis was the only Trotskyist city in the world, I think, during the 1930s. So yes, I’ve seen all of this. The question is, how do you revive the discussion that people have been put in jail for, for almost, well, for 80 years? I guess that’s a long discussion for a future occasion.

Robinson Erhardt

Well, we’ve got about ten minutes or so left before I know Michael has to go to an appointment. So I just wanted to ask if either of you had any closing thoughts you wanted to share before we wrap up?

Richard D. Wolff

I can offer one. The history of the world gives us many examples of the rise, the evolution, and the eventual passing of empires, the Roman, the Greek, the Ottoman, the Persian, and I could go on, and in their declines, these empires always face a choice. And I think that choice is available to the United States today. I do think the United States is a great empire, it became so in the 20th century, as the two world wars extinguished all the old empires and passed them as a kind of inheritance onto the United States. I do think the United States has evolved since then, since 1945, or, if you like, since the Great Depression.

But I do think it has passed its peak and is now in decline. The rise of China, for me, is a very powerful pointer in that direction. The inability to prevail quickly over Iran, both a year ago, in June of 2025, and now again, is another sign. The rise of the BRICS is another sign, the rise of a socialist alternative here inside the United States is yet another. So, in my view, it faces a choice, the same choice all the other empires faced in their declines. I don’t think decline is avoidable, it hasn’t been avoided by any other empire in the history of the world, which makes it unreasonable to expect that the United States would somehow evade or avoid it. So what is the choice? The choice, on the one hand, is to deny it, and to live in that denial, and to see every sign of your decline not as a sign of decline but as a challenge to your authority and power that you need to use every mechanism available to destroy.

I think Mr. Trump, who seems to lack the filters that hold other politicians back, keeps telling us this when he makes remarks like, I’m going to bomb Iran back into the Stone Age, or I’m going to obliterate Iranian civilization. Yes, these are, I suppose, but they also tell you something about how a situation is being viewed. The choice is there: the alternative to denial and viewing everything as a challenge to be met by overwhelming force is to sit down with the alternative, which could either be an emerging new empire, in our case that would be China, or to become part of the assembly of a multinational global governance project premised on peace, in which the United States, along with China and all the others, would have to work out a live-and-let-live approach to cohabiting this planet. I don’t say it isn’t difficult to do what I just said, but I do ask everyone to consider what the alternative is. Iran is only one little country, and its ability to stymie the United States, to bring the United States to the point where, in the last three days, there was a headline, I kid you not, that we have run out of missiles, or certain classes of missiles, and we are facing a century of bizarre defeats that may have given us forewarning. The US lost in Vietnam, it lost in Afghanistan, it lost in Iraq, it’s losing in Iran, these are hints, and they are going to cost us dearly.

Compared to that, wouldn’t the wiser choice be to sit down with Xi Jinping rather than threaten him, to sit down with the leadership in Iran rather than continuously threaten them? How much more of the latter response are we going to see? If I could use a historical parallel: what you could have done a hundred years ago, you probably can’t now, what you could have done fifty years ago, you probably can’t now. And if you don’t understand that, if you don’t interrogate the new conditions, you are likely to find yourself going down a dead end that is horrific. Europe was able to undertake settler colonialism in North America, in Australia, in South Africa, in New Zealand, but it had to do that two or three centuries ago. Israel is trying to do settler colonialism in Palestine now, and that’s why it’s ended up as a genocide, because you can’t do that now. They don’t want to face it, they are in denial, and it is taking them in directions that will plague the Israelis for the foreseeable future, even as it has made their victims, on a global scale, into harrowed heroes and heroines. And that kind of future faces us if we don’t understand what the real choice is now, and make the right choice.

Michael Hudson

I don’t see either the United States or Europe voluntarily joining a better world order. I think both of them are going to fight to the last, because that’s their mentality. I think we will see a new international economic order develop, because for the first time since the 1950s, when there were first attempts at this, with the Bandung Conference in Indonesia, for the first time there’s a critical mass. There is an alternative, and the alternative has been posed by China, and now joined by Russia and Iran.

This is probably going to be designed and proposed over the coming year, as we see them forced to develop an alternative by the crisis that Trump’s war against Russia and Iran, and I guess Venezuela too, you could say, have caused. I think this alternative is the direction in which world history will be progressing, but I think it’s going to leave the United States and Europe behind. Reading the speeches of the Chinese president and of Russian Foreign Minister Lavrov, I think they’ve given up on Europe and America, and I think most countries are going to find it easier to go it alone. And the Americans are so locked into neoliberalism that they’re just going to fight against all of this and be left behind.

Robinson Erhardt

The two of you are an absolutely excellent and complementary duo, and I’m always so happy to get the opportunity to speak to you individually, but when I get both of you together, it’s an even better treat. So again, thank you so much for joining me and Misha on the podcast today.

Richard D. Wolff

I’m very glad to see that your dog, while finding some of what we said worthwhile enough to sleep through the rest of it, got up and seemed to be paying attention.

Thank you very much, Robinson, appreciation for you doing this and trying to get these kinds of conversations and ideas out to a larger public.

Michael Hudson

We’ve laid the groundwork for what I hope will be a long, ongoing discussion. Absolutely.