The bubble and beyond

[stone]

Has anyone here read "The bubble and beyond" by Michael Hudson? Is it worth a look?
http://michael-hudson.com/2012/08/overv ... nd-beyond/

This summary of my economic theory traces how industrial capitalism has turned into finance capitalism. The finance, insurance and real estate (FIRE) sector has emerged to create “balance sheet wealth”? not by new tangible investment and employment, but financially in the form of debt leveraging and rent-extraction. This rentier overhead is overpowering the economy’s ability to produce a large enough surplus to carry its debts. As in a radioactive decay process, we are passing through a short-lived and unstable phase of “casino capitalism,”? which now threatens to settle into leaden austerity and debt deflation.

This situation confronts society with a choice either to write down debts to a level that can be paid (or indeed, to write them off altogether with a Clean Slate), or to permit creditors to foreclose, concentrating property in their own hands (including whatever assets are in the public domain to be privatized) and imposing a combination of financial and fiscal austerity on the population. This scenario will produce a shrinking debt-ridden and tax-ridden economy.......

......Today’s post-industrial strategy of “wealth creation”? is to use debt leveraging to bid up asset prices. From corporate raiders to arbitrageurs and computerized trading programs, this “casino capitalist”? strategy works as long as asset prices rise at a faster rate than the interest that has to be paid. But it contains the seeds of its own destruction, because it builds up financial claims on the assets pledged as collateral – without creating new means of production. Instead of steering credit into tangible capital formation, banks find it easier to make money by lending to real estate and monopolies (and to other financial institutions). Their plan is to capitalize land rent, natural resource rent and monopoly privileges into loans, stocks and bonds.

This leads the banks to act as lobbyist for their rentier clients, to free them from taxes so that they will have more available to pay interest. The resulting tax shift onto labor and industry adds a fiscal burden to the debt overhead......

[MediumTex]

I like Michael Hudson.  He's a smart guy.  Be aware, though, that he is a communist.

[stone]

I like Michael Hudson.  He's a smart guy.  Be aware, though, that he is a communist.

Is that you just joking or is that true?

[MachineGhost]

I like Michael Hudson.  He's a smart guy.  Be aware, though, that he is a communist.

Bakunin, Marx or Trotsky?

[stone]

I like Michael Hudson.  He's a smart guy.  Be aware, though, that he is a communist.

Bakunin, Marx or Trotsky?

I don't think Michael Hudson is anything other than someone wanting to get capitalism working again. IMO he seems a genuine capitalist rather than someone wanting rule by a chimeric bank/state as seems to be advocated by the mainstream.

I hadn't heard of Bankunin. Thanks for pointing him out. I was struck by this in wikipeadia:

He also developed a (resultantly prescient)[26] critique of Marxism, predicting that if the Marxists were successful in seizing power, they would create a party dictatorship "all the more dangerous because it appears as a sham expression of the people's will."[27]

[MediumTex]

I like Michael Hudson.  He's a smart guy.  Be aware, though, that he is a communist.

Bakunin, Marx or Trotsky?

Marx.

Here is the text of a speech he gave to the Communist Party of Cuba in 2000 (from his website):

http://michael-hudson.com/2000/01/speec ... y-of-cuba/

If you go back and read Marx, it makes a lot more sense than 80 years or so of communism would suggest.

In a sense all modern governments are Marxist, it's just that some are more corrupt than others.

[moda0306]

MT,

If our current governments are Marxist, then what about governments of the past that would enslave one population or another, one in the form of a labor force, and the other in the form of a standing army?

I realize that these aren't specifically Marxist, but I certainly feel a heck of a lot more free in a country where I can't be ordered at gun point to stand in the line of fire of a foreign country, nor pick cotton.  I may pay higher taxes than men in the 1800's, but I certainly feel a lot more free today.  Traffic cameras and unmanned drones are a lot less intrusive to my freedom than slavery and the draft.  Maybe it's just me, but if we're looking at freedom as being "do what you want and if you don't hurt others and play by some arbitrary-but-doable rules you'll live a happy life," I'm a happy man.  I'm not going to let a drone, the fed, the IRS, or my family put me in any of the traps that HB made so evident and simply avoided.

By the way, would you care to identify what you deem to be the most perfect example of an appropriate government in the history of the world?  I'm really quite curious what people here would think....

If any of that seemed snarky I absolutely didn't mean it to... I just feel very "free" after coming accross the PP and a HB's philosophy on "finding freedom" where it otherwise may seem it doesn't exist.  I am extremely thankful to live in a country where I'm "90% free" as HB put it, even if I have to hear the buzzing of drones overhead... or not really hear them but read on GI.com that they're up there.

[MediumTex]

MT,

If our current governments are Marxist, then what about governments of the past that would enslave one population or another, one in the form of a labor force, and the other in the form of a standing army?

Marxism is supposed to deliver a happy and peaceful society.  I don't have a problem with the theory.  It's the pesky humans that keep messing it up that bug me.

[TBV]

Intelligent people SHOULD have a problem with Marxism, whether it be the theory or the practice.  The jury is no longer out.  We have 160 years of experience with what Marxism means and what it leads to.  It leads to the legitimization of political violence.  It leads to the de-legitimization of all competing points of view.  It leads to the hyper-concentration of political and economic power in the hands of a few.  It argues against the very free market forces which have made life on planet earth immensely more enjoyable and fulfilling than it has ever been in human history.  And when contemplating a critique of Marxism, one should not have to conjure up a perfect alternative, as if such criticism would be unacceptable without one.  We don't seriously search for some essential kernel of truth to be found in National Socialism, do we?  We don't blow off its historical experience as a deviation from some "true" kinder and gentler version of a movement of people otherwise devoted to rekindling social solidarity, do we?  No we don't, nor should we.  Neither should we take such a line with Marxism, a movement which has given us gulags, state-sponsored famines, religious persecution, mass terror campaigns, killing fields, assaults on free speech and press, decades of needless economic stagnation and the deliberate subordination of individual freedom to a state apparatus just as prone to cronyism and the exploitation of man by man as any other.

Then again, maybe I'm being too harsh.  Perhaps 160 years is not enough time to explore the many creative possibilities that Marxism has to offer.  However, in that case, perhaps we should also start a thread devoted to re-examining the unfairly maligned potential of absolute monarchy or the immense debt the world owes to generations of Viking marauders.  Equally entertaining and equally pointless.

I don't like the current tendency to hyperbolize the term "Marxist" and apply it to folks who are merely over-exuberant welfare-staters (a non-Marxist state socialist perspective espoused by the German conservative nationalist Otto von Bismarck.)  Nor do I like it when the term "fascist" is mis-used in the same way and for the same reasons.   But that doesn't sanitize the ideology behind the terms themselves when taken at face value.

[moda0306]

TBV,

I really wasn't saying that to criticize Marxism one needs a perfect alternative.  I was merely stating that 1) I feel we live in an immensely free and prosperous society once one takes the time to view life's possibilities through HB's "freedom finder" lense, IMO, and stating we're all living in Marxist states is a bit much, and 2) if we're going to lament about freedoms lost, it might serve us well to realize that in centuries past, where people could be born into slavery or ordered into war at the point of a gun, a majority of the world now lives free of that potential fate, at least in the same sense of hopelessness that those people in "free" societies of centuries ago did.

Though the founding fathers had some wonderful ideas and will to implement them, I feel more free having to pay into FICA & Medicare and with the federal reserve in place than I would have during any one of the numerous wars I could have been drafted into in our history, or if I was unable to vote because of my color, gender, or whether I owned land or not... and had few other legal rights to boot.

When thinking about whether we're being oppressed or not today to a degree that "would make the founding fathers role over in their graves," we might want to consider what it felt like to be forced into fighting an enemy you may have few qualms with, and how utterly hopeless ones life might be as a slave.  It least with FICA taxes, I can simply work a little harder or spend a little less to make up for it... there really wasn't any "making up" for fighting a war or being a slave, even as recently as the 70's when we were in Vietnam.

[stone]

I need to read that whole speech but a brief perusal of it doesn't give me any clue that Michael Hudson is a Marxist. David Cameron gives speeches to communists all the time. That doesn't make David Cameron a communist. It would be tragic if one of the very few people who has realistic proposals for getting capitalism on track gets ignored because he has spoken to communist- note spoken to not condoned.

[MediumTex]

Intelligent people SHOULD have a problem with Marxism, whether it be the theory or the practice.  The jury is no longer out.  We have 160 years of experience with what Marxism means and what it leads to.  It leads to the legitimization of political violence.  It leads to the de-legitimization of all competing points of view.  It leads to the hyper-concentration of political and economic power in the hands of a few.  It argues against the very free market forces which have made life on planet earth immensely more enjoyable and fulfilling than it has ever been in human history.  And when contemplating a critique of Marxism, one should not have to conjure up a perfect alternative, as if such criticism would be unacceptable without one.  We don't seriously search for some essential kernel of truth to be found in National Socialism, do we?  We don't blow off its historical experience as a deviation from some "true" kinder and gentler version of a movement of people otherwise devoted to rekindling social solidarity, do we?  No we don't, nor should we.  Neither should we take such a line with Marxism, a movement which has given us gulags, state-sponsored famines, religious persecution, mass terror campaigns, killing fields, assaults on free speech and press, decades of needless economic stagnation and the deliberate subordination of individual freedom to a state apparatus just as prone to cronyism and the exploitation of man by man as any other.

Then again, maybe I'm being too harsh.  Perhaps 160 years is not enough time to explore the many creative possibilities that Marxism has to offer.  However, in that case, perhaps we should also start a thread devoted to re-examining the unfairly maligned potential of absolute monarchy or the immense debt the world owes to generations of Viking marauders.  Equally entertaining and equally pointless.

I don't like the current tendency to hyperbolize the term "Marxist" and apply it to folks who are merely over-exuberant welfare-staters (a non-Marxist state socialist perspective espoused by the German conservative nationalist Otto von Bismarck.)  Nor do I like it when the term "fascist" is mis-used in the same way and for the same reasons.   But that doesn't sanitize the ideology behind the terms themselves when taken at face value.

I was being a bit tongue in cheek about Marxist theory working fine but for the pesky humans who inhabit society.

The post below is something I wrote a while back and it's what I meant when I said that most governments around the world are more Marxist than they realize.  (Note that when I say "Marxist" I mean based upon the writings and beliefs of Karl Marx, as reflected in The Communist Manifesto.)

We often seem to take it as a given that we have turned away from Marxism and that allowing unfettered capitalism may be the source of some of our problems.

However, consider what Marx said were the fundamental tenets of communism in "The Communist Manifesto".  They are as follows:

1. Expropriation of landed property, and the use of land rents to defray state expenditure

2. A vigorously graded income tax

3. Abolition of the right of inheritance

4. Confiscation of the property of all emigres and rebels

5. Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly

6. Centralization of the means of transport in the hands of the State

7. Increase of national factories and means of production, cultivation of uncultivated land, and improvement of cultivated land in accordance with a general plan

8. Universal and equal obligation to work; organization of industrial armies, especially for agriculture

9. Agriculture and urban industry to work hand-in-hand, in such a way as, by degrees, to obliterate the distinction between town and country

10. Public and free education of all children.  Abolition of factory work for children in its present form.  Education and material production to be combined.

Here are my comments on these requirements for a communist society:

1. Expropriation of landed property, and the use of land rents to defray state expenditure

Comment: Our current property tax system is based on the premise of taking a percentage of property value annually in the form of a tax, along with the rents the federal government takes from use of public lands for things like mineral production and the taxes the government assesses on income generated from the use of real estate in general.

2. A vigorously graded income tax

Comment: We've had this one for years.

3. Abolition of the right of inheritance

Comment: In 2013 the top estate tax rate will be 55%.  If Warren Buffett had his way it would be higher.

4. Confiscation of the property of all emigres and rebels

Comment: "Rebels" of course have their property taken through a variety of legal measures.  "Emigres" are people who attempt to leave a country with their assets.  If you have been paying attention it is impossible not to notice that taking your money out of the U.S. or finding a foreign location where it can be securely stored has gotten much more difficult in recent years.  For U.S. citizens, Switzerland is basically no longer an option at all.

5. Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly

Comment: The Fed.

6. Centralization of the means of transport in the hands of the State

Comment: The two primary means of transportation in the U.S. are by car and by air.  If you choose to travel by car you must participate in a variety of state sponsored registration, tracking and tax/fee arrangements.  You must register yourself and pay a fee to get a drivers license and you must register and pay a fee to have a street legal vehicle to drive.  The drivers license database has proven to be a wonderful tool for use by the state in tracking people and the public roads have proven to be a wonderful tool to periodically detain people as needed.  The air travel system is many times worse in terms of state control, surveillance and use of this transportation tool as a way of tracking people and detaining them when the state deems it to be necessary.

7. Increase of national factories and means of production, cultivation of uncultivated land, and improvement of cultivated land in accordance with a general plan

Comment: Although farmers probably just see it as successful political lobbying, the system of land cultivation in the U.S. is basically one giant government program.  As far as the means of production generally, the U.S. tax code has clearly been used to manipulate the allocation of capital and it has ironically pushed a lot of factory production to another country that explicitly calls itself communist.

8. Universal and equal obligation to work; organization of industrial armies, especially for agriculture

Comment: This one is not occurring in a way that I can see, though one interpretation of the governmental bureaucracy is that it is a giant make work program for many otherwise un-employable people.  As far as agriculture goes generally, the automation of so many farm functions makes the "agricultural army" a basically obsolete concept (for now, anyway).

9. Agriculture and urban industry to work hand-in-hand, in such a way as, by degrees, to obliterate the distinction between town and country

Comment: I would say that globalization in general has been targeted at achieving this goal.

10. Public and free education of all children.  Abolition of factory work for children in its present form.  Education and material production to be combined.

Comment: This one is exactly what has happened, and it has been predictably used to indoctrinate children into a certain worldview that in the social sciences is based on many fantasies and distortions of history and reality with a strong tilt toward statism as the natural configuration of society.

***

The next time someone says something negative about Marxism and how the U.S. won the fight against communism, you might ask them which aspects of Marx's description of communism we defeated and what specifically about Marx's philosophy they disagree with.

It is bizarrely ironic that some of the richest people in the world today are accumulating their wealth in economies that are either currently or recently considered "communist" (e.g., China and Russia).  In our own country, it seems as if many corporations have concluded that it makes more sense to embrace communist principles by attempting to influence government policy to help protect them from additional competition in certain markets, rather than seeking less government involvement in the economy generally.  Companies will say they want less regulation, but where regulation provides them with a competitive advantage, they rarely want that type of regulation relaxed.  I seriously doubt, for example, if financial institutions would be very excited if the government said it would no longer backstop their operations in the form of deposit insurance, bailouts and the Fed as lender of last resort.

[MediumTex]

Gumby had a great post about halfway down the thread below observing how Marx's critique of the methods of modern capital accumulation is actually not that crazy at all.

http://gyroscopicinvesting.com/forum/in ... ic=2377.30

I have read Michael Hudson's writings for years and the point Marx was making in Gumby's Marx excerpt above is a point that Hudson makes often in his writings (e.g., criticizing the rentier class, the inequality created by concentrations of wealth, etc.).

[Pointedstick]

Aren't all of us here aspiring or existing rentiers? By the time we're living off our PP, we're not contributing so society (unless we feel like it); we have the option of living entirely off a passive income stream not unlike an absentee landlord or a feudal ferry monopolist, no?

[stone]

Marx did a very good job of describing capitalism in his day especially pointing out the bugs in the system. Agreeing with much of that description does NOT make anyone a Marxist IMO. To my mind being a Marxist means agreeing with Marx's prescription as to how to go about rectifying things. Being a Marxist means agreeing with having a monopolistic single party state control of the economy.

After all you wouldn't say that everyone who agreed with this Bankunin quote was a Bankunin Anarchist simply because they agree with one thing Bankun said:

He also developed a (resultantly prescient)[26] critique of Marxism, predicting that if the Marxists were successful in seizing power, they would create a party dictatorship "all the more dangerous because it appears as a sham expression of the people's will."[27]

[stone]

Aren't all of us here aspiring or existing rentiers? By the time we're living off our PP, we're not contributing so society (unless we feel like it); we have the option of living entirely off a passive income stream not unlike an absentee landlord or a feudal ferry monopolist, no?

Do you want the economy to be configured over towards maximising rental income even at the expense of making the economy shrink overall so that there is less to go around? I don't hold it against anyone that they want to maximise their rental income. I just think we need an economy that is set up in a self stabilizing way that can make use of all the useful work people want to do and provide people with what they want in a sustainable way.

[LonerMatt]

So many silly people talking about Marx, and only one quote.

People should read what he wrote and consider what his analysis is. Anyone basing their opinions of someone's writings without reading the writings is being completely ignorant.

What, are we trusting that the USSR didn't warp and distort his vision? In all their authoritarian honesty?

What a double standard.

There are also various aspects of Marx and Marxist thought:
- The activist (Communist Manifesto)
- The economic (Das Capital)
- The Historian (Communist Manifesto and essays)
- The Philosopher (essays and short works)

Really, as one of the most interesting minds in the last 300 years, Marx lays out some pretty hefty claims - I've never heard of a decent refutation of his Historical perspective, or his philosophy (given that much philosophy takes directly from where Marx left off is a great indicator of that).

People disagree with the means by which Marx espoused political action, and disagree with the nature of what his desired to be political change.

We need to keep in mind that Marx's aim (and you can read this in the CM) is to shatter the nature of history: a minority oppressing a majority. That is not everyone's aim, and it's not everyone's priority - so of course there will be dissidents.

Nothing works in practice: which is why the whole 'theory vs practice' argument is tautological when it comes to Marx (or anything, really).

[LonerMatt]

"do what you want and if you don't hurt others and play by some arbitrary-but-doable rules you'll live a happy life,"

Marx (and Plato) would argue that you are not free: simply because the barometer you use to measure freedom (do what you want) is entirely constrained by the mechanisms of capitalism (you can't do what you want, you can do what you can afford to do - which is to say, I'm afraid, a significant limitation on almost every person in the world).

That's the basis of where Marx begins to explore alternatives: bu looking at how economics, politics and philosophy overlap. His alternative has many flaws, and is dated, but people continually ignore his analysis and thought process, and in doing so miss out on what's being driven at.

[LonerMatt]

Critique's of CM

While I applaud you for having read the Manifesto (many people act as if reading the primary text is above them) - I really need to point out that you undermine your own point.

You're argument can be summarised as "The USA is as Marxist as it is Marxist" - you refer numerous times to when things are "sort of" there or "Warren Buffet wants it higher" - come now: there are great, gaping holes in the logic that the USA operates anywhere close to a Marxist utopia. Property Tax does not equal property re-distribution in the way the CM describes, etc, etc, etc.

The USA is one of the better examples (along with China and Russia) of a society where, more than ever, money is power (socially, politically and personally) - which is at the root of what Marx attempted to address.

This isn't to criticise government/politics (because a nation should take the best ideas from where it finds them, IMO) - just to argue the critique is a little simplistic to support your point, IMO.

[MachineGhost]

I hadn't heard of Bankunin. Thanks for pointing him out. I was struck by this in wikipeadia:

He also developed a (resultantly prescient)[26] critique of Marxism, predicting that if the Marxists were successful in seizing power, they would create a party dictatorship "all the more dangerous because it appears as a sham expression of the people's will."[27]

Yep, Bakunin was the consummate anarchist.  He is my hero.  The Bakunin vs Marx split was intellectually epic, but unfortunately, the Marxists won the debate.

[MediumTex]

Critique's of CM

While I applaud you for having read the Manifesto (many people act as if reading the primary text is above them) - I really need to point out that you undermine your own point.

You're argument can be summarised as "The USA is as Marxist as it is Marxist" - you refer numerous times to when things are "sort of" there or "Warren Buffet wants it higher" - come now: there are great, gaping holes in the logic that the USA operates anywhere close to a Marxist utopia. Property Tax does not equal property re-distribution in the way the CM describes, etc, etc, etc.

The USA is one of the better examples (along with China and Russia) of a society where, more than ever, money is power (socially, politically and personally) - which is at the root of what Marx attempted to address.

This isn't to criticise government/politics (because a nation should take the best ideas from where it finds them, IMO) - just to argue the critique is a little simplistic to support your point, IMO.

The thing is, many American believe that the U.S. defeated Marxism, when what may have actually happened is that the USSR simply collapsed under the weight of its own incompetent political leadership, but many facets of Marxism are actually alive and well in both Russia today and the U.S., even if it is a diluted form of Marxism. 

All of the points I cited were simply to demonstrate that the tilt and momentum in our society is toward Marxist principles of social organization, even though they have in many cases been bent into forms that benefit the wealthy disproportionately, which shouldn't be surprising in light of the fact that everywhere Marxism has been tried it seems to have also benefited the rich and powerful much more than the lowly worker.

[stone]

I think concentration of power is the crux issue not whether that power is political, financial or whatever. If an economy has power concentrated with a small minority, then that economy typically will struggle to meet the requirements of most of the people subject to it. Countries that tried to follow what they perceived as marxism have ended up with political power in the hands of a few people. As MT says, that gives an end result much like an oligarchy.
My impression was that Michael Hudson was describing how financial engineering is being used to dis-empower much of our population.