“Creating Wealth” through Debt: The West’s Finance-Capitalist Road

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Michael Hudson Peking University, School of Marxist Studies May 5-6, 2018 Volumes II and III of Marx’s Capital describe how debt grows exponentially, burdening the economy with carrying charges. This overhead is subjecting today’s Western finance-capitalist economies to austerity, shrinking living standards and capital investment while increasing their cost of living and doing business. That is the main reason why they are losing their export markets and becoming de-industrialized. What policies are best suited for China to avoid this neo-rentier disease while raising living standards in a fair and efficient low-cost economy? The most pressing policy challenge is to keep down the cost of housing. Rising housing prices mean larger and larger debts extracting interest out of the economy. The strongest way to prevent this is to tax away the rise in land prices, ...

The Paradox of Financialized Industrialization

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These remarks were made at the World Congress on Marxism, 2015, at the School of Marxism, Peking University, October 10, 2015. The presentation was part of a debate with Bertell Ollman (NYU). I was honored to be made a permanent Guest Professor at China’s most prestigious university. When I lectured here at the Marxist School six years ago, someone asked me whether Marx was right or wrong. I didn’t know how to answer this question at the time, because the answer is so complex. But at least today I can focus on his view of crises. More than any other economist of his century, Marx tied together the three major kinds of crisis that were occurring. His Theories of Surplus Value explained the two main forms of crises his classical predecessors had ...

The Economic Crisis & Crisis Theory II

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This panel explored causes of the Great Recession and the continuing economic sluggishness since the recession’s ended, as well as how the left can respond to this situation. In keeping with the conference theme, panelists addressed what different analyses and theories imply about the kind of socioeconomic change that is called for. Alan Freeman spoke on “Consumption, Profit and Finance: why can’t the left get it right?” He will explore why so many academic left thinkers persistently avoid normal methods of enquiry after truth. Focusing on Marx’s theory of crisis, the share of wages in US income, and the relation between finance and profitability as examples, he will discuss how prejudice and the desire to find “evidence” to support a political line take first place over the use of logic and ...

From Marx to Goldman Sachs: The Fictions of Fictitious Capital

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As published in Critique, based on a presentation given at the China Academy of Sciences, School of Marxist Studies in Beijing in November 2009, and at the Left Forum in New York City, March 20, 2010. Classical economists developed the labor theory of value to isolate economic rent, which they defined as the excess of market price and income over the socially necessary cost of production (value ultimately reducible to the cost of labor). A free market was one free of such “unearned” income – a market in which prices reflected actual necessary costs of production or, in the case of public services and basic infrastructure, would be subsidized in order to make economies more competitive. Most reformers accordingly urged – and expected – land, monopolies and banking privileges to be ...