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Michael Hudson (born March 14, 1939) is an American
economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
, Professor of
Economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
at the
University of Missouri–Kansas City The University of Missouri–Kansas City (UMKC) is a public research university in Kansas City, Missouri. UMKC is part of the University of Missouri System and one of only two member universities with a medical school. As of 2020, the university ...
and a researcher at the
Levy Economics Institute Founded in 1986 as the Jerome Levy Economics Institute, the Levy Economics Institute of Bard College is a nonprofit, nonpartisan public policy think tank. The purpose of its research and other activities is to enable scholars and leaders in busi ...
at
Bard College Bard College is a private liberal arts college in Annandale-on-Hudson, New York. The campus overlooks the Hudson River and Catskill Mountains, and is within the Hudson River Historic District—a National Historic Landmark. Founded in 1860, ...
, former
Wall Street Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for ...
analyst, political consultant, commentator and journalist. He is a contributor to ''The Hudson Report'', a weekly economic and financial news podcast produced by Left Out. Hudson graduated from the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
(BA, 1959) and
New York University New York University (NYU) is a private research university in New York City. Chartered in 1831 by the New York State Legislature, NYU was founded by a group of New Yorkers led by then- Secretary of the Treasury Albert Gallatin. In 1832, th ...
(MA, 1965, PhD, 1968) and worked as a balance of payments economist in
Chase Manhattan Bank JPMorgan Chase Bank, N.A., doing business as Chase Bank or often as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and fi ...
(1964–1968). He was assistant professor of economics at the
New School for Social Research The New School for Social Research (NSSR) is a graduate-level educational institution that is one of the divisions of The New School in New York City, United States. The university was founded in 1919 as a home for progressive era thinkers. NSS ...
(1969–1972) and worked for various governmental and non-governmental organizations as an economic consultant (1980s–1990s). Hudson has devoted his career to the study of
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
, both domestic debt (
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that ...
s,
mortgages A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...
, interest payments), and
external debt A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be governments, corporations or citizens. External debt may be denominated in domestic or foreign currency. It inclu ...
. In his works, he consistently advocates the idea that loans and exponentially growing debts that outstrip profits from the real economy are disastrous for both the government and the people of the borrowing state as they wash money (payments to
usurers Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is ch ...
and rentiers) from turnover, not leaving them funds to buy goods and services, thus leading to
debt deflation Debt deflation is a theory that recessions and depressions are due to the overall level of debt rising in real value because of deflation, causing people to default on their consumer loans and mortgages. Bank assets fall because of the defaults an ...
. Hudson notes that the existing economic theory, the Chicago School in particular, serves rentiers and financiers and has developed a special language designed to reinforce the impression that there is no alternative to the status quo. In a false theory, the parasitic encumbrances of a real economy, instead of being deducted in accounting, add up as an addition to the
gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is of ...
and are presented as productive. Hudson sees consumer protection, state support of infrastructure projects, and taxation of rentier sectors of the economy rather than workers, as a continuation of the line of classical economists today


Biography


Early life and education

Hudson was born on March 14, 1939 in
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = List of sovereign states, Count ...
,
Illinois Illinois ( ) is a state in the Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolitan areas include, Peoria and Rock ...
. Hudson is a fifth generation American as on his maternal line he has
Ojibwe The Ojibwe, Ojibwa, Chippewa, or Saulteaux are an Anishinaabe people in what is currently southern Canada, the northern Midwestern United States, and Northern Plains. According to the U.S. census, in the United States Ojibwe people are one of ...
blood. His father, Nathaniel Carlos Hudson (1908–2003), received an MBA from the
University of Minnesota The University of Minnesota, formally the University of Minnesota, Twin Cities, (UMN Twin Cities, the U of M, or Minnesota) is a public land-grant research university in the Twin Cities of Minneapolis and Saint Paul, Minnesota, United States. ...
in 1929, the year the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
struck. His father joined the
trade union A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ...
struggle, became an active
Trotskyist Trotskyism is the political ideology and branch of Marxism developed by Ukrainian-Russian revolutionary Leon Trotsky and some other members of the Left Opposition and Fourth International. Trotsky self-identified as an orthodox Marxist, a ...
trade union A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ...
ist, editor of the ''Northwest Organizer'' and ''The Industrial Organizer'' and wrote articles for other trade union publications. When Hudson was three years old, his father was arrested on
Smith Act The Alien Registration Act, popularly known as the Smith Act, 76th United States Congress, 3d session, ch. 439, , is a United States federal statute that was enacted on June 28, 1940. It set criminal penalties for advocating the overthrow of th ...
violation grounds, an act aimed at suppressing Trotskyists in the United States. Hudson received his primary and secondary education in a private school at the
University of Chicago Laboratory Schools The University of Chicago Laboratory Schools (also known as Lab or Lab Schools and abbreviated as UCLS though the high school is nicknamed U-High) is a private, co-educational day Pre-K and K-12 school in Chicago, Illinois. It is affiliated w ...
. After his graduation, he entered the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
with two majors: Germanic philology and history. In 1959, Hudson graduated from the University of Chicago with a bachelor's degree. After graduation, he worked as an assistant to Jeremy Kaplan at the Free Press in Chicago. He managed to obtain the rights to the English language editions of the works of
György Lukács György Lukács (born György Bernát Löwinger; hu, szegedi Lukács György Bernát; german: Georg Bernard Baron Lukács von Szegedin; 13 April 1885 – 4 June 1971) was a Hungarian Marxist philosopher, literary historian, critic, and aesth ...
as well as the rights to the archives and works of
Leon Trotsky Lev Davidovich Bronstein. ( – 21 August 1940), better known as Leon Trotsky; uk, link= no, Лев Давидович Троцький; also transliterated ''Lyev'', ''Trotski'', ''Trotskij'', ''Trockij'' and ''Trotzky''. (), was a Russian ...
after the death of Trotsky's widow,
Natalia Sedova Natalia Ivanovna Sedova (russian: Ната́лья Ива́новна Седо́ва; 5 April 1882 Romny, Russian Empire – 23 January 1962, Corbeil-Essonnes, Paris, France) is best known as the second wife of Leon Trotsky, the Russian revoluti ...
. Hudson found work at the publishing house neither interesting nor profitable. Hudson, who had studied music from his childhood, moved to New York in 1960 in hopes of becoming a pupil of the conductor
Dimitris Mitropoulos Dimitri Mitropoulos ( el, Δημήτρης Μητρόπουλος; The dates 18 February 1896 and 1 March 1896 both appear in the literature. Many of Mitropoulos's early interviews and program notes gave 18 February. In his later interviews, howe ...
, but these plans were not to be realized.


Studying the economy and working for banks

In 1961, Hudson enrolled in the Economics Department of
New York University New York University (NYU) is a private research university in New York City. Chartered in 1831 by the New York State Legislature, NYU was founded by a group of New Yorkers led by then- Secretary of the Treasury Albert Gallatin. In 1832, th ...
. His master's thesis was devoted to the development philosophy of the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
and special attention was paid to credit policy in the agricultural sector. Many years later, Hudson recognized: "The topics that most interested me ... were not taught at New York University where I took my graduate economics degrees. In fact, they are not taught in any university departments: the dynamics of debt, and how the pattern of bank lending inflates land prices, or national income accounting and the rising share absorbed by rent extraction in the Finance, Insurance and Real Estate (FIRE) sector. There was only one way to learn how to analyze these topics: to work for banks." In 1964, Hudson, who had just received his master's degree in economics, joined
Chase Manhattan Bank JPMorgan Chase Bank, N.A., doing business as Chase Bank or often as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and fi ...
's economics research department as a
balance of payments In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., ...
specialist. His task was to identify the payment capacity of Argentina, Brazil, and Chile. Based on export earnings and other international payment data, Hudson had to determine the income the bank could derive from the debt that these countries had accumulated. He recalled that, "I soon found that the Latin American countries I analyzed were fully 'loaned up'. There were no more hard currency inflows available to extract as interest on new loans or bond issues. In fact, there was capital flight." Among other tasks that Hudson performed at Chase Manhattan was an analysis of the balance of payments of the US oil industry and the tracking of "dirty" money that ended up in Swiss banks. According to Hudson, this work gave him invaluable experience in understanding how banks and the financial sector work as well as understanding how bank accounting and real life correlate. Hudson left his job at the bank to complete his doctoral dissertation. His thesis was devoted to US economic and technological thought in the 19th century. It was successfully defended in 1968 and in 1975 it was published under the title ''Economics and Technology in 19th Century American Thought: The Neglected American Economists''. In 1968, Hudson joined the accounting firm
Arthur Andersen Arthur Andersen was an American accounting firm based in Chicago that provided auditing, tax advising, consulting and other professional services to large corporations. By 2001, it had become one of the world's largest multinational corporat ...
, for whom he expanded his analysis of payment flows for all areas of US production. He discovered that the United States deficit was evident only in the military sphere: "My charts revealed that the U.S. payments deficit was entirely military in character throughout the 1960s. The private sector—foreign trade and investment—was exactly in balance, year after year, and "foreign aid" actually produced a dollar surplus (as it was required to do under U.S. law)." However, the accounting system used in the US after the war mixed the balance of individuals and state payments flow into a single balance which concealed the budget deficit. Hudson proposed dividing US balance of payments figures into governmental and private sectors.


Career

In 1972, Hudson moved to the
Hudson Institute The Hudson Institute is a conservative American think tank based in Washington, D.C. It was founded in 1961 in Croton-on-Hudson, New York, by futurist, military strategist, and systems theorist Herman Kahn and his colleagues at the RAND Co ...
headed by Herman Kahn. In 1979, he became an advisor to the
United Nations Institute for Training and Research The United Nations Institute for Training and Research (UNITAR) is a dedicated training arm of the United Nations system. UNITAR provides training and capacity development activities to assist mainly developing countries with special attention ...
(UNITAR). In 1984, Hudson joined Harvard's
archaeology Archaeology or archeology is the scientific study of human activity through the recovery and analysis of material culture. The archaeological record consists of artifacts, architecture, biofacts or ecofacts, sites, and cultural landsc ...
faculty at the Peabody Museum as a research fellow in
Babylon ''Bābili(m)'' * sux, 𒆍𒀭𒊏𒆠 * arc, 𐡁𐡁𐡋 ''Bāḇel'' * syc, ܒܒܠ ''Bāḇel'' * grc-gre, Βαβυλών ''Babylṓn'' * he, בָּבֶל ''Bāvel'' * peo, 𐎲𐎠𐎲𐎡𐎽𐎢 ''Bābiru'' * elx, 𒀸𒁀𒉿𒇷 ''Babi ...
ian economics. A decade later, he was a founding member of the International Scholars Conference on Ancient Near Eastern Economies, an international group of Assyriologists and archaeologists who analyzed the economic origins of civilization. In the mid-1990s, Hudson became a professor of economics at the
University of Missouri–Kansas City The University of Missouri–Kansas City (UMKC) is a public research university in Kansas City, Missouri. UMKC is part of the University of Missouri System and one of only two member universities with a medical school. As of 2020, the university ...
and a fellow at the
Levy Economics Institute Founded in 1986 as the Jerome Levy Economics Institute, the Levy Economics Institute of Bard College is a nonprofit, nonpartisan public policy think tank. The purpose of its research and other activities is to enable scholars and leaders in busi ...
at
Bard College Bard College is a private liberal arts college in Annandale-on-Hudson, New York. The campus overlooks the Hudson River and Catskill Mountains, and is within the Hudson River Historic District—a National Historic Landmark. Founded in 1860, ...
. , Hudson is the director of the Institute for the Study of Long-Term economic Trends (ISLET) and the Distinguished Research Professor of Economics at the University of Missouri–Kansas City.


Contributions

Hudson devoted his first works to the problem of the gold and foreign exchange reserves and the US foreign economic debt, a subject his mentor Terence McCarthy had previously dealt with in detail. In his first article titled "Sieve of Gold", Hudson analyzed the negative economic consequences of the
Vietnam War The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...
. He drew attention to the fact, even without war, the US economy very soon came to a critical point. The welfare of the US in the postwar years was in many cases provided with a "golden pillow", it had created for itself between the end of WW I and the end of WW II (per Michael's Empire lectures on Youtube April 2021 and other 2021 recorded lectures). Since 1934, when frightened by
Adolf Hitler Adolf Hitler (; 20 April 188930 April 1945) was an Austrian-born German politician who was dictator of Germany from 1933 until his death in 1945. He rose to power as the leader of the Nazi Party, becoming the chancellor in 1933 and the ...
, Europeans began to buy US government securities, thereby shifting their gold and foreign exchange reserves to US banks. From 1934, US gold and foreign exchange reserves increased from $7.4 billion to $20.1 billion in 1945. After the creation of the
Bretton Woods system The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretto ...
, an
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) was created within the framework as well as a gold pool which guaranteed the dollar was as good as gold, capital began to leave the country and move to Europe. Military expenditures accounted for a huge share of the United States budget deficit, which tried in vain to prevent further growth in the deficit, on the one hand in every way limiting the flow of gold and on the other hand not allowing foreign central banks to receive gold for the given dollars. Such a policy appealed to European bankers who found such a policy hypocritical. Yet they went along with it, acquiesced, surrendered, as they were afraid to bring down the dollar and thereby deprive their products of competitiveness in US markets. In ''A Financial Payments-Flow Analysis of U.S. International Transactions, 1960-1968'', Hudson showed US export statistics erroneously included a class of goods whose transfer abroad did not involve payment at any time, from residents of one nation to those of another; and, which are for this reason not really international transactions at all. Primary among this class of goods were the transfers of aircraft parts and components by the United States to international airlines at their overseas air terminals and installation on their aircraft. These transfers were brought into the host country under bond and therefore were excluded from import statistics. At the same time, their value was included in the United States export statistics as a credit, therefore the government sector has been in sizable deficit on a payments-flow basis during 1960–1968, resulting mainly from its military operations. Existing accounting systems mixing government and private flows did not show the problem and the source of disparities. In his monograph, Hudson made an attempt to divide the United States balance of payments into government and private sectors. In 1972, Hudson published ''Super Imperialism'', which traced the history of the formation of
American imperialism American imperialism refers to the expansion of American political, economic, cultural, and media influence beyond the boundaries of the United States. Depending on the commentator, it may include imperialism through outright military conques ...
after the end of
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
. In Hudson's interpretation,
super-imperialism Super-imperialism is a Marxist term with two possible meanings. It refers either to the hegemony of an imperialist great power over its weaker rivals which then are called sub-imperialisms, or to a comprehensive supra-structure above a set of the ...
is a stage of
imperialism Imperialism is the state policy, practice, or advocacy of extending power and dominion, especially by direct territorial acquisition or by gaining political and economic control of other areas, often through employing hard power (economic powe ...
in which the state does not realize the interests of any group other than itself. It is itself wholly and entirely aimed at colonializing other states, making them into client states by
dollar diplomacy Dollar diplomacy of the United States, particularly during the presidency of William Howard Taft (1909–1913) was a form of American foreign policy to minimize the use or threat of military force and instead further its aims in Latin America and ...
. Continuing the position outlined in ''A Financial Payments-Flow Analysis of U.S. International Transactions, 1960-1968'', Hudson stressed the aid systems, World Bank and IMF formed after the end of
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
. All American foreign politics (including tied aid and debts) were aimed at restraining the self-sufficient
economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...
of
Third World The term "Third World" arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. The United States, Canada, Japan, South Korea, Western European nations and their allies represented the " First ...
countries in economic sectors where the United States was afraid of emerging competition. At the same time, the US imposed so-called
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
policies on
developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
, policy which was the reverse of the one the US used itself to gain prosperity. In 1971, after cancelling the right to redeem gold for dollars, the US forced foreign central banks to buy US treasury bonds. This income was used to finance the federal deficit and large, overseas military expenditures. In exchange for providing a net surplus of assets, commodities, debt financing, goods and services, foreign countries were forced to hold an equal amount of US treasuries. This drove down US interest rates, which drove down the dollar's foreign exchange rate, making US goods more competitive overseas. Hudson views foreign central banks buying treasuries as a legitimate effort to stabilize
exchange rates In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
rather than a currency manipulation. Foreign central banks could sell the excess dollars on the exchange market which would strengthen their currency. Yet he calls this a dilemma as it decreases their ability to continue a trade surplus even though it also increases their purchasing power. He believes keyboard credit and treasury outflows in exchange for foreign assets without a future, means for the United States to repay the treasuries and a decreasing value of the dollar is akin to military conquest. He believes the surplus balance of payments countries have ncludes?the right to stabilize exchange rates and expect repayment of the resulting loans even as industry shifts from the United States to creditor nations. He states the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Mone ...
has encouraged the International Monetary Fund and
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
to impose
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
so the United States itself is not exposed to, thanks to dollar dominance. Dollar Diplomacy leads to subjecting other countries to unfair trade and investment intending to strip foreign assets and natural resources. This includes privatizing infrastructure, preferably buying it at distressed prices. Parasitic finance techniques (including Western-style tax breaks) are used to extract the maximum amount of the country's surplus and cripple it as an economic competitor to the US, rather than providing fairness and promoting each nation's self-sufficiency.


Debt in the ancient Near East

At the end of the 1980s, Hudson diverged from the field of modern economics in order to explore the foundations of modern western financial practices and concepts in ancient Mesopotamia. Under the aegis of the Institute for the Study of Long-Term Economic Trends, which he organized, Hudson convened a series of five conferences between 1994 and 2004 gathering leading scholars in the pertinent disciplines to investigate this topic, assemble relevant contemporary scholarship and publish it in a series of volumes. The five conferences focused on Privatization In The Ancient Near East and Classical World; Urbanization and Land Ownership; Debt and Economic Renewal in the Ancient Near East; Creating Economic Order: Record-Keeping, Standardization, and the Development of Accounting; and Labor In The Ancient World. Cumulatively, this work demolishes a wide range of economic myths (the origin of markets and money in barter, for example, and of money in metals or coinage) and replaced them with carefully documented, extremely revealing facts. In their investigation of the origins of debt and usury they found the first and by far the earliest major creditors were the temples and palaces of
Bronze Age The Bronze Age is a historic period, lasting approximately from 3300 BC to 1200 BC, characterized by the use of bronze, the presence of writing in some areas, and other early features of urban civilization. The Bronze Age is the second pri ...
Mesopotamia, not private individuals acting on their own. The rate of interest in each region was not based on productivity. It was set purely for simplicity of calculation in the local system of fractional arithmetic, i.e., 1/60th per month in Mesopotamia and later 1/10th per year for Greece and 1/12th for Rome. Money originated in book-keeping, not metals or barter or coinage. Ideas about land ownership, mortgages, rents, and wages originated in this context and were determined by it. The natural stability of a national state depends on having as many free, independent workers doing productive things. The rise of personal debt, past a certain low threshold, begins to reduce worker productivity—even if it makes the elite financial class wealthier. The proclamations of Jubilees or Clean Slates had the purpose of making workers more productive—and happier—thereby improving the economy. Hudson stated: "In the early 1990s I tried to write my own summary, but was unable to convince publishers the Near Eastern tradition of Biblical debt cancellations was firmly grounded. Two decades ago economic historians and even many Biblical scholars thought the Jubilee Year was merely a literary creation, a utopian escape from practical reality. I encountered a wall of cognitive dissonance at the thought the practice was attested to in increasingly detailed Clean Slate proclamations".
David Graeber David Rolfe Graeber (; February 12, 1961September 2, 2020) was an American anthropologist and anarchist activist. His influential work in economic anthropology, particularly his books '' Debt: The First 5,000 Years'' (2011) and ''Bullshit Job ...
's book '' Debt: The First 5,000 Years'' (2011) drew on Hudson's ideas yet presented them more coherently and accessibly. According to the documentary evidence which Hudson and his colleagues assembled and published, rather than debts being held sacred, instead what was sacred in the ancient Near East was the regular cancellation of debts. These included agrarian debts, freeing of bondservants as well as freedmen from permanent debt servitude, in order to preserve social balance, and to ensure a sturdy agrarian class of freedmen to serve in the army. This was one of the primary goals of Hammurabi's famous law code (c. 1729-1686 b.c.). Such debt amnesties were not destabilizing. They were essential to preserving long-term social and economic stability.


Domestic debts and debt deflation of economy

From the beginning of the 2000s, Hudson pays special attention to the issues of inflating fictitious capital, which entails the withdrawal of funds from the real economy and leads to
debt deflation Debt deflation is a theory that recessions and depressions are due to the overall level of debt rising in real value because of deflation, causing people to default on their consumer loans and mortgages. Bank assets fall because of the defaults an ...
. He states finance and "financialization" has been key to guiding politics into reducing the productive capacity of the United States and Europe. The elite financial class benefits from non-productive finance tactics and strategies. They have used these techniques to harm Chile, Russia, Latvia and Hungary. Hudson states parasitic non-productive, rent-seeking finance looks at industry and labor to determine how much wealth it can extract by fees, interest and tax breaks. Rather than invest capital into increasing production and efficiency where the market demands it, wealth accumulated is made into loans, at compound interest. In this way, a nation's debt can grow faster than its real goods production. Compounding interest naturally results in increasing the size of debt which eventually demand more wealth be extracted than production and labor are able to pay. Rather than extracting taxes from the rentiers to reduce the cost of labor and assets and use the tax revenue to improve infrastructure to increase production efficiency, he states the United States tax system, bank bailouts and
quantitative easing Quantitative easing (QE) is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary pol ...
sacrifice labor and industry for the benefit of the finance sector. According to Hudson, bankers and rentiers as early as 1880s started to search ways to rationalize untaxing and deregulating finance, real estate and monopolies. They succeed in the 1980s with establishing a
neoliberal Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent f ...
Washington consensus that states "everyone is worth what they get" so there is no "unearned increment" to be untaxed. Hudson stresses world success of neoliberal Dollar Diplomacy and financialization is closely connected with its educational support in all big universities. He cites the story of Chile. One of the first acts of the
Chicago Boys The Chicago Boys were a group of Chilean economists prominent around the 1970s and 1980s, the majority of whom were educated at the Department of Economics of the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliat ...
in Chile after the military junta overthrew the Allende government in 1973 was to close down every economics department in the nation outside of the
Catholic University Catholic higher education includes universities, colleges, and other institutions of higher education privately run by the Catholic Church, typically by religious institutes. Those tied to the Holy See are specifically called pontifical uni ...
, a
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
monetarist Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on natio ...
stronghold. The junta then closed down every social science department and fired, exiled or murdered critics of its ideology in the terrorist Project Condor program waged throughout Latin America and spread to political assassination in the United States itself. What the Chicago Boys recognized is that
free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...
ideology requires totalitarian control of the school and university system, totalitarian control of the press and control of the police where intellectual resistance survives against the idea that economic planning should become much more centralized, but moved out of the hands of government into those of the bankers and other financial institutions, stating: "Free market ideology ends up as political Doublethink in countering any freedom of thought. Its remarkable success in the United States and elsewhere thus has been achieved largely by excluding the history of classical, conservative economic thought from the early 1800s, which culminated in many ways with Marx. These have been expunged from conventional economics curriculum".
Modern Monetary Theory Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox * * * * * * macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply ...
of which Hudson is an adherent, is gaining traction by showing the falseness of the neoliberal conceiving of economics as purely mathematics.


Position on Karl Marx and Marxian economics

Hudson identifies himself as a Marxist economist, but his interpretation of
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
is different from most other Marxists. Whilst other Marxists emphasize the contradiction of
wage labor Wage labour (also wage labor in American English), usually referred to as paid work, paid employment, or paid labour, refers to the socioeconomic relationship between a worker and an employer in which the worker sells their labour power unde ...
and
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
as the core issue of today's capitalist world, Hudson rejects this idea. He believes the core issue of today's failing economies is parasitic forms of finance changing "free market" from its original 1800s definition as "free from non-productive rents;" and, re-defining "free market" to mean the lowering of all regulation and taxation to permit asset stripping both domestically and foreign. Hudson sides with those who understand Marx as wishing to eliminate all forms of feudalistic
rent seeking Rent-seeking is the act of growing one's existing wealth without creating new wealth by manipulating the social or political environment. Rent-seeking activities have negative effects on the rest of society. They result in reduced economic effi ...
. If encouraged, these can only lead to a new feudalism and economic serfdom for the 99%. The original meaning of a free market as discussed by classical political economists was a market free from all forms of
rent Rent may refer to: Economics *Renting, an agreement where a payment is made for the temporary use of a good, service or property *Economic rent, any payment in excess of the cost of production *Rent-seeking, attempting to increase one's share of e ...
. The gist of classical political economy was to distinguish earned-productive from unearned-non-productive economic activity. Hudson also argues Marx was too optimistic. History did not go in the direction of Capitalism evolving into Socialism—at least not yet. Since the 1930s today's modern capitalism is dominated by non-productive rentier classes. In classical economics, which includes Marx, the
proletariat The proletariat (; ) is the social class of wage-earners, those members of a society whose only possession of significant economic value is their labour power (their capacity to work). A member of such a class is a proletarian. Marxist philo ...
as a class is better off paying as few rents as possible. This is because wages can be lower if workers have less overhead. This lowers the price of goods they produce lower, making them more competitive on the international market. This is also the logic of making healthcare a public commons run not-for-profit by the government. This enables wages to be lower for workers. Hudson contrasts such down-to-earth economic thinking with neoliberal financialists who counter, "Look at the rise in the value of your house! You're making a killing on your house investment!" (paraphrase). Non-productive rents, tactics and strategies are making all countries, the US included, less self-sufficient. This connects back with the idea of a debt jubilee; and, with taxing non-productive activity, not workers and manufacturing. The cost of doing nothing is high. Left to run wild, the ever-growing need for debt and rents causes history to regress back to a neo-feudal system; where, your employer pays for your healthcare, provides you your housing and keeps workers in debt permanently. Although Hudson's views are unpopular amongst other Marxists and sometimes vehemently rejected by them, he points out most Marxists never go beyond ''
Capital, Volume I ''Capital. A Critique of Political Economy. Volume I: The Process of Production of Capital'' (german: Das Kapital. Kritik der politischen Ökonomie Erster Band. Buch I: Der Produktionsprocess des Kapitals) is the first of three treatises that ma ...
'' where Marx does not mention rents at all. This is because a broad consensus existed at the time of Marx among contemporary economists about the toxicity of non-productive rents. So he did not address the issue of rents until Volume III. ...assumes there is a rent-free market where all
commodities In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
are sold at their values. That is how Marx deduces the exploitative nature of capitalism and labour-capital dichotomy as its underlying contradiction. However, in '' Capital, Volume II'' and ''
Capital, Volume III ''Capital. A Critique of Political Economy. Volume III: The Process of Capitalist Production as a Whole'' (german: Das Kapital. Kritik der politischen Ökonomie Dritter Band. Buch III: Der Gesammtprocess Der Kapitalistischen Produktion), is the ...
'' he relaxes his assumptions and discovers other contradictions much closer to what can be observed in today's economic system. In ''Capital, Volume III'', Marx discusses the tendency of productivity and supply to increase at a faster pace than the consumption power and demand. Marx also revised his earlier ideas as he studied and learned more about the asymmetric development of capitalism. This ultimately led him to soften his
revolution In political science, a revolution (Latin: ''revolutio'', "a turn around") is a fundamental and relatively sudden change in political power and political organization which occurs when the population revolts against the government, typically due ...
ary tone as he realized how dominance of industrially advanced nations over underdeveloped nations blocks revolutionary tendencies among the working classes of dominating nations. On the other side, Marx clashed with
Karl Schapper Karl Friedrich Schapper (December 30, 1812, Weinbach – April 28, 1870, London) was a German socialist and labour leader. He was one of the pioneers of the labour movement in Germany and an early associate of Wilhelm Weitling and Karl Marx. You ...
, suggesting the idea of workers taking over the state power ends up in disaster because too many lack what we call today a college education;


Works


Books

Hudson is the author of several books, among them the following:"Der Krieg der Banken gegen das Volk"
(December 3, 2011).''Frankfurter Allgemeine Zeitung''. Retrieved December 7, 2011 .
* ''Super Imperialism: The Economic Strategy of American Empire'' (1972)
Amy Goodman Amy Goodman (born April 13, 1957) is an American broadcast journalist, syndicated columnist, investigative reporter, and author. Her investigative journalism career includes coverage of the East Timor independence movement, Morocco's occupation ...
and Juan Gonzalez (November 5, 2010)
"New $600B Fed Stimulus Fuels Fears of US Currency War"
''Democracy Now!'' Video. Retrieved April 7, 2021.
* ''Global Fracture: The New International Economic order'' (1973), a sequel to ''Super Imperialism''. * ''Trade, Development and Foreign Debt, Volume I, International Trade: A History of Theories of Polarisation and Convergence in the International Economy'' (1992). * ''Trade, Development and Foreign Debt, Volume II, International Finance: A History of Theories of Polarisation and Convergence in the International Economy'' (1992). * ''A philosophy for a fair society (Georgist Paradigm Series)'' (1994). * ''Urbanization and Land Ownership in the Ancient Near East'' (1999), edited by Hudson and Baruch A. Levine, with an introduction by Hudson, Volume II in a series sponsored by the Institute for the Study of Long-term Economic Trends and the International Scholars Conference on Ancient Near East Economies: A Colloquium Held at New York University, November 1996 and The Oriental Institute, St. Petersburg, Russia, May 1997, published by
Peabody Museum of Archaeology and Ethnology The Peabody Museum of Archaeology and Ethnology is a museum affiliated with Harvard University in Cambridge, Massachusetts. Founded in 1866, the Peabody Museum is one of the oldest and largest museums focusing on anthropological material, wi ...
. * ''Super Imperialism Walter E. Williams New Edition: The Origin and Fundamentals of U.S. World Dominance'' (2003), * ''Global Fracture: The New International Economic order, Second Edition'', * ''America's Protectionist Takeoff, 1815-1914: The Neglected American School of Political Economy'' (2010), enlarged, revised and updated version of ''Economics and Technology in 19th-Century American Thought - The Neglected American Economists.'' * ''The Bubble and Beyond'' (2012) * ''Killing the Host'' (2015) * ''J is For Junk Economics: A Guide to Reality in an Age of Deception'' (2017) * ''...and Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year'' (2018) * ''The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism'' (2022)


Documentaries

Hudson has appeared in several documentaries, including the following: * ''The Spider's Web: Britain's Second Empire'' (2017), by Michael Oswald * ''Capitalism'' (2015), by Ilan Ziv * ''Real Estate 4 Ransom'' (2012), by Grant Kot * ''
Four Horsemen The Four Horsemen of the Apocalypse are figures in the Christian scriptures, first appearing in the Book of Revelation, a piece of apocalypse literature written by John of Patmos. Revelation 6 tells of a book or scroll in God's right hand tha ...
'' (2012), by Ross Ashcroft * '' Surviving Progress'' (2011), by Mathieu Roy and Harold Crooks * ''The Secret of Oz: Solutions for a broken Economy'' (2009), by William Still * ''Plunder: The Crime of Our Time'' (2009) * ''In Debt We Trust'' (2006)"In Debt We Trust"
''Indebtwetrust.com''


See also

*
Post-Keynesian economics Post-Keynesian economics is a school of economic thought with its origins in '' The General Theory'' of John Maynard Keynes, with subsequent development influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor, Sidney ...


References


External links


"Michael Hudson""Bibliography"
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Official website. {{DEFAULTSORT:Hudson, Michael 1939 births Living people American economics writers American male non-fiction writers Economic historians Economists from Illinois Georgist economists International finance economists Macroeconomists Marxian economists New York University alumni People from Chicago Post-Keynesian economists University of Missouri–Kansas City faculty Writers about globalization