Monday, December 10, 2012

Michael Hudson — Reality Economics

“Whom the gods would destroy, they first make mad.” And if they would destroy economies, they first create a wealthy class on top, and let human nature do the rest. The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, the emergence of a power elite locks in its position in ways that exclude and injure those below. The wealthy indebt them, shift the tax burden onto the less powerful, and turn government into an oligarchy. 
It is an ancient tale. The Greeks got matters right in seeing how power leads to hubris, bringing about its own downfall. Hubris is the addiction to wealth and power, an arrogant over-reaching that involves injury to others. By impoverishing economies it destroys the source of profits, interest, capital gains, and even recovery of the original savings and debt principal.
This abusive character of wealth and power is not what mainstream economic models describe. That is why economic theory is broken. The concept of diminishing marginal utility implies that the rich will become more satiated as they become wealthier, and hence less addicted to power. This idea of progressive satiation returns gets the direction of change wrong, denying the basic thrust of the past ten thousand years of human technology and civilization.
Counterpunch
Reality Economics
Michael Hudson | Visiting Professor, UMKC
(h/t Kevin Fathi via email)

Covers most of the important points other than monetary economics. Good summary to pass on. Explains to people who are pissed off, why, and explains to those who are not pissed off yet, why they should be.



11 comments:

Daniel Jones said...

debasing a currency through inflation and government cronyism are the two ways, and the only two ways, in which this madness called an oligarchy is at all possible.

inflation always benefits the rich and devastates the poor, and the government is the only institution that makes it possible. the politicians tell us in sound bits that its the other way around, that government is here to benefit and protect the poor and the vulnerable, but thats a bunch of bullshit and propaganda to make people believe in a lie and vote in the best interest of the corporations.

Tom Hickey said...

debasing a currency through inflation and government cronyism are the two ways, and the only two ways, in which this madness called an oligarchy is at all possible.

History would say otherwise. Oligarchy is based on power to establish and maintain privilege. Then are rationale is created to justify it.

inflation always benefits the rich and devastates the poor,

Inflation advantages debtors and disadvantages creditors.

Matt Franko said...

"“Whom the gods would destroy, they first make mad.”

Looks like it is working...

Tom Hickey said...

Daniel, for an analysis of the problem, try Michael Hudson's Reality Economics, which I just posted a link to.

Tom Hickey said...

And specifically respond to the points that Hudson makes.

miller B said...

@ daniel jones

considering the oligarchy is always the creditor class and lower classes are always the debtor class . Inflation would do the exact opposite. giving debtors cheaper dollar to pay, and inturn giving less valuable dollars to the creditors.

Jonf said...

Hudson is right but he still pisses me off.

David said...

Hudson is right but he still pisses me off

Why so, Jonf?

I think sometimes he gets carried away by his own rants. That was supposed to be a book review, wasn't it?
I would say, though, that his Superimperialism along with Naomi Klein's The Shock Doctrine provide the best map to understanding the scope and method of neoliberalism.

Kaj Risberg said...

"...permitting interest to be tax-deductible."

Interest is part of profit/rent. How can profit/rent be tax-deductible 'cost' makes no sense what so ever.

y said...

"debasing a currency through inflation and government cronyism are the two ways, and the only two ways, in which this madness called an oligarchy is at all possible."

Completely false.

"inflation always benefits the rich and devastates the poor"

Completely false.

"the government is the only institution that makes (inflation) possible"

Completely false.

"thats a bunch of bullshit and propaganda to make people believe in a lie and vote in the best interest of the corporations"

And in your ideal world people wouldn't have the right to vote, correct?

James said...

"inflation always benefits the rich and devastates the poor"

That's not right, it's deflation that helps the wealthy. Here's a good little post with Keynes's take on deflation.

http://socialdemocracy21stcentury.blogspot.co.uk/2012/10/keynes-on-nature-of-deflation.html?utm_campaign=MMT&utm_source=twitterfeed&utm_medium=twitter