Friday, February 03, 2012

A new slavery: How Progressive Capitalism degenerated into Neo-Feudalism

At the Levy Institute on 10th February (New York) Prof Michael Hudson will deliver some extraordinary insights into the current crisis of capitalism. This is timely, and concise too. Here is a potted summary: 

He contrasts the dynamic of industrial capitalism, named “Economy of Abundance” by Wharton Business School, Professor Simon Patten, with 'current innovations in modes of financial attack'. 

He sees the history of capitalism as various stages:
1. Industrial Capitalism has given way to
2. Finance Capitalism, which in turn has passed through
3. Pension-Fund Capitalism since the 1950s, and a
4. U.S.-centered Monetary Imperialism since 1971 when
    a) fiat dollar creation became the world’s monetary base 
        (mainly to finance US global militry spending) and fiat   
        dollar credit made possible 
   b) the Bubble Economy after 1980, and its sub-stage of
   c) Casino Capitalism. These were economically radioactive
        decay stages that resolved into
   d) Debt Deflation after 2008 and now are settling into a
5. Debt Peonage and the austerity of
6. Neo-Serfdom.

Thus says Hudson, the end product of capitalism has become a Neo-Rentier Economy – something that
 Industrial Capitalism set out to replace. Capitalism was a Progressive Era from the late 19th century to early 20th century. Politically, the thrust of industrial capitalism was toward democratic parliamentary reform, so as to break the stranglehold of landlords on the national tax system and lawmaking. 

But today’s finance capital is inherently oligarchic, because it seeks to capture the government – and especially the Treasury, central bank and the courts – to enrich (indeed, to bail out) the banking and financial sector. A financial class now plays the role that landlords used to play: a class living off special privilege. Most economic rent now ends up being paid as interest, interrupting the circular flow between production and consumption.

Hudson warns that debt peonage (slavery through debt i.e. neo-feudalism) is the way today’s trends seem to be leading.

Link here for the talk. 'The Neo-Rentier Economy' 
Posted by Charles Bazlinton author The Free Lunch - Fairness with Freedom which concludes that Citizenisation is the way forward: A concept which puts the choices of the individual and their family and grouping as the priority for new policy making. This view enables a clear understanding of which new direction is needed after the clarity of seeing the state of affairs  that Michael Hudson so clearly describes.  

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