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    Re: Finance Capitalismís Self-Destructive Nature part 2 Archived Message

    Posted by Keith-264 on July 21, 2022, 10:41 am, in reply to " Finance Capitalismís Self-Destructive Nature"

    You have in England you have a Boris Yeltsin and in Japan you have leaders who are willing to continue to sacrifice Japanís growth to serve the United States. So these countries, the investors in Europe, England, and Japan are moving their money into the United States especially because the United States is raising its interest rates through the Federal Reserve and thatís telling Japan and Europe not to do it so the Eurozone has very low rates.

    People are borrowing at under one percent and moving it into the United States to make two, two and a half percent. Japan has almost interest-free money from the central bank. Itís moved its money into the U.S. so the dollar, while I wonít say itís soaring against these currencies, other currencies in the U.S. orbit are collapsing against the dollar because theyíre following U.S. advice.

    So, I think when you say other countries are breaking away, youíre talking about the bulk of the world, Central Asia and Latin America and China and the key to the present New Cold War is America has to achieve its almost dictatorial dominance over Europe and Japan. Itís the client oligarchies and client dictatorships and without realizing that this is American democracy, where the leaders of the whole world follow what the United States tells them to do because the United States identifies itself as the democratic center.

    So democracy no longer means a political system where voters get to determine who is in charge, democracy is the policy dictated by the United States State Department. Any country that goes its own way or develops the power potentially to go its own way such as China and Russia is called an autocracy. So, you have to realize in todayís world democracy is autocracy and autocracy is democracy.

    You could say yeah, the question is of course will the world really break into two halves and it looks like it is breaking into parts and there will be the U.S. and its allies, the U.S., Europe, and Japan against a Eurasian core that will go hand in hand with Africa and Latin America and other Asian countries who are able to rely on trade and investment among themselves. And the United States by seeming to isolate Russia and China and Iran and other countries actually is isolating its own dollar from the rest of the world. So, there is an iron curtain but itís not to keep other countries out, itís to keep its own allies within.

    DANNY HAIPHONG: Do you see this succeeding? Weíve been hearing a lot about Russiaís relationship with Europe and just how deep its energy sector is with Europe and how that relationship is a very difficult relationship to break economically. Although Europe is doing everything it can, everything youíve described. It made me think about how throughout this crisis Europe, because of the dominance of the U.S. and just listening to whatever the U.S. said, was actually going way above and beyond what the U.S. would commit to in terms of Russia and how economically they would wage this kind of warfare. But China and Russia, with Russiaís energy and its natural resources but China I think in a broader kind of portfolio, have so much to offer to Europe, do you think that this will succeed?

    Europe has been going the road of austerity for many years but this seems like such a huge step in that direction. Europe could look very much like the United States very soon. Do you see this working given how China has so much to offer it and already has a lot of countries in Europe maybe not the biggest of the clients like the UK for example but a lot of European countries have big relationships with China even the UK does despite all of the nonsense, all the New Cold War stuff. What do you think? Do you think this will work?

    MICHAEL HUDSON: Thereís a lot of crap that futurists tend to fall into and thatís imagining that countries are going to act in their self-interest. This is the mistake Stalin made with Hitler. He thought if Germany attacks Russia in World War II, itís obviously going to lose. No sane country would attack Russia just as winterís coming but Hitler attacked Russia. Youíd think that if you tried to say what is a logical future.

    Letís go back to 1991 when the Soviet Union self-dissolved. The whole idea, the dream at that point according to Russiaís leaders was well, if we can have peace, weíre not going to have a war budget anymore. Europe is going to invest in us and help us rebuild a rationalized, efficient industry and we will trade with Europe and weíll both get rich on mutual trade.

    Well, this terrified the United States. It said, ďoh my! We want it, we Americans want to be the beneficiaries of Russia.Ē We donít want to trade with it. We want to carve it up and privatize it and take over. Basically, have Wall Street take over its oil resources, its gas resources, its nickel resources, its electric utilities. The last thing America wanted was this symbiotic mutual gain between Europe and Russia and I think that Putin and most of the leaders at that time expected that Europe would act in its self-interest and they could both end up gaining.

    But thatís not what happened obviously. Europe followed American dictates and continues to because itís, again, its leaders follow, its leaders are really just like Zelensky in Ukraine, theyíre just as dependent on what the State Department dictates to them to do as Zelensky is. And thereís something evangelistic about it.

    The Europeans Iíve spoken to really believe that America is the land of the future and that neoliberalism, that finance capitalism, somehow is going to be an ideal of private enterprise. Theyíve bought the rat poison, theyíve eaten the rat poison, and they actually believe it and think of themselves not simply as servants of the United States following what itís doing. As the Pakistan former Prime Minister said a few weeks ago, slaves of the United States policy, they actually are evangelistic promoters of neoliberalism and as sort of disciples, just as bishops you could say really. Itís like a religion and they treat the American-centered neoliberalism as the new religion . Itís literally a crusade against Russia and Europe and I think this has shocked Putin.

    I would imagine the Chinese leadership also thinking: How can Europe be so completely unrealistic? How can its media lie so constantly about whatís really happening in Ukraine? How can Europe deify the neo-Nazis in Ukraine as freedom fighters, as heroes, as wonderful people to be supported? I think this has been such a shock to the Russian leadership that they realize finally that, well, Europe is not going to act in its self-interest.

    There is not going to be any mutual gain. Europe again and again is just going to grab any money that we have there like theyíve grabbed our whatever was in European or American banks. Thereís really nothing we can do. So thereís been a fundamental reorganization with Russia and the rest of the Shanghai Cooperation Organization (SCO), meaning not only with China but with Iran, with India, with all of the other Eurasian countries. So, in that sense the United States has brought about exactly what it feared. The whole rest of the world is going its own way productively in a capital investment way, raising living standards, things that democracies are supposed to do well.

    In the United States, we really donít have democracy because the political parties are controlled by the donor class, the one percent, thatís what the Citizens United Supreme Court ruling meant. The United States is left without any means of self-support and Europe will be left without any means and self-support at some point. Europe may say, gee we made a mistake, maybe we should have tried to profit from Russia because everybody else is profiting with and getting Russian gas and nickel and China and other countries are rebuilding Russian industry and we could have had our car industry build up Russia but we donít have a car industry anymore because it doesnít have the gas that it needs and the raw materials and titanium it needs from Russia so now, weíve seen other countries replace us.

    And so, Europe has been rendered pretty much obsolete and even if it says we made a mistake, letís be friends again, I donít think Russia or other countries will trust it mainly because they can afford not to trust it.

    They say, why take a risk with trusting Europe may not just continue to be Americaís poodle?

    Why take a risk? Why not just say, weíre doing just fine the way we are? Why not just work with each other peacefully? And all that the United States can do about this is threaten to bomb it and the way to stay away from this threat is simply to say look, you go your way, weíll go our way and to have enough of the military between them to defend themselves against the American potential military attack despite the almost eight hundred military bases the United States has. If the United States is not getting foreign exchange from these countries anymore, the dollar with the euro and the yen and the sterling will all go way down against the Eurasian currency block and theyíre going to move into a common block with their own counterpart to the IMF, their own counterpart to the World Bank, their own trade organization and the world will be split into two parts Ė just like the world split when the Roman empire fell apart and the east went forward, Western Europe went down. This is really the final submergence of western Europe.

    DANNY HAIPHONG: Yeah, I mean you have more activity now in the BRICS plus, right. The BRIC countries are trying to move forward and add more partners and expand their financial operations. I mean thereís so many multilateral institutions mainly led by China with Russiaís heavy involvement and in other countries that are building a kind of independent monetary system and economic development system that can as you said Ďavoid the risksí.

    The Ukraine crisis is such a huge deal in part because of how geopolitics like you were saying, geopolitics plays such a big role. What the United States has done and what Europe has done during this Ukraine crisis is show countries like Russia and China that they not only cannot be trusted but itís almost a guarantee that not only will this Ukraine situation have no quick ending right, thereís no like, weíre pulling out! The ball is rolling and they canít catch it. Theyíre not going to be able to stop what theyíre doing. Thereís so many issues with that but theyíve even escalated the situation. You have countries like Finland and Sweden saying weíre going to join NATO. You have just so many, just all of these points that show that the United States and Europe canít be trusted.

    What are you to do other than make sure that you can keep the right, as China says, to sovereign economic development safe? And the only way you do that is by increasing that sovereign part, sovereignty, and I think Russia learned a big lesson here. I mean you mentioned those assets that were stolen. They were just stolen. It was bigger than Afghanistan which had the same situation happen to it but with Russia it was probably the biggest problem with all the economic moves that were made against Russia, the assets being stolen right out from under it. Thatís a huge blow economically and it facilitated so much change.

    But I wanted to and you know this is the last question because I feel like a lot of these developments are leading to a positive thing that we see countries like China and Russia increase the sovereignty of their economic development models. Can you end with talking about socialism and you know, where do you see this concept of socialism going as an economy, as
    a political economy?

    We know China has its model, other countries are trying their own models, but what do you think are its prospects now in this environment because China has its particular model, it seems like a lot of countries want to emulate that. You see Cuba and other countries wanting to understand how to do what China has done because it is an economic miracle in a lot of ways.

    You were talking about how China was living, how people were living in China just in the sixties and seventies, itís just a completely different situation. What do you see the prospects of it in this a very chaotic environment, the geopolitics imperialist finance capital itís creating all this chaos, what do you think the prospects are and could you I guess enlighten our audience about socialism and your work on it?

    MICHAEL HUDSON: Well socialism is really how industrial capitalism of the 19th century was
    supposed to evolve. Everybody thought that it was going to evolve into a more democratic system because the first aim of industrial capitalism, what it really needed politically was to get rid of the landlord class because thereís no way that, as David Ricardo pointed out, thereís no way that England could become the workshop of the world if you let the landlord class continue to get more and more land rent and force labor to pay more and more for its food.

    Today, itís housing as well as food. Thereís no way that it could be competitive so in order to get rid of the landlord class, you had to get rid of the house of lords in England and the upper house in every European country because the upper house and the senate were controlled by the hereditary landlords and so industrial capitalism backed democracy.

    Already by 1848, the year that the Communist Manifesto was written, that led to revolutions all over European countries getting rid of the old aristocracy. Well, the rentiers fought back and actually it was wasnít until World War I that the monarchies were overthrown and the aristocracies connected to the monarchies and land no longer was owned by a hereditary class. It was democratized but it was democratized on credit and that you had the banking system replay the role that the landlord class had played out before and the bankers were the new rentier class. The bankers were the new people whose interest charges and debt services and privatization of economic rents prevented economies from underselling non-rentier economies.

    So, socialism was basically getting rid of the free lunch. Marx described capitalism as being revolutionary because he said what was revolutionary was getting rid of all of the unnecessary cost of production and that meant the unnecessary rentiers, the rent seekers, the coupon clippers, the financiers, and the monopolists. Everybody could agree that socialism was getting rid of this parasitic class that was not necessary for economies to grow and actually whose takings slowed the economy.

    Socialism was to free economies and free markets from rent seeking, not freedom for rent seeking. After the 1890s, socialism was to get rid of a free lunch income whereas finance capitalism is all about how to get a free lunch if youíre a member of the one percent.

    So in one sense, socialism is freeing economies from the legacy of feudalism which fought back in the modern world into a kind of neo-feudalism operating through financial control, not simply land ownership and monopoly ownership. And China has been able to get rid of this and at the same time avoid the central planning that gave socialism a bad name under Stalinism because China said well, let one hundred flowers bloom and weíre going to we realize that we canít plan all sorts of innovations because there are so many possibilities of productive innovations.

    Weíre going to let people get rich by being creative, by being productive, by adding but weíre not going to let them get super rich. They can get pretty rich but then at a certain point theyíre so rich that theyíre getting rid of a monopoly weíre going to sort of cut down the high grains of wheat as they say so theyíve got a sort of consensus government where this occurs.

    Other countries will have great difficulty putting this in place because there really isnít any economic doctrine of socialism thatís been developed recently. Thereís been just an out of hand rejection of all discussion of what socialism really was and what makes a socialist economy more efficient than a finance capitalist economy and that really is the key.

    If countries, if economic theory, would talk about what makes a socialist country more efficient- lower cost with higher living standards-then it wouldnít be economics anymore because economics are what gets published in the University of Chicago economic journals. I donít know what you should call it, futurism or reality economics. There has to be a new discipline that our countries are going to develop to try to explain how to think about developing a world that doesnít have parasites in it.

    DANNY HAIPHONG: Right, so true. I mean what you were saying about all this, it just gets you thinking about what China has done to be able to control these forces. You see it in the tech sector especially, now you see it with this common prosperity drive. Like there is a drive to control these forces that can, as industrial capitalism found out of the old in America and Europe, you let those forces get out of control and then finance capital turns around and takes everything. And China has prevented that and you donít hear it, even in like the Bernie Sanders social democracy milieu, you donít hear them talk about this.

    Theyíll say like socialism is when you have Medicare for All but itís not just that, itís how as you were saying, what are the forces that need to be arrested? What are the forces that need to be strengthened to be able to ensure that the public good and public wealth is protected? Thatís not in the discussion. Itís still not in the discussion.

    I mean, itís not on discussion even among the most so-called progressives. But they donít talk about it like that because as you said earlier, itís like autocracy or authoritarianism or something when a government is strong in the interests of economic development for people. Itís almost like finance capital has dominated even just the idea of it and the idea of what socialism is and what it could be.

    But Michael, do you have like five to ten more minutes for a couple of questions? We had some in the audience and I think one of them is very good and I wanted to know your take on it.
    Thank you for the super chat. So, they said that the Peopleís Republic of China has three trillion in USD foreign exchange reserves. What measures, I know that youíve done a lot of work in China and youíve done a lot of work around this. This personís asking, what measures should the central government take to ensure they donít get seized just like how the U.S. seized Russiaís foreign exchange reserves but Iíll let you answer that because I think thatís a great question.

    MICHAEL HUDSON: Well, I bet this is just what theyíre discussing right now in China. Because of COVID, I havenít gone there since 2019 because Iíd have to be isolated in a hotel room for two weeks so Iím not party to their discussion but theyíre obviously worried that the Americans can do to them what they did to Russia. What are they going to do?

    They need to keep some dollars just to intervene in the foreign exchange market to stabilize their exchange rate but they donít need too many dollars and in fact in the third edition of my book Super Imperialism, which is coming out in Chinese now, the first edition sold about sixty thousand copies there and it is the first book of mine translated in China. So that was all about this question that you asked. This is very much in discussion now.

    How do they run down their dollar holdings and what are they going to replace it with? Well, in principle they can replace it with holding each otherís currencies: Rubles, Indian currency and Pakistan currency and with gold because gold doesnít have a liability attached to it. Itís a pure asset.

    The world, the whole world is now de-dollarizing. America has, or Biden has, killed the dollar standard. This was Americaís free lunch, being able to print dollars and never have to pay them back and now countries are all going to be dumping the dollars. They realize that America is just a gangster state financially and obviously theyíre going to dump the dollars and this probably will push up Chinaís exchange rate and countries selling the dollars will increase their exchange rate against the dollar and that will hurt their relative exports. So, I think theyíre trying to figure out how we can all do this together and keep a rough parity among our own currencies while really de-dollarizing. I donít know what theyíre doing but you can be sure this is what is on the forefront of everybodyís mind there.

    DANNY HAIPHONG: Indeed indeed. Itís a huge question. I mean it really is trying to unravel and get oneself out of this hegemonic system, the dollar system. Itís something that you cannot escape and thereís been so much unfair, I feel like unfair condemnation and criticism of China and other countries trying to go their own path, for just their participation, itís something you need to participate in right now to survive absent of another system.

    Last question and I mean this isnít so related to what weíre talking about but it is I think a good super chat question and I think it gets into economics too. What are the chances that China will simply not open back up for the next ten years or so looking at this long term because of COVID-19. I donít know what you think Michael. My opinion of that from what Iíve learned about China there is a huge domestic tourism industry and foreign tourism is very important but I donít know for me it feels like itís going to open up before that. It seems like the economic situation that COVID-19 restrictions are difficult to continue on permanently but what do you think? Do you think that China could maintain these kinds of hard travel restrictions for a long period? I hope not. I want to go back; I need to go back and learn more but what do you think?

    MICHAEL HUDSON: Well, I asked that very question of the universities that Iím associated with yesterday. We had a long discussion and the answer is nobody has a clue. Theyíve been criticized in the West for avoiding COVID-19 but thereís no discussion in America or Europe of
    long COVID and now that thereís a report that a million Americans have long COVID and it really seems awful, your IQ goes down by ten percent and itís almost like inheriting a trust fund. Youíre stupefied. As a result of that theyíre also tired. Some professors I know there say that they still have not fully recovered from COVID months and months ago. They still had very low energy. Thereís no way of knowing. This doesnít look good and if the thought of staying in you know traveling all the way over there, staying in an isolated hotel for two weeks just to have a few days of meetings and then come back and be isolated again, nobody has a clue but it doesnít look good.

    DANNY HAIPHONG: No, it doesnít and I myself, Iíve avoided COVID unironically like the plague like I am so lucky not to have caught it and part of it is U donít want, exactly what youíre saying, long COVID. I donít want that. I donít want that in my life and I feel like you know I know so many people who have gotten COVID-19 and they lived through it and while they had it, it was awful. It was bad but they lived but now they have all of these other symptoms like I know people who had their whole lives kind of turned upside down because they just canít get the energy back or the motivation or whatever it is.

    It has an effect on your breathing and mental health and thereís so many aspects of long COVID that are difficult to understand and I think China you know at one point it was like a twenty one day quarantine. I know people who are traveling there and who go there often and they were staying twenty-one days you know in a quarantine hotel. I mean you know China has done such a great job containing and addressing COVID as best that they can under these circumstances. And so well of course I have my own deep desires to go back, but I totally understand why the government and why the people there who support this policy would be very careful because you have in China a population so huge. If they did what the United States did, I think the recent estimates are like one point seven million would die and then how many would have long COVID? Millions upon millions more because the case numbers would be astronomical through the roof.

    MICHAEL HUDSON I am sure theyíre watching what happens in North Korea which is just experiencing its first outbreak. I mean thatís sort of an example. The difference of course is that China is inoculating people and there are also pills the Chinese have sent me and many kinds of medicine in case I get COVID.

    DANNY HAIPHONG: Thatís great. Amazing, so before we depart Michael, Iíll stay on for another fifteen minutes or so but I definitely want you to plug whatever youíd like to plug now I will pull up the book again and your website. So, if thereís anything youíd like to plug please everyone, keep liking the stream, keep sharing and subscribing to the channel all that good stuff supporting the work at patreon.com/dannyhaiphong but Michael is there anything you would like to plug?

    MICHAEL HUDSON: All of my articles are on my website michael-hudson.com and Iím also on patreon and they can join on patreon and I have an ongoing discussion there so the website, patreon are my favorite sites where I publish, and Naked Capitalism, the Saker, Counterpunch, my articles are usually on a lot of these different websites and youíre showing it now so yeah and the books are available on Amazon or Xlibris and you can all buy them and theyíre well printed and priced not very expensively.

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