Michael Hudson has devoted his career to the study of debt.
Michael Hudson (born March 14, 1939) is an American economist, a professor of economics at the University of Missouri–Kansas City, and a researcher at the Levy Economics Institute at Bard College. He is a former Wall Street 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 (BA, 1959) and New York University (MA, 1965, PhD, 1968) and worked as a balance of payments economist in Chase Manhattan Bank (1964–68). He was assistant professor of economics at the New School for Social Research (1969–72) and worked for various governmental and non-governmental organizations as an economic consultant (1980s–1990s).
Credit economies existed long before money and coinage. These economies were agricultural. Grain was the main means of payment—but it was only paid once a year, at harvest time. You can imagine how awkward it would be to carry around grain in your pocket and measure it out every time you had a beer.
We know how Sumerians and Babylonians paid for their beer (which they drank through straws, and which was cleaner than the local water). The ale-woman marked it up on the tab she kept. The tab had to be paid at harvest time, on the threshing floor, when the grain was nice and fresh. The ale-woman then paid the palace or temple for its advance of wholesale beer for her to retail during the year.
If the crops failed, or if there was a flood or drought, or a military battle, the cultivators couldn’t pay. So what was the ruler to do? If he said, “You owe the tax collector, and can’t pay. Now you have to become his slave and let him foreclose on your land.”
Suddenly, you would have had a slave society. The cultivators couldn’t serve in the army, and couldn’t perform their corvée duties to build local infrastructure.
To avoid this, the ruler simply canceled the debts (most of which were owed ultimately to the palace and its collectors). The cultivators didn’t have to pay the ale-women. And the ale-women didn’t have to pay the palace.
The origins of monetary debts and means of payment are grounded in the accounting practices innovated by Sumerian temples and palaces c. 3000 BC to manage a primarily agrarian economy that required foreign trade to obtain metal, stone, and other materials not domestically available. These large institutions employed staffs of weavers and other craft personnel, who were fed by crops grown either on palace or temple land or that of sharecroppers paying grain-rent or fees to these institutions, and supplied with wool from temple and palace herds managed by entrepreneurs or owned outside of these institutions.
In Book I of Plato’s Republic (380 BC), Socrates discusses the morality of repaying debts. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair and just to pay back what one has borrowed or received. Socrates replies that it would not be just to return weapons to a man who has turned into a lunatic. Because of the consequences, paying back the debt would be the wrong thing to do.
At issue is not the micro-economic morality of paying a debt, but how this act affects society. If a madman is intent on murder, returning his weapon to him will enable him to commit unjust acts. The morality of paying back all debts is not necessarily justice. We need to take the overall consequences into account.
This book describes how the dynamics of interest-bearing debt led to the rise of rentier oligarchies in classical Greece and Rome. This caused economic polarization, widespread austerity, revolts, wars, and ultimately the collapse of Rome into serfdom and feudalism. That collapse bequeathed to the subsequent Western civilization a pro-creditor legal philosophy that has led to today’s creditor oligarchies.
The Destiny of Civilization is based on a lecture series on finance capitalism and the New Cold War that Michael Hudson presented for the Global University for Sustainability. It presents an overview of Hudson’s unique geo-political perspective: analysis which integrates economics, history, politics, archaeology, and psychology.
Most importantly, Hudson applies his macro analysis to explain how the world has arrived at this point of fracture, where a financialized and de-industrialized United States is facing off against the mixed-economies of China and Russia.
He emphasizes that There Are Alternatives (TAA) to the neoliberal finance capitalism that prevails in the West, and that civilization is today at a fork in the road:
- one path leading to a neoliberal neo-feudalism dominated by a rentier oligarchy ruling over the indebted many.
- the alternative path is broadly mixed-economy industrial capitalism leading to socialism.
Hudson cuts to the big issues, conveying that “The role of government has been inverted away from one which was to protect society from the rentiers, but now sees rentiers protected and even encouraged by government.”
In …and forgive them their debts, renowned professor of economics, Michael Hudson—and one of the few who could see the 2008 financial crisis coming—takes us on an epic journey through the economies of ancient civilizations. For the past 40 years in conjunction with the Harvard Peabody Museum, he and his colleagues have documented the archaeological record and history of debt, and how societies have dealt with (or failed to deal with) the proliferation of debts that cannot be paid. In the pages of …and forgive them their debts, readers will discover shocking historical truths about how debt played a central role in shaping ancient societies. Perhaps most striking of all is that—in a nearly complete consensus of Assyriologists and biblical scholars—the Bible is preoccupied with debt, not sin.
In all eras—from antiquity to the present—debts have tended to mount up faster than the ability of most debtors to pay. That is a basic mathematical fact: Economic growth is arithmetic and can’t keep up with the exponential growth of debt growing at compound interest.
The big economic question is—and has always been—what will happen if debts cannot be paid? Will there be a debt write-down in favor of debtors (as has been done for large corporations), or will creditors be allowed to foreclose (as is always done on personal debtors and mortgage-holders), leading to their political takeover of the assets of the economy—and the government’s public sector?
The fifth volume in this series sponsored by the International Scholars Conference on Ancient Near Eastern Economies (ISCANEE) and the Institute for the Study of Long-Term Economic Trends (ISLET) offers case studies on how labor was mobilized and remunerated in the early Near East and Mediterranean world. The initially voluntary character of labor on public building projects evolved into corvée as the primary way of obtaining labor. Among other characteristics are the minor significance of slave labor; the role of large building projects as a tool of social and political integration; the use of hired workers as a way of dealing with the systemic shortage of labor; and the practice of compensating the employees of “large organizations” with salaries in food and/or land allotments. By late Neolithic times the obligation to supply corvée labor services became the basis for assigning land tenure. The historical data demonstrate that the corvée labor tax became the basis for assigning property rights, not a later intrusion on these rights.
A debate between Michael Hudson and Thomas Piketty monitored by Lynn Parramore, and introduced by David Graeber’s widow, Nika.
In part 1 of this conversation, we talk about GDP as a false marker of prosperity, the growing influence of the rentier class, fantasies of joining the one percent, and why there’s never going to be another debt jubilee, even if it means the whole system has to fall apart. We continue the conversation about possible solutions in part 2: We talk about modern monetary theory, the path toward debt forgiveness, and the foundational rules of a more perfect society that is not getting devoured by the rentier class.
With Ben Norton of the Geopolitical Economy Report, economist Michael Hudson discusses his book The Collapse of Antiquity: Greece and Rome as Civilization’s Oligarchic Turning Point, and how this history from 2,000 years ago is still relevant to understanding our debt-based societies today.
The history of money and debt can make us understand more of the economy, the power of the financial elite and how the world is governed today. This is the claim of economics professor Michael Hudson, who has also been an adviser to governments in the USA, Russia, and China.
Now he comes to Positiva Pengar to tell how history has been a struggle over who should benefit from the ownership, the money, and the debts. The Bible talks about jubilee years that recurred at certain intervals when all debts were written off. This was to correct imbalances that arise in economies over time. When economics professor Hudson in 1994 published his research that biblical debt relief dates back two thousand years to the Babylonian and Sumerian traditions, it was very controversial. Today it is recognized by Assyriologists, but among most economic thinkers the idea is taboo. Why was debt write-off a matter of course several thousand years ago, but not today? Hudson's research shows that, as he writes, “Debts that can't be paid, won't be paid.” How then will it be resolved? Do you want to know more? Watch this webinar.whitelistUser:WikiVisor
Civilization could never have taken off if some free-market economist had got into a time machine and traveled back in time five thousand years to the Neolithic and Bronze Age. Suppose that he would have convinced ancient chieftains or rulers how to organize their trade, money, and land tenure on the basis of “greed is good” and any public regulation is bad.
If some Milton Friedman or Margaret Thatcher had persuaded Sumerian, Babylonian, or other ancient rulers to follow today’s neoliberal philosophy, civilization could not have developed. Economies would have polarized—as Rome did, and as today’s Western economies are doing. The citizens would have run away, or else backed a local reformer or revolutionist to overthrow the ruler who listened to such economic advice. Or, they would have defected to rival attackers who promised to cancel their debts, liberate the bondservants, and redistribute the land.