Why it lacks resilience, and What will
take its place
By Michael Hudson
Paper presented on July 11, 2022 to
The Ninth South-South Forum on
Sustainability.
THE COLLAPSE OF MODERN
CIVILIZATION AND THE FUTURE OF HUMANITY.
July 21, 2022:
Information Clearing House
-- The greatest
challenge facing societies has always been
how to conduct trade and credit without
letting merchants and creditors make money
by exploiting their customers and debtors.
All antiquity recognized that the drive to
acquire money is addictive and indeed tends
to be exploitative and hence socially
injurious. The moral values of most
societies opposed selfishness, above all in
the form of avarice and wealth addiction,
which the Greeks called philarguria –
love of money, silver-mania. Individuals and
families indulging in conspicuous
consumption tended to be ostracized, because
it was recognized that wealth often was
obtained at the expense of others,
especially the weak.
The Greek concept of hubris
involved egotistic behavior causing injury
to others. Avarice and greed were to be
punished by the justice goddess Nemesis, who
had many Near Eastern antecedents, such as
Nanshe of Lagash in Sumer, protecting the
weak against the powerful, the debtor
against the creditor.
That protection is what rulers were
expected to provide in serving the gods.
That is why rulers were imbued with enough
power to protect the population from being
reduced to debt dependency and clientage.
Chieftains, kings and temples were in charge
of allocating credit and crop-land to enable
smallholders to serve in the army and
provide corvée labor. Rulers who behaved
selfishly were liable to be unseated, or
their subjects might run away, or support
rebel leaders or foreign attackers promising
to cancel debts and redistribute land more
equitably.
The most basic function of Near Eastern
kingship was to proclaim “economic order,”
misharum and andurarum clean
slate debt cancellations, echoed in
Judaism’s Jubilee Year. There was no
“democracy” in the sense of citizens
electing their leaders and administrators,
but “divine kingship” was obliged to achieve
the implicit economic aim of democracy:
“protecting the weak from the powerful.”
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Royal power was backed by temples and
ethical or religious systems. The major
religions that emerged in the mid-first
millennium BC, those of Buddha, Lao-Tzu and
Zoroaster, held that personal drives should
be subordinate to the promotion of overall
welfare and mutual aid.
What did not seem likely 2500
years ago was that a warlord aristocracy
would conquer the Western world. In creating
what became the Roman Empire, an oligarchy
took control of the land and, in due course,
the political system. It abolished royal or
civic authority, shifted the fiscal burden
onto the lower classes, and ran the
population and industry into debt.
This was done on a purely opportunistic
basis. There was no attempt to defend this
ideologically. There was no hint of an
archaic Milton Friedman emerging to
popularize a radical new moral order
celebrating avarice by claiming that greed
is what drives economies forward, not
backward, convincing society to leave the
distribution of land and money to “the
market” controlled by private corporations
and money-lenders instead of communalistic
regulation by palace rulers and temples – or
by extension, today’s socialism. Palaces,
temples and civic governments were
creditors. They were not forced to borrow to
function, and so were not subjected to the
policy demands of a private creditor class.
But running the population, industry and
even governments into debt to an oligarchic
elite is precisely what has occurred in the
West, which is now trying to impose the
modern variant of this debt-based economic
regime – U.S.-centered neoliberal finance
capitalism – on the entire world. That is
what today’s New Cold War is all about.
By the traditional morality of early
societies, the West – starting in classical
Greece and Italy around the 8th
century BC – was barbarian. The West was
indeed on the periphery of the ancient world
when Syrian and Phoenician traders brought
the idea of interest-bearing debt from the
Near East to societies that had no royal
tradition of periodic debt cancellations.
The absence of a strong palace power and
temple administration enabled creditor
oligarchies to emerge throughout the
Mediterranean world.
Greece ended up being conquered first by
oligarchic Sparta, then by Macedonia and
finally by Rome. It is the latter’s
avaricious pro-creditor legal system that
has shaped subsequent Western civilization.
Today, a financialized system of oligarchic
control whose roots lead back to Rome is
being supported and indeed imposed by U.S.
New Cold War diplomacy, military force and
economic sanctions on countries seeking to
resist it.
Classical antiquity’s oligarchic
takeover
In order to understand how Western
Civilization developed in a way that
contained the fatal seeds of its own
economic polarization, decline and fall, it
is necessary to recognize that when
classical Greece and Rome appear in the
historical record a Dark Age had disrupted
economic life from the Near East to the
eastern Mediterranean from 1200 to about 750
BC. Climate change apparently caused severe
depopulation, ending Greece’s Linear B
palace economies, and life reverted to the
local level during this period.
Some families created mafia-like
autocracies by monopolizing the land and
tying labor to it by various forms of
coercive clientage and debt. Above all was
the problem of interest-bearing debt that
the Near Eastern traders had brought to the
Aegean and Mediterranean lands – without the
corresponding check of royal debt
cancellations.
Out of this situation Greek
reformer-“tyrants” arose in the 7th
and 6th centuries BC from Sparta
to Corinth, Athens and Greek islands. The
Cypselid dynasty in Corinth and similar new
leaders in other cities are reported to have
cancelled the debts that held clients in
bondage on the land, redistributed this land
to the citizenry, and undertaken public
infrastructure spending to build up
commerce, opening the way for civic
development and the rudiments of democracy.
Sparta enacted austere “Lycurgan” reforms
against conspicuous consumption and luxury.
The poetry of Archilochus on the island of
Paros and Solon of Athens denounced the
drive for personal wealth as addictive,
leading to hubris injuring others – to be
punished by the justice goddess Nemesis. The
spirit was similar to Babylonian, Judaic and
other moral religions.
Rome had a legendary seven kings (753-509
BC), who are said to have attracted
immigrants and prevented an oligarchy from
exploiting them. But wealthy families
overthrew the last king. There was no
religious leader to check their power, as
the leading aristocratic families controlled
the priesthood. There were no leaders who
combined domestic economic reform with a
religious school, and there was no Western
tradition of debt cancellations such as
Jesus would advocate in trying to restore
the Jubilee Year to Judaic practice. There
were many Stoic philosophers, and religious
amphictyonic sites such as Delphi and Delos
expressed a religion of personal morality to
avoid hubris.
Rome’s aristocrats created an
anti-democratic constitution and Senate, and
laws that made debt bondage – and the
consequent loss of land – irreversible.
Although the “politically correct” ethic was
to avoid engaging in commerce and
moneylending, this ethic did not prevent an
oligarchy from emerging to take over the
land and reduce much of the population to
bondage. By the 2nd century BC
Rome conquered the entire Mediterranean
region and Asia Minor, and the largest
corporations were the publican tax
collectors, who are reported to have looted
Rome’s provinces.
There always have been ways for the
wealthy to act sanctimoniously in harmony
with altruistic ethics eschewing commercial
greed while enriching themselves. Western
antiquity’s wealthy were able to come to
terms with such ethics by avoiding direct
lending and trading themselves, assigning
this “dirty work” to their slaves or
freemen, and by spending the revenue from
such activities on conspicuous philanthropy
(which became an expected show in Rome’s
election campaigns). And after Christianity
became the Roman religion in the 4th
century AD, money was able to buy absolution
by suitably generous donations to the
Church.
Rome’s legacy and the West’s
financial imperialism
What distinguishes Western economies from
earlier Near Eastern and most Asian
societies is the absence of debt relief to
restore economy-wide balance. Every Western
nation has inherited from Rome the
pro-creditor sanctity of debt principles
that prioritize the claims of creditors and
legitimize the permanent transfer to
creditors of the property of defaulting
debtors. From ancient Rome to Habsburg
Spain, imperial Britain and the United
States, Western oligarchies have
appropriated the income and land of debtors,
while shifting taxes off themselves onto
labor and industry. This has caused domestic
austerity and led oligarchies to seek
prosperity through foreign conquest, to gain
from foreigners what is not being produced
by domestic economies driven into debt and
subject to pro-creditor legal principles
transferring land and other property to a
rentier class.
Spain in the 16th century
looted vast shiploads of silver and gold
from the New World, but this wealth flowed
through its hands, dissipated on war instead
of being invested in domestic industry. Left
with a steeply unequal and polarized economy
deeply in debt, the Habsburgs lost their
former possession, the Dutch Republic, which
thrived as the less oligarchic society and
one deriving more power as a creditor than
as a debtor.
Britain followed a similar rise and fall.
World War I left it with heavy arms debts
owed to its own former colony, the United
States. Imposing anti-labor austerity at
home in seeking to pay these debts,
Britain’s sterling area subsequently became
a satellite of the U.S. dollar under the
terms of American Lend-Lease in World War II
and the 1946 British Loan. The neoliberal
policies of Margaret Thatcher and Tony Blair
sharply increased the cost of living by
privatizing and monopolizing public housing
and infrastructure, wiping out Britain’s
former industrial competitiveness by raising
the cost of living and hence wage levels.
The United States has followed a similar
trajectory of imperial overreaching at the
cost of its domestic economy. Its overseas
military spending from 1950 onwards forced
the dollar off gold in 1971. That shift had
the unanticipated benefit of ushering in a
“dollar standard” that has enabled the U.S.
economy and its military diplomacy to get a
free ride from the rest of the world, by
running up dollar debt to other nation’s
central banks without any practical
constraint.
The financial colonization of the
post-Soviet Union in the 1990s by the “shock
therapy” of privatization giveaways,
followed by China’s admission to the World
Trade Organization in 2001 – with the
expectation that China would, like Yeltsin’s
Russia, become a U.S. financial colony – led
America’s economy to deindustrialize by
shifting employment to Asia. Trying to force
submission to U.S. control by inaugurating
today’s New Cold War has led Russia, China
and other countries to break away from the
dollarized trade and investment system,
leaving the United States and NATO Europe to
suffer austerity and deepening wealth
inequality as debt ratios are soaring for
individuals, corporations and government
bodies.
It was only a decade ago that Senator
John McCain and President Barack Obama
characterized Russia as merely a gas station
with atom bombs. That could now just as well
be said of the United States, basing its
world economic power on control of the
West’s oil trade, while its main export
surpluses are agricultural crops and arms.
The combination of financial debt leveraging
and privatization has made America a
high-cost economy, losing its former
industrial leadership, much like Britain
did. The United States is now attempting to
live mainly off financial gains (interest,
profits on foreign investment and central
bank credit creation to inflate capital
gains) instead of creating wealth through
its own labor and industry. Its Western
allies seek to do the same. They euphemize
this U.S.-dominated system as
“globalization,” but it is simply a
financial form of colonialism – backed with
the usual military threat of force and
covert “regime change” to prevent countries
from withdrawing from the system.
This U.S. and NATO-based imperial system
seeks to indebt weaker countries and force
them to turn control over their policies to
the International Monetary Fund and World
Bank. Obeying the neoliberal anti-labor
“advice” of these institutions leads to a
debt crisis that forces the debtor country’s
foreign-exchange rate to depreciate. The IMF
then “rescues” them from insolvency on the
“conditionality” that they sell off the
public domain and shift taxes off the
wealthy (especially foreign investors) onto
labor.
Oligarchy and debt are the defining
characteristics of Western economies.
America’s foreign military spending and
nearly constant wars have left its own
Treasury deeply indebted to foreign
governments and their central banks. The
United States is thus following the same
path by which Spain’s imperialism left the
Habsburg dynasty in debt to European
bankers, and Britain’s participation in two
world wars in hope of maintaining its
dominant world position left it in debt and
ended its former industrial advantage.
America’s rising foreign debt has been
sustained by its “key currency” privilege of
issuing its own dollar-debt under the
“dollar standard” without other countries
having any reasonable expectation of ever
being paid – except in yet more “paper
dollars.”
This monetary affluence has enabled Wall
Street’s managerial elite to increase
America’s rentier overhead by
financialization and privatization,
increasing the cost of living and doing
business, much as occurred in Britain under
the neoliberal policies of Margaret Thatcher
and Tony Blair. Industrial companies have
responded by shifting their factories to
low-wage economies to maximize profits. But
as America deindustrializes with rising
import dependency on Asia, U.S. diplomacy is
pursuing a New Cold War that is driving the
world’s most productive economies to
decouple from the U.S. economic orbit.
Rising debt destroys economies when it is
not being used to finance new capital
investment in means of production. Most
Western credit today is created to inflate
stock, bond and real estate prices, not to
restore industrial ability. As a result of
this debt-without-production approach, the
U.S. domestic economy has been overwhelmed
by debt owed to its own financial oligarchy.
Despite America’s economy’s free lunch in
the form of the continued run-up of its
official debt to foreign central banks –
with no visible prospect of either its
international or domestic debt being paid –
its debt continues to expand and the economy
has become even more debt-leveraged. America
has polarized with extreme wealth
concentrated at the top while most of the
economy is driven deeply into debt.
The failure of oligarchic democracies
to protect the indebted population at large
What has made the Western economies
oligarchic is their failure to protect the
citizenry from being driven into dependency
on a creditor property-owning class. These
economies have retained Rome’s
creditor-based laws of debt, most notably
the priority of creditor claims over the
property of debtors. The creditor One
Percent has become a politically powerful
oligarchy despite nominal democratic
political reforms expanding voting rights.
Government regulatory agencies have been
captured and taxing power has been made
regressive, leaving economic control and
planning in the hands of a rentier
elite.
Rome never was a democracy. And in any
case, Aristotle recognized democracies as
evolving more or less naturally into
oligarchies – which claim to be democratic
for public-relations purposes while
pretending that their increasingly top-heavy
concentration of wealth is all for the best.
Today’s trickle-down rhetoric depicts banks
and financial managers as steering savings
in the most efficient way to produce
prosperity for the entire economy, not just
for themselves.
President Biden and his State Department
neoliberals accuse China and any other
country seeking to maintain its economic
independence and self-reliance of being
“autocratic.” Their rhetorical sleight of
hand juxtaposes democracy to autocracy. What
they call “autocracy” is a government strong
enough to prevent a Western-oriented
financial oligarchy from indebting the
population to itself – and then prying away
its land and other property into its own
hands and those of its American and other
foreign backers.
The Orwellian Doublethink of calling
oligarchies “democracies” is followed by
defining a free market as one that is free
for financial rent-seeking. U.S.-backed
diplomacy has indebted countries, forcing
them to sell control of their public
infrastructure and turn their economy’s
“commanding heights” into opportunities to
extract monopoly rent.
This autocracy vs. democracy rhetoric is
similar to the rhetoric that Greek and Roman
oligarchies used when they accused
democratic reformers of seeking “tyranny”
(in Greece) or “kingship” (in Rome). It was
the Greek “tyrants” who overthrow mafia-like
autocracies in the 7th and 6th
centuries BC, paving the way for the
economic and proto-democratic takeoffs of
Sparta, Corinth and Athens. And it was
Rome’s kings who built up their city-state
by offering self-support land tenure for
citizens. That policy attracted immigrants
from neighboring Italian city-states whose
populations were being forced into debt
bondage.
The problem is that Western democracies
have not proved adept at preventing
oligarchies from emerging and polarizing the
distribution of income and wealth. Ever
since Rome, oligarchic “democracies” have
not protected their citizens from creditors
seeking to appropriate land, its rental
yield and the public domain for themselves.
If we ask just who today is enacting and
enforcing policies that seek to check
oligarchy in order to protect the livelihood
of citizens, the answer is that this is done
by socialist states. Only a strong state has
the power to check a financial and
rent-seeking oligarchy. The Chinese embassy
in America demonstrated this in its reply to
President Biden’s description of China as an
autocracy:
Clinging to a Cold War mentality and
the hegemon’s logic, the US pursues bloc
politics, concocts the “democracy versus
authoritarianism” narrative … and ramps up
bilateral military alliances, in a clear
attempt at countering China.
Guided by a people-centered philosophy,
since the day when it was founded … the
Party has been working tirelessly for the
interest of the people, and has dedicated
itself to realizing people’s aspirations for
a better life. China has been advancing
whole-process people’s democracy, promoting
legal safeguard for human rights, and
upholding social equity and justice. The
Chinese people now enjoy fuller and more
extensive and comprehensive democratic
rights.
Nearly all early non-Western societies
had protections against the emergence of
mercantile and rentier oligarchies.
That is why it is so important to recognize
that what has become Western civilization
represents a break from the Near East, South
and East Asia. Each of these regions had its
own system of public administration to save
its social balance from commercial and
monetary wealth that threatened to destroy
economic balance if left unchecked. But the
West’s economic character was shaped by
rentier oligarchies. Rome’s Republic
enriched its oligarchy by stripping the
wealth of the regions it conquered, leaving
them impoverished. That remains the
extractive strategy of subsequent European
colonialism and, most recently,
U.S.-centered neoliberal globalization. The
aim always has been to “free” oligarchies
from constraints on their self-seeking.
The great question is, “freedom” and
“liberty” for whom? Classical political
economy defined a free market as one free
from unearned income, headed by land
rent and other natural-resource rent,
monopoly rent, financial interest and
related creditor privileges. But by the end
of the 19th century the
rentier oligarchy sponsored a fiscal and
ideological counter-revolution, re-defining
a free market as one free for rentiers
to extract economic rent – unearned
income.
This rejection of the classical critique
of rentier income has been
accompanied by re-defining “democracy” to
require having a “free market” of the
anti-classical oligarchic rentier
variety. Instead of the government being the
economic regulator in the public interest,
public regulation of credit and monopolies
is dismantled. That lets companies charge
whatever they want for the credit they
supply and the products they sell.
Privatizing the privilege of creating
credit-money lets the financial sector take
over the role of allocating property
ownership.
The result has been to centralize
economic planning in Wall Street, the City
of London, the Paris Bourse and other
imperial financial centers. That is what
today’s New Cold War is all about:
protecting this system of U.S.-centered
neoliberal financial capitalism, by wrecking
or isolating the alternative systems of
China, Russia and their allies, while
seeking to further financialize the former
colonialist system sponsoring creditor power
instead of protecting debtors, imposing
debt-ridden austerity instead of growth, and
making the loss of property through
foreclosure or forced sale irreversible.
Is Western civilization a long detour
from where antiquity seemed to be headed?
What is so important in Rome’s economic
polarization and collapse that resulted from
the dynamics of interest-bearing debt in the
rapacious hands of its creditor class is how
radically its oligarchic pro-creditor legal
system differed from the laws of earlier
societies that checked creditors and the
proliferation of debt. The rise of a
creditor oligarchy that used its wealth to
monopolize the land and take over the
government and courts (not hesitating to use
force and targeted political assassination
against would-be reformers) had been
prevented for thousands of years throughout
the Near East and other Asian lands. But the
Aegean and Mediterranean periphery lacked
the economic checks and balances that had
provided resilience elsewhere in the Near
East. What has distinguished the West from
the outset has been its lack of a government
strong enough to check the emergence and
dominance of a creditor oligarchy.
All ancient economies operated on credit,
running up crop debts during the
agricultural year. Warfare, droughts or
floods, disease and other disruptions often
prevented the accrual of debts from being
paid. But Near Eastern rulers cancelled
debts under these conditions. That saved
their citizen-soldiers and corvée-workers
from losing their self-support land to
creditors, who were recognized as being a
potential rival power to the palace. By the
mid-first millennium BC debt bondage had
shrunk to only a marginal phenomenon in
Babylonia, Persia and other Near Eastern
realms. But Greece and Rome were in the
midst of a half-millennium of popular
revolts demanding debt cancellation and
liberty from debt bondage and loss of
self-support land.
It was only Roman kings and Greek tyrants
who, for a while, were able to protect their
subjects from debt bondage. But they
ultimately lost to warlord creditor
oligarchies. The lesson of history is thus
that a strong government regulatory power is
required to prevent oligarchies from
emerging and using creditor claims and land
grabbing to turn the citizenry into debtors,
renters, clients and ultimately serfs.
The rise of creditor control over
modern governments
Palaces and temples throughout the
ancient world were creditors. Only in the
West did a private creditor class emerge. A
millennium after the fall of Rome, a new
banking class obliged medieval kingdoms to
run into debt. International banking
families used their creditor power to gain
control of public monopolies and natural
resources, much as creditors had gained
control of individual land in classical
antiquity.
World War I saw the Western economies
reach an unprecedented crisis as a result of
Inter-Ally debts and German reparations.
Trade broke down and the Western economies
fell into depression. What pulled them out
was World War II, and this time no
reparations were imposed after the war
ended. In place of war debts, England simply
was obliged to open up its Sterling Area to
U.S. exporters and refrain from reviving its
industrial markets by devaluing sterling,
under the terms of Lend-Lease and the 1946
British Loan as noted above.
The West emerged from World War II
relatively free of private debt – and
thoroughly under U.S. dominance. But since
1945 the volume of debt has expanded
exponentially, reaching crisis proportions
in 2008 as the junk-mortgage bubble, massive
bank fraud and financial debt pyramiding
exploded, overburdening the U.S. as well as
the European and Global South economies.
The U.S. Federal Reserve Bank monetized
$8 trillion to save the financial elite’s
holdings of stocks, bonds and packaged real
estate mortgages instead of rescuing the
victims of junk mortgages and over-indebted
foreign countries. The European Central Bank
did much the same thing to save the
wealthiest Europeans from losing the market
value of their financial wealth.
But it was too late to save the U.S. and
European economies. The long post-1945 debt
buildup has run its course. The U.S. economy
has been deindustrialized, its
infrastructure is collapsing and its
population is so deeply indebted that little
disposable income is left to support living
standards. Much as occurred with Rome’s
Empire, the American response is to try to
maintain the prosperity of its own financial
elite by exploiting foreign countries. That
is aim of today’s New Cold War diplomacy. It
involves extracting economic tribute by
pushing foreign economies further into
dollarized debt, to be paid by imposing
depression and austerity on themselves.
This subjugation is depicted by
mainstream economists as a law of nature and
hence as an inevitable form of equilibrium,
in which each nation’s economy receives
“what it is worth.” Today’s mainstream
economic models are based on the unrealistic
assumption that all debts can be paid,
without polarizing income and wealth. All
economic problems are assumed to be
self-curing by “the magic of the
marketplace,” without any need for civic
authority to intervene. Government
regulation is deemed inefficient and
ineffective, and hence unnecessary. That
leaves creditors, land-grabbers and
privatizers with a free hand to deprive
others of their freedom. This is
depicted as the ultimate destiny of today’s
globalization, and of history itself.
The end of history? Or just of the
West’s financialization and privatization?
The
neoliberal pretense is that privatizing the
public domain and letting the financial
sector take over economic and social
planning in targeted countries will bring
mutually beneficial prosperity. That is
supposed to make foreign submission to the
U.S.-centered world order voluntary. But the
actual effect of neoliberal policy has been
to polarize Global South economies and
subject them to debt-ridden austerity.
American neoliberalism claims that
America’s privatization, financialization
and shift of economic planning from
government to Wall Street and other
financial centers is the result of a
Darwinian victory achieving such perfection
that it is “the end of history.” It is as if
the rest of the world has no alternative but
to accept U.S. control of the global (that
is, neo-colonial) financial system, trade
and social organization. And just to make
sure, U.S. diplomacy seeks to back its
financial and diplomatic control by military
force.
The irony is that U.S. diplomacy itself
has helped accelerate an international
response to neoliberalism by forcing
together governments strong enough to pick
up the long trend of history that sees
governments empowered to prevent corrosive
oligarchic dynamics from derailing the
progress of civilization.
The 21st century began with
American neoliberals imagining that their
debt-leveraged financialization and
privatization would cap the long upsweep of
human history as the legacy of classical
Greece and Rome. The neoliberal view of
ancient history echoes that of antiquity’s
oligarchies, denigrating Rome’s kings and
Greece’s reformer-tyrants as threatening too
strong a public intervention when they aimed
at keeping citizens free of debt bondage and
securing self-support land tenure. What is
viewed as the decisive takeoff point is the
oligarchy’s “security of contracts” giving
creditors the right to expropriate debtors.
This indeed has remained a defining
characteristic of Western legal systems for
the past two thousand years.
A real end of history would mean that
reform stops in every country. That dream
seemed close when U.S. neoliberals were
given a free hand to reshape Russia and
other post-Soviet states after the Soviet
Union dissolved itself in 1991, starting
with shock therapy privatizing natural
resources and other public assets in the
hands of Western-oriented kleptocrats
registering public wealth in their own names
– and cashing out by selling their takings
to U.S. and other Western investors.
The end of the Soviet Union’s history was
supposed to consolidate America’s End of
History by showing how futile it would be
for nations to try to create an alternative
economic order based on public control of
money and banking, public health, free
education and other subsidies of basic
needs, free from debt financing. China’s
admission into the World Trade Organization
in 2001 was viewed as confirming Margaret
Thatcher’s claim that There Is No
Alternative (TINA) to the new neoliberal
order sponsored by U.S. diplomacy.
There is an economic alternative, of
course. Looking over the sweep of ancient
history, we can see that the main objective
of ancient rulers from Babylonia to South
Asia and East Asia was to prevent a
mercantile and creditor oligarchy from
reducing the population at large to
clientage, debt bondage and serfdom. If the
non-U.S. Eurasian world now follows this
basic aim, it would be restoring the flow of
history to its pre-Western course. That
would not be the end of history, but it
would return to the non-Western world’s
basic ideals of economic balance, justice
and equity.
Today, China, India, Iran and other
Eurasian economies have taken the first step
as a precondition for a multipolar world, by
rejecting America’s insistence that they
join the U.S. trade and financial sanctions
against Russia. These countries realize that
if the United States could destroy Russia’s
economy and replace its government with
U.S.-oriented Yeltsin-like proxies, the
remaining countries of Eurasia would be next
in line.
The only possible way for history really
to end would be for the American military to
destroy every nation seeking an alternative
to neoliberal privatization and
financialization. U.S. diplomacy insists
that history must not take any path that
would not culminate in its own financial
empire ruling through client oligarchies.
American diplomats hope that their military
threats and support of proxy armies will
force other countries to submit to
neoliberal demands – to avoid being bombed,
or suffering “color revolutions,” political
assassinations and army takeovers,
Pinochet-style. But the only real way to
bring history to an end is by atomic war to
end human life on this planet.
The New Cold War is
dividing the world into two contrasting
economic systems
NATO’s proxy war in Ukraine against
Russia is the catalyst fracturing the world
into two opposing spheres with incompatible
economic philosophies. China, the country
growing most rapidly, treats money and
credit as a public utility allocated by
government instead of letting the monopoly
privilege of credit creation be privatized
by banks, leading to them displacing
government as economic and social planner.
That monetary independence, relying on its
own domestic money creation instead of
borrowing U.S. electronic dollars, and
denominating foreign trade and investment in
its own currency instead of in dollars, is
seen as an existential threat to America’s
control of the global economy.
U.S. neoliberal doctrine calls for
history to end by “freeing” the wealthy
classes from a government strong enough to
prevent the polarization of wealth, and
ultimate decline and fall. Imposing trade
and financial sanctions against Russia,
Iran, Venezuela and other countries that
resist U.S. diplomacy, and ultimately
military confrontation, is how America
intends to “spread democracy” by NATO from
Ukraine to the China Seas.
The West, in its U.S. neoliberal
iteration, seems to be repeating the pattern
of Rome’s decline and fall. Concentrating
wealth in the hands of the One Percent has
always been the trajectory of Western
civilization. It is a result of classical
antiquity having taken a wrong track when
Greece and Rome allowed the inexorable
growth of debt, leading to the expropriation
of much of the citizenry and reducing it to
bondage to a land-owning creditor oligarchy.
That is the dynamic built into the DNA of
what is called the West and its “security of
contracts” without any government oversight
in the public interest. By stripping away
prosperity at home, this dynamic requires a
constant reaching out to extract an economic
affluence (literally a “flowing in”) at the
expense of colonies or debtor countries.
The United States through its New Cold
War is aiming at securing precisely such
economic tribute from other countries. The
coming conflict may last for perhaps twenty
years and will determine what kind of
political and economic system the world will
have. At issue is more than just U.S.
hegemony and its dollarized control of
international finance and money creation.
Politically at issue is the idea of
“democracy” that has become a euphemism for
an aggressive financial oligarchy seeking to
impose itself globally by predatory
financial, economic and political control
backed by military force.
As I have sought to emphasize, oligarchic
control of government has been a major
distinguishing feature of Western
civilization ever since classical antiquity.
And the key to this control has been
opposition to strong government – that is,
civil government strong enough to prevent a
creditor oligarchy from emerging and
monopolizing control of land and wealth,
making itself into a hereditary aristocracy,
a rentier class living off land
rents, interest and monopoly privileges that
reduce the population at large to austerity.
The unipolar U.S.-centered order hoping
to “end history” reflected a basic economic
and political dynamic that has been a
characteristic of Western civilization ever
since classical Greece and Rome set off
along a different track from the Near
Eastern matrix in the first millennium BC.
To save themselves from being swept into
the whirlpool of economic destruction now
engulfing the West, countries in the world’s
rapidly growing Eurasian core are developing
new economic institutions based on an
alternative social and economic philosophy.
With China being the largest and fastest
growing economy in the region, its socialist
policies are likely to be influential in
shaping this emerging non-Western financial
and trading system.
Instead of the West’s privatization of
basic economic infrastructure to create
private fortunes through monopoly rent
extraction, China keeps this infrastructure
in public hands. Its great advantage over
the West is that it treats money and credit
as a public utility, to be allocated by
government instead of letting private banks
create credit, with debt mounting up without
expanding production to raise living
standards. China also is keeping health and
education, transportation and communications
in public hands, to be provided as basic
human rights.
China’s socialist policy is in many ways
a return to basic ideas of resilience that
characterized most civilization before
classical Greece and Rome. It has created a
state strong enough to resist the emergence
of a financial oligarchy gaining control of
the land and rent-yielding assets. In
contrast, today’s Western economies are
repeating precisely that oligarchic drive
that polarized and destroyed the economies
of classical Greece and Rome, with the
United States serving as the modern analogue
for Rome.
Michael Hudson is President of The
Institute for the Study of Long-Term
Economic Trends (ISLET), a Wall Street
Financial Analyst, Distinguished Research
Professor of Economics at the University of
Missouri, Kansas City. He is the author of
Super-Imperialism: The Economic Strategy of
American Empire (Editions 1968, 2003,
2021),
‘and forgive them their debts’ (2018),
J is for Junk Economics (2017),
Killing the Host (2015), The
Bubble and Beyond (2012), Trade,
Development and Foreign Debt