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Michael Hudson: The End of Western Civilization
07-15-2022, 11:35 PM
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Michael Hudson: The End of Western Civilization
Michael Hudson: The End of Western Civilization – Why It Lacks Resilience, and What Will Take Its Place
Posted on July 12, 2022 by Yves Smith
Yves here. Below is the text of a new Micael Hudson speech for China’s Global University, which he delivered Monday morning. It’s already gotten 200,000 views in China and is getting coverage in the Chinese press. It focuses on how neoliberalism is a major culprit in the West’s wrong turn. Michael has graciously given us the first English transcript.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Destiny of Civilization. Originally published at his website

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 hubrisinvolved 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,” misharumand andurarumclean 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.”

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 notseem 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 8thcentury 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 Aantiquity’s Oligarchic Ttakeover

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 aDark 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 thissituation Greek reformer-“tyrants” arose in the 7thand 6thcenturies 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 2ndcentury 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 4thcentury 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 rentierclass.

Spain in the 16thcentury 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.

https://www.nakedcapitalism.com/2022/07/...place.html

Those who know, know! Big Grin
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