The Future of Capitalism: Neo Feudalism? Panel 4: Radhika Desai and Michael Hudson

HD inter Germanic studies and philosophy from the University of Chicago uh and he's a Humanities teaching fellow here he's editing and translating the writings of Alfred Z retto and is especially interested in hego and Marx and if you allow me to say I think nobody has done more for this conference than Daniel so if we have one person to thank it's Daniel thank you hi thanks so hello everyone my name is Daniel um and it's my pleasure and honor to introduce the next two speakers for the fourth panel today on political economy um rodica Desai is a professor at the department of political studies at the University of Manitoba as well as the Director of the geopolitical economy research group there she's the author of many books and articles including geopolitical economy after us hemony globalization and Empire from 13 and um more recently capitalism coron virus and War 2022 and she'll be presenting a paper titled what's in a name the Mis the misuses of feudalism and capitalism um our second presenter uh is Michael Hudson a distinguished research Professor haven't turned on the video yet at the University of Missouri Kansas City and a researcher at the levy economics Institute at Bard College he's a former Wall Street analyst a political consultant as well as the author of many books including super imperialism which is reissued in 2022 uh originally I believe 1971 killing the host 2015 and most recently the collapse of antiquity in 2023 he'll delivered a paper titled is the West regressing into Neo feudalism so professors Desai and Hudson will both speak for 30 minutes each and then we'll have 20 minutes set aside for discussion so without any further Ado the floor is yours reica I have no PowerPoint no um is this the right angle oh okay thanks and I hope Michael has joined does anybody know if he's joined great okay so first of all thank you to the organizers particularly Daniel as we are told who's done the most for for this uh um session and I'm really pleased to be here really pleased to hear everyone who spoken so far looking forward to Brett Christopher's um presentation later on and of course Michael's so I've as uh Daniel pointed out I've entitled my talk what's in a name the misuses of feudalism and capitalism and in brief I'm going to argue that by calling the Contemporary economic system in which we are living Neo feudalism we are misunder we are demonstrating our misunderstanding of both feudalism and capitalism but let me first start out by saying that there is no doubt that the literature on so-called Neo feudalism or at least the best of it um is concerned about a real problem so for instance uh to quote just one of the relatively good pieces on the subject Stone and cutner make some excellent points they say and I'm now quoting it's slightly longish quote so I'll tell you when it ends the system of Finance they say once supervised by Bank Regulatory Agencies and Securities and Exchange Commission has been delegated to private Realms of law the financial collapse of 2008 is best understood as the seizure corruption and abuse of entire domains of Regulation and jurist Prudence laws to protect workers and consumers reflecting 70 years of struggle to expand rights are now erased by compulsory arbitration regimes trade law permits similar private tribunals to overturn or sidestep public regulation Tech platform monopolies have created a proprietary regime where they can Crush competitors and invade consumer privacy by means of honorous terms often buried in online terms of service Provisions the unity of common scientific inquiry has been balcon ised by confidentiality agreements and abuses of patents as scientific knowledge becomes owned by private entities companies like Monsanto manipul ating intellectual property and trade law prevent Farmers from following the ancient practice of keeping seeds for the next planting season this they say is not deregulation or neoliberalism it is legally sanctioned private jurist Prudence Neo feudalism unquote so what stone and cutner says is that not only is this not capitalism it's not even neoliberalism and of course I'm going to argue that it is NE NE liberalism it has always been about expanding private power that's that is neoliberalism has always been about expanding private power it has never been about markets or competition and I'll elaborate on that as I go along so like most conceptions of Neo feudalism Stone and cutner idealize not only capitalism itself but in their case implicit and which they idealize implicitly if not explicitly in its competitive form as though that is the only type of capitalism there is no other type of capitalism and stone and cutner also wrongly assume that that that well they they're idealizing Neo liberalism because they think that it's about markets and competition and that's why the reality of what is happening now must according to them be separated even from neoliberalism and then of course they idealize what stone and gutner called democracy which they equate with the golden age of capitalism when I think we will all agree that capitalism was it on its best behavior that it has been so far so that's the way I see the situation now there are many things wrong with this the first and most important is that competition always culminates in Monopoly or put it another way Monopoly is the result of the process of competition which eliminates Rivals leaves a handful or one uh uh one entity standing out of the competition This Is the destiny of capitalism as classically analyzed by Marx moreover Marx goes further because he has something to say about what happens at this point in chapter 27 of volume three of capital marks had outlined how the ever greater concentration of capital in large Monopoly firms facilitated by the emergence of join stock companies constituted a huge advance in the socialization of production this was for marks the most important function of capitalism hisor Ally the only reason why he considered it at all Progressive was that it socialized production it may do it brutally it may do it anarchically but it does it and that's what's Progressive about it and it will have under Monopoly capitalism brought that process of socialization to AP in this type a new type of firm Mark says what was once individual Capital quote now receives the form of social capital capital of direct Associated individuals in contrast to private capital and its Enterprises appear as social Enterprises as opposed to private ones this is the abolition of capital and private property within the confines of the capitalist mode of production itself unquote that was marks the transition to Monopoly aided by state intervention and credit is Marx continues is self quote self abolishing contradiction which presents itself primery as a point of transition to a new form of production unquote namely socialism as production is thus Amalgamated and massified its profoundly social character is on Full display the owner operator of early capitalism is split functionally into two the manager paid for his or her labor of oversight of a complex organization and the Mere Money capitalist who no longer makes profit but only interest a mere reward for Capital ownership which is now completely separated from the actual production process unquote the result is a historical rather than merely conceptual clarification according to Marx um the profit is reduced sorry uh let me say that again the result is a historical rather than merely conceptual clarification that is to say in the process of the arrival of Monopoly capitalism something gets objectively class clarified not just conceptually profit according to Marx's reduced reduced to interest is exposed as quote simply the appropriation of other people's Surplus labor arising from the transformation of the means of production into Capital that is from their estrangement visa the actual producer from their opposition as the property of another Vis A all individuals really active in production from the manager down to the lowest day laborer and unquote that's okay such capitalist production in its highest development so Marx considers Monopoly Capital to be capitalist production in its highest development this such production is marks continued and this is the key the necessary I'm quoting him again quote necessary point of transition towards the transformation of capital back into the property of The Producers though no longer as the private property of individual ual producers but rather as their property as Associated producers as directly social property it is furthermore a point of transition towards the transformation of all functions forly bound up with capital ownership in the reproduction process into the into simple functions of associated producers into social functions unquote angles observes editorially at this point because he edited volume three that Tendencies toward calization and toward concentrating quote the entire production of the branch of industry in question into one big joint stock company with a unified management unquote prepares quote in the most pleasing fashion its future appropriation by society as a whole by the nation unquote um and this development according to angles was likely to be aided by the fact that this transformation also gives rise to Monopoly in certain fears and hence provoke State intervention so essentially what marks and angles en Visage is that once capitalism arrives at its Monopoly phase it will be ripe for transition to socialism this will be apparent to everybody because productive forces have been massively centralized they are monopolized and the illegitimacy of the private ownership of Monopoly will become apparent to all this is at least his anticipation their anticipation Marx then goes on to refer in particular to the role of the financial system at this stage what is the financial system going to do in this process however before we can understand what he meant by that we must understand how he conceived the evolution of Finance under capitalism a point originally made by Marx and later elaborated by hording in finance Capital so let me unpack this a little bit though Financial capital is older than industrial capital because Financial Capital existed before the onset of productive capitalism marks anticipated that capitalism's maturation would lead to the quote subordination of interest bearing Capital to the conditions and requirements of modern industry unquote principally through quote the transformed figure of the borrower unquote the borrower would no longer be a suppliant I've got 20 minutes left yeah U no longer be a supplicant in financial Straits but a capitalist to whom money is Lent quote in the expectation that he will use it to appropriate unpaid labor unquote whereas the initial States stages of this process of subordination had led to calls of using quote violence that is the State against interest bearing Capital to effect a compulsory red uction of interest rates so the Bazi is militating against Financial capital in a certain way mature industrial Capital Marx opine would achieve this transformation much more thoroughly and effectively through quote the creation of a procedure specific to itself the credit system which and I'm quoting him now which is its own creation as is itself a form of industrial Capital which begins with manufacturer and develops further with large scale industry unquote when it first emerged the credit system took a pical form directed against old-fashioned usurers now in line with this understanding hiling says the following iling says at the outset of capitalist production money capital in the form of usurers and Merchants Capital plays a significant role in the accumulation of capital as well as in the transformation of handicraft production into capitalism but there then arises a resistance of productive Capital that is the of the profit earning capitalist that is of Commerce and Industry against interest earning capitalists user Capital becomes subordinated to Industrial Capital as money dealing Capital it performs the functions of money which industry and commerce would otherwise have had to carry out themselves in the process of transformation of their commodities as Bank Capital it arranges credit operations among productive capitalists so the Marx is saying essentially that capitalism would take the inherited system of finance and transform it into something that would Aid the expansion of productive capitalism modern so since I have less time I'm just going to jump to this okay so hording as you very well know or you should know if you don't in finance Capital contrast two very different forms of Finance Financial systems on the one hand there is the long-term Finance provided for long-term productive investment which is of which the German Financial system is paradigmatic and on the other hand is the British Financial system which provides only short-term Commercial Credit has never been involved in long-term commercial investment and is associated with speculation and short-termism um so sorry I'm just jumping a little bit here so give me a second um right and so the the first the paradigmatic finance Capital although it involves the the domination of Finance Capital this domination is exercised in the interest of expanding productive capitalist capitalist investment so in hiling these two forms of Investments are not just contrasted historically that is there is the old users form and now there is the new capitalist form but also geographically in that he contrast German Bank industry relations as I've already said with the British system um and I would like to emphasize one thing to anticipate some points I will be making at the conclusion let me also say that precisely the polar opposite characteristics of the British system to the German system is what enabled the British system to be the operator of the gold Sterling standard the German system then would not have been capable of doing this as will not the Chinese system today for all the talk about whether the renm will ever replace the dollar I have been arguing in numerous writings and and and and and and speeches and so on that it cannot and should not unless China wishes to see the type of de-industrialization experienced by the UK and the us having made these points we are now ready to return to how Mark sees the role of credit and Finance in the transformation of capitalism into socialism a point which hiling also develops further the credit system which is everywhere a creature of State regulation for Marks greatly AIDS these processes because quote it reproduces a new Financial aristocracy a new kind of parasite in the guise of company promoters speculators and merely nominal directors an entire system of swindling and cheating with respect to the promotion of companies issue of shares and share dealings it is private production unchecked by private ownership and further he says um well okay I'll skip that a little bit and then he says the credit system not only accelerates capitalist development the credit system of this evolved capitalist sort of the German sort it also accelerates crisis and the dissolution of capital capitalism itself in doing so it moves capitalism closer to socialism and here I'm quoting marks again the credit system has a ual character imminent in it on the one hand it develops the motive of capitalist production enrichment by the exploitation of others labor into its purest and most colossal system of gambling and swindling and restricts ever more the already small number of exploiters of social wealth on the other hand however it constitutes the form of transition towards a new mode of production it is this dual character that gives the principal spokesman for credit through uh from John Law through Isaac per per perer their nicely mixed character of swindler and profit and uh as some of you may know hiling is often ridiculed for having said that if you nationalize six large Berlin Banks then you will be you will have taken many steps closer to socialism people laugh at him because they think that the Berlin banks are like the banks today no he was talking about six large Berlin Banks not six large London Banks six large London Banks they would have been meaningless six large Berlin Banks controlled a very substantial part of German production this is the key okay so um thus here Marx argued that when it arrived at its Monopoly phase when when most if not all sectors of economic activity became dominated by Monopoly capitalism would become ripe for socialism it would have performed its historic function of socializing the forces of production in the highest form it would be obvious that private monopolies are illegitimate and it would lose its productive dynamism something that would take away even the minimal legitimacy it had now capitalism had already reached its Monopoly phase in the early 20th century Lenin was not wrong to say it was the highest phase interestingly neoclassical economics which took its pure which took its purest form in the dogmatically Pro capitalist Austrian version emerged at the same time and one of its dirtiest intellectual Secrets is its conceit that capitalism has remained competitive its historical function has been to legitimize Monopoly Capital through the ideology of free markets and competition that is why the neoliberal era has witnessed the advance of the power of giant corporations under the covering fire of the rhetoric about markets and competition this is what stone and Kutner do not understand when they call say that the current dispensation is not even neoliberal in reality Lenin was not being merely rhetorical or just attacking kowsky when he insisted that capitalism had arrived at its highest phase even KES and Pani anticipated in the inter War period that a certain Tipping Point had been reached and that the path for Humanity at the end of the crisis period after the second world war lay in humanity go leaving capitalism behind and taking another path forward they didn't necessarily call it socialism Etc but that's what they imagined it would be some form of moving beyond capitalism Hayek feared the same outcome which he sought to Forstall by writing the road to serfdom and setting up the mor Pellerin Society in a sense Mark GES and Pani were not wrong the world did turn left after the second World War with the Keynesian welfare state in First World countries communist regimes in from Prague to pongyang as I like to say and National autonomous development projects in develop in the developing world most have misread what happened after the second world war they thought that the anticipation of the end of capitalism was wide of the mark and that capitalism had demonstrated its remarkable ability to bounce back hence the popularity of sheta who think that capitalism is like that child store you you knock it down and it comes back up again and that's what it does all the time but the dynamism of the golden age was not due to capitalism but due to the socialistic modifications it had undergone just to quote Hobs bomb from the age of extremes he characterized this period in the following way he said a return to laser fair and the unreconstructed free market were out of the question certain policy objectives such as full employment containment of Communism modernization of lagging or declining or ruined economies had absolute priority and Justified the strongest government presence even regimes dedicated to economic and political liberalism now could and had to run their economies in ways that would once have been rejected as socialist so yes um the modification these modifications not capitalism accounted for the productive dynamism of the postwar era principally by expanding domestic demand as decolonization and communism closed off other markets this fact ought to have been clear to people at that time certainly to marxists at that time but it was not however after four Decades of neoliberalism that is to say giving ever greater freedoms to Capital and after watching what the results of the these four decades has been which has resulted in ever lower rather than ever higher growth ever lower rather than ever higher investment we have finally we finally can see we can record what a scile monopoly capitalism is like it is incapable of growth or of investment and it has turned to financialization and the creation and maintenance of Monopoly power domestically and internationally through all means possible I'm now no longer talking about competition but the use of state power to maintain Monopoly both domestically and internationally so by calling today's capitalism feudal we are excusing capitalism we are forgetting that capitalism itself is historical and that the Contra that its contradictions are the chaotic motor that drives its history forward and that those contradictions have brought it to where we are today that therefore it must not be reduced to an idealized competitive form that today's economic system is what capitalism looks like when it has run its course and is still being kept Alive by the inability of productive forces to take us Beyond it towards socialism and in this present context it is bound to get even uglier than it is today now let me just say a couple of things about rent these remarks are more in the form of a research agender than a finished thesis I'm not a historian I'm certainly not a great historian of feudalism as one of our previous speakers was so please forgive me but this is what I would like to say propose to you um first of all you have to understand that rent is not characteristic of feudalism What is the characteristic form of surplus extraction in feudalism it is not rent it is feudal dues tithes compulsory Services whether they are offered in kind in labor or in money it does not matter but that is what characterizes feudalism I should also add that in feudalism land is not alien you cannot buy and sell land and it is based on no matter how minimal they are and no matter the misery of the surf it is based on certain reciprocal obligations of Lord and surf which are completely non-existent in capitalism Capital does not give mosquitoes ask about what happens to the worker okay so let us remember that um okay so as far as I can tell feudalism's typical form of surplus extraction as I say was through a various forms of feudal dues rent began to intrude upon this scenario and by the way I have consulted marks particularly the chapters on rent at the very end of volume three and I have consulted what I can of blocks work on feudalism beyond that I don't know but let me just say this from what I can tell from these two sources rent emerges in the course of struggles between surfes and landlords in which rent becomes a substitute for the landlord if the landlord is forced to recognize to some extent certain greater equality of the serve then he commutes the use but he substitutes it with rent and this is how rent appears because rent is between two equal Contracting parties not between a social Superior and a social inferior so that's the first thing so to me that's what rent appears to be the transformation of feudal dues into rent represented on the one hand the greater social equality of the producer but nevertheless involved extracting Surplus product mark is very clear that rent is a capital category a capitalist category and like interest it is a deduction from profit wages and government revenues all of which are ex are take emerge from productive activity of one sort or another ronti capitalism therefore is what you get when you give Capital the freedom that that that you give it in we have given it under neoliberalism when we keep capitalism alive past its cell by date and we have kept capitalism Alive by giving Capital more and more freedom to do what it likes and this is what it does when you leave it to itself now I would how much time do I have okay that's good I did time it okay so I just want to add a final set of points you know I said earlier about how the um the uh short-termist character of the British Financial system at the between roughly 1870 and 1914 was what enabled it to operate the uh uh the Sterling system now uh I have also written a lot about the dollar system in Visa V the Sterling system and how the two are contrasted and how the dollar system has always been unviable so let me just say a couple of things about that so um because it's related to this um we have we live in an age when the idea that the currency of the do PR minent country is the currency of the world or should be the currency of the world has become naturalized but the Sterling system so and we said dollar is world's money today just as Sterling was the world's money in the past but the Sterling system was Sterling was not a national currency it was an imperial currency it was able to supply liquidity to the rest of the world essentially through Capital exports not because it was so wondrously productive of capital that it would afford to export it but precisely because it extracted surpluses from its non-settler colonies and I'm talking about British India later Africa the Caribbean Etc but British India was always the biggest chunk of this extracted surpluses from these non-settler colonies and exported them as capital exports to Europe to the United States and to the remaining British settler colonies this is why the the gold Sterling standard period is the period of the most rapid industrialization of these countries and that is how it exported Capital even with these surpluses the system required a short-term Financial system because basically as kanes uh kanes is Indian currency and finance describes very well and by the way you should all think about why a book little book called Indian currency and finance is still regarded as the primer on how the gold standard worked is because India British India not just present day India but British India was so Central to its functioning it could not have worked without it so anyway as uh as kanes pointed out Britain operated the gold standard with hardly any gold he even jokes that even the Kaja of Argentina has more gold you know about that uh had more gold than the bank of England and why was it able to do so because the moment it needed to in it could increase interest rates and decrease them at will because also it did not care about the effects of this on economic activity and employment within Britain because the British working class was not yet sufficiently organized to assert its own interest we no longer live in that World um so even then the product the the sort of financial systems that created strong productive systems in Germany in Japan in early 20th century United States they could not have played a similar role because their money was tied up in long-term Investments and the British system the British gold Sterling standard it is not a surprise that the period of the gold Sterling standard roughly 1870 to 1914 is also the period of the beginning of the long-term productive and Industrial decline of the UK which has which continues to this day unable to export Capital the US has never been able to create a stable dollar system of dollar dominance before 1971 uh it was essentially already it had a decade a rocky decade before the gold link to Gold had to be broken Robert Griffin explained why this was the case and after 1971 the gold uh the dollar system has only worked because the US Financial system which back in the day hilford in considered to be close to the German one capable of long-term productive investment has been systematically transformed into something resembling the British system more so we're talking about two very different models of Finance the one which is shortterm leads to de-industrialization in Britain in the past and in the US today there is nothing admirable about it okay and then there is another system of Finance which marks anticipated might exist uh uh you know in mature capitalism and would be the bridge to socialism it still exists in Parts would say in substantial way it exists in China today but that's another whole system of discussion all together so I will end here for now thank you very much so thank thank you very much Rica are you there Michael next our next speaker is Michael Hudson are you there when Ric and I were contacted about this uh we fell for your literary title Neo feudalism uh and I was just uh spending the last two years writing the feudalism chapters of my history of debt and finance from the Crusades to the uh 19th century so and so naturally I wanted to work on the characteristics of feudalism that were uh being revived today I thought that that was what uh the whole uh lecture was going to be about but then in last week uh when I had uh actually two meetings with uh you folks uh I realized that what you're really interested in is where is the current capitalist system and the current uh Western economy going uh and uh you wanted to look at the future uh much more than the past and I think that what rtica has said is paved the ground you do need a historical uh perspective to see the dynamic that we're on that is leading uh to the Future uh and that helps but basically uh we have to begin to describe uh today's economy Rica used the word monopoly capitalism and that was a word used in the 1930s I never liked it that much uh and there uh there uh two words phrases that are used in more recent literature that's Finance capitalism and ronier capitalism uh and the reason we're looking around for uh how to label what happening is words are very important in focusing on the key Dynamics and what's happening today as radica just pointed out in her lecture is not what industrial capitalism looked like in the 19th century uh and to the extent that Marx described the contast the problems that we're having today uh he thought that they were problems that capitalism was going to get rid of not problems that it's currently causing well the aim of industrialis uh let's talk how what it was supposed to be uh the aim of industrial capitalists for the entire Century of classical political economy from the physiocrats to Adam Smith John Stewart Mill Marx thorstein Fein was to make profits by employing labor and uh this led them to want to minimize the cost of Labor they recognized that wellp paid well-fed and well hosed later labor was more productive but they still wanted to minimize its cost of living and that required minimizing the cost that labor needed to pay out of the paychecks that they received from their employers and the largest uh element of this paycheck uh was rent uh is rent today it was food uh in the early 19th century in both cases uh this uh charge out of uh Labor's basic wage was paid to the landlord and uh the objective of industrial capitalism was Radical uh therefore it was to uh free economies from the carryover of feudal characteristics so it was going to so it was really post feudal uh capitalism uh is what they wanted and uh they especially uh land rent paid to the landlords but also uh mon uh that just uh increase the cost of living for labor and for other uh capitalists now Rica has pointed that out that the tendency of capitalism itself is to concentrate production in the form of monopolies but a capitalist Monopoly is not the same thing as the roner monopolies that were uh around in the 19th century uh and were simply predatory monopolies uh not efficient mon monopolies but just claims on the ability to Levy Monopoly rents uh on on the prices that people had to pay so uh industrial capitalism wanted to get rid of the landlord class the monopolies uh that they paid uh mainly the the monopolies that capitalism wanted to get rid of were created basically they were given away to finance years in exchange for Lo loans to wage war and the uh the creditors said well we're going to give you of loan but you have to give us a monopoly so we can just collect money in our sleep just like the landlords do so in addition to uh the monopolies the the industrial capitalists as radical just described wanted to uh end predatory banking banking that was geared towards making War loans to governments and petty loans and Usery and they wanted to for the first time to get banking integrated with the industrial sector by actually making loans for industry not just uh for war and for overhead reasons well uh the these aims seem to be on the way to take taking place in the late 19th century uh and in a way you'd think that we've gone beyond this the West no longer has a hereditary landlord class uh about half of American families or homeowners uh falling rapidly uh it's Fallen by 10 percentage points just since uh the Obama uh wave of evictions and uh support of the banks in 2008 uh and nine uh but all as much as 80% of many European countries are homeowners the problem is that uh in today's capitalism still has land rent and that uh is a major cost of wage earners budgets uh about 40% uh of the wage earners uh income in the United States has to go to paying rent how can an industrial capitalist make money when uh wage earners have to pay these enormous rental charge the difference is that although there's no landlord class uh the land rent still exists and it's paid to the banks Bankers today play the role that landlords did uh in the 19th century uh anybody can buy a home but in order to buy a home you have to take out a mortgage loan and uh whether you're buying a home uh or commercial rental property uh the the buyer bids against other buyers and the winner is the buyer who's willing to pay the most of of the land of the rental value uh that is not the cost of the building but uh just the cost of the the rent of location uh the site value uh as interest uh to the banks and so the banks now end up with all the land rent that the 19th century expected to be either the tax base uh or if not the tax if not the tax base then uh the government would own the land uh directly and uh what we have therefore is not the kind of capitalism that marks and his contemporaries describe what should we call it well the term capitalism is too broad uh to just say uh for itself so I think we have to say that uh something more specific to say that there are different kinds of capitalism uh and how do we distinguish what today really is a novel Distortion of everything that industrial capitalism began to be and the two major suggestions as have I said are Finance capitalism and ronier capitalism well ronas make money in their sleep without playing a productive role uh the the landlords uh the old Monopoly renters and the banks do not play a role in the productive process Marx called this the sphere of circulation not the sphere of production uh however the uh the producers have to somehow uh pay this sphere of circulation as an overhead on production uh and calling ronier capitalism emphasizes the fact that interest and financial fees are a form of economic rent banks have a privilege of Simply creating credit on their keyboards uh you go into a bank uh the bank doesn't say let me see how much money we have to lend you they'll print in uh the the loan they'll they'll create a uh uh a deposit for you and uh the buyer will sign an IOU so the bank has an asset uh to balance uh the debt and uh that that uh privilege essentially enables the banks to collect interest instead of having uh banking either become part of the capitalist uh industrial process as it was in Germany as R pointed out uh or as it is supposed to be in socialist countries so that's uh an argument for calling uh at ronier capitalism with a financial character and in fact uh it's an argument also for calling today's economies Finance capitalist because Financial Centers are the main political and ideological Defenders of the other rtier sectors uh of all the of the rent grabbing sectors Finance is their organizer uh and its mode of ownership now goes beyond merely extracting income uh but it actually uh aims at uh making uh gaining Fortunes in a way that the the 19th century hardly envisioned it's capital gains the capital gains in the United States are as large as the gain in the entire GDP uh every year and yet uh if you only look at the flow of income in economy uh income and expenses you miss the big point that almost all of the great fortunes of the wealthiest 1% 10% of the population have not been made by making profits they have not been made by saving money by wage earners out of income they've been made by uh by Banks inflating the prices of real estate and uh stocks and bonds on credit with debt leveraging so in effect the seeming success of creating fortunes has created a uh a bif economy where the fortunes are made by the 1% by getting the 99% into debt so homeowners and buyers of uh industrial companies named corporate Raiders or private Capital companies uh borrow the money uh to buy a company and then uh essentially use their uh income not to plow into new means of production as marks and everybody else in the 19th century except expected capitalist to do but 92% of a corporate income in the United States is paid for stock BuyBacks or to pay out as dividends well already by uh the time that World War I developed there was a big argument even in England that I've described in uh in in my books killing the host uh the English fear that the Germans are going to win the war because instead of their companies uh being told by their Banks well pay out dividends uh buy your own stocks uh the banks encourag the German companies to reinvest their profits in new means of production in expansion uh whereas the English uh Banks just were hit and run they make a loan they'd wanted a quick Reb uh payback and as radica pointed out Finance lives in the short run not the long run industrial capitalism was supposed to have a long-term strategy and corporate invest supposed to be longterm as a way of building markets that hasn't occurred Finance capitalist capitalism is short term because Finance lives uh in the short run and it's basically a predatory uh hit one customer go on to the next so to show how the laws of motion in this rtier uh Finance capitalism uh have evolved uh I I think I'm going to take three different Dynamics uh that I'll describe the geopolitical D Dynamic the domestic dyn Dynamic and the historical Dynamic uh I'll first of all talk about how economic surpluses are extracted in the domestic economy uh and the best way is to look at this is who gets the economic uh Sur Surplus uh rent profits uh and uh the overall Sur Surplus and what form does it take uh in the now we get back to feudalism just as an example in the 13th century the immediate recipients were the warlord Kings and the uh who were acting as legal vassals of Rome Rome would uh essentially the papacy wanted to conquer countries who wouldn't uh permit wouldn't allow it to dominate their economies this was the Imperial papacy of the Crusades in the 12th and the 13th century uh so to get an army the uh the papacy said went to the Norman Warlords and said if you they went to Robert guisard and said if you conquer sther Italy and Spain will uh announce that you're the king and you're ruling by Divine Light divine right and well we'll have all the churches support you and then a few years later they went to William the Conqueror Another War Norman warlord uh and said if you conquer England uh we'll immediately applaud you as uh uh the conquerors now as uh radica said the uh the purpose of conquering a land was to get the rent uh and even after the the Warlords conquered England Southern Italy Spain and other countries the largest uh owner uh land owners in every European country were the church and uh the Kings got the rent and what did they do the the banks the Vatican said well uh we we need to go to war against Germany against uh the uh Islamic countries uh countries who won't uh let us uh uh dominate them and take all of their rents and send them uh to Rome so you have to uh uh first of all tax the rent of your land by leving taxes but their taxes aren't enough to pay for the war so uh you have to uh borrow from the banks that we've set up the the uh problem in the 11th century by Western Christianity was that it it hated early Christianity it said we've got to get rid of everything of all of the anti-user laws in Christianity and uh Finance is going to be uh what we're going to have to create in order to finance the wars so that uh we can use all the rents of the land to essentially to conquer countries won't uh accept our leadership uh you can you may see where I'm going with this with a parallel with the United States but uh uh the Roman papacy had uh essentially opposed uh uh you user and sponsored uh uh Bankers to lend the money industrial capitalism is very different uh what made them different from uh the pre-existing uh uh economy was was that they uh uh they made money uh by labor not by uh having labor create land rent uh and crops but by uh being employed to produce industrial goods so for the first time you had a shift from an Economy based on uh rent uh and Usery to an economy that was based on on actual on profits being reinvested into new capitalist uh capitalist production so marks still uh placed rent uh in the context of you money turned into Commodities to make more money uh but today most finances are made simply money makes more money by Financial engineering based on credit creation to and debt leveraging so money creates uh debt creation uh which is used to raise the prices of real estate stocks and bonds uh and uh independently of uh the industrial process well this has been called Neo feudalism because it revives the Dynamics of a financialized roner income from which the 19th century economy sought to free itself so that aim uh as I mentioned was uh what classical economics was all about uh but uh and they really thought that the logic was so clear that economies uh certainly the industrial capitalists would work in their own self-interest to free economies from economic rent and from the predatory banking mainly uh uh for unproductive purposes not for production uh but what happened already in the late 19th century the the roner interests fought back and they were led by the financial sector and that resilience of economic parasitism and the ronier overhead is what uh characterizes today Finance capitalism well now we get into the another way of looking at what's happened is the geopolitical setting who gets the economic surplus and uh capitalism and feudalism uh both sought expansion every exploitative system seeks expansion uh and that everpresent drive makes the most powerful economies imperialistic and imperialism traditionally has been uh rent seeking uh simply asset stripping translating rents and profits uh if there's foreign industry uh into monetary form is tribute uh and it's also a drive for unipolar control one indicator of the Dynamics of rtia Finance capitalism uh and the form that it uh its exploitation takes is to look at what countries receive most of the international economic surplus well in the 13th century as I said West Europe's Imperial papacy so Rome received tribute uh uh not only from its churches and every Kingdom but also from the vassel Kings uh that were told raise taxes uh send it to Rome we need it to fight uh uh to hire uh mercenaries to fight Wars and for you to uh get all of your uh Knights and Nobles and uh to fight Wars too uh and uh essentially that's uh What uh flowered into the Crusades into a full-blown fight uh against other Christian countries I am I running over okay okay well and War funding War funding uh essentially transformed uh the economy by creating Financial interests that finally ended up saying well uh We've we've already got pushed all of the kings of Europe into debt by the 16th Cent Cy uh and by the early 17th century uh the the problem was that Kings would keep going broke and all that the creditors could get when the uh debts went bad was uh the collateral of Kings or all the money that they could tax and they wanted all the money the economy had so the creditors for the first time turned against the Christian concept of divine Rule and they said we want parliamentary democracy because parliamentary democracy Holland uh and other Protestant countries can pledge the entire uh income of the country to pay debts so the key to the political Evolution uh that shaped the social Evolution that led to uh industrial capitalism was essentially a a finance uh uh transforming all of this and modernizing the economy's ability to create a surplus because they knew that the Surplus would be paid to the financial sector well by the 19th century as radica pointed out the leading Global uh economic power was Britain and it used its industrial profits and Military colonialism and trade financing to gain control of foreign raw materials uh in exchange for its products and to gain control ownership of foreign land foreign property uh and essentially uh foreign governments uh ostensibly is the workshop of the world uh but you could also call it even at that time the Ron of the world labor was replacing land as the exploited factor of production under capitalism but the 20th century uh saw the United States replace Britain's role and at first this was by a combination of industrial power and then after World War I as the leading creditor to Britain and other countries uh America greatly expanded its Frontier motor production after 1945 by establishing the dollar as a major currency held in foreign Central Bank Reserves seemingly is as good as gold military spending in Southeast Asia forced the dollar off gold in 1971 but it convinced other countries not to replace gold uh uh not to uh do can hold gold themselves but to buy treasury IUS treasury bounces in which to hold their International savings and so they lent the essentially the more uh balance that payment surpluses Germany and Europe and Asia would get they at Japan they relent it to the United States government that's financed uh its domestic deficit to uh and the balance of payments costs of its military spending which were the entire uh cost of the balance uh payments deficit uh up through the 1960s and70s of the Vietnam War on on military spending uh and uh essentially got a free ride this is financial Groner economy in an un unprecedented form although I'm sure England did something like that uh akin to that in India well this is not how marks and other 19th century economists expected uh capitalism to evolve and uh by the time the reaged administration in the 1980s yeah five minutes could you wrap up two minutes yes please wait I have to turn it louder to hear you yes please could you wrap up in two I'm sorry wait wait one second I have to get the no can you now can you repeat would you would you try to wrap up in two if you can yes okay uh it's a unipolar financial economy and uh that tendency towards unipolar ISM this uh attempt to uh dominate other economies uh is one of the U Neo feudal characteristics it's the same uh Dynamic internationally that the Catholic church had and that uh England had uh and what has happened is that you uh you've had under this system a Revival of all of the forms of uh economic rent that uh were created in in feudalism uh the the Kings uh try tried to uh use enough taxes in medieval times uh uh to pay the debts but that wasn't enough so the finance sers came in and said let us help you create monopolies trade monopolies and that will create money and you can pay us out of the Monopoly gains well this is pretty much what the United States is doing uh in uh the global South countries and other countries trying to create uh monop uh political and economic control systems in order to gain uh their economic surpluses that that's basically I could go down you yourself can probably fill out uh the blanks to see all of the parallels between uh what's happening in today's Financial capitalism uh which is the the mother of monopolies more or less uh and uh the historical uh uh characteristics of pre- capitalist economy that industrial capitalism was supposed to get rid of and failed so you could look at today's uh roner Financial economy is the failure of industrial capitalism to succeed in the way that marks another 19th Century's economists expected e

Channel: The Future of Capitalism: Neo-Feudalism?

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Id: Cj4tKZjhYEo

Length: 59min 46sec (3586 seconds)

Published: Mon May 13 2024