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So, the economy has been more and more concentrated in the hands of a few large companies that have been able to get the credit from the banks to buy potential rivals. Facebook has been buying its rivals. You have the cable companies buying rivals. So people's cable rates continue to go up and up without any actual cost increase.
You have a dissociation of price from the cost of production. Price is whatever the market will bear. There is no longer that reference to the cost of production. And hence as profit is understood under industrial capitalism as a rate of return on the cost of production and the capital investment. You have essentially prices being dictated by a financially organized trustification and monopolization of the economy most conspicuously in the United States of course.
FRIES: We should also note pharmaceutical monopolies.
HUDSON: That's the most obvious. When you have prices of drugs here so much higher than you have in Canada and other countries. President George W. Bush said: we're not going to bargain with the firms. We're not going to have what every other country does wherever the government gets to buy in bulk. The whole idea is if you buy in bulk, you get a low price. George Bush says: we're going to pay the retail price. And then a little bit more because after all they're his campaign contributors.
Under the Obamacare you had a huge giveaway written, essentially written by the pharmaceutical industry. And the people that Biden has appointed as the health czars were the lobbyists and the heads of the pharmaceutical companies. So you're going to have a very vicious pharmaceutical monopoly squeezing the population here.
Already in Idaho, where there's a very heavy COVID issue, people are now being put in jail for medical debts. If you can't pay the hospital, you can be arrested, put in jail and then you die as everybody in jail gets COVID.
So it's like a financial death star has hit America. And the death star isn't COVID itself. COVID is all over the world. Other countries have been able to cope. It's the financial death star that's really killing people in the United States.
FRIES: So, Michael, how is that industrial capitalism ended up in the stage you describe, one of pro-rentier finance capitalism?
HUDSON: Well, nobody really expected industrial capitalism to enter the stage we're in now which is finance capitalism. This was not a necessary stage of industrial capitalism because you think of a stage as a kind of natural evolution, Darwinian style where the most efficient stage or form wins out. But what's happened is instead of evolution, you have a devolution. You have a move backwards. The whole idea of industrial capitalism as explained from Adam Smith to David Ricardo to the John Stuart Mill to Marx, the whole idea was that the destiny of industrial capitalism was to get rid of the remnants of feudalism.
To get rid of the landlord class, of economic rent of natural resource rent. And the idea was to make everybody basically only earn money in proportion to what they contributed to production. Industrial capitalism was supposed to clear away the whole overgrowth of absentee landlordism, of unproductive credit or usury capital.
And that seemed to be happening by the late 19th century. In the field of finance, for instance, you had German and Central European industrial banking creating credit only to create new means of production, to build factories, to create a steel industry.
The Lower House of governments throughout Europe, for instance and the House of Commons over the House of Lords in Britain, in 1909, there was a constitutional showdown in Britain where they passed the land tax law to sort of get rid of landlordism. And the House of Lords vetoed it; constitutional crisis for a whole year. And they passed the law that never again could the House of Lords, the Upper House, veto a revenue bill in the House of Commons.
In every country, the Upper House in government was created and run by the rentier interests. That is by the landlords and the wealthiest interests. And the whole idea of industrial capitalism was to push democratic reform in order to sort of over overthrow the old rentier class.
World War I changed all that. Since World War I, the rentier class began to fight back. Before World War I you finally had the United States pass an income tax law that really only 1% of the American population was liable for the income tax law because there was a cut off point. You had to be fairly rich to pay the income. And most of the income of wealthy people was from either rents or stocks or bonds or financially from loans.
After World War I, all of this was changed. Instead of taxing real estate, instead of taxing the oil and gas industry, they were made pretty much income tax exempt. You had a shift of tax onto labor and industry. And you had industrial capitalism lose out to finance capitalism, not as a step forward but as a lapse backward. As the old post-feudal landlord class and the financial class fought back and sort of took over the development.
And that was greatly increased in the 1980s with Ronald Reagan and Margaret Thatcher. And since then the whole Western world has been characterized by really a kind of neoliberal meaning a pro financial, a pro-rentier economy. And the result is that we have a financial view of the world, not industrial view of the world.
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