Send a Tweet
Most Popular Choices
Poll Analyses
Share on Facebook 20 Share on Twitter 1 Printer Friendly Page More Sharing
OpEdNews Op Eds    H2'ed 10/25/20

How an "Act of God" Pandemic is Destroying the West

Author 36185
Message Dr. Michael Hudson
Become a Fan
  (7 fans)

Reprinted from michael-hudson.com

Homeless Children
Homeless Children
(Image by Felton Davis from flickr)
  Details   DMCA

The U.S. is Saving the Financial Sector, not the Economy

Before juxtaposing the U.S. and alternative responses to the corona virus's economic effects, I would like to step back in time to show how the pandemic has revealed a deep underlying problem. We are seeing the consequences of Western societies painting themselves into a debt corner by their creditor-oriented philosophy of law. Neoliberal anti-government (or more accurately, anti-democratic) ideology has centralized social planning and state power in "the market," meaning specifically the financial market on Wall Street and in other financial centers.

At issue is who will lose when employment and business activity are disrupted. Will it be creditors and landlords at the top of the economic scale, or debtors and renters at the bottom? This age-old confrontation over how to deal with the unpaid rents, mortgages and other debt service is at the heart of today's virus pandemic as large and small businesses, farms, restaurants and neighborhood stores have fallen into arrears, leaving businesses and households - along with their employees who have no wage income - to pay these carrying charges that accrue each month.

This is an age-old problem. It was solved in the ancient Near East simply by annulling these debt and rent charges. But the West, shaped as it still is by the legacy of the Roman Empire, has left itself prone to the massive unemployment, business closedowns and resulting arrears for these basic costs of living and doing business.

Western civilization distinguishes itself from its Near Eastern predecessors in the way it has responded to "acts of God" that disrupt the means of support and leave debts in their wake. The United States has taken the lead in rejecting the path by which China, and even social democratic European nations have prevented the corona virus from causing widespread insolvency and polarizing their economies. The U.S. corona virus lockdown is turning rent and debt arrears into an opportunity to impoverish the indebted economy and transfer mortgaged property and its income to creditors.

There is no inherent material need for this fate to occur. But it seems so natural and even inevitable that, as Margaret Thatcher would say, There Is No Alternative.

But of course there is, and always has been. However, resilience in the face of economic disruption always has required a central authority to override "market forces" to restore economic balance from "above."

Individualistic economies cannot do that. To the extent that they have a strong state, they are not democratic but oligarchic, controlled by the financial sector in its own interest, in tandem with its symbiotic real estate sector and monopolized infrastructure. That is why every successful society since the Bronze Age has been a mixed economy. The determining factor in whether or not an economic disruption leaves a crippled economy in its wake turns out to be whether its financial sector is a public utility or is privatized from the debt-strapped public domain as a means to enrich bankers and money-lenders at the expense of debtors and overall economic balance.

China is using an age-old policy used ever since Hammurabi and other Bronze Age rulers promoted economic resilience in the face of "acts of God." Unless personal debts, rents and taxes that cannot be paid are annulled, the result will be widespread bankruptcy, impoverishment and homelessness. In contrast to America's financialized economy, China has shown how natural it is for society simply to acknowledge that debts, rents, taxes and other carrying charges of living and doing business cannot resume until economic normalcy is able to resume.

Near Eastern protection of economic resilience in the face of Acts of God

Ancient societies had a different logic from those of modern capitalist economies. Their logic - and the Jewish Mosaic Law of Leviticus 25, as well as classical Greek and Roman advocates of democratic reform - was similar to modern socialism. The basic principle at work was to subordinate market relations to the needs of society at large, not to enrich a financial rentier class of creditors and absentee landowners. More specifically, the basic principle was to cancel debts that could not normally be paid, and prevent creditors from foreclosing on the land of debtors.

All economies operate on credit. In modern economies, bills for basic expenses are paid monthly or quarterly. Ancient economies operated on credit during the crop year, with payment falling due when the harvest was in - typically on the threshing floor. This cycle normally provided a flow of crops and corve'e labor to the palace, and covered the cultivator's spending during the crop year. Interest typically was owed only when payment was late.

Next Page  1  |  2  |  3  |  4

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

 

Must Read 3   Well Said 2   Valuable 2  
Rate It | View Ratings

Dr. Michael Hudson Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

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 and author of J is for Junk Economics(2017), Killing the Host (2015), The Bubble and Beyond(2012), Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971), amongst (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEdNews Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

De-Dollarization: Dismantling America's Financial-Military Empire The Yekaterinburg Turning Point

Peter "Socialist" Schiff _ Exposed by MMT's Michael Hudson

The IMF forgives Ukraine's debt to Russia

US Coronavirus 'Bailout' Scam is $6 Trillion Giveaway to Wall Street

The IMF Changes its Rules to Isolate China and Russia

America Escalates Its "Democratic" Oil War in the Near East

To View Comments or Join the Conversation: