Why, on top of the pandemic, is the US stuck in an economic crisis and how can it get out? Michael Hudson, a highly respected economist, will address our question. Among Hudson’s many books on economics his most famous, just recently out in a 3rd edition, is: Super Imperialism: The Economic Strategy of American Empire. It traces our crisis to preparations, made as World War II ended, for making the US dollar the world’s reserve currency. Its first edition in 1971, however, came out soon after Nixon took the dollar off of the gold standard. Hudson had himself earlier cautioned Nixon against risks of such a policy but Nixon took the warnings as a how-to manual. Korean and Vietnam war debts might be relieved if nations exporting goods to the US could be made to buy US Treasury bills with their US dollars instead of gold. The risk paid off. The “super” in superimperialism consisted in the fact that buying T-bills in effect gave back to the US the dollars it had paid foreign producers (e.g. China, Japan and Germany). The US then spent them to militarily occupy or encircle the producer. To top off the new global financial control, US taxpayer money built global military domination.
But Hudson contends that by building and sustaining this global system of financial and military power since 1945, the US painted itself into a corner. Armed to the teeth but having abandoned manufacturing, with inflated costs unattractive to investors and affordable only to rentiers, he sees the US losing its industrial advantages and even its international competitiveness. By electing dissident leaders like Allende or Zavala, Chile and Honduras provoked US intervention. Result? Many nations feel growing needs to restore sovereignty - especially in finances. Russia and China, where banking is a sort of public utility, are often envied. More recently, he finds that the US has fallen into an us-them relation to the world exemplified by Trump’s paranoid fixation on borders.
Hudson identifies himself as a classical economist like Adam Smith and John Stuart Mill. His interpretation of Marx is almost unique to him and differs from major Marxists. He insists that exponentially growing debts that outstrip profits in the real economy are disastrous for both government and citizens. He would tax away unearned parasitic gains due solely to ownership. Yet he is also a dissident, noting that existing economic theory tends to serve rentiers (receivers of unearned gains due solely to ownership) in language that implies there is no alternative.
Yet Hudson insists a feasible exit from our crisis is in reach that is compatible with a re-invented US democracy in a new place among nations. He is among the most influential of today’s publicly visible economists. He is Distinguished Research Professor of Economics at the University of Missouri, Kansas City and lectures at Hong Kong’s Global University for Sustainability. Many interviews with him are available on You Tube.