The author is a widely quoted economist in the liberal and left-wing press, and consultant to several governments in Europe. He clearly is not an anti-capitalist, but probably more like a social democrat (one who advocates liberal labor and welfare laws). But he has a clear grasp of the failings of contemporary capitalism. (See below, the intro to his 2006 predictions about the imminent economic collapse) Apparently he thinks that the system can be reformed. As you must know if you follow this blog at all, I am convinced that the system of capitalism IS the problem.
In any case this article has a lot of insightful material regarding the current economic collapse and the application of neo-liberal policies. Although he focuses on Europe, I fail to see much in the way of differences between Europe and the US, except that the attack on labor in the US has occurred over the last 30 years while in Europe it is happening rather quickly.
...so far the neoliberals are fully in control of the bureaucracy, and they are reviving Margaret Thatcher’s slogan, TINA: There Is No Alternative. But there is an alternative, of course. In the small Baltic economies, pro-labor parties are pressing for the government to shift the tax burden off employees and consumers back onto property and financial wealth. Bad debts beyond the reasonable ability to pay must be scaled back. It may be necessary to let the banks go under (they are mainly Swedish), even if this means withdrawing from the Euro. The choice is between who will be destroyed: the banks, or labor?*******************************************************
European politicians now view this as being truly a fight to the death. This is the ideology that has replaced social democracy.
His May 2006 Harper's cover story, “The New Road to Serfdom: An illustrated guide to the coming real estate collapse,” was the first major national article forecasting - in precise chart form - the bursting of the real estate bubble and its consequences for homeowners and state and local government solvency. The November 2008 “How to Save Capitalism” issue of Harper's includes an article by Hudson on the inevitability of a large write-off of debts and the savings they back. (Wikipedia)
The following introductory paragraphs were copied from the online Harper's article (subscription required):
THE NEW ROAD TO SERFDOM
An illustrated guide to the coming real estate collapse
By Michael Hudson from Harper's Magazine, May 2006.
Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism
in the American cotton districts, in the old rubber plantations, and in
the factories of India, China, and South Italy, appeared as generous supporters
of and subscribers to the sacred cause of individual liberty.
-H. G. Wells, The Shape of Things to Come
Never before have so many Americans gone so deeply into debt so I
willingly. Housing prices have swollen to the point that we've taken
to calling a mortgage-by far the largest debt most of us will ever
incur-an "investment." Sure, the thinking goes, $100,000 borrowed
today will cost more than $200,000 to pay back over the next thirty
years, but land, which they are not making any more of, will appreciate
even faster. In the odd logic of the real estate bubble, debt has come
to equal wealth.
And not only wealth but freedom-an even stranger paradox. After all,
debt throughout most of history has been little more than a slight variation
on slavery. Debtors were medieval peons or Indians bonded to Spanish
plantations or the sharecropping children of slaves in-the postbellum South.
Few Americans today would volunteer for such an arrangement, and therefore
would-be lords' and barons have been forced to develop more sophisticated
enticements.
The solution they found is brilliant, although--it is complex, it can
be reduced to a single word--rent. Not the rent that apartment dwellers
pay the landlord but economic rent, which is the profit one earns simply
by owning something. Economic rent can take the form of licensing fees
for the radio spectrum, interest on a savings account, dividends from a
stock, of the capital gain from selling a home or vacant lot. The distinguishing
characteristic of economic rent is that earning it requires no effort
whatsoever. Indeed, the regular rent tenants pay landlords becomes
economic rent only after subtracting whatever amount the landlord actually
spent to keep the place standing.
Most members of the rentier class are very rich. One might like to join
that class. And so our paradox (seemingly) is resolved. With the real estate
boom, the great mass of Americans can take on colossal debt today and realize
colossal capital gains--and the concomitant rentier life of leisure--tomorrow.
If you have the wherewithal to fill out a mortgage application,
then you need never work again. What could be more inviting--or, for that
matter, more egalitarian?
That's the pitch, anyway. The reality is that, although home ownership
may be a wise choice for many people, this particular real estate bubble
has been carefully engineered to lure home buyers into circumstances
detrimental to their own best interests. The bait is easy money. The trap
is a modern equivalent to peonage, a lifetime spent working to payoff
debt on an asset of rapidly dwindling value.
