Click here to access article by Michael Hudson posted on Naked Capitalism. (Note: this website has separated the longer piece posted on Hudson's website into four convenient postings, with this being the final one. I've noticed that the last seven paragraphs of the original were revised for this post.)
As I understand his view, it is a much more sophisticated version of the 19th century political economist Henry George's advocacy of a single land tax. Hudson has expanded this to all forms of income that do not derive from productive activity such as interest on loans, capital gains, value extracted from nature, etc. Hence, all income which he refers to as "rentier" income as opposed to earned income. Logically this should include currency issued by central banks on which interest is charged to sovereign governments, although I don't think he stated that directly in this piece. Thus, he is suggesting that most current debts that provide such income should be forgiven and that this type of income should be taxed at a higher rate to restore consumer demand and stimulate productive enterprises. This, of course, indulges in pure fantasy.
Also, it seems to me that it is quite confusing and futile to try to separate out productive from non-productive income. All income from productive capitalist enterprises involves some rentier type of wealth extraction. Where wealth comes from certainly doesn't matter to major capitalists including industrial capitalists who are currently sitting on piles of cash. Neoliberal policies and technology has enabled the latter simply to move their enterprises to other countries that can provide them with cheap labor and weak environmental laws. Thus, in Western capitalist countries the One Percent ruling classes have dramatically shifted to the remaining opportunity to extract wealth from an excess labor force--financial capitalism. Thus, the One Percent's pursuit of rentier type of income within Western capitalist countries is an effect, not a cause, of perfectly normal capitalist activity.
Although it would certainly be beneficial to relieve most people and governments of debt, it simply ain't gonna happen under our present system. You see, capitalism wasn't established to serve most people! For things to change, we, the people of the 99 Percent, must organize to deconstruct this exploitative system and replace it with one that serves all the people.
