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Michael Hudson, author of the newly released J is for Junk Economics, says the media and academia use well-crafted euphemisms to conceal how the economy really works

SHARMINI PERIES: Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City. He’s the author of many books including, “The Bubble and Beyond” and “Finance Capitalism and Its Discontents”, “Killing the Host: How Financial Parasites and Debt Destroy the Global Economy,” and most recently, of course, “Junk Economics”.

Michael, your book reminds me of Raymond Williams’ key words. That was an incredible contribution to cultural criticism, a criticism of society and cultural studies as a discipline. And I think your book is going to make a phenomenal contribution to the field of economics. It would be a reference for people to go back, especially students to go back, and look at your version of the definition of these terms and looking at economics from that critical prism. So, my first question to you is really about this book. Why did you write it?

MICHAEL HUDSON: I originally wrote it as an appendix to a book to have been called, “The Fictitious Economy.” That draft was written before the 2008 crisis. My point was that the way the economy is described in the press and in University courses has very little to do with how the economy really works. The press and journalistic reports use a terminology made of well crafted euphemisms to confuse understanding of how the economy works.

In addition to giving key words to explain what’s positive and how to understand the economy, I discuss the misleading vocabulary, the Orwellian double-think used by the media, bank lobbyists and corporate lobbyists to persuade people that austerity and running into debt is the key to wealth, not its antithesis. The aim is to make them act against their own interests, by drawing a fictitious picture of the economy as if it’s a parallel universe.

If you can make people use a vocabulary and concepts that make it appear that when the 1% gets richer, the whole economy is getting richer – or when GDP goes up, everybody is improving – then the people, the 95% who did not improve their position from 2008 to 2016 somehow can be made to suffer from the Stockholm syndrome. They’ll think, “Gee, it must be my fault. If the whole economy is growing, why am I so worse off? If only we can give more money to the top 5% or the 1%, it’ll all trickle down. We’ve got to cut taxes and help them so they can give me a job because as Trump and other people said, Well, I never met a poor person who gave me a job.”

I’ve met a lot of rich people, and instead of giving people jobs when they buy a company, they usually make money for themselves by firing people, downsizing and outsourcing labor. So you’re not going to get the rich necessarily giving you jobs. But if people can somehow think that there’s an association between wealth at the top and more employment, and that you have to cut the taxes on the wealthy because it’ll all trickle down, then they have an upside-down view of how the economy works.

I had written an appendix to the book and that took on a life of its own. If you have a vocabulary that describes how the world and the economy actually work, then one word will lead to another and soon you build up a more realistic picture of the economy. So, I not only discuss words and vocabulary, I discuss some of the key individuals and the key economists who’ve made contributions that don’t appear in the neoliberal academic curriculum.

There’s a reason the history of economic thought is not taught anymore in the universities. If people really read what Adam Smith wrote and what John Stewart Mill wrote, they’d see that Smith criticized the landlords. He said that you’ve got to tax away their rents, because it’s a free lunch. Mill defined rent as what landlords make in their sleep, without working. Adam Smith said that whenever businessmen get together, they’re going to conspire as to how to get money from the public at large – how to do a deal and mislead people that it’s all for society’s good.

This is not the kind of free enterprise that people who talk about Adam Smith explain when they depict him as if he were a tax cutter, an Austrian economist or a neoliberal. They don’t want to hear what he actually wrote. So, my book is really about reality economics. I found that to discuss reality economics, we have to take back control of the language or economic methodology, not use the logic that they use.

Mainstream economists talk as if any status quo is in equilibrium. The subliminal trick here is that if you think of the economy as always being in equilibrium, it implies that if you’re poor or you can’t pay your debt, or you have problems sending your kids to school, that’s just part of nature. As if there isn’t an alternative. That is what Margaret Thatcher said: “There is no alternative.” My book is all about how of course there’s an alternative. But to make an alternative, you need an alternative way of looking at the world. And to do that you, as George Orwell said, you need a different vocabulary.


SHARMINI PERIES: Speaking of vocabulary and euphemistic economic concepts, that’s what’s so unique about this book. It’s not just the words, like in Raymond Williams’, but it’s also about the theory and the concepts that we are tackling. You also talked about businessmen and how they use these terminologies in order to mislead us. So here we have a businessman in office, as President of the United States, who is proposing all kinds of economic reforms supposedly in our favor, in terms of workers. And you know, the big infrastructure projects he is proposing that are supposed to elevate and lift people out of poverty and give them jobs and so on. What is the mythology there?

MICHAEL HUDSON: Well, you just used the word “reform.” When I grew up, and for the past century, “reform” meant you unionize labor, you protect consumers, and you regulate the economy so that there’s less fraud against consumers. But the word “reform” today, as used by the International Monetary Fund in Greece when it insists on Greek reforms, means just the opposite: You’re supposed to lower wages by 10 or 20%. You cut back the pensions by about 50%. Ideally, you stop paying pensions in order to pay the IMF and other foreign creditors. You stop social spending. So, what you have is an inversion of the traditional vocabulary. Reform now means the opposite of what it meant early in the 20th century. It’s no longer Social Democratic. It’s right wing, anti-labor, pro-financial “reform” to cut back social spending and leave everything in a privatized way to the wealthy, and to the corporate sector.

So reform is the first word that I’d use to illustrate how the meaning has changed as it’s used in the mainstream press. Basically, what the right wing has done in this country is hijack the vocabulary that was developed by the labor movement and by socialist economists for a century. They’ve appropriated it and turned it to mean the opposite.

There are 400 words that I deal with. Many of these words show how the meaning has been turned upside down, to get people to have an upside down view of how the economy works.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002). His new book is: Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy (a CounterPunch digital edition). Sharmini Peries is executive producer of The Real News Network. This is a transcript of Michael Hudson’s interview with Sharmini Peries on the Real News Network.

(Republished from Counterpunch by permission of author or representative)
• Category: Economics • Tags: American Media, Wall Street 
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  1. Ivy says:

    Looking forward to reading the book. So much of economics has seemed like peeling an onion and trying not to cry too much as more layers are unveiled (or, as the scales fall away). A sharp knife, like a good author, helps reduce the temporary unpleasantness when cutting through to the core of the matter.

  2. KA says:

    It is always a struggle how to prevent a system from getting taken over by the people who control the system Soviet system might have many reasons for failure but one main reason was the corruption that stifled possibility of redirection. Capitalism is no less corrupt and is corrupt for the benefit of the bankers, hedge fund managers , certain industries and for their families .

    I think human being has to be disabused from the thinking that it is fine for some one to legally steal because of whatever- i.e: they have more IQ,they are innovative,they bring wealth ,they are exercising their rights , they are working within the system . These ideas are man made man created and could be replaced by other man made ideas if that benefit the largest section . It has taken humankind thousands not hundred of years to realize that humanity needs to fight against natural forces , aginst natural enemies like snake and wild beasts to survive , against disease ,against unpredictability ,against unnatural manufactured ideas like God given rights or privileges to advance to feel safe and to make progress . Humanity needs to start thinking boldly again Now the forces that are arrayed against the survival and progress of humanity need to be understood , need to be cast along the same level as those of the adverse natural and unnatural forces or ideas or both and fight .

    • Replies: @Liosnagcat
  3. @KA

    Socialism is corrupt by design, for, unless participation is 100% voluntary, coercion by the state will be required to redistribute wealth. Capitalism, or, more accurately, free-market economics, while corruptible, is not corrupt by design, for, left to its own devices (i.e., without government intervention), it allows anyone to compete freely for his share of the pie.

    • Replies: @bluedog
    , @KA
    , @Fran Macadam
  4. woodNfish says:

    Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City……Basically, what the right wing has done in this country is hijack the vocabulary that was developed by the labor movement and by socialist economists for a century. They’ve appropriated it and turned it to mean the opposite.

    Translation: “Hudson is a communist,” and everything that goes with it.

  5. bluedog says:

    The wealth has been redistributed all upward as the capitalist took over, and look at where we are now \$20 trillion in debt and a looming depression free trade is a joke for with out fair trade you end up just where we are now running billions upon billions in deficits.
    As the one said capitalism is a twin sister to communism in the respect that it cause’s far to much poverty for far to many, and of course this has caused the social programs, for without those there would have been blood in the streets long ago.
    Now with all the jobs outsourced who’s going to pay the taxes as the capitalist fled to third world countries to increase their bloated profit to park it into off-shore accounts, to by-pass the tax man and then use all the created loop holes so they can write it off next year or down the road ,no I don’t believe it was social programs that created the 100,000,000 unemployed nor the thousands who will be added to it as the country continues to decline and it will.

  6. KA says:

    Capitalism still holds enormous promises to certain section and not without validity or reasons Having said so, it is difficult to understand capitalism without the contributions or the effects of the slavery,colonizations,drug laundering . We might add the war efforts in every decade and the contribution of the murder inc .known as military industrial complex as well to the bounties of the capitalism.
    It seems that the capitalism is entering its crisis just when the old colonized countries are stepping up to the front and staking claims to what until now was the Euro -American preserve . One additional point is how the capitalism would have evolved or wandered off without Oil-Dollar merger .
    These are not capitalism These are arrangements that have no logic other than pure muscle power play of forcing a certain or group of polices on the rest .

  7. Miro23 says:

    Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City……Basically, what the right wing has done in this country is hijack the vocabulary that was developed by the labor movement and by socialist economists for a century. They’ve appropriated it and turned it to mean the opposite.

    The labor movement and socialist economists weren’t going anywhere either.

    At some point individuals have to be given power (local taxation and spending) and the responsibility to get involved in their communities, do the work and abandon their “representatives” in Washington.

    Local issue based politics involves comprehensive citizen participation with research, debates and votes (also on national issues), which IS HARD WORK – but is a real functioning Democracy.

    The US public has long lost the kind of local Democracy ( the kind that De Tocqueville so admired), and has lazily let “representatives” do the work with the inevitable corrupt result. Left or Right has nothing to do with it.

  8. colm says:

    Soon the banks will own everything, kick all renters to the curb to die, and the remaining owners will open a new stage of civilization.

  9. Economy was destroyed when economists appeared. Because economists are ideologists, not economists. If we remove ideology, we will clearly see economy.
    1) We do not live in capitalism. Capitalism is when a person has money and he spends his own money.
    2) Under the current system, a person spends money that does not belong to him. The money belongs to the shareholders. This bogus “capitalist’ is a SEO who has power to spend someone else’s money. This “capitalist” is not the owner, he is a salaried employee. That’s, by the way, is the source of corruption.
    3) In a just society nobody should have power to spend money that does not belong to him. (Govt. except)
    4) I am now saying things that were well known before WWII. Please, if you want to understand economy, you must read this book:

    Adolf A. Berle “Power Without Property”, 1959, Harcourt, Brace and Co., NY. I recommend this book to anyone who wants to know the truth, well, at least to know about the first period of the communist subversion. Berle was not a conspiracy theorist, he was the US Deputy Secretary of State. His books now are never mentioned. He opposed J.K. Galbraith and his “Affluent Society” which laid the foundation for the destruction of the free economy and the free society in the West. Berle was an economist and a honest man. Galbraith – a demagogue. Galbraith won.

    Well, since Berle, things gone much, much worse.

  10. anarchyst says:

    Henry Ford, as vilified as he was, by the wall street banksters and their enablers (the chosen) was proven right.
    Henry Ford paid his employees \$5.00 per day, when the average wage was \$1.25 per day. Although not for altruistic means, but for attempting to keep a stable long-term workforce. his wage increase almost singlehandedly established the beginnings of the American middle class.
    He was able to reduce the price of his cars on a continuous basis; automobiles previously being reserved as playthings for the rich.
    He wanted his workers to be able to afford his products.
    Of course,the wall street banksters and their enablers howled that Ford would destroy capitalism…yeah right. Ford CREATED the middle class.
    On a parallel note, prospective and current Ford employees (of the day) were investigated by Bill Bennett’s “Service Department”. Although a heavy-handed, questionable aspect of Ford’s employment practices, his investigators made sure that his employees were firmly assimilated into American life and values. Living conditions and practices were thoroughly investigated. As Ford paid high wages, prospective employees were willing to undergo strict scrutiny. “Working for Mr. Ford” was not only a privilege, but was financially rewarding.
    Business schools would do well to study Henry Ford and his business practices…

  11. @Liosnagcat

    “Capitalism, or, more accurately, free-market economics, while corruptible, is not corrupt by design, for, left to its own devices (i.e., without government intervention), it allows anyone to compete freely for his share of the pie.”

    Well, since all are not equal, there develops the situation where the biggest elephant in the room grows to claim the right to crush everyone else underfoot, absence any community regulation (i.e. democratically accountable government.)

    One might well ask, what is the Mafia, other than a force that wants to remain free from oversight? Left to its own devices, it will secure a monopoly, competing freely for that position.

  12. OutWest says:

    About words;

    Tax the rich! The rich have wealth. Wealth is not taxed on the whole. We tax income. Income is largely the rate of change of wealth, but a guy with a startup and large debt to service is not rich. Clever those rich folk.

  13. anarchyst says:

    Go after the foundations (mostly left-wing, anyway) that have TRILLIONS. Subject them to the same auditing requirements as for-profit businesses.
    True wealth is almost never taxed. Maybe it is time…

  14. I’d be interested to know what Michael Hudson thinks of John Williams’ “Shadow Government Statistics”:

    Williams argues that the official statistics are rigged, and offers statistics calculated by other means. This resolves some problems – for example, how the USA can have a “recovery” without creating more jobs – because when calculated correctly the country has not had a recovery, it has been in recession since 2000 (except for two quarters).

    Is the picture as bad as Williams’ statistics suggest?

  15. Tax away rents, huh?

    Why go into the housing business then? Oh, I know, the STATE will house people.


    Just because our current system is a catastrophe doesn’t mean it’s time to reanimate the corpse of the Labor Theory of Value.

    If I create a surplus (by not consuming everything I produce), who give you or anyone else the right to tell me I can’t rent that wealth to someone else? If I make shoes in excess of what I need, who are you to tell me I can’t RENT OUT THOSE DAMNED SHOES?!

    I really get irritated by people who point to the Vampire Squid (Goldman Sachs) and then conclude that private property is evil.

    When you can explain how to allocate resources in the absence of market prices (Mises Socialism, 1922) I’ll give you a listen.

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