The Industrial Revolution in North-Western Europe, studied in innumerable papers and books, happened largely “endogenously” by building upon the Commercial Revolution of the Middle Ages, putting science to direct economic use and creating new technologies. The Industrial Revolution in one corner of the world had been however accompanied, or perhaps even accelerated, by the four “bad” developments elsewhere.

The first was colonization of many non-European parts of the world. European nations imposed political control over most of Africa, Asia, and Oceania, and employed it to exploit natural resources and cheap (or forced) domestic labor. This is the so-called “unrequited transfers” whose extent is widely debated although there is no doubt that it was substantial. Angus Maddison puts it, from India to the UK, and from Java to the Netherlands, between 1 and 10 percent of the colonies’ GDP per year. Utsa Patnaik thinks that it was much larger and that it contributed significantly to the British take-off by funding up to 1/3 of funds used for investment.

The second “bad” was trans-Atlantic slavery that added to the profits of those who controlled the trade (mostly merchants in Europe and the US), and those who used the transported slaves in plantations in Barbados, Haiti, Southern United States, Brazil etc. This was clearly another huge “unrequited” transfer of value.

The third “bad”, as argued by Paul Bairoch and Angus Maddison among others, was that Northern countries discouraged technological advances elsewhere by imposing rules favoring themselves (bans on production of processed goods, Acts of Navigation, monopsony power, control of internal trade and national finances etc.). They are summarized in the term “colonial contract” coined by Paul Bairoch. Countries as diverse as India, China, Egypt and Madagascar come under this heading. “Deindustrialization and the fact that profits from exports have probably been appropriated by the foreign intermediaries have caused a catastrophic decline in the standard of living of the Indian masses.” (Paul Bairoch, De Jericho à Mexico , p. 514)

These “bads” have been, and continue to be, debated and while learning about each of them is to be encouraged, they do not have direct political or financial consequences on today’s world. The ideas, floated from time to time, for monetary compensation for such ills are far-fetched and unrealizable. Nor is there any ability to clearly identify the “culprits” and the “victims”.

However this is not the case with the fourth “bad”, the accumulation of CO2 in the atmosphere, and thus climate change, which is largely the product of industrial development. The fourth “bad” is today’s problem. It is not a simple past injustice that can be studied and debated, but regarding which nothing else can be done. The reason is that fresh industrial production continues to add to the problem of climate change. To the extent that the former Third World nations are now in the process of catching up with the “old” rich world, it is the fast-industrializing countries in Asia, as well as those who have recently discovered large deposits of oil (like Guyana), who may be significantly adding to the stock of CO2. Certainly, much more than they have done in the past. China, for example, is today the largest emitter of CO2. (It is not at all obvious that countries should be the main “parties” to this problem because it is the rich people who are the most important emitters. This is an issue I discussed here , and that for now, I leave out.)

If newly developing countries are then held responsible for their share of annual emissions (that is, for their share in the annual “flow” of emissions) as if the responsibility for the previous “stock” of emissions does not matter, this would slow the growth of the new industrializing countries and impose unjust costs on them. The emissions that exist are a “stock” problem. It is because in the past, the world, i.e. the currently rich countries, have made so many emissions that we face the problem today. In other words, climate change cannot be treated as a “flow” problem alone, and not even primarily so.

This holds especially true for countries that are poor today and that have not contributed to the emissions in the past. Shaming them means slowing their growth and undermining poverty reduction in the world. A poor country that is emitting 100 units of CO2 this year cannot be treated as a rich country that is emitting 100 units of CO2 this year. The rich country is more responsible because of its past emissions. (Whether the net accumulated stock of its emissions is directly proportional to its today’s GDP I do not know—but that it is positively correlated is acknowledged by all.) Thus, by any concept of fairness, the rich country would either have to commit to much lower absolute annual emissions than a poor country (which by itself would reduce income of the rich country) or to compensate poor country for all the income that it would have made through oil production or industrial output that it forgoes in order to reduce emissions.

Rich countries would either have to emit (on per capita basis) much less than poor or developing countries –ideally, in proportion to which they are responsible for the “stock” of emissions—or to compensate poor countries for any loss of income that comes from voluntary reduction of production.

This means that rich countries must either reduce their income levels, or transfer significant resources to the developing countries. Neither is politically feasible. The first scenario would imply GDP per capita reductions of a third or more. No political party in the West can win votes by suggesting income declines that exceed several times those experienced during the 2007-08 recession. The second scenario is likewise unlikely since it would involve open-ended transfers of billions if not trillions of dollars.

As rich countries cannot do either of these two things, and wish to maintain some moral high ground by speaking about the problem, we are treated to the spectacles like the recent interview on BBC where the President of Guyana was lectured about the possibility of Guyana emitting millions of tons of CO2 into atmosphere if its new oil deposits are exploited. Before the recent discovery of oil, Guyana’s per capita GDP was some $6,000 or in PPP terms about $12,000; the first number is one-eighth of that for the United Kingdom, the second, a fourth. Guyana’s life expectancy is 10 years less than that of the UK and the average number of years of schooling 8.5 vs. 12.9 in the UK .

The conclusion is thus: if rich countries are unwilling to do anything meaningful to address climate change and their responsibility for it, they should not use moral grand-standing to stop others from developing. Otherwise, one’s seeming concern with the “world” is just a way to shift the conversation and to maintain many people in abject poverty. It is logically impossible to (a) hold moral high ground, (b) to do nothing in response to past responsibilities; and (c) to claim to be in favor of global poverty reduction.

A comment on this article:

Since developmentalism is rooted in equality, justice and independence, the US painted it as the first step towards godless communism, forever tarnishing it in Americans minds. Then, in 1953, President Eisenhower launched the war on development by appointing the Dulles brothers – who had represented the Cuban Sugar Cane Co. and United Fruit Co. – as Secretary of State and CIA Director. When Iran elected a fervent developmentalist President, Mohammad Mossadegh, the Dulles brothers set out to destroy him and his country, a project that remains a White House priority.
Ike’s anti-development policy was called Capitalist Modernization Theory: Western societies are inherently progressive in ways older civilizations can never be, and the wealth they generate is distributed unevenly because some people work harder than others. But the only road to economic evolution and social modernization leads through free trade, individual effort and capitalism, and those who stray from the path will be destroyed.
So thorough was the anti-developmentalist campaign that the US carried its attack to the UN, where it blocked all resolutions recognizing food, shelter and national development as human rights. Learning of this a horrified Harold Pinter wrote, "The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good. It’s a brilliant, even witty, highly successful act of hypnosis. "U.S. foreign policy is best defined as follows: kiss my arse or I’ll kick your head in. It is as simple and as crude as that. What is interesting about it is that it’s so incredibly successful. It possesses the structures of disinformation, use of rhetoric, distortion of language, which are very persuasive, but are actually a pack of lies. It is very successful propaganda. They have the money, they have the technology, they have all the means to get away with it, and they do.” – Nobel Prize lecture, 1958.

Platypus interview on The Destiny of Civilization

The destiny of civilization: An interview with Michael Hudson
On July 15, 2022, Platypus Affiliated Society member D. L. Jacobs interviewed Michael Hudson to discuss his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism (2022). An edited transcript follows.

D. L. Jacobs: Can tell us about your background regarding Marxism and how you came to political economy?
Michael Hudson: Well, I grew up in a Marxist household. My father was a political prisoner, one of the Minneapolis 17.1 Minneapolis was the only city in the world that was a Trotskyist city, and my parents worked with Trotsky in Mexico. So, I grew up not having any intention of going into economics. I wanted to be a musician, and when I was 21, I began writing a history of the connection between music, art, drama theory, and the Renaissance in the 19th century. But then I went to New York and went to work on Wall Street just to get a job. I met the translator of Marx’s Theories of Surplus Value, Terence McCarthy, who convinced me that economics was more interesting than anything else that was happening. He became my mentor, I took a PhD in economics, and that’s it.

DLJ: You begin The Destiny of Civilization by talking about how it was the historical task of both industrial capitalism and classical political economy to emancipate the economy from feudal rentiership. How was classical political economy revolutionary?

MH: Marx said that the role of industrial capitalism was to cut costs of production in order to compete with industrial capitalists in other countries. There are two ways of reducing the costs if you are a capitalist. One is to simply lower wages, but if you lower wages, you don’t get high productivity labor. The Americans, by the 19th century, realized that the higher the wage was, the higher the labor productivity, because productive labor was well-educated. well-fed, healthy labor. The idea of capitalism was, number one, to reduce the costs of production that were unnecessary. Namely, what did labor have to pay just to live that wasn’t really necessary. The biggest cost of labor was land rent — this paid for high food prices if there was agricultural protectionism, as in London, England until 1846 — and housing rent. The idea was that socialism would replace all landlords as rent recipients by either taxing away the land rent or nationalizing the land.

The state would be the landlord and that would be its source of fiscal funding. It didn’t have to tax labor, but would tax landlords. The other way that capitalism would reduce labor’s living costs was working to prevent monopolies, to prevent all forms of economic rent. That was revolutionary because feudalism was based on a hereditary landlord class: the heirs of the warlords, the Normans, who had conquered France, England, and the rest of the earth. The monopolies that had been privatized and created were largely by governments running into war debts. The bank of England was a monopoly created with £1.2 million to be paid and government debt. Many British trading companies and monopolies, like The South Sea Company of the South Sea Bubble, were created this way in order to finance their war debts.

Capitalism wanted to get rid of all of the economic overhead and to be a more efficient society. Instead of having private monopolies produce basic needs like health care, it will have public health care. Instead of monopolies providing communications, transportation, or telephone services, the government would have these basic needs provided either freely or subsidized so that labor wouldn’t require a high salary from its industrial employers to pay for its own education, health care, or the other basic needs. In the late-19th century, everybody thought that industrial capitalism was evolving into socialism of one kind or another: not only Marx, but a proliferation of socialists and books on socialism, e.g., John Stuart Mill, Christian socialists, libertarian socialists. The question was, what kind of socialism would everyone take? That made capitalism revolutionary, until the point that World War I broke out and changed the whole direction.

DLJ: You begin Chapter 5 of Destiny with, “[t]he 19th century’s fight to tax away land rents, nearly succeeded, but lost momentum after World War I.”2 Can you elaborate on this?

MH: In the late 1890’s, the rentiers began to fight back. In academia the real-estate interests and the banks got together and denied that there was any such thing as economic rent. Capitalism is revolutionary, because it wanted to bring market prices in line with the actual cost of production; economic rent was the excess of price over the intrinsic cost value. The idea was that economic rent was a free lunch. and that because it was an empty price, it was a price without a corresponding cost-value. In the U.S., John Bates Clark was saying, there’s no such thing as economic rent. The landlord actually provides a public service in deciding who to rent to and the banks provide a public service in deciding to whom they will make loans. Everybody deserves whatever they can make. This concept underlies today’s Gross National Product (GNP) accounting. If you look at America’s GNP accounting, you have a rent and interest included as a profit — not only interest, but bank penalties and fees.

A few years ago, I called up the Commerce Department that makes the national income and product accounts, and I said, “where do bank and credit card companies’ penalties and late fees occur?” I’d read that banks make even more money on late fees and penalties than they do on the enormous interest charges on their credit cards. And they said, “that’s financial services.” I asked, “how is that a financial service?” And they said, “that’s what banks do: they provide the service, and what they charged was the value of the service.” That’s not what the classical economists would have said. They would have said that what banks charge is an economic rent for the service, and this should be a subtraction from the national income and product accounts, not in addition to it.

I’m working with Dirk Bezemer and others on an article where we calculate how much of the GNP, the reported product, is actually overhead. In other words, what is Gross Domestic Product (GDP) without the FIRE sector (finance, insurance and real estate)? A strict classical economist would say, let’s take out the monopolist rent. How much of American industry’s reported profits, e.g., in healthcare, are really monopoly rent? The idea of industrial development today is to carve out a monopoly where there’s no competition and get super profits. This is a concept that has been dropped, really, ever since World War One, about a century ago. There’s no distinction between productive and unproductive labor, between wealth and overhead. John Bates Clark said that if somebody’s wealthy, they earned the wealth; there’s no such thing as unearned wealth. Today wealth is mainly achieved by asset-price inflation; by capital gains. You won’t find a single wealthy family that made money simply by saving up what they earned. They make money by increasing the price of their stocks and bonds and real estate holdings, not by saving up their earnings. Yet, capital gains, i.e., asset-price inflation, are left out of the statistics of almost every country. So it is very hard to explain how wealth is achieved, and yet that was the purpose of economics in the 19th century and centuries before. But suddenly the idea of wealth has been suppressed as sex was in the day of Sigmund Freud.

DLJ: In Destiny and your articles, you note how the classical conception of the free market has been inverted.3 I.e., it used to be freedom from rentiership, and now it is the freedom of rents. You made reference to GDP, and this goes back to Adam Smith and Ricardo’s distinction of productive and unproductive labor, or net revenue and gross revenue. But Smith also described the government officials as unproductive in that sense, and you can find it in Smith’s translators and Marx.4 In Destiny, you bring up Simon Patten talking about the “fourth factor of production.”5 How does that fourth factor relate to what Smith and Ricardo talk about regarding value? They would say the government officials are not productive labor, yet you’re discussing how they reduce costs by providing public infrastructure.

MH: From Antiquity up through Adam Smith’s time, the main government expense was war, e.g., ancient Rome. Almost all of the public budget was war-making and police, which Smith sees as the same thing. Government had not begun to provide many public needs by the late-19th century. Things that change there were basically from 1815 when the Napoleonic Wars ended outbreak of war in 1914. They call, that was almost a people. Call it a war free Century, despite the Crimean War, and the Civil War, but basically, there wasn’t a World War at that time. Increasingly more of the government budget was spent on public utilities as they were introducing the new industrial, transportation, and health technology.

After the Civil War, American students interested in economics mainly went to Germany to study, and they came back to the U.S. with an idea of Bismarckian state socialism. The chair of the first business school at Wharton School of Economics at the University of Pennsylvania was Simon Patten, who said that land, labor, and capital all receive the respective forms of income, but there is a fourth factor of production: public infrastructure. Public infrastructure differs in that it’s not trying to make a profit or an economic rent. It sells at less than the cost of production, because it’s trying to subsidize the economy, and its productivity should be measured in principle by the degree to which it lowers the economy’s overall cost of production by providing subsidized or free public services.

That concept is antithetical to Margaret Thatcher and Ronald Reagan, who began privatizing these public utilities. The difference is that a privatized, public utility is going to use borrowed money usually — so you have interest charges — and it must make a profit — so you have profits added on the price. In fact, public utilities are natural monopolies, which is why they’re public in the first place. You have economic rent added on, along with other privatized costs that have to be covered. Government doesn’t have to cover the cost: that’s what the taxes are for. If the taxes are a public collection of rent, a rent tax, they’re not only preventing economic rent and lowering the whole economies close to production, but they’re funding public infrastructure to further lower the cost of production. That’s what helped the U.S. undersell Europe, especially England, and become the leading industrial power — by staying out of WWI, except to act as a creditor — emerging from WWI as by far the world’s major intergovernmental predator, to such an extent that it brought on the Great Depression and WWII to resolve the reparations and inter-allied debt problem from WWI.

DLJ: You mentioned Bismarck, and I think of the famous painting of the Battle of Sedan6 where he’s sitting with Louis Bonaparte, the other Bonaparte — to use this language in Europe at the time. Right after the 1848 revolutions, Louis Bonaparte invested in railroads and a lot of investment in Paris, and Marx refers to this as “Imperialist Socialism.”7 The state is stepping in but doing so in order to quell the class struggle. How do you see that then related to this question of government intervention? On the one hand we could say yes, lowering the cost, but on the other hand, isn’t it preserving the conditions that are giving rise to capitalist exploitation and production?

MH: The question is who’s going to control the state? Is the state going to be run by leaders who are engaged in long-term planning as to how to make the economy more productive and raise living standards, or is the state going to be taken over by a financial oligarchy that wants to increase the cost and deindustrialize?

Already 2,500 years ago, Aristotle said that many economies and constitutions that are thought of as being democracies are really oligarchies. That certainly is the case today. Oligarchies call themselves democracies. President Biden says, the world is dividing into two right now: democracy versus autocracy. The autocracy is in the U.S. That’s the oligarchy. Democracy is a confusing word. Political democracy has not been effective in checking economic oligarchy, because, as Aristotle said, democracies tend to evolve into oligarchies and they make themselves into hereditary aristocracies.

The only counter example in early history of what America calls autocracy or Karl Wittfogel called “Oriental Despotism” was the Near-East take off. Every Near-East, Mesopotamian, Egyptian ruler would begin their reign with a debt cancellation, a clean slate. They would free the indentured servants, cancel the debts, and return land that was forfeited to the former holders to prevent an oligarchy developing. Civilization in the 3rd–1st centuries BC — all non-Western cultures, going all the way to India and China — try to prevent a mercantile and financial oligarchy from developing.

The West didn’t do that. They had no tradition of royal clean slates, and when they did have their own revolutions in Greece, you had the so-called tyrants. I.e., reformers, who overthrew the closed aristocracy, canceled the debts and redistributed the land. They did just exactly what the Near East did and they catalyzed democracy in Greece. There was infrastructure spending in ancient Greece in the 7th and 6th centuries BC. By the 3rd and 2nd century BC the Greeks were saying that when the oligarchy had taken over, a reformer was someone seeking tyranny. That’s when tyranny took on a bad connotation, like “socialism” today.

The same thing happened in Rome. Rome began with kings trying to make Rome grow in a mosquito-laden, hilly area near the Tiber River. Rome began by offering land rights to fugitives fleeing debt bondage, and the neighboring towns of central Italy. The kings were overthrown in 509 BC, the oligarchy took over, and there were five centuries of revolts by the Romans: the secession of the plebs in the 490s BC, the second secession after 450, and then the many fights. The oligarchy accused any reformers urging alleviation, urging more equal distribution of “seeking kingship.” because there can’t be any state strong enough to check their ability to impose land rent and other forms of economic rent.

When President Biden juxtaposes democracy to autocracy, he wants America to fight against any country — Russia, China — that does not privatize its public domain like Thatcher and Reagan were doing. Biden defines an autocracy as a country that does not privatize and make a free market for the rentiers to take over. The ideal of American neoliberalism is what the Americans did to Russia under Boris Yeltsin: take all of the public assets, the nickel mines, oil, gas, and the land and give it to the managers to register in their own name. The result was that Russia lost more of its population as a result of neoliberal privatization than it had lost during WWII, as President Putin likes to say. This is the whole framework of Destiny, where I am trying to clarify, what is democracy, and what is autocracy, and what is socialism?

DLJ: You write that this is something Western civilization has never dealt with8 — even the political economy has shown it to be unproductive. Marx frequently makes reference to the debtor and creditor struggles in ancient Rome and he usually quotes Simone de Sismondi, who will say that whereas the ancient proletariat lived at the expense of society, modern society lives at the expense of the proletariat.9 Likewise, Smith in Wealth of Nations says that the modern representative institutions were unknown in ancient Rome.10 While there have been examples of debt cancellations today, wouldn’t one say that they also had a different organization of society, when a king would cancel debts in ancient traditional societies? To some degree, yes, we can do it today, but there are different institutions, and the bourgeois revolution might complicate the cancellation of debts, at least, creating a kind of political problem unknown in ancient Greece.

MH: They’re different kinds of debts, and canceling them requires different kinds of institutions. E.g., what’s most in the news these days is student loan debt and that it could be canceled by just an act of President Biden, which he won’t do, because he’s the person that sponsored the bankruptcy law.11 That law made it impossible to cancel student debts by bankruptcy laws. It could be done by a congressional law. The government has all sorts of regulatory agencies to handle corporate debt write-downs. Corporate write-downs in bankruptcy proceedings are a normal course, taking place almost continually, and we’re going to see that again. There are real estate debts.

When the junk mortgage frauds peaked in 2008, President Obama ran by promising to write-down the junk mortgage debts to the actual market value of the homes bought by the victims of bank fraud and to bring the mortgage payments in line with the current rent. As soon as he was elected, Obama invited the bankers to the White House and said, “don’t worry. I’m the only guy standing between you and the pitchforks. That was just to get elected. I’m on your side.” He proceeded to evict seven or eight million American families.

Not only did Obama not write-down the debts, but he started quantitative easing that has given nine trillion dollars to support the real estate market, the stock market, and the bond market, so that the banks and the wealthy rentier 10% of the American economy would not lose any money.

The result was that American home ownership rates have fallen from 69% and plunged into the 50s. America is being turned from a middle-class home ownership economy into a landlord economy. We’re regressing back towards the 19th century, including its legacy of feudalism. That’s what we’re moving toward, as official government policy. We still have a strong government, but the role of the government is now to enforce the debts, not to write them down, and the most serious debts in the news are actually international debts. And of course, international debts cannot be settled by one nation. What is the vehicle to cancel the debts of global South countries like Argentina, that is now in yet another crisis with the International Monetary Fund (IMF). The Argentinian crisis, Sri Lanka — all this will characterize the Global South by this fall as a result of rising energy prices for oil and gas, rising food prices, and capital flight to the U.S. as it raises its interest rate.

If countries have to pay more for food and energy, how can they afford to pay their foreign debts? It’s necessary to have a new international organization to sponsor this. That’s what both President Putin and President Xi have said: we’re going to create a BRICS12 bank as an alternative to the World Bank and the IMF and this will have to accompany a new world court. We are going to provide a different philosophy of operations for this bank: the principle is that no country should be obliged to lower its living standards, bankrupt itself, and privatize its public domain in order to pay foreign debts. If a country can’t pay its debt, it’s a bad loan, and just as individuals and corporations are allowed to declare bankruptcy, countries should be able to declare bankruptcy.

These are mainly dollarized debts. Even though they’re not owed to the U.S., they’re often owed to their own oligarchies. Most dollar debts in Brazil are owned by Brazilians. Most dollar debts of Argentina are owned by wealthy Argentines because no one else is going to take a risk that they won’t pay. But the Brazilians say, we run the presidency, the central banks, and most of all, we run the police: if someone wants to cancel the debts, we’ll just kill them.

Violence has always been hand-and-hand with a high finance ever since Rome, through the Spanish, English, and French empires. The advocates of debt cancellation, from Catiline to Julius Caesar, were assassinated. There were five centuries of assassinations of Roman senators and reformers wanting to alleviate the debt. The U.S. is engaged in similar practices today. So you are right to put the debt in the political context. What is the vehicle to oversee debt cancellation, when in almost every Western economy, the oligarchies — often creditor oligarchies — have taken control of the government, as in the U.S. via election funding and dominating policy. This is unique in Western Civilization.

There’s always been empires consolidated by extortion of colonies. Today, we don’t say that America is involved in colonialism; we say America is a leader of globalization, which is a euphemism for colonialism, specifically, financial colonialism that indebts other countries, using that as a lever to privatize their public domain, utilities, national resources, and their commanding heights.

DLJ: Returning to the 1890s, this is the period leading up to 1914, which is, as you put it, the turning point for the dollar creditocracy: the 1890s as the imperialist era, in the Second International and going into the Third International. I was thinking about Lenin’s view of the growth of finance and of how you had banks that were taking over different companies, that were maybe even competing with each other and/or different sectors. He saw this as an opportunity for socialism. In your text, you mention how finance capitalism has diverted from socialism, or inhibited or blocked that opportunity.13 I was thinking of Lenin’s famous line, “[w]ithout big banks socialism would be impossible.”14 This doesn’t mean that J. P. Morgan and Bank of America are socialist, but rather that they created the institutional apparatus that could be the transformation into a socialized society.

MH: In terms of how economies allocated their resources and how they were planned, this forward-planning was coordinated largely by banks, often in conjunction with the government. This occurred most clearly in Germany where the German government worked with the Reichsbahn and heavy industry, especially in the military field, to build warships and armaments. The idea was state capitalism in Germany: a three-way linkage between government, industry, and finance. In the U.S., these were separated: finance took the form of the mother of trusts. The Wall Street banks would create a steel trust, a copper trust, and they would integrate all the different companies in the field to create a monopoly. In this case they were the former planners trying to create monopolies, but there was the Sherman Antitrust Act of 1890 and Teddy Roosevelt coming on as a trust-buster. Roosevelt tried to prevent finance acting as a promoter of the rentier class, as the monopoly class, to prevent industrial capitalism from being turned into monopoly capitalism. All of this momentum ended in the wake of WWI.

But there was this question of what kind of socialism are we going to have? What kind of government are we going to have? Are we going to have a government that is in charge of steering prosperity and raising living standards or a government by the 1%, the elite, who will impoverished societies? Two things happened in 1913 in the U.S.: first, income tax that only fell on the wealthiest 1% of Americans, mainly on monopoly rent and real estate. The other event of 1913, at the very end of the year, was the Federal Reserve was created to replace the Treasury and to take over the Treasury’s function, shift financial policy, moving away from Washington to Wall Street, and other financial centers, such as Philadelphia and Boston. This was the explicit aim.

The National Monetary Commission published a series after the 1906–07 crash: a wonderful set of volumes about reviewing the global financial situation all over the world. David Kinley wrote a book on the U.S Treasury, showing that essentially the Treasury was performing all of the functions that we now think of as part of the Federal Reserve. The Federal Reserve has 12 districts, the Treasury had sub-Treasuries all over the country that were in charge of local development. All of this was privatized under the leadership of J.P. Morgan, who organized the Fed and sponsored President Wilson, who also got the country into war. The Democrats were, from the very beginning, the party of the rentiers, the anti-Labor party, as they are today. They were the sponsors of Wall Street as opposed to the Republicans, who until the 1970s and 80s, had represented industrial capitalism protecting itself from the rentiers.

Looking at the turn of the 20th century, you see the different roads that could have been taken, and you realize that there were many alternatives and that there’s nothing natural in the way that today’s economy is structured. Economists say this is the result of Darwinian struggle for existence, and that’s what the free market is, and there is no alternative as Thatcher said. But there were plenty of alternatives back in the 1890s, when the world seemed to be moving towards socialism of one form or another, especially the Marxian socialism dominated by the wage-earning class which was going to be democratic socialism.

Instead we have oligarchic socialism in the U.S. and oligarchic state capitalism really isn’t state capitalism. Think of America’s policy as state neo-feudalism, because the purpose of the state is to protect the rents of finance, real-estate, oil, mining, and natural resources. The idea of the Biden Administration — really of both the Republican and Democratic Parties — is that since America has moved its industry and manufacturing to Asia in order to lower the wages here, how can Americans continue to get high-living standards, if it doesn’t produce raw materials or manufacturers? How can it be a post-industrial society, getting rich on economic rents and interest on and profits paid by foreign countries? How can America get rich by being a parasite? That was a problem that the Roman Empire had, and we know what happened to the Roman Empire. It was a problem that the British Empire had, and we know what happened to that: it can’t be done.

This attempt to make America into a post-industrial society means a rent-seeking, neo-feudal society, treating the rest of the world as a colony under globalization. How can that work? Well, It’s not working. Biden’s war, the NATO war, against Russia in the Ukraine is the catalyst dividing the world into two. That’s why Secretary of State Anthony Blinken said that the Ukraine war is part of a process that will go on for at least two decades, because it takes time for the world to split away into a neo-feudal West and a productive, basically socialistic Asia, or industrial capitalist and socialist Asia, and Eurasia, along with much of the global South.

DLJ: You have an interesting history about Georgists, socialists, and the debates between them regarding the rent question, or the emphasis on capital and labor. Is the neo-feudalism or the new rentiership of the West bound up with a failure of socialism in some way? I.e., you discuss the manner in which mainstream socialists forgot the rent question or subordinated it to capital and labor.15

MH: Henry George was one of the first investigative reporters that exposed the inequity of rent-seekers. His first book was a wonderful exposé of how the railroads got land grants in order to develop the land, using the land grants to become highly exploitative landlords throughout the western states. This was impoverishing the farmers by siphoning farm income off in the form of land rent and railroad charges. George became popular in the large cities that were largely Irish — New York, and Boston — by writing a wonderful book on the Irish land question. His writings inspired a generation of journalists in the 1870s–90s, such as Ida B. Wells and Upton Sinclair. Many of these reformers had originally been supporters of George. When there was a New York City election, the socialists and the labor parties selected George to run as mayor, as a celebrity-candidate, because he had written Progress and Poverty (1879). It’s not a very good book, but it was very popular at the time.

George said he could only run if he could get rid of everything that the socialists had wanted; everything that the working-class had wanted. He said, “I have a panacea, it’ll solve everything: just tax the land. You don’t need control of landlords, you don’t need to make them have decent housing. All you need is land-rent.” The socialists said, “There’s much more to the economy than taxing the landlord; there’s a labor problem. There’s a financial problem. The banks seem to be running everything.” George said, “the enemy is big government.” The socialists replied, “you need a strong enough government to check the landlords, who are the strongest class in New York City which is largely a rental city?” So, George formed his own political party, expelling any socialists and he defended the banks.

Many bankers supported him because he called for the banks to remain in private hands. He said, “I can’t figure out a way to tax a bank interest, like you can tax land-rent.” He was criticized for that, the party didn’t go anywhere, and he ended up expelling his strongest supporters, who had joined him thinking that taxing the land was part of an overall social restructuring. The word panacea, sort of developed specifically because it went hand-in-hand with the name of the Georgists. George’s followers became libertarians and anti-socialist.

Followers of George and the socialists went all around the U.S., having debates, most of which were transcribed and published by Charles H. Kerr & Co., the socialist collective that published Marx’s Capital in English. The common theme of the debate was that society is going to go in one direction or another: either socialist or middle-class. The problem is that taxing the land rent doesn’t solve the labor problem. It doesn’t solve the tension between wage-earners and employers as to working conditions that they have. It doesn’t have anything to do with economic planning. George had actually become libertarian and anti-socialist, and his followers became so anti-socialist that in Europe they were the among the earliest supporters of the Nazis. In the U.S. they were noted Nazi sympathizers. Many of the leading Georgists were known for their anti-Semitism. When I went to the Henry George School Library in New York, I was amazed at all the anti-semitic books in their library. I knew a number of teachers there, and they said that because the school was supporting Germany early in WWII, most of the attendants were FBI agents. The head of the School told me that the number two guy at the Henry George School was part of the Nazi intelligence operation in the U.S. before escaping back to Germany.

I realized that a government strong enough to check the landlords has to be a socialist government. You can’t say, I’m a libertarian, I’m against strong government, and then hope that the landlords are going to end up being taxed. That’s an oxymoron.

DLJ: You write:
[i]t always should be borne in mind that solving the problem of finance capitalism and the rentier legacy of feudalism would still leave the class conflict of industrial capitalism in place. Freeing the economy from rentier overhead charges would not solve the problem of exploitation of labor by its employers. But taking the intermediate step of creating a classical economy free of rentier claims is a precondition before the labor/capital conflict can become the focal point of political reform, having finally freed capitalism from the rentier legacy of feudalism.16

It seems the socialists should have paid heed to this question of rentiership and that this was an opportunity missed at the turn of the 20th century. You’re saying that today financialization is a more immediate barrier rather than subordinating finance to the capital-labor relationship.

MH: This shows the role of personalities in history. The Georgists were so anti-socialist that the socialists left the rent issue to followers of George. That’s why it was Marxists and socialists who wrote about finance capitalism, whereas most of the society treated finance as if it were part of the industrial system, not extraneous to the industrial system.

So you’re right. The socialists after WWI didn’t focus highly on finance, but things changed quite a bit after WWII. The CIA put money into supporting progressive literary and cultural figures as leaders of the socialist movement, focussing on what the CIA called, “the mighty Wurlitzer,” to control public opinion concerning the socialist parties. This results in the British Labour Party having Tony Blair, who was to the Right of Thatcher, who identified Blair as her greatest legacy, in privatizing Britain’s railroads. The social democratic parties in Europe jumped on the neoliberal bandwagon largely because of the U.S. meddling in foreign politics, which pushed neoliberals and socialists to stop talking about economic issues.

In the U.S., there is identity politics, but the one kind of identity you don’t have is the identity of wage earners. That’s been stripped away from the socialist parties of the United States and Europe, and so the socialist parties are no longer socialist. The irony is that what people thought of as being a socialist in a sense of a more efficient economy, free of bad statism and free of war — the Republicans in the U.S. and the nationalists in France and Germany are against the war in Ukraine, the NATO War. The socialists, Bernie Sanders and AOC, voted for giving money to Ukraine. So the word socialism has changed quite a bit into the opposite. Almost the whole economic vocabulary that is used today is the opposite of what it meant a century ago, and that’s what my book, J is For Junk Economics is all about.17 That’s what I talk about when I’m in China.

DLJ: Do you see China as realizing the ideals of classical political economy better than the West? That might be a provocative statement because, for a lot of Americans, China means communism, and so it would mean the opposite of Adam Smith — at least that’s what we’ve been taught since the 20th century by something like the Adam Smith Institute, a neoliberal think-tank.

MH: The Adam Smith Institute hates everything that Adam Smith stood for. That’s why it’s called the Adam Smith Institute: to confuse people! Smith wanted to tax land-rent. The Adam Smith Institute wants to glorify the landlords, privatize public housing, and create a rentier and financial utopia for the 1%. There’s a reason why the economics curriculum in the U.S. no longer has the history of economic thought, because if you study the history of economic thought, which they taught when I was in school 60 years ago, you would know that when people talk about Adam Smith and free markets, it’s the exact opposite of the kind of free market that Smith talked about. What Marx described was capitalism. That’s why he called his book Capital, not Socialism.

What the Chinese government is trying to follow has been called a “state-capitalist society” or a “communist society”: the focus is on productive labor and productive investment. The most important feature of China is that it kept the banking sector and money creation in the public domain. In the West, commercial banks create credit against assets that are already in place. Mortgage loans are made against real estate in place. Corporate takeover loans are made to corporations in place. Government control of money, as it was in Germany in the late 19th century, created new means of production, especially public infrastructure.

China does not have its banks make loans for corporate takeovers, or for mergers and acquisitions. China makes them increase the means of production. In that sense they are following the industrial capitalist policy that evolves naturally into socialism, which is why they call themselves a socialist economy, and rightly so, because they’re not running the economy on behalf of the 1%. Obviously, by letting a hundred flowers bloom, they realized that the state cannot act as the Stalinist state did as a central planner. They need innovation, they need individual innovators to create market opportunities and new products and that’s been best done by letting market forces take place. But when somebody achieves such a hyper-billionaire level, as did Jack Ma with his phone payments company, they coordinate the private wealth that is created to serve the long-term public interest. That’s why there is a strong state.

The Communist Party of China is delegated to administer economic democracy, something that political democracy has not been able to do in the Western countries. You need a state to act as the agent of social planning, so that it’s not the banks and the rentier sector that does it, as occurred in the U.S. and Western Europe. Europe. China is doing what most of the world was doing before Western civilization took off and in an oligarchic form.

DLJ: Do you think the U.S. could do that? In many ways, China’s extraordinary growth, especially post-Deng Xiaoping reform era has presupposed the U.S.’s current account deficit; these “twin deficits” where the U.S. is this large importer from China. I’m thinking to what degree there’s also a mutual character to it as well. Maybe that has been in crisis. When Trump came to office – I’m not saying whether or not he was correct – he was expressing to some degree a process of deindustrialization in the U.S. that has turned the U.S. into a consumer nation without having any production. When I think of two nations having industrial production, I also think back to the end of the 19th century, what Karl Kautsky called the fall of the Manchester School: once one country begins to have state intervention, it encourages other nations to have state intervention. How do you see this working out, besides the more violent past? What do you think would be a more positive way of this working out?

MH: Technologically, of course, the U.S. could redevelop; it has developed before. But it can’t do so, because politically it’s controlled by the anti-labor party. Both Democrats and Republicans are controlled by the rentier interests that seek to increase corporate profits by looking around the world for the cheapest labor, which is not in the U.S.

An even more serious problem is that the rulings in the Supreme Court have turned America into a failed state, e.g., how the Supreme Court ruled that the existing anti-pollution laws, the environmental protection laws by the EPA were unconstitutional, because the government has no power over the states. Or when they say “we on the Supreme Court know that the Constitution was written by slave owners who wanted state power to be in the states, not the federal government, because they feared that if there were a federal government and the northern population wanted to abolish slavery, we could abolish it. Every state gets to go their own way.”

America is an evolved slave-owning state, even though there’s no more slavery, the fight against federal power has been adopted by rentier class. It’s literally a neo-feudalism class. If you cannot have the government, either Congress or the president impose basic environmental, social, educational, or any other social regulation, and if everything is deregulated state-by-state, you have a dissolution of the government and a paralysis. The U.S. now is in a state of political paralysis locking itself into the current status quo, which means that the U.S. cannot have any kind of an industrial recovery, because that requires a federal policy to check the overhead of the banking system, the real estate sector, and the insurance sector. You can’t have a Supreme Court that would prevent any kind of a public health system, a single-payer public health system, and yet 18% of America’s GDP is for medical care. America has priced its labor and its industry out of world markets by having to pay so much debt service, so much insurance for medical care, home insurance, and real estate rents. As long as this revenue is paid out in the form of rent, you’re not going to develop.

DLJ: It almost sounds like you’re pointing to the need for a political revolution. If the potential for development in the U.S. is checked by a rentier class, it is an infringement upon the people, from the perspective of classical bourgeois political theory.

MH: If other countries in the past had a problem like the U.S. now has with the Supreme Court, they would have had a revolution. A European prime minister would invite the court into the office and say, “I’m sorry but I’ve got to make a choice: either you resign or I’m going to have to either execute you or let the mob outside come in and lynch you.” Wouldn’t you rather resign? It would be settled by some kind of revolt like you’re seeing with the Yellow Vests in France or like you saw in the 1848 Revolutions throughout Europe. That’s not likely in America because there’s no real consciousness that there is an alternative.

There’s no group in America, no political party, that is offering an alternative to the current political and economic system in America. The fact that you have two parties in America that are really the same party, means that there’s no room for a new party to come and, as it would in Europe, get represented in Congress. In Europe, you can have any number of parties, and they would be represented in Parliament in proportion to their votes. A third party would be kept off the ballots in the U.S., and that’s why Bernie Sanders and others decided not to run as a third party; there’s no way we can meet the court challenges by the Republicans and the Democrats together. Sanders had to pretend to run as a Democrat. But we’ve seen that the Democrats don’t want any part of anything progressive. There’s an illusion that somehow the Democrats can be progressive because they have people who can’t find any alternative, who are running as a Democrat. Whereas in Europe, they are running as nationalists, as third parties, e.g., Alternative für Deutschland.

I just don’t see the political development in the U.S. that would be a precondition for an economic restructuring to get back on the pre-WWI track. There was anti-monopoly legislation that would be hard to impose. Biden talks as if he’s against monopolies. but he’s supporting the monopolies, e.g., for Pfizer with regard to the vaccines: the government does the research and gives it to Pfizer who makes huge monopoly rents protected by the Biden Administration. Large companies are able to buy control of the politicians by paying for their election contributions under the Citizen’s United Supreme Court ruling, and they do. They control the mainstream media. People just don’t have an idea that there is an economic alternative, which would not be the socialism that is represented by people who call themselves socialist, but are actually enable neoliberals.

DLJ: I’m trying to think about Destiny and its purpose. How could it raise consciousness in the U.S.? You mentioned going back to pre-WWI conditions. In the Communist Manifesto (1848) Marx and Engels speak of reactionary reformers who want to turn back the wheel.18 I.e., for Marx and Engels, it was always a question of how opportunities develop out of the present, rather than trying to clean the slate. The financialization in the United States, for them, poses the question of developing this neo-feudalism into socialism. In other words, we can’t go back to pre-1914. How does one find the opportunities in the present to even point towards alternatives within the U.S.?

MH: I have not found an alternative for the U.S., and so I can’t come up with a panacea. I remember Max Schachtman gave a speech in the late 1960s, where he asked, “what’s happened to all my old socialist friends? What happened to the socialists?” He said, they all went out West; they all withdrew. They thought, “we can just have community development,” and there were all sorts of ideas and utopian communities founded throughout the U.S.. There were French followers of Saint Simon attempting to make utopian communities, followers of Henry George, making utopian land-tax communities. They’re all middle-class bourgeois communities today. All the socialist communities were all very artsy: they’ve all become arts and crafts centers today. The last thing they want is a land tax that prevents their housing prices from going up.

I don’t see how things can be fixed in the U.S., which is why I’ve spent most of my time analyzing what’s happening in Asia and working primarily with countries from Asia and elsewhere, which seems to be where most of the flexibility and innovation resides. My idea is that if people see that what Asia is doing is quite simply what America could be doing and isn’t, it would be the only way to show them that there is an alternative. You can’t just draw an alternative and apply it as an idealistic application. You have to show that it’s working somewhere. I’m trying to explain why China was able to make its economy grow and raise the living, educational, and health standards for its population, and that the West hasn’t. And that is the path on which the West would have to develop, but it has not been able to check oligarchies.

Non-Western countries are able to do that, and that’s what the fight of global South reform is going to be by this fall when the grace of the debt crisis, really is the trigger for a restructure.

DLJ: Economies are interdependent. I.e., it would still be a question of the Chinese working class and the American working class building bonds across nations.

MH: The Democratic Party has produced such an anti-Asian, hate-filled racism, that I don’t think that can be. The Democratic Party has done everything it could to spur an ethnic war between the black and Asian populations. You see that here in New York by the attacks on the subways, on the street, mainly by blacks against Asians. The Democratic Party, by pushing this ethnic identity, has pushed ethnic hatred.

That’s why the Democrats are surprised that the Hispanics and Asians are moving towards the Republicans. The Hispanics and Asians realize that the Democrats have a race-hatred policy, much like the Nazis. I don’t believe that any political progress can be made in the U.S. until the Democratic Party, certainly the current leadership, is swept away. There cannot be any progress in America today led by the Democratic Party, which is today the ideologically Right-wing party that has turned what should be an economic problem into an ethnic and non-economic problem. It’s like the old industrial capitalist was supposed to have said, “if I can get half the working class fighting against the rest of the working class, then we have won.” That’s the Democratic Party. They asked, “how do we do it?” We divide the working class into ethnicities, ethnic identity, gender identity.

DLJ: You can have the working class cancel each other.

MH: Yes.

_Image by Elias from Pixabay_

Footnotes

1. Carlos Hudson. See Michael Hudson, “Dad’s Many Proverbs” (June 17, 2017), available online at https://michael-hudson.com/2017/06/dads-many-proverbs/;.
2. Michael Hudson, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism (Glashütte: ISLET-Verlag, 2022), 85.
3. Hudson, Destiny, 165: “Reversing the tradition of classical value, price and rent theory, neoliberal economics teaches that all income is earned, and that all forms of economic rent are not merely transfer payments but contribute to output, as measured by neoliberal formulations and redefinition of Gross Domestic Product (GDP). This inversion of classical logic is so far-reaching and censorial that it has influenced Chinese and Russian planning as well as that in the Western economies.”
4. See Karl Marx, “Theories of Productive and Unproductive Labor,” in Theories of Surplus Values (1863), available online at https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch04.htm;.
5. Hudson, Destiny, 120: “China has invested in a vast public infrastructure network to facilitate its industrial production by minimizing the cost of living and doing business. This has saved employers from having to pay higher wages for labor to afford privatized education, health care, transportation and other essential services. These basic needs are provided by public infrastructure, which Simon Patten called a ‘fourth factor of production.’”
6. Wilhelm Camphausen, “Napoleon III and Bismarck, on the morning after the Battle of Sedan” (1878).
7. Karl Marx, “The French Crédit Mobilier,” The People’s Paper 214, June 7, 1856, available in Marx and Engels Collected Works, vol. 15, and online at http://marxengels.public-archive.net/en/ME0978en.html;.
8. Hudson, Destiny, 270: “These redistributive and fiscal principles are the basis of modern socialism but not of Western economies. Ever since classical Greece and Rome stopped the Near Eastern practice of Clean Slates, Western economies have not been able to save themselves from polarizing between creditors and debtors, landlords and tenants, patrons and clients. Today, the neoliberal reaction against social democracy has ensured such polarization, first by letting debts grow faster than the ability to be paid and hence concentrating wealth in the hands of creditors, and second by advocating that basic public utilities be privatized and run by financial managers, not provided as a human right.”
9. Karl Marx, Preface to the Second Edition (1869), in The Eighteenth Brumair of Louis Bonaparte (1852), available online at https://www.marxists.org/archive/marx/works/1852/18th-brumaire/preface.htm;: “Lastly, I hope that my work . . . will contribute toward eliminating the school-taught phrase now current, particularly in Germany, of so-called Caesarism. In this superficial historical analogy the main point is forgotten, namely, that in ancient Rome the class struggle took place only within a privileged minority, between the free rich and the free poor, while the great productive mass of the population, the slaves, formed the purely passive pedestal for these combatants. People forget Sismondi’s significant saying: The Roman proletariat lived at the expense of society, while modern society lives at the expense of the proletariat. With so complete a difference between the material, economic conditions of the ancient and the modern class struggles, the political figures produced by them can likewise have no more in common with one another than the Archbishop of Canterbury has with the High Priest Samuel.”
10. Adam Smith, “Book IV: On the Advantages which Europe has derived from the Discovery of America, and from that of a Passage to the East Indies by the Cape of Good Hope,” in Wealth of Nations (1776), available online at https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book04/ch07c-2.htm;: “The idea of representation was unknown in ancient times. When the people of one state were admitted to the right of citizenship in another, they had no other means of exercising that right but by coming in a body to vote and deliberate with the people of that other state. The admission of the greater part of the inhabitants of Italy to the privileges of Roman citizens completely ruined the Roman republic. It was no longer possible to distinguish between who was and who was not a Roman citizen. No tribe could know its own members. A rabble of any kind could be introduced into the assemblies of the people, could drive out the real citizens, and decide upon the affairs of the republic as if they themselves had been such. But though America were to send fifty or sixty new representatives to Parliament, the doorkeeper of the House of Commons could not find any great difficulty in distinguishing between who was and who was not a member. Though the Roman constitution, therefore, was necessarily ruined by the union of Rome with the allied states of Italy, there is not the least probability that the British constitution would be hurt by the union of Great Britain with her colonies. That constitution, on the contrary, would be completed by it, and seems to be imperfect without it. The assembly which deliberates and decides concerning the affairs of every part of the empire, in order to be properly informed, ought certainly to have representatives from every part of it That this union, however, could be easily effectuated, or that difficulties and great difficulties might not occur in the execution, I do not pretend. I have yet heard of none, however, which appear insurmountable. The principal perhaps arise, not from the nature of things, but from the prejudices and opinions of the people both on this and on the other side of the Atlantic.”
11. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
12. Brazil, Russia, India, China, and South Africa.
13. Hudson, Destiny, 42: “Finance capitalism aims to avoid what Marx and indeed the majority of his contemporaries expected: that industrial capitalism would evolve towards socialism, peacefully or otherwise. By finding its main source of exploitation to be rent-seeking, not only from land and natural resources but increasingly from privatizing public investment in infrastructure and creating new monopolies, finance capitalism renders economies high cost. That prevents industrialists from underselling competitors in less rent-and- debt-strapped economies…That is why it seemed a century ago that the destiny of industrial capitalism was to evolve into socialism. Public education, health care, roads and basic infrastructure and pensions were coming to be provided by government at subsidized administered prices or freely. Industrial capital backed this policy as a means of shifting as many ‘external’ costs as possible onto the public sector. But that is not the way matters have turned out. And today’s victorious finance capitalism, centered in the United States, is trying to prevent its takeover of industrial economies from being rolled back. That means preventing such a rollback from occurring in other countries. It also requires overcoming other countries’ resistance to finance capital’s takeover of their economies.”
14. V. I. Lenin, Can the Bolsheviks Retain State Power? (October 1, 1917), available online at https://www.marxists.org/archive/lenin/works/1917/oct/01.htm;: “Capitalism has created an accounting apparatus in the shape of the banks, syndicates, postal service, consumers’ societies, and office employees’ unions. Without big banks socialism would be impossible. The big banks are the ‘state apparatus’ which we need to bring about socialism, and which we take ready-made from capitalism; our task here is merely to lop off what capitalistically mutilates this excellent apparatus, to make it even bigger, even more democratic, even more comprehensive. Quantity will be transformed into quality. A single State Bank, the biggest of the big, with branches in every rural district, in every factory, will constitute as much as nine-tenths of the socialist apparatus. This will be country wide book-keeping, country-wide accounting of the production and distribution of goods, this will be, so to speak, some thing in the nature of the skeleton of socialist society. We can ‘lay hold of’ and ‘set in motion’ this ‘state apparatus’ (which is not fully a state apparatus under capitalism, but which will be so with us, under socialism) at one stroke, by a single decree, because the actual work of book-keeping, control, registering, accounting and counting is performed by employees, the majority of whom themselves lead a proletarian or semi-proletarian existence.”
15. Hudson, Destiny, 162: “One of the most fateful byproducts of George’s defense of capital was to so repel socialists that they left the issue of land taxation to his followers — and in so doing, socialists drifted away from rent theory. The socialist mainstream treated classical land and rentier problems as subordinated to problems between labor and industrial capital.”
16. Hudson, Destiny, 103–04.
17. Michael Hudson, J is For Junk Economics: A Guide to Reality in an Age of Deception (Glashütte: ISLET-Verlag, 2017).
18. Karl Marx and Friedrich Engels “Part 1: Bourgeois and Proletarians,” in The Communist Manifesto (1848), available online at https://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch01.htm.;

Since 2008, we have lived in a western world shaped by the ‘permanent state’ or by our managerial technocrats – label to choice.

Since 2008, we have lived in a western world shaped by the ‘permanent state’ or by our managerial technocrats – label to choice.

This ‘creative class’ (as they like to see themselves) is particularly defined by its intermediary position in relation to the wealth-controlling oligarchic cabal as ultimate big money overlords on one hand, and the dullard ‘Middle Class’ below them – at whom they sneer and deride.

This intermediary class didn’t set out to dominate politics (they say); It just happened. Initially, the aim was to foster progressive values. But instead, these professional technocrats, who both had accreted considerable wealth and were tightly congregated into cliques in America’s large metro areas, came to dominate left-wing parties around the world that formerly were vehicles for the working class.

Those who coveted membership in this new ‘aristocracy’ cultivated their image as one of cosmopolitan, fast-moving money, glamour, fashion, and popular culture – multiculturalism suited them to perfection. Painting themselves as the political conscience of the whole of society (if not the world), the reality was that their Zeitgeist reflected primarily the whims, prejudices and increasingly psychopathies of one segment of liberal society.

Into this milieu arrived two defining events: In 2008, Ben Bernanke, Chair of the Federal Reserve, gathered together in the aftermath of the Global Financial Crisis, a room-full of the wealthiest oligarchs, ‘locking them in’ until they found the solution to the unfolding systemic bank failure.

The oligarchs did not find a solution but were released from their lock-up anyway. They opted instead, to throw money at structural problems, compounded by egregious errors of judgement about risk.

And to finance the resulting massive losses – which were over $10 trillion in the U.S. alone – the world’s central banks began printing money – since when they have never stopped!

Thus begun the era in the West where deep problems are not solved, but simply have freshly-printed money thrown at them. This methodology was whole-heartedly adopted by the EU also, where it was called Merkelism (after the former German Chancellor). Underlying structural contradictions were simply left to accumulate; kicked down the road.

A second defining characteristic of this era was that as the great oligarchs retreated from industrial production and threw themselves into hyper-financialisation, they saw advantage in adopting the burgeoning Metro-Élite agenda centred around utopian ideals of diversity, identity and racial justice – ideals pursued with the fervour of an abstract, millenarian ideology. (Their leaders had almost nothing to say about poverty or unemployment, which suited the oligarchs perfectly).

So, espying advantage, the Oligarchs too, turned radical. Led by such as the Rockefeller and Ford Foundations, Big Philanthropy and Business, they adopted woke speech and thought codes. And endorsed putting wealth directly into the hands of those who have been systematically victimized, through history. But again, deep structural change in society was addressed superficially – as simply moving money from ‘one pocket to another’.

The real problem flowing from the 2008 crisis however, wasn’t essentially financial. Yes, the losses were shifted from failing institutions balance sheets to the Fed’s, but the real structural problems were never addressed. So, people soon believed that almost every problem could be solved by speech and thought codes – married to the printing press.

Political trade-offs were no longer to be considered a requisite. Costs no longer relevant. In this environment, no problem was too big to solve through behavioural management techniques and the central bank. And if there wasn’t a crisis to mandate and ‘liquify’ agenda change, then one could be invented. And, sure enough, as soon as the U.S. Fed began to return to ‘normal’ policies in 2018 and 2019, a new, even bigger crisis was found.

Not surprisingly, in the context of what was seen as failed Civil Rights and New Deal reforms, the activist movements being funded by the Oligarchic ‘wealth funds’ turned more radical. They adopted a revolutionary cultural activism deployed to “solve problems once and for all” – aimed at bringing about deep structural change within society.

This meant shifting power once again away from the liberal Middle Class ‘who were so often white and male’ – and were therefore part to society’s structural injustice. Put simply, the western Middle Class became seen by the technocrats as a pain in the backside.

The point here is what was missed in all the talk of ‘positive discrimination’ paths in favour of ‘victims’ was the other side to the coin: Negative harmful discrimination practiced against those ‘blocking the path’ – those failing to get out of the way.

Scott McKay’s Revivalist Manifesto calls this hostile discriminatory process, ‘weaponised Government Failure’ – such as the induced government dysfunctionality in U.S. cities to drive the Middle Class away. “‘White flight’ is a feature. It’s not a bug”, its advocates preached. The urban socialist Left wants a manageably small core of rich residents, and a teeming mass of pliable poor ones, and nothing in between. That’s what weaponized governmental failure produces, and it’s been a wide-scale success.

New Orleans votes 90 percent Democrat; Philadelphia is 80 percent Democrat; Chicago is 85 percent. Los Angeles? Seventy-one percent. None of those cities will have a Republican mayor or city council again, or at least not in the foreseeable future. The Democrat Party barely exists outside of the ruins that those urban machines produce.

The bigger message is that ‘induced dysfunctionality’ can produce a society that can be ruled over (made compliant through unpleasantness and hurt) – without having to govern it (i.e. make things work!).

This process is evident too, in the EU today. The EU is in crisis because it has made a hash of its governance in respect to sanctions on Russian energy. The leadership class thought the effects of EU sanctions on Russia to be ‘slam dunk’: Russia would fold in weeks, and all would return as it was before. Things would go back to ‘normal’. Instead, Europe faces melt-down.

Yet, some leaders in Europe – zealots for the Green Agenda – nonetheless pursue an approach parallel to that in the U.S. – of ‘weaponised failure’, conceived as a strategic asset to achieve Green Net Zero ends.

Because … it forces their societies to embrace de-industrialisation; accept carbon footprint monitoring and the Green Transition – and to bear its costs. Yellen and certain EU leaders have celebrated the financial pain as accelerating Transition, like it or not, even if it pushes you out of employment, to the edge of society. Dysfunctional European airports are one example to discourage Europeans from travel and adding to the carbon load!

Put simply, this is another noxious trait that has emerged with the 2008 ‘turn’. Sociopathy refers to a pattern of antisocial behaviours and attitudes, including manipulation, deceit, aggression, and a lack of empathy for others that amounts to mental disorder. The defining characteristic of the sociopath is a profound lack of conscience – an amorality however, which may be hidden by an outwardly charming demeanour.

‘Nudging’ us to compliance through cost, or making life intolerable, is the new way to rule. But our world is rapidly fracturing into potted zones of ‘old normal’ and surrounding pools of disintegration.

Which brings us to the big question: As the West skirts economic systemic failure again, why not then call together the billionaire Oligarchs, as in 2008, and lock them in a room, until they find a solution?

Yes, the Oligarchs may hold themselves in high regard (being so rich), but their last effort gave no solution, but rather was an exercise in self-preservation, achieved through throwing freshly printed money at broad structural problems, thus easing the transition of their empires into their new financialised identity.

However, something does seem to have changed around 2015-2016 – a reaction began. The latter originates not from Oligarchs but from certain quarters in the U.S. system who fear the consequences, were the mass psychological dependency on the printing of ever more money not to be addressed. Their fear is that the slide to societal conflict as wealth and wellbeing distortions explode apart, will become unstoppable.

The Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation ‘dragon’ (they would need to be much higher to do that). The purpose is to break a generalised ‘dependency habit’ on free money.

The only question from market participants everywhere is when does the Fed pivot (back to ‘printing’) … when? They want their ‘fix’ and want it quickly.

So many are ‘dependent’: The Biden Admin needs it; the EU is dependent on it; the Re-set requires printing. Green requires printing; support for the Ukrainian ‘Camelot’ requires printing. The Military Industrial Complex needs it, too. All need a free cash ‘fix’.

Perhaps the Fed can break the psychological dependency over time, but the task should not be underestimated. As one market strategist put it: “The new operating environment is entirely foreign to any investor alive today. So, we must un-anchor ourselves from a past that is ‘no longer’ – and proceed with open minds”.

This period of zero rates, zero inflation and QE was an historical anomaly – utterly extraordinary. And it is ending (for better or worse).

A small Fed ‘inner circle’ may have a good grasp of what the new operating environment will mean, but any detailed implementation simply can’t extend faithfully down a long trickle-down chain of command oriented to the obverse ‘Growth’ paradigm pleading for ‘pivot’. How many of the people currently involved with this transition understand its full complexity? How many concur with it?

What can possibly go wrong? Starting the shift at the top is one thing. However, the cure for ‘induced governance dysfunctionality’ as an operating strategy in a ‘permanent state’ staffed by sociopath Cold Warriors and technocrats selected for compliance is not obvious. The more sociopathic may tell the American public F*** you! They intend ‘to rule’ – ruin or not.

It may seem strange to invite an economist to give a keynote speech to a conference of the social sciences. Economists have been characterized as autistic and anti-social in the popular press for good reason. They are trained to think abstractly and use a priori deduction – based on how they think societies should develop. Today’s mainstream economists look at neoliberal privatization and free-market ideals as leading society’s income and wealth to settle at an optimum equilibrium without any need for government regulation – especially not of credit and debt.

The only role acknowledged for government is to enforce the “sanctity of contracts” and “security of property.” By this they mean the enforcement of debt contracts, even when their enforcement expropriates large numbers of indebted homeowners and other property owners. That is the history of Rome. We are seeing the same debt dynamic at work today. Yet this basic approach has led mainstream economists to insist that civilization could and should have followed this pro-creditor policy from the very beginning.

The reality is that civilization could never have taken off if some free-market economist had got into a time machine and travelled back in time five thousand years to the Neolithic and Bronze Age. Suppose that he would have convinced ancient chieftains or rulers how to organize their trade, money and land tenure on the basis of “greed is good” and any public regulation is bad.
If some Milton Friedman or Margaret Thatcher had persuaded Sumerian, Babylonian or other ancient rulers to follow today’s neoliberal philosophy, civilization could not have developed. Economies would have polarized – as Rome did, and as today’s Western economies are doing. The citizens would have run away, or else backed a local reformer or revolutionist to overthrow the ruler who listened to such economic advice. Or, they would have defected to rival attackers who promised to cancel their debts, liberate the bondservants and redistribute the land.

Yet many generations of linguists, historians and even anthropologists have absorbed the economic discipline’s anti-social individualistic world view and imagine that the world must always have been this way. Many of these non-economists have unwittingly adopt their prejudices and approach ancient as well as modern history with a bias. Our daily discourse is so bombarded with the insistence by recent American politicians that the world is dividing between “democracy” with “free markets” and “autocracy” with public regulation that there is much fantasy at work about early civilization.

David Graeber and I have sought to expand the consciousness of how different the world was before Western Civilization took the Roman track of pro-creditor oligarchies instead of palatial economies protecting the interests of the indebted population at large. At the time he published his Debt: The First Five Thousand Years in 2011, my Harvard group of assyriologists, Egyptologists and archaeologists was still in the process of writing the economic history of the ancient Near East in a way that was radically different from how most of the public imagined it to have occurred. David’s and my emphasis on how royal Clean Slate proclamations cancelling debts, liberating bond-servants and redistributing the land were a normal and expected role of Mesopotamian rulers and Egyptian pharaohs was still not believed at that time. It seemed impossible that such Clean Slates were what preserved liberty for the citizenry.

David Graeber’s book summarized my survey of royal debt cancellation in the ancient Near East to show that interest-bearing debt originally was adopted with checks and balances to prevent it from polarizing society between creditors and debtors. In fact, he pointed out that the strains created by the emergence of monetary wealth in personal hands led to an economic and social crisis that shaped the emergence of the great religious and social reformers.

As he summarized “the core period of Jasper’s Axial age … corresponds almost exactly to the period in which coinage was invented. What’s more, the three parts of the world where coins were first invented were also the very parts of the world where those sages lived; in fact, they became the epicenters of Axial Age religious and philosophical creativity.” Buddha, Lao-Tzu and Confucius all sought to create a social context in which to embed the economy. There was no concept of letting “markets work” to allocate wealth and income without any idea of how wealth and income would be spent.

All ancient societies had a mistrust of wealth, above all monetary and financial wealth in creditor hands, because it generally tended to be accumulated at the expense of society at large. Anthropologists have found this to be a characteristic of low-income societies in general.

Toynbee characterized history as a long unfolding dynamic of challenges and responses to the central concerns that shape civilizations. The major challenge has been economic in character: who would benefit from the surpluses gained as trade and production increase in scale and become increasingly specialized and monetized. Above all, how would society organize the credit and debt that was necessary for specialization of economic activities to occur – and between “public” and “private” functions?

Nearly all early societies had a central authority in charge of distributing how the surplus was invested in a way that promoted overall economic welfare. The great challenge was to prevent credit leading to debts being paid in a way that impoverished the citizenry, e.g., through personal debt and usury – and more than temporary loss of freedom (from bondage or exile) or land tenure rights.

The great problem that the Bronze Age Near East solved – but classical antiquity and Western civilization have not solved – was how to cope with debts being paid – especially at interest without polarizing economies between creditors and debtors, and ultimately impoverishing the economy by reducing most of the population to debt dependency. Merchants engaged in trade, both for themselves and as agents for palace rulers. Who would get the profits? And how would credit be provided but kept in line with the ability to be paid?

Public vs. private theories of how land tenure originated

Ancient societies rested on an agricultural base. The first and most basic problem for society to solve was how to assign land tenure. Even families who lived in towns that were being built up around temples and civic ceremonial and administrative centers were allocated self-support land – much like Russians have dachas, where most of their food was grown in Soviet times.

In analyzing the origins of land tenure, like every economic phenomenon, we find two approaches. On the one hand is a scenario where land is allocated by the community in exchange for corvée labor obligations and service in the military. On the other hand is an individualistic scenario in which land tenure originated by individuals acting spontaneously by themselves clearing land, make it their own property and producing handicrafts or other products (even metal to use as money!) to exchange with each other.

This latter individualistic view of land tenure has been popularized ever since John Locke imagined individuals setting out to clear the land – apparently vacant wooded land – with their own labor (and presumably that of their wives). That effort established their ownership to it and its crop yield. Some families would have more land than others, either because they were stronger at clearing it or had a larger family to help them. And there was enough land for everyone to clear ground for planting crops.

In this view there is no need for any community to be involved, not even to protect themselves from miliary attack – or for mutual aid in times of flood or other problems. And there is no need for credit to be involved – although in antiquity that was the main lever distorting the distribution of land by transferring its ownership to wealthy creditors

At some point in history, to be sure, this theory sees governments enter the picture. Perhaps they took the form of invading armies, which is how the Norman ancestors of landlords in John Locke’s day acquired English land. And as in England, the rulers would have forced landholders to pay part of their crops in taxes and provide military service. In any case, the role of government was recognized only as “interfering” with the cultivator’s right to use the crop as he saw fit – presumably to trade for things that he needed, made by families in their own workshops.

My Harvard-sponsored group of assyriologists, Egyptologists and archaeologists have found an entirely different genesis of land tenure. Land rights seem to have been assigned in standardized plots in terms of their crop yield. To provide food for these community members, late Neolithic and early Bronze Age communities from Mesopotamia to Egypt allocated land to families in proportion to what they needed to live on and how much they could turn over to the palace authorities.

This tax yield turned over to palace collectors was the original economic rent. Land tenure came as part of a quid pro quo – with a fiscal obligation to provide labor services at designated times of the year, and to serve in the military. It thus was taxation that created land-tenure rights, not the other way around. Land was social in character, not individualistic. And government’s role was that of coordinator, organizer and forward planner, not merely predatory and extractive.

Public vs. private origins of money

How did early societies organize the exchange of crops for products – and most important, to pay taxes and debts? Was it simply a spontaneous world of individuals “trucking and bartering,” as Adam Smith put it? Prices no doubt would have varied radically as individuals had no basic reference to cost of production or degrees of need. What happened as some individuals became traders, taking what they produced (or other peoples’ products on consignment) to make a profit. If they traveled large distances, were caravans or ships needed – and the protection of large groups? Would such groups have been protected by their communities? Did supply and demand play a role? And most important, how did money emerge as a common denominator to set prices for what was traded – or paid in taxes and to settle debts?

A century after Adam Smith, the Austrian economist Anton Menger developed a fantasy about how and why ancient individuals may have preferred to hold their savings in the form of metals – mainly silver but also copper, bronze or gold. The advantage of metal was said to be that it did not spoil (in contrast to grain carried around in one’s pocket, for instance). It also was assumed to be of uniform quality. So pieces of metal money gradually became the medium by which other products came to be measured as they were bartered in exchange – in markets in which governments played no role at all!

The fact that this Austrian theory has been taught now for nearly a century and a half is an indication of how gullible economists are willing to accept a fantasy at odds with all historical records from everywhere in recorded world history. To start with, silver and other metals are not at all of uniform quality. Counterfeiting is age-old, but individualist theories ignore the role of fraud – and hence, the need for public authority to prevent it. That blind spot is why U.S. Federal Reserve Chairman Alan Greenspan was so unprepared to cope with the massive junk-mortgage bank crisis peaking in 2008. Wherever money is involved, fraud is omnipresent.

That’s what happens in unregulated markets – as we can see from today’s bank frauds, tax evasion and crime that pays very, very well. Without a strong government to protect society against fraud, lawbreaking, the use of force and exploitation, societies will polarize and become poorer. For obvious reasons the beneficiaries of these grabs seek to weaken regulatory power and the ability to prevent such grabitization.

To avoid monetary fraud, silver and subsequently gold coinage from Bronze Age Mesopotamia down through classical Greece and Rome was minted in temples to sanctify their standardized quality. That is why our word for money comes from Rome’s temple of Juno Moneta, where Rome’s coinage was struck. Thousands of years before bullion was coined, it was provided in metal strips, bracelets and other forms minted in temples, at standardized alloy proportions.

Purity of metals is not the only problem with using bullion money. The immediate problem that would have confronted anyone exchanging products for silver is how to weigh and measure what was being bought and sold – and also to pay taxes and debts. From Babylonia to the Bible we find denunciations against merchants using false weights and measures. Taxes involve a role of government, and in all archaic societies it was the temples that oversaw weights and measures as well as the purity of metallic metals. And the denomination of weights and measures indicate their origin in the public sector: fractions divided into 60ths in Mesopotamia, and 12ths in Rome.

Trade in basic essentials had standardized customary prices or payments to the palaces or temples. Taxes and debts were the most important used for money. That reflects the fact that “money” in the form of designated commodities was needed mainly to pay taxes or buy products from the palaces or temples and, at the end of the harvesting season, to pay debts to settle such purchases.

Today’s neoliberal economic mainstream has created a fairy tale about civilization existing without any regulatory oversight or productive role for government, and without any need to levy taxes to provide basic social services such as public construction or even service in the military. There is no need to prevent fraud, or violent seizure of property – or the forfeiture of land tenure rights to creditors as a result of debts. But as Balzac noted, most great family fortunes have been the result of some great theft, lost in the mists of time and legitimized over the centuries, as if it were all natural.

These blind spots are necessary to defend the idea of “free markets” controlled by the wealthy, above all by creditors. This is claimed to be for the best, and how society should be run. That is why today’s New Cold War is being fought by neoliberals against socialism – fought with violence, and by excluding the study of history from the academic economics curriculum and hence from the consciousness of the public at large. As Rosa Luxemburg put it, the fight is between socialism and barbarism.

Public vs. private origins of interest-bearing debt

Interest rates were regulated and stable for many centuries on end. The key was ease of calculation: 10th, 12th or 60th.

Babylonian scribes were trained to calculate any rate of interest as a doubling time. Debts grew exponentially; but scribal students also were taught that herds of cattle and other material economic output tapered off in an S-curve. That is why compound interest was prohibited. It also was why it was necessary to cancel debts periodically.

If rulers had not cancelled debts, the ancient world’s takeoff would have prematurely suffered the kind of decline and fall that impoverished Rome’s citizenry and led to the decline and fall of its Republic – leaving a legal system of pro-creditor laws to shape subsequent Western civilization.

What makes Western civilization distinctly Western? Has it all been a detour?

Civilization could not have developed if a modern Milton Friedman or kindred Economics Nobel Prize winner had gone back in time and convinced Hammurabi or the Egyptian pharaoh to just let individuals act by themselves and let wealthy creditors reduce debtors to bondage – and then to use their labor as an army to overthrow the kings and take over government for themselves, creating a Roman-style oligarchy. That is what Byzantine families tried to do in the 9th and 10th centuries.

If the “free enterprise” boys had their way there would have been no temple coinage or oversight of weights and measures. Land would belong to whomever could grab, foreclose on or conquer it. Interest would have reflected whatever a wealthy merchant could force a needy cultivator to pay. But to economists, everything that occurs is a matter of “choice.” As if there is no outright need – to eat or to pay.

An economic Nobel Prize was awarded to Douglass North for claiming that economic progress today and indeed throughout all history has been based on the “security of contracts” and property rights. By this he means the priority of creditor claims to foreclose on the property of debtors. These are the property rights to create latifundia and reduce populations to debt peonage.

No archaic civilization could have survived for long by following this path. And Rome did not survive by instituting what has become the distinguishing feature of Western Civilization: giving control of government and its lawmaking to a wealthy creditor class monopolizing the land and property.

If an ancient society had done this, economic life would have been impoverished. Most of the population would have run away. Or else, the Thatcherite/Chicago School elite would have been overthrown. The wealthy families that sponsored this grabitization would have been exiled, as occurred in many Greek cities in the 7th and 6th centuries BC. Or, discontented populations would have walked out and/or threatened to defect to foreign troops promising to free the bondservants, cancel their debts and redistribute the land, as occurred with Rome’s Secessions of the Plebs in the 5th and 4th centuries BC.

So we are brought back to David Graeber’s point that the great reformers of Eurasia rose at the same time that economies were becoming monetized and increasingly privatized – an epoch in which wealthy families were increasing their influence over how city-states were run. Not only the great religious reformers but the leading Greek philosophers, poets and dramatists explained how wealth is addictive, and leads to hubris that leads them to seek wealth in ways that injure others.

Looking over the sweep of ancient history, we can see that the main objective of rulers from Babylonia to South Asia and East Asia was to prevent a mercantile and creditor oligarchy from emerging and concentrating ownership of land in their own hands. Their implicit business plan was to reduce the population at large to clientage, debt bondage and serfdom.

That is what occurred in the West, in Rome. And we are still living in the aftermath. Throughout the West today, our legal system remains pro-creditor, not in favor of the indebted population at large. That is why personal debts, corporate debts, public debts and the international debts of Global South countries have mounted up to crisis conditions threatening to lock economies into a prolonged debt deflation and depression.

It was to protest this that David helped organize Occupy Wall Street. It is obvious that we are dealing not only with an increasingly aggressive financial sector, but that it has created a false history, a false consciousness designed to deter revolt by claiming that There Is No Alternative (TINA).

Where Western civilization went wrong

We have two diametrically opposed scenarios depicting how the most basic economic relationships came into being. On the one hand, we see Near Eastern and Asian societies organized to maintaining social balance by keeping debt relations and mercantile wealth subordinate to the public welfare. That aim characterized archaic society and non-Western societies.

But the Western periphery, in the Aegean and Mediterranean, lacked the Near Eastern tradition of “divine kingship” and Asian religious traditions. This vacuum enabled a wealthy creditor oligarchy to take power and concentrate land and property ownership in its own hands. For public relations purposes, it claimed to be a “democracy” – and denounced any protective government regulation as being, by definition, “autocracy.”

Western tradition indeed lacks a policy subordinating wealth to overall economic growth. The West has no strong government checks to prevent a wealth-addicted oligarchy from emerging to make itself into a hereditary aristocracy. Making debtors and clients into a hereditary class, dependent on wealthy creditors, is what todays economists call a “free market.” It is one without public checks and balances against inequality, fraud or privatization of the public domain.

It may seem amazing to some future historian that the political and intellectual leaders of today’s world hold such individualistic neoliberal fantasies that archaic society “should” have developed in this way – without recognizing that this is how Rome’s oligarchic Republic did indeed develop, leading to its inevitable decline and fall.

Bronze Age debt cancellations and modern cognitive dissonance

So we are led back to why I was invited to speak here today. David Graeber wrote in his Debt book that he was seeking to popularize my Harvard group’s documentation that debt cancellations did indeed exist and were not simply literary utopian exercises. His book helped make debt a public issue, as did his efforts in the Occupy Wall Street movement.

The Obama administration backed police breaking up the OWS encampments and did everything possible to destroy awareness of the debt problems plaguing the U.S. and foreign economies. And not only the mainstream media but also academic orthodoxy circled their wagons against even the thought that debts could be written down and indeed needed to be written down to prevent economies from falling into depression.

That neoliberal pro-creditor ethic is the root of today’s New Cold War. When President Biden describes this great world conflict aimed at isolating China, Russia, India, Iran and their Eurasian trading partners, he characterizes this as an existential struggle between “democracy” and “autocracy.”

By “democracy” he means oligarchy. And by “autocracy” he means any government strong enough to prevent a financial oligarchy from taking over government and society and imposing neoliberal rules – by force. The ideal is to make the rest of the world look like Boris Yeltsin’s Russia, where American neoliberals had a free hand in stripping away all public ownership of land, mineral rights and basic public utilities.

Is it so, as some wags say, that industry no longer makes money; only finance does? That’s been the operating theory for much of the West lately. Of course, that invites the question: what then is finance supposed to finance… that is, put money into? Why… industry, of course, and in the broadest sense of the word: the production of goods… goods being things that have value (that’s what’s good about them). How quaint! But most of the industry that used to be here has gone to other lands.

What about all that money (capital) flowing into technology: Facebook, Google, Amazon? Hmmmm. What does Facebook produce, besides conflict between its users? Okay, it harvests data about them to sell to advertisers. And what are the advertisers advertising? Their products. Who produces the products? Mostly those people in other lands. Facebook users, then, are increasingly not employed, at least not in the production of goods. Perhaps in services like nursing, trucking, garbage pickup, food prep, police, firemen, prison guards, government bureaucracy (is that a service or a dis-service?) and et cetera.

Anyway, those service people are being fired left-and-right now because they refuse to be coerced into taking a vaccine that was never properly tested and has many scary side-effects. By the way, as of Sunday, the “newspaper-of-record” (The New York Times) finally had to come clean, after months of whistling past the graveyard, and admit what the public already knows: mRNA vaccines are dangerous:

While we’re on the subject, what does Google produce? Supposedly, answers to questions, plus, like Facebook, it harvests information about the people who ask the questions and then sells the info, blah blah. And whutabout Amazon? Don’t they sell a lot of products? Yeah, mostly produced by those people in other lands. What Amazon really produces is a phenomenal amount of motion — trucks going hither and thither, at increasing cost now as the price of gasoline and diesel fuel shoots up. To me, that looks like a problem for Amazon’s business model. Another problem is the growing number of people without gainful employment who have little money to buy stuff from Amazon, wherever it comes from.

That last problem has been papered-over for two years by “helicopter money” from the federal government — direct payment to the people for doing nothing, producing neither goods nor services. This has been an impressive trick. The money comes from nowhere and for nothing. The trick is based on simple accounting fraud. The second law of thermodynamics, a.k.a. entropy, suggests that eventually this process will degrade the value of the money (or “money”) issued by the fraudsters.

The hand in play for the moment is the spending legislation proposed by “Joe Biden.” It would generate a whole helluva lot more helicopter money from nowhere for nothing, and would theoretically keep the game going a little bit longer — except the process will only generate more unwanted entropy, causing decay in the value of that “money” and canceling the desired effect of spreading it around. That’s called inflation. If the value of money drops hard and fast, that is called hyperinflation. It would be politically and socially devastating, and probably lead to the downfall of the government. The net effect would be a nation bankrupt at all levels and that will segue into an epic economic depression.

If the legislation doesn’t get passed, the USA will perhaps skip the hyperinflationary intermezzo and move straight into a deflationary depression, which is what you get when nobody has any money. When that happens, especially in a system with money actually based on debt-creation, debts do not get paid (mortgages, car payments, credit cards, perhaps even coupons on US Treasury bonds), and when debts are not paid, money disappears. Poof! No money! It’s a vicious cycle. The more money disappears the more money keeps disappearing. None of this bodes well for the winter ahead.

Add to that the growing breakdown in global trade operations. Even many of those goods produced in other lands aren’t making it to the docks, and the reduced flow of goods that happened to already land on the docks can’t get unloaded and delivered to its various destinations because of disruptions in the US trucking sector. To some degree, those disruptions are caused by bonehead government regulations, especially in California, where most of the stuff from Asia lands. The bonehead regulations (like, outlawing trucks more than three years old) can be thought of as typical government “dis-services.”

Now add to that the rising cost of oil, natural gas, and coal — the global economy’s primary resources — and disruptions in the industries that produce these vital resources and you’ve got another layer of disorder being introduced into the system (entropy again). For the moment, government propaganda tries to divert your attention to a possible shortage of Christmas presents as the nation’s main concern. Don’t be fooled. It’s more about total systemic economic breakdown, as in US citizens having no heat and no food. Also, no gasoline and no parts for fixing broken cars (and trucks).

Do you suppose the capital markets will keep rising as all this spins out? I would suppose that the capital markets will lose 80 to 90 percent of their value when all is said and done. The fabled “One Percent” will finally feel the pain that was previously distributed among the rest of us. Don’t make the mistake of thinking the One Percent can control the situation. They are mere Wizards of Oz, barfing into their laptops. If working-from-home wasn’t a thing, they’d be jumping out of windows on Wall Street.

It’s a grim outlook, I admit, but you could see it coming over the horizon from a thousand miles away. Where I differ from other observers is that I doubt that any sort of extreme government surveillance state can be imposed on the public under these conditions. The people will be too pissed-off and, anyway, the current regime will be broke and out of mojo — possibly to the degree that it has to be shoved aside. “Let’s Go Brandon” is serious business. It’s the end of something.

In the background lurks this virus thing, and the insane vaccination program it prompted. We know that people have been harmed by the vaccinations, but not how many people altogether will be affected moving forward. The possibility, though, is for a nation both broke and sick struggling to get through a dark passage of history. Stay nimble, stay local, stay reality-based, be helpful, be honest, be brave, and be kind to each other. We’ll get through it.

Preface. Heavy-duty diesel-engine trucks (agricultural, mining, logging, construction, garbage, cement, 18-wheelers, and more) are the essential for our fossil-fueled civilization. Without them, no goods would be delivered, nothing could be manufacturied, no food planted or harvested, no garbage picked up, no minerals mined, no concrete made, no metals smelted, and roads are constructed with specialized diesel trucks and petroleum asphalt. If trucks stopped running, gas stations, grocery stores, factories, pharmacies, and manufacturers would shut down within a week and civilization would end.

Since oil, coal, and natural gas are finite, biomass doesn’t scale up, and hydrogen is an energy sink, clearly someday trucks will need to run on wind, solar, hydro, and geothermal generated electricity with batteries or overhead catenary wires (though that won’t work either, see chapter 8 of Life After Fossil Fuels: A Reality Check on Alternative Energy and this post). Yet even batteries for autos aren’t cheap, long-lasting, light-weight, or powerful enough for most Americans to replace their current gas-guzzlers with. And given the distribution of wealth, few Americans may ever be able to afford an electric car, since two-thirds of Americans would have trouble finding even $1,000 for an emergency.

Trucks that matter — that haul 30 tons of goods, pour cement, haul mining ore — can weigh 40 times more than an average car. So scaling batteries up for heavy-duty trucks (NRC 2014) is impossible now given the state of battery technology. For example, a truck capable of going 621 miles hauling 59,525 pounds, the maximum allowable cargo weight, would need a battery weighing 55,116 pounds, and so could only carry about 4,400 pounds of cargo (den Boer et al. 2013). And because a heavy-duty truck battery is so heavy and large, charging takes too long — typically 12 hours or more.

Or as Ryan Carlyle, oil company engineer puts it: “As far as heavy trucking is concerned, there is no replacement for hydrocarbon fuels. The physics of power/weight ratios, and existence of legal road weight limits, means you simply can’t build an “electric semi” and expect it to haul anything comparable to what diesel trucks haul today. This is not an area where Tesla can build a 30% better battery pack and suddenly it’s feasible. The necessary energy density numbers are more like 50 times less than they need to be. The truck will use over half its payload capacity just carrying its own batteries. There are chemical limits to what batteries can do. Electrochemical galvanic cells physically cannot store enough energy — ever — to approach today’s large diesel engines (Carlyle 2014).

Microsoft founder Bill Gates agrees: ” The problem is that batteries are big and heavy. The more weight you’re trying to move, the more batteries you need to power the vehicle. But the more batteries you use, the more weight you add—and the more power you need. Even with big breakthroughs in battery technology, electric vehicles will probably never be a practical solution for things like 18-wheelers, cargo ships, and passenger jets. Electricity works when you need to cover short distances, but we need a different solution for heavy, long-haul vehicles (Gates 2020).”

And car battery development is hitting the brick-walls of the laws of physics and thermodynamics, yet truck batteries need to be even more powerful, durable, and long-lasting.

_Alice Friedemann www.energyskeptic.com Women in ecology author of 2021 Life After Fossil Fuels: A Reality Check on Alternative Energy best price here; 2015 When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity_

***

There are not any commercially available heavy-duty Battery Electric Vehicles (BEVs) outside the transit bus segment at this time. It is not expected that BEVs can penetrate into the long-haul trucking vocation in the next several decades, where significant high speed steady-state operations dominate the vehicles duty cycle, without significant advances in battery energy density and BEV recharging technologies. (ARB 2015).

There are however, demonstration projects with class 8 electric trucks. The first, NFI, has two trucks running between Chino and the Ports of Los Angeles/San Pedro 135 miles round-trip using two of the five heavy-duty charging stations in Southern California. Only one round-trip can be made, there isn’t enough juice left in the battery to go again. The second, Penske is averaging 150 miles per shift on dedicated routes to a California quick-service restaurant chain with two battery-powered trucks in a relay system to make the most of the available electric charge. And other demonstration projects are planned (Adler 2019).

Nikola claimed to have a working Nikola One truck and portrayed it as fully functional with a video called “Nikola One Electric Semi Truck in Motion. But investment firm Hindenburg Research published a bombshell report claiming that the Nikola One wasn’t close to being fully functional. Even more incredible, Hindenburg reported that the truck in the “Nikola One in motion” video wasn’t moving under its own power. Rather, Nikola had towed the truck to the top of a shallow hill and let it roll down. The company allegedly tilted the camera to make it look like the truck was traveling under its own power on a level roadway, and has admitted that it didn’t have a working hydrogen fuel cell or motors to drive the wheels, the two key components (Lee 2020).

And the latest Nikola scandle from August 1, 2021: Nikola electric-truck prototypes were powered by hidden wall sockets, towed into position and rolled down hills. The prototypes didn’t function and were Frankenstein monsters cobbled together from parts from other vehicles. Nikola also overstated the number of pre-orders the company had received. Federal prosecutors have charged the founder of the Nikola Corp. (NKLA) with lying to investors about the supposed technological breakthroughs the company had achieved in order to drive up its stock price. Prosecutors said in the initial period following Nikola starting to trade publicly, the value of Milton’s shares shot up by $7 billion. After it emerged the company was under investigation, shares tanked causing many retail investors to lose tens and even hundreds of thousands of dollars, prosecutors said. In some cases, some investors lost substantial portions of their retirement savings, they said. Nikola founder Milton was taken into custody and later released on a $100 million bond.

Electric trucks do exist, mostly medium-duty hybrid that stop and start a lot to recharge the battery. This limits their application to delivery and garbage trucks and buses. These trucks are heavily subsidized at state and federal levels since on average they cost three times as much as a diesel truck equivalent (Table 1).

But even these stop-and-start a lot to recharge the battery trucks may not be economically feasible. Nikola Motor Company’s plans to mass produce 5,000 garbage trucks for Republic Services, one of the nation’s largest waste management service providers, were canceled, the latest in a string of bad news for the electric truck and hydrogen cell maker (Alcorn 2020).

The most vital truck is a farm tractor to plant and harvest food. A battery-driven tractor would have to be very small or the weight would compact the soil and reduce crop productivity for many decades. The first one I saw appear in the search engine was the 7030 series John Deere battery pack tractor in December 2016, and it was pretty small. But they never did make it, and it isn’t even mentioned anywhere on their website.

The latest tractor, not in production but promised in 2021, is the $50,000 Monarch Electric Tractor with peak power of 70 HP for a few seconds, otherwise 40 HP (Smith 2020). The farmers comments were interesting:

• Most farmers I know frequently have to drive their tractors long distances, sometimes miles, just to get to the field of the day. And there’s no power out there…. Talk about range anxiety!
• 40hp class tractors do not usually till fields. Where I am now, for these applications we see a 75hp class tractor at the very least, usually 90hp and up on larger farms
• Take it from someone who is actually a farmer. This will never take over the heavy tractor work as there are constant interactions due to irregularities in the ground which require the operator to adjust the tractor or the attached implement to the terrain, ie. rocks, roots, animal burrows. drainage etc. Farming is extremely brutal on equipment and it must be durable enough and simple enough to fix so that we don’t miss very small time windows on each step of the process. Farming has ridiculously small margins so the economic proposition of service life vs. amortized and operating costs over that life must make sense no one wants to pay $4 for one onion.
• I bought my MF 133 for $1200 USD and it works just fine for being 50 years old. Would I like 4WD? Yeah. Would I like an electric? Sure! Do I see this thing running very long in -10º with a snow-blower hanging off of the PTO? Color me skeptical.
• As far as the “goal of 20-plus years of continuous service life” — uh huh. Considering my issues and my friend’s issues with getting EVs repaired, I’ll believe it when I see it.
• I know a few farmers (corn, beans and hogs or cattle) and they dont really have a use for a 40-70hp tractor. This is likely to end up at grape vineyards or hobby farmers who use a tractor intensely for a few days or weeks of the year.
• The grid is thin in the country, if battery tractors existed, could they all charge up at once in the narrow planting and harvesting seasons?

Tractors do a lot of heavy work over rough ground, and today only internal combustion engines can provide efficient mobile and portable heavy-duty power (DTF 2003).

The Port of Los Angeles thought about using heavy-duty all-electric drayage trucks to improve air quality. Drayage trucks drive at least 200 miles a day back and forth between the port and inland warehouses. But it remained a thought experiment because electric drayage trucks cost too much, $307,890. The 350 kWh battery alone is $110,880 dollars. That’s three times as much as an equivalent diesel truck $104,360, and 100 times more than a used $3,000 drayage truck. And cost wasn’t the only problem (Calstart 2013a):

• The range is too short because of the battery weight and size. Drayage trucks need to go at least 200 miles a day, but at best an electric truck could go 100 miles before having to be recharged, which would take too long, and require expensive infrastructure to charge each truck several times a day.
• The batteries/battery pack cost too much.
• Overcoming the long time to recharge by using fast-charging may shorten battery life which would result in the unacceptable expense of a new battery pack before the lifetime of the truck ended
• Although electricity is available almost everywhere, the quantities required for a fleet of Battery Electric Vehicle (BEV) drayage trucks are very high and could require significant infrastructure. Multiple costly high-power and/or fast-charging stations would be required
• Roadway power infrastructure is complicated and expensive, and may be appropriate only in certain areas or applications. The impact on the grid and whether enough power could be supplied is unknown for the roughly 10,000 drayage trucks in the I-710 region
• Large battery pack life-cycle and maintenance costs are unknown
• Swapping stations are impractical and would require “industry standardization and ‘ruggedization’ of battery packs, as well as standardized software and communication protocols for batteries and system integration, plus many locations, and the storage space and operating space for multiple large trucks and hundreds of large battery packs.

Table 1. Electric trucks coust 3 times more than diesel equivalents (ICEV) on average. Source: 2016 New York State Electric Vehicle – Voucher Incentive Fund Vehicle Eligibility List. https://truck-vip.ny.gov/NYSEV-VIF-vehicle-list.php

Other costs

• Battery cost is a major component in the overall cost, ranging from $500 to $700 per kilowatt-hour (kWh) range. This is substantially more than the cost for a conventional diesel powerplant. In their 2013 I-710 commercialization study, CALSTART estimated the cost of a 350 kWh battery system at over $200,000 in 2012.
• A BEV 240 kW fast charger can cost can cost $1,500,000 (with $300,000 in additional costs). It can charge 5 heavy duty trucks (ICF 2016) per charger: $350,000 EVSE 450kW+ $150,000 to $200,000 installation costs per EVSE (Calstart 2015), or $350,000 for a specialized Proterra fast charger able to accommodate up to eight Proterra transit buses (ARB 2015)
• Additional costs to upgrade the distribution system if the rated capacity of the installed electric equipment is exceeded. A fleet with 20 E-Trucks in Southern California had to upgrade a transformer on the customer side of the meter. The transformer cost $470,000. 100 medium-duty E-Trucks charging at the same time would demand 1.5 MW of power on the grid and 50 E-Buses would demand 3.0 MW. This is in the same order of magnitude as the peak power demand of the Transamerica Pyramid building, the tallest skyscraper in San Francisco, CA (Calstart 2015)
• Unlike electric cars, which can charge at night when rates are lowest (11 pm to 8 am for $0.05), e-trucks and buses need to run during the day at the highest peak hours (12 noon to 6 p.m. $0.20) and mid-peak charges (8 a.m. to noon and 6 pm to 11 pm ($0.10), doubling to quadrupling the price paid for electricity (Calstart 2015).
• Earning money from V2G is not likely to be adopted by commercial fleets because they have rigid operating schedules while the grid varies constantly and unpredictably. If the grid tapped into e-truck batteries, it might reduce their range or delay availability (Calstart 2015)

Electric trucks are also not commercial yet because they have too many performance issues, such as poor performance in cold weather, swift acceleration, driving up steep hills, too short a range and battery life, they take too long to recharge, declining miles per day as the battery degrades, all of which make planning routes difficult and inefficient.

It is also much harder to develop batteries for trucks than cars because trucks are expected to last 15 years (versus 10 for cars) or go for 1 million miles. Trucks also have to endure more extreme conditions of temperature, vibrations, and corrosive agents than autos (NRC 2015), and it is hard to make battery packs durable enough for this rougher ride, longer miles, and longevity.

Calstart interviewed many businesses about their reluctance to buy hybrid or all electric trucks, and found their greatest concerns were the purchase cost, lack of confidence in the technology, lack of industry and truck manufacturer support, lack of infrastructure, and the heavy weight (Calstart 2012).

Elon Musk recently tweeted that Tesla will build a semi-truck with absolutely no details, promising to tweet again half a year from now with more information. Why should I believe an Elon Musk tweet any more than a Trump tweet? Especially since nearly all of the electric truck companies I studied for “When Trucks Stop Running” are out of business now, despite huge federal and state subsidies. Given that Tesla is nearly $5 billion in debt, he’s clearly angling to get drayage truck subsidies from the Ports of Los Angeles and San Pedro and more money from investors. None of the electric trucks I studied or that are on the market now were long-haul or off-road tractors, harvesters, construction, logging, or other class 8 heavy-duty trucks (except garbage trucks). They were all much smaller class 4-6 delivery trucks or buses, because they stop and start enough to use hybrid batteries, a far more commercially likely possibility than long-haul trucks, that can go for hundreds of miles before stopping, and be up to 80,000 pounds (and even more weight off-road). This wired.com article points out other issues as well with electric trucks as well.

But if the devil is in the details, then read more below in my summary and excerpts of a paper about electric trucks. Catenary trucks, which use overhead wires, will be covered in another post. Both electric and catenary trucks are covered at greater length in “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer

Abbreviations:

• BEV Battery Electric Vehicle
• PEV Plug-in Battery Electric Vehicle
• HEV Hybrid Electric Vehicle
• ICEV Internal Combustion Engine Vehicle (usually diesel, also gasoline engines)

What follows is a summary and then deytails of the following paper:

**Pelletier, S., et al. September 2014. Battery Electric Vehicles for Goods Distribution: A Survey of Vehicle Technology, Market Penetration, Incentives and Practices. CIRRELT. 51 pages.

**

SUMMARY

Financial

While commercial BEVs’ energy costs can be nearly four times cheaper than ICEV equivalents, the downside is that their purchase costs are around three times higher.

A study of drayage trucks on the I-710 corridor found that $3,000 old used trucks were used to take containers from Los Angeles ports to inland facilities that paid $100 per container delivered. “Costs for a full BEV truck are not expected to go below $250,000 even past the 2025 time frame of this report. … The same is true for fuel cells” (Calstart 2013b).

Furthermore, the cost of the equipment necessary for charging the battery can be several thousand dollars. The high cost of level 3 Electric Vehicle Supply Equipment (EVSE) is still a significant barrier to a wider adoption of fast charging. Level 2 charging equipment costs approximately $1,000 per station and installation costs approximately $2,500 to $6,000 for one unit or $18,520 for 10 units. Level 3 fast charging is not used much yet because more research needs to be done on whether this shortens battery life.

PEV and HEV vehicles typically have significant autonomy and payload limitations and involve much larger initial investments in comparison to internal combustion engine vehicles (ICEV). The battery pack is the most expensive component in PEVs and significantly augments their purchase cost compared to similar ICEV trucks.

Competing with compressed natural gas (CNG) and existing diesel (ICEV) trucks will be hard — significant improvements in ICEV efficiencies are likely in the future from the 21st Century truck partnership and other efforts to improve diesel engines. BEVs will also have to compete with other fuel alternatives such as CNG, in which case their business case can be even harder to make.

Battery Issues

Can’t carry enough cargo: Battery size and weight reduce maximum payloads for electric vans and trucks compared to equivalent diesel trucks. Even HEVs suffer from the extra weight of two power-trains reducing payload capacity.

Short range. Technical disadvantages include a relatively low achievable range. Typical ranges for freight BEVs vary from 100 to 150 kilometers (62-93 miles) on a single charge.

The miles a truck can travel declines over time. In Germany and the Netherlands, the limited operating range of electric trucks caused less flexibility in planning trips and restricted ad-hoc tour planning, resulting in less efficient operations. Also, the range declined over time through battery aging, when carrying heavy loads, and in winter from heating, lights and ventilation. Furthermore, the range listed by EV manufacturers is based on measurements according to the New European Drive Cycle which, compared to real life energy consumption in urban last mile delivery, do not give a reliable indication of the expected range. The reliability of the EVs was dependent on the model; certain prototypes and conversions were judged as reliable, while others were reported as insufficient (Taefi 2014).

Short battery life. At the moment, lithium ion batteries last for four years; however, practical experience has shown that the average period of use is only two years.

Range is also shortened by: extreme temperatures, high driving speeds, rapid acceleration, carrying heavy loads and driving up slopes. The efficiency and driving range varies substantially based on driving conditions and driving habits. Extreme outside temperatures tend to reduce range because more energy must be used to heat or cool the cabin. Cold batteries do not provide as much power as warm batteries do. The use of electrical equipment, such as windshield wipers and seat heaters, can reduce range. High driving speeds reduce range because more energy is required to overcome increased air resistance. Rapid acceleration reduces range compared with smooth acceleration. Hauling heavy loads or driving up significant inclines also reduces range (U.S. Department of Energy 2012b).

Long time to charge battery: It takes a long time to charge the batteries because of their low energy density. Recharging time may take up to 4 to 8 hours, and even with quick-charging equipment, recharging a battery to 80% takes up to 30 minutes.

Charging issues: The most common way of charging was to slow charge the vehicles over night at company premises. The in-house charging infrastructure had to be fixed several times when it was overloaded by the high capacity need of the e-trucks in Germany. Other charging related issues found were that the implementation of a smart grid and load management for large electrical fleets is not yet clarified; solutions to ensure charging in case of power outage are necessary; and charging plugs were too damageable, so only specially trained staff could handle the plug, which caused problems with replacement drivers and training issues. The limited number of charging spots outside the cities and lack of battery swapping for larger vehicles was also an issue (Taefi 2014).

Batteries have low energy density — too low. Batteries are a critical factor in the widespread adoption of electric vehicles but have a much lower energy density than gasoline, partly caused by the large amount of metals used in their production.

Battery life too short: Lithium-ion batteries in current freight BEVs typically provide 1,000 to 2,000 deep cycle life, which should last around six years.

Some manufacturers are working on a 4,000 to 5,000 deep cycle life within 5 years, but there are often tradeoffs to be made between different lithium based battery chemistries. For example, lithium-titanate batteries already reach 5,000 full discharge cycles, but have lower energy densities than other lithium-ion technologies. Calendar life, on the other hand, is a measure of natural degradation with time and was in the 7-10 years range as of 2010 with a projected range of 13-15 years by 2020. Typical battery warranty lengths for electric trucks have been reported as being in the three to five year range.

Battery degradation. Battery health can be influenced by the way they are charged and discharged. For example, frequent overcharging (i.e., charging the battery close to maximum capacity) can affect the battery’s lifespan, just as can keeping the battery at high states of charge for lengthy periods**. As expressed through deep cycle life, battery deterioration can also occur if it is frequently discharged to very deep levels . This generally implies that only 80% of the marketed battery capacity is actually usable. Using high power levels to quickly charge batteries could also have negative impacts on battery life, especially if used in the beginning and end of the charging cycle. The uncertainty regarding the effect of extreme operational temperatures on lithium batteries is another issue that should be further considered. All these potential deteriorating factors can speed up the reduction of maximum available battery capacity and shorten vehicle range and battery life**.

Lithium-ion batteries. At the moment, lithium ion batteries last for four years; however, practical experience has shown that the average period of use is only two years (AustriaTech 2014).

The Demands on the Electric Grid

Power Requirements to recharge batteries are high. A battery electric truck with a 120 kWh battery would require a charging power level of 15 kW to be able to charge in 8 hours, and the same vehicle with a battery pack of 200 kWh would require a power level of 400 kW to be able to be charged in 15-30 minutes.

The impact of the high power demand from the electricity grid. This could limit the amount of vehicles in a depot which could simultaneously be charged with high power levels, potentially requiring further investments for transformer upgrades.

The stations would also need to recharge a very large amount of batteries at the same time, which could impact the electric grid.

Out of Business

Better Place was considered a fron-trunner in the battery swapping industry but it recently filed for bankruptcy (Fiske (2013)).

Some models have recently been discontinued due to manufacturers’ financial difficulties or restructuring plans; these include Azure Dynamics’ Transit Connect Electric in 2012, Navistar’s eStar in 2013, and Modec’s Box Van in 2011.

Commercial Vehicles are dependent on government subsidies

To see the New York State All-Electric NYSEV-VIF incentives, click here.

To see the California Hybrid Truck and Bus Voucher Incentive Project (HVIP) incentives, click here.

Many U.S. companies which operate battery electric trucks also have received funding from the American Recovery and Reinvestment Act.

Plug-in electric trucks and vans (class 2 to 8 vehicles) have generally only penetrated niche applications, while remaining dependent on government incentives. They attribute this to key industry players going out of business, the conservative nature of fleet operators when it comes to new technologies, renewed interest in natural gas, and the important cost premium of these vehicles.

Sales of HEV & BEV trucks are very low

The global stock of class 2 to 8 HEVs, PHEVs and BEVs was around 20,000 at the end of 2013, versus 15 million diesel and gasoline (ICEV) trucks sold in 2013.

The vast majority of expected sales are not fully electric plug-ins, but are Hybrid Electric Vehicles (HEVs) which do not require plug-in recharging (but which are only suitable for applications that require a great deal of stopping and starting, i.e. garbage trucks, delivery vans).

One of project FREVUE’s reports identifies other factors explaining the limited use of electric freight vehicles in city logistics, namely doubts regarding technology readiness, high purchase costs, limited amount of models on the market, and rapid technology improvements themselves can be a market barrier since fleet operators fear that an electric freight vehicle purchased today could quickly lose all residual value. The uncertainties surrounding the vehicles’ residual value also limit leasing companies’ interest in electric freight vehicles.

The bottom line is that a wider adoption of Battery Electric Vehicles can only be achieved if these prove to be cost-effective.

———————————–

[ Here are more details. ]

The worst possible use of an e-truck is daily mileage less than 40 km, never needs to return to the base, has little chance of charging while on operations, needs to be charged in 20 minutes or less, carry a full load equal to a diesel truck, carries the full load all day, goes the same speed much of the day, travels on freeways, hilly terrain, and charges at peak load. The best possible use of EV is 60+ km/day, returns to the base to recharge 3 to 6 times a day for 30 minutes a day, carries half a load, has very high variations in speeds traveled in flat urban areas and only charges off-peak (AustriaTech 2014b).

Cost Competitiveness of Battery Electric Vans and Trucks

While commercial BEVs’ energy costs can be nearly four times cheaper than diesel equivalents, the downside is that their purchase costs are approximately three times higher (Feng and Figliozzi 2013).

Furthermore, the cost of the equipment necessary for charging the vehicle’s battery, which can reach several thousands of dollars, should be considered. Maintenance costs should also be significantly less than for ICEVs (Taefi et al. (2014)) and this advantage should increase as the vehicles get older (Electrification Coalition (2010)). Because of these different cost structures between ICEVs and BEVs, the only way to appropriately compare the cost competitiveness of battery electric vans and trucks for goods distribution is to study their whole life costs (McMorrin et al. 2012), according to which all costs incurred over the vehicle’s life are actualized to a net present value. Whole life costs are also referred to as the vehicle’s total cost of ownership (TCO). The following are brief descriptions of the cost structure and TCO of battery electric freight vehicles compared to their conventional counterparts.

Cost Structure: High Fixed Costs and Low Variable Costs Purchase costs for medium duty battery electric trucks offered by AMP Trucks, Inc., Boulder Electric Vehicles, Electric Vehicle International, and Smith Electric Vehicles range from $130,000 to $185,000 US, while equivalent ICE trucks go within the $55,000 to $70,000 range (New York State Energy Research and Development Authority (2014)). One way to decrease the cost premium of these larger BEVs is to be able to right-size the costly battery according to the application (Electrification Coalition 2013). However, while this measure could significantly improve the vehicles’ business case and allow for additional payload capacity, the smaller battery would require more frequent deep discharges, which could cause accelerated battery deterioration (Pitkanen and Van Amburg 2012). Another option for reducing upfront costs while also addressing fleet operators’ concerns about battery life is to lease the battery for a monthly fee based on energy consumed or distance traveled (McMorrin et al. 2012).

However, uncertainties regarding battery residual value limit many fleets’ interest in battery leasing (Pitkanen and Van Amburg (2012)), most likely because these uncertainties will be integrated into the leasing fee. Furthermore, battery leasing currently only seems available for a few battery electric vans but not for trucks, for whom it could significantly help the business case based on whole life costs (Valenta (2013)). Purchase costs for battery electric vans vary largely depending on GVWs and the availability of battery leasing. Large manufacturer products with battery leasing go for about $25,000 for GVWs close to 2,100 kg. Examples of these include Renault for its Kangoo Z.E. vans and Nissan for its e-NV200 van, with monthly battery leasing fees starting at approximately $100 per month and varying according to monthly mileage and contract lengths (Renault (2014c), Nissan (2014d)). Typical purchase costs with battery ownership range from approximately $25,000 for lighter battery electric vans (GVW starting at 1100 kg) with limited battery capacities, to about $100,000 for larger battery electric vans (GVW up to 3,500 kg) with higher battery capacities. Conventional cargo vans with GVWs close to 4,500 kg cost between $30,000 and $40,000, GVWs close to 3,500 kg are within the $25,000-$30,000 price range, and GVWs around 2,500 kg are closer to $20,000 (Nissan (2014a)).

Valuable sources for vehicle prices include Source London (2013) and New York State Energy Research and Development Authority (2014), referred to as SL (2013) and NYSEV-VIF (2014) in the tables. Some models’ prices are simply not available, most likely because, as Lee et al. (2013, p.8025) point out, “commercial vehicle prices can vary depending upon negotiation between fleet operators and truck manufacturers, and truck volumes to be purchased”. This could also imply that the prices listed here could vary depending on specific purchasing contexts. Ranges for these class 3 to 6 trucks are from 115 to 200 km (71-124 miles) depending on battery size, vehicle weight

• $133,000 AMP vehicles 100 kWh battery, 6350-8845 kg GVW
• $130-150,000 Boulder 500-series 72 kWh battery, 4765-5215 kg GVW, payload 1405 kg,
• $150,000 Navistar eStar 80 kWh battery 5490 kg GVW, payload 1860 kg
• $185,000 EVI walk-in van 99 kWh battery, 7255-10435 GVW
• $150,000 Smith Electric “Newton” 80 kWh, $181,000 with a 120 kWh battery

Den Boer et al. (2013) state that approximately 1,000 battery electric distribution trucks were operated around the world as of July 2013. CALSTART’s report on the demand assessment of electric truck fleets (Parish and Pitkanen 2012) claims that industry experts have estimated there were less than 500 battery electric trucks in use in North America as of 2012, with most sales made in US states like California and New York, which offered incentives for these vehicles. Also, approximately 4,500 hybrid electric trucks were sold in North America as of 2012. The large majority of hybrid and battery electric trucks sold were in medium duty and vocational applications rather than long-haul class 8 applications. Stocks of freight electric vehicles (vans and trucks) as of January 1st 2012 in Europe included 70 in Belgium, 106 in Denmark, 338 in Germany, 1,566 in France, 217 in the Netherlands, 103 in Norway, 38 in Austria, 13 in Portugal, 459 in Spain, and over 2000 in London (TU Delft et al. 2013). However, most of the electric vans in the UK are old low performance vans with lead-acid batteries, with only a few hundred modern electric vans with lithium-ion batteries sold in 2012 (Cluzel et al. 2013).

As previously noted, the advantage in the cost structure of BEVs comes from their lower variable costs (i.e., energy and maintenance costs) (McMorrin et al. 2012).

However, electricity rates incurred depend on geographical location, average consumption levels, and time of use (Hydro-Quebec (2014)). Charging during off-peak hours can allow for reduced electricity rates and seasonal price variations may also occur. It is therefore necessary to evaluate the potential of lower energy costs of commercial BEVs according to one’s specific context.

Gallo and Tomi´ c (2013) provide an overview of the performance of delivery BEVs (class 4-5) operated by a large parcel delivery fleet in Los Angeles. The findings showed that in comparison to similar diesel vehicles, the electric trucks were up to four times more energy efficient, offering up to 80% lower annual fuel costs. The report estimated maintenance savings ranging from $0.02 to $0.10 per mile, finding these savings “will vary widely depending on driving conditions, vehicle usage, driver behavior, vehicle model and regenerative braking usage”(p.53). Other findings included the need for drivers to be trained to adapt their techniques to electric trucks, that a minimum utilization of 50 miles per day is necessary to recuperate purchase costs in a reasonable time span, and that incentives are still necessary at this stage to make the vehicles a viable alternative. Additionally, some repairs needed to be provided by the vehicle manufacturers because of the limited experience of fleet mechanics with electric trucks. TU Delft et al. (2013) also reported several companies having experienced a lack of available resources for quickly solving technical issues with freight BEVs. This is important to consider because in order to profit from lower variable costs, companies must have access to reliable maintenance services and spare parts.

Figliozzi (2013) compared whole life costs of battery electric delivery trucks to a conventional diesel truck serving less-than-truckload delivery routes. The BEVs are the Navistar eStar (priced at $150,000) and Smith Newton (priced at $150,000), while the diesel reference is an Isuzu N-series (priced at $50,000). Different urban delivery scenarios were designed based on typical US cities values and different routing constraints. Thus, 243 different route instances were simulated by varying values for the number of customers, the service area, the depot-service area distance, the customer service time, and the customer demand weight. Different battery replacement and cost scenarios were also studied. The planning horizon was set to ten years, with the residual value of the vehicles set at 20% of their purchase price. In spite of the fact that the electric trucks had a higher TCO in 210 out of the 243 route instances, a combination of the following factors would allow them to be a viable alternative: high daily distances, low speeds and congestion, frequent customer stops during which an ICEV would idle, other factors amplifying the BEVs’ superior efficiency, financial incentives or technological breakthroughs to reduce purchase costs, and a planning horizon above ten years. With a battery replacement after 150,000 miles at a forecasted cost of $600/kWh, the diesel truck always had a lower TCO.

The need for a battery replacement significantly decreases thee business case for BEV Trucks

Battery electric freight vehicles currently fit much more into city distribution than long haul applications because of the battery’s energy density limitations (den Boer et al. 2013). Typical daily miles traveled by urban delivery trucks are often lower than the range already achieved by electric commercial vehicles (Feng and Figliozzi 2013). With limited payloads, this makes them more viable for last mile deliveries in urban areas involving frequent stop-and-go movements, limited route lengths, as well as low travel speeds (Nesterova et al. 2013), AustriaTech 2014b), Taefi et al. 2014)). With forecasted reductions in battery costs and evolution of diesel prices are compared to electricity prices, as time goes by, BEV distribution trucks should become more competitive with equivalent ICEVs based on their own economic proposition (den Boer et al. 2013). However, commercial BEVs will also have to compete with other fuel alternatives such as compressed natural gas, in which case their business case can be even harder to make (Valenta 2013). Furthermore, significant improvements in ICEV efficiencies are expected in upcoming years (Mosquet et al. (2011)). Nevertheless, for now, the appropriateness of using delivery BEVs ultimately depends on the context of their intended use, but the high purchase cost has been extensively pointed out as a huge cost effectiveness barrier, and the need for incentives at this stage of the market seems like a recurring requirement for a viable business case.

Financial Incentives

The goal of financial incentives is to reduce the upfront costs of electric vehicles and charging equipment (IEA and EVI (2013)). One form is purchase subsidies granted upon buying the vehicle (Mock and Yang (2014)). An example of this is the California Hybrid Truck and Bus Voucher Incentive Project (HVIP) which provides up to $35,000 towards hybrid truck purchases and up to $50,000 towards battery electric truck purchases to be used in California (Parish and Pitkanen (2012)). Eligible vehicles can be found in CEPAARB (2014). Another similar program is the New York Truck Voucher Incentive Program, which offers up to $60,000 for electric truck purchases to be used New York (New York State Energy Research and Development Authority (2014)).

Companies are also eligible to receive similar purchase subsidies for participating in demonstration or performance evaluation projects (US DOE (2013b)).

Overviews of tax exemptions related to electric vehicles can be found in IEA and EVI (2013), Mock and Yang (2014), ACEA (2014), and US DOE (2012a).

Companies Experimenting with BEVs In North America, large companies using battery electric delivery vehicles include FedEx, General Electric, Coca-Cola, UPS, Frito-Lay, Staples, Enterprise, Hertz and others (Electrification Coalition (2013b)). Frito-Lay alone has been operating 176 battery electric delivery trucks in North America since 2010 (US DOE (2014b)). Fedex also operates over 100 electric delivery trucks (Woody (2012)). Many U.S. companies which operate battery electric trucks have received funding from the American Recovery and Reinvestment Act to cover a portion of the vehicles’ purchase costs (US DOE (2013b)).

BEVs in city logistics have often been used for parcel delivery, deliveries to stores, waste collection and home supermarket deliveries. A few notable private initiatives identified in the report include Deret’s 50 electric vans for last mile deliveries to city centers in France, UPS’s 12 Modec vehicles for parcel and post delivery in the UK and Germany, Tesco’s 15 Modec vehicles for on-line shopping deliveries in London, Sainsbury’s use of 19 electric vans for supermarket

Drivers expressed concerns regarding the reduction in payloads.

Delivered products include parcel, courier, textiles, fast food, bakery, hygienic articles and household articles.

Negative factors experienced included the required investments (vehicles and EVSE), reduced payloads, limited range, the effect of cold temperatures on range, imprecise marketed vehicle ranges, the lack of resources to fix technical problems, incompatibility of vehicles’ connectors with public charging infrastructure, and the need to train drivers to better adapt to the vehicles. All in all, the case studies indicated that the vehicles were found to be most adequate for last mile and night deliveries.

Electric Tricycles carrying up to 440 pounds (200 kg)

Urban consolidation centers (UCC) are logistic facilities multiple organizations use, close to the area they serve. UCCs using BEVs for last mile deliveries also often use smaller vehicles ideal for tight urban areas, which can lead to increases in vehicle kilometers per ton delivered (Allen et al. (2012)). These smaller vehicles are typically electric tricycles, which have payloads of up to 200 kg (AustriaTech 2014b) and low driving speeds. These tricycles can find parking locations more easily than larger vehicles, can often use bicycle lanes for faster access to customers in congested and pedestrian areas, and from a cost point of view are more affected by driver costs than purchase costs and utilization rates (Tipagornwong and Figliozzi 2014). Allen et al. (2007) present an example of the use of electric tricycles by a UCC. La Petite Reine used a consolidation center in the center of Paris for last mile deliveries of food products, flowers, parcels, and equipment/parts with electric tricycles with a maximum payload of 100 kg (220 pounds). The initial trial in 2003 was deemed a success, with monthly trips growing from 796 to 14,631 and the number of tricycles from seven to 19 in the first 24 months. Operations are now permanent and La Petite Reine operates three locations in Paris with over 70 collaborators, 80 tricycles, 15 electric light duty vehicles and 1 million deliveries per year (La Petite Reine 2013).

Nesterova et al. (2013) present two other cases of two phased deliveries in Paris integrating to some extent electric bikes and tricycles. The first is Chronopost International, which offers express delivery of parcels and uses two underground areas in Paris for sorting last mile deliveries. The parcels are first transported from their facility at the border of Paris to their underground areas, where they are sorted per route and distributed to customers by electric bikes and vans in inner Paris. The second is Distripolis, a delivery concept tested by road transport operator GEODIS. A depot in Bercy receives shipments from three organizations and delivers the packages under 200 kg to multiple UCCs in the city center of Paris (heavier packages are directly delivered to the receiver). From here, electric trucks and tricycles are used for the last mile deliveries of the light packages. Distripolis operated 10 light duty electric vehicles (Electron Electric truck, GVW 3.5 tons) and one electric tricycle in 2012, and aims at having 56 tricycles and 75 electric vehicles by 2015.

BESTFACT (2013) provides another case of two-phased deliveries with electric vehicles. Gnewt Cargo operates a transhipment facility for the last mile deliveries of an office supplies company in London (Office Depot). They use an 18 tons vehicle to transport parcels from the office supplies company warehouse in the suburbs of London to the transhipment center in the city, where the parcels are transferred onto electric vans and tricycles for final delivery to customers. Initially a trial in 2009, the company has permanently implanted this system because it involved no increases in operational costs, and it plans to implement similar delivery systems in other cities (Browne et al. (2011)).

Other Interesting Distribution Concepts for BEVs

An interesting experiment regarding last mile deliveries with BEVs can be found in the context of project STRAIGHTSOL, during which TNT Express integrated a mobile depot into their operations in Brussels with electric vehicles during the summer of 2013 (Nathanail et al. 2013), Anderson and Eidhammer 2013), Verlinde et al. 2014). A large trailer equipped as a mobile depot with typical depot facilities was loaded with parcels at TNT’s depot near the airport in the morning. Next it was towed by a truck to a dedicated parking spot in the city center, where last mile deliveries as well as pick-ups were made with electric tricycles by a Brussels courier company, which then returned to the mobile depot with the collected parcels. At the end of the day, the mobile depot was towed back to TNT’s depot, from where the collected parcels were shipped. Challenges included gaining exclusive access to the parking location for the mobile depot, significant increases in operating costs, and decreases in the punctuality of the deliveries and pickups (Johansen et al. 2014), Verlinde et al. 2014).

They could find a niche application in short haul port drayage operations (CALSTART 2013b). One example of this practice is found at the Port of Los Angeles, where 25 heavy duty battery electric drayage trucks manufactured by Balqon were tested for operational suitability. In exchange for the purchase of the trucks, Balqon agreed to locate its factory in L.A. and pay the port a royalty for future sales (EVI et al. (2012)). The Port of L.A. also tested similar heavy duty battery electric trucks from Transpower and U.S Hybrid, as well as a fuel cell heavy duty truck (Port of L.A. 2014).

Incentives still play a critical role in the business case of these vehicles, but the long-term unsustainability of certain financial incentives and recent trends suggest their imminent phasing out (Bernhart et al. 2014) will require that these vehicles be cost competitive independent of such incentives. One could argue that these vehicles are not ready for this challenge, in view of current cost dynamics, recent financial setbacks of key industry players, often resulting in discontinued vehicle models (Schmouker 2012), Shankleman 2011), Truckinginfo 2013), Everly 2014), Torregrossa 2014)).

The market take-up of electric vehicles in urban freight transport is very slow, because costs are high compared to conventional vehicles and companies are still uncertain about the maturity of the technology and about the availability of charging infrastructure.

The worst possible use of an e-truck is daily mileage less than 40 km, never needs to return to the base, has little chance of charging while on operations, needs to be charged in 20 minutes or less, carry a full load equal to a diesel truck, carries the full load all day, goes the same speed much of the day, travels on freeways, hilly terrain, and charges at peak load. The best possible use of EV is 60+ km/day, returns to the base to recharge 3 to 6 times a day for 30 minutes a day, carries half a load, has very high variations in speeds traveled in flat urban areas and only charges off-peak.

Financially at least 50% public subsidies pay for it

At present, lithium ion batteries are most often used in electric freight vehicles with a current battery lifetime of 1000 to 2000 cycles (approximately 6 years). Also, the kilometer range declines over time, which may reduce peak power capacity and energy density. For these reasons electric vehicles are currently most suitable for daily urban distribution activities as the battery energy density is too low for regular long haul applications. At the moment, lithium ion batteries last for four years; however, practical experience has shown that the average period of use is only two years. Improvements in battery powered trucks are expected within five years in terms of the cost and durability of batteries.

Related Articles

• • Making the most energy dense battery from the palette of the periodic table
  • Hydrogen: The dumbest & most impossible renewable
  • Diesel is finite. Trucks are the bedrock of civilization. So where are the battery electric trucks?
  • Just 16,000 catenary trucks would use 1% of California’s electricity generation, all vehicles 2.5 times more power than available
  • Who Killed the Electric Car and more importantly, the Electric Truck?
  • All Electric Trucks. Probably not going to happen. Ever. Why not?
  • Hybrid electric trucks are very different from HEV cars
  • Electric truck range is less in cold weather
  • Utility scale energy storage batteries limited by materials and few locations for pumped hydro, compressed air
  • Roger Andrews: California public utilities vote no on energy storage
  • Electric Grid Energy Storage
  • Would Tesla, li-ion batteries, SolarCity or SpaceX exist without $4.9 billion in government subsidies?
  • Electric vehicle overview
  • What is the life span of a vehicle Lithium-ion Battery?
  • EPA LCA study lithium-ion battery environmental impact, energy used, recycling issues
  • Bloomberg News: Tesla’s new battery doesn’t work that well with solar
  • Renewable Energy can’t supply more than 30% of electricity without revolutionary battery breakthrough
  • Revolutionary understanding of physics needed to improve batteries – don’t hold your breath
  • American Physical Society: has the Battery Bubble Burst?
  • Batteries are made of rare, declining, and imported minerals
  • Battery energy density too low to power cars
  • Notes from “The Powerhouse: Inside the Invention of a Battery to Save the World” by Steve LeVine
  • Why aren’t there Battery Powered Airplanes?
  • Given the laws of physics, can the Tesla Semi really go 500 miles, and what will the price be?

References

• Abdallah, T. 2013. The plug-in hybrid electric vehicle routing problem with time windows. Master’s thesis, University of Waterloo, Waterloo, Ontario, Canada. URL https://uwspace. uwaterloo.ca/bitstream/handle/10012/7582/Abdallah_Tarek.pdf?sequence=1

• 2014. Overview of purchase and tax incentives for electric vehicles in the EU. URL http: //www.acea.be/uploads/publications/Electric_vehicles_overview__2014.pdf

• 2011. Fleet fast charging station, 250 kW DC. URL http://evsolutions.avinc. com/uploads/products/5_AV_EV250-FS_061110_fleet_dc.pdf

• Adler, A. 2019. NFI, Penske reach electric-driving milestones with Freightliner test trucks. freightwaves.com

• Aixam Mega. 2014a. e-Worker basic version. URL http://www.mega-vehicles.co.uk/ ressources/modeles/E-Worker-basic-version.pdf. Last accessed 9/5/2014. Aixam Mega. 2014b. Mega e-Worker brochure. URL http://www.megavan.org/ MEGAEWORKERBROCHURE.pdf

• Alcorn C (2020) Nikola and Republic Services scrap their electric garbage truck. CNN Business.

• Allen, J., M. Browne, A. Woodburn, J. Leonardi. 2012. The role of urban consolidation centres in sustainable freight transport. Transport Reviews 32(4) 473–490.

• Allen, J., G. Thorne, M. Browne. 2007. BESTUFS good practice guide on urban freight transport. BESTUFS consortium. URL http://www.bestufs.net/download/BESTUFS_II/good_ practice/English_BESTUFS_Guide.pdf

• Allied Electric. 2014a. Peugeot eBipper electric vans. URL http://www.alliedelectric.co.uk/ electric-vans/peugeot-ebipper .

• Allied Electric. 2014b. Peugeot eBoxer electric vans. URL http://www.alliedelectric.co.uk/ electric-vans/peugeot-eboxer

• Allied Electric. 2014c. Peugeot eExpert electric vans. URL http://www.alliedelectric.co.uk/ electric-vans/peugeot-eexpert

• Allied Electric. 2014d. Peugeot ePartner electric vans. URL http://www.alliedelectric.co.uk/ electric-vans/peugeot-epartner

• AMP Electric Vehicles. 2014. Commercial Chassis. URL http://ampelectricvehicles.com/ourchassis/commercial-chassis. Last accessed 19/5/2014.

• Anderson, J., O. Eidhammer. 2013. Project SRAIGHTSOL deliverable D4.2: Monitoring of demonstration achievements – second period. URL https://docs.google.com/file/d/ 0ByCtQR4yIfYDckJoWU5DZGxycHM/edit?pli=1.

• ARB. October 2015. TECHNOLOGY ASSESSMENT: MEDIUM- AND HEAVY- DUTY BATTERY ELECTRIC TRUCKS AND BUSES. Air Resources Board, California Environmental protection agency.

• AustriaTech 2014a. Annex: Electric fleets in urban logistics – Overview of current low emission vehicles. Published as part of the ENCLOSE project. URL http://www.austriatech.at/files/ get/9e26eb124ad90ffa93067085721d4942/austriatech_electricfleets_annex.pdf. Last accessed 22/5/2014.

• AustriaTech 2014b. Efficiency in small Electric fleets in and medium-sized urban logistics: historic towns. ENCLOSE project, funded by Intelligent Energy Improving urban freight Published as part of the Europe (IEE), Vienna, Austria. URL http://www.austriatech.at/files/get/834747f18fdcc9538376c9314a4d7652/austriatech\_electricfleets\_broschuere.pdf

• Azure Dynamics. 2011. Transit Connect Electric specifications and ordering guide. pdf

• Balgon 2013a. Mule M100 brochure. URL http://www.balqon.com/wp-content/uploads/2013/ 09/m100_brochure_2013.pdf

• Balgon 2013b. MX30 electric drayage tractor brochure. URL http://www.balqon.com/wpcontent/uploads/2013/08/71_MX30D.pdf

• Balgon 2014a. Mule M100 electric truck. URL http://www.balqon.com/electric-vehicles/ mule-m100/

• Balgon 2014b. MX30 class 8 electric tractor. URL http://www.balqon.com/electric-vehicles/ nautilus-xe30

• Balgon 2014c. Nautilus XRE20. URL http://www.balqon.com/electric-vehicles/nautilusxe20

• Balgon 2014d. XRE20 product specifications. URL http://www.balqon.com/xre-20-productspecifications/

• Berman, B., J. Gartner. 2013. Report executive summary: Selecting electric vehicles for fleets. Navigant Research. URL http://www.navigantresearch.com/wp-assets/uploads/2013/ 02/RB-SEVF-13-Executive-Summary.pdf

• Bernhart, W., et al. 2014. E-mobility index for Q1/2014. Roland Berger Strategy Consultants. URL http://www.rolandberger.com/media/ pdf/Roland_Berger_E_mobility_index_2014_20140301.pdf

• 2013. Deliverable 2.2: Best practice handbook 1 (version 1.1). URL http: //www.bestfact.net/wp-content/uploads/2014/01/BESTFACT_BPH.pdf

• Birmingham Post. 2011. Modec electric van know-how sold to US firm Navistar. URL http://www.birminghampost.co.uk/business/manufacturing/modec-electric-vanknow-how-sold-3921741

• Botsford, C., et al. 2009. Fast charging vs. slow charging: pros and cons for the new age of electric vehicles. Paper presented at the EVS24 International Battery, Hybrid and Fuel Cell Electric Vehicle Symposium. Stavanger. http://www.cars21.com/assets/link/EVS24-3960315%20Botsford.pdf

• Boulder Electric Vehicle. 2013a. 1000-series master brochure. URL http://www.boulderev.com/ docs/1000%20Master%20Brochure.pdf.

• Boulder Electric Vehicle. 2013b. 500-series master brochure. URL http://www.boulderev.com/ docs/500%20Master%20Brochure.pdf.

• Boulder Electric Vehicle. 2013c. Why Electric? URL http://www.boulderev.com/goelectric. php

• Browne, M., J. Allen, J. Leonardi. 2011. Evaluating the use of an urban consolidation centre and electric vehicles in central london. IATSS research 35(1) 1–6.

• Bruglieri, M., et al. 2014. The vehicle relocation problem for the one-way electric vehicle sharing: An application to the Milan case. Procedia-Social & Behavioral Sciences 11 18–27

• Bunkley, N. 2010. Ford starts to ship an electric delivery van. The New York Times URL http:// www.nytimes.com/2010/12/08/business/08electric.html?_r=0. Last accessed 19/5/2014.

• California Environmental Protection Agency’s Air Resources Board (CEPAARB). 2014. HVIP eligible vehicles – zero-emission. http://www.arb.ca.gov/msprog/aqip/hvip/042414\_ vehicle_eligibility_zev.pdf

• Calstart. 2012. Demand Assessment of First-Mover Hybrid and Electric Truck Fleets 2012 – 2016. Calstart.org

• Calstart 2013a. I-710 Project zero-emission truck commercialization study final report. Pasadena, California. URL http://www.calstart.org/Libraries/I-710\_Project/I-710\_ Project_Zero-Emission_Truck_Commercialization_Study_Final_Report.sflb.ashx. Last accessed 20/5/2014.

• Calstart 2013b. Technologies, challenges and opportunities: I-710 Zero-emission freight corridor vehicle systems (Revised Version Final V1). URL http://www.calstart.org/ Libraries/I-710_Project/Technologies_Challenges_and_Opportunities_I-710_ZeroEmission_Freight_Corridor_Vehicle_Systems.sflb.ash

• Carlyle, R. 2014. What commercially viable alternate power sources for semi-trucks / tractor-trailers are likely to become available in the next decade? Quora.

• Chan, C.C. 2007. The state of the art of electric, hybrid, and fuel cell vehicles. Proceedings of the IEEE 95(4) 704–718.

• Chawla, N., S. Tosunoglu. 2012. State of the art in inductive charging for electronic appliances and its future in transportation. Paper presented at the 2012 Florida Conference on Recent Advances in Robotics. Boca Raton, Florida. http://www.eng.fiu.edu/mme/Robotics/elib/FCRAR2012-InductiveCharging.pdf

• Calstart. September 2015. Electric Truck & Bus Grid Integration Opportunities, Challenges & Recommendations. CALSTART, Inc.

• Chen, T.D., K.M. Kockelman, M. Khan. 2013. The electric vehicle charging station location problem: a parking-based assignment method for seattle. Proceedings of the 92nd Annual Meeting of the Transportation Research Board in Washington DC . URL http://www.caee. utexas.edu/prof/kockelman/public_html/TRB13EVparking.pdf

• Citroen. 2014. Citro¨en Berlingo Electric. URL http://www.citroen.fr/vehicules/lesvehicules-utilitaires-citroen/citroen-berlingo/citroen-berlingo-electric. html#sticky

• Cluzel, C., B. Lane, E. Standen. 2013. Pathways to high penetration of electric ve hicles. Element Energy and Ecolane, commissioned by The Committee on Climate Change. URL http://www.theccc.org.uk/wp-content/uploads/2013/12/CCC-EVpathways_FINAL-REPORT_17-12-13-Final.pdf

• Comarth. 2014. T-truck. URL http://www.comarth.com/en/t-truck.aspx

• Crist, P. 2012. Electric vehicles revisited: cussion Paper No. 2012-03, International Costs, subsidies and prospects. DisTransport Forum at the OECD. Paris. URL http://www.oecd-ilibrary.org/docserver/download/5k8zvv7h9lq7.pdf?expires= 1407278294&id=id&accname=guest&checksum=5AC58E3FC5201411F1A7446C5EAE9F7B.

• Davis, B.A., M.A. Figliozzi. 2013. A methodology to evaluate the competitiveness of electric delivery trucks. Transportation Research Part E: Logistics and Transportation Review 49(1) 8–23.

• de Santiago, J., et al. 2012. Electrical motor drivelines in commercial all-electric vehicles: A review. IEEE Transactions on Vehicular Technology 61(2) 475–484.

• Delucchi, M.A., T.E. Lipman. 2001. An analysis of the retail and lifecycle cost of battery-powered electric vehicles. Transportation Research Part D: Transport and Environment 6(6) 371–404.

• den Boer, E., S. Aarnink, F. Kleiner, J. Pagenkopf. 2013. Zero emission trucks: An overview of state-of-the-art technologies and their potential. CE Delft and DLR, commissioned by the International Council on Clean Transportation (ICCT). URL http://www.cedelft.eu/publicatie/zero\_emission\_trucks/1399

• Dharmakeerthi, C.H., N. Mithulananthan, T.K. Saha. 2014. Impact of electric vehicle fast charging on power system voltage stability. International Journal of Electrical Power & Energy Systems 57 241–249.

• DHL. 2014. Deutsche Post DHL fleet of alternative vehicles continues to grow. http://www.dhl.com/en/press/releases/releases\_2014/group/dp\_dhl\_fleet\_of\_ alternative_vehicles_continues_to_grow.html#.U5dISPl5MlI

• Dolan, M. 2010. Ford works with manufacturer for new electric van. The Wall Street Journal URL http://blogs.wsj.com/drivers-seat/2010/09/24/ford-switches-role-withnew-electric-van/?blog_id=146&post_id=3782

• Dong, J., C. Liu, Z. Lin. 2014. Charging infrastructure planning for promoting battery electric vehicles: An activity-based approach using multiday travel data. Transportation Research Part C: Emerging Technologies 38 44–55.

• DTF. June 2003. Diesel-Powered Machines and Equipment: Essential Uses, Economic Importance and Environmental Performance. Diesel Technology Forum.

• Duleep, G., H. van Essen, B. Kampman, M M. Gr¨unig. 2011. Impacts of electric vehicles – Deliverable 2: Assessment of electric vehicle and battery technology.

• CE Delft, ICF International and Ecologic, commissioned by the European Commission. http://www.cedelft.eu/?go= downloadPub&id=1153&file=4058_D2defreportHvE_1314726004.pdf

• Eberle, U., R. von Helmolt. 2010. Sustainable transportation based on electric vehicle concepts: a brief overview. Energy & Environmental Science 3(6) 689–699.

• Ehrler, V., P. Hebes. 2012. Electromobility for city logistics – the solution to urban transport collapse? An analysis beyond theory. Procedia-Social and Behavioral Sciences 48 786–795.

• Electric Power Research Institute (EPRI). 2013. Total cost of ownership model for current plug-in electric vehicles. Tech. rep., Palo Alto, California. URL http://www.epri.com/abstracts/ Pages/ProductAbstract.aspx?ProductId=000000003002001728

• Electric Vehicles Initiative (EVI), Rocky Mountain Institute (RMI), IEA’s Implementing Agreement for Cooperation on Hybrid and Electric Vehicle Technologies and Programmes (IA-HEV). 2012. EV city casebook: A look at the global electric vehicle movement. http:// iea.org/publications/freepublications/publication/EVCityCasebook.pdf

• Electric Vehicles International. 2013a. EVI Medium Duty Truck Specification Sheet. URL http:// evi-usa.com/LinkClick.aspx?fileticket=SyZhwUVqNJs%3d&tabid=83

• Electric Vehicles International. 2013b. EVI Walk-in Van Specification Sheet. URL http:// evi-usa.com/LinkClick.aspx?fileticket=Er2c6QQx-Mo%3d&tabid=62

• Electrification Coalition. 2010. Fleet electrification roadmap.

• URL http://www. electrificationcoalition.org/sites/default/files/EC-Fleet-Roadmap-screen.pdf

• Electrification Coalition. 2013a. EV case study: The city of Houston forward thinking on electrification. URL http://www.electrificationcoalition.org/sites/default/files/Houston\_ Case_Study_Final_113013.pdf

• Electrification Coalition. 2013b. State of the plug-in electric vehicle market. Written in consultation with PricewaterhouseCoopers. nothing of interest, mainly autos

• Element Energy. 2012. State of the art – commercial electric vehicles in western urban Europe. Commissioned by the Cross River Partnership (CRP) within the URBACT II programme. URL http://urbact.eu/fileadmin/Projects/EVUE/documents_media/OP_State_of_the_ Art_report_May_20121.pdf

• Emadi, A., K. Rajashekara, S.S. Williamson, S.M. Lukic. 2005. Topological overview of hybrid electric and fuel cell vehicular power system architectures and configurations. IEEE Transactions on Vehicular Technology 54(3) 763–770. EMOSS. 2014. e-truck—full electric truck. URL http://www.emoss.biz/electric-truck. Last accessed 11/5/2014.

• Etezadi-Amoli, M., K. Choma, J. Stefani. 2010. Rapid-charge electric-vehicle stations. IEEE Transactions on Power Delivery 25(3) 1883–1887. European Commission. 2013. Green public procurement (GPP) in practice: Framework agreement for zero-emission vehicles. URL http://ec.europa.eu/environment/gpp/pdf/news\_alert/ Issue30_Case_Study65_Oslo_zero_emission_vehicles.pdf. Last accessed 6/6/2014.

• Everly, S. 2014. Electric truck maker Smith Electric attracts $42 million investment, plans to reopen Kansas City plant. The Kansas City Star URL http://www.kansascity.com/ news/business/article356097/Electric-truck-maker-Smith-Electric-attracts42-million-investment-plans-to-reopen-Kansas-City-plant.html

• EV-INFO. 2014a. URL http://www.ev-info.com/. Last accessed 15/5/2014. EV-INFO. 2014b. List of electric vehicle battery manufacturers. URL http://www.ev-info.com/ electric-vehicle-battery-manufacturer

• EV-world. 2013. Citroen Introduces 2013 Berlingo Electric Work Van. URL http://evworld. com/news.cfm?newsid=29975. Last accessed 22/8/2014.

• Feng, W., M. Figliozzi. 2013. An economic and technological analysis of the key factors affecting the competitiveness of electric commercial vehicles: A case study from the USA market. Transportation Research Part C: Emerging Technologies 26 135–145.

• Finlay, J.G. 2012. Strategic options for Azure Dynamics in hybrid and battery electric vehicle markets. Master’s thesis, Simon Fraser University. URL http://summit.sfu.ca/system/files/ iritems1/13099/MOT%2520MBA%25202012%2520James%2520Gordon%2520Finlay.pdf

• Fiske, G. 2013. Better Place files for bankruptcy. The Times of Israel URL http://www. timesofisrael.com/better-place-files-for-bankruptcy/. Last accessed 28/5/2014.

• Fleet News. 2010. New evidence shows electric vans could last over ten years. URL http://www.fleetnews.co.uk/news/2010/12/1/new-evidence-shows-electric-vanscouldlast-more-than-10-years/38353/

• Frade, I., A. Ribeiro, G. Gonalves, A.P. Antunes. 2011. Optimal location of charging stations for electric vehicles in a neighborhood in Lisbon, Portugal. Transportation Research Record: Journal of the Transportation Research Board 2252 91–98.

• Gallo, J-B., J. Tomi´c. 2013. tion. California Hybrid, Battery electric parcel delivery truck testing and demonstration. Efficient and Advanced Truck Research Center (CalHEAT). URL http://www.calstart.org/Libraries/CalHEAT\_2013\_Documents\_Presentations/ Battery_Electric_Parcel_Delivery_Truck_Testing_and_Demonstration.sflb.ashx

• Gates B (2020) How do we move around in a zero-carbon world? gatesnotes.com

• 2014. The Electron. URL http://www.geodis.com/en/view-868-article.html; jsessionid=-T+zlU8bsRm30gkVlo7loQ__

• Gonzalez, J., R. Alvaro, C. Gamallo, M. Fuentes, J. Fraile-Ardanuy. 2014. Determining electric vehicle charging point locations considering drivers’ daily activities. Procedia Computer Science 32 647–654.

• Green Waco. 2008. Jolly-2000 Electric Vehicle. http://www.greenwaco.be/infra/pdf/ jolly2000-fr.pdf

• Haghbin, S., et al. 2010. Integrated chargers for EV’s and PHEV’s: Examples and new solutions.

• IEEE 2010 XIX International Conference on Electrical Machines (ICEM). IEEE, Rome, 1–6.

• Hannisdahl, O.H., et al. 2013. EV revolution in Norway – explanations and lessons the EVS27 International Battery, Hybrid and Fuel Cell Electric Vehicle The future is electric! the learned. Paper presented at Symposium. Barcelona. URL http://www.gronnbil.no/getfile.php/FILER/Norway%20-%20lessons%20learned%20from%20a%20global%20EV%20success%20story%20-%20Final.pdf

• Hatton, C.E., et al. 2009. Charging stations for urban settings the design of a product platform for electric vehicle infrastructure in Dutch cities. Paper presented at the EVS24 International Battery, Hybrid and Fuel Cell Electric Vehicle Symposium. Stavanger. http://www.e-mobile.ch/pdf/2010/EVS-24-1230095.pdf

• Hazeldine, T., et al. 2009. Market outlook to 2022 for battery electric vehicles and plug-in hybrid electric vehicles. AEA Group, commissionned by the Committee on Climate Change, Oxfordshire, England. URL http://www.ricardo-aea.com/cms/assets/Uploads/Papers-and-Reports/SustainableTransport/AEA-Market-outlook-to-2022-for-battery-electric-vehicles-and-plugin-hybrid-electric-vehicles-1.pdf

• He, F., D. Wu, Y. Yin, Y. Guan. 2013. Optimal deployment of public charging stations for plug-in hybrid electric vehicles. Transportation Research Part B: Methodological 47 87–101.

• Hensley, R., J. Newman, M. Rogers. 2012. Battery technology charges ahead. McKinsey & Company. URL http://www.mckinsey.com/insights/energy\_resources\_materials/battery\_ technology_charges_ahead

• Hess, A., F. Malandrino, M.B. Reinhardt, C. Casetti, K.A. Hummel, J.M. Barcel-Ordinas. 2012. Optimal deployment of charging stations for electric vehicular networks. Proceedings of the first workshop on Urban networking, Association for Computing Machinery. New York, NY, 1–6.

• Howell, D. 2011. Energy storage R&D. U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, presented at the 2011 U.S. DOE Vehicle Technologies Program Annual Merit Review and Peer Evaluation Meeting. URL http://www1.eere.energy.gov/vehiclesandfuels/pdfs/merit\_review\_2011/ electrochemical_storage/es000_howell_2011_o.pdf

• Hydro-Qu´ebec. 2014. Comparison of electricity prices in major North American cities. URL http://www.hydroquebec.com/publications/en/comparison\_prices/pdf/ comp_2014_en.pdf

• Idaho National Laboratory. 2014. DC fast charging effects on battery life and evse efficiency and security testing. Presentation given at the 2014 U.S Department of Energy Hydrogen and Fuel Cells Program and Vehicle Technologies Office Annual Merit Review and Peer Evaluation Meeting. URL http://energy.gov/sites/prod/files/2014/07/f18/vss131\_francfort\_ 2014_o.pdf

• I’Moving. 2014a. I’Moving Ecomile: small size for large transport. URL http://www.i-moving. it/en/product/ecomile.html. Last accessed 28/6/2014. I’Moving. 2014b. I’Moving Jolly 2000: large cargo space for city logistics. URL http://www.imoving.it/en/product/jolly-2000.html

• I’Moving. 2014c. I’Moving Smile: piccolo, leggero, affidabile. URL http://www.i-moving.it/en/ product/smile.html. Last accessed 28/6/2014. International Energy Agency (IEA). 2011. Technology roadmap – electric and plug-in hybrid electric vehicles. URL http://www.iea.org/publications/freepublications/publication/EV\_ PHEV_Roadmap.pdf

• International Energy Agency (IEA), Electric Vehicles Initiative (EVI). 2013. Global EV outlook – Understanding the electric vehicle landscape to 2020. URL http://www.iea.org/ publications/globalevoutlook_2013.pdf

• International Energy Agency’s Implementing Agreement for co-operation on Hybrid and Electric Vehicle Technologies and Programmes (IA-HEV). 2013. Hybrid and electric vehicles The electric drive gains traction. IA-HEV 2012 Annual Report. URL

• http://www.ieahev. org/assets/1/7/IA-HEV_Annual_Report_May_2013_3MB.pdf

• Jerram, L., J. Gartner. 2013. Report executive summary – Hybrid electric, plug-in hybrid, and battery electric light duty, medium duty, and heavy duty trucks and vans: Global market analysis and forecasts. Navigant Research. URL http://www.navigantresearch.com/wpassets/uploads/2013/12/HTKS-13-Executive-Summary.pdf

• Ji, S., C.R. et al. 2012. Electric vehicles in China: emissions and health impacts. Environmental science & technology 46(4) 2018–2024. http://personal.ce.umn.edu/~marshall/Marshall_34.pdf

• Jia, L., et al. 2012. Optimal siting and sizing of electric vehicle charging stations. 2012 IEEE International Electric Vehicle Conference (IEVC). IEEE, 1–6.

• Johansen, B.G., et al. 2014. Project STRAIGHTSOL deliverable D5.1: Demonstration assessments. URL https://docs.google.com/file/d/0ByCtQR4yIfYDLVk2MUZkMW1pdzQ/ edit?pli=1

• Kempton, W., J. Tomi´c. 2005. Vehicle-to-grid power implementation: From stabilizing the grid to supporting large-scale renewable energy. Journal of Power Sources 144(1) 280–294.

• Khaligh, A., Z. Li. 2010. Battery, ultracapacitor, fuel cell, and hybrid energy storage systems for electric, hybrid electric, fuel cell, and plug-in hybrid electric vehicles: State of the art. IEEE Transactions on Vehicular Technology 59(6) 2806–2814.

• La Petite Reine. 2013. Chiffres cl´es. URL http://www.lapetitereine.com/fr/ENT\_reperes\_ chiffres.php?id_niv1=2. Last accessed 12/6/2014.

• Larminie, J., J. Lowry. 2003. Electric Vehicle Technology Explained. Wiley, Chichester. URL http://ev-bg.com/wordpress1/wp-content/uploads/2011/08/electric-vehicletechnology-explained-2003-j-larminie.pdf

• Lee, D.Y., V.M. Thomas, M.A. Brown. 2013. Electric urban delivery trucks: Energy use, greenhouse gas emissions, and cost-effectiveness. Environmental science & technology 47(14) 8022–8030.

• Lee H, Lovellette G (2011) Will electric cars transform the us vehicle market? An analysis of the key determinants. Discussion paper #2011-08, Energy Technology Innovation Policy Discussion Paper Series, Belfer Center for Science and International Affairs, Harvard Kennedy School. URL http://mail.theeestory.com/files/Lee\_Lovellette\_Electric\_Vehicles\_ DP_2011_web.pdf

• Lee TB (2020) Nikola admits prototype was rolling downhill in promotional video. Arstechnica.com

• Lipman, T.E., M.A. Delucchi. 2006. A retail and lifecycle cost analysis of hybrid electric vehicles. Transportation Research Part D: Transport and Environment 11(2) 115–132.

• Lukic, S.M., J. Cao, R.C. Bansal, F. Rodriguez, A. Emadi. 2008. Energy storage systems for automotive applications. IEEE Transactions on Industrial Electronics 55(6) 2258–2267.

• MacLean, H.L., L.B. Lave. 2003. Evaluating automobile fuel/propulsion system technologies. Progress in Energy and Combustion Science 29(1) 1–69.

• Mak, H.Y., et al. 2013. Infrastructure planning for electric vehicles with battery swapping. Management Science 59(7) 1557–1575.

• May, J.W., M. Mattila. 2013. Plugging In: A Stakeholder Investment Guide for Public ElectricVehicle Charging Infrastructure Rocky Mountain Institute. URL http://www.rmi.org/ Content/Files/Plugging%20In%20-%20A%20Stakeholder%20Investment%20Guide.pdf

• McMorrin, F., R. Anderson, I. Featherstone, C. Watson. 2012. Plugged-in fleets: A guide to deploying electric vehicles in fleets. The Climate Group, Cenex, and Energy Saving Trust. URL http://www.theclimategroup.org/_assets/files/EV_report_final_hi-res.pdf.

• MDS Transmodal Limited. 2012. DG move – European Commission: Study on urban freight transport. In association with Centro di ricerca per il Trasporto e la Logistica (CTL). URLURL 04-urban-freight-transport.pdf

• Mercedes-Benz. 2012. Vito-e-cell brochure. URL http://www.mercedes-benz.fr/content/ media_library/france/vans/pdf_files/brochure_vito_ecell.object-SingleMEDIA.download.tmp/Brochure_Vito_ECELL_2012.pdf.

• Millner, A. 2010. Modeling lithium ion battery degradation in electric vehicles. 2010 IEEE Conference on Innovative Technologies for an Efficient and Reliable Electricity Supply (CITRES). IEEE, 349–356.

• Mitsubishi Motors. 2011. Mitsubishi Motors to launch new MINICAB-MiEV commercial electric vehicle in Japan. URL http://www.mitsubishi-motors.com/publish/pressrelease\_en/ products/2011/news/detail0817.html.

• Mock, P., Z. Yang. 2014. Driving electrification: A tive policy for electric vehicles. The International global comparison of fiscal incenCouncil on Clean Transportation (ICCT). URL http://www.theicct.org/sites/default/files/publications/ICCT_EVfiscal-incentives_20140506.pdf

• 2010. Modec box van data. http://www.liberty-ecars.com/downloads/MDS80002-005-Boxvan-Data-Spec.pdf

• Mosquet, X., M. Devineni, T. Mezger, H. Zablit, A. Dinger, G. Sticher, M. Gerrits, M. Russo. 2011. Powering autos to 2020 – The era of the electric car? The Boston Consulting Group. URL http://www.bcg.com/documents/file80920.pdf

• Motiv Power Systems. 2014a. All-electric refuse truck documentation. URL http: //www.motivps.com/wp-content/uploads/2014/06/Motiv_AllElectricRefuseTruck_ 1sheet_06112014.pdf

• Motiv Power Systems. 2014b. Electrified E450 documentation. URL http://motivps.com/wpcontent/uploads/2014/06/Commercial-TruckShuttleBus_1sheet_022414.pdf

• Naberezhnykh, D., et al. 2012a. CLFQP EV CP freight strategy study – Annex A and B. Prepared for Central London FQP by Transport & Travel Research Ltd. URL http://www.triangle.eu.com/check-file-access/?file= 2012/06/CLFQP_EVCP_strategy_Annexes_draft-v1.0.doc

• Naberezhnykh, D., et al. 2012b. Electric vehicle charging points for freight vehicles in central London (Version – Draft 0.7). Prepared for Central London FQP by Transport & Travel Research Ltd, in partnership with TRL and Zero Carbon Futures. URL http://www.centrallondonfqp.org/app/download/12240926/ CLFQP_EVCP_strategy+report_Final+v1+0.pdf.

• Nathanail, E., M. Gogas, K. Papoutsis. 2013. Project STRAIGHTSOL deliverable D2.1 – Urban freight and urban-interurban interfaces: Best practices, implications and future needs. URL https://docs.google.com/file/d/0B7oEyNF3009lYVluNVN1RjJDWjA/edit?pli=1. Last accessed 14/6/2014.

• Neandross, E., P. Couch, T. Grimes. 2012. Zero-emission catenary hybrid truck market study. Gladstein, Neandross & Associates. URL http://www.transpowerusa.com/wordpress/wpcontent/uploads/2012/06/ZETECH_Market_Study_FINAL_2012_03_08.pdf

• Nesterova, N., H. Quak, S. Balm, I. Roche-Cerasi, T. Tretvik. 2013. Project FREVUE deliverable D1.3: State of the art of the electric freight vehicles implementation in city logistics. TNO and SINTEF. European Commission Seventh framework programme. URL http://frevue.eu/wp-content/uploads/2014/05/FREVUE-D1-3-Stateof-the-art-city-logistics-and-EV-final-.pdf

• New York State Energy Research and Development Authority. 2014. New York truck voucher incentive program – NYSEV-VIF all-electric vehicle eligibility list. [ vehicle cost versus conventional cost and the incentive ] https://truck-vip.ny.gov/NYSEV-VIF-vehicle-list.php

• Nie, Y.M., M. Ghamami. 2013. A corridor-centric approach to planning electric vehicle charging infrastructure. Transportation Research Part B: Methodological 57 172–190.

• 2014a. Competitive comparison. URL http://www.nissancommercialvehicles.com/ compare-competitors?next=vlp.features.nvcargo.compare.nv2500.button

• 2014b. e-NV200 brochure. URL http://www.nissan.co.uk/content/dam/services/gb/ brochure/e-NV200_van_Brochure.pdf

• 2014c. Nissan e-NT400. URL http://nissannews.com/fr-CA/nissan/canada/releases/ nissan-e-nv200-zero-emission-van-in-final-development-phase/photos/nissan-ent400. Last accessed 21/5/2014.

• 2014d. Nissan e-NV200 prices and specs. URL http://www.nissan.co.uk/ GB/en/vehicle/electric-vehicles/e-nv200/prices-and-equipment/prices-andspecifications.html

• NRC. 2014. Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, Phase Two: First Report. National Research Council, National Academies Press. 117 pages

• Offer, G.J., et al. 2010. Comparative analysis of battery electric, hydrogen fuel cell and hybrid vehicles in a future sustainable road transport system. Energy Policy 38(1) 24–29.

• Parish, R., W. Pitkanen. 2012. Demand assessment of first-mover hybrid and electric truck fleets. CALSTART. URL http://www.calstart.org/Libraries/Publications/Demand\_ Assessment_of_First-Mover_Hybrid_and_Electric_Truck_Fleets.sflb.ashx. Last accessed 8/6/2014.

• 2014. Peugeot new Partner: Prices, equipment and technical specifications. URL http://business.peugeot.co.uk/Resources/Content/PDFs/peugeotpartner-prices-and-specifications.pdf

• Pitkanen, W., B. Van Amburg. 2012. ness case for e-trucks: Findings Best fleet uses, key challenges and the early busiand recommendations of the e-truck task force. CALSART. URL http://www.calstart.org/Libraries/E-Truck_Task_Force_ Documents/Best_Fleet_Uses_Key_Challenges_and_the_Early_Business_Case_for_ETrucks_Findings_and_Recommendations_of_the_E-Truck_Task_Force.sflb.ashx

• Plug In America. 2014. Plug-in vehicle tracker. URL http://www.pluginamerica.org/vehicles

• Pollet, B.G., I. Staffell, J.L. Shang. 2012. Current status of hybrid, battery and fuel cell electric vehicles: From electrochemistry to market prospects. Electrochimica Acta 84 235–249.

• Port of Los Angeles. 2014. Zero emission technologies. http://www.portoflosangeles.org/ environment/zero.asp

• Power Vehicle Innovation (PVI). 2014. Les chanes l, xl et xxl. URL http://www.pvi.fr/leschaines-l-xl-et-xxl,041.html

• Prud’homme, R., M. Koning. 2012. Electric vehicles: A tentative economic and environmental evaluation. Transport Policy 23 60–69. Renault. 2014a. Kangoo express & Z.E. brochure. http://www.renault.fr/e-brochure/ VU_ZE_F61/pdf/fullPDF.pdf

• 2014b. Kangoo Z.E. http://www.renault.fr/gamme-renault/vehiculeselectriques/kangoo-ze/kangoo-ze

• 2014c. Renault Kangoo van Z.E. http://www.renault.co.uk/cars/electricvehicles/kangoo/kangoo-van-ze/price.jsp. Last accessed 16/5/2014.

• Renault Trucks. 2011a. Le plus gros camion ´electrique du monde en exp´erimentation chez Carrefour. URL http://corporate.renault-trucks.com/fr/les-communiques/le-plusgros-camion-electrique-du-monde-en-experimentation-chez-carrefour.html.

• Renault Trucks. 2011b. Renault Maxity Electrique – L’utilitaire au sens propre. URL http://www. renault-trucks.fr/media/document/leaflet_maxity_electrique-fr.pdf

• Schmouker, O. 2012. Azure Dynamics en panne. Les Affaires URL http://www.lesaffaires. com/secteurs-d-activite/general/azure-dynamics-en-panne/542659

• Schultz, J. 2010. Better Place opens battery-swap station in Tokyo for 90-day taxi trial. The New York Times URL http://wheels.blogs.nytimes.com/2010/04/29/better-place-opensbattery-swap-station-in-tokyo-for-90-day-taxi-trial

• Shankleman, J. 2011. Could Modec crash kill off UK’s commercial electric vehicle market? The Guardian URL http://www.theguardian.com/environment/2011/mar/08/modec-crashcommercial-electric-vehicle.

• Shulock, C., et al. 2011. Vehicle task 1 report: Technology status. The International electrification policy study – Council on Clean Transportation (ICCT). URL http://www.theicct.org/sites/default/files/publications/ICCT_ VEPstudy_Mar2011_no1.pdf. Last accessed 4/6/2014.

• Sierzchula, W., S. Bakker, K. Maat, B. van Wee. 2012. The competitive environment of electric vehicles: An analysis of prototype and production models. Environmental Innovation and Societal Transitions 2 49–65.

• Smith Electric Vehicles. 2011a. Smith Edison spec sheet. URL http://www.smithelectric. com/wp-content/themes/barebones/pdfs/SmithEdisonSpecSheet_OUS_2011.pdf

• Smith Electric Vehicles. 2011b. Smith Newton outside of U.S spec sheet. URL http://www. smithelectric.com/wp-content/themes/barebones/pdfs/SmithNewtonSpecSheet_OUS_ 2011.pdf

• Smith Electric Vehicles. 2011c. Smith Newton United States spec sheet. http://www.smithelectric.com/wp-content/themes/barebones/pdfs/SmithNewtonUS_ SpecSheet_2011.pdf

• Smith Electric Vehicles. 2013. Smith Vehicles – models and configurations. http:// smithelectric.com/smith-vehicles/models-and-configurations

• Smith SC (2020) The $50K Electric Monarch Tractor Can Plow a Field Without You and Run for 10 Hours. Thedrive.com

• Source London. 2013. Electric vehicle models. URL https://www.sourcelondon.net/ sites/default/files/Source%20electric%20vehicles%20March%202014.pdf

• Stewart, A. 2012. Ultra low emission vans study (final report). Element Energy, commissioned by the UK government’s Department for Transport (DfT). URL https://www.gov.uk/government/uploads/system/uploads/attachment\_data/file/ 4550/ultra-low-emission-vans-study.pdf

• Sweda, T.M., et al. 2014. Optimal recharging policies for electric vehicles. Working paper No.14-01, Department of Industrial Engineering and Management Sciences, Northwestern University. URL http://www.iems.northwestern.edu/docs/WP_14-01.pdf

• Taefi, T., et al. 2014. Comparative analysis of European examples of freight electric vehicles schemes. A systematic case study approach with examples from Denmark, Germany, the Netherlands, Sweden and the UK. 4th International Conference on Dynamics in Logistics (LDIC 2014). Bremen, Germany. http://nrl.northumbria. ac.uk/15185/1/Bremen_final_paperShoter.pdf

• Taefi, T.T., et al. 2013. A framework to enhance the productivity of electric commercial vehicles of in urban freight transport. HamHelmut Schmidt University Hamburg. http://www2.mmu.ac.uk/media/mmuacuk/content/documents/carpe/2013-conference/papers/creative-engineering/Tessa%20T.%20Taefi.pdf

• Nine EV parcel, courier, and others in Germany interviewed said that the high price land lower volume of goods than an ICEV made them unprofitable without subsidies

• Tanguy, K.C., C. Gagn´e, M. Dubois. 2011. ´Etat de l’art en mati`ere de v´ehicules ´electriques et sur la technologie v2g. Rapport technique RT-LVSN-2011-01, Universit´e Laval, Qu´ebec, Canada. URL http://vision.gel.ulaval.ca/~cgagne/pubs/V2G-RT-LVSN-2011-01.pdf. Last ac cessed 5/5/2014.

• Taniguchi, E., S. Kawakatsu, H. Tsuji. 2000. New co-operative system using electric vans for urban freight transport. Sixth International Conference on Urban Transport and the Environment for the 21st Century. 201–210.

• Thiel, C., A. Perujo, A. Mercier. 2010. Cost and CO2 aspects of future vehicle options in Europe under new energy policy scenarios. Energy Policy 38(11) 7142–7151.

• Tipagornwong, C., M. Figliozzi. 2014. An analysis of the competitiveness of freight tricycle delivery services in urban areas. Paper presented at the 93rd Annual Meeting of the Transportation Research Board. http://web.cecs.pdx.edu/~maf/Journals/2014_An_Analysis_of_ the_Competitiveness_of_Freight_Tricycle_Delivery_Services_in_Urban_Areas.pdf

• Tomi´c, J., W. Kempton. 2007. Using fleets of electric-drive vehicles for grid support. Journal of Power Sources 168(2) 459–468.

• 2012. 2011 Mitsubishi MINICAB MiEV van. URL http://www.topspeed.com/trucks/ truck-reviews/mitsubishi/2011-mitsubishi-minicab-miev-van-ar131865.html#main

• Torregrossa, M. 2014. Mia Electric plac´e en liquidation judiciaire. http://www.avem.fr/ actualite-mia-electric-place-en-liquidation-judiciaire-4837.html

• Touati-Moungla, N., V. Jost. 2012. Combinatorial optimization for electric vehicles management. Journal of Energy and Power Engineering 6(5) 738–743.

• 2014. Port trucks. URL http://www.transpowerusa.com/wordpress/cleantransportation/zero-emissions-transportation-solutions/electric-trucks/ electric-port-trucks/. Last accessed 11/5/2014.

• 2013. Navistar sells RV business, drops Estar van as part of its turnaround plan. URL http://www.truckinginfo.com/channel/fuel-smarts/news/story/2013/05/ navistar-sells-recreational-vehicle-business.aspx

• TU Delft, HAW Hamburg, Lindholmen Science Park, ZERO, FDT. 2013. Comparative analysis of European examples of schemes for freight electric vehicles – Compilation report. E-Mobility NSR, Aalborg, Denmark. http://e-mobility-nsr.eu/fileadmin/user\_upload/ downloads/info-pool/E-Mobility_-_Final_report_7.3.pdf

• Tuttle, D.P., K.M. Kockelman. 2012. Electrified vehicle technology trends, infrastructure implications, and cost comparisons. Journal of the Transportation Research Forum 51(1) 35–51. URL http://journals.oregondigital.org/trforum/article/view/2806/2411

• UK Government Office for Low Emission Vehicles (UK OLEV). 2014. Plug-in van grant vehicles list and eligibility guidance. URL https://www.gov.uk/government/publications/plugin-van-grant/plug-in-van-grant-vehicles-list-and-eligibility-guidance. Last accessed 5/6/2014.

• U.S. Department of Energy. 2010. The recovery act: Transforming America’s transportation sector – Batteries and electric vehicles. URL http://www.whitehouse.gov/files/documents/Battery-and-Electric-Vehicle-Report-FINAL.pdf

• U.S. Department of Energy. 2012a. All laws and incentives sorted by type. Office of Energy Efficiency and Renewable Energy, Alternative Fuels Data Center. URL http://www.afdc. energy.gov/laws/matrix/incentive

• U.S. Department of Energy. 2012b. Plug-in electric vehicle handbook for fleet managers. Office of Energy Efficiency and Renewable Energy, National Renewable Energy Laboratory (NREL). http://www.afdc.energy.gov/pdfs/pev_handbook.pdf

• U.S. Department of Energy. 2013a. Clean cities guide to alternative fuel and advanced medium- and heavy-duty vehicles. Office of Energy Efficiency and Renewable Energy, National Renewable Energy Laboratory (NREL). URL http://www.afdc.energy.gov/uploads/publication/ medium_heavy_duty_guide.pdf

• U.S. Department of Energy. 2013b. Vehicle technologies program – Smith Newton vehicle performance evaluation. URL http://www.nrel.gov/docs/fy13osti/58108.pdf. Last accessed 13/6/2014.

• U.S. Department of Energy. 2014a. Availability of hybrid and plug-in electric vehicles. Office of Energy Efficiency and Renewable Energy, Alternative Fuels Data Center. URL http://www. afdc.energy.gov/vehicles/electric_availability.html

• U.S. Department of Energy. 2014b. National clean fleets partner: Frito-lay. Office of Energy Efficiency and Renewable Energy. URL http://www1.eere.energy.gov/cleancities/fritolay.html. Last accessed 28/5/2014.

• U.S. Department of Energy. 2014c. Vehicle weight classes & categories. Office of Energy Efficiency and Renewable Energy, Alternative Fuels Data Center. URL http://www.afdc.energy.gov/ data/10380. Last accessed 12/7/2014.

• Valenta, M. 2013. Business case of electric vehicles for truck fleets. Ph.D. thesis, Argosy University, Denver, Colorado

• van Duin, J.H.R., H. Quak, J. Muuzuri. 2010. New challenges for urban consolidation centres: A case study in the Hague. Procedia-Social and Behavioral Sciences 2(3) 6177–6188.

• van Duin, J.H.R., L.A. Tavasszy, H.J. Quak. 2013. Towards e(lectric)-urban freight: first promising steps in the electric vehicle revolution. European Transport / Trasporti Europei 54(9) 1– 19. URL http://www.openstarts.units.it/dspace/bitstream/10077/8875/1/ET\_2013\_ 54_9%20van%20Duin%20et%20al..pdf

• van Rooijen, T., H. Quak. 2010. Local impacts of a new urban consolidation centre – The case of Binnenstadservice.nl. Procedia-Social and Behavioral Sciences 2(3) 5967–5979.

• Verlinde, S., C. Macharis, L. Milan, B. Kin. 2014. Does a mobile depot make urban deliveries faster, more sustainable and more economically viable: results of a pilot test in brussels. International Scientific Conference on Mobility and Transport, mobil.TUM 2014 . URL http://www.mobiltum.vt.bgu.tum.de/fileadmin/w00bqi/www/Session_Poster/Verlinde_et_al.pdf

• Vermie, A., M. Blokpoel. 2009. Rotterdam, city of electric transport. EVS24 International Battery, Hybrid and Fuel Cell Electric Vehicle Symposium. World Electric Vehicle Journal Vol.3, Stavanger. URL https://www.google.ca/url?sa=t&rct=j&q=&esrc= s&source=web&cd=1&cad=rja&uact=8&ved=0CB4QFjAA&url=http%3A%2F%2Fwww.evs24. org%2Fwevajournal%2Fphp%2Fdownload.php%3Ff%3Dvol3%2FWEVJ3-3930308.pdf&ei=t_ZU7iNFIWnyASpioKoBw&usg=AFQjCNGh5DRigcrqUtogJqgnrRLVr49B1Q&bvm=bv.72185853, d.aWw

• Vermie, T. 2002. ELCIDIS – electric vehicle city distribution final report. European Commission. URL http://www.elcidis.org/elcidisfinal.pdf. Last accessed 28/5/2014.

• Wang, H., Q. Huang, C. Zhang, A. Xia. 2010. A novel approach for the layout of electric vehicle charging station. IEEE 2010 International Conference on Apperceiving Computing and Intelligence Analysis (ICACIA). IEEE, Chengdu, China, 64–70.

• Woody, T. 2012. Fedex delivers on green goals with electric trucks. Forbes URL http://www.forbes.com/sites/toddwoody/2012/05/23/fedex-delivers-on-greengoals-with-electric-trucks

• Wu, H.H., A. Gilchrist, K. Sealy, P. Israelsen, J. Muhs. 2011. A review on inductive charging for electric vehicles. 2011 IEEE International Electric Machines Drives Conference (IEMDC). IEEE, 143–147.

• Xu, H., S. Miao, C. Zhang, D. Shi. 2013. Optimal placement of charging infrastructures for largescale integration of pure electric vehicles into grid. International Journal of Electrical Power & Energy Systems 53 159–165.

• Yılmaz, M., P.T. Krein. 2013. Review of battery charger topologies, charging power levels, and infrastructure for plug-in electric and hybrid vehicles. IEEE Transactions on Power Electronics 28(5) 2151–2169.

• 2014. Specs. URL http://zerotruck.com/our-fleet/. Last accessed 16/5/2014.

• Zhang, S.S. 2006. The effect of the charging protocol on the cycle life of a li-ion battery. Journal of Power Sources 161(2) 1385–1391.

An astute journalist I know once described carbon capture and storage (CCS) as a "delay-and-fail strategy" devised by the fossil fuel industry. The industry's ploy was utterly obvious to him: Promise to perfect and deploy CCS at some vague point in the future. By the time people catch on that CCS won't work, the fossil fuel industry will have successfully extended the time it has operated without onerous regulation for another couple of decades.

And because huge financial resources (mostly government resources) will have gone to CCS projects instead of low-carbon energy production, society will continue to be wildly dependent on carbon-based fuels (giving the industry further running room).

The trouble is that the cynical CCS strategy has already been under way and failing for more than two decades already. And yet, it is seeking a renewed lease on life with a proposal for a vast network of carbon dioxide pipelines "twice the size of the current U.S. oil pipeline network by volume." The public face of the effort is a former Obama administration secretary of energy with a perennially bad haircut, Ernest Moniz.

Moniz has a partnership with the AFL-CIO to push the idea. No doubt unions like the project because it would create a lot of jobs regardless of whether it actually addresses climate change.

Just for the record, here's a list of reasons that CCS doesn't work and likely will not work in any time frame that matters for addressing climate change:

1. It's very costly. Many of the pilot projects have been shut down because they are uneconomical.

2. Suitable underground storage is not abundant and frequently not near facilities that produce the carbon dioxide.

3. Long-term storage may fail, releasing the carbon dioxide into the atmosphere anyway. After all, one must have injection wells into the underground storage, wells that can leak if not properly maintained. Not least, there is no multi-decade record of successful, leak-free sequestration. And finally, there is no assurance that such storage facilities can be maintained properly for the many centuries required to have them actually protect the climate.

4. The carbon dioxide in some current viable CCS projects is used by the oil industry to flush out more oil from existing wells. That's hardly in keeping with the purpose of addressing climate change.

Energy expert Vaclav Smil did some calculations for an American Scientist magazine article that demonstrate the scale of the CCS challenge:

[I]n order to sequester just a fifth of current CO2 emissions we would have to create an entirely new worldwide absorption-gathering-compression-transportation-storage industry whose annual throughput would have to be about 70 percent larger than the annual volume now handled by the global crude oil industry whose immense infrastructure of wells, pipelines, compressor stations and storages took generations to build. Technically possible—but not within a timeframe that would prevent CO2 from rising above 450 ppm.

Smil wrote that back in 2011. The latest reading in Hawaii at the often-cited Scripps Institution of Oceanography Mauna Loa Observatory is 418 parts per million of carbon dioxide in the Earth's atmosphere. The relentless upward slope of the observatory's graph of carbon dioxide concentration shows that the fossil fuel industry's tactics—of which delay-and-fail CCS is just one—are working splendidly.

It is troubling that a key official at the U.S. Department of Energy is taking the CCS plan seriously. One would think that decades of failure would finally make clear the false promises of the industry. But, of course, failure is the whole point of the CCS ruse. What's puzzling is that the failure to date has somehow become a rallying cry to try harder by building one of the biggest boondoggles ever conceived.

I couldn't stop thinking about what a scam rent is, where you pay your landlord to look after their investment property, so I made a mixed media piece about it. Join Joelene on her whimsical journey to the mythical land of housing security.

I have written many posts relating to the fact that we live in a finite world. At some point, our ability to extract resources becomes constrained. At the same time, population keeps increasing. The usual outcome when population is too high for resources is “overshoot and collapse.” But this is not a topic that the politicians or central bankers or oligarchs who attend the World Economic Forum dare to talk about.

Instead, world leaders find a different problem, namely climate change, to emphasize above other problems. Conveniently, climate change seems to have some of the same solutions as “running out of fossil fuels.” So, a person might think that an energy transition designed to try to fix climate change would work equally well to try to fix running out of fossil fuels. Unfortunately, this isn’t really the way it works.

In this post, I will lay out some of the issues involved.

[1] There are many different constraints that new energy sources need to conform to.

These are a few of the constraints I see:

• Should be inexpensive to produce
• Should work with the current portfolio of existing devices
• Should be available in the quantities required, in the timeframe needed
• Should not pollute the environment, either when created or at the end of their lifetimes
• Should not add CO2 to the atmosphere
• Should not distort ecosystems
• Should be easily stored, or should be easily ramped up and down to precisely match energy timing needs
• Cannot overuse fresh water or scarce minerals
• Cannot require a new infrastructure of its own, unless the huge cost in terms of delayed timing and greater materials use is considered.

If an energy type is simply a small add-on to the existing system, perhaps a little deviation from the above list can be tolerated, but if there is any intent of scaling up the new energy type, all of these requirements must be met.

It is really the overall cost of the system that is important. Historically, the use of coal has helped keep the overall cost of the system down. Substitutes need to be developed considering the overall needs and cost of the system.

The reason why the overall cost of the system is important is because countries with high-cost energy systems will have a difficult time competing in a world market since energy costs are an important part of the cost of producing goods and services. For example, the cost of operating a cruise ship depends, to a significant extent, on the cost of the fuel it uses.

In theory, energy types that work with different devices (say, electric cars and trucks instead of those operated by internal combustion engines) can be used, but a long delay can be expected before a material shift in overall energy usage occurs. Furthermore, a huge ramp up in the total use of materials for production may be required. The system cannot work if the total cost is too high, or if the materials are not really available, or if the timing is too slow.

[2] The major thing that makes an economy grow is an ever increasing supply of inexpensive-to-produce energy products.

Food is an energy product. Let’s think of what happens when agriculture is mechanized, typically using devices that are made and operated using coal and oil. The cost of producing food drops substantially. Instead of spending, for example, 50% of a person’s wages on food, the percentage can gradually drop down to 20% of wages, and then to 10% of wages for food, and eventually even, say, to 2% of wages for food.

As spending on food falls, opportunity for other spending arises, even with wages remaining relatively level. With lower food expenditures, a person can spend more on books (made with energy products), or personal transportation (such as a vehicle), or entertainment (also made possible by energy products). Strangely enough, in order for an economy to grow, essential items need to become an ever decreasing share of everyone’s budget, so that citizens have sufficient left-over income available for more optional items.

It is the use of tools, made and operated with inexpensive energy products of the right types, that leverages human labor so that workers can produce more food in a given period of time. This same approach also makes many other goods and services available.

In general, the less expensive an energy product is, the more helpful it will be to an economy. A country operating with an inexpensive mix of energy products will tend to be more competitive in the world market than one with a high-cost mix of energy products. Oil tends to be expensive; coal tends to be inexpensive. This is a major reason why, in recent years, countries using a lot of coal in their energy mix (such as China and India) have been able to grow their economies much more rapidly than those countries relying heavily on oil in their energy mixes.

[3] If energy products are becoming more expensive to produce, or their production is not growing very rapidly, there are temporary workarounds that can hide this problem for quite a number of years.

Back in the 1950s and 1960s, world coal and oil consumption were growing rapidly. Natural gas, hydroelectric and (a little) nuclear were added, as well. Cost of production remained low. For example, the price of oil, converted to today’s dollar value, was less than $20 per barrel.

Once the idyllic 1950s and 1960s passed, it was necessary to hide the problems associated with the rising cost of production using several approaches:

• Increasing use of debt – really a promise of future goods and services made with energy
• Lower interest rates – permits increasing debt to be less of a financial burden
• Increasing use of technology – to improve efficiency in energy usage
• Growing use of globalization – to make use of other countries’ cheaper energy mix and lower cost of labor

After 50+ years, we seem to be reaching limits with respect to all of these techniques:

• Debt levels are excessive
• Interest rates are very low, even below zero
• Increasing use of technology as well as globalization have led to greater and greater wage disparity; many low level jobs have been eliminated completely
• Globalization has reached its limits; China has reached a situation in which its coal supply is no longer growing

[4] The issue that most people fail to grasp is the fact that with depletion, the cost of producing energy products tends to rise, but the selling prices of these energy products do not rise enough to keep up with the rising cost of depletion.

As a result, production of energy products tends to fall because production becomes unprofitable.

As we get further and further away from the ideal situation (oil less than $20 per barrel and rising in quantity each year), an increasing number of problems crop up:

• Both oil/gas companies and coal companies become less profitable.
• With lower energy company profits, governments can collect less taxes from these companies.
• As old wells and mines deplete, the cost of reinvestment becomes more of a burden. Eventually, new investment is cut back to the point that production begins to fall.
• With less growth in energy consumption, productivity growth tends to lag. This happens because energy is required to mechanize or computerize processes.
• Wage disparity tends to grow; workers become increasingly unhappy with their governments.

[5] Authorities with an incorrect understanding of why and how energy supplies fall have assumed that far more fossil fuels would be available than is actually the case. They have also assumed that relatively high prices for alternatives would be acceptable.

In 2012, Jorgen Randers prepared a forecast for the next 40 years for The Club of Rome, in the form of a book, 2052, with associated data. Looking at the data, we see that Randers forecast that world coal consumption would grow by 28% between 2010 and 2020. In fact, world coal consumption grew by 0% in that period. (This latter forecast is based on BP coal consumption estimates for 2010 and 2019 from BP’s Statistical Review of World Energy 2020, adjusted for the 2019 to 2020 period change using IEA’s estimate from its Global Energy Review 2021.)

It is very easy to assume that high estimates of coal resources in the ground will lead to high quantities of actual coal extracted and burned. The world’s experience between 2010 and 2020 shows that it doesn’t necessarily work out that way in practice. In order for coal consumption to grow, the delivered price of coal needs to stay low enough for customers to be able to afford its use in the end products it provides. Much of the supposed coal that is available is far from population centers. Some of it is even under the North Sea. The extraction and delivery costs become far too high, but this is not taken into account in resource estimates.

Forecasts of future natural gas availability suffer from the same tendency towards over-estimation. Randers estimated that world gas consumption would grow by 40% between 2010 and 2020, when the actual increase was 22%. Other authorities make similar overestimates of future fuel use, assuming that “of course,” prices will stay high enough to enable extraction. Most energy consumption is well-buried in goods and services we buy, such as the cost of a vehicle or the cost of heating a home. If we cannot afford the vehicle, we don’t buy it; if the cost of heating a family’s home rises too high, thrifty families will turn down the thermostat.

Oil prices, even with the recent run-up in prices, are under $75 per barrel. I have estimated that for profitable oil production (including adequate funds for high-cost reinvestment and sufficient taxes for governments), oil prices need to be over $120 per barrel. It is the lack of profitability that has caused the recent drop in production. These profitability problems can be expected to lead to more production declines in the future.

With this low-price problem, fossil fuel estimates used in climate model scenarios are almost certainly overstated. This bias would be expected to lead to overstated estimates of future climate change.

The misbelief that energy prices will always rise to cover higher costs of production also leads to the belief that relatively high-cost alternatives to fossil fuels would be acceptable.

[6] Our need for additional energy supplies of the right kinds is extremely high right now. We cannot wait for a long transition. Even 30 years is too long.

We saw in section [3] that the workarounds for a lack of growing energy supply, such as higher debt and lower interest rates, are reaching limits. Furthermore, prices have been unacceptably low for oil producers for several years. Not too surprisingly, oil production has started to decline:

[

](https://i2.wp.com/ourfiniteworld.com/wp-content/uploads/2021/06/World-Crude-Oil-Production-EIA-2020.png?ssl=1)

Figure 1 – World production of crude oil and condensate, based on data of the US Energy Information Administration

What is really needed is sufficient energy of the right types for the world’s growing population. Thus, it is important to look at energy consumption on a per capita basis. Figure 2 shows energy production per capita for three groupings:

• Tier 1: Oil and Coal
• Tier 2: Natural Gas, Nuclear, and Hydroelectric
• Tier 3: Other Renewables, including Intermittent Wind and Solar

[

](https://i1.wp.com/ourfiniteworld.com/wp-content/uploads/2021/06/World-per-capita-energy-consumption-by-tier.png?ssl=1)

Figure 2 World per capita energy consumption by Tier. Amounts through 2019 based on BP Statistical Review of World Energy 2020. Changes for 2020 based on estimates provided by IEA Global Energy Review 2021.

Figure 2 shows that the biggest drop is in Tier 1: Coal and Oil. In many ways, coal and oil are foundational types of energy for the economy because they are relatively easy to transport and store. Oil is important because it is used in operating agricultural machinery, road repair machinery, and vehicles of all types, including ships and airplanes. Coal is important partly because of its low cost, helping paychecks to stretch further for finished goods and services. Coal is used in many ways, including electricity production and making steel and concrete. We use coal and oil to keep electricity transmission lines repaired.

Figure 2 shows that Tier 2 energy consumption per capita was growing rapidly in the 1965 to 1990 period, but its growth has slowed in recent years.

The Green Energy sources in Tier 3 have been growing rapidly from a low base, but their output is still tiny compared to the overall output that would be required if they were to substitute for energy from both Tier 1 and Tier 2 sources. They clearly cannot by themselves power today’s economy.

It is very difficult to imagine any of the Tier 2 and Tier 3 energy sources being able to grow without substantial assistance from coal and oil. All of today’s Tier 2 and Tier 3 energy sources depend on coal and oil at many points in the chain of their production, distribution, operation, and eventual recycling. If we ever get to Tier 4 energy sources (such as fusion or space solar), I would expect that they too will need oil and/or coal in their production, transport and distribution, unless there is an incredibly long transition, and a huge change in energy infrastructure.

[7] It is easy for energy researchers to set their sights too low.

[a] We need to be looking at the extremely low energy cost structure of the 1950s and 1960s as a model, not some far higher cost structure.

We have been hiding the world’s energy problems for years behind rising debt and falling interest rates. With very high debt levels and very low interest rates, it is becoming less feasible to stimulate the economy using these approaches. We really need very inexpensive energy products. These energy products need to provide a full range of services required by the economy, not simply intermittent electricity.

Back in the 1950s and 1960s, the ratio of Energy Earned to Energy Investment was likely in the 50:1 range for many energy products. Energy products were very profitable; they could be highly taxed. The alternative energy products we develop today need to have similar characteristics if they truly are to play an important role in the economy.

[b] A recent study says that greenhouse gas emissions related to the food system account for one-third of the anthropogenic global warming gas total. A way to grow sufficient food is clearly needed.

We clearly cannot grow food using intermittent electricity. Farming is not an easily electrified endeavor. If we do not have an alternative, the coal and oil that we are using now in agriculture really needs to continue, even if it requires subsidies.

[c] Hydroelectric electricity looks like a good energy source, but in practice it has many deficiencies.

Some of the hydroelectric dams now in place are over 100 years old. This is nearing the lifetime of the concrete in the dams. Considerable maintenance and repair (indirectly using coal and oil) are likely to be needed if these dams are to continue to be used.

The water available to provide hydroelectric power tends to vary greatly over time. Figure 3 shows California’s hydro electricity generation by month.

[

](https://i2.wp.com/ourfiniteworld.com/wp-content/uploads/2021/06/Californa-Hydroelectric-Generation-by-Month.png?ssl=1)

Figure 3. California hydroelectric energy production by month, based on data of the US Energy Information Administration.

Thus, as a practical matter, hydroelectric energy needs to be balanced with fossil fuels to provide energy which can be used to power a factory or heat a home in winter. Battery storage would never be sufficient. There are too many gaps, lasting months at a time.

If hydroelectric energy is used in a tropical area with dry and wet seasons, the result would be even more extreme. A poor country with a new hydroelectric power plant may find the output of the plant difficult to use. The electricity can only be used for very optional activities, such as bitcoin mining, or charging up small batteries for lights and phones.

Any new hydroelectric dam runs the risk of taking away the water someone else was depending upon for irrigation or for their own electricity generation. A war could result.

[d] Current approaches for preventing deforestation mostly seem to be shifting deforestation from high income countries to low income countries. In total, deforestation is getting worse rather than better.

[

](https://i1.wp.com/ourfiniteworld.com/wp-content/uploads/2021/06/Forest-Area-Percentage-by-Income-Group.png?ssl=1)

Figure 4. Forest area percentage of land area, by income group, based on data of the World Bank.

Figure 4 shows that deforestation is getting rapidly worse in Low Income countries with today’s policies. There is also a less pronounced trend toward deforestation in Middle Income countries. It is only in High Income countries that land areas are becoming more forested. In total (not shown), the forested area for the world as a whole falls, year after year.

Also, even when replanting is done, the new forests do not have the same characteristics as those made by natural ecosystems. They cannot house as many different species as natural ecosystems. They are likely to be less resistant to problems like insect infestations and forest fires. They are not true substitutes for the forest ecosystems that nature creates.

[e] The way intermittent wind and solar have been added to the electric grid vastly overpays these providers, relative to the value they add to the system. Furthermore, the subsidies for intermittent renewables tend to drive out more stable producers, degrading the overall condition of the grid.

If wind and solar are to be used, payments for the electricity they provide need to be scaled back to reflect the true value that they add to the overall system. In general, this corresponds to the savings in fossil fuel purchases that electricity providers need to make. This will be a small amount, perhaps 2 cents per kilowatt hour. Even this small amount, in theory, might be reduced to reflect the greater electricity transmission costs associated with these intermittent sources.

We note that China is making a major step in the direction of reducing subsidies for wind and solar. It has already dramatically cut its subsidies for wind energy; new subsidy cuts for solar energy will become effective August 1, 2021.

A major concern is the distorting impact that current pricing approaches for wind and solar have on the overall electrical system. Often, these approaches produce very low, or negative, wholesale prices for other providers. Nuclear providers are especially harmed by such practices. Nuclear is, of course, a low CO2 electricity provider.

It seems to me that in each part of the world, some utility-type provider needs to be analyzing what the overall funding of the electrical system needs to be. Bills to individuals and businesses need to reflect these actual expected costs. This approach might avoid the artificially low rates that the current pricing system often generates. If adequate funding can be achieved, perhaps some of the corner cutting that leads to electrical outages, such as recently encountered in California and Texas, might be avoided.

[8] When I look at the requirements for a successful energy transition and the obstacles we are up against, it is hard for me to see that any of the current approaches can be successful.

Unfortunately, it is hard for me to see how intermittent electricity can save the world economy, or even make a dent in our problems. We have searched for a very long time, but haven’t yet found solutions truly worth ramping up. Perhaps a new “Tier 4 approach” might be helpful, but such solutions seem likely to come too late.

THE THREAD OF RATIONAL INTERPRETATION

According to Greek mythology, Theseus, having killed the Minotaur, found his way back from the heart of the Labyrinth by following a thread given to him by Ariadne.

There are two lessons – in an earlier idiom, morals – to be taken from this story. The obvious one is the wisdom of taking a thread into the maze and using it to find the way back out. The less obvious lesson is that the thread Theseus followed was reliable, a guide which, like real gold, would pass an ‘assay’ of veracity.

Our current economic and broader circumstances merit comparison with the Labyrinth – we’re in a maze which has many complex blind-alleys, routes to nowhere which tempt the unwary. If we’re to fashion a reliable thread that can be followed through it, we need to apply the assays of logic and observation.

The thread followed here starts with the purposes of saving and investment, purposes which pass the assay of logic, but fail the test of observation. This points to dysfunction based on anomaly, the anomaly being that the practice only conforms to the principle in the presence of growth.

Postulating that the economy is an energy system rather than a financial one also passes the assays of logic and observation, and confirms we have a thread that can be followed to meaningful explanations and expectations.

An assay of logic

Capital theory is as a good a place to start as any. This theory is that, in addition to meeting current needs and wants, a sensible person puts aside a part of his or her income for the purposes both of having a reserve (“for a rainy day”) and of accumulating wealth. The flip-side of this process is that saving – as ‘economic output not consumed’ – provides capital for investment. This theory would apply, incidentally, even if some form of barter were substituted for money.

For this to work, the saver or investor must receive a real return on investment that is positive (that is, it exceeds inflation), and this return must be calibrated in proportion to any risk to which his or her investment is exposed. The user of this capital must earn a return on invested capital which exceeds the return paid to the investor. Any business unable to do this must fail, freeing up capital and market share for more efficient competitors.

This thesis rings true when measured on the ‘assay of logic’ – indeed, it describes the only rational set of conditions which can govern productive and sustainable relationships between saving, investment, returns and enterprise.

But it’s equally obvious that this does not describe current financial conditions. Returns to investors are not positive. These returns are not calibrated in proportion to risk. Businesses do not need to earn returns which exceed appropriate returns being paid to investors. Businesses unable to meet this requirement do not fail.

When logic points so emphatically towards one set of conditions, whilst observation leaves us in no doubt that contrary conditions prevail, we don’t need to venture further into investment theory in order to confirm the definite existence of an anomaly.

To discover the nature of this anomaly, let’s look again at capital theory to discover the predicates shared by all participants.

The investor needs returns which increase the value of his or her capital.

The entrepreneur needs returns which are higher again than those required by the investor.

The shared predicate here is that the sum of money X must be turned into X+.

For the system to function, then, the shared predicate is growth.

Logic therefore tells us two things. The first is that a functioning capital system absolutely depends on growth. The second, inferred-by-logic conclusion is that, if the system has become dysfunctional, the absence of growth is likely to be the cause of the dysfunction.

Observed anomaly is thus defined as a property of dysfunction, whilst dysfunction itself is a property of the absence of growth.

You don’t need a doctorate in philosophy to reach this conclusion. All you need do is follow a logical sequence which (a) defines anomaly as intervening between theory and current practice, and (b) identifies this anomaly as the absence of growth.

We can confirm this finding by hypothesis. If we postulate the return of real, solid, indisputable growth into this situation, we can follow a sequential chain which goes on to eliminate the anomaly and restore the alignment of theory and practice.

Testing the thread

The deductions that (a) dysfunction exists, and (b) that this is a product of the lack of growth, take us on to familiar territory. If you’re a regular visitor to this site, you’ll know that the basic proposition is that the economy, far from being ‘a function of money, and unlimited’, is in fact a function of energy, and is limited by resource and environmental boundaries.

Using logic and observation, we can similarly apply the ‘assay of rationality’ to the propositions informing the surplus energy interpretation. There are three of these propositions or principles, previously described here as “the trilogy of the blindingly obvious”.

The first principle is that all of the goods and services which constitute economic output are products of the use of energy. If it were false, this proposition would be easy to disprove. All we’d have to do is to (a) name anything of economic utility that can be produced without the use of energy at any stage of the production process, and/or (b) explain how an economy could function in the absence of energy supply.

The second principle, applied here as ECoE (the Energy Cost of Energy), is that whenever energy is accessed for our use, some of that energy is always consumed in the access process. Again, if this proposition were false, its fallacy could be demonstrated, simply by citing any example where energy can be accessed without the use of any energy at any stage in the access process.

The third proposition – that money has no intrinsic worth, and commands value only as a ‘claim’ on the output of the energy economy – ought, if false, to be the easiest one to disprove. We would need to do no more, as a thought-exercise, than cast ourselves adrift in a lifeboat, equipped with very large quantities of any form of money, but with nothing for which this money could be exchanged. If this experiment succeeded, the ‘claim only’ hypothesis would be disproved.

The inability to disprove these propositions means that the theory of the economy as a surplus energy system passes the assay of rationality. Application is a much more complex matter, of course, but the next test is to see how theory fits observation.

The assay of observation

From the mid-1990s, and as the following charts show, global debt started to expand far more rapidly than continuing growth in reported GDP. Available data for twenty-three economies – accounting for three-quarters of GDP – shows a corresponding trend in the broader measure of ‘financial assets’, which are, of course, liabilities of the non-financial economy of governments, households and private non-financial corporations (PNFCs).

There is reliable data showing yet another correspondence, this time between the GDPs and the unfunded pension obligations (“gaps”) of a group of eight economies which include global giants such as the United States, China, Japan and India.

Let’s be clear about where this takes us. We’ve already identified the absence of growth as the source of financial dysfunction. We’ve now seen parallel anomalies in the relationships between GDP and liabilities.

These divergent patterns can be explained – indeed, can really only be explained – in terms of exploding financial commitments distorting reported GDP. Put another way, there are compounding trends whose effect is to ‘juice’ and to mispresent reported economic output.

This observation accords with the logical conclusion, discussed earlier, that the relationships between saving, investment, returns and enterprise have been distorted into a dysfunctional, anomalous condition by the absence of growth. The only complication is that we have to look behind reported “growth” numbers to make this connection.

What, though, explains the absence – in practice, the deceleration, ending and impending reversal – of growth itself? The right-hand chart indicates that what was happening at the start-point of observed economic distortion was a rise in ECoEs.

The assay that we’ve undertaken has shown the validity of the concepts of output as a function of energy, ECoE as a characteristic of the output equation, and money in the role of ‘claim’. This in turn validates the linkage identified here.

Fig. 1

Once again, let’s apply the test of hypothesis. Assume that a new source of low-cost (low ECoE) energy is discovered. Prosperity would increase, and real growth would return to the system. The observed anomalies in capital relationships would disappear.

This, remember, is purely hypothesis, because the discovery of a new source of low-cost energy is at the far end of the scale of improbability. We can thus conclude that dysfunction and anomaly will continue, to the climacteric at which the monetary system described by capital theory reaches a point of failure.

The clarity of defined anomaly

For anyone who isn’t a mythical hero, venturing into the Labyrinth, confronting the Minotaur and finding our way out again sounds like a terrifying experience. There are clear analogies to the present, in terms of the uncertainty of the maze, and the fear induced by the unknown. We may not have Ariadne’s thread, but we can fashion a good alternative by opting for rationality, applied through logic and observation.

The results of this process do seem to have the merit of clarity. Comparing capital theory with observed conditions identifies a dysfunction or anomaly that can be defined as the absence of growth. This in turn can be explained in terms of a faltering energy economy. Take away the predicate – growth – and the financial system becomes dysfunctional.

This interpretation helps to clarify the roles of the various players in the situation. Taking the ‘elites’, for example, we know that the defined aim of all elites is to maintain and, wherever possible, to enhance their wealth and influence. We can infer that, if we can identify the dysfunctionality of capital theory and observed conditions, so can they.

Likewise, we know that the defined aim of governments is the maintenance of the status quo, and we can again infer that they, like we, recognize the essential dysfunction as ‘the failure of the predicate’.

To this extent, we can demystify the behaviour of elites and governments. We can also make informed judgements on their probabilities of success. (These probabilities are low, for reasons which lie outside the scope of this discussion).

A similar application of logic and observation tells us that anomaly cannot continue in perpetuity. We can hypothesize the resolution of the energy-ECoE problem, but examination of the factors involved suggests that any such resolution, even if attainable, is unlikely to happen in time to restore equilibrium to the financial system. There are equations which relate the investment of legacy energy (from fossil fuels) into a new energy system (presumably renewables), and these equations give few grounds for optimism where current systems are concerned.

If rationality can take us this far, it surely makes sense to adhere to it. The probabilities are that global prosperity will contract, meaning that systems predicated on growth will cease to function. The logic of the situation seems to be that, when old predicates change, we need to fashion new systems based on their successors.

MGPE Seminar titled "De-Dollarization – Toward the End of U.S. Monetary Hegemony?" on 20 November 2019. (https://mgpe.ssc.cuhk.edu.hk/en/news/...​)

Since the end of World War II, the United States has been the world’s hegemonic power. In economic, military, and cultural spheres, the U.S. has enjoyed nearly unrivalled supremacy. However, unlike past hegemons, which have been net creditors to the rest of the world, the United States is a net debitor; but this is a strength, not a weakness. U.S. debt is an integral feature of its economic dominance, through which the United States receives goods and services from the rest of the world in exchange for dollars it can print and keystroke into existence. Yet cracks are showing in the foundations of dollar hegemony, as countries look to find ways to escape from U.S. economic dominance. In this talk, Prof. HUDSON will discuss the prospects and challenges of global de-dollarization, and how countries like China may forge a way toward a different monetary system free of U.S. control.

Speaker: Prof. Michael HUDSON
Prof. Michael HUDSON is President of the Institute for the Study of Long-Term Economic Trends (ISLET), Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and author of …And Forgive Them Their Debts (2018), J is for Junk Economics (2017), Killing the Host (2015), The Bubble and Beyond (2012), America’s Protectionist Takeoff, 1815-1914 (2010), Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), and Trade, Development and Foreign Debt (1992 & 2009), amongst many others. Michael acts as an economic advisor to governments worldwide, including Iceland, Latvia, and China on finance and tax law.

Moderator: Prof Peter BEATTIE 裴弼革教授
(https://mgpe.ssc.cuhk.edu.hk/en/facul...​)
Prof. Peter BEATTIE is Assistant Professor and Assistant Programme Director of the MSSc in Global Political Economy at The Chinese University of Hong Kong, where he teaches political economy and political psychology. His published work has focused on the role of ideas in politics, and his research has been presented at conferences in Asia, Europe, South America, and the United States.

Nearly 50 years after the original publication of "Superimperialism", Michael Hudson revisits how the lucrative dollar-based economic system that the US set up after WWII has evolved with the rise of China and the Covid-19 pandemic. What financial weapons is the US likely to use, and does China's de-dollarisation protect it from such attacks?

The book provides a detailed analysis of how the US has used its economic might to control international relations. The book is complicated, but essentially documents how after WWII the US held an unprecedented amount of the world's gold reserves (50%). These reserves were depleted with the incursion into Korea, and subsequent involvement in Viet Nam, requiring the US to abandon the "gold standard" for valuing world currencies. A failure that proved itself valuable, pushing the US to develop multiple strategies that today allow it to make other countries pay for its military dominance.

Changes in Superimperialism

Oscar Brisset:
Welcome to the first event of the Oxford Economics Society for this academic year. I’m Oscar, the Co-President of our society, and I’m glad to welcome you back for another term of exciting discussions. Although we were hoping last term to be back in-person by January, due to the worsening Covid-19 situation in the UK our events this term are going to remain online, so that everyone at home can still participate.

A new year calls for new resolutions, and our society’s resolution for 2021 is to increase the diversity of economic topics discussed. To give you an idea, we’ll be hosting a presentation on Decolonising Economics and its role in Emerging Markets by Dr. Ingrid Kvangraven, the executive board member of Diversifying and Decolonising Economics. We’ll be hosting Prof. Randall Wray, a strong proponent of the much-discussed modern monetary theory, who was also as I just discovered, professor at the University of Missouri-Kansas City, like our guest today. We’ll also be hosting a presentation on the Young Scholars Initiative run by the Institute of New Economic Thinking at Oxford, a community some of you will definitely be interested in joining that brings together more than 15,000 young economists from around the world. Finally, we’ll be organizing a moderated discussion with the FT’s Chief Economics commentator Martin Wolf, and many other events of course.

To start us off, we are proud to host Michael Hudson, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, former balance-of-payments economist at Chase Manhattan, and an economic advisor to governments worldwide, including Iceland, Latvia and China, on finance and tax law. Now, nearly 50 years after the original publication of “Super Imperialism”, Professor Hudson will be discussing “Changes in Super Imperialism: The position of the USA & China in our Global Economic System”. How has the rise of China and the Covid-19 pandemic affected the USA’s capacity to control financial flows? How will the USA modify its behaviour as a result?

The talk will last 45 minutes, with 15 minutes of questions at the end. Make sure to send in your questions throughout the talk through our Pigeonhole page. The link should be in the description of this event. If you would like to re-watch our events, they’ll be posted to our YouTube channel afterwards.

Thank you for joining us, Professor Hudson…

Prof Hudson:
It’s good to be here. Thank you for inviting me, especially since you mentioned people that I’ve known for a long time. Randall Wray, both of us are now at the Levy Institute and working in other places, and Martin Wolf I’ve been friends with.

The reason that I’m writing a new version of Super Imperialism is that I was asked to by China, and I thought, “As long as they want to bring out a new translation and basically an update of the book, I might as well do it in English too.” I bought the rights back from Pluto and in about two or three months I will be reissuing the English language edition. The context for de-dollarization today by China, Russia and other countries is basically “How do you make an alternative to an international financial order that really was designed from the beginning to benefit the United States in its own self-interest?”

This issue was discussed after WWI when the intergovernmental debt system broke down into Allied debts and German reparations. It was discussed again at the 1930s when the United States sort of scuttled the London Economic Conference of 1933, and it was especially discussed in 1945 in December, in parliament. In the House of Commons, the British parliamentarians were discussing, “Do we want to accept the terms of the British loan?” which ended up being 3.75 billion USD, written down from what Keynes had wanted, or “Do we want to go it alone?”

It was the Conservative pro-empire Members of Parliament that wanted to reject the loan. Churchill wanted at least to abstain, but there was no alternative. In 1945 and again in 1971 when America moved off gold, in every case the alternative seemed to be anarchy. The U.S. strategy was to say, either you accept U.S. rules that favored the United States – in the beginning creditor rules, but debtor rules after 1971, and essentially gave it control of the world economy – or you go it alone and risk anarchy.

Britain was not able to go it alone in 1945. I did not include the parliamentary discussion in the first version of Super Imperialism, but I’ve included that discussion in the new version, because Britain said very clearly: “The United States basically wants to absorb the British Empire and the Sterling area into the Dollar area on its own terms and leave us almost broke. What can we do about it?” Both parties said: “We see that the United States is treating us, its ally in WWII, as a defeated party.” They came right out and said that. “But we don’t have an alternative because we can’t go alone. We have to rely on the United States.”

Let me review what the U.S. strategy is, and what’s led to major changes over time. Dollar supremacy was established after World War I by America’s creditor position. Something very novel happened after. In every previous war, for instance the Napoleonic wars and the earlier wars England had been involved with, the allies had forgiven all of their mutual debts at the end of the war. There was something that the British called “shared sacrifice”, and the idea was “We’re going to have a clean slate after the war.”

This idea goes all the way back to Babylonia in the second millennium BC. Throughout history there was a debt cancellation. There was no carryover of war debts after victory was achieved, because the idea was that if you leave war debts in place, that’s going to bankrupt the allies that you had during the war. It’s also going to bankrupt the defeated countries, and leave them no choice except to fight back.

The laws of Hammurabi showed this. His whole dynasty showed this. My book on Forgive Them Their Debts is a whole history of debt cancellations. But the United States broke this practice after WWI and said: “The debts have to be paid.” The amazing thing is that Europe went along with it. It had a pro-creditor ideology. It believed in the sanctity of debt, and was not going to question that because there was a guiding assumption – which is erroneous – that all debts somehow can be paid if only countries will either devalue or transform their economy, or impose austerity.

Keynes had a long debate with the anti-German Jacques Rueff of France and the American-Swede Bertil Ohlin. Keynes explained that there was no way that debtor countries like the allies or Germany could pay their debts to the creditor unless the creditor is willing to buy their exports, to provide them with the foreign exchange to pay. That debate obviously he won in reality, but that assumption was rejected by the United States, and continues to be rejected by the International Monetary Fund today. The junk economics that was brought in after World War One to consolidate the American position was: “Of course you can pay: simply destroy your economy and let us take you over, and sell out all of your industry and raw materials out to us, and that will enable you to pay.” That’s what the Americans demanded. It’s what the creditor demand has always been. Essentially you have to be willing to destroy your economy in order to pay your debts.

Keynes said this was crazy and he was right, but Europe went along with it and said, “Yes, we are willing to destroy our economies; we are willing to create the resentment for World War II rather than question the assumption that all the debts have to be paid.”

What Keynes pointed out was that there was a distinction between the budget problem – in other words, taxing the economy to raise a domestic fiscal surplus in German Marks or British Sterling – and the transfer problem of paying foreign currency. What happened was that the Allies said, “If America is going to insist that we pay, we’re not going to wreck our economies. We’re going to make Germany pay reparations.”

As you all know, the result was to bankrupt Germany, causing a hyperinflation there that was only solved by Germany essentially borrowing the money from the United States. German municipalities would borrow the money in dollars for local spending, use the dollars to turn over to the Reichsbank to pay the Bank of England and the Bank of France, in turn to pay their dollar debts to the United States. That was a circular flow.

It could only be kept going by the Federal Reserve making interest rates very low here in the United States to promote an outflow of foreign investment to Germany. But those low interest rates also created a stock market boom that crashed in 1939. In the end, the Inter-Ally debts had to be canceled. There had to be a moratorium [on those debts], along with German reparations, as the system broke down in 1931. There was an attempt to reconstruct the economy at the London Economic Conference of 1933 but Roosevelt scuttled that and said, “We’re going to go it alone.”

The basic principle of American foreign policy is that no other country can tell us what to do. We can tell other countries what to do, but they cannot tell us what to do. So we will not join any agreement in which we don’t have a veto power that gives us control of the World Bank and the International Monetary Fund, or the veto power in the United Nations and any international organization that the United States will join. So the question is: how could this supremacy be established all over again as World War II came to a close?

In 1944 and 1945, America made plans for the postwar economy. Its guiding logic was that: “In order to have full employment in the United States we have to have an export-based industry. Now that we’ve destroyed Germany and Japan our major enemy is the United Kingdom.” It became very clear that America’s enemy immediately on the ending of World War II was not Russia or the Soviet Union, but England. It developed a strategy that was designed to essentially bankrupt England with the 1946 British Loan, to force England to accept to end Imperial Preference, to break up its empire, to make it free the about 10 billion pounds Sterling, to be used for spending not in England as blocked currency as the British Board of Trade expected, but in the United States. So England was stripped of all of the blocked currency, stripped of the currency area, stripped of its exclusive Sterling Area, and thereby the empire that became absorbed into the Dollar Area.

The parliamentarians and members of the House of Lords said, “We know that we’re bankrupting Britain, but the alternative is to go it alone, and we can’t really make an alternative.” Keynes said, “Of course you could create your own currency and trading area with India, Canada and other countries, but that would involve a great shrinking.”

At the time they believed still that there had to be some means of settling international payments on creditor terms with gold. The United States had most of the gold in 1945. The British understood very clearly that what seemed to be the gold exchange standard – for countries that settled their balance of payments deficits in gold – was really the Dollar standard, because the dollar was defined in terms of gold. What seemed to be a gold standard was actually the Dollar standard, and in fact the arrangements that America created in 1945 were so one-sided that by 1950 it had drawn another five billion dollars’ worth of monetary gold into the United States out of Europe. There was a refugee flight of gold in the 1930s that was followed by a post-war flight out of Europe. British banks and the wealthiest classes began to move their money to the United States.

By the time of the Korean War in 1950 and 1951, America’s balance-of-payments deficit changed abruptly. From 1951 through the 1960s and 1970s, the entire U.S. balance of payments deficit was military. At first this deficit was welcomed by Europe and by other countries because finally the United States was providing the rest of the world with dollars that it needed to grow. The dollar outflows became the basis of Europe’s central bank reserves along with gold. Some of the dollars were cashed into gold especially by France, and by Germany even more.

The U.S. balance-of-payments deficit was entirely due to America’s military spending. The U.S. private sector was exactly in balance. All of the deficits were on government account, and were entirely military. American foreign aid actually made money in balance-of-payments terms. In the 1960s when I was working at the Chase Manhattan Bank, every Friday the Federal Reserve would publish statistics on the gold cover. All of the paper currency in the United States had to be backed 25 percent by gold. Every Friday we would look at what is the gold cover – how much over the 25 percent does America have in free gold to sell, to settle the military deficit from spending in Southeast Asia, in the Vietnam War and other military operations throughout the world.

It was obvious already in the mid-60s that the United States at some point would run out of gold if it continued its military spending. That led Chase Manhattan’s Chairman of the Board George Champion to oppose the Vietnam War, saying it was fiscally irresponsible. It was the business community and the right-wing in the United States that opposed America’s foreign war, not the labor movement. The labor movement was for the war because it was causing an inflation and helping wages rise. The golden age of American labor was the 1960s and 1970s, resulting from the balance of payments deficit. It was the business community that opposed the war – but not David Rockefeller when he took over from George Champion. Rockefeller wanted to “do the right thing.” He sort of followed what the Treasury asked Chase to do and the other Wall Street leaders followed suit.

Already in the mid-60s the United States faced the problem of how to avoid its balance-of-payments deficit. The solution was to make America the haven for criminal capital in the world. Somebody from the State Department joined Chase Manhattan, and asked Chase to set up enclave affiliates in the Caribbean to essentially attract the criminal capital of the world. As they explained it to me: “We want to be the new Switzerland.” They said the most liquid people in the world are the criminal class, the drug dealers. “We want the drug dealer money; we want the criminal money because it’s liquid. They have nowhere to go. Let’s make America safe for the flight capitalists, for the kleptocrats, for the crooked heads of states of the world for putting their money. Don’t have them put them in Switzerland to push up the Swiss currency. Have them put it in the branches of Wall Street banks that then would take this money in the Caribbean tax evasion and offshore banking center enclaves and then send the money to the head offices.”

The Federal Reserve every three months would publish statistics on head office bank liabilities to their branches in the Caribbean and Panama and Liberia and other countries that were used as tax avoidance centers. We were following that quite closely. Despite trying such stratagems, the United States went off gold in August 1971. At the time it worried about what on earth was going to happen. “Are we going to lose the creditor position that has enabled us to dictate the trade rules and the financial rules and political diplomacy of the world when they went off gold?”

In 1972, a year after the United States went off gold, my Super Imperialism was published. Its theme was that American diplomacy was in an even stronger position now that its deficit was not having to be paid with gold. What were other countries to do? How were foreign central banks going to hold their international reserves? There was only one currency that they could hold, and that was the U.S. dollar. So the fear by Wall Street and the U.S. Government that the dollar would be devalued as a result of its military spending didn’t materialize, because foreign central banks were in a quandary: If they did not recycle the dollars that they received from the America’s balance of payments deficit, their currencies would rise and that would hurt their export interests.

From the American point of view, central banks recycled dollars into Treasury bond holdings, because foreign central banks at that time could only invest in official government securities; they were not creating sovereign wealth funds. America’s balance-of-payments deficits thus financed its domestic budget deficits.

The response to my book on Super Imperialism was not primarily from the Left but from the U.S. Government, especially the Defense Department. I went to work for the Hudson Institute with Herman Kahn, and immediately we got a contract from the Defense Department to explain to them how Super Imperialism was working. I didn’t want to call the book Super Imperialism. I wanted to call it Monetary Imperialism, but the publisher thought differently. Most of the copies were sold in Washington to the Defense Department, the State Department and the CIA, and Herman Khan brought me numerous times down to the White House to discuss this. The Americans made it very clear that – for instance when OPEC quadrupled its oil prices in 1973 and 1974, after America quadrupled its grain prices – Kissinger and the State Department and Treasury told them that they could charge whatever they wanted for the oil, but whatever they charged they had to recycle into U.S. financial markets, mainly into government bonds. They also could buy U.S. stocks and U.S. corporate bonds, but couldn’t buy majority ownership of any big American industry. American had to be in control of its industry. The Arab countries were told “you can buy all the stocks you want through the stock market”. I think one of the Saudi Arabian kings bought a million shares of every company on the Dow Jones Industrial Average.

So you had a recycling. The more dollars Americans spent abroad on its military deficit, the more money flowed into the bond market to finance America’s budget deficit. What the American government had achieved by its creditor status before 1971, it achieved by its debtor status after 1971. Once again, it told the rest of the world: “What’s the alternative? The alternative is anarchy.” Essentially it used that threat. President Johnson insisted that Europe give America special trade favoritism, special advantages, and the rest of the world felt that it had to go along to survive.

At the time there was a discussion concerning the advantages of gold. Herman Khan was a monetary right-winger, and believed that gold should be reintroduced into the international monetary system. He and I went down and gave a presentation to the U.S. Treasury, saying, “Gold is a peaceful metal because it’s a constraint on the balance of payments. If countries had to pay their balance-of-payments deficit in gold, they would not be able to afford the balance-of-payments costs of going to war.” That was pretty much accepted and that was why the United States basically responded, “That’s why we’re not going back to gold. We want to be able to go to war and we want the only alternative to hold central bank reserve to be the United States Dollar.”

The United States also arranged the World Bank and the International Monetary Fund to favor the U.S. economy. In the World Bank it would only make foreign currency loans to other countries. It sent out missions to foreign countries to say “What does the country need?” and almost every mission said “What Latin America, Africa and the Near East need is not foreign currency. They need domestic currency for agricultural development.” You had a latifundia problem in Latin America. The United Nations came out with two wonderful reports on the need for land reform throughout the Third World in order to grow domestic food. But the World Bank was set against other countries becoming food independent. The most important heads of the World Bank were former Secretaries of Defense like McNamara and John McCloy. You can look through who the heads were. The Americans said that any foreign country wanting to grow its own food instead of depending on U.S. grain exports was counted as an Act of War and would be overthrown. That was the explicit reason why the United States established military dictatorships and client oligarchies in Latin America.

The World Bank did promote plantation agriculture but the plantation agriculture was for tropical export crops to compete with other exporting countries, to lower the price of export crops, of tropical crops that could not be grown in the United States. These countries were not supposed to grow their own food supply.

The World Bank became a huge market for American firms to build dams etc. I was told that the World Bank person in charge of designing dams had been a chronic bed-wetter as a child, sort of acting it all out. It also got countries into debt, and once countries were in debt they were forced into the International Monetary Fund, which said basically” “In order to pay your debts, you have to engage in a vicious class war against labor”. You have to lower wages because it’s the only variable in world trade. There’s a common world trade [price] in raw materials: All countries pay the same price for copper, machinery, and other materials. There’s a common world price for oil; there’s a common world price for capital goods. The one variable in foreign trade is the price of labor. So the IMF said, “You’ve got to prevent unionization, you’ve got to prevent any kind of pro-labor reform. Your only way of paying debts is to polarize your economy and impoverish your labor force.”

That is exactly what the opponents of Keynes had urged in the 1920s, and you saw the result in Germany. The same thing was imposed on the Third World countries. That is why, until a few years ago, all the countries of the world tried to get free of the IMF’s “conditionalities,” the terms on which the IMF would lend money. You should essentially think of the IMF as a small office in the basement of the Pentagon, deciding what countries to support, and what countries are following policies that the United States does not want and therefore wants to wreck. That explains why the IMF will give loans to completely non-creditworthy countries such as Argentina under the dictators, or the Ukraine with no visible means of paying off the debt.

The loans to Ukraine, the loans to Greece recently that ended up bankrupting it, the loans yet again to Argentina have demoralized the IMF staff. They complained that every forecast they make shows that the debts can’t be paid, but the IMF continues to make them anyway. The IMF has become a pariah among competent financial analysts throughout the world. The United States is still trying to force countries into the IMF as a means of controlling them, saying “Either you engage in a pro-American war against labor and [engage in] neoliberalism, or the alternative is wreckage.”

Ironically what’s changing all this is the United States’ cold war against Russia and China. The United States has begun to impose sanctions on the Russian and other post-Soviet economies, and on China. This is driving them into a position where their only defense is to do what Britain could not do in 1945: to create an alternative economic order with its own rules. So for the last five years or so China, Russia and other countries are discussing how to de-dollarize their economy.

What do they want to do? They say: “The first thing we have to do is we don’t want to hold our international reserves in loans to the U.S. Government, because that finances the United States military deficit, building its 800 military bases all around us, to try to threaten us militarily. If we withdraw from this international financial system based on the U.S. dollar free-lunch, then dollars can’t be spent ad infinitum without any constraint on military policies that we don’t agree with – right-wing and anti-labor policies that we don’t agree with. So we’re going to take the lead in creating a new grouping – China, Russia, Iran, the Shanghai Cooperation Organization members basically – to do this.”

They’re trying to do what the world began to talk about doing in 1933 at the London Economic Conference: “How do we make a fair system?” When Keynes outlined his plans for Bretton Woods in 1944, his alternative was the Bancor. He said there should be a central bank that can make loans, creating fiat money to enable deficit countries to pay. So that if they ran a balance-of-payments deficit, they wouldn’t have to impose austerity. Austerity and anti-labor policies never enable a country to pay debts. It makes them less able to pay, and even more dependent on creditor countries. So the Chinese and Russians are discussing today “How do we create a currency, a central bank that will help us actually develop? We’ll use international reserves to promote the industrialization and the upgrading of labor and public infrastructure investment, instead of the U.S. demand to privatize infrastructure development and sell it off to foreign rent-seekers.”

What China and Russia found out very quickly is what initially seemed to be an economic rivalry between America and China and other countries was not really an anti-China rivalry as such. It’s a conflict of economic systems. The conflict is between neoliberalism – a financialized world order that wants to privatize all infrastructure and create monopoly rents for transportation, education, healthcare, like what occurs in the United States – and having these basic investments in the public domain, to be subsidized and their services provided at minimum cost. The question at issue is what kind of economy the world is going to have. Will it be a neoliberal economy, a privatized economy – Reaganized, Thatcherized and financialized, organized by central planning in Wall Street – or is the government going to plan?

China and Russia do not want a centrally planned economy anywhere near as centralized as the United States is promoting with Wall Street. In the United States the center of economic planning has been shifted from Washington to Wall Street financial institutions. Banks create credit not to create new means of production, not to build new factories and plant and equipment, but essentially to extend credit against assets already in place. Eighty percent of bank loans in the United States and in England are mortgage loans for real estate, against real estate that’s already in place. I think three percent of mortgage loans are for new construction as long as these loans are already collateralized with promises to buy apartments etc.

So the question is what kind of financial system are you going to have to back up a central banking system and credit creation? Is credit going to be a public infrastructure enterprise as it is in China, where the banks of China are able to decide who is going to get the loans. A public bank is not going to make corporate takeover loans or loans to corporate raiders. It’s going to make loans to actually increase the tangible economy, not to take it over and turn public infrastructure – the education system, healthcare, transportation and communications – into rent extraction.

We’re having today finally a revival of the kind of debate that classical economics was all about in the 19th century – Adam Smith, John Stuart Mill, down through Marx and Alfred Marshall. At issue was how to minimize unearned income as economic rent. At that time, the main form of economic rent they were trying to minimize was land rent. The idea was to get rid of the hereditary landlord class, which was treated as a form of overhead. In today’s economy the main rentiers are financial. There’s not a landlord class anymore, because two-thirds of Americans own their own home (on credit, to be sure). Home ownership rates are higher in continental Europe and England. You don’t have a hereditary landlord class living off land rent. What you do have is a financial class that’s emerged after World War I in a way that they have become the new central planners. It’s a new concentration of wealth, engaging in a new kind of economic war, not only against labor but against government as well, to appropriate the public domain by financializing it. This is done by getting governments into debt and having them sell off the public infrastructure. That’s happening in America at the state and local level, for indebted cities and states like New York.

How do China and Russia avoid their economies becoming financialized? How do they avoid a financialized economy from becoming a high-cost economy and losing their international trade advantage? What’s at stake in de-dollarization is how to create an alternative to a financialized, dollarized economy, one that is going to try to minimize the cost of living and minimize the cost of doing business, instead of a high-cost economy as is occurring in the United States.

The answer they have is that to some extent there’s going to be gold as a means of settlement. But most of all China, Russia, Iran, and other countries are going to mutually hold each other’s trading currencies. They’re replacing dollars with gold and with each other’s currencies. That essentially is the response that the world could have taken after World War One and didn’t, and could have taken after World War II if it had followed Keynes’s policies. Finally, with the help of Donald Trump isolating China and Russia, U.S. diplomacy is creating an independent bloc and helping them do what was unthinkable in the past.

Oscar Brisset:
Great, thank you very much. We’ve got some questions coming in.

To start off, yesterday Joe Biden was inaugurated, making him the 46th President of the United States. What are your expectations regarding his stance on China? We’ve heard him talk a lot about democracy as a guiding foreign-policy principle to distinguish between what is good and what is bad for the U.S. Which measures are likely to be used to advance the USA’s interests: will it be tariffs, sanctions or could we even see a military buildup and embargoes?

Prof Hudson:
The question is, what are the U.S. interests? Again and again in the 1920s, the 1930s and today, the U.S. Government interests were the opposite of U.S. industrial interests, opposite of U.S. economic interests. Just because the Biden administration has an emotional hatred of Russia does not mean that it’s in the U.S. interest. The Biden administration said, “On second thought we’re not going to join the Iran agreements because we’re going to talk to Israel first,” and Blinken, his neocon Secretary of State, said that we won’t do anything without Israel’s approval regarding Iran. Biden also said that the United States will not do anything about solving the world problem of global warming that the oil industry doesn’t like, because basically what’s called the “interest of the United States” is that of his political campaign contributors. So almost his first act was to approve more oil drilling. Here we have the Supreme Court’s Citizens United ruling that lets campaign contributors dominate U.S. policy, not the voters. The American voters were not given a choice in this election. Biden did not do well in the early primaries and Kamala Harris got only one percent of the primary vote.

Polls show that what American voters want is basically a Bernie Sanders type policy. They want what you have in Europe. They want public healthcare, universal healthcare. They don’t want to have to pay 18 percent of America’s GDP for medical insurance and medical expenses, because there’s no way that American industry can compete in markets and American labor be employed in export industries, having health care monopolies protected by successive administrations.

The American public didn’t want the Obama administration to evict 10 million American families, and it looks like the Biden administration is going to outdo Obama. Biden basically says, “We’re going to evict another 10 million American families. What Obama did I can do more.” Many families have not been able to pay the rent or even pay the mortgage if they’ve been unemployed or if their income is reduced because of the Coronavirus. There’s going to be a huge wave of evictions in the United States that will be even larger than the Obama evictions.

The Obama evictions were targeted mainly against Black and Hispanics, who were the victims of the junk mortgage loans. Biden has made a point of appointing many Black women and men to administer positions as a cover story for the fact that his policies are going to be just as viciously anti-Black and anti-minority and anti-Hispanic as the Obama administration’s were. They found that as long as you can have identity politics front and center you can do whatever you want economically to crush the people that you pretend to be representing in identity politics.

Nobody can see really any way in which the American economy can recover. The stock market can recover because the Federal Reserve credit and quantitative easing has been going into supporting stocks and bonds, including junk bonds. Sheila Bair wrote a Wall Street Journal editorial on that. But the underlying economy is shrinking rapidly while the stock market’s going up. That’s what the American economists call a K-shaped recovery – up for the One Percent, down for the 99 Percent.

Oscar Brisset:
I’m going to ask one more question on the China topic and then talk a bit more about historical things you mentioned. China has been building up a network of support and trade deals to drive its expansion. You mentioned some of the policies. It’s also been growing its presence in the U.N. system and even putting together alternative international organizations like the Asian Infrastructure Investment Bank. Is there a line that the U.S. would not tolerate China crossing, after which the U.S. would start devoting much larger resources and spending to contain China, or is the U.S. already at full power?

Prof Hudson:
The United States is muscle-bound. Despite its huge military budget it can’t field an army. It has a foreign legion. ISIS, for instance, is part of its foreign legion. The European NATO is part of its foreign legion. But there’s no way American can ever have a land war again, so you can never invade and conquer a country with a military army. All America has is the Atom bomb, and that’s muscle bound. It cannot go to wage any kind of war except atomic war. There’s nothing in between.

I think Russia and China know that, and Russia at least has taken steps to protect itself and said, “If the United States wants atomic war, we’ll be wiped out but it’ll be wiped out too, and Europe will be wiped out.” I think probably the first exchange would be to wipe out England and Europe, to say “We don’t want to go to war with you and really blow up the world, America. Let’s just show you what we can do. Let’s blow up England and Europe so at least you won’t have your colonies there.” If America persisted, it would be the end of the world. Will America really do that? There was worry that Donald Trump would do that so he could go down in history as the man who destroyed civilization, but I don’t think other people are going to do that.

Oscar Brisset:
Moving now into some of the historical things you mentioned, for example in the 19th century the most powerful European empire was the British Empire. I am trying to see if there’s a parallel between the UK and the American. Did the UK establish such currency dominance similar to the one the U.S. has today? Did it use similar methods to the U.S. to establish its dominance, for example creating international organizations in which it had an institutional advantage, or for example through the control of key energy deposits?

Prof Hudson
England thought that it was establishing currency dominance with the Sterling area. In other words it would spend money abroad and other countries would save their money in Sterling. All during the 1930s the surpluses earned by India and by other members of the Sterling area were basically kept in London, paid to England. But then England ran a deficit with the United States so ultimately the benefit of England’s Sterling area, the financial benefit, was all spent to the United States already in the 1930s. You can look up the balance of payments articles on that.

In 1945, as I mentioned, England thought, “We have 10 billion Pounds of all the savings of Argentina and India, countries that have been providing the raw materials for the World War that we fought, World War II. Now there is going to be a demand for English exports and we can recover by employing our labor to make exports.” But the terms of America’s British Loan said: “No, you have to open up the Sterling area and let these countries cancel their contracts with England.” England had long four-year and five-year capital purchase contracts from India, Argentina. “They can cancel them all and buy from the United States”. England went along with that. So the attempt to create a currency area was smashed by the United States.

Ever since the 19th century America looked at England as the great rival, not the Soviet Union. The Cold War in the 19th century was against England. The fight for protectionism in the United States went so far as to create state colleges and universities that would teach an alternative to Anglo-centered free-trade economics and Anglophile moral philosophy. There was a feeling in the late 19th century of America creating a new civilization and it would not be the religious-based, unscientific civilization of Europe. It would be a new secular civilization. That feeling of a new civilization in America is what led Americans to think, “We will never let other countries tell us what to do because they’re part of the decadent old world and we’re the new world. We’re going to make our own rules.”

Oscar Brisset
You also discussed Bretton Woods. Would it be beneficial to recreate, very hypothetically, a system similar to the Bretton Woods one today? I think a key question that underlies that is, “Does the country that runs such a system reap a benefit from running it or are they just constrained?” Will there be an interest for China to set up such a system?

Prof Hudson
They realize that they cannot set up any system in which the United States is a member because the United States will insist on veto power. If it has veto power, then they can’t do the kind of economic system that I described. Bretton Woods was designed one-sidedly to give all the benefit to the United States, and to make other countries dependent on the U.S. economy, on U.S. exports – largely of agriculture, but also industry – and also on the U.S. dollar. Obviously, that’s not going to be done. The agreement that is being developed on an ad hoc spontaneous basis between China, Russia and neighboring countries is their own system of international payments that will be based on mutual benefit, of holding of each other’s currencies, of preventing any payment surplus country – and it could be China – any payment surplus country ending up with so much credit in a creditor position vis-a-vis debtors. The new system will not impoverish the debtors.

The IMF system was designed to impoverish debtors. The purpose of the IMF was to make other countries so poor and dependent on the United States so they could never be militarily independent. In the discussion of the British loan for instance, in the 1930s the discussion in the London Economic Conference was, “Yes, we’re bankrupting Europe, but if we give Europe enough money to avoid austerity, they’re just going to spend the money on the military.” That was said by the Americans in the State Department and the White House again and again, especially by Raymond Moley who was basically in charge of President Roosevelt’s foreign policy towards Europe.

The question is: how do you create an international financial system designed to promote prosperity, not austerity? The Bretton Woods perspective is for austerity for everybody except the United States, which will have a free ride forever. The question that I’m involved with in the work I’m doing in China and with other countries is how to create a system based on prosperity instead of austerity, with mutual support between creditors and debtors, without the kind of financial antagonism that has been built into the international financial system ever since World War I. Financial reform involves tax reform as well: how do we end up taxing economic rent instead of letting the rentiers take over society. That is what classical economics is all about: how do we revive it?

Oscar Brisset
Final question: these austerity and anti-labor policies which the IMF imposes on countries of the global South seem to be well known practices from before the IMF was created, from what you’ve discussed. Did the IMF invent anything new? In addition, in the 19th century, was predatory lending something common, or was direct invasion always the go-to method for subjugating a territory?

Prof Hudson
The 19th century was really the golden age of industrial capitalism. Countries wanted to invest to make a profit. They didn’t want to invest in dismantling an existing industry, because there wasn’t much industry to dismantle. They wanted to make profit by creating industry. There was a lot of investment in infrastructure, and it almost always lost money. For instance, there was recently a criticism of China saying, “Doesn’t China know that the Panama Canal went bankrupt again and again, and that all the investments in canals and the railroads all went broke again and again?” Of course China knows that. The idea is that you make investment not to make a profit on basic large infrastructure. The 19th century was basically inter-state lending, inter-governmental lending, public sector lending. That’s where the money was made. The late 20th century was one of financialization, dismantling the industry that was already in place, not lending to create industry to make a profit. It’s asset-stripping, not profit-seeking

Oscar Brisset
Thank you very much for joining us today. Our next event will be on February 4th and we look forward to seeing you all then. Thank you very much Prof. Hudson.

Michael Hudson is Professor of Economics at the University of Missouri-Kansas, former balance of payment economist at Chase Manhattan, political consultant, and has written on many topics relating to the history of debt and the international financial system.

The President of Russia Vladimir Putin has given a great speech to the Davos 2021 online forum organized by the World Economic Forum. As usual it created little echo in the 'western' media.

Putin sees a new danger of large international conflicts. Economic imbalances have caused socio-political problems in many countries which, when externalized, can lead to international conflicts.

To solve this one has to reject the laissez faire doctrines that caused the economic imbalances. The nation states must intervene more in their economies. The people must be seen as the ends, not the means of such economic policy. There must be more international cooperation through global organizations to enable this everywhere.

There is more in the speech than that. But the above is the core idea. U.S. neo-liberalism will of course reject such a program.

Following are excerpts that reflect on the above points.

The big picture view points to great danger:

The pandemic has exacerbated the problems and imbalances that built up in the world before. There is every reason to believe that differences are likely to grow stronger. These trends may appear practically in all areas.

Needless to say, there are no direct parallels in history. However, some experts – and I respect their opinion – compare the current situation to the 1930s. One can agree or disagree, but certain analogies are still suggested by many parameters, including the comprehensive, systemic nature of the challenges and potential threats.

We are seeing a crisis of the previous models and instruments of economic development. Social stratification is growing stronger both globally and in individual countries. We have spoken about this before as well. But this, in turn, is causing today a sharp polarisation of public views, provoking the growth of populism, right- and left-wing radicalism and other extremes, and the exacerbation of domestic political processes including in the leading countries.

All this is inevitably affecting the nature of international relations and is not making them more stable or predictable. International institutions are becoming weaker, regional conflicts are emerging one after another, and the system of global security is deteriorating.

Klaus [Schwab] has mentioned the conversation I had yesterday with the US President on extending the New START. This is, without a doubt, a step in the right direction. Nevertheless, the differences are leading to a downward spiral. As you are aware, the inability and unwillingness to find substantive solutions to problems like this in the 20th century led to the WWII catastrophe.

Putin then goes into the details of the above theses.

What caused the current economic imbalances?

These imbalances in global socioeconomic development are a direct result of the policy pursued in the 1980s, which was often vulgar or dogmatic. This policy rested on the so-called Washington Consensus with its unwritten rules, when the priority was given to the economic growth based on a private debt in conditions of deregulation and low taxes on the wealthy and the corporations.

As I have already mentioned, the coronavirus pandemic has only exacerbated these problems. In the last year, the global economy sustained its biggest decline since WWII. By July, the labour market had lost almost 500 million jobs. Yes, half of them were restored by the end of the year but still almost 250 million jobs were lost. This is a big and very alarming figure. In the first nine months of the past year alone, the losses of earnings amounted to $3.5 trillion. This figure is going up and, hence, social tension is on the rise.

At the same time, post-crisis recovery is not simple at all. If some 20 or 30 years ago, we would have solved the problem through stimulating macroeconomic policies (incidentally, this is still being done), today such mechanisms have reached their limits and are no longer effective. This resource has outlived its usefulness. This is not an unsubstantiated personal conclusion.

According to the IMF, the aggregate sovereign and private debt level has approached 200 percent of global GDP, and has even exceeded 300 percent of national GDP in some countries. At the same time, interest rates in developed market economies are kept at almost zero and are at a historic low in emerging market economies.

Taken together, this makes economic stimulation with traditional methods, through an increase in private loans virtually impossible. The so-called quantitative easing is only increasing the bubble of the value of financial assets and deepening the social divide. The widening gap between the real and virtual economies (incidentally, representatives of the real economy sector from many countries have told me about this on numerous occasions, and I believe that the business representatives attending this meeting will agree with me) presents a very real threat and is fraught with serious and unpredictable shocks.

The economic imbalances create deep socio-political problems:

In this context, I would like to mention the second fundamental challenge of the forthcoming decade – the socio-political one. The rise of economic problems and inequality is splitting society, triggering social, racial and ethnic intolerance. Indicatively, these tensions are bursting out even in the countries with seemingly civil and democratic institutions that are designed to alleviate and stop such phenomena and excesses.

The systemic socioeconomic problems are evoking such social discontent that they require special attention and real solutions. The dangerous illusion that they may be ignored or pushed into the corner is fraught with serious consequences.

In this case, society will still be divided politically and socially. This is bound to happen because people are dissatisfied not by some abstract issues but by real problems that concern everyone regardless of the political views that people have or think they have. Meanwhile, real problems evoke discontent.

The danger rises when the socio-political problems get externalized:

And finally, the third challenge, or rather, a clear threat that we may well run into in the coming decade is the further exacerbation of many international problems. After all, unresolved and mounting internal socioeconomic problems may push people to look for someone to blame for all their troubles and to redirect their irritation and discontent. We can already see this. We feel that the degree of foreign policy propaganda rhetoric is growing.

We can expect the nature of practical actions to also become more aggressive, including pressure on the countries that do not agree with a role of obedient controlled satellites, use of trade barriers, illegitimate sanctions and restrictions in the financial, technological and cyber spheres.

Such a game with no rules critically increases the risk of unilateral use of military force. The use of force under a far-fetched pretext is what this danger is all about. This multiplies the likelihood of new hot spots flaring up on our planet. This concerns us.

What can be done to prevent the danger which arises from socio-political problems caused by imbalanced economies?

Clearly, with the above restrictions and macroeconomic policy in mind, economic growth will largely rely on fiscal incentives with state budgets and central banks playing the key role.

Actually, we can see these kinds of trends in the developed countries and also in some developing economies as well. An increasing role of the state in the socioeconomic sphere at the national level obviously implies greater responsibility and close interstate interaction when it comes to issues on the global agenda.
...
It is clear that the world cannot continue creating an economy that will only benefit a million people, or even the golden billion. This is a destructive precept. This model is unbalanced by default. The recent developments, including migration crises, have reaffirmed this once again.

We must now proceed from stating facts to action, investing our efforts and resources into reducing social inequality in individual countries and into gradually balancing the economic development standards of different countries and regions in the world. This would put an end to migration crises.

The essence and focus of this policy aimed at ensuring sustainable and harmonious development are clear. They imply the creation of new opportunities for everyone, conditions under which everyone will be able to develop and realise their potential regardless of where they were born and are living.

Here Putin sets the goals for national strategies:

I would like to point out four key priorities, as I see them. This might be old news, but since Klaus has allowed me to present Russia’s position, my position, I will certainly do so.

First, everyone must have comfortable living conditions, including housing and affordable transport, energy and public utility infrastructure. Plus environmental welfare, something that must not be overlooked.

Second, everyone must be sure that they will have a job that can ensure sustainable growth of income and, hence, decent standards of living. Everyone must have access to an effective system of lifelong education, which is absolutely indispensable now and which will allow people to develop, make a career and receive a decent pension and social benefits upon retirement.

Third, people must be confident that they will receive high-quality and effective medical care whenever necessary, and that the national healthcare system will guarantee access to modern medical services.

Fourth, regardless of the family income, children must be able to receive a decent education and realise their potential. Every child has potential.

This is the only way to guarantee the cost-effective development of the modern economy, in which people are perceived as the end, rather than the means. Only those countries capable of attaining progress in at least these four areas will facilitate their own sustainable and all-inclusive development. These areas are not exhaustive, and I have just mentioned the main aspects.

A strategy, also being implemented by my country, hinges on precisely these approaches.

What should be done globally:

We are open to the broadest international cooperation, while achieving our national goals, and we are confident that cooperation on matters of the global socioeconomic agenda would have a positive influence on the overall atmosphere in global affairs, and that interdependence in addressing acute current problems would also increase mutual trust which is particularly important and particularly topical today.

Obviously, the era linked with attempts to build a centralised and unipolar world order has ended. To be honest, this era did not even begin. A mere attempt was made in this direction, but this, too, is now history. The essence of this monopoly ran counter to our civilisation’s cultural and historical diversity.

The reality is such that really different development centres with their distinctive models, political systems and public institutions have taken shape in the world. Today, it is very important to create mechanisms for harmonising their interests to prevent the diversity and natural competition of the development poles from triggering anarchy and a series of protracted conflicts.

To achieve this we must, in part, consolidate and develop universal institutions that bear special responsibility for ensuring stability and security in the world and for formulating and defining the rules of conduct both in the global economy and trade.

It is no wonder that the neo-liberal 'west' constantly attacks Putin and at the same time takes care that his speech gets as little attention as possible. It is dangerous because it could give the deplorables some ideas.

It is also sad that no 'western' politician I am aware of would ever give such a speech.

Session of Davos Agenda 2021 online forum

Vladimir Putin spoke at the session of the Davos Agenda 2021 online forum organised by the World Economic Forum (WEF).

January 27, 2021

15:10

The Kremlin, Moscow

The online events are taking place from January 25 to 29 and involve heads of state and government, CEOs of major international companies, global media and youth organisations from Asia, Europe, Africa, the Middle East, North America and Latin America.

The main focus of the forum is the discussion of the new global situation arising from the novel coronavirus pandemic.

* * *

World Economic Forum Founder and Executive Chairman Klaus Schwab: Mr President, welcome to the Davos Agenda Week.

Russia is an important global power, and there’s a long-standing tradition of Russia’s participation in the World Economic Forum. At this moment in history, where the world has a unique and short window of opportunity to move from an age of confrontation to an age of cooperation, the ability to hear your voice, the voice of the President of the Russian Federation, is essential. Even and especially in times characterised by differences, disputes and protests, constructive and honest dialogue to address our common challenges is better than isolation and polarisation.

Yesterday, your phone exchange with President Biden and the agreement to extend the New START nuclear arms treaty in principle, I think, was a very promising sign in this direction.

COVID-19, Mr President, has shown our global vulnerability and interconnectivity, and, like any other country, Russia will certainly also be affected, and your economic development and prospects for international cooperation, of course, are of interest to all of us.

Mr President, we are keen to hear from your perspective and from that of Russia, how you see the situation developing in the third decade of the 21st century and what should be done to ensure that people everywhere find peace and prosperity.

Mr President, the world is waiting to hear from you.

President of Russia Vladimir Putin: Mr Schwab, dear Klaus,

Colleagues,

I have been to Davos many times, attending the events organised by Mr Schwab, even back in the 1990s. Klaus [Schwab] just recalled that we met in 1992. Indeed, during my time in St Petersburg, I visited this important forum many times. I would like to thank you for this opportunity today to convey my point of view to the expert community that gathers at this world-renowned platform thanks to the efforts of Mr Schwab.

First of all, ladies and gentlemen, I would like to greet all the World Economic Forum participants.

It is gratifying that this year, despite the pandemic, despite all the restrictions, the forum is still continuing its work. Although it is limited to online participation, the forum is taking place anyway, providing an opportunity for participants to exchange their assessments and forecasts during an open and free discussion, partially compensating for the increasing lack of in-person meetings between leaders of states, representatives of international business and the public in recent months. All this is very important now, when we have so many difficult questions to answer.

The current forum is the first one in the beginning of the third decade of the 21st century and, naturally, the majority of its topics are devoted to the profound changes that are taking place in the world.

Indeed, it is difficult to overlook the fundamental changes in the global economy, politics, social life and technology. The coronavirus pandemic, which Klaus just mentioned, which became a serious challenge for humankind, only spurred and accelerated the structural changes, the conditions for which had been created long ago. The pandemic has exacerbated the problems and imbalances that built up in the world before. There is every reason to believe that differences are likely to grow stronger. These trends may appear practically in all areas.

Needless to say, there are no direct parallels in history. However, some experts – and I respect their opinion – compare the current situation to the 1930s. One can agree or disagree, but certain analogies are still suggested by many parameters, including the comprehensive, systemic nature of the challenges and potential threats.

We are seeing a crisis of the previous models and instruments of economic development. Social stratification is growing stronger both globally and in individual countries. We have spoken about this before as well. But this, in turn, is causing today a sharp polarisation of public views, provoking the growth of populism, right- and left-wing radicalism and other extremes, and the exacerbation of domestic political processes including in the leading countries.

All this is inevitably affecting the nature of international relations and is not making them more stable or predictable. International institutions are becoming weaker, regional conflicts are emerging one after another, and the system of global security is deteriorating.

Klaus has mentioned the conversation I had yesterday with the US President on extending the New START. This is, without a doubt, a step in the right direction. Nevertheless, the differences are leading to a downward spiral. As you are aware, the inability and unwillingness to find substantive solutions to problems like this in the 20th century led to the WWII catastrophe.

Of course, such a heated global conflict is impossible in principle, I hope. This is what I am pinning my hopes on, because this would be the end of humanity. However, as I have said, the situation could take an unexpected and uncontrollable turn – unless we do something to prevent this. There is a chance that we will face a formidable break-down in global development, which will be fraught with a war of all against all and attempts to deal with contradictions through the appointment of internal and external enemies and the destruction of not only traditional values such as the family, which we hold dear in Russia, but fundamental freedoms such as the right of choice and privacy.

I would like to point out the negative demographic consequences of the ongoing social crisis and the crisis of values, which could result in humanity losing entire civilisational and cultural continents.

We have a shared responsibility to prevent this scenario, which looks like a grim dystopia, and to ensure instead that our development takes a different trajectory – positive, harmonious and creative.

In this context, I would like to speak in more detail about the main challenges which, I believe, the international community is facing.

The first one is socioeconomic.

Indeed, judging by the statistics, even despite the deep crises in 2008 and 2020, the last 40 years can be referred to as successful or even super successful for the global economy. Starting from 1980, global per capita GDP has doubled in terms of real purchasing power parity. This is definitely a positive indicator.

Globalisation and domestic growth have led to strong growth in developing countries and lifted over a billion people out of poverty. So, if we take an income level of $5.50 per person per day (in terms of PPP) then, according to the World Bank, in China, for example, the number of people with lower incomes went from 1.1 billion in 1990 down to less than 300 million in recent years. This is definitely China's success. In Russia, this number went from 64 million people in 1999 to about 5 million now. We believe this is also progress in our country, and in the most important area, by the way.

Still, the main question, the answer to which can, in many respects, provide a clue to today’s problems, is what was the nature of this global growth and who benefitted from it most.

Of course, as I mentioned earlier, developing countries benefitted a lot from the growing demand for their traditional and even new products. However, this integration into the global economy has resulted in more than just new jobs or greater export earnings. It also had its social costs, including a significant gap in individual incomes.

What about the developed economies where average incomes are much higher? It may sound ironic, but stratification in the developed countries is even deeper. According to the World Bank, 3.6 million people subsisted on incomes of under $5.50 per day in the United States in 2000, but in 2016 this number grew to 5.6 million people.

Meanwhile, globalisation led to a significant increase in the revenue of large multinational, primarily US and European, companies.

By the way, in terms of individual income, the developed economies in Europe show the same trend as the United States.

But then again, in terms of corporate profits, who got hold of the revenue? The answer is clear: one percent of the population.

And what has happened in the lives of other people? In the past 30 years, in a number of developed countries, the real incomes of over half of the citizens have been stagnating, not growing. Meanwhile, the cost of education and healthcare services has gone up. Do you know by how much? Three times.

In other words, millions of people even in wealthy countries have stopped hoping for an increase of their incomes. In the meantime, they are faced with the problem of how to keep themselves and their parents healthy and how to provide their children with a decent education.

There is no call for a huge mass of people and their number keeps growing. Thus, according to the International Labour Organisation (ILO), in 2019, 21 percent or 267 million young people in the world did not study or work anywhere. Even among those who had jobs (these are interesting figures) 30 percent had an income below $3.2 per day in terms of purchasing power parity.

These imbalances in global socioeconomic development are a direct result of the policy pursued in the 1980s, which was often vulgar or dogmatic. This policy rested on the so-called Washington Consensus with its unwritten rules, when the priority was given to the economic growth based on a private debt in conditions of deregulation and low taxes on the wealthy and the corporations.

As I have already mentioned, the coronavirus pandemic has only exacerbated these problems. In the last year, the global economy sustained its biggest decline since WWII. By July, the labour market had lost almost 500 million jobs. Yes, half of them were restored by the end of the year but still almost 250 million jobs were lost. This is a big and very alarming figure. In the first nine months of the past year alone, the losses of earnings amounted to $3.5 trillion. This figure is going up and, hence, social tension is on the rise.

At the same time, post-crisis recovery is not simple at all. If some 20 or 30 years ago, we would have solved the problem through stimulating macroeconomic policies (incidentally, this is still being done), today such mechanisms have reached their limits and are no longer effective. This resource has outlived its usefulness. This is not an unsubstantiated personal conclusion.

According to the IMF, the aggregate sovereign and private debt level has approached 200 percent of global GDP, and has even exceeded 300 percent of national GDP in some countries. At the same time, interest rates in developed market economies are kept at almost zero and are at a historic low in emerging market economies.

Taken together, this makes economic stimulation with traditional methods, through an increase in private loans virtually impossible. The so-called quantitative easing is only increasing the bubble of the value of financial assets and deepening the social divide. The widening gap between the real and virtual economies (incidentally, representatives of the real economy sector from many countries have told me about this on numerous occasions, and I believe that the business representatives attending this meeting will agree with me) presents a very real threat and is fraught with serious and unpredictable shocks.

Hopes that it will be possible to reboot the old growth model are connected with rapid technological development. Indeed, during the past 20 years we have created a foundation for the so-called Fourth Industrial Revolution based on the wide use of AI and automation and robotics. The coronavirus pandemic has greatly accelerated such projects and their implementation.

However, this process is leading to new structural changes, I am thinking in particular of the labour market. This means that very many people could lose their jobs unless the state takes effective measures to prevent this. Most of these people are from the so-called middle class, which is the basis of any modern society.

In this context, I would like to mention the second fundamental challenge of the forthcoming decade – the socio-political one. The rise of economic problems and inequality is splitting society, triggering social, racial and ethnic intolerance. Indicatively, these tensions are bursting out even in the countries with seemingly civil and democratic institutions that are designed to alleviate and stop such phenomena and excesses.

The systemic socioeconomic problems are evoking such social discontent that they require special attention and real solutions. The dangerous illusion that they may be ignored or pushed into the corner is fraught with serious consequences.

In this case, society will still be divided politically and socially. This is bound to happen because people are dissatisfied not by some abstract issues but by real problems that concern everyone regardless of the political views that people have or think they have. Meanwhile, real problems evoke discontent.

I would like to emphasise one more important point. Modern technological giants, especially digital companies, have started playing an increasing role in the life of society. Much is being said about this now, especially regarding the events that took place during the election campaign in the US. They are not just some economic giants. In some areas, they are de facto competing with states. Their audiences consist of billions of users that pass a considerable part of their lives in these eco systems.

In the opinion of these companies, their monopoly is optimal for organising technological and business processes. Maybe so but society is wondering whether such monopolism meets public interests. Where is the border between successful global business, in-demand services and big data consolidation and the attempts to manage society at one’s own discretion and in a tough manner, replace legal democratic institutions and essentially usurp or restrict the natural right of people to decide for themselves how to live, what to choose and what position to express freely? We have just seen all of these phenomena in the US and everyone understands what I am talking about now. I am confident that the overwhelming majority of people share this position, including the participants in the current event.

And finally, the third challenge, or rather, a clear threat that we may well run into in the coming decade is the further exacerbation of many international problems. After all, unresolved and mounting internal socioeconomic problems may push people to look for someone to blame for all their troubles and to redirect their irritation and discontent. We can already see this. We feel that the degree of foreign policy propaganda rhetoric is growing.

We can expect the nature of practical actions to also become more aggressive, including pressure on the countries that do not agree with a role of obedient controlled satellites, use of trade barriers, illegitimate sanctions and restrictions in the financial, technological and cyber spheres.

Such a game with no rules critically increases the risk of unilateral use of military force. The use of force under a far-fetched pretext is what this danger is all about. This multiplies the likelihood of new hot spots flaring up on our planet. This concerns us.

Colleagues, despite this tangle of differences and challenges, we certainly should keep a positive outlook on the future and remain committed to a constructive agenda. It would be naive to come up with universal miraculous recipes for resolving the above problems. But we certainly need to try to work out common approaches, bring our positions as close as possible and identify sources that generate global tensions.

Once again, I want to emphasise my thesis that accumulated socioeconomic problems are the fundamental reason for unstable global growth.

So, the key question today is how to build a programme of actions in order to not only quickly restore the global and national economies affected by the pandemic, but to ensure that this recovery is sustainable in the long run, relies on a high-quality structure and helps overcome the burden of social imbalances. Clearly, with the above restrictions and macroeconomic policy in mind, economic growth will largely rely on fiscal incentives with state budgets and central banks playing the key role.

Actually, we can see these kinds of trends in the developed countries and also in some developing economies as well. An increasing role of the state in the socioeconomic sphere at the national level obviously implies greater responsibility and close interstate interaction when it comes to issues on the global agenda.

Calls for inclusive growth and for creating decent standards of living for everyone are regularly made at various international forums. This is how it should be, and this is an absolutely correct view of our joint efforts.

It is clear that the world cannot continue creating an economy that will only benefit a million people, or even the golden billion. This is a destructive precept. This model is unbalanced by default. The recent developments, including migration crises, have reaffirmed this once again.

We must now proceed from stating facts to action, investing our efforts and resources into reducing social inequality in individual countries and into gradually balancing the economic development standards of different countries and regions in the world. This would put an end to migration crises.

The essence and focus of this policy aimed at ensuring sustainable and harmonious development are clear. They imply the creation of new opportunities for everyone, conditions under which everyone will be able to develop and realise their potential regardless of where they were born and are living

I would like to point out four key priorities, as I see them. This might be old news, but since Klaus has allowed me to present Russia’s position, my position, I will certainly do so.

First, everyone must have comfortable living conditions, including housing and affordable transport, energy and public utility infrastructure. Plus environmental welfare, something that must not be overlooked.

Second, everyone must be sure that they will have a job that can ensure sustainable growth of income and, hence, decent standards of living. Everyone must have access to an effective system of lifelong education, which is absolutely indispensable now and which will allow people to develop, make a career and receive a decent pension and social benefits upon retirement.

Third, people must be confident that they will receive high-quality and effective medical care whenever necessary, and that the national healthcare system will guarantee access to modern medical services.

Fourth, regardless of the family income, children must be able to receive a decent education and realise their potential. Every child has potential.

This is the only way to guarantee the cost-effective development of the modern economy, in which people are perceived as the end, rather than the means. Only those countries capable of attaining progress in at least these four areas will facilitate their own sustainable and all-inclusive development. These areas are not exhaustive, and I have just mentioned the main aspects.

A strategy, also being implemented by my country, hinges on precisely these approaches. Our priorities revolve around people, their families, and they aim to ensure demographic development, to protect the people, to improve their well-being and to protect their health. We are now working to create favourable conditions for worthy and cost-effective work and successful entrepreneurship and to ensure digital transformation as the foundation of a high-tech future for the entire country, rather than that of a narrow group of companies.

We intend to focus the efforts of the state, the business community and civil society on these tasks and to implement a budgetary policy with the relevant incentives in the years ahead.

We are open to the broadest international cooperation, while achieving our national goals, and we are confident that cooperation on matters of the global socioeconomic agenda would have a positive influence on the overall atmosphere in global affairs, and that interdependence in addressing acute current problems would also increase mutual trust which is particularly important and particularly topical today.

Obviously, the era linked with attempts to build a centralised and unipolar world order has ended. To be honest, this era did not even begin. A mere attempt was made in this direction, but this, too, is now history. The essence of this monopoly ran counter to our civilisation’s cultural and historical diversity.

The reality is such that really different development centres with their distinctive models, political systems and public institutions have taken shape in the world. Today, it is very important to create mechanisms for harmonising their interests to prevent the diversity and natural competition of the development poles from triggering anarchy and a series of protracted conflicts.

To achieve this we must, in part, consolidate and develop universal institutions that bear special responsibility for ensuring stability and security in the world and for formulating and defining the rules of conduct both in the global economy and trade.

I have mentioned more than once that many of these institutions are not going through the best of times. We have been bringing this up at various summits. Of course, these institutions were established in a different era. This is clear. Probably, they even find it difficult to parry modern challenges for objective reasons. However, I would like to emphasise that this is not an excuse to give up on them without offering anything in exchange, all the more so since these structures have unique experience of work and a huge but largely untapped potential. And it certainly needs to be carefully adapted to modern realities. It is too early to dump it in the dustbin of history. It is essential to work with it and to use it.

Naturally, in addition to this, it is important to use new, additional formats of cooperation. I am referring to such phenomenon as multiversity. Of course, it is also possible to interpret it differently, in one’s own way. It may be viewed as an attempt to push one’s own interests or feign the legitimacy of one’s own actions when all others can merely nod in approval. Or it may be a concerted effort of sovereign states to resolve specific problems for common benefit. In this case, this may refer to the efforts to settle regional conflicts, establish technological alliances and resolve many other issues, including the formation of cross-border transport and energy corridors and so on and so forth.

Friends,

Ladies and gentlemen,

This opens wide possibilities for collaboration. Multi-faceted approaches do work. We know from practice that they work. As you may be aware, within the framework of, for example, the Astana format, Russia, Iran and Turkey are doing much to stabilise the situation in Syria and are now helping establish a political dialogue in that country, of course, alongside other countries. We are doing this together. And, importantly, not without success.

For example, Russia has undertaken energetic mediation efforts to stop the armed conflict in Nagorno-Karabakh, in which peoples and states that are close to us – Azerbaijan and Armenia – are involved. We strived to follow the key agreements reached by the OSCE Minsk Group, in particular between its co-chairs – Russia, the United States and France. This is also a very good example of cooperation.

As you may be aware, a trilateral Statement by Russia, Azerbaijan and Armenia was signed in November. Importantly, by and large, it is being steadily implemented. The bloodshed was stopped. This is the most important thing. We managed to stop the bloodshed, achieve a complete ceasefire and start the stabilisation process.

Now the international community and, undoubtedly, the countries involved in crisis resolution are faced with the task of helping the affected areas overcome humanitarian challenges related to returning refugees, rebuilding destroyed infrastructure, protecting and restoring historical, religious and cultural landmarks.

Or, another example. I will note the role of Russia, Saudi Arabia, the United States and a number of other countries in stabilising the global energy market. This format has become a productive example of interaction between the states with different, sometimes even diametrically opposite assessments of global processes, and with their own outlooks on the world.

At the same time there are certainly problems that concern every state without exception. One example is cooperation in studying and countering the coronavirus infection. As you know, several strains of this dangerous virus have emerged. The international community must create conditions for cooperation between scientists and other specialists to understand how and why coronavirus mutations occur, as well as the difference between the various strains.

Of course, we need to coordinate the efforts of the entire world, as the UN Secretary-General suggests and as we urged recently at the G20 summit. It is essential to join and coordinate the efforts of the world in countering the spread of the virus and making the much needed vaccines more accessible. We need to help the countries that need support, including the African nations. I am referring to expanding the scale of testing and vaccinations.

We see that mass vaccination is accessible today, primarily to people in the developed countries. Meanwhile, millions of people in the world are deprived even of the hope for this protection. In practice, such inequality could create a common threat because this is well known and has been said many times that it will drag out the epidemic and uncontrolled hotbeds will continue. The epidemic has no borders.

There are no borders for infections or pandemics. Therefore, we must learn the lessons from the current situation and suggest measures aimed at improving the monitoring of the emergence of such diseases and the development of such cases in the world.

Another important area that requires coordination, in fact, the coordination of the efforts of the entire international community, is to preserve the climate and nature of our planet. I will not say anything new in this respect.

Only together can we achieve progress in resolving such critical problems as global warming, the reduction of forestlands, the loss of biodiversity, the increase in waste, the pollution of the ocean with plastic and so on, and find an optimal balance between economic development and the preservation of the environment for the current and future generations.

My friends,

We all know that competition and rivalry between countries in world history never stopped, do not stop and will never stop. Differences and a clash of interests are also natural for such a complicated body as human civilisation. However, in critical times this did not prevent it from pooling its efforts – on the contrary, it united in the most important destinies of humankind. I believe this is the period we are going through today.

It is very important to honestly assess the situation, to concentrate on real rather than artificial global problems, on removing the imbalances that are critical for the entire international community. I am sure that in this way we will be able to achieve success and befittingly parry the challenges of the third decade of the 21st century.

I would like to finish my speech at this point and thank all of you for your patience and attention.

Thank you very much.

Klaus Schwab: Thank you very much, Mr President.

Many of the issues raised, certainly, are part of our discussions here during the Davos Week. We complement the speeches also by task forces which address some of the issues you mentioned, like not leaving the developing world behind, taking care of, let’s say, creating the skills for tomorrow, and so on. Mr President, we prepare for the discussion afterwards, but I have one very short question. It is a question which we discussed when I visited you in St Petersburg 14 months ago. How do you see the future of European-Russian relations? Just a short answer.

Vladimir Putin: You know there are things of an absolutely fundamental nature such as our common culture. Major European political figures have talked in the recent past about the need to expand relations between Europe and Russia, saying that Russia is part of Europe. Geographically and, most importantly, culturally, we are one civilisation. French leaders have spoken of the need to create a single space from Lisbon to the Urals. I believe, and I mentioned this, why the Urals? To Vladivostok.

I personally heard the outstanding European politician, former Chancellor Helmut Kohl, say that if we want European culture to survive and remain a centre of world civilisation in the future, keeping in mind the challenges and trends underlying the world civilisation, then of course, Western Europe and Russia must be together. It is hard to disagree with that. We hold exactly the same point of view.

Clearly, today’s situation is not normal. We need to return to a positive agenda. This is in the interests of Russia and, I am confident, the European countries. Clearly, the pandemic has also played a negative role. Our trade with the European Union is down, although the EU is one of our key trade and economic partners. Our agenda includes returning to positive trends and building up trade and economic cooperation.

Europe and Russia are absolutely natural partners from the point of view of the economy, research, technology and spatial development for European culture, since Russia, being a country of European culture, is a little larger than the entire EU in terms of territory. Russia’s resources and human potential are enormous. I will not go over everything that is positive in Europe, which can also benefit the Russian Federation.

Only one thing matters: we need to approach the dialogue with each other honestly. We need to discard the phobias of the past, stop using the problems that we inherited from past centuries in internal political processes and look to the future. If we can rise above these problems of the past and get rid of these phobias, then we will certainly enjoy a positive stage in our relations.

We are ready for this, we want this, and we will strive to make this happen. But love is impossible if it is declared only by one side. It must be mutual.

Klaus Schwab: Thank you very much, Mr President.

Paulus Potter De stier 1625

Dr. D today from an entirely unexpected angle: cattle farming from a engineer’s point of view. His interest here stems from the increasing numbers of people wanting to move “back to the land” in COVID time, who have very little idea what that entails. Well, here it is, here’s your manual:

Dr. D: Since the idea of 1840 has come up, let’s do something useful and work out math on 1840’s factory-food system. That is to say, cows.

In 1840 the Victorian age had started, and the world was moving away from the post-medieval 18th century in important ways. Far from the millennia-long tradition of shepherds and commons punctuated by manor houses, life was moving towards distributed farmsteads integrated with modest small businesses in the nearest town. From centuries-old regional breeds, active breeding had developed powerful new plants and animals with new niche purposes overnight. And likewise, active management of pastures led to a revolution in hay and fodder unimagined a few years previously.

Although railroads and canals radically transformed nations overnight, permitting that specialization of labor and radically reduced costs that expertise and infrastructure bring – that is to say, “Capital” – nevertheless, life remained solidly local by our standards. A farm might have been cleared last year or 200 years previous. It might be attached to a railroad or be in the Alps. It might be under the eye of the Feudal Lord or might be a colony of Anabaptists. But the general structure was now one of single family ownership, large or small, with a central house and barn, with fields moving back from the house and road into ever-wilder, less human territory, eventually becoming impassible forest in the great beyond.

While there was a human transformation happening, daily items were more historic than we might credit: a farm might have few iron nails and hinges, few window panes, with turf cellars and wood box granaries that a Viking would recognize. Spinning and weaving existed on site or in the cots nearby. Although an explosion in factory goods was beginning, there was still little to buy, and few stores to buy things from. At the same time, the new availability of iron, of steel for blacksmiths, but also for saws and new wood mills made materials unimaginably cheap, as material science opened the world to new inventions. The revolution of Jethro Wood’s steel plow opened up soil to production unimaginable a few years before, and Jethro Tull’s grain drill was finally becoming common instead of simply tossing seeds by the handful for the birds on ox-harrowed ground.

American corn, maize, was transforming from Indian-flint grown in hills and hung on poles to endless fields of food, cattle feed even for cities and feedlots far away. And with it, the opening of the north, of feeding chickens, pigs, and horses in a newly-sawn Dutch barns all winter. And cows. Cows have a different place in human life. Unlike sheep, who need little and can stay faraway much of the year, or chickens which require daily tending, cows live in the middle place. They can stay in the field, but essentially must be fenced. They may not need humans, but when used for milk they require human attention twice daily all year.

They can be an expensive breakeven, but with the right support and infrastructure, they are highly profitable in diverse ways: Milk, butter, cheese, which may be too much for one farm without a nearby market. Meat, leather, bones, which again tie into the butchers, markets, prices, tanners and railroads. And oxen, the slow tractor of the small, as well as calves for sale, and the milk they cause, starting the year over again. So a cow is not a cow: it’s a system. The system has parts, and the parts are not only breeds, traditions, methods, but expensive standing infrastructure – barns, fences, wells, dairies, markets — Capital — or else they are put afield, Roman-style, and wild, near-subsistence living returns again.

Of course all methods, all areas, all answers are local, but let’s take your British/French/U.S. areas as an example. In these wet, temperate areas, land requirements are ~1 acre/cow. In addition, in the north, but also in the new scientific methods of Victorian Britain, they were no longer leaving cows to destroy winter pasture in the cold and rain, but haying and sheltering them in barns at the expense of a building, the fields…and the enormous time of mucking and haying. But still it was a well-paying improvement.

A 1,200lb cow eats 10,000lbs a year. At this time, the high-tech cow would be left to field 9 months of the year. So let’s say 3 months or 3,300lbs of hay per cow. You need more rare and expensive Capital of troughs, sheds, and stanchions to feed carefully at this time, so much is wasted. Estimate 5,000lbs dry hay per cow. Cows are not “cows”; they live in herds. To milk, you need calves. To calve you need bulls. Bulls are generally overhead as they are quickly too tough for the butcher, and too tough for the farmer without a very strong fence and strong britches.

You can’t have a herd of 500 cows either: they are too many and will trample the soil to powder anywhere within walk of the house and barn. So you’re set with 5, 10, 20 cows for a family stead, and not many more on a manor, when for the same reasons they will break off and sublet to a new barn and pasture. 10 cows x 5,000lbs = 50,000lbs of hay. 25 tons. They used the new haystacks, cranes, hay elevators, but let’s visualize in hay bales, a technology common 70 years later. At 50lbs/bale, it’s 1,000 bales. 10 high, 10 deep, 10 wide. That’s 30ft x 16 feet x 14 feet.

A modest 1-story house. Picture 2 semis packed tight, +4 semis loose hay. For only three months. Weather and yield vary wildly by area and year but let’s say hay fields produce 3 tons per acre, so10 acres guarded hay in addition to 10 acres fenced summer pasture. What do we get for it? Hard to figure exactly but +2 gal/day/cow for these hardier breeds which varies wildly with shelter, season, and diet. 2 gallons milk = 2 pounds of cheese. It takes 1 year to raise beef, so 7,500lbs of hay = 1,200lb cow = 750lb beef.

While you need 20 acres for the feed alone, you’ll also need crop rotation, a barn, a springhouse, a dairy, an implement shed, a repair garage, a human house and cellar, and because of humans on site to support the cows: a chicken coop, pigs to eat the leftover dairy, a smokehouse, a garden and orchard, as well as wood for heat. That’s 1 acre / face cord, so let’s say 20 acres for cows, 10 acres for crop rotation, 10 acres for wood, and 10 acres for the homestead, garden, and buildings. What is the common size of American farms from Cape Cod to Iowa? 50 acres. 20 hectares. How many people? 4-10/farm. 1-2 humans/acre.

Why do I bring this up? It gives you a rough sense of transforming a suburban housing development back into the farm it came from. First: there’s no longer any forest. That means no boards, no firewood. We have new materials and oil too, so let’s not dwell on this. There is an enormous surplus of existing buildings. How many acres per house? Presently, it’s 1/5 acre. How many people per house? There are unimaginable difficulties answering this, but let’s say 2 people/house. That’s 10 people per acre.

Pablo Picasso Bull – Plate 4 1945

Starting to see the problem? At merely the cow-size, even ignoring the existing buildings, using McMansions for hay, ignoring firewood, even using solar or (insert fantasy here) you have to displace 20 acres, or 200 people. But you only have 10 cows feeding those 200 people, or 1/20th of 20 gallons = 1 gal, or 1 quart of milk + 12 oz of cheese per day. No grains, no veg. You could halve the population density and it’s not much better. This is your 1840s reality.

They might say this explains why we must have no cows and become vegetarians. But aside from land that cannot be gardened – the entire U.S. cattle plains, for instance, or the Swiss Alps – this is just more false science. Howso? There are 30 calories per cup of kale, 200 calories/pound. There are 1,500 calories per beef pound – 1,900cal/lb dry (jerky). So you need to eat 7x more kale than meat. All you’re doing is concentrating vegetables into meat with a small efficiency loss. So you can EAT more as a vegetarian, but you also HAVE to eat much more to break even. So when they say they can create more food by outlawing meat, be careful of what they’re saying. They’re not creating more calories, more life stuff. They will also calculate the maintenance of a cow from birth on corn feed, which is foolhardy. High-cost, high-input corn or grain feed is only used – or should be – in the last weeks if at all.

Comparing your 1840 yields (i.e. without petroleum fertilizer), that’s 800lbs field corn/acre – a very productive crop. But we just said we have 750lbs/acre in grass-fed beef. The calories are 1,600cal dry corn vs 1,900cal dry beef. Where’s the savings? Where’s the rennet, the suet, the soap, the fertilizer, the leather that could greatly increase the use, the “profit”, the value? Where’s the diversity? Where’s the life?

Here’s the engineering reality: only 442BTUs of sunlight fall per square foot. It may fall evenly or more in summer and less in winter. It may fall on trees, grass, or houses. You can eat it as beef, sugar or kale. You can burn it in the stove. But that’s the energy input of a non-carbon world. And since photovoltaic is at 12% efficiency, solar may be the single least efficient way to capture and store these BTUs – and that’s beyond the rare-earths, glass smelting, world-wide transportation, back-end space-age infrastructure, transmission loss, and replacement problems. Trees, grass, and cows may be the best way. It depends on your goal.

Now can I increase yields from 1840 levels? Yes. A lot. And they did too – I’m describing only one food stream of many overlapping. And although the soil is ruined and the present structures are practically useless in what Kunstler calls “the largest misallocation of resources in world history,” we can still leverage perfect roads, electric, ditches, water lines and structures. But to do so we would need to un-misallocate them, completely convert them out of centralization and suburbia, out of consumption and back into production, and all that takes time, energy, and materials.

And to think I started this discussion calculating how many people and how many scythes to take in those 10 acres of hay. 2 acres per man per day x 5 men, 2 pounds of steel per scythe per man. 10 pounds of finest steel per hay barn. 9 million barns, 90 million pounds of fine scythe steel for this one tool alone. 35 million blades, 1 blade smithed per man per day, 35 million days…on and on and on.

So if you plan to adjust to a new rural world, might want to start early and beat the rush.

Albert Cuyp Cows in a river 1650

Support this blog by visiting Jim’s Patreon Page

And thanks to all my Patrons for your support!

As I write, the presidential election is still not resolved, with dramatic events potentially unfolding in the first days of the New Year. I’m not convinced that Mr. Trump is in as weak a position as the news media has made him out to be in these post-election months of political fog and noise. The January 6 meet-up of the Senate and House to confirm the electoral college votes may yet propel matters into a constitutional Lost World of political monsterdom. The tension is building. This week’s public demonstration by one Jovan Hutton Pulitzer of the easy real-time hackability of Dominion Voting Systems sure threw the Georgia lawmakers for a loop, and that demo may send reverberations into next Wednesday’s DC showdown.

There may be some other eleventh-hour surprises coming from the Trump side of the playing field. As I averred Monday, we still haven’t heard anything from DNI Ratcliffe, and you can be sure he’s sitting on something, perhaps something explosive, say, evidence of CIA meddling in the election. There have been ominous hints of something screwy in Langley for weeks. The Defense Dept., under Secretary Miller, took over all the CIA’s field operational functions before Christmas — “No more black ops for you!” That was a big deal. There were rumors of CIA Director Gina Haspel being in some manner detained, deposed and…talking of dark deeds. She was, after all, the CIA’s London station-chief during the time that some of the worst RussiaGate shenanigans took place there involving the international men-of-mystery, Stefan Halper, Josepf Mifsud, and Christopher Steele. Mr. Ratcliffe seemed to be fighting with the CIA in the weeks following the election over their slow-walking documents he had demanded.

What else does Mr. Trump know about this rumored inter-agency feud? Or a number of other fraught matters surrounding the election, and also questions concerning the harassment he suffered from the four-year rolling coup run by his Deep State antagonists (many of them CIA). What does he know of China’s infiltration into our national affairs, of which the Biden Family’s business deals with CCP-connected companies is only one piece? Or of China’s relationship with Dominion systems — China is rumored to have acquired a 75-percent interest in the company as recently as October.

In any case, the president cut short his holiday break in Florida before New Years Eve to fly back to Washington. The company line is that he wants to exhaust all the prescribed legal procedures to contest the November 3 vote tally. And if none of it avails to correct the outcome, he might move on to… something else. If even the so-far publicly revealed evidence of the Biden family’s influence-peddling schemes overseas is true — and the emails and corporate memoranda from Hunter’s laptop seem genuine — then it would be Mr. Trump’s duty to prevent Joe Biden from becoming president. And outside the constitutionally-mandated process in the national legislature, that would leave him some sort of other emergency executive action.

Mr. Trump has called for a gigantic assembly of his supporters on January 6 in Washington. He didn’t call them there to watch him get humiliated. Something is up. You can feel it in the air. I’ll give it a fair chance that Donald Trump is the one with his hand on the bible come January 20. One caveat to all that: 2021 is going to be very rough sledding, with many discomforts, traumas, and things left behind for America. Whoever occupies the Oval Office is going to be buried in trouble. In theory, I would have preferred to see a Democrat left holding that awful bag, if only as payback for all their bad faith and dirty fighting of the past four years. But Mr. Trump is apparently willing to shoulder that burden, and, in such an existential emergency, he’s likely to be a better leader than the corrupt and feckless Ol’ White Joe.

Okay, I’m going to just come right out and splatter a bunch of individual forecast predictions up-front in this lead chapter, and if you’re interested, you can continue on to the finer points and arguments below. I’m grateful for all of you interested readers coming here twice a week, and for those of you who keep this outfit afloat with your Patreon support. A healthy, sane, purposeful, and upright 2021 to you!

A Bill of Particulars for 2021

• The election is re-adjudicated, fraud subtracted from the tally, and President Trump is declared the winner.
• The mail-in vote for the Georgia Senate seat runoff is disqualified as systematic fraud is revealed. Stacy Abrams is indicted for organizing the fraud.
• A number of political celebrities, DC swamp rats, K-Street hustlers, media figures, and tech company executives are arrested and charged with serious crimes around election fraud.
• The CIA is purged and reduced to a strictly analytical role for advising the executive.
• The FBI is likewise purged; Director Wray is charged with obstruction of Justice.
• Following the reversal of the news media’s election narrative (and the actual election results), Black Lives Matter and Antifa are loosed upon a number of cities and wreak considerable destruction, but eventually get their asses kicked by federal troops. City mayors who allowed the havoc to proceed are arrested, charged with abetting insurrection, and removed from office pending trial.
• Nancy Pelosi replaced as Speaker of the House. Mitch McConnell replaced as Majority Leader.
• US Attorney John Durham brings charges against lawyers involved in the Mueller Investigation, including Andrew Weissmann, Aaron Zebly, Brandon Van Grack and Jeanie Rhee. Mr. Mueller is named as an unindicted co-conspirator due to mental incompetence.
• A special Prosecutor is named to investigate the Biden family business operations; indictments follow late 2021.
• Stock market enters long, deep asset value deflation through first and second quarters and bottom-bounces the rest of the year. S & P falls to 550 range; DJI under 10,000; Nasdaq under 3000.
• The dollar DXY index falls under 80 by 2nd quarter, 60 at year end.
• US GDP down by 40-percent year end 2021.
• US oil production (minus natural gas liquids) down by 40-percent, year-end 2021.
• Banking system thrown into disarray due to non-payment of rents and mortgages. Federal government intervenes with direct renter relief payments. Home owners in default are allowed to remain in their houses on provisional basis (which is never reconciled).
• Bubonic plague outbreak among homeless of Los Angeles as rats proliferate in their encampments.
• Pension funds collapse as broken chain of rent-and-mortgage payments destroy Real Estate Investment Trusts.
• Federal government forced to organize massive food giveaway programs.
• Millions enrolled in make-work projects a la the New Deal (some of them of value).
• New York City forced to curtail subway service to bare minimum as money runs out.
• California Governor Gavin Newsom recalled out of office.
• George Soros and several directors of Soros-funded NGOs charged with racketeering and election campaign finance crimes.
• General Motors, Chrysler, and Ford are back seeking bankruptcy protection. This time, their assets are sold and reorganized into smaller companies. No bailouts.
• Covid virus fades from the scene by 3rd quarter, but economic carnage remains. Huge amount of restaurant equipment sold for dimes on the dollar.
• Bitcoin “Hodlers” becoming Bitcoin “Sodlers” as cryptos tank.
• “Woke” hysteria evaporates as Americans struggle with desperate reality-based problems of everyday life.
• Collapse of higher education begins in earnest as college loan racket implodes. Scores of colleges and even some universities shutter; others shrink drastically in desperate effort to carry on.
• Hollywood celebrities apologize en masse for past “Woke” behavior, beg forgiveness from cancel victims and fans. Nevertheless, collapse of the movie industry continues as, post-Covid, Americans desperately seek the company of other people instead of canned entertainments, which they have grown sick of.
• Professional sports collapse as business model fails. Impoverished Americans start-up low-cost, local baseball and football leagues.
• Twitter and Faceback become public utilities.

The Covid Crisis and Economic Meltdown

I won’t have a whole lot to say about the Covid-19 virus that others have probably analyzed better elsewhere, so I’ll make it short. In the fog of pandemic, it’s hard to know who or what to believe. The outbreak in early 2020 induced similar official responses and social changes in many other nations, raising the question: did the whole world get played? If so, it was quite a stunt. Was it intended as a cover to enable the much blabbed-about “Great Reset?” More on that below.

One big mystery is how, in China, the disease seemed mostly contained within Wuhan and its Hubei province, and how rapidly that country got over it compared to so many other places around the world where the illness lingered and got a second wind in the fall. All that said, it’s apparent that, in America, the virus was gamed opportunistically by the Resistance and its news media handmaidens, first to make Mr. Trump look as bad as possible, then to promote the mail-in ballot scheme that led to a fraud-riddled election.

Much of the confusion about the disease itself — ventilators or not… masks or no masks… hydroxychloroquine or not… lockdowns or not — ended up damaging the authority of the medical and scientific experts like Dr. Anthony Fauci, Deborah Birx, Surgeon General Adams, the NIH and the FDA, and is still not settled to many people’s satisfaction. And, as if we didn’t already have a big enough problem with failing institutional authority, that scientific failure added to our already acute cultural corrosion. I’m suspicious of the statistics regarding true case numbers and the official spinning of Covid-19 deaths actually from other causes, as well as the tests that produced so many false conclusions. It seems pretty obvious in these tense weeks post-election that The New York Times, CNN, and other media have worked to ramp up the Covid hysteria to distract the public from emerging news about the contested election.

What’s quite clear about the whole Covid-19 episode to date is how badly the states’ government response harmed the small businesses of America that make up at least 40 percent of the economy. According to Bloomberg News, more than 110,000 restaurants shut down, 17 percent of them permanently out-of-business, surely with more to come with the winter lockdowns. More than three million employees lost their jobs in that industry alone. Data from the University of California Santa Cruz indicates that nearly 317,000 small businesses closed between February and September, 60 percent for good.

The nation’s economic affairs were in considerable disorder before the Covid-19 virus threw things into more desperate disarray. Decades of off-shoring industry decimated the working class. In much of Flyover Country, the working class has been reduced to a demoralized idle-and-addicted class with a strikingly high suicide rate, especially for men. The situation only improved marginally under President Trump, who, after all, was bucking practically all of corporate America, which liked the benefits of off-shoring just fine.

I believe that working class will return to laboring, and not in the giant American factories of the kind we had in the 1960s, but because the government social safety nets will be running out of financial mojo in the coming decade. So, they will have no choice but to labor — at the same time that many automated activities we’ve enjoyed will not be running much longer. A lot of that automation has been applied, for instance, in agriculture, where one person could plow or harvest hundreds of acres a day riding in the air-conditioned cab of a multi-million-dollar rig guided by GPS, allowing the driver to watch movies while he “worked.” Well, that agri-business model is about to fail. The scale is all wrong and the capital requirements are too exorbitant. Bottom line: many idle working-class folk have a future in agricultural work. They don’t know it yet. Expect, also, more opportunities as household servants as American society becomes more distinctly hierarchical, and in more fine-grained strata than merely the rich and the poor. Far from being an evil outcome, consider how important to human psychology it is to have a place in this world, both in terms of purpose and a physical place to call home. And, anyway, how wonderful is the former working-class’s current plight as drug-addled, often homeless, and suicidal? Would you want things to stay that way, or can you imagine new social arrangements to meet new economic realities?

The consolidation of commerce into a few giant companies such as Walmart, Target, Amazon had reached a deadly and tragic pitch before Covid-19, destroying all lesser organisms in the business ecosystem, and thousands of local Main Streets in the process. With the Covid lockdowns, the big boxes were somehow exempted from closure. Though they seem to be triumphing for the moment, these giant national chain merchandising outfits are in their sunset phase headed for twilight. As I’ll surely state again in this forecast, the macro-trend is for downscaling and re-localizing in everything, all activities. The chain-stores and big boxes depend on systems and arrangements that won’t persist, for instance, the long supply lines from the factories of Asia. The end of mass motoring will also prove problematical for commerce at the giant scale smeared all over suburban landscapes. And, of course, Amazon’s business model of home delivery for absolutely anything and everything, was perfectly suited to the Covid-19 crisis — though in the longer term its model will prove fatally flawed, since it depends on trucking every single item to its customers, and the reason will become evident further down.

The catastrophic failure of so much small business in America through 2020 will provide the seeds for a rebirth of small businesses when the giants fall. A lot of equipment will be available at dimes on the dollar. Rents will be cheap. Enterprising people will have to be careful about where they decide to set up for new businesses: better Main Street than out on some empty strip-mall. Consolidation will be working in a different way — not to make companies bigger, but to bring many small businesses closer together in places people can get to without a car (what used to be known as a business district or downtown or Main Street). America is not going to need nearly as much shopping infrastructure as we had before 2020, and also not nearly as many restaurants. But we’re going to need some of these things and done in a new way. I can also imagine new businesses that would have been unthinkable a year ago. At some point when Covid-19 exits the scene, people will want to get together with other people very badly. Think about opening a dance hall or a nightclub with live music, even a life performance theater.

The American economy had already entered a zone of dangerous structural fragility before Covid-19 stepped onstage. As Tim Morgan and Gail Tverberg argue so well in their respective blogs, the economy is an energy system that, in the advanced techno-industrial form, depends absolutely on fossil fuels, which have become a problem the past two decades, leading to the present inflection point bringing on de-growth, the onset of a long emergency, and what others call a fourth turning. Same things, really. We’ve entered a state of contraction, and it’s in the nature of large economic organisms to move from contraction to collapse fairly quickly, because the complex interconnections in their systems ramify and amplify each other’s failures. The virus has made it all worse, and faster.

Oil

Hardly anyone paid any attention to the oil story this year with all the frightful distractions of Covid-19, the economic havoc of lockdowns, and the janky election. The oil story is probably more important than any other single factor in the current situation, and is largely responsible for America’s economic mess. Everything in the USA runs on oil and our business model for doing that is broken. De-growth changes everything.

From 2000 to 2008, we were on a downward slide with our conventional oil supply — the kind of oil where you just drill a pipe into the ground and the oil flows out, or, at worst, gets sucked out by a pump-jack — all-in-all, a simple procedure. In 2008, total US oil production was under 5-million barrels-a-day, down from the old production peak of just under 10-milliion b/d in 1970. And of course, our consumption kept going up to about 20-million b/d by 2008. So, we were importing most of our oil then.

That created terrible problems for our balance-of-payments in international trade, but we fudged that by pretending for decades that deficits don’t matter, as Veep Dick Cheney famously put it. The result, via the recondite and pernicious operations of financialization — that is, replacing a production economy with one based on the sheer manipulation of money and its derivatives — was the 2008-9 Great Financial Crisis. The GFC was presaged in the summer of 2008 by the price of a barrel of oil reaching just under $150 — which badly strained what remained of real productive industry. The dynamic in play induced political authorities to quit regulating wild misconduct in finance and banking, as they attempted to replace productive industry with money games. These malfeasances played out most vividly in real estate and the “innovative” securitized mortgage bonds that were gamed to a fare-the-well by the banks. The abstruse crimes have been chronicled widely elsewhere (e.g., my 2012 book Too Much Magic). But consider, also, that all the mortgage fraud of the early 2000s was based on the last gasp of the suburban expansion, and understand that suburbia was entirely at the mercy of mass motoring, which depended on affordable oil.

So, oil shot up to just under $150, the economy wobbled, the banks and the automobile companies had to be bailed out and central bank interventions became normalized, including zero interest Federal Reserve policy, a desperate legerdemain to keep up the appearance of a sound economic-financial gestalt. And that led to the “shale oil miracle.”

It was more a stunt than a miracle, really. First, you had this suite of techniques that could be employed to goose the last bit of oil from otherwise unproductive source rock. These included computerized horizontal drilling and the injection of fluids plus chemicals to fracture the impermeable rock and release the oil. This was “fracking.” It was not new but had not been scaled up into a major activity while the easier pickings were good. It was way different from the old simple method of drilling a pipe in the ground and letting it flow out of permeable rock. The old simple method cost about a half million dollars (in current dollars) per well to drill and start the oil flowing. Shale oil, with all its complications, cost between $6-12 million per well. The old 1960s conventional oil wells produced thousands of barrels a day for decades. The new shale wells produced maybe 100-odd barrels a day for the first year and they were done after four years. The depletion rate was horrendous.

Shale oil was made possible by the Federal Reserve’s ultra-low-interest, easy lending policies. They made a lot of cheap capital available, and hundreds of billions migrated to the new shale oil plays in expectation that they would produce excellent steady revenues. Big institutional investors like pension funds and insurance companies especially were looking for reliable revenue with bond interest rates so low due to Fed policy. They thought they’d be swimming in shale oil company dividends and revenue streams from loans to shale drillers that paid better than US treasury bonds. One thing for sure, they thought: America wasn’t going to stop needing lots of oil. So, shale oil seemed like a sure thing. Except that after a few years, it turned out that nobody was making any money producing shale oil.

It just cost so damn much to get that stuff out of the ground. And the depletion rate was so savage that you had to drill and re-drill incessantly. And what was worse, the economy had evolved to the stage where there was no sweet spot for oil prices. Oil over $75 destroyed the business model for productive industrial activities that relied on cheap oil; while oil under $75 destroyed oil companies because they couldn’t make a profit at the well head. The melodrama played out over ten years through several rounds of Fed Quantitative Easing (money creation from nowhere) and relentless run-ups of government deficits. The oil companies themselves were caught in a “Red Queen syndrome” (ref.: Alice Through the Looking Glass) in which they were producing as much and as fast as they could just to keep up their cash flow to make loan repayments, without generating any profits — and quite a few companies couldn’t even keep up with their loan repayments, so shale was a total bust for them and they went bankrupt. It all came to a head in early 2020.

Just before the Covid-19 virus hit, shale oil production stood at over 9 million barrels a day, with another roughly 4 million from conventional oil, offshore oil, and natural gas liquids, for a grand total of nearly 13 million barrels a day in US oil production, a new record! That was 3 million b/d higher than the previous peak of 1970, at just under 10 million b/d. Quite a feat! Added to that was just under 5 million b/d in natural gas liquids. Daily US consumption was around 20 million b/d heading into 2020. It fell briefly during the initial Covid panic to around 15 million b/d and bounced back a little to around 18 million b/d in the fall of 2020. So, production appeared to be basically equal to our consumption.

However, the quality of the oil skewed the equation of “oil independence.” Shale oil tended to be ultra-light oil, composed mostly of gasoline-grade distillates. Fine, America uses a lot of gasoline because we drive everywhere and incessantly so. The trouble is, shale oil contains little of the crucial heavier distillates: diesel fuel, which the trucking industry and heavy machinery depends on, aviation fuel (basically kerosene), and bunker fuel, a heavy oil fuel for home heating and ships’ engines. Neither did those nearly 5 million barrels a day of natural gas liquids, which were really only used for cutting heavy oil, which was mostly what the USA did not produce and was not well-equipped to refine. The bottom line was that the US had to swap a lot of gasoline to other countries to get heavier distillates to keep the economy going. It worked, but it was awkward and involved a tremendous amount of transport. So, America’s oil situation coming out of 2019 was superficially stabile but fragile.

But entering 2020, shale oil production was in collapse. The lack of profitability finally caught up with the industry. Investors finally noticed that the shale oil producers couldn’t make money. At one flukey point in the Covid-19 spring of 2020, the oil markets became so disordered by collapsing demand that oil on the futures market cratered to a surreal negative-$40 a barrel. It soon corrected to the positive-$30-40 range, which was not nearly enough for the shale oil business to turn a profit. Consequently, the companies could not get new financing to continue their “Red Queen” operations, and without new financing they could not keep up cash flow… and they crapped out. Thirty-six producers filed for bankruptcy in 2020, including Chesapeake, Oasis, Lonestar, Ultra, Whiting, and Chaparral. Oil field service companies that are subcontracted to perform the drilling and fracking have also gone bust.

Shale oil production fell by roughly 2.7 million b/d from March to May 2020, recovered a little at mid-year and stumbled again with the winter wave of the virus. Oil analyst Steve St. Angelo predicts that total US oil production (shale and everything else) will fall to between 9.5 and 10 million b/d in 2021, which would put us back to 1970 levels when the nation’s population was just 205 million (compared to 330+ million today). So, that’s a lot less oil-per-capita, to view it from another angle. Independent oil analyst Art Berman is predicting a more severe production crash by midyear 2021 to roughly half what it was at year-end 2019. Nafeez Ahmed, Director Institute for Policy Research & Development, is simply calling this the end of the oil age. Ahmed says it “will begin over the next 30 years, and continue through to the next century.”

I believe it will go down much quicker than that because falling production is so destructive to the business model of industrial society that it will induce gross economic, social, and political disorder. All that disorder will generate self-reinforcing feedback loops making a return to previous levels of comfort, convenience, prosperity, and order much less likely. The net effect will be a much lower standard-of-living among formerly “advanced” nations, and also falling populations. We’re just experiencing the beginning of that process with the destruction of America’s middle-class. It is the essence of the long emergency. We just can’t tell right now how far down these dynamics will drive us, and how fast. 2021 is likely to manifest intense disorder in the USA as people reel from the loss of small businesses, economic conditions deteriorate further, and political grievance gets amped up by institutional failure to resolve, or even address, our many problems and quandaries.

As for transitioning into a “sustainable economy” powered by “renewables” such as solar and wind power, that just ain’t going to happen — unless you’re talking about oxen and firewood, and a human population about ten percent of what the planet currently carries. All our fantasies about a high-tech utopia driven by wind and sun depend on a fossil fuel economy to produce the hardware for it and then the replacement parts for the hardware, ad infinitum. It’s not worth going into it further here, but if you want to see more elaborate arguments, they’re in my recent book Living in the Long Emergency (BenBella Books, 2020).

The So-called Great Reset

Life in the USA, and other “advanced” nations will reset, but not in the way that most people blabbering about “the Great Reset” think or say it will.

Surely, there are groups, gangs, claques, and covens of people in the world who have some consensual agreement about how things might work, and how they would run them to their benefit, in their hypothetical ideal disposition of things. For instance, the so-called “Davos Crowd.” What are they? A convocation of bankers, market movers, politicians, business moguls, tech entrepreneurs, Hollywood catamites, black ops runners, and PR errand boys who have plenty of financial and political mojo in their own realms, but not enough collectively to carry out the kind of global coup that comprises the standard paranoid Great Reset fantasy. That they meet-up in an ultra-luxurious setting out of a James Bond movie every year stokes terrific fascination, envy, anger, and paranoia that they are capable of anything beyond a festival of ass-kissing, mutual self-congratulation, and status-jockeying, which are the actual activities at the Davos meet-up.

For another thing, in the USA, at least, there are too many pissed-off people with small arms, hardened by years of proffered bad faith and dishonesty from the political/media/higher-ed complex, to just bend over and take it up the back-door from a gang of seditious, would-be aristo-totalitarians with lèse-majesté dreams of nostalgie-de-la-boue Marxist redemption. If you have any doubt about how disruptive angry people with small arms and lots of ammo might be to condescending elites, just review the events in the Middle East the past twenty years and imagine those dynamics transferred to Kansas.

What does the “reset” fantasy supposedly include? A “new world order,” a phantasm of a unified world government, which is preposterous because the macro-trend at this moment of history worldwide is the opposite of consolidation and centralization of power, but rather breakup, downscaling, and re-localization. Why? As you saw in the Econ chapter, because the scale, pitch, and range of all our activities must be reduced to survive in the post-industrial conditions of resource and capital scarcity. And it will happen whether we like it or not and despite anybody’s objections.

What else is in the Reset grab-bag? Supposedly a single world currency, also absurd for reasons already stated — unless you are talking about gold and silver, which may eventually become the universally-accepted medium of exchange (and store of value, index of price) if the post-industrial contraction is severe and destructive enough. But fuggeddabowt “digital currencies,” especially in the USA because too many people are “un-banked,” or otherwise depend on cash-money in the informal “gray” economy of just-getting-by (and there will be a lot more of these types as the middle-class gets pounded further down into the mud), plus a large cohort of digitally-capable people just plain ornery about being herded into an IRS surveillance cul-de-sac — and the whole lot of them will fight like hell to prevent government-sponsored crypto-dollars from replacing what used to be considered money. And, if, in the unlikely event that rebellion fails, it’s back to gold and silver by default — and that might literally mean by default.

Now, I grant you that there are fer sure problems with all the major currencies, especially the USA dollar, and they are all liable to become worthless eventually for all the usual and traditional reasons. The US dollar is especially vulnerable since its status as the world’s “reserve” currency — a reliable medium of exchange in global trade — is no longer consistent with the true financial condition of our country, which is morbidly obese with debt that will never be repaid — a terminal case. There will eventually be some kind of default, either the straightforward way, by declaring nonpayment to bond-holders and creditors outright, or by sneakily engineering a hyper-inflation of the money supply to destroy the value of the dollar. If either of those events plays out, the nation will be thrust into serious social and political disorder, blame will get cast, people will get hurt, and it will be a while before the finer points of the social contract get pasted back together — such as any agreement to introduce a “new dollar” of some kind to replace the ruined old one. By then, the old USA may not still be standing intact, and it would be up to states or regions to address the money issue.

I don’t believe it will be settled as a new digital money for reasons outlined above, but also because digital money is utterly dependent on the Internet, which, in turn, is utterly dependent on a reliable electric grid, and both systems are susceptible to going down in the kind of socio-political convulsion that would attend financial collapse. Not only would transactions become impossible, but records of money ownership — “wallets,” or files — could be permanently lost, wiping out fortunes. This obviously includes Bitcoin and things like it. Blockchain is only as strong as the chain, and without the Internet there’s no chain at all. So, again, gold and silver must enter the picture, perhaps backing a paper currency, perhaps circulating as coin.

In the meantime of such a crisis, very little of daily life would come out the other end looking the way it used to in the years prior to 2020. We’ll see a Great Reset, all right, but not some totalitarian gruel dished out to the plebes from the Davos steam-table or any other elite catering service. It will be an emergent, self-organizing phenomenon, from the ground up, in which everyday people will have to improvise new systems at the local level for getting food, arranging for shelter, and creating business activities around their most fundamental needs: food production, transport, trade, manufacturing, energy supplies, medical care, cleaning, building, et cetera.

I’ve been saying for a while that this might amount to “going medieval.” Could be better, could be worse. Well, there it is. There’s your Great Reset for you. Stand by and prepare to scramble.

The Abyss Stares Back

The federal eviction moratorium passed by Congress with the spring 2020 onset of Covid-19 will expire at the end of January as things stand now, placing 30-million renters at risk of losing their dwellings. Another 28-million house-holders have been placed in a mortgage moratorium. What happens a month from now? Well, for one thing, don’t overlook the brutal fact that these moratoria don’t excuse anybody from having to pay all the back rent and back mortgage installments that were suspended for the year. The federal government just can’t keep rolling that forward forever because it thunders through the banking system. If landlords don’t get paid, they cannot pay their mortgages — and most rental real estate is mortgaged to allow for a coherent cash-flow, tax payment, and business model. Neither can the landlords pay their taxes to the municipalities (states and US government). The cities are especially harmed by collapsing tax revenue because they can’t keep with infrastructure repair, can’t cover pensions, or schools, the vicious cycle of urban decay.

How are people who have lost businesses and livelihoods going to come up with the money to make up these back payments. They probably will not. So far, there is no national discussion of that problem, but we’re seeing the first signs of an emotional response in rent rebellions under the banner “cancel rent.” This quandary points to the likelihood of a campaign for the federal government to bail out renters and homeowners, and/or a campaign for the program that made its debut in the 2020 Democratic primaries, “universal basic income” (UBI). Either one of those has a fair chance of happening as America’s economic collapse proceeds and politicians panic.

These programs won’t work. As soon as they are bailed out for their old debts, the renters and home “owners” will start racking up new back-payments if they have not done enough to generate a regular income, or simply can’t because the economy is so broken. And then what? Another bail out in six months? All the money creation to fuel that wheel of futility will only hasten the inflationary depreciation of the dollar as ever more money is created from thin air to make these bail-outs and hand-outs. The kind of UBI that was bandied about in the 2020 primaries, especially by candidate Andrew Yang, amounted to $1000-a-month. Most renters probably could not cover their monthly rents out of that, not to mention all the other costs of living. So then what? $5000-a-month? If you’re going to give away large sums of money for nothing, why not just make every impoverished American a millionaire? (And then watch the price of a Dunkin’ donut go up to $150.)

A parallel crisis has also ripened in commercial real estate as companies adjust to their employees working from home and try to get out of their leases – or just bail if their leases are up for renewal. The office building may not be altogether a thing of the past, but it won’t be like it was before 2020, and the problem is most acute in a place like New York or Chicago where midtown is chockablock with megastructures that went from being assets to liabilities virtually overnight. We have no idea what will become of them, but I doubt they will be retrofitted into apartments for two reasons: 1) the cost would be out-of-this-world, and 2) the apartment tower is just an accessory to the office tower, and if the office towers are obsolete, so are the apartment towers.

This leads to what I have been saying since I wrote Too Much Magic: our cities are going to contract substantially; the process is going to painful; and there will be battles over who gets to inhabit the districts that, for one reason or another, retain value — waterfronts, older small-scale, low-rise neighborhoods. Covid-19 plus riots-and-looting have prompted people-of-means to resettle hastily in the suburbs. But this trend is a head-fake. Facing the oil problems that we do, the suburbs will quickly follow the cities into disutility and dysfunction. The people who moved there the past year will discover that they made a major mistake, especially if they bought a house.

The more permanent shift will be to America’s small cities and small towns, places scaled to the energy and capital resource realities coming down on us, including the need to live closer to where your food is grown.

This snowballing national existential fiasco certainly suggests the need to reorganize the American economy and the choices are pretty stark. The Democratic Party and the whole left-leaning side of the transect is inclined to attempt centralized control of economic activity in a way that strongly resembles the gigantic national experiments of the 20th century that went by the name of socialism. I mean… what else can you call it? It doesn’t really exist anymore in practice, not even in China, which is now merely totalitarian racketeering state. The 20th century was a moment in history when everything really was growing in scale, and with it came a wish for controlling all that by national governments. It was tried in many places and everywhere it was tried it ended in tyranny, hardship, and mass murder

Things have changed. They have reversed. Things are contracting. So, the other choice we have is to go with that flow, scale down the things we do and the terrain we occupy and the range of things we think we can control. That will ultimately be the only choice, of course, since the urge for a new statist socialism is against the current impulse of history, and therefore against nature. It will fail and then we will have to get with the program that the zeitgeist actually offers.

Wokesterism

Sometimes societies just lose their shit and go crazy and that is kind of what happened to America in 2020. The distress had been building for years, especially since the GFC of 2008-9 when the middle-class began dissolving in earnest. Now, their grown children discern that the future is going to be very unlike the recent past, and that their programmed hopes and dreams do not jibe with what that future actually requires of them: rigor, realism, earnestness, and rectitude. It’s too much for them. It’s too painful. And they’re not ready for it. They retreat into fantasy, cynicism, and ambiguity. So instead of virtue, we got virtue-signaling and, in adults who ought to know better, the kind of bratty behavior you’d expect from 13-year-old girls.

The ground for this was prepared by a society that opted to turn most of its important institutionalized activities into rackets, most particularly, higher education, which entered a late-stage metastasizing expansion fed by government guaranteed loan racketeering. The loan racket allowed the universities and colleges to jack up their tuition extravagantly, which prompted them to regard their debt-burdened, overpaying students as customers, which evolved into just plain pandering to their every wish.

Already in place, as a legacy of the 1960s, was a faculty of crusaders and activists in revolt against the bourgeois indignities of their own comfortable lives, making common cause with all other imagined “victims of oppression” as a form of careerist theater. They concocted curricula of bullshit disciplines for various victim-identity cohorts to monetize their grievance obsessions, and it all worked splendidly until Covid-19 ripped through the campuses and started blowing up the whole business model. And now college enrollments are headed down an estimated 20 percent for 2021, and an awful lot of the not-so-well-endowed schools will be going out of business, with even better-endowed schools soon to follow.

Another thing happened in parallel to the grievance hysterias on campus. The half-century-long civil rights campaign that went up a dead-end with all the family-destroying social services policies of the late 20thcentury, became such a manifestly embarrassing failure with an ever-growing hostile and dangerous underclass, that, in abject shame and disappointment, all of white liberaldom had to come up with an excuse for that failure, which finally fluoresced as Critical Race Theory with its hobgoblin-in-chief, systemic racism.

Hence: Black Lives Matter, based on the fantasy that white policemen were engaged in a genocide against people of color. Really, what you had with Trayvon Martin of Sanford, FLA, Michael Brown of Ferguson, MO, Tamir Rice, of Cleveland OH, and a long line of insta-martyrs, was a series of extremely ambiguous incidents at best, and, at worst, episodes of teens with poor impulse control acting out in ways very likely to get them into big trouble. And then, finally, with the maddening Covid-19 upon the land, and temperatures rising around Memorial Day, came George Floyd, middle-aged ex-con (home invasion, armed robbery, etc.), sometime porn star, hustler, a drug abuser who was “turning his life around” in Minneapolis, suddenly trapped under the knee of officer Derek Chauvin….

Black Lives Matter can be simply understood as a well-funded hustle, and by “hustle” I mean a program for dishonestly extracting goods from others, a crude “street” variation of a racket. BLM also features a patina of moral fakery, namely its supposed “Marxist” credo — an attempt to appear intelligent and political where it is actually merely criminal. In reality, it’s just a destructive force, a vehicle for punishing its perceived enemies, especially the police who are supposedly (but not in reality) perpetrating racist genocide. This gets to the heart of the Wokesterism more generally in all its aspects from Critical Race Theory to cancel culture to the #Me Too game. Its animating purpose is coercion, the wish to push other people around, to find excuses to punish them, and to do it for the sheer sadistic pleasure of watching them squirm, suffer, lose their livelihoods, and perish. That’s it. The rest is sheer bullshit.

In the new year, the ongoing economic carnage will be so severe that the nation may not have time for the finer points of Woke theory and philosophy, or the patience to hear tedious explications of identitarian complaints. Women will have to stop pretending to be an alt version of men, and begin conceiving of some plausible role for themselves as a complementary division of the human race in a new and harsh struggle to thrive. Woke cries of “racist, racist, racist” will no longer be greeted with supplication, apologies, and cosseting. Claims of special victimhood will be laughed out of the public meetings. For the first time in decades in the USA, everyone will have to pull his-or-her own weight, and shut the fuck up about it. Hard times will shake America out of its squishy fantasies and concentrate millions of minds on looking after their basic needs without mommy-hugs, participation trophies, or affirmative action line-jumping.

Antifa, a Woke auxiliary with a really bad attitude, spent most of the Covid-19 year as a social space for youth meet-ups as all the usual social venues — campuses, bars, coffee shops, parties, concerts, etc — all got locked-down. In Seattle, WA, Portland, OR, Minneapolis, MN, Philly, PA, and NYC, NY, where feckless politicians forced police to stand down, or crippled them with sanctions against the use of force, or just fired a bunch of them wholesale, Antifa rioters discovered that it was especially fun to play adult versions of capture-the-flag or ring-a-leevio on warm summer nights with the cops. They got to wear groovy street-fighting outfits and wield umbrellas against gas attacks, and the hormonal young men showboated acts of derring-do with fireworks, skateboards, baseball bats, and, more than once, alas, firearms. If they happened to get rounded up by the police, the local DA’s let them go and many returned to the fun riots time after time, all summer long.

A lot of property got damaged, statues of famous Americans got pulled down, spray-painted, peed-on, busted up, decapitated. Businesses having a hard enough time staying afloat under the Covid lockdowns, had their storefronts smashed, equipment and merchandise looted. Fifty years from now, wrinkled old Antifas will recall how romantic it was. In 2021, the public will lose patience with any further Antifa antics in the streets. They will just get their little umbrellas shredded and their asses kicked, and they’ll go weee-weee-weee back to whatever the equivalent of a crash-pad is nowadays, or to mommy’s basement. We’ll also learn a thing or two about who was funding Antifa in 2020, paying for their airplane tickets to stage their fun riots in city after city, and make sure they were well-supplied with pallets of bricks, Roman candles, and bear spray. Many of today’s Antifas will be tomorrow’s agricultural laborers. Having spent their youth rioting, drugging, playing with their gender presentation and their phones, they won’t be qualified for anything else.

Chinese Fire Drills with Russian Dressing

Donald Trump attempted to put the schnitz on the established order of things between the US and China, which had steadily turned against our own national interest. For a couple of decades, they sent us cheap manufactured goods and we sent them US treasury bond paper. China liked that arrangement well enough, but it really wasn’t working out so well for us. Having given away our manufacturing sector to them, and everybody else in East Asia, our working class no longer had decent-paying jobs and were increasingly strapped to buy all that cheap stuff made in China, even at low, low Walmart prices. So, Mr. Trump made a stink about it and slapped tariffs on Chinese goods, and they have lately been dumping US treasury paper instead of loading up on it as before. They still hold over a trillion dollars’ worth, and they can’t dump a whole bunch of it at once without destroying its value. And we still buy a lot of stuff from China, though the relationship is now very fraught.

Some say we’re at war with China, that it’s a new kind of war, an information and infiltration war. Just what and who does China own in the USA? The American people are starting to find out. Gawd knows what else our unreliable Intel Community knows. Perhaps China owns our CIA now. Perhaps that’s why Mr. Trump has been so busy stripping away the CIA’s various perqs and capacities. We’ve learned for sure that they bought and paid for the Democratic presidential candidate, Joe Biden, through a series of lucrative business deals made by his son, Hunter, with a subsidiary of China’s own Intel Agency. Nobody seems to care about that at the moment — but maybe they will care more as we approach his hypothetical inauguration.

It’s pretty clear that China put a bid on Congressman Eric Swalwell (D-CA), a majority member of the House Intel Committee. They sent a little fortune cookie named Fang Fang over to California some years ago when Mr. Swalwell was a member of the Dublin, CA, city council, and she hung with him for years, bundling campaign money and helping him rise into a congressional seat. He was rumored to be playing hide-the-winter-melon with her, for years. Was he owned? Nobody seems to care for now. Perhaps that will change.

And, of course, we learned some time ago that Senator Diane Feinstein (D-CA) had a Chinese (national) chauffeur and go-fer for twenty freakin’ years — including her years as chair of the Senate Intel Committee. He vamoosed to China when his identity as a spy was revealed. Nobody cares. That’s what a sloppy-ass country we’ve become.

China, apparently, has thousands upon thousands of carefully placed agents throughout America, especially in big academic research centers and American tech companies and even the news media. Reports say that a Chinese company purchased a 75-percent interest in Dominion Voting Systems for $400-million from Staple Street Capital in October 2020 in a shadowy deal run through the Swiss Bank UBS. It has been demonstrated that Dominion voting machines used in the recent national US elections, were connected to the Internet, though, by law, they are not allowed to be connected. Weird, a little bit. Connected to whom? So far, nobody seems to care.

Oh, and there was China’s Lunar New Year gift to America almost a year ago: Covid-19.

Thanks, China. What do we actually know about how that went down? Apparently, they are busy as I write destroying virus samples in the Wuhan lab.

Will this so far informational and economic war between China and the US heat up and become a different kind of war? I don’t think there’s much in it for China to go that route. Anyway, they’ve got their hands full waiting to see if their bought-and-paid-for errand boy, Mr. Biden, actually becomes president and also perhaps waiting to see exactly how the USA falls apart in the coming year. They will lose a lot of customers for patio furniture and sundry other stuff, but then they won’t have to worry about us monitoring all their activity elsewhere around the world, where, let’s face it, they have a lot going on. The main thing is, China is nearly as fragile as we are, only in different ways. They don’t have whole lot of oil reserves, and they’re burning almost 13-million barrels a day, of which they produce close to 5-million and import the rest. Not a great situation, and not appreciably better than our own. Their banking system is at least as janky as ours, probably worse, since their banks only have to answer to the CCP and they can paper-over any financial sucking chest wound. A global depression could create serious unemployment problems for them, and hence political pressure on and within the CCP. For 2021. If, by some chance, Donald Trump ends up back in the White House, things could go a bit more non-linear.

Reports emerged only days ago that President Xi Jinping will be undergoing brain surgery for a worsening aneurysm. They imply a power struggle in the CCP to ensue in the event that the surgery doesn’t turn out well. I can’t confirm these rumors, but there it is… just sayin’….

Russia appears best positioned to sit out the economic disorders of the West and the discontents of China. Russia has already been through a traumatic economic and political collapse and emerged much lightened, streamlined, and viable. Due to punitive US sanctions, she has had to develop an import-replacement economy, supplying more of her own needs. She has about twice the proven oil reserves as the USA and less than half our population. She has been steadily acquiring gold reserves and has been making noises about establishing a gold-backed currency — which would be a real novelty in a world of fiat junk money. She has a well-educated and relatively homogenous population of capable people who have recovered psychologically from the 75-year-long political mind-fuck of communism. She has an arsenal of world-beating hypersonic nuclear weapons. She has rational and intelligent political leadership. And Russia just passed a law stating that anyone who brings false #MeToo accusations against another citizen faces five years in prison. One looks on in awe!

Europe

Achhhhh. Fugeddabowdit. No oil. No mojo. Buried in debt. Failing social safety nets. Over a million hostile Muslim immigrants looking to burn the joint down. In 2021, the EU will break down and states will scramble desperately to shore up their economies. They will not succeed. Disorders follow and governments will fall. Angela Merkel waves goodby to das volk. Boris Johnson faces a no confidence vote in parliament. Macron survives and gets very tough, but France grows poor and bitter. Everybody starts saying nice things about Victor Orban.

There’s the whole shootin’ match. Forgive me for leaving out only about ten thousand other topics and issues, including climate change, about which I will only say: believe it or not, we’ve got more urgent things to worry about. Happy New Year everybody!

[](http://twitter.com/intent/tweet?text=DIANA JOHNSTONE: The Great Pretext … for Dystopia&url=https://consortiumnews.com/2020/11/24/diana-johnstone-the-great-pretext-for-dystopia/ "Share to Twitter")[](http://reddit.com/submit?url=https://consortiumnews.com/2020/11/24/diana-johnstone-the-great-pretext-for-dystopia/&title=DIANA JOHNSTONE: The Great Pretext … for Dystopia "Share to Reddit")[](http://www.stumbleupon.com/submit?url=https://consortiumnews.com/2020/11/24/diana-johnstone-the-great-pretext-for-dystopia/&title=DIANA JOHNSTONE: The Great Pretext … for Dystopia "Share to StumbleUpon")

In their World Economic Forum treatise Covid-19: The Great Reset, economists Klaus Schwab and Thierry Malleret bring us the voice of would-be Global Governance.

Viewing the virtual-reality film “Collisions” at a session of the World Economic Forum in Davos, Switzerland, January 2016. (World Economic Forum, Flickr, CC BY-NC-SA 2.0)

By Diana Johnstone
**in Paris**Special to Consortium News

By titling their recently published World Economic Forum treatise Covid-19: The Great Reset, the authors link the pandemic to their futuristic proposals in ways bound to be met with a chorus of “Aha!”s. In the current atmosphere of confusion and distrust, the glee with which economists Klaus Schwab and Thierry Malleret greet the pandemic as harbinger of their proposed socioeconomic upheaval suggests that if Covid-19 hadn’t come along by accident, they would have created it (had they been able).

In fact, World Economic Forum founder Schwab was already energetically hyping the Great Reset, using climate change as the triggering crisis, before the latest coronavirus outbreak provided him with an even more immediate pretext for touting his plans to remake the world.

The authors start right in by proclaiming that “the world as we knew it in the early months of 2020 is no more,” that radical changes will shape a “new normal.” We ourselves will be transformed. “Many of our beliefs and assumptions about what the world could or should look like will be shattered in the process.”

Throughout the book, the authors seem to gloat over the presumed effects of widespread “fear” of the virus, which is supposed to condition people to desire the radical changes they envisage. They employ technocratic psychobabble to announce that the pandemic is already transforming the human mentality to conform to the new reality they consider inevitable.

“Our lingering and possibly lasting fear of being infected with a virus … will thus speed the relentless march of automation…” Really?

“The pandemic may increase our anxiety about sitting in an enclosed space with complete strangers, and many people may decide that staying home to watch the latest movie or opera is the wisest option.”

“There are other first round effects that are much easier to anticipate. Cleanliness is one of them. The pandemic will certainly heighten our focus on hygiene. A new obsession with cleanliness will particularly entail the creation of new forms of packaging. We will be encouraged not to touch the products we buy. Simple pleasures like smelling a melon or squeezing a fruit will be frowned upon and may even become a thing of the past.”

This is the voice of would-be Global Governance. From on high, experts decide what the masses ought to want, and twist the alleged popular wishes to fit the profit-making schemes they are peddling. Their schemes center on digital innovation, massive automation using “artificial intelligence,” finally even “improving” human beings by endowing them artificially with some of the attributes of robots: such as problem-solving devoid of ethical distractions.

Engineer-economist Klaus Schwab, born in Ravensburg, Germany, in 1938, founded his World Economic Forum in 1971, attracting massive sponsorship from international corporations. It meets once a year in Davos, Switzerland – last time in January 2020 and next year in May, delayed because of Covid-19.

Klaus Schwab, founder and executive chairman, World Economic Forum, on Jan. 21, 2015. (World Economic Forum, Flickr, CC BY-NC-SA 2.0)

A Powerful Lobby

What is it, exactly? I would describe the WEF as a combination capitalist consulting firm and gigantic lobby. The futuristic predictions are designed to guide investors into profitable areas in what Schwab calls “the Fourth Industrial Revolution (4IR)” and then, as the areas are defined, to put pressure on governments to support such investments by way of subsidies, tax breaks, procurements, regulations and legislation. In short, the WEF is the lobby for new technologies, digital everything, artificial intelligence, transhumanism.

It is powerful today because it is operating in an environment of State Capitalism, where the role of the State (especially in the United States, less so in Europe) has been largely reduced to responding positively to the demands of such lobbies, especially the financial sector. Immunized by campaign donations from the obscure wishes of ordinary people, most of today’s politicians practically need the guidance of lobbies such as the WEF to tell them what to do.

In the 20th century, notably in the New Deal, the government was under pressure from conflicting interests. The economic success of the armaments industry during World War II gave birth to a Military-Industrial Complex, which has become a permanent structural factor in the U.S. economy.

It is the dominant role of the MIC and its resulting lobbies that have definitively transformed the nation into State Capitalism rather than a Republic.

The proof of this transformation is the unanimity with which Congress never balks at approving grotesquely inflated military budgets. The MIC has spawned media and Think Tanks which ceaselessly indoctrinate the public in the existential need to keep pouring the nation’s wealth into weapons of war. Insofar as voters do not agree, they can find no means of political expression with elections monopolized by two pro-MIC parties.

The WEF can be seen as analogous to the MIC. It intends to engage governments and opinion manufacturers in the promotion of a “4IR” which will dominate the civilian economy and civilian life itself.

The pandemic is a temporary pretext; the need to “protect the environment” will be the more sustainable pretext. Just as the MIC is presented as absolutely necessary to “protect our freedoms,” the 4IR will be hailed as absolutely necessary to “save the environment” – and in both cases, many of the measures advocated will have the opposite effect.

Public street art on 6th Street in Austin, Texas, depicting the impact of Covid-19 closings. (Leah Rodgers, CC BY 4.0, Wikimedia Commons)

So far, the techno-tyranny of Schwab’s 4IR has not quite won its place in U.S. State Capitalism. But its prospects are looking good. Silicon Valley contributed heavily to the Joe Biden campaign, and Biden hastened to appoint its moguls to his transition team.

But the real danger of all power going to the Reset lies not with what is there, but with what is not there: any serious political opposition.

Can Democracy Be Restored?

The Great Reset has a boulevard open to it for the simple reason that there is nothing in its way. No widespread awareness of the issues, no effective popular political organization, nothing. Schwab’s dystopia is frightening simply for that reason.

The 2020 presidential election has just illustrated the almost total depoliticization of the American people. That may sound odd considering the violent partisan emotions displayed. But it was all much ado about nothing.

There were no real issues debated, no serious political questions raised either about war or about the directions of future economic development. The vicious quarrels were about persons, not policy. Bumbling Trump was accused of being “Hitler,” and Wall Street-beholden Democrat warhawks were described by Trumpists as “socialists.” Lies, insults and confusion prevailed.

A revival of democracy could stem from organized, concentrated study of the issues raised by the Davos planners, in order to arouse an informed public opinion to evaluate which technical innovations are socially acceptable and which are not.

Cries of alarm from the margins will not influence the intellectual relationship of forces. What is needed is for people to get together everywhere to study the issues and develop well-reasoned opinions on goals and methods of future development.

Unless faced with informed and precise critiques, Silicon Valley and its corporate and financial allies will simply proceed in doing whatever they imagine they can do, whatever the social effects.

Serious evaluation should draw distinctions between potentially beneficial and unwelcome innovations, to prevent popular notions from being used to gain acceptance of every “technological advance,” however ominous.

Redefining Issues

The political distinctions between left and right, between Republican and Democrat, have grown more impassioned just as they reveal themselves to be incoherent, distorted and irrelevant, based more on ideological bias than on facts. New and more fruitful political alignments could be built through confrontation with specific concrete issues.

We could take the proposals of the Great Reset one by one and examine them in both pragmatic and ethical terms.

(Bob Mical, Flickr, CC BY-NC-SA 2.0)

No. 1 – Thanks to the pandemic, there has been a great increase in the use of teleconferences, using Skype, Zoom or other new platforms. The WEF welcomes this as a trend. Is it bad for that reason? To be fair, this innovation is positive in enabling many people to attend conferences without the expense, trouble and environmental cost of air travel. It has the negative side of preventing direct human contact. This is a simple issue, where positive points seem to prevail.

No. 2 – Should higher education go online, with professors giving courses to students via internet? This is a vastly more complicated question, which should be thoroughly discussed by educational institutions themselves and the communities they serve, weighing the pros and cons, remembering that those who provide the technology want to sell it, and care little about the value of human contact in education – not only human contact between student and professor, but often life-determining contacts between students themselves. Online courses may benefit geographically isolated students, but breaking up the educational community would be a major step toward the destruction of human community altogether.

No. 3 – Health and “well-being”. Here is where the discussion should heat up considerably. According to Schwab and Malleret: “Three industries in particular will flourish (in the aggregate) in the post-pandemic era: big tech, health and wellness.” For the Davos planners, the three merge.

Those who think that well-being is largely self-generated, dependent on attitudes, activity and lifestyle choices, miss the point. “The combination of AI [artificial intelligence], the IoT [internet of things] and sensors and wearable technology will produce new insights into personal well-being. They will model how we are and feel […] precise information on our carbon footprints, our impact on biodiversity, on the toxicity of all the ingredients we consume and the environments or spatial contexts in which we evolve will generate significant progress in terms of our awareness of collective and individual well-being.”

Question: do we really want or need all this cybernetic narcissism? Can’t we just enjoy life by helping a friend, stroking a cat, reading a book, listening to Bach or watching a sunset? We better make up our minds before they make over our minds.

User being monitored in a biometrics lab. (Grish068, CC BY-SA 4.0, Wikimedia Commons)

No. 4 – Food. In order not to spoil my healthy appetite, I’ll skip over this. The tech wizards would like to phase out farmers, with all their dirty soil and animals, and industrially manufacture enhanced artificial foods created in nice clean labs – out of what exactly?

The Central Issue: Homo Faber

No. 5 – What about human work?

“In all likelihood, the recession induced by the pandemic will trigger a sharp increase in labor-substitution, meaning that physical labor will be replaced by robots and ‘intelligent’ machines, which will in turn provoke lasting and structural changes in the labor market.”

This replacement has already been underway for decades. Along with outsourcing and immigration, it has already weakened the collective power of labor. But clearly, the tech industries are poised to go much, much further and faster in throwing humans out of work.

The Covid-19 crisis and social distancing have “suddenly accelerated this process of innovation and technological change. Chatbots, which often use the same voice recognition technology behind Amazon’s Alexa, and other software that can replace tasks normally performed by human employees, are being rapidly introduced. These innovations provoked by necessity (i.e. sanitary measures) will soon result in hundreds of thousands, and potentially millions, of job losses.”

Cutting labor costs has long been the guiding motive of these innovations, along with the internal dynamic of technology industry to “do whatever it can do.” Then socially beneficial pretexts are devised in justification. Like this:

“As consumers may prefer automated services to face-to-face interactions for some time to come, what is currently happening with call centers will inevitably occur in other sectors as well.”

“Consumers may prefer…”! Everyone I know complains of the exasperation of trying to reach the bank or insurance company to explain an emergency, and instead to be confronted with a dead voice and a choice of irrelevant numbers to click. Perhaps I am underestimating the degree of hostility toward our fellow humans that now pervades society, but my impression is that there is a vast unexpressed public demand for LESS automated services and MORE contact with real persons who can think outside the algorithm and can actually UNDERSTAND the problem, not simply cough up preprogrammed fixes.

“Corporate agility in the Fourth Industrial Revolution” session held in Tianjin,China, September 2018. (World Economic Forum, Faruk Pinjo, CC BY-NC-SA 2.0)

There is a potential movement out there. But we hear nothing of it, being persuaded by our media that the greatest problem facing people in their daily lives is to hear someone exhibit confusion over someone else’s confused gender.

In this, I maintain, consumer demand would merge with the desperate need of able-minded human beings to earn a living. The technocrats earn theirs handsomely by eliminating the means to earn a living of other people.

Here is one of their great ideas. “In cities as varied as Hangzhou, Washington DC and Tel Aviv, efforts are under way to move from pilot programs to large-scale operations capable of putting an army of delivery robots on the road and in the air.” What a great alternative to paying human deliverers a living wage!

And incidentally, a guy riding a delivery bicycle is using renewable energy. But all those robots and drones? Batteries, batteries and more batteries, made of what materials, coming from where and manufactured how? By more robots? Where is the energy coming from to replace not only fossil fuels, but also human physical effort?

At the last Davos meeting, Israeli intellectual Yuval Harari issued a dire warning that:

“Whereas in the past, humans had to struggle against exploitation, in the twenty-first century the really big struggle will be against irrelevance… Those who fail in the struggle against irrelevance would constitute a new ‘useless class’ – not from the viewpoint of their friends and family, but useless from the viewpoint of the economic and political system. And this useless class will be separated by an ever-growing gap from the ever more powerful elite.”

No. 5 – And the military. Our capitalist prophets of doom foresee the semi-collapse of civil aviation and the aeronautical industry as people all decide to stay home glued to their screens. But not to worry!

“This makes the defense aerospace sector an exception and a relatively safe haven.” For capital investment, that is. Instead of vacations on sunny beaches, we can look forward to space wars. It may happen sooner rather than later, because, as the Brookings Institution concludes in a 2018 report on “How artificial intelligence is transforming the world,” everything is going faster, including war:

“The big data analytics associated with AI will profoundly affect intelligence analysis, as massive amounts of data are sifted in near real time … thereby providing commanders and their staffs a level of intelligence analysis and productivity heretofore unseen. Command and control will similarly be affected as human commanders delegate certain routine, and in special circumstances, key decisions to AI platforms, reducing dramatically the time associated with the decision and subsequent action.”

So, no danger that some soft-hearted officer will hesitate to start World War III because of a sentimental attachment to humanity. When the AI platform sees an opportunity, go for it!

“In the end, warfare is a time competitive process, where the side able to decide the fastest and move most quickly to execution will generally prevail. Indeed, artificially intelligent intelligence systems, tied to AI-assisted command and control systems, can move decision support and decision-making to a speed vastly superior to the speeds of the traditional means of waging war. So fast will be this process especially if coupled to automatic decisions to launch artificially intelligent autonomous weapons systems capable of lethal outcomes, that a new term has been coined specifically to embrace the speed at which war will be waged: hyperwar.”

Americans have a choice. Either continue to quarrel over trivialities or wake up, really wake up, to the reality being planned and do something about it.

The future is shaped by investment choices. Not by naughty speech, not even by elections, but by investment choices. For the people to regain power, they must reassert their command over how and for what purposes capital is invested.

And if private capital balks, it must be socialized. This is the only revolution – and it is also the only conservatism, the only way to conserve decent human life. It is what real politics is about.

Diana Johnstone lives in Paris. Her latest book is Circle in the Darkness: Memoirs of a World Watcher and is also the author of Fools’ Crusade: Yugoslavia, NATO, and Western Delusions. Her lates book is Queen of Chaos: the Misadventures of Hillary Clinton. The memoirs of Diana Johnstone’s father Paul H. Johnstone, From MAD to Madness, was published by Clarity Press, with her commentary. She can be reached at diana.johnstone@wanadoo.fr .

When oil drillers descended on North Dakota en masse a decade ago, state officials and residents generally welcomed them with open arms. A new form of hydraulic fracturing, or "fracking" for short, would allow an estimated 3 to 4 billion barrels of so-called shale oil to be extracted from the Bakken Formation, some 2 miles below the surface.

The boom that ensued has now turned to bust as oil prices sagged in 2019 and then went into free fall with the spread of the coronavirus pandemic. The financial fragility of the industry had long been hidden by the willingness of investors to hand over money to drillers in hopes of getting in on the next big energy play. Months before the coronavirus appeared, one former oil CEO calculated that the shale oil and gas industry has destroyed 80 percent of the capital entrusted to it since 2008. Not long after that the capital markets were almost entirely closed to the industry as investor sentiment finally shifted in the wake of financial realities.

The collapse of oil demand in 2020 due to a huge contraction in the world economy associated with the pandemic has increased the pace of bankruptcies. Oil output has also collapsed as the number of new wells needed to keep total production from these short-lived wells from shrinking has declined dramatically as well. Operating rotary rigs in North Dakota plummeted from an average of 48 in August 2019 to just 11 this month.

Oil production in the state has dropped from an all-time high of 1.46 million barrels per day in October 2019 to 850,000 as of June, the latest month for which figures are available. Even one of the most ardent oil industry promoters of shale oil and gas development said earlier this year that North Dakota's most productive days are over. CEO John Hess of the eponymous Hess Corporation is taking cash flow from his wells in North Dakota and investing it elsewhere.

So, what has this meant for the state? Not only is the oil industry in North Dakota suffering, but all those contractors who service the oil industry. Beyond that are the housing and public services which had to be expanded dramatically during the boom. Will there be enough people to live in that housing years from now? Will the cities be able to maintain the greatly expanded infrastructure their dwindling tax revenues must pay for?

The state government relies on oil and gas revenues for 53 percent of its budget. So far those revenues are running 83 percent lower than projected for this year. In addition, the pandemic reduced other revenue sources, but those are returning to normal as the overall economy bounces back (at least for now). North Dakota's historically low unemployment rate popped from 2 percent in March to 9.1 percent in April, but has recently come down.

Perhaps the most enduring legacy of the boom will be the damage to the landscape and the water in North Dakota from years of sloppy environmental practices. While companies are legally responsible for cleaning up their sites and capping old wells, in practice the state's failure to force companies to post bonds to pay for these things means much of the work will have to be done by the state or not done at all. This is because bankrupt companies are just abandoning their wells and other infrastructure. There will be no one left with money to sue to pay for the cleanup in many cases.

What North Dakota may have traded for a temporary boom is a long-lived legacy of tainted land and especially water. Back in 2012 I warned about this danger from the fracking industry in a piece called "Pincushion America: The irretrievable legacy of drilling everywhere on drinking water."

In that piece, I cited a former EPA engineer who said that within 100 years most of the country's underground drinking water will be contaminated. What has happened in North Dakota (and is still happening at a somewhat reduced rate) has likely sped up that timetable considerably for the state. Even with the waning oil industry, the state still has considerable oil to produce and so the damage will only continue to mount.

North Dakota may now experience a long, slow withdrawal from what is called the resource curse. This is the paradoxical notion that natural resource-rich jurisdictions often fail to prosper partly due to the huge swings in prices of their principal products, swings which destabilize their societies. This is because disproportionate amounts of wealth (including labor) are devoted to the natural resource sector and therefore unavailable for other more stable forms of commerce and industry.

In addition, the enormous wealth and influence of those in the natural resource sector are used to thwart environmental protections necessary for the long-term well-being of the population. This influence also keeps taxes on the industry low, depriving the people in the state of the full fruits of the resource boom (and of investments necessary for the day when the resource will be depleted).

Beyond this, governments tend to rely on resource sectors too much for their revenue. This causes them to overspend during booms and face austerity during downturns.

All of the negative effects of the resource curse are now on display in North Dakota and may well get worse. Of course, what North Dakota is experiencing, many resource-rich places around the world are also experiencing in one form or another. The worst thing the state can do now is live by the hope that the oil industry will revive and save North Dakota from its woes. Now is the time to plan a new path to a more stable and sustainable economy.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique, Oilprice.com, OilVoice, TalkMarkets, Investing.com, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He is currently a fellow of the Arthur Morgan Institute for Community Solutions. He can be contacted at kurtcobb2001@yahoo.com.

Remarks given at the 1st ASECU Teleconference ‘Systematic Crises Triggered the Current Pandemic & Progressive Way-Outs, May 8, 2020.

Well, I think you’re quite right in organizing the conference to point out that today’s pandemic crisis hastens and intensifies the internal contradictions that have been building up. Many of these contradictions are going to be blamed simply on the virus. But there is an underlying problem that the virus is exposing and turning into a crisis. That underlying problem is the debts that have been building up for the last few decades.

We are in a situation much like a war. There are winners and there are losers in a war. In this case the winner is the aggressor – the financial sector. Its demands for payment have set the stage for today’s economic breakdown. This has been the case throughout history. Finance always has been the great destabilizing factor. Right now, you’re having businesses – retail stores, restaurants, hotels, airlines and other businesses that are being closed down or operating at only a small capacity far below break-even levels. These businesses are not able to pay their stipulated rents or mortgage debt service. Their landlords are not able to pay their banks.

Workers have been laid off, and they’re unable to pay their landlords or creditors. So they are falling more deeply into debt. Entire states and the cities, like New York State and New York City, are being squeezed. In addition to having to pay local unemployment insurance, they have to maintain basic infrastructure and social services. But their d tax revenues ae plunging as a result of fewer sales taxes and income taxes. So the pandemic is creating a fiscal crisis as part of the overall debt and real-estate crisis.
The question is, how do we get out of it? What is happening is what legal contracts call an Act of God. What do you do when economic activity is disrupted and the flow of payments that people have every month – their debt service, their rents or their mortgage, or their credit cards and other basic ongoing expenses. What do you do when they can’t be paid? I think that this crisis is laying the problem bare. It is a problem that’s occurred in Western civilization for the last 2,000 years. But what is so striking is how much more adroitly ancient civilizations handled this problem. They did so in a completely different way from how other civilizations have handled things.

I have written quite a bit about Bronze Age archaeology in the ancient Near East. That is where the Act of God stipulation originated. It appears in the Laws of Hammurabi c. 1750 BC. The problem that the Babylonians had to deal with was what to do when there is a flood, a drought, warfare or a pandemic. What should be the rules when, suddenly out of nowhere, cultivators and the citizenry on the land are rendered unable to grow and harvest crops, out of which to pay the debts that they have run up during the year and are falling due. They owe the taxes, sharecropping or other rent that could not be paid.

Hammurabi was quite specific about how to handle this situation. Paragraph 48 of his Laws said that there would be a debt and a tax amnesty when the weather god, Adad, created a flood or otherwise prevented debts and other obligations from being paid. If the storm god floods the lands, the debts and rents don’t have to be paid. A fresh start was made under conditions of balance for the next crop season.

The basic problem was similar to that today: How does a society restore continuity and save itself from disruption creating a permanent loss and distortion of existing wealth and income relationships? What Hammurabi and every other Babylonian, Sumerian ruler and other Near Eastern rulers did between about 2,500 BC and the 1st century BC was to proclaim amnesties in such circumstances. If they hadn’t done that, cultivators would not have been able to pay their creditors and they would have fallen into bondage. They would have owed their labour and crops to their creditors.

This would have caused a serious fiscal problem for rulers. If victims of a crop failure or other economic interruption had to pay their creditors with their labour and crop surplus, this labor and crop tax wouldn’t be available to pay the palace its normal claims for taxes and corvée labour duties to build infrastructure or even serve in the army. Social balance and continuity would have been destroyed – from within. So when Hammurabi and every ruler of his dynasty proclaimed a clean slate cancelling the debts and rent arrears that had mounted up unpaid, proclaiming a return to the normal situation prevented a creditor oligarchy from emerging and seeking its own interest as distinct from that of the palace.

All this changed in Roman times. Classical antiquity protected the financial and rentier elites. Cicero and the other Roman leaders said that all the debts had to be paid, even (or indeed, precisely because!) this led to the enslavement of poorer Romans and Greeks. Rome’s creditor oligarchy used every crisis as an opportunity to grab the land of the smallholders, to force the population into bondage and to get control of their land.

We’re seeing the same basic dynamic occur throughout the post-Roman Western world. Creditors are now already planning to buy up distressed real estate from landlords that default as their rents are not paid. There is going to be a huge bankruptcy sale. Large private capital funds have already announced their intention to begin buying out the retail stores that have gone bankrupt, along with their real estate.

Individuals who are unable to pay their debts, workers who’ve been laid off, are told to borrow from their pension funds or social security accounts. That means that they won’t be receiving the retirement income they need to live. Likewise, the states and the cities that Jeffrey Sachs mentioned also are facing a debt crisis with their bondholders. Mitch McConnell, the Republican Senate head, said that Democratic states like New York, New Jersey and California should cover their shortfall by taking the pension funds that they’ve set up for public employees. The financial sector’s intention is to use this crisis to wipe out the pension funds and transfer the savings of the wage-earners to pay bondholders and other creditors. The promises that state and local governments made for pension in exchange for not asking for higher wages are to be wiped out.

The debts that have been built up are being used as a financial warfare tactic. It is more efficient than military warfare. Debt has been used to strip away the assets of middle-class people, of home owners, of employee pension funds, to suck their savings and property up to the top of the economic pyramid. The pandemic crisis has created a battlefield. Its rules have been written by the financial sector and their lobbyists as an opportunity for the largest property and financial grab since the Great Depression.

The result will be that much of the American and European economies are going to end up looking like the Greek economy five years ago, when it was unable to pay its euro-debts. You can look at Greece as the future of the United States, catalysed by the coronavirus pandemic.

Thank you, thanks a lot. Michael, it’s your turn and allow me, before you start, because there was an extra question addressed to you, but also to the rest, included perhaps in the previous questions: who are the big winners, in economic terms, after current developments?

I’ll talk about the questions in reverse order, beginning with the idea that there may be an inflation to help pay off the debts.

Just the opposite: What we are facing now is an era of debt deflation. It’s the worst debt deflation since the Great Depression. I’ve already described how there are going to be major defaults in real estate, especially for commercial real estate, for stores and all the other businesses that are going without income while their rents have accrued. If we are going to have a close-down for at least three more months, with no income for stores, entertainment, motion-picture houses and museums, paying three months’ back rent is not viable. There’s no way in which stores, or many wage-earners, can earn enough to pay the rent out of normal work and business. So, they’re going to go out of business.

There is going to be a wave of bankruptcy, and that will be followed by fire sales of real estate. Unemployment is going to lead to lower wage levels, and there also will be cutbacks in public spending for social services, transportation and other normal programs. Privatisation sell-offs will occur, much like Margaret Thatcher’s in England. this is now going to be imposed upon Europe. It’s possible that the Eurozone will break up if it does not change its rules and create the euro-money to enable Italy and Spain to get by. But at present the Eurozone rules are that all the money, all of the credit that is needed to grow in Europe, should be borrowed from banks at interest.

Banks can create this money on their keyboards electronically. The government could do the same, but relinquishes this privilege to the privatized banking sector. As Modern Monetary Theory explains, a central bank can simply print the money that is needed to fuel economic growth. But the financial sector has captured the hearts and minds of central bankers, from Europe to the United States.
The problem is these banks don’t lend money to create means of production or livelihood. They don’t lend money to build factories. Banks lend money against assets already in existence, mainly real estate, houses, buildings, and also companies – and to corporate raiders to buy other companies on credit. So, the effect of this bank lending has been to inflate the price of real estate, because a house or a building is worth whatever a bank will lend against it.

The financial sector has become less and less productive, and more predatory. It has prevented European governments from having a central bank that directs deficit spending into the real economy. Only the banks and financial sector, the elite One Percent, are supported, as in the United States. Ten trillion dollars ’s put into the economy, mainly into the stock and financial markets, the bond market and the real estate market, but not into production.

The Eurozone does not do that. This means that the governments of Europe are not really democratic. Europe is governed by the European Central Bank. It works for its customers, the commercial banks. And the commercial bankers say: “We want to starve the economy of credit, so that we, the commercial bankers, can create the money to lend to our customers, and charge interest and financial fees. Our own financial speculation that all the growth, the surplus that Europe produces, should be turned over to the financial sector.” That’s what the Europeans have voted for. In effect they vote for lower wages, cutbacks in public services and shorter pensions. These living standards are threatened by the way in which the financial dimension of the coronavirus crisis is being managed.

You’re seeing a disparity between Italy and the Mediterranean countries and northern Europe. Countries need credit in order to recover. But the Eurozone refuses to provide the credit that is needed to get through the coronavirus suspension of economic activity and its aftermath of unpaid debts, rents and other obligations. The Eurozone is treating Italy, Greece, Portugal and Spain just like President Trump here in America is treating the Democratic states like New York, New Jersey and California. The effect is to create a deflationary crisis. That makes it impossible to pay the backlog of debts and rents.

We may see a power grab creating something much like feudalism. In the United States it’s suggested that for student loans, or for loans to wage-earners collateralized by the debtor promising to pay 10%, 20%, 25% of everything they earn for the rest of their life. This is like a tax, but it’s really a form of debt peonage. It’s a payment much like medieval serfs had to turn over their economic surplus to their landlords. Well, now the wage-earners, small business and even big business in America and in Europe are going to have to turn over even more of their earnings to the financial sector in order to survive.

This may seem a crazy way to organize society, but it is how Western civilization has been structured on the basis of protecting creditor rights, not debtor solvency and overall social balance and continuity. Unlike non-Western societies, unlike even China today, credit in Europe and America is privatized. The supply of credit, like money, should be a public utility. Just like public health should be a public utility. Just like roads and communication should be a public utility. Europe has let it be privatized in an aggressive, predatory way.

As long as governments subordinate the will of democratic voters to whatever the central banks tell you, you are not a democracy. Jeffrey earlier mentioned what Aristotle thought. Aristotle explained a kind of eternal political triangle. He said that many constitutions appeared to be democratic, but they’re, actually, oligarchic. That’s because democracies tend to evolve into an oligarchy. The oligarchy makes itself hereditary into an aristocratic ruling class. Finally, thank heavens, some of the wealthy aristocrats fight among themselves and they try – like Cleisthenes did in Athens as early as 406 BC – to take the masses into their camp, and become democratic and order to mobilize support in the citizens against the other aristocrats. Then you have a democratic revolution, but democracy once again develops into oligarchy. That’s the eternal political triangle that Aristotle described.

And that’s what you have in Europe. It’s not a democracy anymore; it’s an oligarchy making itself into the same kind of hereditary aristocracy that occurred in classical antiquity. Many of you hoped that Europe had overthrown the aristocracy after World War I when you did indeed get rid of the kings and royalty. But you opened the way for a new kind of oligarchy turning itself into a hereditary aristocracy, that of finance. That’s the task before you to solve. The only thing I can say is that, perhaps, this crisis has indeed catalysed this basic internal contradiction and will create a response that deals with the pandemic by cancelling debts and de-privatizing the banking sector.

Photo by Laura Seaman on Unsplash

As time goes on in close confinement, even people bound by love may start to find each other unbearable. On a larger scale, in this crazy mass confinement, people brought together by a common rejection of the lies of our criminal rulers may find themselves at each other’s throats because of conflicting interpretations of why who is doing what.

This is happening on alternative media – especially in Germany. It seems that many anti-conformist political analysts believe that the Coronavirus crisis is a fake, perpetrated by media and governments for sinister reasons. They are actually calling for protest demonstrations against confinement.

I can’t help seeing this as an obsession of certain dissidents to prove to themselves that they are good “anti-authoritarian” Germans who would never have bowed to Nazism. But is this assertion of individual freedom appropriate in the midst of a public health crisis?

The Limits of Power

Very clever people naturally want to find motives behind whatever happens. At one time such people might have been theologians, who explained the extremely mysterious ways in which God carries out His cosmic plan. A flood, a plague, an earthquake? There had to be a reason for it, a motivation in human terms. The All-Powerful was punishing his sinful flock and reminding them of who was boss.

Mammon. (Wikipedia)

Today, quite a number of alternative media commentators are ready to believe in the absolute power not of God but of Mammon, of the powers of Wall Street and its partners in politics, the media and the military. In this view, nothing major happens that hasn’t been planned by earthly powers for their own selfish interest.

Mammon is wrecking the economy so a few oligarchs will own everything. Or else Mammon created the hoax Coronavirus 19 in order to lock us all up and deprive us of what little is left of our freedom. Or finally Mammon is using a virus in order to have a pretext to vaccinate us all with secret substances and turn us all into zombies.

Is this credible? In one sense, it is. We know that Mammon is unscrupulous, morally capable of all crimes. But things do happen that Mammon did not plan, such as earthquakes, floods and plagues. Dislike of our ruling class combined with dislike of being locked up leads to the equation: They are simply using this (fake) crisis in order to lock us up!

But what for? To whom is there any advantage in locking down the population? For the pleasure of telling themselves, “Aha, we’ve got them where we want them, all stuck at home!” Is this intended to suppress popular revolt? What popular revolt? Why repress people who aren’t doing anything that needs to be repressed?

What is the use of locking up a population – and I think especially of the United States – that is disunited, disorganized, profoundly confused by generations of ideological indoctrination telling them that their country is “the best” in every way, and thus unable to formulate coherent demands on a system that exploits them ruthlessly? Do you need to lock up your faithful Labrador so he won’t bite you?

If anything, the trauma of this situation might actually awaken a somnolent population to the vital need for basic transformation of society. The notion that this lockdown threatens to be permanent is totally unrealistic, against all evidence from previous lockdowns. On the contrary, prolonged confinement is most likely to lead to explosions. The question is, can these explosions be constructive.

On a wall in Paris: “You will not confine our anger.”

Blinded by Hubris

Rather than deploring the all-powerful nature of Mammon, it would be more constructive to look for the flaws in his armor, for his weaknesses, for the ways he can be massively discredited, denounced and defeated.

Mammon is blinded by its own hubris, often stupid, incompetent, dumbed down by getting away with so much so easily. Take a look at Mike Pompeo or Mike Pence – are these all-powerful geniuses? No, they are semi-morons who have been able to crawl up a corrupt system contemptuous of truth, virtue or intelligence – like the rest of the gangsters in power in a system devoid of any ethical or intellectual standards.

The power of creatures like that is merely the reflection of the abdication of social responsibility by whole populations whose disinterest in politics has allowed the scum to rise to the top.

The lockdown decreed by our Western governments reveals helplessness rather than power. They did not rush to lock us down. The lockdown is disastrous for the economy which is their prime concern. They hesitated and did so only when they had to do something and were ill-equipped to do anything else. They saw that China had done so with good results. But smart Asian governments did even more, deploying masks, tests and treatments Western governments did not possess.

Western governments called for confinement when experts explained the exponential curves to them. They didn’t know what else to do. There is at least enough sense of social responsibility left in our societies to oblige governments to take the basic, classic quarantine methods usual during pandemics.

Of course, in every crisis some are well placed to take advantage of disaster. The vultures didn’t cause the cattle to die so they could eat the carrion. But they will gobble it up when it’s there. Wall Street financial powers could quickly get Congresspeople to vote laws to bail them out while small businesses sink and working people are plunged into despair.

But in the long run, without the small businesses, without the workers now being deprived of income to spend, without normal economic activity, Wall Street itself will have no one to bleed, nothing to exploit. It makes absolutely no sense to believe that dominant economic powers sought this ruinous crisis for some mysterious benefit to themselves.

In the European Union, creditor countries like Germany and the Netherlands refuse to let the European Central Bank issue “Coronabonds” to finance economic recovery of hard-hit countries like Italy and Spain. That means those countries will have to borrow from the private financial system, at high interest rates leading to bankruptcy.

That sounds like a boon to international finance, which, however, will find itself holding an infinite amount of unpayable debt. And the European Union may split apart as a result – not in the interests of any of these powerful masters of Mammon.

Public Health Is Not an Individual Choice

In the West, “human rights”, are conceived in terms of the “rights” of the individual, or of a minority, to go against what we call “the regime” when speaking of countries other than our own. The United States uses the absolute value of “human rights” as a pretext to impose its will through sanctions and bombing on nations that reject its global domination. The defiance of authority is celebrated as resistance, without necessarily examining the details.

However, virtually all key aspects of any civilized society go contrary to the absolutism of individual rights. Every civilized society has some sort of legal system, some basic rules that everyone is expected to follow. Most civilized societies have a public education and (except for the United States) a public health insurance system designed to benefit the whole population. These elements of civilization include constraints on individual freedom.

The benefits to each individual of living in a civilized society make these constraints acceptable to just about everybody. The health of the individual depends on the health of the community, which is why everyone in most Western countries accepts a single payer health insurance system. The only exception is the United States, where the egocentricities of Ayn Rand are widely read as serious thought.

Mammon and His Slave. (Wikimedia Commons)

The arrival of a plague or an epidemic suddenly calls for totally abnormal, extremely unpleasant constraints, such as quarantines. This is a case where the freedom of the individual is sacrificed for the general good: the individual is confined not merely for his own good but for the good of his community and indeed of all humanity.

The paradox of our highly technological societies is that the greater the impossibility of the general public (all of us) to understand crucial functions and issues, the more we depend on experts and authorities, and the more we distrust those experts and authorities and suspect them of using their position to advance secret agendas. There is thus a sort of built-in paranoia in our societies where the power of invisible forces becomes constantly more inscrutable.

This paradox operates forcefully on issues of medicine and public health, all the more in that the authorities themselves are frequently divided in their opinions. In Germany especially, where the crisis has been relatively mild, one can hear a doctor claiming that fear of Covid-19 is artificially created and that nature should be allowed to take its course, since healthy people will be spared and the few who die would have died anyway.

Stay Home and Take a Pill

This opinion is readily accepted by those who suspect every government measure of being an arbitrary assault on personal liberties. But it is hardly a majority opinion in the world medical profession.

Personally, I’ve been there. I’ve seen this virus in action. This is not simply a bad cold, or a seasonal flu. Yes, there are light cases, but there are fatal ones as well. It does not just kill off superfluous elderly people that some commentators seem satisfied to get rid of.

Still, it is quite reasonable to question the usefulness of confinement alone. Here in France, authorities turned to confinement with some delay, only because the illness was spreading and they had nothing else to do about it.

There were no masks; a factory in Brittany that provided the domestic market with masks and other medical equipment had been bought up a while back by Honeywell and closed down. This is an aspect of the deindustrialization of France, based on the assumption that we in the West can live from our brains, our ideas, our startups, while actual things are made for low wages in poor countries.

So there were no masks and no immediate capacity to make them. There was also a shortage of ventilators, even of hospital beds – in fact there was no ability to deal with the epidemic other than to tell people to stay at home and prescribe paracetamol.

Surely there are better ways to deal with it, and one inevitable explosion after confinement will be an outpouring of criticism of the way the government has handled the crisis and demands for drastic improvements in the public health system.

The argument that “oh well, even more people die of ordinary flu, or cancer, or something else” is not valid because this illness comes in addition to all the others that are anticipated: it pushes already largely saturated health facilities over the top, into collapse.

In Italy, Covid-19 has killed off a hundred medical doctors in just over a month. They would not have “died anyway, of something else” without the epidemic.

In France, in normal times, dial the emergency service SAMU 15 and usually a team is there within minutes. During the Covid-19 crisis, you could dial 15 and wait an hour or more for an answer, whatever your health crisis might be, and help might never come.

The main purpose of the quarantine is to reduce the pression on overburdened systems. Without the confinement, the overload would have been even worse. This crisis is exposing the inadequacy of existing facilities and the crucial need for major programs to strengthen public health systems.

Irrational Fear of Vaccination

Jonas Salk’s vaccine wiped out polio in the United States, and he didn’t patent it. (Wikimedia Commons)

Mass vaccination has always been the surest way to wipe out deadly diseases. It is also an instance where individual freedoms need be sacrificed to the general good. It is deeply disturbing that many intelligent people are more afraid of the vaccine that may be developed to combat this virus than they are of the virus itself.

One objection is that profit-oriented Big Pharma takes advantage of every illness to make money. But the answer is not to reject pharmaceuticals. The main problem with Big Pharma is unleashed neoliberal capitalism in the United States, combined with the absence of a government-run single payer health insurance, which allows pharmaceutical companies to charge outrageous prices for their products, as well as to focus on production of the most profitable rather than the most generally useful medication.

The answer to this is not to give up medication but to demand greater public supervision and price control.

Finally, the pharmaceutical industry should be considered a public utility rather than a business and nationalized so that revenue can be used to finance research rather than to pay dividends to Big Finance.

The prospects are different from one country to another. Achieving social control in the United States looks practically impossible because of the overwhelming belief that “free enterprise” is the only way to do things. In France, which has positive experience of a mixed economy, it could be politically possible to nationalize pharmaceutical companies – if France were not under the domination of the European Union and, less directly, the United States, which is always prepared to do what it can to block socialist measures anywhere in the world.

No Longer the Center

But the West is no longer the center of the world. The Covid-19 crisis has demonstrated the rising capabilities and more human attitudes of East Asia. There will be vaccines developed in China, in Russia, in other countries outside the NATO sphere. Their achievements will break the monopoly of Western “Big Pharma.”

In Europe, and notably in France, Italy and Spain, the total disillusion with the European Union is strengthening the trend toward return of national sovereignty. And sovereign nations, able to respond to their people’s demands can be able to break away from the dictates of Big Finance in order to renew democracy in more appropriate forms.

In France, labor unions and progressives are demanding better protection of the population, starting with all those essential service workers, in hospitals and grocery stores, bus drivers, deliverymen, all those who are increasingly appreciated by their confined compatriots and who need to reap the benefits of their public service.

Yellow Vests protest, March 7, 2020 in Paris before lockdown. (Joe Lauria)

Perhaps because of the long tradition of social struggle in France, including the Yellow Vest movement which is not dead but only on hold, one can be sure that after confinement there will be an explosion of demands to abandon the fantasies of neoliberal globalism and build a system where the welfare of the people comes first.

In contrast, in the context of the corona virus crisis in Germany, someone supposedly “on the left” has initiated a petition calling on persons over 75 to declare that if they are sick, they renounce medical treatment, in order to give preference to younger people. This is a new twist of identity politics, of classifying people by groups, and a step toward revival of the worst eugenics of Nazism.

Which is civilized and which is barbaric: insisting on a system that gives equal care to all, or deciding that the elderly be sacrificed for the others? What is this but a suggestion to resort to human sacrifice to please Mammon?

For Civilization

Sounding the alarm about how horrible our ruling class is gets us nowhere unless we have an idea of a real alternative – not just “resisting” but proposing and fighting for something different and better.

Let’s start with a most concrete practical issue and work from there: vaccination. Like other aspects of public health, this is an issue of collective welfare rather than individual rights. It is an element not of “resistance to oppression” but of the construction of civilization.

The coronavirus has not illustrated the need to get rid of vaccines – on grounds that “they” want to use them against us – but on the contrary, of the need to make sure that vaccines are developed under proper supervision for the public welfare and not as a means for Big Pharma to make bigger dividends for BlackRock.

So the problem with vaccines is not vaccination but American capitalism that has gotten completely out of hand. Once upon time, the Food and Drug Administration was a reliable monitor of pharmaceutical innovations. In recent decades, such control agencies have increasingly been taken over by the companies they are supposed to control and transformed into rubber stamps.

Alarms are also raised about the alleged role of billionaires like Bill Gates whose philanthropic institutions are suspected of manipulating vaccines for hidden nefarious purposes.

The remedy is not to flee medication and vaccination, but to dismantle these overgrown dictatorial powers and build a society that can properly be called civilized because it is balanced between collective and individual welfare. Of course, to say what should be done is very far from knowing how to do it. But without an idea of what should be done, there will not even be any effort to figure out how.

A Mixed Economy

In the United States, it would be necessary to accept the fact that certain essential activities must be considered public services. This requires a wave of reforms equivalent to a revolution, not as prescribed by Marxist revolutionaries to situations that no longer exist. Pharmaceuticals and hospitals are public services and must be socially controlled. Internet has become a public service.

How should that be treated? Innovators who used free market mechanisms to gain virtual monopoly control of their sector should be invited to choose which of their mansions to retain as residence as they are retired to the role of advisor, while their disproportionate accumulated earnings should become part of the public treasury.

What I am advocating is not a “communist revolution,” certainly not for the United States. I am advocating a mixed economy, which can take various forms, from France in the 1960s to China today. The commanding heights of the economy should be under social control, to ensure that major investment has social purpose.

The forms of this control can vary. In the United States, the first task of the commanding heights should be to shift investment away from insanely wasteful military production to domestic infrastructure and measures to integrate all citizens into a genuinely civilized society. Such a mixed economy creates a favorable environment for the proliferation of small independent enterprises free to innovate.

Free from fear of illness and homelessness allows more real freedom than the polarized lottery that passes for capitalism in the United States today. Such a project of civilization should win support from decent and lucid people in all classes of society.

I am perfectly aware that the United States today is ideologically light years away from such a sensible project. But developments are underway in other countries to meet the threat of Big Pharma and meddling American billionaires. The word that sums up these developments is “multipolarization.”

This is the slogan launched by Vladimir Putin in 2007. It drove Western champions of unipolar globalization into a frenzy from which they are far from having recovered – witness the insanely provocative “Defender Europe 20” military games practicing nuclear war right up to the Russian border, stalled temporarily by Covid-19.

The United States and its European satellites are in effect waging war against the Free World – that is, countries free of U.S. domination, in order to perpetuate an imaginary global regime along the lines of neoliberalism: rule of finance approved by manipulated elections.

Nevertheless, unipolar globalization is in the process of disintegration. All the slander against China cannot change the facts. While U.S. propagandists blast their rising rival, most of the world sees that China handled the epidemic with more professional know-how than the West. The United States control of international agencies is being threatened by growing Chinese influence – in particular, the World Health Organization.

This is the greatest threat to Big Pharma: a multipolar world. Bill Gates and U.S. pharmaceutical companies will have no monopoly of vaccine development to combat Covid-19. A dramatic shift from neoliberal globalization to multipolar national sovereignty will restore genuine competition – not only in production of vaccines but in social organization.

Let Western countries look to their own problems and find solutions. Let other countries develop according to models that suit their history, philosophy and popular demands. It is obvious that the vaunted U.S. “free market democracy” is not a model that should be imposed on every country on earth, nor even on the United States itself.

Mixed economies can take various forms. Some could evolve toward something that could be called socialism, others not. Let every small country be as independent as Iceland. Let the world explore different paths. Let a hundred flowers bloom!