The Austrian School of Economics versus the American School of Economics: Americans need to ditch the Austrian nonsense, reclaim our heritage, and take it even further.
JS = John Siman
MH = Michael Hudson
MH: ... The Republicans and industrialists saw that America’s prestige colleges had been founded long before the Civil War, basically as religious colleges to train the clergy. They taught British free trade theory, serving the New England commercial and banking interests and Southern plantation owners. But free trade kept the United States dependent on England. My book America’s Protectionist Takeoff describes how the American School of Political Economy, led by Henry Carey and E. Peshine Smith (William Seward’s law partner), developed an alternative to what was being taught in the religious colleges.
MH: The first U.S. business schools in the late 19thcentury described rentiers as unproductive. That is why today’s neoliberals are trying to rewrite the history of Institutionalism in a way that expurgates the Americans who wanted the government to provide public infrastructure to make America a low-cost economy, undersell England and other countries, and evolve into the industrial giant it became by the 1920s.
JS: So how much longer does this go on — for months, for years, for decades?
MH: It always goes on longer than you think it will. Inertia has a great elastic self-reinforcing power. Polarization will widen until people believe that there is an alternative and decide to fight for it. Two things are required for this to happen: First, a large proportion of people need to see that the economy is impoverishing them, and that the existing picture of what is happening is misleading. Instead of wealth trickling down, it is defying gravity and sucking income up from the base of the economic pyramid. People are having to work harder just to stay in place, until their life style breaks down.
Second, people must realize that it doesn’t have to be this way. There is an alternative.
JS: Right now most people think that government regulation and progressive taxation will make things worse, and that the wealthy are job creators, not job destroyers. They think that the system needs to be bolstered, not replaced, because the alternative is “socialism” — that is, what the Soviets did, not what Franklin Roosevelt was doing. But today bailing out the banks and giving subsidies to new employers is said to be for our own good.
MH: That’s what the Romans told their provinces. Everything they did was always to preserve “good order,” meaning open opportunities for their own wealth grabbing. They never said they were out to destroy and loot other societies. Madeline Albright followed this rhetorical pattern in describing as being, like the Romans and France’s brutal mission civilisatrice, a program to uplift the world free-market efficiency. For performing this service, the imperial power takes all the money that its colonies, provinces and allies can generate. That’s why the U.S. meddles in foreign politics, as we have just seen in Ukraine, Libya and Syria. [Source]