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Michael Hudson is one the world's foremost critics of contemporary financial capitalism. He is also one of a tiny handful of eminent economists who is leading us to look at old questions in startling new ways. Professor Hudson is the author numerous books on international finance and economic history, and a frequent contributor to leading newspapers and public affairs sites. "There are few people alive who have taught me more than Michael Hudson. The incisive and brilliant essays in this book should really be assigned to every first-year student of economics. The fact they never will be is the ultimate testimony to the fact economics has betrayed its own most noble tradition - and Hudson here so magnificently embodies - to become a sheer instrument of power." David Graeber, author of Debt: the First 5,000 Years and co-organizer of Occupy Wall Street "Michael Hudson... I consider to be the best economist in the West." The Saker "Economist's theoretical edifice does not explain economic reality. Economists need to begin anew. Michael Hudson shows them the way." Paul Craig Roberts, Institute for Political Economy

Pax Americana -- The treasury-bill standard versus the gold standard -- Third World problems -- Cold War strains resolve themselves in détente -- The events of 1973 -- U.S. trade strategy culminates in export embargoes -- The oil war transforms world diplomacy -- America's new financial strategy -- Closing the open door to world investment -- The ending of U.S. foreign aid -- America's steel quotas herald a new protectionism -- The ending of laissez faire -- Basic objectives -- World financial reform -- New aims of world trade -- Government regulation of international investment -- The future of war -- Some implications of the new international economic order -- The American response

BIRTH OF THE AMERICAN WORLD ORDER: 1914-46 -- Origins of Intergovernmental Debt, 1917-21 -- Breakdown of World Balance, 1921-33 -- America Spurns World Leadership -- Lend-Lease and Fracturing of the British Empire, 1941-45 -- Bretton Woods: The Triumph of U.S. Government Finance Capital, 1944-45 -- Isolating the Communist Bloc, 1945-46 -- THE INSTITUTIONS OF THE AMERICAN EMPIRE -- American Strategy within the World Bank -- The Imperialism of U.S. Foreign Aid -- GATT and the Double Standard -- Dollar Domination through the International Monetary Fund, 1945-46 -- MONETARY IMPERIALISM AND THE U.S. TREASURY BILL STANDARD -- Financing America's Wars with Other Nations' Resources, 1964-68 -- Power through Bankruptcy, 1968-70 -- Perfecting Empire through Monetary Crisis, 1970-72 -- The Monetary Offensive of Spring 1973 -- Monetary Imperialism: The Twenty-first Century

Marx and many of his less radical contemporary reformers saw the historical role of industrial capitalism as being to clear away the legacy of feudalism—the landlords, bankers, and monopolists extracting economic rent without producing real value. However, that reform movement failed. Today, the finance, insurance, and real estate (FIRE) sector has regained control of government, creating neo-rentier economies. The aim of this postindustrial finance capitalism is the opposite of industrial capitalism as known to nineteenth-century economists: it seeks wealth primarily through the extraction of economic rent, not industrial capital formation. Tax favoritism for real estate, privatization of oil and mineral extraction, and banking and infrastructure monopolies add to the cost of living and doing business. Labor is increasingly exploited by bank debt, student debt, and credit card debt while housing and other prices are inflated on credit, leaving less income to spend on goods and services as economies suffer debt deflation. Today's new Cold War is a fight to internationalize this rentier capitalism by globally privatizing and financializing transportation, education, health care, prisons and policing, the post office and communications, and other sectors that formerly were kept in the public domain. In Western economies, such privatizations have reversed the drive of industrial capitalism. In addition to monopoly prices for privatized services, financial managers are cannibalizing industry by leveraging debt and high-dividend payouts to increase stock prices. JEL Classification: B26, N20, B51

Volumes II and III of Marx's Capital describe how debt grows exponentially, burdening the economy with carrying charges. What policies are best suited for China to avoid this neo-rentier disease while raising living standards in a fair and efficient low-cost economy? The most pressing policy challenge is to keep down the cost of housing. Rising housing prices mean larger and larger debts extracting interest out of the economy. The strongest way to prevent this is to tax away the rise in land prices, collecting the rental value for the government instead of letting it be pledged to the banks as mortgage interest. The same logic applies to public collection of natural resource and monopoly rents. The US and European business schools are part of the problem, not part of the solution. They teach the tactics of asset stripping and how to replace industrial engineering with financial engineering, as if financialization creates wealth faster than the debt burden. Having rapidly pulled ahead over the past three decades, China must remain free of rentier ideology that imagines wealth to be created by debt-leveraged inflation of real-estate and financial asset prices.