In the West, industrial capitalism has devolved into finance capitalism. In China, Russia and Iran, it has evolved toward socialism. Finance capitalism is based on debt. It is essentially usury, and rather than increasing productivity, in prevents productivity by loading the real economy with debt. The only way to restore the productivity of Western economies is to cancel most of this debt. If that can be done, then the money saved can be used for productive credit to restore industry and productivity, rather than for making a tiny minority ridiculously wealthy while impoverishing the rest of society. But in our current economic system, debt is the sacred cow that cannot be touched. All economists except Marxists operate on the assumption that all debts must be paid. In France, the left wing led by Melenchon has proposed a cancellation of debt owed by the French government to the French Central Bank, which would immediately free up some 18% of the French budget for other uses, such as education and medical care, that the French people want. Michael Hudson makes the point that this interest is always returned to the French treasury by the Bank, which is entirely owned by French government, so this is just a bookkeeping trick, not real debt cancellation. But Richard Wolff insists that it is nevertheless very important, because it opens up a whole discussion about cancellation and socialization of debt that was impossible as long as the axiom “all debts must be paid” prevailed. The opening up of this possibility is a nightmare for the financial ruling class whose whole system is a house of cards based on debt.

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