139
views
0
recommends
+1 Recommend
0
shares
    • Review: found
    Is Open Access

    Review of '“Creating Wealth” through Debt: The West's Finance-Capitalist Road'

    Bookmark
    4
    “Creating Wealth” through Debt: The West's Finance-Capitalist RoadCrossref
    Article discusses China's policy challenge to avoid rentier ideology
    Average rating:
        Rated 4 of 5.
    Level of importance:
        Rated 4 of 5.
    Level of validity:
        Rated 3 of 5.
    Level of completeness:
        Rated 4 of 5.
    Level of comprehensibility:
        Rated 4 of 5.
    Competing interests:
    None

    Reviewed article

    • Record: found
    • Abstract: found
    • Article: found
    Is Open Access

    “Creating Wealth” through Debt: The West's Finance-Capitalist Road

    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.
      Bookmark

      Review information


      Political economics

      Review text

      The article provides an interesting perspective on the issue of debt and its exponential growth, which can burden the economy with carrying charges. The author argues that China must avoid the neo-rentier disease and suggests policies to prevent the rise in housing prices, such as taxing away the increase in land prices and collecting rental value for the government. The author also criticizes US and European business schools for teaching tactics of asset stripping and replacing industrial engineering with financial engineering.

      Comments

      Comment on this review

      Version and Review History