Mexico's debt forgiveness, Michael Hudson's economics of extraction, and the Block Share / Community Credits model for change from below.
When Mexican President Claudia Sheinbaum stood before families in Playa del Carmen in late 2025 and announced the restructuring of nearly five million unpayable mortgage loans, she framed the initiative not as charity but as a correction: the undoing of a financing architecture that, in her words, “was taken from the people and given to a few.” By January 2026, her Housing for Well-Being programme had reached 4.85 million restructured credits and was on track to build 1.8 million homes during the current administration, targeting families earning between one and two minimum wages — those who would otherwise never own a home.
Sheinbaum's housing programme is the most ambitious initiative of its kind in recent Mexican history. Through the national housing agency INFONAVIT, her administration identified millions of mortgage loans originated during the neoliberal era — loans structured with terms that guaranteed default for low-income borrowers. Rather than allowing these debts to compound indefinitely, enriching creditors while trapping families in permanent financial distress, the government intervened: interest rates were slashed, principal balances were written down, and property deeds were finally delivered to families who had been paying for years without ever gaining clear title.
The political framing matters. Sheinbaum has explicitly linked her housing policy to a rejection of the neoliberal model — the same model that Hudson identifies as the primary engine of what he calls “rentier capitalism.” When Sheinbaum tells families, “We are never going to divorce ourselves from the people of Mexico,” she is drawing a line between a government that serves productive economic life and one that serves the claims of creditors. In Hudson's terms, she is choosing the real economy over the overhead economy.
Mexico's debt forgiveness required the political alignment of a supermajority in Congress, constitutional reform, and a president willing to absorb enormous political risk. It required a transformation of state power — the kind of transformation that is nowhere on the horizon in Canada, the United States, or most of Europe. This is precisely the gap that the Block Share model is designed to address.
Michael Hudson's body of work — from Super Imperialism through …And Forgive Them Their Debts to The Destiny of Civilization — offers the most comprehensive account available of how financial extraction operates as a system. His argument, compressed to its essentials, runs as follows.
Classical political economy, from Adam Smith through Ricardo and Marx, drew a sharp distinction between productive income and unearned income. Wages and industrial profits were earned through labour and enterprise. Land rent, monopoly pricing, and interest on debt were not. The entire programme of 19th-century industrial capitalism was, in Hudson's analysis, an effort to minimize these overhead costs — to bring the price of goods in line with their actual cost of production by stripping away the rentier claims of landlords, monopolists, and bankers.
That programme was reversed in the 20th century. Beginning with the marginal revolution in economics and accelerating dramatically after 1980 under Thatcher and Reagan, the distinction between earned and unearned income was systematically erased from mainstream economic thought. The financial sector, once subordinate to industry, now dominates it. And the chief vehicle of this dominance is debt — specifically, mortgage debt.
“GDP now treats interest payments, rising rents, and monopoly fees as productive output.”
| Category | Classical View | Modern GDP Treatment |
|---|---|---|
| Wages & profits | Productive — earned through labour and enterprise | Counted as output ✓ |
| Land rent | Unearned — an overhead cost to be minimized | Counted as output — indistinguishable from production |
| Mortgage interest | Transfer from debtor to creditor — not productive | Counted as “financial services” output |
| Monopoly fees | Parasitic rent — a drag on the real economy | Counted as output — “innovation premium” |
As Hudson explains in his March 2026 interview, what the classical economists feared has come to pass. The excess of market price over cost value — what Ricardo called rent — now constitutes most of what passes for economic growth in the West. Housing is the paradigmatic case.
“…the price of a home is overwhelmingly determined not by the cost of building it but by the price of the land beneath it, inflated by credit.”
Interest + land speculation = 68¢ of the $3.37M a Vancouver household pays over 30 years. Only 15¢ — the construction cost — goes to actually building the home. The remaining 17¢ covers the down payment (saved earnings returned as equity), municipal fees, and soft costs.
Source: HAVAN New Home Cost Breakdown (Dec 2021 data, $1.75M avg. Metro Vancouver detached); mortgage interest calculated at 6% / 30-year amortization on 80% LTV.
Over the life of a typical 30-year mortgage, the bank collects more in interest than the seller received for the property. And the land cost itself is substantially driven by credit availability — the more banks are willing to lend, the higher land prices are bid. Interest inflates the land price, then extracts a second layer of wealth servicing the debt created to pay that inflated price. It is extraction compounding on extraction.
Hudson calls this “debt deflation”: the systematic transfer of purchasing power from debtors to creditors, from the real economy to the overhead economy. It is not a bug in the system. It is the system.
One of Hudson's most original contributions is his archaeological and historical recovery of debt cancellation as a recurring, deliberate institution in the ancient world. In …And Forgive Them Their Debts, he demonstrates that every ruler in Hammurabi's Babylonian dynasty began his reign by cancelling personal debts, freeing debt bondservants, and restoring land to cultivators who had lost it to creditors. The Mosaic Jubilee laws in Leviticus codified the same practice.
“The early Christian concept of ‘forgiveness’ — as in the Lord's Prayer — originally referred not to personal sin but to economic debts.”
These were not acts of compassion. They were acts of statecraft. Ancient rulers understood that without periodic debt cancellation, wealth would concentrate in the hands of a creditor oligarchy, the productive population would lose its land and its capacity to serve in the military or pay taxes, and the society itself would collapse.
Regular debt forgiveness, land redistribution, and release of bondservants maintained productive populations and political stability across thousands of years.
Refusal to cancel debts produced creditor oligarchy, centuries of civil war, loss of the productive citizenry, and eventual collapse into serfdom.
Hudson draws the direct parallel to today. The West's refusal to write down debts — whether student loans, medical debt, sovereign debt in the Global South, or mortgage obligations that can never be repaid — is not merely a policy failure. It is a civilizational trajectory. When he says that the destiny of civilization hangs on this question, he means it literally.
So where does this leave ordinary citizens in a country like Canada — where no Sheinbaum is on the horizon, where no political party has proposed anything remotely resembling a jubilee, and where the financial extraction Hudson describes is, if anything, more acute than in Mexico? Vancouver's housing market is among the most financialized on earth.
The Block Share / Community Credits model begins from a different premise: rather than waiting for top-down reform, communities can begin building the institutional infrastructure of a post-extractive economy right now, at the smallest viable scale.
“The unit of organization is the block — a geographic and social unit small enough for neighbours to know each other, large enough to generate meaningful economic activity.”
Community Credits (CC) are not a utopian proposal. They are a carefully designed complementary currency with built-in mechanisms that address the very dynamics Hudson identifies.
A small holding cost on unspent credits discourages hoarding. The inverse of interest: rewards spending locally, not accumulating.
New credits issued to reward community-building: Quest Cards, Living Roots, shared mobility. Public money creation for productive activity.
Credits must circulate locally before conversion. Creates a 2.6× local multiplier — wealth recirculates through the neighbourhood.
Community insurance against debt spirals. Pools contributions to buffer against job loss, medical emergency, rent shocks.
Interest rewards accumulation and flows wealth outward to creditors. Demurrage rewards circulation and keeps wealth local.
Private credit creation finances speculation. CC seigniorage finances ecological and community-building activity.
Conventional money leaks out of the neighbourhood with every transaction. Locked CC multiplies through the local economy 2.6× before conversion.
Hudson has long called for a fundamental reform of national income accounting — a recalculation of GDP that distinguishes between actual production and rentier overhead. The Financial Extraction Index (FEI), developed by Ward Stirrat as part of the Blockonomics analytical suite, does exactly this at the household level. By quantifying the share of housing costs attributable to financial extraction rather than the provision of shelter, the FEI makes visible what the conventional statistics conceal: how much of a family's finite lifetime is consumed not by the cost of living but by the cost of being extracted from.
When the Block Share housing policy analysis compares Vancouver's market-rate housing to models like Copenhagen's social housing or Singapore's HDB, the LEI differential — roughly 36 percentage points — translates into approximately 28 years of additional labour that a Vancouver household must perform over a lifetime simply to service financial claims. It is the arithmetic of extraction universalized as Life “Time”.
Sheinbaum's Mexico and the Block Share model represent two different responses to the same underlying diagnosis. Both begin from the recognition that debt-driven extraction is not a natural feature of economic life but a political choice — one that can be reversed. Both reject the neoliberal fiction that rent is earned, that interest is the price of a productive service, and that the market price of housing reflects its actual value.
| Dimension | 🇲🇽 Sheinbaum's Mexico | 🏘 Block Share |
|---|---|---|
| Scale | Nation-state — sovereign authority over millions | Neighbourhood — block by block |
| Mechanism | Debt restructuring, principal write-downs, zero-interest mortgages | Complementary currency, demurrage, local multiplier, community insurance |
| Requires | Supermajority, constitutional reform, presidential will | Neighbours organizing, local participation, legal trust structure (housing only) |
| Fragility | Dependent on political continuity — one election can reverse | Self-sustaining once established — not dependent on state power |
| Availability | Unavailable in Canada, US, or most of Europe | Available anywhere people can organize |
| Hudson alignment | Chooses real economy over overhead economy at sovereign level | Builds post-overhead institutions from the ground up |
The difference is one of scale and strategy. Sheinbaum operates at the level of the nation-state, deploying sovereign authority to restructure millions of loans and build hundreds of thousands of homes. This is the path of top-down reform — powerful when the political conditions align, but fragile, dependent on the continuity of political will, and unavailable to citizens living under governments that serve creditor interests.
Block Share operates at the level of the neighbourhood. It does not wait for a progressive government to act. It builds the institutional machinery of a less extractive economy in the spaces where people actually live — their blocks, their super-blocks, their immediate communities. It creates currencies that reward production rather than extraction, insurance instruments that pool risk rather than privatize it, and analytical tools that name the extraction so clearly that it can no longer be ignored.
Hudson himself has noted, with characteristic bluntness, that the economics profession as it currently exists cannot be reformed from within. He has called for an entirely new discipline — not called economics — that would return to the classical distinction between value and price, between production and rent.
The Blockonomics framework is, in a sense, an attempt to build something like that new discipline at the community level: a set of tools, metrics, and institutions grounded in the same analytical tradition Hudson represents but designed for deployment by ordinary citizens rather than nation-states.
In his Patreon roundtable discussion in December 2025, Hudson was asked whether the United States might ever enact a debt jubilee. His answer was unequivocal: no. The political system, captured by creditor interests, will not permit it. The debts will simply not be paid — but the write-down will happen through chaos, default, and dispossession rather than through deliberate policy.
This is precisely the future that Block Share and Community Credits are designed to navigate. If the jubilee will not come from above, it must be built from below — one block at a time. Not as a metaphor, but as a practical programme: credits that circulate locally, insurance that protects against predatory lending, analytical tools that quantify extraction and make the case for alternatives, and a governance structure rooted in the people who live on the block rather than the institutions that profit from their debt.
Sheinbaum's Mexico proves that top-down debt relief is possible when the political stars align. Hudson's analysis proves that it is necessary — that without it, civilizations follow the trajectory of Rome rather than Babylonia. The Block Share model proposes a third path: the patient, persistent construction of post-extractive economic infrastructure at the community level, so that when the existing system's contradictions finally become unbearable, there is something already in place to grow into.
The question is not whether the current system will change. It is whether the change will be designed by those who live within it — or imposed by those who profit from its collapse.