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The Institute for Economic Democracy is dedicated to producing a philosophy for elimination of waste within the economy, that ends poverty, and that provides a quality life for each citizen of earth. Towards that end we have published the books listed below. For later books go to www.ied.info. A Constitution for the Federation of Earth, 2010, Glen T. Martin Triumph of Civilization: Democracy, Nonviolence, and Piloting Spaceship Earth, 2010, Glen T. Martin Weaving Golden Threads of Sociological Theory, 2010, Bob Blain Dawn Dancing – A Collection of Poetry, 2010, Elaine F. Webster Money: A Mirror Image of the Economy, 2nd edition, updated, 2010, J.W. Smith Emerging World Law, 2009, Editors Eugenia Almand and Glen T. Martin Travesty in Haiti: A True Account of Christian Missions, Orphanages, Fraud, Food Aid, and Drug Trafficking, 2009, Timothy Swartz An Unknown God: Essays in Pursuit of the Sacred, 2009, Tony Equale The Emperors God: Important Misunderstandings of Christianity, 2008, Michael Rivage-Seul The Earth Belongs to Everyone, 2008, Alanna Hartzok Ascent to Freedom: The Philosophical Foundations of Democratic World Law, 2008, Glen T. Martin Twenty-First Century Democratic Renaissance: From Plato to Neoliberalism to Planetary Democracy, 2008, Errol E. Harris World Revolution Through World Law: Basic Documents of the Emerging Earth Federation, 2005, Glen T. Martin Millennium Dawn: The Philosophy of Planetary Crisis and Human Liberation, 2005, Glen T. Martin A Constitution for the Federation of Earth, 2008, Editor Glen T. Martin Earth Federation Now! Tomorrow is Too Late, 2005. Errol E. Harris Economic Democracy: The Political Struggle of the Twenty-First Century, 4th edition, 2005, J.W. Smith
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WHY: The Deeper History of the September 11th Terrorist Attack on America, 3rd edition, 2005, J.W. Smith Cooperative Capitalism: A Blueprint for Global Peace and Prosperity, 2nd edition, 2005, J.W. Smith
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ECONOMIC DEMOCRACY ___________________________________________________
A Grand Strategy For World Peace And Prosperity
Green Economics for Sustainable Development Revised 2nd Edition
__________________ Continual update, concept expansion, version 1.8, 2010
J.W. Smith
The Institute for Economic Democracy Press
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Copyright © 2010 by J.W. Smith Continual update, concept expansion, version 1.8, 2010
We believe all ideas should have maximum exposure. Thus for any properly cited individual quotation up to 500 words no permission is necessary. By expanding upon parts of this manuscript, or nesting your work within the framework of this in-depth study, you can present a clearer picture while producing a book in six months as opposed to six to ten years. Permission will be granted (
[email protected]) to those qualified. The authors, the Institute for Economic Democracy, and their officers and supporters, specifically retain full rights to this and other published research so that others may use it, correct it, expand upon it, and produce an ever-more powerful and workable plan for world development and elimination of poverty. At only the cost of alerting others to this unique research, universities and serious progressive groups within the developing world will be granted the right to expand upon this work, translate, and publish. Please request the latest manuscript. Published by: the Institute for Economic Democracy Press 235 Dabney Lane, Pamplin, VA 23905 888.533.1020 - www.ied.info -
[email protected] In Cooperation with the Institute on World Problems worldproblems.net & Earth Rights Institute - earthrights.net Library of Congress Cataloging-in-Publication Data Smith, J. W., 1930Economic democracy : a grand strategy for world peace and prosperity / J.W. Smith. -- 2nd ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-1-933567-10-5 (pbk : alk. paper) ISBN-13: 978-1-933567-11-2 (hbk : alk. paper) 1. Wealth. 2. Free enterprise. 3. Free trade. 4. Developing countries--Economic conditions. 5. Democracy. 6. Equality. I. Title. HC79.W4S36 2007 330--dc22 2007017095 The above were provided by The Library of Congress 7. Public Commons. 8. World Federation. 9. Property rights law. 10. Monopolies. 11. Monetary theory. 12. Peace. 13. Economic theory. 14. Technology. 15 Henry George. 16. Social-credits 17. Extracting wealth. 18. Unearned Wealth. 19. Economic Policy. 20. Distributive justice. 21. Equality. 22. Capital. 23. Money.
Book cover designed by Abel Robinson, Creative Factory Inc. This book is printed on acid free paper.
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Table of Contents Foreword Introduction Part I Plunder by Trade 1. The Exponential Advantage of High-Paid Labor Trading with Low-Paid Labor Lower Pay for Equally-Productive Labor is Part of the Monopolization, Wealth Extraction, Process Extracting Wealth through Unequal Currency Values Purchasing Power Parity, a Strategy of Deception Periphery of Empire Finances the Imperial Centers Former Colonies do not have Economic Freedom 2. The History of Plunder by Trade Today‘s Plunder by Trade Originated Centuries Ago From Imperial Cities to Nascent Imperial Nations The Advantage of Cheap Water Transportation Creating Empires through Control of Trade 3. In Both Internal Trade and World Trade, the Unwitting Hand Their Wealth to the Cunning America‘s Freedom is based on Economic Freedom Friedrich List Wrote His Classic Observing America's Industrialization America Takes Over the Protection of Allied Empires Protection for the Imperial Centers, Free Trade for the Periphery of Empire 4. The Historical Struggle for Dominance in World Trade Unequal Trades Enriching Britain and Impoverishing India Earlier Unequal Trades with China 5. World Wars: Deciding Who Controls World Trade Germany and World War II Japan's Greater East Asia Co-Prosperity Sphere and World War II America Protecting the Imperial Centers 6. They Who Write History Control History The CIA‘s Mighty Wurlitzer Inoculated the World against Philosophies of Full and Equal Economic Rights Controlling Nations on the Periphery of Empire NSC-68, the Master Plan for the Cold War Corporate Funded Think Tanks Building Upon the Beliefs Created by the CIA McCarthyism Suppressing Honest Thought Corporate News Media Protecting Corporate Interests Destabilizing Internal Political Groups Writing History to Protect Wealth and Power ―National Security‖ and the ―National Interest‖ Professors and Intellectuals are Conscientious and Sincere Providing a Beacon for Intellectuals Throughout the World
xii 1 10 10 11 11 13 14 14 15 17 18 20 22 23 27 31 33 35 37 41 43 45 47 50 51 52 55 55 62 63 68 70 72 73 80 83 83 85
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Damage Control 87 7. The World Breaking Free Frightened the Security Councils of Every Western Nation 95 A Crisis of Overproduction had to be Averted 97 Fabricating Incidents to Start Wars 98 National Security Council Directive 68, Master Plan for the Cold War, Was a Strategy of Tension 99 The Korean War, a Strategy of Tension to Attain Backing and Financing for the Cold War 99 Peace in Korea Could Not be Permitted 103 Containing the Soviet Federation 104 World War II‘s Huge Costs for the Soviet Federation 107 Fictional Missile Gaps were Strategies of Tension 109 The Massive Resources of the Soviet Federation: The More Massive and Cheaper Resources of the West 110 Containing the Soviet Federation through forcing it to Waste its Industrial Production 111 Destabilizing Eastern Europe and the Soviet Union 113 Now it was Yugoslavia‘s Turn to be Destabilized 114 Now it was Bosnia-Herzegovina‘s Turn 115 Then it was Kosovo‘s Turn 115 Making a Deal with the Corrupt of Russia 129 The First Destabilization of Afghanistan was Aimed at the Soviet Federation 133 The Decision to Restructure to a Market Economy was made by Soviet Intellectuals 138 Could the Soviet Union have Avoided the Cold War? 141 Imperial, Representative, Participatory and Direct Democracies 144 The Essence of the Cold War: Perception Management (Propaganda) Encasing Society within a Belief System 146 Conceptually Reversing the Process 147 Keeping the World in Chains 148 8. Suppressing the World's Breaks for Freedom 153 America as an Empire Predates the Cold War 153 Iran Breaks Free 154 Containing Iraq 155 Economic Freedom for Indonesia was a Big Threat 156 Nigeria Did Not Break Free 157 Vietnam Gained Political, but not Economic, Freedom 157 Guatemala Broke Free Briefly 158 Chile Broke Free Very Briefly 159 El Salvador Did Not Gain Even its Political Freedom 161 Nicaragua Never Attained Economic Freedom 161 Southern Africa‘s Frontline States 162 The Libyan Threat 163 Cuba: Under President Barack Obama, They May Gain Their Freedom 163
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Orchestration of Death Squads and Writing History 166 Future Leaders of Nations Picked and Trained 168 Erasing the Records Writes History 169 The Battle for Trade Supremacy Continues 171 9. Creating Enemies for the Masses Locks Society within a Belief System 179 The Inquisitions of the Middle Ages 179 The Spanish Inquisition 181 The Inquisitorial Suppression of the Templars 181 Winding Down the Inquisitions of the Middle Ages 182 The Inquisitorial Suppression of the Illuminati 183 Czarist Secret Police Demonize the Jews 184 The World Starts Breaking Free From Imperial Centers 185 Part II. 191 Capital Destroying Capital Within World Trade 191 10. The Enforcers of Unequal Trades 193 The Greatest Peacetime Transfer of Wealth in History 195 The Purpose of IMF-World Bank Loans to the Periphery of Empire 197 Friedrich List Supports for the Developed World, Adam Smith Structural Adjustments for the Developing World 200 The Privatization of the Commons of other Societies 201 11. Corporate Imperialism 203 The Legal Structure for Corporate Imperialism‘s Massive Wealth Extraction 204 Thinking in terms of Units of Production 210 12. Impoverishing Labor & Eventually Capital 213 Power Relationships are Shifting Fast 217 Capitlizing the Values of Corporate Welfare 218 13. Unequal Trades in Agriculture 221 Hunger is Partially Determined by Who Controls the Land 222 The Market Economy Guides the World's Production to Imperial Centers of Capital 223 Beef: ―A Protein Factory in Reverse‖ 224 Conceptually Reversing the Process of Free Food 227 Global Economies and Local Economies Within the Community Social-Credit Process 228 14. Emerging World Loans, Capital Flight, Debt Traps, and Unjust Debt 231 Controlling Puppets of the Imperial Centers 231 Economic Warfare and Financial Warfare 232 The World‘s Poor Have Been Subsidizing the Rich 232 Building the Infrastructure to Transfer Natural Wealth to the Imperial Centers 234 Debt Traps: Loaning Excess Accumulations of Capital Back to the Proper Owners of that Wealth 234 Peonage has only changed its Name 234 Lending Responsibly, a Well-Recognized Tenet of Law 235 Canceling Unjustly Incurred Debts 235
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15. The Economic Multiplier, Horizontal and Vertical Expansion of Wealth 237 Friedrich List's Fundamental Thesis 238 Gaining Wealth through the Vertical Building of Industrial Capital and the Horizontal Flow of Money 239 Capializing Uneaned Values through Creation of Scarcity 240 Invisible Economic Borders Channeling Wealth to the Imperial Centers 241 16. Japan's Post-World War II Defensive, Mercantilist, Economic Warfare Plan 243 The American-Japanese-China-Oil Exporting Nations Debt-Equity Embrace 245 Care for Another's Economy is Only Between Allies 246 Much Japanese Industry has been Forced Offshore 246 It is far from Free Trade wherever One Looks 247 17. Asian Development, an Accident of History 249 Will Developing Nations Oppose, or Ally With, the Imperial Centers? 250 18. Capital Destroying Capital Within World Trade 253 Failure to Expand Buying Power to Keep Factories Running is Economic Insanity 255 Under Monopoly Capitalism, Industries Build Quickly but Markets Only Slowly255 Expanding Buying Power in Step with Increased Industrial Capacity 255 The Monopoly Hold on Technology and Markets Is Weakening 256 Competitive Sharing will Lower Prices and Raise Living Standards 256 19. China: Possibly A New Hope for the World 259 Four Powerful Economic Weapons Available for Developing World Use 260 Emerging World Regional Trading Blocs Attaining Equal Negotiating Power 260 Part III, Utopian Living Through Restructuring Property Rights Law 264 The Potential for an Economic Collapse 264 The Ease With Which it can be Halted 264 Introduction, Part III, Utopian Living Through Restructuring Property Rights Law 265 Monopoly Capitalism‘s Extractive Property Rights Versus Property Rights Providing Full and Equal Economic Rights 267 The Community Social-Credit Process 278 20. A Modern Money Commons, Citizens Paying Banking Profits to Themselves 283 From Barter to Commodity Money 283 From Commodity Money to Coins of Precious Metal 284 From Gold, to Gold-Backed Paper Money, to Fiat Paper Money 284 Paper Money, to Checkbook Money, to Electronic Money 285 Credit or Trust Money 286 The Different Meanings of Money 286 Money is a Contract Against Another Person‘s Labor 287 Money Productively Contracting Labor 287 Money Unproductively Contracting Labor 288 Learning the Secret of Bank-Created Money 289
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Establishing the Federal Reserve: Base Money Circulating Becomes the Money Supply Further Testing the Assertions that, Under Modern Fractional Reserve Banking, Private Banks Create Money The Fed‘s Open Market Operations hide the Simplicity of Money Creation Efficient Social Credits Require Bank Profits and Created Monies be Paid Into the Social-Credit Fund The Theory of Interest as Usury 21. A Modern Land Commons, Citizens Paying Resource Rents to themselves Reclaiming Your Share of the Wealth Produced by Nature Pride in Ownership Must be Maintained The Feudal Origins of Land Titles Private Ownership of Social Wealth Moves to America Saleable Land Titles Permitted the Mobilization of Capital Profound Thinkers Who Believed in Society Collecting Resource Rent Commercial Land Farm Land Home Sites Society Paying Resource Rents to Themselves and Taxes Disappearing is Key to the Community Social-credit Process 22. A Modern Technology Commons Lowers Consumer Prices Fifty Percent or More Capital Destroying Capital Within Internal Economies Labor Should Employ Capital Efficient Socially-Owned Capital Efficient Privately-Owned Capital Fictitious Capital Invention, a Social Process Capitalizing Actual and Fictitious Values Royalty Conferring Monopoly Trading Rights is the Origin of Patent Royalties The Ever-Increasing Efficiencies of Technology Wealth is Extracted by Titleholders Through Capitalizing Unearned Values The Stock Markets are Primarily Extracting Wealth Market Bubbles and Crashes Options, Futures, Derivatives, and Hedge funds are Extractors of Wealth Bringing the World‘s Markets under Control Equal and Efficient Patent Laws Within the Community Process 23. The Productive Roles and Extractive Roles of Secondary Monopolies The insurance industry extracting wealth within the monopolization process The legal structure also extracts wealth Extracting wealth through health care Welfare disappears when the wealth extractive processes are eliminated
291 295 298 301 307 311 311 313 313 315 318 319 320 321 321 323 327 329 330 332 334 335 336 338 340 340 346 346 348 350 352 352 357 358 360 363 365
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Agriculture within the community social-credit process 366 24. A Modern Information Commons, Education at 5-to-15% The Cost of Brick and Mortar Schools 369 Communications Superhighways Eliminating Monopolization 372 Communication Superhighways Eliminates Intermediaries and Reduces Trading Costs 373 Big-ticket, Infrequently-Purchased Items 374 Inexpensive, Small, Frequently-Traded Items 377 Shopping as a Social Event Entails a Cost 377 Reserving TV Time for New Products 377 Music, Sports, Movies, and Game Shows 378 Investment and Job Opportunities 378 Education 380 Inspired Teachers for Every Student 384 Parents Interacting Closely with Their Children‘s Education 384 Better Institutions for Socialization 385 Maintaining Curiosity, Creativity, and Love of Learning 385 Once Borderline Teachable Graduating at the Top of Their Class 386 Culture and Recreational Learning 386 Minority Cultures 387 Foreign Cultures 387 Local Television 387 Elections 388 A Socially-Owned Banking System within the Community Process Paying for Communication Superhighways 388 25. The Mighty Economic Engine of Full and Equal Economic Rights 391 26. Summary 395 27. President Barack Obama’s Economic Transition Team’s Stabilization Policies 419 28. Conclusion: An Open Message to President Barack Obama’s Economic Recovery Team 421 Appendix I: Myths in Monetary Theory 440 Appendix II: A Practical Approach for Developing Nations& Regions 443 About the Author 469
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Acknowledgements
This treatise, like all knowledge and accomplishments, is the result of many people's thoughts and efforts. My special thanks go to the hundreds of authors and reporters who each had a special window on the world, knew that what they viewed was of importance, and had the talent and courage to express it. Their work was the hard part, and in comparison, synthesizing their clear views of reality into a broad picture of the world economic and political landscape was easy. Special thanks goes to Henry George who gave me an understanding of economics which led to this thesis on property rights law, as applied to nature‘s wealth and technologies, being the heart of the monopoly system. I thank Professor Richard Hienberg, Anup Shah, Mochamad Effendi Aboed of Indonesia, Dmitry Yanovich from Belarus, Phil Hawes, William Kotke author of the classic Final Empire, Keith McHenry (FoodNotBombs), John Leonard, Michael Mityok, David Aronson, Edward Ongwesso, and Franz Nahrada for their support. The advice and support of Professor Glen Martin and Alanna Hartzok has been crucial. I thank Ms. Sudha Menon, Jeff & Diana Jewell, and David Kendall, for their editing. Jeff Yalan‘s last minute proofing was sincerely appreciated. The advice of William Krehm of COMER is appreciated. The support of Garda Ghista of the Prout Assembly was invaluable. We welcome Professor Sidney Becker Smith to the group. Most important, I wish to again dedicate this book to my children, Betty, Ada, Patti, and Cynthia, and grandchildren Sam C., Will, Stephan, Mathew, Sam O, and Susie. It is hoped that this work will contribute to their understanding of the world.
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Foreword Glen T. Martin President, Institute On World Problems Professor of Philosophy, Radford University This amazing book contains ―the whole story.” It represents one of the most illuminating books I have read during my lifetime. In a single volume, Dr. J.W. Smith exposes the immense failures of our global economic system while at the same time clearly describing the economic path toward a transformed future embracing peace, justice, and global prosperity. Smith‘s work has made the story of ―plunder by trade‖ (described in the first half of this book) known to all thoughtful people. It reveals the story of the unholy marriage of monopoly capitalism and the system of imperial nation-states that, today, has resulted in forty percent of the world‘s assets being owned by one percent of the world‘s population. However, critique remains easier, and more common, than practical solutions. Brilliant writers have mounted penetrating critiques since before the time of Marx. Smith‘s compelling and dynamic story of plunder by trade forms the background for a penetrating and powerful solution to our nightmarish economic quagmires. Here we find our way free of any sort of ―left-socialist‖ or ―right-capitalist‖ dogmatisms. The nail has been hit on the head, and we see clearly what human beings must do on this planet to have peace, justice, and prosperity. This penetrating and original economic vision has not yet been widely understood. We remain lost in dogmatisms and half-truths. As Smith puts it: ―The world now understands plunder by trade, the first half of this book, but few realize that inequality and poverty are caused by property rights law, as applied to nature’s resources and technologies, denies others their rightful share of what nature offers to all for free.‖ Few understand the beautiful simplicity of the solution. That is why this book is a must read: "Poverty and inequality is eliminated through a citizenry paying resource (land) rents to themselves and those social-credits coming right back to them in the form of infrastructure, running governments, education, health care, retirement, and other essential social services. With all taxes eliminated, they are quintuply repaid by paying resource rents and banking profits to themselves. In a word, property rights law was developed to enhance monopoly capitalism and the ruling classes of imperial nationstates at the expense of nature and the rest of humanity. A just and equitable property rights law restores the global commons (what nature offers to all for free) and energizes an ―efficient capitalism‖ in which ―each region of the world: each nation, each state, each community, and every entrepreneur has equal rights to both created money and savings (finance capital).‖ Smith tells us that the global commons must be restored in four central areas: land, technology, communications, and banking; mentally not a difficult task. With a sociallyowned banking system citizens would be paying bank profits to themselves. Since the system is socially owned, monopoly private banking practices fall into disuse as ―bank
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profits and resource rents together will pay for infrastructure (railroads, electricity, gas for heating communities, water and sewer systems, etc, all natural monopolies) and they will cover all social services, running governments, education, health care, retirement, etc.‖ Production and distribution here retain the efficiency of capitalism while the global commons is restored, and people are empowered to take their economic life into their own hands. Smith‘s book represents a powerhouse: a stick of dynamite for the economic soul. It simply tells the whole story: where we went wrong and how we can simply and easily get it right. Under a modern land commons, property owners pay resource rents to themselves (into the social fund), and receive that rent back in the quality infrastructure that empowers business and the economy. This simple, efficient and wide circulation of money creates a healthy, vibrant, economy. Monopoly property rights depriving most of those who now have nothing from acquiring something through their hard work are converted to conditional property rights. Under a technology commons, the current exclusive rights to profits derived from the ever-increasing productivity resulting from technological innovations shift to conditional rights. Inventors and developers are paid a capitalized value upfront and their patents placed in the public domain for all to use. That simple change in social structure makes productive techniques available to the world and empowers the economy manyfold. The savings is realized through a 50% to 80% drop in consumer prices. Under a communications commons, Internet2 (a thousand times more powerful than Internt1), a socially owned information superhighway is created. The give-away of the major air waves and information spectrums at low cost to huge private monopolies who then propagandize the population in the service of private, monopoly interests becomes a vestige of history. As with technology and land, the resources given to us for free (e.g., the electromagnetic spectrum) are no longer monopolized under exclusive private property laws for the benefit of the few. The savings are apparent in distribution costs dropping by half and education costs dropping to 5% to 15% of today‘s costs. . Finally, banking converts from a system of loaning appropriated finance capital back to those from which it was unjustly appropriated to a system in which banking is socially owned and operated for the common good of every citizen and the economic empowerment of all. The ability of huge banking conglomerates to manipulate national currencies, to place third world countries into unpayable debt, and to drive a citizenry ever deeper into debt borrowing back what should never have been taken from them in the first place, converts banking to a socially owned system in which finance capital is available to anyone (non-profit organizations, individuals, or businesses) with a sustainable, creative idea for production or services. Together, these innovations create a modern economic commons that empowers economics beyond anything that the world has previously known. This amazing book does indeed tell the whole story. Professor Glen T. Martin, author, Ascent to Freedom, 2008, Emerging World Law, 2009, Triumph of Civilization, 2010
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A friend was having trouble understanding banking. So I sent her this summary: Alert and motivated leaders had just been voted in with a pledge to clean up the collapsed political and economic system. As per current law, the bankrupt banks were automatically taken over by the socially owned Federal Reserve (this may happen in this 2008-10 financial crash). A new currency was issued spendable only within the nation‘s borders. As the books were settled and with negotiations on currency values with other countries ongoing, newly created money was tradable for the old money (not happening in today‘s crash yet but it may if, or when, the dollar crashes). You were chosen to run one of these banks. You come to work the first day, check that your share of the newly created money to operate your region was in your Federal Reserve account, and sit down at your desk. As this socially-owned bank established under this emergency operates at 1/3rd the cost of the collapsed monopoly system you can pay higher interest rates on deposits while charging lower interest rates on loans. As it also has access to Federal Reserve created money to cover any emergency (100% reserves) and thus cannot go broke, depositors and borrowers flock to the security and profits of your bank. You already understand depositing and loaning with your employees taking in the money and making the loans. There are minor things to pay attention to, such as how to keep your surplus invested, but that my friend is all there is to banking. All else is smoke and mirrors as the ethereal world of high finance, primarily made up of massive funds appropriated from productive labor, devises more devious ways to lay claim to wealth properly belonging to others. As those huge blocs of capital pile up, more and more obscure financial instruments are devised. They are primarily bets on values going up or down while in an honest banking-economic system values vary only slightly and there is nothing to bet on except new entrepreneurial projects which can be handled by your bank or venture capital. Eliminate the monopolies we are told do not exist and both money and the economy becomes simple, visible, touchable, and understandable by all. My simultaneously released book, Money: A Mirror Image of the Economy, and this book does that. Except for gifts or thefts, every trade is a transfer of wealth symbolized by money. You cannot have an honest banking system without first creating an honest property rights system. Neither can you have honest property rights without an honest banking system. One is the mirror image of the other. A monopolized economy is just as much smoke and mirrors as a monopolized banking system. Restructure to full and equal economic rights and those monopolies disappear, economic efficiency doubles, poverty disappears and, if those principles are extended worldwide, wars will be relegated to history. This is continual update, concept expansion, version 1.8, 2010. Please check www.ied.info for latest updates
Introduction
1
Introduction The chance that an honest economic structure will be set up within the imperial nations without first a total crash, massive poverty, and a revolution, is virtually zero. Almost all citizens are so fully indoctrinated that their economy is the only possible right economy, that only in a total collapse of the world, as they know it, can their beliefs be proven wrong. Even then, the echo chamber of the corporate media will be protecting power and wealth by trying to convince the citizenry that China, emerging countries, Muslims, and/or a disloyal faction, are responsible for the disaster. The evidence to refuse to look reality in the eye is everywhere. The owners of the once steadily-expanding massive sums of unearned wealth—roughly 95% of all investment capital (see p.3) and still holding (May 2010)—and the massive waste within the superstructures of their monopolies are not even acknowledged to exist. Conspicuous consumption is occasionally mentioned; but only as ―thank goodness someone still has money to spend.‖ The massive waste and miseries of war are pointed to; but only as ―a danger to America‘s budget deficits.‖ There are articles on poverty; but never, except on the far fringes, is that addressed as caused by the economic philosophy under which we run our economy. Virtually no where within these imperial centers will one see the cause of all this misery and waste being our property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. Total indoctrination protects wealth and power, and denies imperial center populations from seeing reality until that unequal and inefficient structure totally collapses, which it will; empires always collapse. As this massive worldwide bubble continues to burst, trillions of dollars are thrown at the very people who caused this financial collapse in the first place; those within the ethereal world of high finance. Only on the far margins of the permitted parameters of debate will one read that ―this is nothing more than all wealth above subsistence flowing to the already wealthy.” One reads of the almost certainty of the collapse of Europe due to bailout money going to bankers, while the wages and pensions of labor are cut to make the payments on those bailouts, plus the tripled interest costs on bonds. One does not read in those same articles that all wealth above subsistence is flowing to the already wealthy. Nor does one read about the inequality within property rights law which guides that unearned money to the powerful.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
However, within Africa and South America the story of ―plunder by trade‖ and ―unequal property rights” within internal trades, our two foundation theses, can be, and are being, told. As that is the only place it can be discussed, only within the emerging world is there the opportunity to restructure to honest property rights law, and reduce employed working hours—as well as resource consumption—by over 50%; even as all citizens live a quality life. To accomplish that, each economically viable developing region, the resource powers, must ally together, and force the imperial nations to include them equally in the wealth-producing, wealth-sharing, process. Once allied, their power—most the world’s resources being within their borders—will be greater than the power of the imperial world. No combination of military power can offset half the world laying down their tools, and fighting back with industrial sabotage, suicide bombs, car bombs, and roadside bombs. Those resource powers coming together as the imperial powers are collapsing will be the opportunity under which the entire world can restructure to honest and peaceful economies. To start restructuring, there are three orders of business: 1) Create a currency spendable only within the borders of economically viable developing regions, and use those funds to build infrastructure and first industries. 2) Trade access to their resources for technology, training, and access to markets. 3) When the developing world gains equal negotiating power, establish a digital world currency for trades between nations with a mandate to protect the value of all currencies; a dual currency system. 4) Finance further development through the socially collected rental values of nature’s resources and technologies. With imperialism‘s financial warfare weapons rendered harmless by currencies spendable only within economically viable borders, each nation, or region, can create base money to build infrastructure and first industries. As that money circulates, resource rents provide the funding for more infrastructures. Within that circulation of money there will be savings to build more industries. Permaculture and building homes from earth materials that will last for centuries should be simultaneously established. Wages paid, building and operating this rapidly developing infrastructure, industry, and economy, automatically stays in financial balance. When fully developed, and due to the massive efficiencies of technology, this economic structure reduces working hours to less than three days a week. Under a communitarian structure, and with five free days per week free, personal skills and arts will flourish; handling much of the local building, repairs, permaculture gardens, etc. Normal employed working hours will drop further, as society evolves to an everhigher level.
Introduction
3
Visualize a fertile valley 10,000 years ago with fruits, nuts and vegetables growing wild along with lush thatch for building shelters. The new settlers have only to pick their food, build their thatch homes, and, once that home is built, relax most the day. A cunning cabal form and each lay claim to a part of the land. They make a pact with toughies that they will share the spoils if they protect their unequal and unjust ―property rights.‖ The meek, mild, and law abiding now have to share the food they pick with those ―owners,‖ have to build their houses, and provide any and all other services. We restore the full and equal rights of that tribe 10,000 years ago in 170 words: Utopia: By paying land (resource) rents to ourselves (socially collected), a citizenry is quintuply repaid through those continually circulating social-credits, building roads, railroads, water systems, sewer systems, and electric grids (any natural monopoly), as well as funding governments, providing education, health care, and retirement. Infrastructure and populations, not capitalists, establish the use-value of land, other natural resources, and their rental values provide the social-credits funding essential social services. Restructure to honest capitalism, as described herein, and taxes disappear as employed working hours and consumed resources drop by half, and all enjoy a quality, secure, life. This requires sharing the “productive” remaining jobs and equal pay for equally-productive labor. Each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur has equal rights to their share of both created and saved finance capital (created money and savings). With those rights, entrepreneurs (private industry) will fill every niche within the production-distribution process. Virtually all capitalized values, those unearned monopoly values, disappear.
Perception management has been so intense that few realize they could be living a life beyond their fondest dreams while working half their current hours and all while lowering the pressure on resources and the environment. Incredulity disappears when one realizes all social infrastructure—roads, water and sewer systems, electric systems, and communication systems—and all social services—education, health care, and retirement—are fully funded even as a high quality life is attained with half the employed working hours. This simple thesis would be understandable the first day of an economics class, as opposed to current economics which is falling apart worldwide as we speak (2008-10). If it had ever been broadly taught, and applied, the theft of others wealth, wars, and poverty would have quickly disappeared. Throughout this book you will be pointed to this page; the proof that 95% of current finance capital is unearned and unproductive; 5% is productive. A quote from our previous work outlines more fundamentals of a peaceful, prosperous, world. A communications superhighway would permit every home to communicate with every other home in the world so cheaply that accounting and billing costs would
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
be greater than the cost of providing the services. Through those communication superhighways, all could be educated to whatever level they wished for 5-to-15% the cost of brick and mortar schools. Three-dimensional orchard permaculture would permit bringing fresh vegetables and fruits from the garden each day or delivered from Southern climes during the winter. The local mall would carry groceries and small consumer items just as today. Moderately-priced to expensive items would be delivered directly from the factory warehouse at 1/3 the price. Laws and constitutions being discussed and voted on over that same communication superhighway would be participatory direct democracy. … Many jobs—recording, accounting, and communicating—can be handled from home offices and, if we share instead of monopolize, employed hours would drop well over 50%. Once monopolies structured within unequal property rights laws—as applied to nature’s resources and technologies, denying others their rightful share of what she offers to us all for free —are eliminated, everybody has a human right to land for a home, to that home, privately provided universal health care, a quality life, a secure retirement, a social right to educate oneself as far as one wanted to go, a social right to know of, discuss, and vote on, laws, and on and on. Each region of the world, each nation, each region of a country, each community, and each entrepreneur has constitutional rights to finance capital. Just as inequality has been structured into past constitutions and law, everything required for an efficient, equal, and honest community can be put into constitutions or laws as a social right or a human right. The right to a belief, balanced by a right not to believe, requires a constitutional separation of church and state. All true costs are labor costs, plus the rental value paid for nature‘s resources which went into producing that product or service (both industrial and honest finance capital are stored labor). Efficient, productive, labor, paid equally for equally productive labor, produces use values relatively equally shared by all. Train labor, build industries to scale for a region, build construction equipment with those industries, build that infrastructure, and the cost to a developing region is primarily importing modern tools for those factories. They have most of the world‘s natural resources, and all manufactured wealth is processed from that natural wealth. So, although it is necessary that the banking system be socially-owned, developing an economically viable region is primarily creating money, to train and employ a region‘s labor force, and to build the necessary infrastructure. Regional and national currencies must have no value outside their borders. In conjunction with a digital only world trading currency, with a mandate to protect the value of all currencies of the world, this creates a dual currency system.a China, Russia, India, Brazil, and other countries are pushing for a new reserve currency to replace the dollar in world trade, and since America has no choice, this will happen in some form. An honest world currency will protect all nations and regions of the world, not just the few who have gained equality in world trade. An honest world currency requires providing each region of the world with technology and training to build and operate both infrastructure and industry. As most the world‘s resources are within the undeveloped world, access to those resources can be traded a
Introduction
5
That infrastructure, and the wealth produced, backs the newly-created money as it circulates producing more wealth. The circulation (velocity) of base money, producing and consuming year after year within the borders of an economicallyviable region, is the economic multiplier of a prosperous community. Current aristocratic exclusive titles to nature's resources and technologies, denying others their rightful share of what nature offers to all for free, and the many other monopolies, copied from those aristocratic excessive rights structured within unequal property rights, denies that simplicity to the world.
Ten to 12 years ago, our research exposed control of resources on the periphery of empire, plunder by trade, as the foundation principle of Western trade policies ever since it originated in the city states of Europe 800 to 1,000 years ago. In those few years—due to the diligence of thousands of researchers—control of resources, covert actions, and much more—all tools of imperialism we discuss deeply—have been broadly addressed throughout the developing and developed world, in the alternative news, and even spoken of within the corporate media. With the emerging world now alert to the many methods of laying claim to their wealth, and beyond the unequal property laws described above, what is there to learn from this book? 1 We feel the exponential theft of poor nations, and labor‘s wealth through unequal pay for equally-productive labor, needs more attention (chapter one). 2 Though the many pressures, forcing the signing of unequal trades, are now well understood, the early history of plunder by trade, which evolved into today‘s world trade structure, is not yet widely known (primarily chapter two). 3 Every nation that successfully developed did so under the principles of protection of tender industries and markets, as per Friedrich List. Not one nation ever successfully developed under the free market philosophies of Adam Smith. Yet every economics department in the world teaches Adam Smith free trade, and almost none teach Friedrich List. This exposes how a perception management (propaganda) system, in place for centuries, works. Push the propaganda aside; no nation ever developed under that philosophy, so it can be nothing else, and Adam Smith‘s Wealth of Nations would disappear from the classroom (primarily chapter three). 4 Under belief systems imposed within a ―free‖ society (they all claim to be free), theft of others‘ wealth is not even thought to happen, let alone be understood. Chapters six through nine, provide a solid foundation for understanding that perception management (propaganda) process. The chapter, ―They Who Write History Control History,‖ explains why books addressing reality, such as for that technology and training. Once each region‘s infrastructure, industry, and economy is balanced, currency values will, through that honest world currency, automatically balance.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
you will be reading here, were hard to find before 1990. Slowly such books became acceptable to the public, market forces forced the corporate media to publish them, today hundreds of books exposing imperialism, and all its many forms of violence, are for sale, and are selling by the tens of thousands. Asia‘s development as allies, to stop fast expanding socialism, was an accident of history. It was not anticipated by managers of state that the huge profits made through manufacturing, in a country paying their labor 30 cents per hour (now $3 to $5), and selling within economies paying their labor $10 to $35 an hour, would deindustrialize the imperial centers, and create the crisis we find ourselves in today. However, the industrialization of a large share of the world (anticipated by 2035); the simultaneous deindustrialization of the imperial centers; nations on that periphery now understanding how they have been suppressed by financial, economic, diplomatic, covert, and overt warfare; a communications superhighway outside the control of the corporate media explaining reality to the world‘s citizenry; and America‘s loss of the moral high ground—due to massively violent, and faulty, foreign policies, such as shattering the peaceful Yugoslavia, the quagmires in Iraq and Afghanistan, secret prisons, the systematic torture of prisoners, etc—all these discovered truths provide an opening for the periphery of modern-day empires to break free. Those breaks are coming fast! An East Asian Summit (EAS), representing half the world‘s population, three billion people, was held in Malaysia, December 2005, and America was not invited. The Shanghai Cooperation Organization (SCO)—consisting of Russia, China, Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan, with Iran expected to join—is contracting to provide oil and gas to fast-developing Asia. Interest quickened at the April 10, 2006 meeting of the South Asian Association for Regional Cooperation (SAARC). And 80% of South America‘s populations are now under freely-elected, progressive, governments. Hugo Chavez‘s Bolivarian Revolution, funded by Venezuelan oil profits, provides the financial cover, and they have declared their independence from the historic imperial powers. Contracts have been signed with China for satellites, broadcasting the Latin American message to the world, is now fully operational; Venezuela is now 100% literate, and Bolivia will be within a few years; Cuban doctors will have returned vision to 4.5 million Latin Americans by 2015, all for free; 40% of Cuba‘s 70,000 doctors are working throughout Latin America bringing badly needed medical services to the poor. Plans are being laid for pipelines throughout Latin America for those nations to tap into Venezuela‘s rich oil fields; oil has been discovered off the coast of Cuba; and trade agreements are being signed with the fast-developing centers of capital in Asia. 5 The ―resource powers‖ (the emerging world) understand well the many methods of plunder by trade. However, as that system is hidden through percep-
Introduction
7
tion management, the imperial world‘s citizenry are only beginning to have that understanding. Thus, we still address deeply, both the early history, and the modern methods, of plunder by trade (enforced by financial, economic, diplomatic, covert, and overt warfare). China, and other countries, are scouring the best minds in the world to understand the many methods through which the world was controlled and plundered (see chapter 19, first out). 6 We are taught we have gained all our rights, and are a democratic society. We have not! And we are not! Aristocratic law, exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, is hidden under beautiful words like capitalism, democracy, peace, freedom, justice, rights, majority rule, etc. Those aristocratic exclusive titles, to what nature offers freely to all, are the very heart of the ―monopolization, wealth extraction, process‖ we are told does not exist, and thus we have no way of knowing that those unequal property rights are denying ourselves, and the world, the enormous economic efficiencies we speak of as possible. The conversion of those aristocratic exclusive titles to conditional titles, increases economic efficiency equal to the invention of money, the printing press, and electricity. The theoretical application of those principles of full and equal economic rights proves that most classical economic philosophies are only justifications for monopoly capitalism, they are not philosophies for economic efficiency, nor do they provide an understanding of full and equal economic rights. 7 The privately collected rents of nature‘s resources and technologies, denying others their rightful share, is unearned wealth, properly shared by all. This is proven by their appropriated, and capitalized, values transposing into equallyshared use-values when those rental values are paid to oneself (society). This eliminates monopolies, and creates a modern commons. The price of consumer products and services, measured in labor time, then drops 50% to 80%. In that honest economy, there are no capitalized values. There are only use values. 5. The costs which disappeared were the values previously extracted from the economy by those aristocratic exclusive titles; the waste of capital, labor, and resources within the superstructures managing those monopolies; and the waste—both within the internal economy and in world trade—defending, or even expanding, the privatized/monopolized/mercantilist/rent-seeking (different names for the same thing) systems of theft.b 8 Changes in word usage attempting to tease out the pictures of an efficient economy, under a philosophy of full and equal economic rights, exposed all later monopolies being copies of the land monopolization, wealth extraction, process (aristocratic exclusive titles to what nature offers for free, denying Robert B. Ekelund, R. Tollison, throughout Mercantilism as a Rent-seeking Society (Texas A&M U, 1981). b
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
others their rightful share). Doing so exposed monopoly capitalism‘s powerful financial engine as nothing more than wealth, properly belonging to us all, and stolen from us, through those exclusive titles to nature‘s resources and technologies. Comparing monopoly capitalism‘s financial engine to the smaller, more powerful, engine of full and equal economic rights, teaches us that the huge blocs of finance capital, that America is worshipped for, need never have been appropriated from their proper owners. Even without counting the wars protecting the monopoly system, that engine was reducing economic efficiency by well over 50%. 9 Utilizing that knowledge, we demonstrate how to eliminate current waste within the economy, eliminate poverty in 10 years, and develop the emerging world to a sustainable level within 50 years. That, of course, is what the above quote from our earlier work tells us. Since a banking system must finance every sector of the economy, monetary theory is not complete without addressing the elimination of monopolization. To write our monetary theory book, the primary and secondary monopolies were pulled from our earlier work, and structured into the simultaneously released, Money: A Mirror Image of the Economy, 2010, 2nd edition. That book is Part III of this larger work you are now reading. ―Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%).‖c That ethereal world of high finance, all above what is needed to run an efficient economy, is not only totally non-productive, it is extracting $7.00 from the economy for every $1.00 of wealth they create.d Andre Damon tells us that, over a period of five years, ―the income of the wealthiest increased by a multiple of five while other incomes remained flat.‖ There is not only no legitimate purposes for extracting those enormous sums of unearned wealth from society, but also the process reduces economic efficiency by over 50%. It is the primary cause of poverty, both within internal economies, and on the periphery of empire. As it is not done by any economist I know of, I ask you to continually calculate the unearned wealth accruing to the ethereal world of high finance through ―plunder by trade,‖ and their many exclusive-title monopolies. Theft of wealth that properly belongs to each and every one of us is, and always has been, massive; so massive that, on balance between them, the monopolists could not spend it all, no matter how hard they tried. Neither could they, again on the average, find William K Black‘s calculations in his blog, ―How the Servant Became a Predator: Finances Five Fatal Flaws‖ Michael Hudson‘s blog, ―Which Economy is Obama Talking about?‖ We thank William K. Black and Michael Hudson for quantifying the steadily expanding unearned and unproductive finance capital, fully 95% of all finance capital at the peak of this latest financial bubble. . d Lucy Ballinger‘s blog, ―How bankers destroy £7 for every £1 they create.‖ c
Introduction
9
enough safe places to invest it all. Called ―export of capital,‖ that surplus finance capital purchased the natural wealth of societies on the periphery of empire. Through the many power levers of empire (financial warfare, diplomatic warfare, economic warfare, covert warfare, and overt war), the profits on capital invested overseas far exceeded the profits on capital invested within the imperial centers. Through this process, ―unearned finance capital‖ kept expanding and becoming an ever larger share (95%) of all finance capital. Eventually, and closely analogous to Nikolai Kondratieff‘s 50 year cycle for financial crashes, the masses became so impoverished, and the elite so wealthy, that imperial economies collapsed. The section on full and equal rights through society funding infrastructure and social services utilizing the rental values on nature’s wealth, Part III, has its own introduction. Within those concluding pages, classical economists stand exposed as justifying a system of theft evolving directly out of aristocratic law, as opposed to writing honest philosophy providing the greatest good for the greatest number of people. In contrast, the simple economic philosophy, that virtually anyone—and everyone—can understand, will, if applied, provide that ―greatest good‖ to every citizen of this earth. Twentieth century neoliberal economics has, by its own violence and failures also been discredited. Classical economics is the neoliberal economics of centuries ago. Because serious exposure of the inequalities and injustices would have led to being ostracized, or to even more serious consequences, only socially-safe belief systems were permitted to be discussed seriously, and that has not changed to this day. Example: The Physiocrats are credited with being the forerunners on Henry George‘s principles were primarily ―Royalists‖ who believed the king should collect the rent from nature‘s wealth. Throughout the classics, or neoliberal works on economics, no where will one find the claiming of these rental values, or the ―earnings‖ of other monopolies, as unearned wealth (extracted from society while producing nothing). Unearned wealth is exactly what those ―surpluses‖ above productive labor values are. Those classics and neoliberal philosophies were, and still are, little more than justifications for systems of theft. With that realization, one‘s mind can focus on honest economic structures, and one will soon learn that honest economics is really quite simple. These first chapters are hidden histories, throughout the centuries, brought to light through studies of classics on the Middle Ages, and tracing both plunder by trade and unequal property rights laws through the centuries. To observe this unearned wealth extraction process today, its possible collapse, and watch the ongoing populist revolutions unfold, follow Democracy Now, Free Speech TV, Link TV, information clearinghouse.info, commondreams.org, globalnet news, globalresearch.ca, europac.net, etc. If CNN keeps up, and expands, it‘s in depth analysis of crisis situations, daily reality may eventually end up on all our mainstream evening newscasts.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Part I Plunder by Trade
The Exponential Advantage of High-Paid Labor Trading with Low-Paid Labor 11
1. The Exponential Advantage of High-Paid Labor Trading with Low-Paid Labor
Capital being properly owned and employed by labor is recognized by no less an authority than Adam Smith: ―Produce is the natural wages of labor. Originally the whole belonged to the labourer. If this had continued all things would have become cheaper, though in appearance many things might have become dearer.‖1 The production once claimed by labor, and now lost, is the everincreasing share going to monopoly profits of land (resources) technologies, banking—all of which nature offers for free—and to the enormous costs of operating, and defending, those monopolies. What Adam Smith means by ―all things being cheaper, though they appear dearer,‖ is fully-paid workers would retain clear title to the values they produced. Things would be cheaper because fully-paid workers would be able to buy more from other well-paid workers, who in turn would both produce more and purchase more. Not only would purchasing power be advancing in step with productive capacity, those who live off the labors of others would now have to find productive work. Instead of workers being paid full value for their labor, much of history has been capital, through control of the law-making process, transferring a large part of the wealth properly shared by us all to the already wealthy. This is a centurieslong process of the wealth produced by labor becoming a right of capital through monopolized title to land, technology, and finance capital.2 The rights of labor, and the masses, have historically been ignored, and an excessive share of the wealth produced by the increased efficiencies of technology has, under exclusive title to nature’s resources and technologies denied others their rightful share of what nature offers to all for free.
Lower Pay for Equally-Productive Labor is Part of “The Monopolization, Wealth Extraction, Process Technology and skill gaps, if initially large, tend to grow under free trade. This is an old Mercantilist insight that the modern economic analysis of innovation has reaf-
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
firmed and renamed the ―learning-by-doing‖ requirement—that is, experience with the productive process is a sine qua non for building up productive skills and innovative prowess. —-David Felix, ―Latin America‘s Debt Crisis,‖ World Policy Journal
Arjun Makhijani calculates that, through imbalances in currency values and directly underpaying labor, equally-productive labor in the world's defeated, dependent, nations were paid 20% that of the developed world, a five to one differential.3 Wealth accumulation advantage from unequally-paid but equally-productive labor is not a linear progression, it is exponential. Consider how long labor within the underpaid nation must work to buy one unit of wealth from the high-paid nation, and then consider how many units of wealth labor within the high-paid nation can purchase from the underpaid nation with the wages of their equallyproductive labor, and working that same number of hours. All true costs are labor costs (both industrial and honest finance capital are stored labors) so we ignore monopoly capital costs, which go to the developed world, and only increases the advantage anyway, and calculate the cost of those widgets at the labor cost of production, $1 an hour labor producing one widget per hour and $10 an hour labor, also producing one widget per hour. The $1 an hour laborer must work 10 hours to buy one of the widgets of the $10 an hour worker, but, with the money earned in the same 10 hours, the $10 an hour worker (country) can buy 100 of the widgets of the $1 an hour worker (nation). At that 10-times wage differential, there is an exponential 100-times-differential in capital accumulation or buying power. The wealth accumulation advantage of the higher-paid nation over the lower-paid nation is equal to the high pay divided by the low pay squared: (Wr/Wp)2 = A (Wr is the wages paid to equally-productive labor in the rich country [$10 earned for every 1-hour time-unit of production]. Wp is the wages paid to equally-productive labor in the poor country [$1 earned for every 1-hour time-unit of production]. A is the capital accumulation advantage of the well-paid nation [100 to 1 in this example]). All wealth is processed from natural resources by labor utilizing industrial capital, most of those resources are in the developing world, and that natural wealth is extracted by the powerful imperial-centers-of-capital through low commodity prices and unequal pay for equal work, as per this formula. The scenario above is expressed ã’ priôri’—a deduction assuming the labor cost to build industries in each country, and the resources harvested in each country, and thus the value of those industries and resources, and the profits produced, at the same differential. If the pay differential is 5 to 1, the difference in wealth accumulation advantage is 25 to 1. If the pay differential is 10 to 1, the wealth accumulation advantage
The Exponential Advantage of High-Paid Labor Trading with Low-Paid Labor 13
is 100 to 1. If the pay differential is 20 to 1, the wealth accumulation advantage is 400 to 1. Place a trader between those two unequally-paid nations to claim all surplus value, both through outright underpaying in hard currency, or through paying in soft currency and selling in hard currency, capitalize those profits by 10 to 30 times in the stock markets, and you have accumulated unearned finance capital through the capitalized value of wealth extracted from the developing world.a Inequality in pay creates invisible borders guiding the world‘s wealth to imperial-centers-of-capital. Equal pay for equally-productive labor within nations quickly eliminates those borders, and assuming technology is shared instead of monopolized, just as quickly alleviates world poverty.
Extracting Wealth through Unequal Currency Values When the IMF-World Bank-GATT-NAFTA-WTO-MAI-GATS-FTAA-CAFTA -military colossus forced other countries to devalue their currencies, and reduce consumption, to increase sales of their valuable natural resources to the developed world, this lowered the value of their labor and commodities, and raised the relative value of manufactured products from the developed world. The claim is made that this is due to the inefficiencies of emerging world industry and labor, but this is hardly so: The low level of wages is intimately linked not to low productivity of labor-time, as classical economic theory would suggest, but to the undervalued exchange rates and the workings of the international monetary system.... The world‘s monetary system does not set values of the currencies on the basis of relative productivity of workers.... The present system is based on balance of payments considerations and on capital flows.... [T]he Mexican currency is valued much lower than the relative productivity of Mexican workers collectively.... [W]hile the average amount produced per unit of time by workers in Mexico, Brazil or Bangladesh is lower than in France, the United States or Japan; the difference in wages at present exchange rates is much bigger than the difference in productivity. This explains why the purchasing power of American dollars, French francs or Japanese yen is much bigger in Mexico, Bangladesh or Brazil than it is in their countries of origin. 4
Arjun Makhijani explains further: The product that export platform countries in the developing world are selling is not merely cheap labor, but highly productive labor. In Singapore ... McGraw Hill produces in one year an encyclopedia that takes five years to produce in the US.... Mexican metal workers are 40 percent more productive than U.S. workers, electronics workers 10 to 15 percent more productive, and seamstresses produce 30 percent more sewing per hour than their U.S. counterparts.5 Under honest property rights law, there are no capitalized values. Those values are paid to inventors and their patents are placed in the public domain. All values are then use values. a
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
One study concluded developing world workers were paid under 2% of the product sales price in the industrial world and in all cases they were paid under 5% of the final sales price.6 There is ―a continuing South-to-North resource flow on a scale far outstripping any the colonial period could command.‖7 During Kennedy‘s presidency there were $3 flowing north for every $1 going south; by 1998 the ratio was seven to one.8
Purchasing Power Parity, a Strategy of Deception The farther one goes east from the borders of Western Europe, the lower the value of local currencies and thus the higher the rate of wealth confiscation. If the IMF, World Bank, and traders used PPP equal values in pricing commodities and payment of debts, the world‘s currently suppressed, and oppressed, people would be fully paid for their labors, and would thus have gained economic freedom. Of course, such calculations would immediately expose how powerful societies lay claim to others‘ wealth through unequal wages and low-priced commodities by imposed ―soft‖ currency values.
Periphery of Empire Finances the Imperial Centers Poor countries are financing the rich through the wealthy world underpaying equally-productive developing world labor, and paying far less than full value for natural resources. In this process, between 1980 and 1990, and when measured against the dollar, not internal PPP (purchasing power parity) relative values, ―wage levels in Mexico declined by 60% [another 40% in 1994-95] ..., in Argentina by 50%, and in Peru by 70%.‖9 This appears as IMF-World Bank-GATTNAFTA-WTO-MAI-GATS-FTAA-CAFTA failures. Not so, they are instead the successes of financial and economic warfare. (All this is rapidly changing due to the worldwide populist revolution. The IMF, the World Bank, and those unequal trade agreements, as currently structured, may soon be history.): Capital that has extended its influence over these new territories knows its own interests, works together in its common interests even while individual capitals compete, [and] coordinates its goals and its strategies in its common interest.... There will always be social inequality, because that increases profits; winners win more because losers lose more. Keeping the Third World in dependence and poverty is not an accident or a failure of the world capitalist system, but part of its formula for success.10
Through far undervaluing developing world labor, Holland consumes 14-times the natural resources obtained within its borders. Other European countries are
The Exponential Advantage of High-Paid Labor Trading with Low-Paid Labor 15
more or less comparable, and the United States, with fewer than 5% of the world‘s population, consumes almost 30% of the world‘s natural resources.11 Any intention of the emerging world succeeding under a philosophy of the wealthy world extracting such enormous unearned wealth is an oxymoron. For the world‘s poor to gain control of their destiny, the wealthy world must pay them equally for equally-productive work, pay full value for their natural resources, and permit them equal access to finance capital, technology, and markets. The key, of course, is that access. With it they will attain equal pay.
Former Colonies do not have Economic Freedom We are taught that former colonies are now free, but this is not so, rhetoric that they are notwithstanding. Labor is too poorly paid in defeated, weak, and dependent nations to create buying power, and those cheap resources are processed into useful products which become the wealth of the industrialized, and militarily powerful, imperial centers. A small share of those manufactured products is returned to the weak defeated nations, to pay for the raw material from which those manufactured products, created wealth, were made. (Again we must emphasize this may be changing fast and hopefully these thefts will end.) To purchase a small share of manufactured products from the industrialized countries produced with emerging world resources, defeated societies must sell even more of their natural wealth below its real value. Far below, considering they should be processing their own resources. Manufactured product purchases, money wasted on arms, and corruption, continually increase the debts of the dependent nations. Servicing continually increasing debt requires the sale of even more resources. Heavy investment in extraction of the natural wealth of weak, resourcewealthy, nations while paying local labor subsistence wages assures a surplus of production, and low prices for those natural resources, while simultaneously denying both the accumulation of capital, and buying power, in the dependent nation. Of course, those debts cannot be paid off, and that is the much spoken of, but little understood, debt trap. Control of trade, and thus control of who becomes wealthy, has, for centuries, been through monopolization of technology and unequal currency values. The cooperative approach to Germany, Japan, and Asia, we witnessed for 40 years, as technology was shared and currency values equalized with allies, was only to gain supporters for the battle to suppress the breaks for freedom worldwide which we will be addressing in depth. That almost every region of the world has more natural resources than Japan attests to—once it has industrial capital, an efficient internal transportation system, and access to markets—the developing world being able to, on the average, produce more cheaply than Japan. Where are Hong Kong's resources? Where are
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
South Korea's resources? Where are Taiwan's resources? Where are the resources of most of Europe? The answer, of course, is those resources are primarily in the resource wealthy developing world and that natural wealth has been confiscated, through inequalities of trade, to become the wealth of the imperial (dominating) centers of capital. The centuries-long process of embedding aristocratic rights into exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, has created an economic monster. We grow up within this monstrosity, no other system for comparison is permitted to evolve, everything looks normal to us, and people are instinctively threatened by thoughts of major changes. But consider this: The greater share of low-paid labor we have been describing is essential work while over half the labor in the high-paid services in the industrialized world is, except as a method of distributing the wealth, totally unnecessary. The rights of property are so excessive, and the rights of labor so inadequate, that, throughout the Industrial Revolution, distribution by unnecessary labor has evolved to pull some of the unearned wealth back from capital. Wasted labor within what appeared to be an efficient economy has been outlined in classics by Benjamin Franklin 200 years ago, Charles Fourier 180 years ago, John Stuart Mill and Alfred Marshall 130 years ago, and Thorstein Veblen, Bertrand Russell, Lewis Mumford, Stuart Chase, Upton Sinclair, and Ralph Borsodi in the first half of the 20th century. Later writers describing the same phenomenon are Juliet Schor, Seymour Melman, Samuel Bowles, David Gordon, Thomas Weiskopf, Jeremy Rifkin, Andre Gorz, and numerous European authors. Notes
Adam Smith, The Wealth of Nations, Modern Library edition (New York: Random House, 1965), p. 64. Ibid, pp. 64-67. 3 Arjun Makhijani, From Global Capitalism to Economic Justice (New York: Apex Press, 1992). 4 Makhijani, Economic Justice, pp. xv, 80-81, 121-22, 162-65; see also pp. 159, 167-70. 5 Ibid, p. 163. 6 Jack Epstein, ―Dickens Revisited,‖ The Christian Science Monitor, August 24, 1995, pp. 1, 8; Amy Kaslow, ―The Price of Low-Cost Clothes: U.S. Jobs,‖ The Christian Science Monitor, August 20, 1995, p. 4; Christopher Scheer, ―Illegals Made Slaves to Fashion,‖ The Nation, September 11, 1995, pp. 237-38. 7 Susan George, The Debt Boomerang (San Francisco: Westview Press, 1992), p. xvii. 1 2
8
Ken Silversteen, ―Shopping for Sweat,‖ Harpers Magazine, January 2010, p. 39.
Susan George, Fabrizio Sabelli, Faith and Credit (San Francisco: Westview Press, 1994); Duncan Green, Silent Revolution (London: Cassel, 1995), especially pp. 95-96; Hancock, Graham, Lords of Poverty (New York: Atlantic Monthly Press, 1989); James Petras, "Latin America's Free Market Paves the Road to Recession," In These Times, February 13-19, 1991, p. 17. 10 Peter Marcuse, ―Letter from the German Democratic Republic,‖ Monthly Review, July/August 1990, p. 61. 11 David C. Korten, When Corporations Rule the World (West Hartford, CT, Kumarian Press, 1995), p. 33. 9
The History of Plunder by Trade
17
2. The History of Plunder by Trade See Clifford E Singer, Energy and International War, 2008, other volumes of World Scientific Series on Energy and Resource Economics for further studies on trade wars throughout history.
The economic system [neo-mercantilism] we are now creating in [Adam] Smith‘s name bears a far greater resemblance to the monopolistic market system he condemned ... [and] opposed as inefficient and contrary to the public‘s interest ... than it does to the theoretical competitive market system he hypothesized would result in optimal allocation of a society‘s resources. – David C. Korten, When Corporations Rule the World
That unique historian of the Middle Ages, Petr Kropotkin, also recognized a "resemblance" in societies as they evolved towards modern times. At first glance, cities of different cultures may appear different and quaint but the basic structure was the same: The medieval cities ... [were] a natural growth in the full sense of the word.... Each one, taken separately, varies from century to century. And yet, when we cast a broad glance upon all the cities of Europe, the local and national unlikeness disappear, and we are struck to find among them a wonderful resemblance, although each has developed for itself, independently from the others, and in different conditions.... The leading lines of their organization, and the spirit which animates them, are imbued with a strong family likeness. Everywhere we see the same federations of small communities and guilds, the same "sub-towns" round the mother city, the same folkmote, and the same ensigns of its independence.... Food supplies, labour and commerce are organized on closely similar lines [and] inner and outer struggles are fought with the same ambitions.1
The "wonderful resemblance" Kropotkin spotted as such, a social positive actually had a dark side, a "resemblance to the monopolistic system" as David C. Korten observed in today's world economy. Violence and economic warfare is central to the monopolization, wealth extraction, process today just as it was at its origin in the Middle Ages. We will be following those common threads of plunder by trade (monopolization) through history, demonstrating that it has been the foundation principle of world trade, a primary cause of immense unearned wealth for the few, and impoverishment for the many, all these past centuries. Though they typically function in tandem, the other primary cause is unequal property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, which we discuss in Part III.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Today’s Plunder by Trade Originated Centuries Ago Just as their predecessors fought to appropriate their neighbors‘ wealth through raids, the cities of the Middle Ages used their military superiority to monopolize the tools of production, control trade, and make the outlying societies dependent upon their commerce. They were learning to plunder by trade. Henri Pirenne and Eli F. Heckscher, in their classics on the Middle Ages, and Immanuel Wallerstein in The Origin of the Modern World System, through outlining the origins of monopolization of tools of production, and proto-mercantilist trade, imposed and controlled through violence, describes the precursors to the activities of today‘s national security councils, and America‘s National Security Administration: Up to and during the course of the fifteenth century the towns were the sole centers of commerce and industry to such an extent that none of it was allowed to escape into the open country.... The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years.... The severity of these measures increased with the growth of ‗democratic government.‘.... All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms and fulling-vats were broken or carried away.2 The problem of the towns collectively was to control their own markets, that is, be able to reduce the cost of items purchased from the countryside and to minimize the role of stranger merchants. Two techniques were used. On the one hand, towns sought to obtain not only legal rights to tax market operations but also the right to regulate the trading operation (who should trade, when it should take place, what should be traded). Furthermore, they sought to restrict the possibilities of their countryside engaging in trade other than via their town. Over time, these various mechanisms shifted their terms of trade in favor of the townsmen, in favor thus of the urban commercial classes against both the landowning and peasant classes.3
Those simple looms and fulling vats were primitive industrial capital. With this early technology the cities could produce cheaper, and better, cloth, and trade these commodities to the countryside for wool, timber, ore, and food. When the outlying villagers came to town; looked at the simple looms, fulling vats, and forges; it did not take them long to build their own tools, and produce their own cloth, leather goods, metal tools, etc. The loss of the city‘s markets, for both raw material and manufactured products, due to the comparative advantage of the countryside, meant impoverishment, and possibly even starvation, for those in the city who formerly produced those consumer products. The same loss of monopoly, through increased technological knowledge of the countryside, and its natural comparative advantage, held true for other products and other cities. The comparative advantages of the outlying villages were eliminated, by force, to maintain dependency upon
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the city, and lay claim to both the natural wealth of the countryside, and the wealth produced by technology (which are gifts of nature that has been discovered). Obtaining raw materials from the countryside cheap, and selling their manufactured products at high prices, through a legal system of feudal rights of their own creation, the powerful, and crafty, of the city transferred others‘ earned wealth, within their trading region, to themselves. These same powerful and crafty groups, throughout history, continually structured laws to protect their property rights because property rights monopolies ―entitled‖ them to all wealth above labor, produced on, or with, that property. We will learn in Part III, Internal Trade, that a key aspect of the monopolization, wealth extraction, process is aristocratic exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, copied from aristocratic property rights. Immanuel Wallerstein‘s phrase, ―they sought to restrict the possibilities of their countryside engaging in trade in other than via their town‖4 describes the same problem facing the powerful today. To maintain their wealth, power, and the luxurious standard of living their upper class citizens now feel is normal, the powerful maintain their monopolies and unequal trades. To permit the countryside to utilize its natural comparative advantage would mean a drastic drop in living standards for the wealthy, in both the established and the forming imperial-centers-of-capital. This could lead to open revolt as they become poorer. Thus the emergence of conscientious leaders in powerful imperial centers, with a sincere interest in the well-being of people in dependent societies providing their crucial resources, is a rare occurrence. Reality requires imperial leaders to care for their own, even as millions, or even billions, of people on the periphery are impoverished by their Grand Strategies of Containments through economic, financial, diplomatic, covert, or overt warfare.5 To protect their access to crucial resources, powerful imperial cities of the Middle Ages used military power to eliminate the comparative advantage of the countryside, and that of other cities. Power struggles between city states had intrigues, alliances, balances of power, and preponderance of power foreign policies identical to, and for the same purpose as, the modern nations and empires of recent history (control of resources and trade to maintain their security): The leading mercantile cities [of Europe] resorted to armed force in order to destroy rival economic power in other cities and to establish [a more complete] economic monopoly. These conflicts were more costly, destructive, and ultimately even more futile than those between the merchant classes and the feudal orders. Cities like Florence, which wantonly attacked other prosperous communities like Lucca and Siena, undermined both their productivity and their own relative freedom from such atro-
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
cious attacks. When capitalism spread overseas, its agents treated the natives they encountered in the same savage fashion that it treated their own nearer rivals.6
Title to industrial capital (the tools of production), and control of trade were the primary mechanisms for claiming the wealth of the countryside, of another city, of the weak within an empire, and of the periphery of empire. The destruction of another society's industrial and finance capital, to protect markets, substituted plunder by trade for plunder by raids. Instead of appropriating wealth directly, societies learned to accomplish this through the proto-mercantilist policies of making others dependent, and claiming their wealth through unequal trades. Thus evolved the foundation philosophy of mercantilism. The quote below describing British mercantilism is from Adam Smith's The Wealth of Nations; however, the origin of this 20th century trade philosophy (weakening in the 21st century) can be traced to the free cities of Europe in the Middle Ages. Adam Smith‘s philosophical work was the result of studying world trade patterns in force for centuries: [Mercantilism‘s, monopolization‘s, privatization‘s, rentseeking‘s {different names for the same thing}] ultimate object ... is always the same, to enrich the country [or city] by an advantageous balance of trade. It discourages the exportation of the materials of manufacture [tools and raw material], and the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations [cities] in all foreign markets: and by restraining, in this manner, the exportation of a few commodities of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture, in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities.7
From Imperial Cities to Nascent Imperial Nations With the cities battling over the wealth of the countryside, the aristocracy, and the Church, reorganized and, while consolidating the first modern states, incorporated the free cities of Europe. As livelihoods of the countryside were dependent upon control of their coveted wealth-producing resources, convincing them their well-being should be entrusted to others controlling these resources went against all instinct and common sense. The masses wished to maintain control of their resources, and their community support structures. ―Only wholesale massacres by the thousand could put a stop to this widely spread popular movement, and it was by the sword, the fire, and the rack that the young states secured their first and decisive victory over the masses of the people.‖8 The 14th century saw the beginning of a 300 year effort to erase all trace of community support structures, and community ownership of social wealth. The
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process of implanting aristocracies‘ exclusive title to nature‘s resources and technologies, denying others their rightful share of what nature offers to all for free, into modern law, to individualize the masses, and to limit their power, had begun: For the next three centuries the states ... systematically weeded out all institutions in which the mutual-aid tendency had formerly found its expression. The village communities were bereft of their folkmotes, their courts and independent administration; their lands were confiscated. The guilds were spoliated of their possessions and liberties, and placed under the control, the fancy, and the bribery of the State‘s official. The cities were divested of their sovereignty, and the very springs of their inner life—the folkmote, the elected justices and administration, the sovereign parish and the sovereign guild—-were annihilated; the State‘s functionary took possession of every link of what formerly was an organic whole. Under that fatal policy and the wars it engendered, whole regions, once populous and wealthy, were laid bare; rich cities became insignificant boroughs; the very roads which connected them with other cities became impracticable. Industry, art, and knowledge fell into decay.... For the next three centuries the states, both on the Continent and in these islands [Great Britain], systematically weeded out all institutions in which the mutual-aid tendency had formerly found its expression. It was taught in the universities and from the pulpit that the institutions in which men formerly used to embody their needs of mutual support could not be tolerated in a properly organized State.9
Having gained control of the masses through the power of the state, those with power could safely concentrate on monopolization of the wealth-producing mechanisms of world trade: The problem of the towns collectively was to control their market, that is, be able to reduce the cost of items purchased from the countryside and to minimize the role of stranger merchants.... But the profits [controlling the trade], while important, were small by what might be earned in long-distance trade, especially colonial or semicolonial trade. Henri Sée estimates the profit margins of the early commercial operations as being very high: ―Sometimes in excess of 200 or 300 percent from dealings that were little more than piracy.‖10
The raiders of the Middle Ages did not need to keep what they were doing secret; that it was for their survival was obvious. But, as soon as imperial cities evolved into imperial states, the connections between the traders who would lose business, and those who would have to fight, were broken. Managers of state cannot teach their citizens to be kind and just, and then send them out to destroy the industries of peaceful neighbors. The excuses used are those we read in history, which have become so ingrained we accept them as the biological imperatives of humankind. They are not biological imperatives. Humans are far more peaceful and cooperative than they are aggressive. Expose the real reason for these wars and suppressions, eliminate
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those inequalities in internal and external trade, establish a modest security force whose mission is everybody‘s security, and the world will be peaceful.
The Advantage of Cheap Transportation While cities fought back and forth, those with timber for boats, with access to the sea, and with seafaring skills, had a unique advantage. Dominance on the seas ensured they could move commodities much more cheaply than their competitors. Thus, the great trading and seafaring city state of Amalfi was destroyed by the sea power of Pisa. Pisa was then defeated by Genoa, which was later overwhelmed by Venice. Through naval power, Venice was able to enforce the rules of trade for centuries. However, along with the loss of the silk and spice trade through Muslim control of those trade routes, the Venetians slowly succumbed to the combined power of competing sister states and European powers.11 The battles between Italian city states prevented a consolidation of wealth and power. It was now the turn of Western European cities. The Hanseatic League formed in the late 13th century and, within 100 years, 85 to 100 cities were cooperating to quell pirates, foster safe navigation with lighthouses, train pilots, import raw material, and export manufactured goods—by agreement only in Hanseatic boats. They established navigation laws and custom duties with trading enclaves on foreign soil, the forerunner of today‘s duty-free ports and industrial enclaves (free trade zones where normal labor protection laws are suspended). Having copied the principles of monopolization of trade practiced by the Venetian Empire, the Hansa dominated the trade of Western and Middle Europe for 300 years. With treaties between cooperating cities, this powerful league avoided most, but not all, of the pitched battles typical of Southeastern, and Eastern, European city states. However, like those sister city states, it was weakened by principalities, and ruling families within its geographical area, demanding tributes within their jurisdictions. This league lacked the power, cohesiveness, and coordination of a unified nation, and was overwhelmed by united national powers—Denmark, Sweden, Norway, Lithuania, Poland, the principality of Moscow, and Holland—a replay of the unified coalitions which defeated Venice.12 As the Hanseatic League‘s trade declined, nations with unique advantages of coastline, timber for building ships, and skilled seamen—Spain, Portugal, France, England, Holland and Italy-—spread across the world, overwhelming primitive cultures, and creating their colonial trading empires. The seventh colonial nation, Germany, arrived late on the scene. With the development of ships carrying many more tons of cargo, thus greatly reduced shipping costs, tiny Holland‘s trade blossomed. Out of 20,000 ships in world trade in the middle of the 17th century, 16,000 were Dutch. In
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James Buchan‘s Frozen Desire, 1997, Nouvelle Edition, 1768, Vol 1: Picador, quotes the Siecle de Louis XIV, ―One day, a French consul was telling the King of Persia that Louis XIV had conquered nearly the whole of Holland. The monarch replied, ‗How can that be? There are always twenty Dutch ships to one French in the Port of Ormuz.‘‖? But other imperial nations were continually studying the process of gaining wealth and power through control of trade, and Holland's expanding trade monopoly would soon be overwhelmed by the English, who were slowly building a base for economic and military power. Britain created enormous advantages for her industry through tariffs, support for industries, and other protectionist measures. But its primary advantage was rich beds of coal and iron ore only 15 miles apart, a favorable circumstance that, early in the Industrial Revolution, no other nation could match.
Creating Empires through Control of Trade Shortage of labor created by the Black Death of the 14th century, and the wool market created by Hanseatic traders provided the impetus for English sheep farming (in the 15th century, 90% of English exports were wool). Though the true origin of privatization was the Statute of Merton, in 1235,13 the greater wool profits quickened the English Enclosure Acts. Skilled artisans were encouraged to emigrate from countries where they suffered religious persecution and declining economic fortunes, such as France after the revocation of the Edict of Nantes. This was the opposite of today‘s industry fleeing high-priced skilled labor, and moving to cheap labor. During Britain's early industrial development—from virtually every country in Europe, and as far away as Persia, India, and China—the technology and skilled labor to produce almost every product in world commerce were brought to England. English labor was trained in those productive skills, custom duties were enacted to protect those new industries, and bounties were given to promote exports of manufactures.14 The cornerstone of British control (monopolization) of trade was the Navigation Acts (1651-1847), copying Hanseatic and Venetian trade rules, which required British trade to be handled on British ships. England and Scotland peacefully federating into one nation, in 1707, provided a cohesive government under which all industry could be nurtured and protected. The Navigation Acts, economic warfare aimed directly at Dutch dominance of commercial trade, triggered war. English warships attacked Dutch shipping. English exports and imports, now produced and transported largely by English fishermen, manufacturers and shippers increased rapidly. The Methuen treaty of 1703 between Britain and Portugal, shutting the Dutch off from trade with the Portuguese empire, was a deadly blow to Holland. Suddenly-idled Dutch capital and skilled labor emigrated to the protective trade structure of England.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Britain developed under the yet-unwritten protection principles of Friedrich List, not under the yet-unwritten principles of Adam Smith free trade, as interpreted by neo-mercantilists. Britain becoming the wealthiest nation in the world, for over 100 years, is powerful evidence in favor of Friedrich List‘s philosophy of protecting a nation‘s tender industries and markets. Past errors have been, and still are, such protection is always for one selfish nation or bloc of nations. Weaker nations, which need even more protection, were at Britain‘s mercy: [Britain‘s Navigation Acts] became the fundamental basis for the Old Colonial System. According to this Act the colonies could send their most important products, the socalled Enumerated Commodities, only to the mother country. By an important law passed three years later, actually called the Staple Act, the same was ordered with regard to the export of European goods to the colonies, with the express purpose of ―making this Kingdom a staple not only of the commodities of those plantations but also of the commodities of other countries and places for the supplying of them.‖15
Starting out more industrially advanced, the Spanish concentrated their labors on confiscating shiploads of gold and silver booty from their colonies. They did not produce consumer products for the elite; they imported them instead.16 In 1593, an advisor explained the problem to King Philip II: The Cortes of Valladolid in the year 1586 petitioned Your Majesty not to allow the further importation into the kingdom of candles, glassware, jewelry, knives and similar articles; these things useless to human life come from abroad to be exchanged for gold, as though Spaniards were Indians.... The general remote cause of our want of money is the great excess of this Kingdom in consuming the commodities of foreign countries, which prove to us discommodities, in hindering us of so much treasure, which otherwise would be brought in, in lieu of those toys.17
Holland, Britain and France supplied these ―toys,‖ and Spain‘s wealth ended up in their vaults. Britain's First Earl of Shaftesbury (1621-83) was the primary promoter of the mercantilist plan to lay claim to Spain‘s wealth through trade. Shaftesbury explained, ―If you will follow our directions we shall lay a way open to you to get all the Spanish riches in that country with their consent, and without any hazard to yourselves.‖18 Wealth accumulated by Britain, and the simultaneous impoverishment of Spain, its major rival, the eventual dominance of Britain in world trade for over 100 years, and the immense wealth this produced for the small nation of Britain, proved the validity of Shaftesbury‘s economic warfare plans. Although Spain was immensely wealthy, its riches and power were sapped by unnecessary purchases of other societies‘ labor, and British economic warfare, backed and enforced by superior sea power, overwhelming other nations.
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This book follows two consistent threads of plunder by trade, through the last 850 years of history, that were fundamental in world trade before the 21st century: 1) Control of nations and resources on the periphery of empire through financial, economic, covert, and overt warfare, to maintain control of resources, and the wealth producing process, 2) locking societies within belief systems to protect the wealth extracted through those unequal trades. In Confessions of an Economic Hit Man (2004), John Perkins identifies the National Security Administration as the managers of state overseeing the control of resources outside America‘s borders; the same job as those overseeing the security of those Free Cities of Europe 700 to 800 years ago.19 1 Petr Kropotkin, Mutual Aid (Boston: Porter Sargent, 1914), pp. 187-88.
Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), p. 277. Quoting the classics: Henri Pirenne‘s Economic and Social History and Eli F. Heckscher‘s Mercantilism. 3 Immanuel Wallerstein, The Origin of The Modern World System, vol. 1 (New York: Academic Press, 1974), pp. 119-20. For ―plunder by trade,‖ see William H. McNeill, The Pursuit of Power (Chicago: University of Chicago Press, 1982). 4 Wallerstein, The Modern World System, vol.1, pp. 119-20. For a fuller understanding of cities throughout history, read Paul Bairoch‘s, Cities and Economic Development From the Dawn of History to the Present (Chicago: University of Chicago Press, 1988). 5 Christopher Layne, ―Rethinking American Grand Strategy,‖ World Policy Journal, (Summer 1998), pp. 8-28. 6 Lewis Mumford, Technics and Human Development (New York: Harcourt Brace Jovanovich, 1967), p. 279; see also George Renard, Guilds of the Middle Ages (New York: Augustus M. Kelly, 1968), p. 35; Petr Kropotkin, The State (London: Freedom Press, 1987), p. 41; Kropotkin, Mutual Aid, chapters 6-7; Dan Nadudere, The Political Economy of Imperialism (London: Zed Books, 1977), p. 186. 7 Adam Smith, The Wealth of Nations (New York: Random House, 1965), p. 607. 8 Kropotkin, Mutual Aid, chapters 6-8, especially p. 225. 9 Ibid, especially p. 226. See also Renard, Guilds of the Middle Ages, p. 66 and chapters 7-8; Adam Smith, Wealth of 2
Nations, pp. 523-626, 713; Wallerstein, Modern World System, vol. 2, pp. 5, 37, 245, vol. 3, p. 137. 10 Wallerstein, Modern World System, vol. 1, pp. 119-20, emphasis added. 11 Friedrich List, The National System of
Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977), pp. 5-10.
12 List, National System, pp. 9-10, 12-33, 40-45, 78-79.
Hartzok, Alanna. The Earth Belongs to Everyone, (Institute for Economic Democracy, 2008), chapter 1. Ibid., pp. 71, 56, 345, chapters 26-27. 15 Heckscher, Mercantilism,1955, vol.2, pp. 70-71; also Adam Smith, Wealth of Nations, pp. 429-31, 544-65, 580. 16 Michel Beaud, A History of Capitalism, 1500 to 1980 (New York: Monthly Review Press, 1983), p. 19. 17 Eric Williams, From Columbus to Castro (New York: Vintage Books, 1984), pp. 46-47. See also Paul Kennedy, The Rise and Fall of Great Powers (New York: Random House, 1987), p. 54, and Kevin Phillips, Boiling Point (New York: Random House, 1993), especially chapter 8. 18 List, National System, pp. 57-59, 66-68; William Appleman Williams, The Contours of American History (New York: W.W. Norton & Company, 1988), pp. 50-77, especially pp. 57, 77. See also Heckscher, Mercantilism, 2 vols. 19 Steven Hiatt, Editor, A Game As Old As Empire: The Secret World of Economic Hit Men and the Web of Global Corruption (Barrett-Koehler, San Francisco, 2007), builds upon and goes far beyond John Perkins. 13 14
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The Unwitting Hand Their Wealth to the Cunning
27
3. In Both Internal Trade and World Trade, the Unwitting Hand Their Wealth to the Cunning
Classical Economists Sir William Petty (1623-87) down through Sir James Steuart (1712-80), built the philosophical foundation for Adam Smith free trade. In a replay of controlling the countryside, to control resources and markets, each classical philosopher pointed out the necessity of, ―using the powers of government, to restrict self-provisioning in the countryside,‖ so as to provide labor for new industries, and a market for those industries. ―Classical political economy was, first and foremost, meant to be a formula for accelerating the overall accumulation process,‖ and was meant to guide the greater share of the wealth produced, by the increased efficiencies of technology, to the already wealthy.a Again: we will learn in Part III that, the primary means for ―accelerating the overall accumulation process‖ were, aristocratic exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. This foundation stone for all monopolies, before and since, was so simple that it was kept hidden by most classical economists by simply ignoring it. Those listed just below, did address those monopolization principles. The elimination of today‘s inequalities and injustices, which have their foundation in those earlier classics addressed above, is the inherent goal of this work. Most of the early classical philosophers were members of polite society, writing a philosophy for other elites, a process ongoing yet today. Speaking for the common people were, Gerard Winstanley in the 16th century, Jean Jacques Rousseau in the Michael Perelman, The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (London: Duke University Press, 2000), especially p. 91: Thomas C. Patterson, Inventing Western Civilization (New York: Monthly Review Press, 1997). Classical economists translated mean "those within the empire‘s university system whose philosophies are pushed by the current power structure." The lure of prestige and advancement (peer pressure), forced most professors and intellectual to protect the then-current power structure. Herbert Spencer, possibly the most respected thinker of the tune, agreed that society should collect all land (resource) rents. Ostracized from elite circles, he eventually recanted. This demonstrates why such common-sense philosophy is forced to the margins of the educational system. All career advancements and funding go behind those whose teachings and writings protect the current power structure. It is hard to believe, but this system of control, through peer pressure, works so well that high quality philosophy was rejected, and essentially unknown to all but a few of the most serious researchers. a
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
17th century, Johann Herder in the 18th century, and Karl Marx in the 19th century.1 In 1841, Friedrich List, the primary source for this chapter, addressed the rights of European empires ,and the emerging United States, but did not address rights of nations, and people, on the periphery of empire. Nor did he address those aristocratic exclusive titles to nature's resources and technologies, denying others their rightful share of what nature offers to all for free, the primary wealth appropriation principle within internal economies, and also applying deeply to control world trade. In-depth descriptions of 18th century mercantilist trade, describe well the proto-mercantilist trade between the cities and countryside 600 years earlier, and mirror the neo-mercantilist trade between developed and developing nations for the next 230 years, when the world was supposedly operating under Adam Smith‘s philosophy. For neo-mercantilists to restructure their overt plunder of weak societies, into plunder through inequalities of trade, it was necessary to ignore statements in The Wealth of Nations that contradicted neoliberal trade philosophy. Though more were included, Free Trade was diplomatic code for continued mercantilist unequal trade. Adam Smith again: A small quantity of manufactured produce purchases a great quantity of rude produce. A trading and manufacturing country, therefore, naturally purchases with a small part of its manufactured produce a great part of the rude produce of other countries; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity.... Few countries ... produce much more rude produce than what is sufficient for the subsistence of their own inhabitants. To send abroad any great quantity of it, therefore, would be to send abroad a part of the necessary subsistence of the people. It is otherwise with the exportation of manufactures. The maintenance of the people employed in them is kept at home, and only the surplus part of their work is exported.... The commodities of Europe were almost all new to America, and many of those of America were new to Europe. A new set of exchanges, therefore, began to take place which had never been thought of before, and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several [all] of those unfortunate countries.2
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John C. Miller points out that, Britain‘s Navigation Acts were mercantilism, translated into statute law; the Staple Act completing that structure.3 Before Britain‘s near defeat by Napoleon and his continental system, these protectionist, maxims later so vehemently denied under Adam Smith, were, plainly professed by all English ministers and parliamentary speakers: [1] Always to favour the importation of productive power, in preference to the importation of goods. [2] Carefully to cherish and to protect the development of the productive power. [3] To import only raw materials and agricultural products, and to export nothing but manufactured goods. [4] To direct any surplus of productive power to colonization, and to the subjection of barbarous nations. [5] To reserve exclusively to the mother country the supply of the colonies and subject countries with manufactured goods, but in return to receive on preferential terms their raw materials and especially their colonial produce. [6] To devote especial care to the coast navigation; to the trade between the mother country and the colonies; to encourage sea fisheries by means of bounties; and to take as active a part as possible in international navigation. [7] By these means to found a naval supremacy, and by means of it to extend foreign commerce, and continually increase her colonial possessions. [8] To grant freedom in trade with the colonies and in navigation only so far as she can gain more by it than she loses. [9] To grant reciprocal navigation privileges only if the advantage is on the side of England, or if foreign nations can by that means be restrained from introducing restrictions on navigation in their favor. [10] To grant concessions to foreign independent nations in respect of the import of agricultural products, only in case concessions in respect of her manufactured products can be gained thereby. [11] In cases where such concessions cannot be obtained by treaty, to attain the object of them by means of contraband trade. [12] To make wars and to contract alliances with exclusive regard to her manufacturing, commercial, maritime, and colonial interests. To gain by these alike from friends and foes; from the latter by interrupting their commerce at sea; from the former by ruining their manufactures through subsidies which are paid in the shape of English manufactured goods.4
As William Pitt refined the First Earl of Shaftesbury's formula for British trading supremacy, ―Britain seems to have decided the protectionist policies through which she had become immensely wealthy had all been a mistake.‖ In his classic, The National System of Political Economy (1977 edition), Friedrich List outlines how Britain, under the guidance of William Pitt, for the first time eulogized Adam Smith‘s doctrine of free trade, while secretly maintaining the old maxim of, becoming wealthy by selling expensive manufactured goods and, buying cheap commodities from weak dependent societies as outlined in the above 12 protectionist maxims. The British state department, British intelligence, and British industry were funding think tanks, correspondents, writers, and lecturers to impose their interpretation of Adam Smith‘s free-trade philosophy across the world.5
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Friedrich List alerts us that, Adam Smith free trade—as interpreted, designed, and managed by neo-mercantilists—is a br‘er rabbit-don‘t throw me in the brier patch scam, designed to prevent the rest of the world from industrializing. This maintains the emerging world‘s technological dependence and protects the flow of the world‘s resources, cheaply, to the imperial centers. List also points out that, ―the forces of production are the tree on which wealth grows, and an individual may be better off purchasing something cheaper from another society, but, collectively, everybody is better off if a society produces its own basic commodities, machine tools, and finished products.‖6 For those who understand the multiplier factor (economic multiplier), as money circulates year after year, this is obvious. However, note the relative equality which must be assumed, and it is specifically that equality which is missing. Napoleon knew well that, any nation would be impoverished if their industry and trade were dominated by another: ―Under the existing circumstances ... any state which adopted the principles of free trade must come to the ground ... [and] a nation which combines in itself the power of manufacturers with that of agriculture is an immeasurably more perfect and more wealthy nation than a purely agricultural one.‖7 Finally List tells us that both ―Adam Smith and J.B. Say had laid it down that ... nature herself had singled out the people of the United States [and most of the rest of the world] exclusively for agriculture.‖ The Wealth of Nations had no allowance for industrial development beyond a few select nations and Friedrich List, who challenged the philosophy of Adam Smith because his native Germany could not develop under a philosophy designed to maintain the supremacy of Britain, allowed only for the industrialization of the temperate zones. Even List's staunchest supporters criticized his philosophy for not considering the rights of all people throughout the world.8 An honest philosophy for world development, as we are advocating, must put ―rights for all worldwide‖ as a first consideration. Adam Smith recognized that protection for a developing nation could ―raise up artificers, manufacturers and merchants of its own,‖ but claimed this would lower the price of their agriculture products.9 Considering agricultural production would be marketed to those employed in the new local industries, and dependency of others on British commodities markets and manufactures was the centerpiece for maintaining the wealth of his native Britain, this was a difficult logic. This tells us Adam Smith was considering only the rights of an imperial center, and had relegated the periphery to providers of resources for that empire. For the newly-free American colonies, France, and later Germany, William Pitt's philosophy was easy to see through. ―Such arguments did not obtain currency for very long [in France]. England‘s free trade wrought such havoc amongst the manufacturing industries, which had prospered and grown strong under the Con-
The Unwitting Hand Their Wealth to the Cunning
31
tinental Blockade system, that a prohibitive règime was speedily resorted to and French manufactories doubled between the years 1815 and 1827.‖10 List's insights into the "distinction between the theory of values, the theory of the powers of production, and between manufacturing power and agricultural power, were gained through observing firsthand both the rapid development of the newly-free United States as they ignored Britain's promotion of Adam Smith [unequal] free trade, and "the wonderfully favourable effects [to the continent] of Napoleon's Continental System, and the destructive results of its abolition.‖11 Adam Smith pointed out, ―England had founded a great empire for the sole purpose of raising up a people of customers.... The maintenance of this monopoly has hitherto been the principal, or more properly perhaps the sole end and purpose of the dominion which Great Britain assumes over her colonies.‖12 Historian Barbara Tuchman concurs: Trade was felt to be the bloodstream of British prosperity. To an island nation it represented the wealth of the world, the factor that made the difference between rich and poor nations. The economic philosophy of the time (later to be termed mercantilism) held that the colonial role in trade was to serve as the source of raw materials and the market for British manufacture, and never to usurp the manufacturing function.13
America’s Freedom is based on Economic Freedom The Grand Strategy of Britain to control the industry and markets of the American colonies was the primary reason for the American War of Independence. America‘s founding fathers recognized the ―consumption of foreign luxuries, [and] manufactured stuffs, as one of the chief causes of [the colonies‘] economic distress.‖14 In the harbor of New York there are now 60 ships of which 55 are British. The produce of South Carolina was shipped in 170 ships of which 150 were British.... Surely there is not any American who regards the interest of his country but must see the immediate necessity of an efficient federal government; without it the Northern states will soon be depopulated and dwindle into poverty, while the Southern ones will become silk worms to toil and labour for Europe.... In the present state of disunion the profits of trade are snatched from us; our commerce languishes; and poverty threatens to overspread a country which might outrival the world in riches.15
The famous Boston Tea Party, touted as one cause of the revolution, was only a particularly theatrical protest, over a rather minor example, of this systematic injustice. Not even a horseshoe nail was to be produced in America, and under
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
no circumstances were manufactured products to be exported to countries within Britain‘s trade empire. The colonialists could import only goods produced in England or goods sent to the colonies by way of England. They were not allowed to export wool, yarn, and woolen cloth from one colony to another, ―or to any place whatsoever,‖ nor could they export hats and iron products. They could not erect slitting or rolling mills or forges and furnaces. After 1763, they were forbidden to settle west of the Appalachian Mountains. By the Currency Act of 1764, they were deprived of the right to use legal tender paper money and to establish colonial mints and land banks.16
After American independence England‘s Lord Brougham proposed destroying America‘s infant industries by selling manufactured goods to them below cost. ―He thought it ‗well worthwhile to incur a loss upon the first exportation [of English manufactures], in order, by the glut, TO STIFLE IN THE CRADLE THOSE RISING MANUFACTURES IN THE UNITED STATES.‘‖ This experience, and Spain and France blocking America‘s expansion, caused Americans to lay the foundation for their own Grand Strategy, copying Britain‘s neomercantilist trade policy. Gaining full freedom required military might and led to establishing the Naval War College and a powerful navy.17 U.S. statesman Henry Clay quotes a British leader: ―[N]ations knew, as well as [we did], what we meant by 'free trade' was nothing more nor less than, by means of the great advantage we enjoyed, to get a monopoly of all their markets for our manufactures, and to prevent them, one and all, from ever becoming manufacturing nations.‖18 Lord Brougham‘s economic warfare plan was thwarted when, 36 years after gaining their political freedom and theoretical rights in the Revolutionary War, and while Britain was busy battling Napoleon on the Continent, Americans fought the War of 1812 to remove Britain‘s iron grip from America‘s commerce. America was now both politically and economically free. By winning that War America gained its full independence. Until then, the American economy—and thus the fundamental rights of Americans—were dependent upon the whims of British neo-mercantilists, backed by British naval power. America, Canada, New Zealand, and Australia were the only former colonies to eventually gain both their political and economic freedoms.b There is more to The following books will lead you to primary sources on nations, especially America, successfully developing protecting their industries and markets. Though some—because they were needed as allies—developed under others‘ protection, there are no nations which successfully developed without protection for their industries and markets. Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977); Clarence Walworth Alvord, The Mississippi Valley in British Politics: A Study of Trade, Land Speculation, and Experiments in Imperialism Culminating in the American Revolution ( New York: Russell & Russell, 1959); Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: University of Chicago Press, 1993); Correli Barnett, The Collapse of British b
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independence than the political freedom first gained by the American Revolution; the right to vote, free speech, and choice of religion. For example, the states could trade between themselves, but they could not trade freely with the rest of the world due to the British navy‘s denial of that basic right, this maintained colonial dependence upon British industry and shipping. A humiliating treaty, Peace of Versailles, 1783, had been forced on the colonies permitting ―only the smallest American vessels to call at the island ports and prohibited all American vessels from carrying molasses, sugar, coffee, cocoa, and cotton to any port in the world outside the continental United States,‖ and Britain‘s navy was there to ensure compliance.19 But, when Britain was fighting Napoleon on the Continent, the War of 1812 broke those trade barriers and won for the United States those economic freedoms. With its massive natural wealth, rapid industrialization, and rich gold and silver discoveries, America was able to break free from Britain‘s monopolization of finance capital.
Friedrich List Wrote His Classic Observing America's Industrialization Friedrich List, the German diplomat, writer, and promoter of a German state with no internal tariffs, observed ―the wonderful favourable effects of Napoleon‘s Continental System, and the destructive effects [on the continent] of its abolition‖ when France was defeated at Waterloo.20
Power (New York: Morrow, 1971); Oscar Theodore Barck, Jr. and Hugh Talmage Lefler, Colonial America, 2nd ed. (New York: Macmillan, 1968); Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday, Doran & Co., 1933); John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission (Washington DC: U.S. International Trade Commission, 1976); Alfred E. Eckes, Jr., Opening America’s Markets: U.S. Foreign Trade Policy Since 1776 (Chapel Hill: University of North Carolina Press, 1995); James Thomas Flexner, George Washington: The Forge of Experience (Boston: Little Brown and Co., 1965); William J. Gill, Trade Wars Against America: A History of United States Trade and Monetary Policy (New York: Praeger, 1990); John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt (New York: Walker and Co., 1997); Irwin, Against the Tide; Emory R. Johnson, History of Domestic and Foreign Commerce of the United States (Washington DC: Carnegie Institute of Washington, 1915); Richard M. Ketchum, ed., The American Heritage Book of the Revolution (New York: American Heritage Publishing, 1971); Michael Kraus, The United States to 1865 (Ann Arbor: University of Michigan Press, 1959); John A. Logan, The Great Conspiracy: Its Origin and History, 1732-1775 (New York: A.R Hart & Co., 1886); William MacDonald, ed., Documentary Source Book of American History, 1606-1926, 3rd ed. (New York: MacMillan, 1926); John C. Miller, Origins of the American Revolution (Boston: Little Brown and Co., 1943); Samuel Eliot Morison and Henry Steele Commanger, Growth of the American Republic, 5th ed. (New York: W.W. Norton, 1959); Sir Lewis Namier and John Brooke, Charles Townsend (New York: St. Martin‘s Press, 1964; Gus Stelzer, The Nightmare of Camelot: An Expose of the Free Trade Trojan Horse (Seattle, Wash.: PB publishing, 1994); Peter D.J. Thomas, The Townshend Duties Crisis: The Second Phase of the American Revolution, 1776-1773 (Oxford: Clarendon Press, 1987); Arthur Hendrick Vandenberg, The Greatest American (New York: G.P. Putman‘s and Sons, 1921).
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Thirteen years after the American-British war of 1812, Friedrich List arrived in America, became an American citizen, and studied America's protectionist break for economic freedom. America‘s Grand Strategy, designed by America's founders, and promoted through List's German language newspaper Outlines of Political Economy, provided the foundation for his 1841 protectionist classic, The National System of Political Economy.21 America took the philosophical lead in protection of industry and markets and, from 1816 to 1945, was one of the most protected nations. Virtually every nation which has ever successfully industrialized did so under the protection principals laid down by Friedrich List. List analyzed how the British had industrialized; their strategy of technological monopolization, and control of trade; noticed the collapse of European industry when sales of English products penetrated Europe after Napoleon‘s defeat, how America had ignored British free trade propaganda (perception management), protected its industry and markets, became wealthy; and how Britain‘s promotion of free trade was a subterfuge to maintain control of markets. He then designed a philosophy under which his beloved native Germany, or any other nation, could industrialize, protect their tender industries and markets, and become wealthy. America‘s founding fathers, especially Alexander Hamilton, had made the same analysis. The prosperity Americans enjoyed, once they had gained both their political and economic freedom, exposes the Grand Strategy of the original promoters of Adam Smith to keep America's, and the world‘s, wealth going to British vaults. America‘s treasured independence is little more than breaking the chains of financial dependence. Financial independence depends on gaining control of industrial technology, access to raw material and fuel to process natural wealth into more industrial tools and useful products, as well as access to markets to sell enough products to pay for necessary imports. Gaining their economic freedom to manufacture and trade is what most colonial nations were unable to do. Adam Smith‘s philosophy, although somewhat just between equally developed nations and quite valuable as an analysis of trade between nations of equal power, is the industrial world's self-protective philosophy forced upon the rest of the world under the guise of it being for their own good.
America Takes Over the Protection of Allied Empires America‘s two Grand Strategy choices, championing the economic freedom of other colonized nations, or joining the imperial nations in neo-mercantilist siphoning of their wealth, were complicated by its being forced to take sides in the battles between the old imperial nations, the two world wars, and by the almost certain post-WW II collapse of the American, and European, imperial-centers-
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of-capital if the entire world became nonaligned, or if they allied with, or federated with, the emerging socialist centers of capital. The enormous industrial success of Germany‘s Bismarck, and later Hitler‘s Third Reich, following List's precepts, proved the sound logic of that philosophy, as did America's protection for European industrial development under the Marshall Plan. Such support was protection, even though it came from without. Under threat of the entire world gaining their economic freedom, and thus the loss of crucial resources and markets, the old imperial nations allied, both formally (NATO, EU) and informally, under one protective bloc. Containing fast expanding socialism required the allied imperial centers to bring Japan, Taiwan, and South Korea under the umbrella of protected trade. Their success again proved the soundness of List's philosophy and that the managers of state knew exactly what they were doing, protecting crucial allies and maintaining—frequently imposing—dependency on others. When the leading threat to the allied imperial-centers-of-capital disappeared with the successful destabilization of the Soviet federation, and those protections partially withdrawn, the financial meltdown of those once-allied nations, on the periphery of empire, again proved the validity of protecting tender emerging economies. Those Asian Tigers still had full rights to sell their production but their industrial capacities, developed to feed the imperial center, were overbuilt, and their economies were unbalanced. Except for Japan, their populations were at first underpaid, thus unable to purchase their own production, and their rights to capital to make that adjustment disappeared with the flight of capital in the 199798 financial crisis. ―That [imposed] financial Meltdown was pure theft.‖ Capital looks for a small stock market and injects liquidity into it. This little stock market starts rising and the locals who have been trading on it start making huge profits. They tell their friends and relations and soon all the savings that were in the local banks are sucked into the market. As soon as the market has taken more liquidity than it can withstand (sophisticated computer models can monitor just this) the foreign capital sells its portfolios. It then sells all the local currency it has acquired through the sales of shares thereby driving down the value of the local currency. In short it takes its dollar-profit and runs.22
The IMF-World Bank was imposing structural adjustments, which reduced regional development and buying power. Private capital analyzed the overcapacity, knew that much of that industry must close down, fled, and then returned to buy up key industries for pennies on the dollar. This was not a natural flow of events. It was a planned raid on emerging nations‘ wealth producing capacity by American and European finance capital. Removing protection was little more than turning loose the dogs of speculation through structural adjustments requiring access to Asian markets for specula-
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
tive capital. Some leaders of the nations which underwent financial meltdowns complain that Federal Reserve Chairman Alan Greenspan, then Deputy Secretaries of the Treasury Robert Rubin and Larry Summers, and ―their henchmen at the International Monetary Fund‖ have turned countries like Malaysia and Russia into leper colonies by isolating them from global capital and making life hellish in order to protect U.S. growth. The three admitted they had made hard choices, and they will even cop to some mistakes.‖23 These same ―usual suspects‖—as Professor Stephen Gill, Professor of Political Science at York University in Toronto, calls those always paraded forward to justify such policies—derailed Japan‘s plan for an Asian Monetary Fund (AMF), which would not have required the structural adjustments which collapsed those tiger economies.24 The ―hard choices‖ faced by these ―usual suspects‖ can only be the taking care of one‘s own at the expense of others. Greenspan, Summers, and Rubin (also key architects of the ongoing, worldwide financial collapse) knew they had no reason to worry: As the crisis spread across the region, the US Treasury and the Federal Reserve were serene about its global consequences. They knew from a wealth of past experience that financial blow-outs in countries of the South provided a welcome boost for the US financial markets and through them the US domestic economy. Huge funds could be expected to flood into the US financial markets, cheapening the cost of credit there, boosting the stock market and boosting domestic growth. And there would be a rich harvest of assets to be reaped in East Asia when these countries fell to their knees before the IMF.25
All rising centers of capital are a threat to established centers of capital: In any long and broad historical perspective the free market is a rare and short-lived aberration. Regulated markets are the norm, arising spontaneously in the life of every society.… The idea that free markets and minimum governments go together … is an inversion of the truth.… The normal concomitant of free markets is not stable democratic government. It is the volatile politics of economic insecurity.… Since the natural tendency of society is to curb markets, free markets can only be created by the power of a centralized state.… A global free market is not an iron law of historical development but a political project.… Free markets are the creatures of government and cannot exist without them.… Democracy and free markets are competitors rather than partners.… [just as the disastrous British free market 100 years ago which culminated into two world wars, the current] global free market is an American project.… In the absence of reform, the world economy will fragment, as its imbalances become insupportable.… The world economy will fracture into blocs, each riven by struggles for regional hegemony.26
In financial warfare, currency markets become a weapon of mass destruction. The speculator
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takes out huge forward contracts to sell pounds for French francs at 9.50 to the pound in one month‘s time: say forward contracts totaling £10 billion. For these he must pay a fee to a bank. Then he waits until the month is nearly up. Then suddenly he starts buying pounds again in very large volumes and throws them against the exchange rate through selling them. So big is his first sale of pounds that the currency falls, say 3 percent against the franc. At this point other, smaller players see the pound going down and join the trend he has started, driving it down another 3 percent. Overnight he borrows another vast chunk of pounds and sells into francs again, and meanwhile the word is going around the market that none other than the master speculator is in action, so everyone joins the trend and the pound drops another ten percent. And on the day when the forward contract falls due for him to sell pounds for francs at 9.50 the pound in the spot market is down at 5 francs. He takes up his huge forward contract and makes a huge profit. Meanwhile there is a sterling crisis, etc.27
John Gray also points out the imperial centers being at risk: A global free market … no more works in the interests of the American economy than of any other. Indeed, in a large dislocation of the world markets the American economy would be more exposed than many others.… In this feverish atmosphere a soft landing is a near impossibility. Hubris is not corrected by twenty percent.… Economic collapse and another change of regime in Russia; further deflation and weakening of the financial system in Japan, compelling a repatriation of Japanese holdings of US government bonds; financial crisis in Brazil or Argentina; a Wall Street crash – any or all of these events, together with others that are unforeseeable, may in present circumstances act as the trigger of a global economic dislocation. If any of them come to pass, one of the first consequences will be a swift increase of protectionist sentiment in the United States, starting in Congress.28
U.S. President George W Bush‘s imposition of 30% tariffs on imported steel in 2002 may have signaled today‘s worldwide financial crisis.
Protection for the Imperial Centers, Free Trade for the Periphery of Empire Throughout the century the flood of ‗foreign aid‘ grew and grew until in the half century preceding 1914 Western Europe, led by Great Britain, ‗had invested abroad almost as much as the entire national wealth of Great Britain.... If the same proportion of American resources were devoted to foreign investment as Britain devoted ... in 1913, the flow of investment would require to be thirty times as great. The entire Marshall Plan would have to be carried out twice a year.‘29
The economic miracle after WW II was the rebuilding of Europe in five years under the Marshall Plan. However, if the industrialized world provided industry to the emerging world at the relative rate Britain exported capital at the height of her empire‘s expansion, the annual ―donation‖ of capital from the currently developed
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
world to the emerging world would total over four-times that given Europe during the five-year-period of the Marshall Plan. Note we say ―donation,‖ not ―export,‖ of capital. If control of world trade is to be maintained, as capital is ―exported,‖ developing world labor must remain underpaid and overcharged. This prevents development of purchasing power in the emerging world, and due to lack of buying power; wealth will continue to flow from the resource wealthy world to the financial and technologically wealthy world. Europe and Japan were simultaneously granted the right to protect their industry and labor, as well as access to American markets Thus they could simultaneously raise the pay to their workers and repay that ―exported‖ capital where, under current free trade rules, it is typically unpayable. Though Adam Smith free trade was being preached, Friedrich List protection was provided to Japan, Taiwan, South Korea, and later, all of Asia slipped under that umbrella. Within that bloc, capital and access to markets was provided on easy terms, equality of trade was maintained, and labor was continually being better paid. Under those Friedrich List protection policies, buying power and prosperous economies were developing. The rest of the developing world were not afforded protection, and their share of world trade dropped from 28% to 13%, as their commodity prices dropped 60%.30 That is Friedrich List protection of tender industries within a block of nations with need for group protection, not Adam Smith free trade as designed, preached, and managed, by neo-mercantilists. Southeast Asia, and China, had only moved in under the protection provided Japan, Taiwan, and South Korea, at the height of the Cold War, and the rest of the emerging world remained the providers of raw material and markets. To maintain credibility, and thus protect the center, structural adjustment rules, which are little more than the withdrawal and forced elimination of protections that brought on those collapses, almost certainly will now be relaxed. Such an event will be acknowledgment that Adam Smith, as interpreted and applied by monopolists, was wrong and Friedrich List was right. That money fleeing the periphery drives up stock markets in the imperial centers. IMF loans to the financially troubled countries are then made, under the conditions of those funds being used to repay investors in the imperial center. Typically those IMF funds never leave the center of empire. The investors of the center are credited, the IMF funds debited, and the collapsed nation now has the identical debt as before, only it is now owed to the IMF. While the center is still holding and with money seeking safety bloating its financial institutions, speculators and stock market "bottom fishers" borrow those funds, and purchase equities and property on the collapsed periphery. Prices and sales in the center hold due to the flight of capital back to that center, the cheapening of imports, and the purchase of industries on the periphery for pennies on the dollar. Resources, labor, and production costs in the
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peripheral nations drop by half as a factor of currency collapses and enormous wealth transfers from the periphery to the center. So long as the center held, wealth was being transferred at a rate unheard of in earlier times. As the current worldwide populist revolution unfolds, hopefully that will rapidly change. With substantial technology and skilled labor, emerging nations have the option of repudiating unjust debts, creating their own trading currency, and reorganizing their economies to trade with the resource-rich emerging nations that are now at least partially free of the old imperial-centers-of-capital. That is the centerpiece of our Conclusion which explains that, the current collapse, 2008-2010 may be like no other in history, and permit the peripheries of empire to break free. Choosing its ethnic, religious, and cultural European cousins, America took the helm of the imperial nations, and led the battle to suppress the world‘s post WW II breaks for economic freedom. Through worldwide covert destabilizations of emerging democracies and supporting development of nations necessary as key allies to stop fast expanding socialism, America won that battle. But victory was very temporary. The huge profit potentials led to moving factories to those cheap-labor allied countries, competition forced others to follow, and this hollowed out America‘s industrial capacity. The Cold War ended only 19 years ago and those newly-developing nations, allowed within world trade so as to stop fast expanding socialism, are poised to outbid America and Europe for the resources of the world. This accounts for the rapid rise in resource prices early in the current worldwide collapse. The collapse of plunder by trade, still coming at us, will shatter the empirical systems when it hits with hurricane force. The clincher that the imperial centers are practicing Friedrich List protection philosophy, under the cover of Adam Smith free trade philosophy, was the 1997 economic collapse on the periphery of empire while the centers held firm. Money fled those nations, this intensified the crisis, and the money then came back in and bought up prime companies for pennies on the dollar. With the exception of China remaining intact, this is a perfect model of a successful neo-mercantilist policy, laying claim to the wealth of weak nations, under the cover of free trade. When the worm turned and the imperial centers collapsed, 2008-10. No where did one hear of financial retrenchment as had been recently forced upon the periphery. Instead, trillions of created dollars were poured at the imperial financial structures which caused this crash, and more trillions are waiting in the wings if those very same people who caused this crash need more money. Right there is proof the entire financial structure of the imperial nations knew exactly what they were doing these past 65 years. They were ―plundering the periphery of empire,‖ they banked too many trillions of unearned wealth, got caught in their own trap, and as the emerging world understands this well, this, we believe, will accelerate the world finally gaining their freedom.
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Perelman, The Invention of Capitalism, chapter 3. Adam Smith, The Wealth of Nations (New York: Random House, 1965), pp. 413, 426, 642. For free trade philosophy before Adam Smith, see Perelman, The Invention of Capitalism and Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade (Princeton, N.J.: Princeton University Press, 1996), chapter 3. 3 John C. Miller, Origins of the American Revolution (Stanford: Stanford U Press, 1959), pp. 4-6. 4 Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977), pp. 366-370. 5 Ibid, pp. xxvii-xxviii, 368-69. 6 List, The National System summarized. 7 Ibid, p. 73. Earlier theorists on protection against mercantilists were: Alexander Hamilton, 1791; Adam Muller, 1809; Jean-Antoine Chaptal, 1819 and Charles Dupin, 1827, see Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: University of Chicago Press, 1993), p. 17. 8 List, National System, Memoirs and p. 99. 9 Smith, Wealth of Nations, pp. 66-67, 636-37; see especially List, National System, pp. xxvi, xxvii, 11, 73-75, 15055, 99-100, 351. 10 List, National System, pp. 73-75. 11 Ibid, p. xxv.. 12 Quoted by Herbert Aptheker, The Colonial Era (New York: International Publishers, 1966), pp. 23-24; taken from Smith, Wealth of Nations, pp. 579-80, 626. 13 Barbara Tuchman, The March of Folly (New York: Alfred A. Knopf, 1984), pp. 130-31 (emphasis added). For early mercantilist theory see Irwin, Against the Tide, chapter 2. 14 Charles A. Beard, An Economic Interpretation of the Constitution (New York: Macmillan Publishing Co., 1941), p. 46. See also Michael Barratt Brown, Fair Trade (London: Zed Books, 1993), p. 20. 15 Beard, Economic Interpretation, pp. 46-47, 171, 173. 16 Philip S. Foner, From Colonial Times to the Founding of the American Federation of Labor (New York: International Publishers, 1982), p. 32. See William Appleman Williams, Contours of American History (New York: W.W. Norton & Company, 1988), pp. 105-17; Smith, Wealth of Nations, pp. 548-49, Book IV, chapters VII, VIII; James Fallows, ―How the World Works,‖ Atlantic Monthly. December 1993, p. 42 ; Frederic F. Clairmont, Rise and Fall of Economic Liberalism (Goa India: Other India Press, 1996), p. 100. 17 Williams, Contours of American History, pp. 192-97, 339-40; Aptheker, Colonial Era, pp. 23-24; List, National System, especially pp. 59-65, 71-89, 92, 342, 421-22; chapter XI; Dean Acheson, Present at the Creation (New York: W.W. Norton & Company, 1987), p. 7; Richard Barnet, The Rockets’ Red Glare: War, Politics and American Presidency (New York: Simon and Schuster, 1983), pp. 40, 60, 68. 17 34. 18 Williams, Contours of American History, p. 221. 19 Barnet, Rockets’ Red Glare, p. 40. 20 List, National System, pp. xxv-xxvi. 21 Ibid., in Memoirs. See also Irwin, Against the Tide, pp. 125-27, chapter 14 and Eckes, Opening America’s Markets, chapter 1. 22 Feisal Mansoor, ―The Health of Nations,‖ Lanka Monthly Digest (December 2000) 23 ―The Three Marketeers,‖ Time. February 15, 1999, pp. 34-42. 24 Stephen Gill, ―The Geopolitics of the Asian Crisis,‖ Monthly Review (March, 1999), pp. 1-9. 25 Peter Gowan, The Global Gamble: Washington’s Faustian Bid for World Dominance (New York: verso, 1999), pp. 104-05. 26 John Gray, False Dawn (New York: The Free Press, 1998), pp. 210-13, 217-18; see also p. 199. 27 Gowan, The Global Gamble, p. 96, see also pp. 95-138 and Richard C. Longworth, Global Squeeze: The Coming Crisis of First-World Nations (Chicago: Contemporary Books, 1999), pp. 225, 243. 28 Gray, False Dawn, pp. 217, 224-25. 29 Acheson, Present at the Creation, p. 7. 30 Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996), p. 67. 1 2
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4. The Historical Struggle for Dominance in World Trade
With Europe‘s discovery of the sea route to the East and America, the maximum control of natural resources, as well as markets for manufactured products, could be attained through gaining title to lands of easily conquerable people. The race was on to colonize the world. ―By 1900 Great Britain had grabbed 4,500,000 square miles.... France had gobbled up 3,500,000; Germany, 1,000,000; Belgium 900,000; Russia, 500,000; Italy, 185,000; and the United States, 125,000.‖ An imperial center must be careful about importation of manufactured products, from either its colonies or from other great powers: ―So it is now,‖ explained the [British] Protectionist Act of 1562, ―that by reason of the abundance of foreign wares brought into this realm from the parts of beyond the seas, the said artificers are not only less occupied, and thereby utterly impoverished ... [with] divers cities and towns within this realm greatly endangered, and other countries notably enriched.‖1
In the late 17th century, Jean Baptiste Colbert, French Naval Secretary of State and Finance Minister, recognized the threat if France became dependent upon British mercantilism as was being established by Lord Shaftesbury. Therefore, Colbert duplicated Britain‘s industrial development efforts. France purchased the latest technology, encouraged skilled workers, protected the home markets, eliminated internal tariffs, and constructed canals and roads. France developed flourishing industries, a profitable shipping industry, and a powerful navy. However, wars, spendthrift governments, the revocation of the Edict of Nantes—which encouraged persecution of Protestants and forced 500,000 of France‘s most productive workers to flee—and the 1786 Eden Treaty with Britain—a replay of the Methuen Treaty's monopoly agreements which severely damaged Portugal, Holland, and Germany—impoverished the French economy.2 Napoleon understood Britain‘s economic warfare and, in 1807, issued his Continental Decrees to establish manufacturing to protect France‘s market from Britain, and to prevent the loss of continental wealth:
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
Napoleon was forced to devise a new tactic to deal with his perpetual enemy [Britain]: the Continental System. Developed during 1806/1807, this policy called for economic warfare against the ―nation of shopkeepers,‖ whereby France, either through the cooperation of friends or by the use of force against enemies, would close the entire European continent to British trade and commerce. By weakening Britain‘s economy, Napoleon would destroy her ability to wage war, and also make it impossible for Great Britain to provide the huge subsidies to Continental allies which had characterized all the previous coalitions against France.3
Napoleon‘s resurrection of Colbert‘s protective system started the rapid industrialization of Europe. This immense trading bloc would have meant the end of Britain‘s dominance of world trade. Britain, the European monarchies, and the Church— fearful ever since the French Revolution—quickly entered into a ―Holy Alliance‖ and finally defeated Napoleon at Waterloo. The markets of Europe were breached, and industries throughout the continent collapsed.4 That collapse, along with the unequal trades imposed upon the fledgling United States, alerted Friedrich List and Alexander Hamilton to the necessity of protecting regional industries and markets. One cannot miss the similarity between the industrial collapse on the Continent, its dependency upon Britain after the French defeat at Waterloo, and the immediate dependency of the Soviet Union after its successful destabilization in 1991. At its peak, Britain was manufacturing 54% of the finished products in world trade. The British ―exulted at their unique state, being now, as the economist Jevons put it in 1865, the trading center of the universe.‖ The world was Britain‘s ―countryside,‖ a huge plantation system, feeding its developed imperialcenter-of-capital: The plains of North America and Russia are our corn fields; Chicago and Odessa our granaries; Canada and the Baltic our timber forests; Australia contains our sheep farms, and in Argentina and on the Western prairies of North America are our herds of oxen; Peru sends her silver, and the gold of South Africa and Australia flows to London; the Hindus and the Chinese grow our tea for us, and our coffee, sugar and spice plantations are all in the Indies. Spain and France are our vineyards and the Mediterranean our fruit garden; and our cotton grounds, which for long have occupied the Southern United States, are being extended everywhere in the warm regions of the earth.5
To funnel this wealth to the mother countries, exclusive trading companies were established—East India Company (English, Dutch, and French), Africa Companies, The Hudson Bay Company, etc. Forcing the natives to work for nothing while providing their own subsistence created enormous profits. Thus Indians were enslaved in Spanish mines and Africans were enslaved to replace the Indians when over 95% of their population were outright slaughtered or died off under such oppression. Wealth on
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the periphery—America, Africa, Australia, and Asian island colonies—were claimed by Europe, some in trade for trinkets, but most were simply conquered.
Unequal Trades Enriching Britain and Impoverishing India In 1897, British statesman Neville Chamberlain wrote a Colonial Office report: ―During the present century ... you will find that every war, great or small, in which we have engaged, has had at bottom a colonial interest, that is to say, either of a colony or else of a great dependency like India.‖ The impoverishment of India is a classic example of ―plunder by trade‖ backed by military might. Before being subdued, colonized, and enforced to become dependent upon British industry: India was relatively advanced economically. Its methods of production and its industrial and commercial organization could definitely be compared with those prevailing in Western Europe. In fact, India had been manufacturing and exporting the finest muslins and luxurious fabrics since the time when most western Europeans were backward primitive peoples.6
Hand weaving was tedious and paid little so, at first, the British purchased much of their cloth from India. India had no need, or desire, for British products, so imports had to be paid for with gold. However, Britain did not make the same mistake as Spain; Indian textiles were embargoed and British cloth was produced with the evolving technology of weaving machinery. After India was conquered, its import and export policies were controlled by Britain, which not only banned Indian textiles from British markets, but also taxed them to a disadvantage within India so British cloth would dominate the Indian market. India‘s internal production of cloth was not only excluded from their own internal market, so as to be undersold by Britain‘s inferior cloth, Britain also excluded those beautiful and much higher quality fabrics from England while marketing them all over Europe. Controlling India and the seas ―entitled‖ British merchants to buy for a pittance and sell at a high price. Friedrich List points out the purpose of this control of trade as building Britain‘s ―productive power‖: Was England a fool in so acting? Most assuredly according to the theories of Adam Smith and J.B. Say [in their] Theory of Values. For, according to them, England should have bought what she required where she could buy them cheapest and best; it was an act of folly to manufacture for herself goods at a greater cost than she could buy them elsewhere, and at the same time give away that advantage to the Continent. The case is quite contrary according to our theory, which we term the Theory of the Powers of Production, and which English Ministry ... adopted when enforcing their maxim of importing produce and exporting fabrics.... The English ministers cared not for the acquisition of low-priced and perishable articles of manufacture, but for that of a more costly but enduring manufacturing power.... They have attained their objective to a brilliant degree. At this day [1841] England produces se-
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
venty million pounds‘ worth of cotton and silk goods, and supplies all of Europe, the entire world, India itself included, with British Manufactures. Her home production exceeds by fifty or a hundred times the value of her former trade in Indian Manufactured goods. What would it have profited her had she been buying for a century the cheap goods of Indian manufacture? And what have they gained who purchased those goods so cheaply of her? The English have gained power, incalculable power, while the others have gained the reverse of power.7
Through the forced sales of British products, and the simultaneous embargoing of, or high tariffs on, the cheaper, yet higher quality, Indian cloths, India‘s wealth started flowing toward Britain. ―It was [only] by destroying [the] Indian textile industry that [the British textile industry of] Lancaster ever came up at all.‖8 Other Indian industries were similarly devastated. In the words of historian Lewis Mumford: In the name of progress, the limited but balanced economy of the Hindu village, with its local potter, its local spinners and weavers, its local smith, was overthrown for the sake of providing a market for the potteries of the Five Towns and the textiles of Manchester and the superfluous hardware of Birmingham. The result was impoverished villages in India, hideous and destitute towns in England, and a great wastage in tonnage and man-power in plying the oceans between.9
One exceptionally rich sector of India was East Bengal (Bangladesh). When the British first arrived, [they] found a thriving industry and a prosperous agriculture. It was, in the optimistic words of one Englishman, ‗a wonderful land, whose richness and abundance neither war, pestilence, nor oppression could destroy.‘ But by 1947, when the sun finally set on the British Empire in India, Eastern Bengal had been reduced to an agricultural hinterland. In the words of an English merchant, ‗Various and innumerable are the methods of oppressing the poor weavers ... such as by fines, imprisonment, floggings, forcing bonds from them, etc.‘ By means of every conceivable form of roguery, the company‘s merchants acquired the weaver‘s cloth for a fraction of its value.10
Later, still under British control and ignoring the East Bengalis being impoverished through dispossession of the land which produced their food and cotton, Bengal produced raw materials, indigo and jute, for world commerce, and poppies for the large, externally-imposed, Chinese opium market. As Adam Smith commented, money was lent to farmers ―at forty, fifty, and sixty percent;‖ this, and other profits of trade, would confiscate all wealth except that paid in wages. Of course, Bengali labor was paid almost nothing, so Bengal‘s wealth was rapidly transferred to Britain. Foreign control—enforcing dependency upon British industry (siphoning wealth away through unequal trades in everyday commerce)—
The Historical Struggle for Dominance in World Trade
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devastated the balanced and prosperous Bengali economy, and created the extreme poverty of Bangladesh today. ―[O]nce it was the center of the finest textile manufactures in the world ... [with] a third of its people ... employed in nonagricultural occupations.... Today 90 percent of its workers are in agriculture or unemployed.‖11 The destruction of the once thriving economy of East Bengal was so thorough even the long-staple, finely textured local cotton became extinct.12 Anyone who saw the movie Gandhi will remember Indian citizens being denied the right to collect salt from the ocean, and they were required by law to buy their salt, and other everyday staples, from British monopolies. Such enforced dependencies were little more than a tax upon defeated societies under the guise of production and distribution. Much work was being done, but it could have been done just as well, or better, by those being dispossessed of their land, denied the right to produce for themselves, and overcharged for consumer products. Japan, because it had few valuable natural resources, was the only country not militarily tied to Europe which escaped domination during this period. Until Taiwan, South Korea, and now China and Southeast Asia, were industrialized, all under the same protectionist barrier to contain fast expanding socialism, Japan was the only non-white society to industrialize and join the club of wealthy nations. In The Discovery of India, Prime Minister Jawaharlal Nehru wrote, ―If you trace British influence and control in each region of India, and then compare that with poverty in the region, they correlate. The longer the British have been in a region, the poorer it is.‖13 What applies to British colonialism applies to all colonialism; India and China were actually the least damaged of all colonial regions.
Earlier Unequal Trades with China In 1800, the per-capita standard of living in China exceeded Europe.14 Like India, China did not need, or want, Britain‘s products. However, Britain consumed large quantities of Chinese tea and, to avoid the loss of Britain‘s gold, it was imperative that something else be traded. Though it was done covertly, and not acknowledged by the British government, it became official policy for British merchants to peddle opium to China. ―Opium [sold to China] was no hole-inthe-corner petty smuggling trade but probably the largest commerce of the time in any single commodity.‖15 This injustice was challenged by Chinese authorities, the Boxer Rebellions, but their attempt to maintain sovereignty was put down by a combined force of 20,000 British, French, Japanese, German, and United States troops (5,000), led by a German general.16 It was a blatant attempt to carve up China between the imperial-centers-of-capital.
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With the sales of opium exceeding the purchases of tea, Britain lost neither gold nor currency. Their capital and labor costs involved only an internal circulation of money. No wealth was lost to another society, which is the essence of a successful mercantilist policy (monopolization, mercantilism, privatization, and rentseeking are all monopolization, wealth extraction, processes). While the imperial centers were battling each other in WW II, China was laying its base for economic freedom. Although it is little known to Americans, after that war United States troops were guarding key rail lines and ports for the collapsing Chinese government, and the OSS, precursor to the CIA, was busy ferrying Chiang Kai-shek‘s troops back and forth across China to suppress that revolution. However, China did break free in 1949 and, although it was marginalized for years by the imperial nations, China still built a modest industrial capacity with technology provided by the Soviet Union, and—by moving under the same protectionist umbrella as Japan, Taiwan, and South Korea—eventually averaged production gains substantially exceeding 9% a year. 1
William Appleman Williams, Contours of American History (New York: W.W. Norton & Company, 1988), introduction, especially p. 43. 2 Friedrich List, The National System of Political Economy (Fairfield, NJ: Augustus M. Kelley, 1977), pp. 33, 41-60, 72, 323, 342, 357, 369, 391. 3 Gordon C. Bond, The Grand Expedition (Athens: University of Georgia Press, 1979), pp. 1-2, 8. 4 List, National System, chapters 6 and 25, pp. 39, 72-73, 85-87, 323, 343-45, 357, 421-22. 5 Paul Kennedy, Rise and Fall of Great Powers (New York: Random House, 1987), pp. 151-52, quoted from R. Hyam, Britain’s Imperial Century 1815-1914 (London: B.T. Batsford, 1976), p. 47. Economist John Stuart Mill also believed the colonies were Britain‘s fields (Frances Moore Lappé, Joseph Collins, Food First: Beyond the Myth of Scarcity, rev. (New York: Ballantine, 1979), pp. 63 – 64, reproduced and quoted from Douglas H. Boucher, The Paradox of Plenty; Hunger in a Bountiful World (Food First, 1999). 6 Hunt and Sherman, Economics, p. 142. 7 List, National System, pp. 43-44. 8 Dan Nadudere, The Political Economy of Imperialism (London: Zed Books, 1977), p. 35, 68, especially 86. See also Betsy Hartman and James Boyce, Needless Hunger: Voices from a Bangladesh Village (San Francisco: Institute for Food and Development Policy, 1982). 9 Lewis Mumford, Technics and Civilization (New York: Harcourt Brace Jovanovich, 1963), pp. 184-85. 10 Hartman and Boyce, Needless Hunger, pp. 10, 12. 11 Arjun Makhijani, From Global Capitalism to Economic Justice (New York: Apex Press, 1992), p. 79. 12 Adam Smith, Wealth of Nations, Modern Library edition (New York: Random House, 1937, 1965), pp. 94, 97; Hartmann and Boyce, Needless Hunger, describes this devastation. 13 Noam Chomsky, The Prosperous Few and the Restless Many (Berkeley: Odonian Press, 1993), p. 56. 14 Anthony Sampson, The Midas Touch (New York: Truman Talley Books/Plume, 1991), p. 108. 15 Samuel Flagg Bemis, A Diplomatic History of the United States (New York: Henry Holt and Company, 1936), pp. 1027-1142; Michael Greenberg, British Trade and the Opening of China 18001842 (New York: Monthly Review Press), p. 104; Eric R. Wolf, Europe and the People Without History (Berkeley: University of California Press, 1982), pp. 255-58. (emphasis added) 16 Jack Beeching, The Chinese Opium Wars (New York: Harcourt Brace Jovanovich, 1975). See also Michael Bentley, Politics Without Democracy (London: Fontana Paperbacks, 1984), p. 154.
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5. World Wars: Deciding Who Controls World Trade
United States President Woodrow Wilson is known as one of the most peaceful presidents America has ever had. But, he knew control of resources and trade was the goal of all powerful nations: Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused.1
When two, or more, powerful nations deny each other equal trading rights, war develops. Spain, Holland, Portugal, and France had been overwhelmed by British sea power, and cunning control of markets. Otto von Bismarck, unifier of the German nation, deduced ―free trade is the weapon of the dominant economy anxious to prevent others from following in its path.‖2 Studying the development philosophy of Friedrich List, he consolidated the German nation in the late 1800s, and industrialized—―factories, machinery, and techniques were bought whole-sale, usually from England.‖3 Kaiser Wilhelm carried on Bismarck‘s development policies. At first German manufactures were of inferior quality, just as Japan‘s products were later when they first industrialized. However, it did not take the Germans long to learn. By 1913, Germany had 60,000 university students to Britain‘s 9,000, and 3,000 engineering students to Britain‘s 350. German industries were not only out-producing Britain, they were also producing superior products.4 The result of that imminent loss of markets for British products was WWI. Earlier, in 1888, philosopher T.H. Huxley outlined the disaster that would befall Britain if it should ever lose its dominance in trade: We not only are, but, under penalty of starvation, we are bound to be, a nation of shopkeepers. But other nations also lie under the same necessity of keeping shop, and some of them deal in the same goods as ourselves. Our customers naturally seek to get the most and the best in exchange for their produce. If our goods are inferior to those of our competitors, there is no ground, compatible with the sanity of
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the buyers, which can be alleged, why they should not prefer the latter. And if the result should ever take place on a large and general scale, five or six millions of us would soon have nothing to eat.5 [26 years later, when Britain was threatened with just such a loss, WW I began.]
Outlining that the concern was Germany‘s threat to British trade, in 1897 the publication Saturday Review wrote: ―If Germany were extinguished tomorrow, the day after tomorrow there is not an Englishman in the world who would not be richer. Nations have fought for years over a city or right of succession; must they not fight for two hundred fifty million pounds sterling of yearly commerce?‖6 Britain‘s survival depended upon selling overpriced manufactured products; losing those markets would collapse her economy. As their "national interest" was at stake, she had signed pacts with France, Austria-Hungary, Italy, and eventually Russia, all designed to contain Germany. Austria-Hungary changed sides; the clash of interests in the Balkans, between the competing imperial-centers-ofcapital, led directly to WW I. WW II was partially a replay of WW I.7 Before that first War, Europe was ―stifling‖ within her boundaries, with production everywhere outstripping the European demand for manufactured products. All Europe was therefore ―driven by necessity to seek new markets far away,‖ and ―what more secure markets‖ could a nation possess than ―countries placed under its influence?.‖ ... The rapid growth of German trade and the far-flung extension of German interests first encouraged in Germany a demand for a larger merchant marine, and then for a larger and more effective navy.... Without a strong fleet, Germany would find herself at the mercy of Britain, a ―grasping and unscrupulous nation which, in the course of history, had taken opportunity after opportunity to destroy the trade of its commercial rivals.‖8
As Germany tried hard to break Britain‘s control of world commerce, Britain was reinforcing her position by making a hard and fast alliance with AustriaHungary and Italy.... In 1904, Britain made a sweeping deal with France over Morocco and Egypt; a couple of years later she compromised with Russia over Persia, that loose federation of powers was finally replaced by two hostile power groupings; the balance of power as a system had now come to an end.... About the same time the symptoms of the dissolution of the existing forms of world economy— colonial rivalry and competition for exotic markets—became acute.9
These ―two hostile power groupings‖ were the old imperial centers, Britain and her allies, and the emerging imperial centers, Germany and her allies. Restrictive trade practices were strangling potentially wealthy countries and ―everyone knew it would start but no one knew how or when ... until Archduke Ferdinand was shot.10
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President Woodrow Wilson recognized the cause of WW I: ―Is there any man, is there any woman, let me say any child here that does not know that the seed of war in the modern world is industrial and commercial rivalry?‖11 The real war, of which this sudden outburst of death and destruction is only an incident, began long ago. It has been raging for tens of years, but its battles have been so little advertised that they have hardly been noted. It is a clash of traders.... All these great German fleets of ocean liners and merchantmen have sprung into being since 1870. In steel manufacture, in textile work, in mining and trading, in every branch of modern industrial and commercial life, and also in population, German development has been equally amazing. But geographically all fields of development were closed.... Great Britain took South Africa. And pretended to endless sur-
prise and grief that the Germans did not applaud this closing of another market.12
Financial warfare is a powerful weapon in trade wars: It should be recalled that the practically universal use of sterling in international trade was a principal component of Britain‘s financial sway, and it was precisely into this strategic sphere that Germany began to penetrate, with the mark evolving as an alternative to the pound. The Deutsche Bank conducted ―a stubborn fight for the introduction of acceptance [of the German mark] in overseas trade in place of the hitherto universal sterling bill.... This fight lasted for decades and when the war came, a point had been reached at which the mark acceptance in direct transactions with German firms had partially established itself alongside the pound sterling.‖...―It seems probable that if war had not come in 1914, London would have had to share with Germany the regulatory power over world trade and economic development which it had exercised so markedly in the nineteenth century.‖13
Serious researchers recognize a dominant currency as having "regulatory power over world trade and development." Almost 50 years after the American dollar replaced the British pound as the world‘s trading currency, the Washington Post noted: ―Under the Bretton Woods system, the Federal Reserve acted as the world's central bank. This gave America enormous leverage over economic policies of its principal trading partners.‖14 Control of a trading currency is the primary mechanism through which imperial centers maintain unequal currency values, and unequal trading values which keep the wealth of the periphery flowing to the imperial center. The British were afraid of both German economic power, and the loss of their central bank, operating as the world‘s central bank. Because their industries and economic infrastructures were primitive, and could not compete with Britain‘s highly developed technology and economic infrastructure, all major countries had protective tariffs on the eve of WW I. Historically markets have been
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Economic Democracy: A Grand Strategy for World Peace & Prosperity
both opened and protected by military force. Opening others markets, while protecting their own, were primary considerations to the national security of virtually every imperial-center-of-capital. Britain thought placing a ring of new nations around Germany (supported by proper guarantees) would do away with the immediate danger of a German-led economic union.... Once Germany‘s threat to British economic supremacy had abated the prewar crisis inside British politics would resolve itself.15
Germany and World War II German leaders were still angry over their humiliating defeat in WW I, a war fought over trade, and trade was a large component of this second struggle. ―The peace conference of 1919, held in Versailles, marked not the end of the war but rather its continuation by other means.‖16 The injustice of controlled markets, under the guise of free trade, was never rectified. A resentful Germany prepared, at first secretly, then more and more openly, to develop military might to eventually break those trade barriers, and eliminate the humiliation, and restrictions, of Versailles: The late 1920s and early 1930s began with a series of worldwide financial crashes that ultimately spiraled downward into the Great Depression. As GNPs fell, the dominant countries each created trading blocks (the Japanese Greater East Asia CoProsperity Sphere, the British Empire, the French Union, Germany plus Eastern Europe, America with its Monroe Doctrine) to minimize imports and preserve jobs. If only one country had kept imports out, limiting imports would have helped it avoid the Great Depression, but with everyone restricting trade, the downward pressures were simply magnified. In the aggregate, fewer imports must equal fewer exports. Eventually, those economic blocks evolved into military blocks, and World War II began.17
This is not a defense of Germany‘s racist motives or conduct in WW II. The supporters and goals of fascism are the antithesis of this treatise. Fascism would severely restrict rights for the masses, while we would expand them to full and equal rights. However, the injustice to Germany in denying her equality in world trade was extreme, and injustice breeds extremism. As we have shown, the purpose of World War I was to economically strangle (contain) Germany,18 and that was also a component cause of WW II. Below we address the need to prevent the rise of the Soviet Union as at least an equal, and likely a primary, cause. William Appleman Williams, in The Tragedy of American Diplomacy, identified control of markets as the cause of both World Wars I and II. He notes free trade was then called the "Open Door Policy," and ―It was conceived and designed to win the victories without the wars.... It does not prove that any nation that re-
World Wars: Deciding Who Controls World Trade
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sisted (or resists) those objectives was (or is) evil, and therefore to blame for [the] following conflicts or violence.‖19 Both Presidents McKinley and Wilson ―unequivocally pointed to Germany as the most dangerous rival of the United States in that economic struggle;‖ President Franklin Roosevelt and his advisors ―explicitly noted as early as 1935 ... that Germany, Italy and Japan were defined as dangers to the well-being of the United States.‖20 In fact, on April 10, 1935, four years before WW II, and six years before America entered the war, Roosevelt ―wrote a letter to [Britain‘s] Colonel House telling him he was considering American participation in a joint military and naval blockade to seal off Germany‘s borders.‖21 Germany was bypassing Britain‘s monopolization of finance capital through barter agreements. That blockade was intended to contain German economic power as well as its Aryan supremacist philosophy. After the war, Secretary of State Cordell Hull reaffirmed trade as being a primary cause of WW II: Yes, war did come, despite the trade agreements. But it is a fact that war did not break out between the United States and any country with which we had [negotiated] a trade agreement. It is also a fact that, with very few exceptions, the countries with which we signed trade agreements joined together in resisting the Axis. The political line-up followed the economic line-up.22
Walter Russell Mead concurs that wars are extensions of trade wars. He warned: ―The last time the world deprived two major industrial countries, Germany and Japan, of what each considered its rightful ‗place in the sun‘ the result was World War II.‖23
Japan's Greater East Asia Co-Prosperity Sphere and World War II Under the guns of Admiral Perry‘s naval task force in 1854, Japan‘s markets were forced open. They were forced to sign a trade agreement with a tariff limit of 5% while the average tariff on imports into America of almost 30% was immediately raised even higher.24 Learning the mechanics of becoming wealthy through this experience with neo-mercantilist unequal trade, and on the advice of Herbert Spencer, the Japanese studied Western economic theories carefully and in 1872 formed their trade policies. Japan copied and improved upon Germany‘s industrial cartels, and followed the European model of establishing colonial empires to create the pre-WW II Greater East Asia Co-Prosperity Sphere. Both Germany and Japan were following Friedrich List‘s philosophy of consolidating nations and developing industrial power.
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The origin of many of today‘s Japanese corporations came from the post-Meji Japanese government building the most up-to-date factories, and selling them to industrialists for 15%-30% of building costs.25 Germany and Japan‘s independence, based on military might, gave them the power to create money, and thus combine technology, natural resources, and labor, to produce industrial capital. They could not have built those basic industries quickly, if at all, while remaining dependent upon the British pound as their trading currency. A nation without natural resources need only create the money, build the industry, barter production from industry for more resources, and pay for it all with the goods produced. Japan provides the model. So long as a country has access to technology and resources to produce quality products, and access to markets to sell those products, those industries, and products produced, back the money created to run an economy. After WW II, under United States‘ protection, and as a buffer against fastexpanding socialism, Japan re-established her centrally planned cartels (Germany re-established theirs at the same time) to maintain low import prices for raw materials, high prices for Japanese citizens, and competitive export prices of highquality consumer goods to penetrate world markets. Japan‘s industrialization was a strengthened and fine-tuned copy, of Germany‘s cartel industrialization which was such a threat to England: ―America is no longer such a rich country. And Japan is no longer poor. Much of America‘s wealth has been transferred to the Japanese through the medium of exports and imports. Their exports and our imports.‖26 Japan‘s pre-WW II conquests cut powerful European traders off from what was once their private domain. This was the common bond between Germany and Japan in WW II, and virtually any respectable history of the origin of the war in the Pacific outlines the embargoes against Japan, and the trade negotiations carried out right up to the bombing of Pearl Harbor. The total embargo of oil against Japan, just before war broke out in 1941, would have squeezed its economy just as effectively as a Middle East oil embargo would squeeze Western economies today.
America Protecting the Imperial Centers Check a globe and note the enormous expanse of the world where most of the world‘s natural resources are located, which is struggling to develop, and which, in 1997, consumed only 14% of the world‘s resources. Then note the small area of the world which has few resources, which is developed, wealthy and powerful and which consumed 86% of the world‘s resources.27 The secret that can never be acknowledged is, since they have more resources, if allied ―resource powers” (the developing world) world had access to finance capital, technology, and markets, it is they who would be wealthy.
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Western security councils clearly realized their dilemma: ―China is moving towards an economy and a type of trade in which there is no place for the foreign manufacturer, the foreign banker, or the foreign trader.‖28 ―We cannot expect domestic prosperity under our system without a constantly expanding trade with other nations. The capitalist system is essentially an international system; if it cannot function internationally, it will break down completely.‖29 The threat of the governments of half of Europe being no longer allied with the West, and the loss of China after that war, led to Germany and Japan, as well as Taiwan and South Korea, right on the border of China, being included as allies. The strategy of allowing those once-threatening imperial-centers-of-capital have access to finance capital, technology, and resources, rapidly rebuilt Germany and Japan, and eventually most of Asia. The Friedrich List protection provided post-WW II Japan, Taiwan, South Korea, and eventually all Asia, would be a great model to develop the entire world. However, the rest of the colonial world, which were forming their own nonaligned bloc to control their destiny, were not only denied all those protections, they were also covertly destabilized and the rules of Adam Smith free trade, as interpreted by neo-mercantilists, were applied. True free trade was nonexistent, all the rhetoric notwithstanding. America allied with Britain to defeat Germany in WW I, allied with both Britain and the Soviet federation to defeat Germany again, and defeated Japan almost alone in WW II. The United States then allied with the former hostile imperial centers to defeat the rising center of capital to the East, the federated Soviet Union, and suppress the many breaks for economic freedom of the colonial nations. Because European nations were prostrate after bankrupting each other battling over the world‘s wealth, America picked up the baton as protector of the now-allied imperial-centers-of-capital. Western imperialists may need that firepower. China‘s graduation of 100,000 PhD students in the hard sciences is increasing 30% per year. We must remember, it was Germany graduating 3,000 engineers annually to Britain‘s 350 which made the German economy so much more efficient, and it was Germany‘s takeover of British markets with the production of those engineers that led to World War I, and created the framework for World War II. 30 With China having signed 50 cooperation agreements and 800 Chinese firms investing in Africa, President George Bush established U.S. Africa Command (AFRICOM) in February, 2007 with the intention of establishing 24 military bases on that continent. The cover was to be health, education, democracy, and economic growth. Africa knows their history and has accepted no ―Africom‖ troops on their soil.
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Woodrow Wilson, President of the United States, 1919, quoted by Noam Chomsky, On Power and Ideology (South End Press, 1990), p.. 14. 2 Steven Schlosstein, Trade War (New York: Congdon & Weed, 1984), p. 9. 3 Kurt Rudolf Mirow, Harry Maurer, Webs of Power (Boston: Houghton Mifflin Co, 1982), p. 16. 4 D.J. Goodspeed, The German Wars (New York: Bonanza Books, 1985), p., 71. 5 Petr Kropotkin, Mutual Aid(Boston: Porter Sargent, no date). P. 334. 6 Frederic F. Clairmont, The Rise and Fall of Economic Liberalism (Goa, India: The Other India Press, 1996), pp. 195, 197; William Appleman Williams, The Contours of American History (New York: W.W. Norton, 1988), his Empire as a Way of Life (Oxford: Oxford University Press, 1980), and his The Tragedy of American Diplomacy (New York: W.W. Norton, 1972); Eli F. Heckscher, Mercantilism (New York: Macmillan Company, 1955); Fritz Fisher, Germany’s Aims in the First World War (New York: W.W. Norton, 1967), pp. 38-49; Dwight E. Lee, Europe’s Crucial Years (Hanover, NH: Clark University Press, 1974). 7 Williams, Contours of American History, pp. 54, 66, 122-23, 128-29, 144-45, 168-70, 221-22, 272, 319, 338-40, 363, 349, 368-69, 383, 411, 417-23, 429, 434-37, 452, 455-58, 461-64; Williams, Empire as a Way of Life; Williams, Tragedy of American Diplomacy; Heckscher, Mercantilism, especially vol. 2, pp. 70-71. 8 Nazi Choucri, Robert C. North, Nations in Conflict (San Francisco: W..H. Freeman & Company, 1974), in part quoting other authors, pp 55-59. See also Samuel Williamson Jr. The Politics of Grand Strategy (London: Ashfield Press, 1969). 9 Karl Polanyi, The Great Transformation(Boston: Beacon Press, 1957), p. 19. 10 Lawrence Malkin, The National Debt (New York: Henry Holt and Co., 1988), p. 11; Williams, Contours of American History; Heckscher, Mercantilism; Lloyd C. Gardner, Safe for Democracy (New York: Oxford University Press, 1984). 11 Terry Allen, ―In GATT They Trust,‖ Covert Action Information Bulletin, (Spring 1992), p. 63; George Seldes, Never Tire of Protesting (New York: Lyle Stuart, Inc., 1968), p. 45; Gardner, Safe For Democracy, chapters 1-2. See also Williams, Contours of American History, p. 412; Heckscher, Mercantilism, vol. 2. 12 John Reed, The Education of John Reed (New York: International Publishers, 1955), pp. 74-75. 13 Harry Magdoff, Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987) p. 167. Quotes are from H. Parker Willis and B. H. Beckhart‘s Foreign Banking Systems and from J. B. Condliffe‘s The Commerce of Nations. 14 Bookworld, Washington Post (April 14, 1994), p. 14 (From McGehee‘s Database). 15 Gardner, Safe for Democracy, p. 98. 16 Goodspeed, German Wars, pp. 267-68. 17 Lester Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe, and America (New York: William Morrow and Company, 1992), pp. 55-56. 1
18 James and Suzanne Pool, Who Financed Hitler (New York: Dial Press, 1978), p. 41. 19 Williams, Tragedy of American Diplomacy, pp. 128-29.
20 Ibid, pp. 73, 128-29, 172-73; see also pp. 72-3, 134-5, 142; Williams, Contours of American History, pp. 412, 451-57, 462-64.
Richard Barnet, The Rockets’ Red Glare: War, Politics and the American Presidency (New York: Simon and Schuster, 1990), p. 194. 22 Williams, Tragedy of American Diplomacy, pp. 163-64, emphasis added. 23 WalterRussellMead,―AmericanEconomic Policy inthe Antemillenial Era,‖WorldPolicy Journal (Summer 1989),p.422. 24 James Fallows, ―How the World Works,‖ The Atlantic Monthly. December 1993, p. 82. 25 Clairmont, Rise and Fall of Economic Liberalism, pp. 169, 268. 26 Schlosstein, Trade War, pp. 9, 13, 55, 99. Fallows, World Works, pp. 73, 82. See also J.M. Roberts, The Triumph of the West (London: British Broadcasting Company, 1985), p. 33. 27 United Nations Human Development Report, 1998. 28 Noam Chomsky, ―Enduring Truths: Changing Markets,‖ CovertAction Quarterly (Spring 1996), p. 49. 29 Eric Wolf, Europe and the People Without History (Berkeley: University of California Press, 1982), p. 9. 30 Kurt Rudolph Mirow, Harry Maurer, Webs of Power (Boston: Houghton Mifflin Co., 1982), p. 16. 21
They Who Write History Control History
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6. They Who Write History Control History
The great masses of the people in the very bottom of their hearts tend to be corrupted rather than purposely or consciously evil ... therefore ... they more easily fall a victim to a big lie than to a little one, since they themselves lie in little things, but would be ashamed of lies that were too big. —Adolph Hitler
To properly understand this chapter; one must mentally straddle two time periods. The first is the creation of belief systems under which the Cold War was fought, when there was little out there to read, or hear, except carefully crafted perception management, within which the citizenry were encased. The second period is now, as that perception management history is being understood. The exposures of America‘s violent foreign policy, secret renditions to foreign countries for torture, tortures within American-operated prisons overseas, etc, are, in softened language, being covered on mainstream news. Those egregious foreign policies are so violent and unethical, that a substantial share of the citizenry has broken out from under the belief systems imposed the past 60 years. That change in the Western world‘s perception of themselves, is one of the keys to this analysis that a revolution in world power relationships is ongoing. People are good and will not tolerate such unjust violence in their name.
The CIA’s Mighty Wurlitzer Inoculated the World against Philosophies of Full and Equal Economic Rights Through the expansion of empires in the 19th century, the emerging world had become the ―countryside‖ from which to obtain resources for the European imperial centers. Battling over the world‘s wealth in World Wars I and II, broke the imperial nations of Europe. America was the only intact center of capital. The frightened leaders of the old imperial nations, handed the baton to the United States, to suppress the emerging world‘s break for economic freedom; America has done that job well. To maintain control of the economies of periphery nations, it was essential that the influence of the once rapidly-developing former Soviet federation be contained. Witness the waste within the Western capitalist system we are exposing. The successful development of a federation, or even one nation anywhere in the world, with efficient and just property rights laws, that challenged deeply the Western view of the
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world, would be a beacon for historians, social scientists, and intellectuals worldwide.1 Those economic and political philosophies and successful opposing belief systems would be noticed, and controlling the rest of the world would be impossible. Even if a small country gained their freedom and their living standards rapidly rose, the rest of the world would immediately demand their freedom. Hence the otherwise incomprehensible destruction, by the world‘s most powerful nations, of small weak nations such as Korea, Vietnam, Indonesia, Chile, Nicaragua, Angola, Mozambique, the Congo, and many more who came close to gaining their freedom. The drumbeat of the West being under imminent threat of attack by other nations, was a strategy of tension to assure the support of the citizenry for their wars. So the powerbrokers hid from their citizenry, the extremely violent and terrorizing suppression of other countries breaks for freedom. As the Cold War was being won, Peter Coleman, author of Liberal Conspiracy, gained complete—and unimpeded—access to the archives of the Congress for Cultural Freedom, an American and European writers‘ support group covertly established by the Central Intelligence Agency (CIA). The path to easy publication of books and articles throughout the ―free‖ world was through this worldwide, CIA-orchestrated and funded, strategy of tension creating the belief within Western populations that they were about to lose their freedom to totalitarian dictators: Five years after their victory in 1945, the Western democracies were about to lose the battle for Europe, but this time to Stalinist totalitarianism [language created by the CIA] instead of Nazis. To combat this prospect, an intellectual guerrilla group was formed: over one hundred European and American writers and intellectuals met in Berlin to establish the Congress for Cultural Freedom to resist the Kremlin's sustained assault on Western and liberal values. During the 1950s the Congress spread throughout the world, creating a network of affiliated national committees, a worldwide community of liberal intellectuals fiercely committed to democratic governance, but supported by grants which, unknown to most of them, originated in the Central Intelligence Agency. Through the Congress's influential publications, conferences, and international protests, it kept the issues of Soviet totalitarianism and liberal [imposed word usage] anti-Communism alive in a largely hostile environment.... It was finally dissolved in 1967 amid the revelations of its funding by the CIA.2
Frances Stoner Saunders, in The Cultural Cold War: The CIA and the World of Arts and Letters, discusses this further: Whether they liked it or not, whether they knew it or not, there were few writers, poets, artists, historians, scientists or critics in post-war Europe whose names were not in some way linked to this covert enterprise.... Defining the Cold War as a ‗battle for men‘s minds‘ it stockpiled a vast arsenal of cultural weapons: journals, books, conferences, seminars, art exhibitions, concerts, awards.... Endorsed and subsidized
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by powerful institutions, this non-Communist group became as much a cartel in the intellectual life of the West as Communism had been a few years earlier (and [since it was the intellectual left that was being targeted for control through the establishment of a Non-Communist left] it included many of the same people).... It spied on tens of thousands of Americans; harassed democratically elected governments abroad, plotted assassinations, denied these activities to Congress, and in the process, elevated the art of lying to new heights.3
Frances Stoner Saunders, and others cited, alerts us there were covert coordinations of the writings of Western authors, such as the covert production of perception management movies based on George Orwell‘s books. This covert operation supported Hannah Arendt, Irving Kristol—the CIA buying 50,000 of his books for free distribution worldwide—Isaiah Berlin, Sidney Hook, Arthur Koestler, Henry Luce, Bertrand Russell--who wrote some good stuff but was listed—Arthur Schlesinger Jr., Robert Conquest and Peter Coleman (who wrote most the earlier exposures above) and the simultaneous sabotage of media they could not control—such as Ramparts Magazine, The New Republic, the Nation, the New Statesman, and many more of which only a few were able to avoid bankruptcy from loss of their readers. This wholesale corruption of the American media was only one of the many ―black ops,‖ and covert actions, which became the hidden history of the Cold War. That hidden history was first exposed by the Church and Pike Congressional Committees in 1975-76 and by many researchers and reporters since. To carry out its strategies of tension, the CIA had its own wire service and publishing companies. It set up and supported magazines, newspapers, and radio stations with solidly biased and beholden editorial staffs. It established the largest news conglomerate in West Germany and major media in many countries, including Radio Free Europe, Radio Liberty, and Voice of America with roughly 100 transmitters each, and many lesser-known regional radio stations beamed to Asia, the Middle East, Latin America, and Africa. Attorney William Schapp says the CIA alone—not to mention its counterparts in the rest of the American intelligence community—owned or controlled some 2,500 media entities all over the world. In addition, it has people ranging from stringers to highly visible journalists and editors in virtually every major media organization.4 [To that we must add those controlled by the intelligence services of other nations.]
Canned Cold War editorials were sent to large and small newspapers all over the world. These editorials were available for any editor to restructure as his/her own creation; corporations and governments are doing this yet today. Large independent think tanks were established, funded, and staffed with ideological supporters, as were think tanks attached to universities. Non-government organizations were established and given beautiful names and mission statements to pull in members. They were firmly in place taking up financial, intellectual, and
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emotional space, would do many good things, but would never seriously challenge the rhetoric being poured out by the perception management system and many were specifically tools for destabilization of emerging nations. After the Soviet Union‘s destabilization, those NGOs poured into the Ukraine, Belarus, the former Soviet Eastern provinces, and into Russia itself. They printed textbooks and provided political guidance with the obvious goal of expanding unequal property rights law such as we address in Part III. The Russians finally realized those NGOs, such as George Soros‘ destabilization foundations, were little more than arms of Western intelligence and foreign policy.5 Those many billions of dollars freely spent came out of black-op budgets and the National Endowment for Democracy. By 2006, studying on how to rein in those supposed ―charitable‖ organizations; Russia decided to simply expose them. Doing so reversed the 15 month old orange revolution in the Ukraine and weakened the Western puppets busy looting their country (Google Michael Hudson European Debt wars and William Engdahl, We are losing Far Eastern Europe will alert one that, due to such exposures, world power is shifting fast). Using negative ―buzzword‖ labels to describe others as communist dictatorships, subversives, and extremists and using only positive words—peace, freedom, justice, rights, and majority rule—when talking of ourselves was the foundation of all perception management protecting suppressive power structures. This was designed to create fear, a strategy of tension among the populations of the wealthy nations, locking them within a belief system, so they would support a policy of worldwide suppression, and oppression, under the cover of protecting freedoms and rights. Even the hard left still uses those ―buzz‖ words, and creating false images in the process. Only after imperialism‘s collapse can honest history be written, and empires tagged with the proper ―buzz‖ words. Foundations and NGOs established, and funded, by the CIA, were only some of the many financial conduits providing the funds for this immense operation. Money was passed covertly through more than 170 major, seemingly independent, foundations as well as the Marshall Plan and the American Federation of Labor. The CIA‘s covert perception management budget, throughout the Cold War, exceeded that of UPI, AP, and Reuters, even as those news services were the unwitting primary carriers of its carefully crafted views of the world. Muslim extremists, trained to destabilize Afghanistan and the Soviet Union, morphed into Al Qaeda. After 911, many of these same terrorists were renditioned to interrogation (torture) centers around the world, or they were assassinated. The CIA offering reporters news scoops in exchange for publication of fraudulent articles tells us some of the leading columnists in the world were planting these deceptions. Reporters with a pipeline to sensational stories rose quickly to the top. According to Frances Saunders, well-known Washington columnists such as Joe and Stewart Alsop, and Walter Lippmann, were dinner and social friends with
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the managers of state, and CIA leaders—such as William Colby, Frank Wisner, and other managers of the CIA who were creating this propaganda and were in on the ground floor of Cold War planning. Those columnists knew the Grand Strategy was to misinform the nation that it was under dire threat of military assault, even as they knew this was pure fabrication. Those columnists never breathed a word of their involvement in imposing belief systems on the world. The news media were scandalized when the Pike Committee exposed over 400 journalists as in the direct employ of the CIA. At $200 a month, they were cheaper than prostitutes. Of course, ―A central feature of this program was to advance the claim that it [propaganda] did not exist.‖6 Though those programs were supposedly shut down when exposed, they actually expanded into the National Endowment for Democracy financing destabilization NGO‘s, addressed above, to establish Western unequal property rights law as applied to nature‘s resources and technologies, denying others their rightful share of what nature offers to all for free, throughout the former Soviet Federation. Mind controlling stories were planted worldwide to control the world‘s perceptions. Though eventually exposed, those fabrications were pouring out right over main stream news. And they still are; the push to justify the Iraq war, for example. Here is how the propagandizing of the so-called ―free world‖ was accomplished: CIA leaders moved in the same social circles as—and were personal friends of—leading columnists, newspaper editors, and media owners. With the base of fraudulent books and articles in place for unaware researchers, the CIA would leak dramatic fictitious stories, missile gaps, Soviet aggression, threats from rogue terrorist nations, etc. The masses must believe such stories so they would support the violent suppression of the world‘s breaks for freedom.a When media leaders published these fraudulent stories, they were passed over all the wire services. Every media in the nation would publish or broadcast them, usually as front page news and lead articles. Follow up interviews were channeled to prepared spokespersons and the threats were confirmed. In one day, not only the United States, but also much of the world faithfully believed what, in final analysis, was carefully crafted propaganda. These ―strategies of tension‖ are still created so the masses will fully support whatever military campaign or covert activity is on the agenda of the State Department, National Security Council, or President. The difference today is the process has now been exposed, good researchers are alert, the propagandists are occasionally getting caught, such as the 75 retired military officers, coached by the Pentagon, posing During those crucial years, publishing honest current history or research could only be done at the margins. Where reality was once extremely tough to find, great exposure books are now published by the hundreds and some are selling by the tens of thousands. a
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as independent media experts. (The aware are now watching this process in real time, and successfully alerting a part of the world through blogs on the Internet.) Below the elite group of misinformers, addressed above, were accredited reporters who remained in good standing only by parroting what was fed to them. No one except the ideologically safe media, personal and social friends of CIA managers, and top government officials, knew this was perception management with accredited reporters straitjacketed. To challenge those planted stories, which the whole nation believed fully, would be career suicide. Thus there were no reporters to seriously challenge such silly notions as El Salvador, Nicaragua, Guatemala, Chile, Cuba, Yugoslavia, and other tiny countries being serious military threats to anyone. With the ―free‖ media saturated with those articles carefully crafted to control the masses‘ view of the world, perception management became recorded history. Generally speaking, the media did not have reporters checking facts. They only had reporters rushing to the phone to be the first to report what they were told. Once a social control paradigm was carried in every newspaper and newscast in the nation as fact, and every applicable organ of government was backing it, no reporter or editor would dare challenge that report. That process was in full force when Iraq was demonized in 2002-03 in preparation for the April 2003 invasion with the goal of installing an ―imperial democracy‖ (a puppet government). This time the majority of Americans knew better but we have the war anyway. The powerful were writing history, building a framework of orientation, wrapping society within belief systems, and all to control the thoughts of the general public well into the future. The intention was forever but these timetested perception management practices collapsed under fierce Iraqi resistance and the gross corruption of the managers of state. We can thank sincere researchers, alternative news, and bloggers, for partially correcting recent history, but most of those earlier frauds will forever be cited in the writings of false history. All empires have been practicing such black-ops to protect their empires for centuries; America‘s OSS and CIA were taught by Britain‘s MI6. The intelligence services of allied empires cooperated in misinforming their citizens, supposedly to suppress tyrants but in reality to maintain control of the world. Thanks to alternative media, and the oppressed world developing their own media, this orchestrated propaganda machine, eventually described by agents of the CIA itself as its Mighty Wurlitzer,7 may yet be exposed. But in those earlier years, the route to becoming well-published and well-known was through parroting what came out of that Mighty Wurlitzer. Certainly most writers and reporters had no direct contact with the Congress for Cultural Freedom. But Cold War hysteria created by the intelligence services, and government press releases, left them no option but to parrot the same line. Thus, in those earlier years, and to a substantial extent yet today, most political and economic writers and columnists were unwittingly creating the literature-
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historical base to suppress the world‘s breaks for freedom, and protect the current power structure‘s control of world resources and markets. Those earlier gross fabrications and crafted perception managements are not only a major part of Western literature and history; they are Western literature and history. It is to the credit of the conscientious academics during the Cold War that they did stand up and attempt to tell the American people the truth. However, they were quickly silenced by ―McCarthyism,‖ the House Un-American Activities Committee, and others encasing society within belief systems protecting wealth and power. The destruction of the careers of 300-plus blacklisted Hollywood stars and writers, as was pointed out during the March 21, 1999 Academy Awards when the recipient of an Oscar was acknowledged by all major media as having testified against his friends to the House Un-American Activities Committee, provides just a hint of the thousands of professors and intellectuals whose careers were destroyed or badly damaged. As these conscientious voices were silenced, the careers of academics, reporters, and writers, parroting the CIA‘s Mighty Wurlitzer creations, soared. Little did they know that, just like the hard right, Aryan Nations, Posse Commitatus, John Birch Society, etc, absurdities which all respectable academics know better than to source, imperial nations were creating their own reality, reporters and academics were unwittingly recording this misinformation as reality, and everyone was referencing each other as authoritative sources. Ralph McGehee, a career CIA agent, concluded: The CIA [was not then nor had it ever been] a central intelligence agency. It [was] the covert action arm of the President's foreign policy advisers. In that capacity it overthrows or supports foreign governments while reporting "intelligence" justifying those activities. It shapes its intelligence ... to support presidential policy. Disinformation is a large part of its covert action responsibility, and the American people [and legislators] are the primary target of its lies.8
To target the American people, American intelligence services simultaneously targeted those the masses look up to for interpreting our world, Congress, academia, and the media. Reformed CIA agent McGehee claimed: ―He has never once seen a CIA official tell the truth to Congress. Instead, there came a steady stream of lies.‖ Even the information going to those with security clearances is controlled. This explains why academics and other intellectuals are so misled and, in turn, mislead the citizenry. The Mighty Wurlitzer was established to write a history protecting powerbrokers as they imposed enormous violence upon the world to protect their wealth and power. Those outright lies, and distorted stories, are recorded as real history and there is little else in the media of record. If that pattern of encasing society within belief systems through strategies of tension, covert actions, military
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power, and then distorting the record as they write history, is ever to be broken, we must recognize and analyze this process.
Controlling Nations on the Periphery of Empire After WW II, colonial nations were declaring their full independence. Many were electing democratic governments, and hoping to emulate the United States‘ economic successes and freedoms. The loss of the resources in their former colonies meant impoverishment for the war-shattered imperial-centers-of-capital. For the American-led coalition of empires to regain control, it was crucial that the educational institutions, and the media of emerging countries, not be permitted unbiased observation and critiques of the maneuvers of the superpowers. Newly-free democracies therefore had to be covertly overthrown, and puppet governments put in place, Indonesia, Iran, Chile, Guatemala, Nicaragua, etc. Yugoslavia, Afghanistan, and Iraq too had to be militarily suppressed, fragmented, and submissive governments installed. Those struggles are still on-going and this time wealth and power may lose. Even though many of the colonial oppressed fought hard and suffered tens of thousands, hundreds of thousands, and even a few millions of casualties, most are still not fully free. Massive military and financial support was put behind puppet dictators to prevent loss of those countries by the vote. The citizens of the imperial centers accepted these interferences into other countries because the information reaching them through the CIA‘s Mighty Wurlitzer essentially reversed reality: Dictators were described with the buzzword ―authoritarian governments‖ or even ―democracies‖ while true fledgling democracies, defending themselves against overthrow by CIA covert destabilizations, were portrayed as ―dictatorships.‖ Freedom and democracy are taught, preached, and believed in throughout the world. So suppression of any break for freedom could only be accomplished under a cover of ―free‖ elections. Progressive leaders could easily explain true freedom to their followers. To silence them, and subvert elections, required funding the campaigns of dictators and reactionary newspapers, and establishing death squads. Not even these ―black-ops‖ could fool the people into voting against their own best interests. No matter how idealistic these 2nd and 3rd tier planners were it was obvious to them that those standing up and preaching freedom for their countries had to be eliminated. Talking to ex-CIA agent Ralph McGehee, the party quoted above, I said, ―America established and orchestrated those death squads.‖ His instant response, ―Of course we did.‖ On December 3, 2001, President Vicente Fox of Mexico admitted Mexico also kidnapped, tortured, and murdered, hundreds of ―leftists‖ during the 1960s and 1970s. Leftists of course were, and still are, a buzzword for any progressives outside the ideological control of the established political powers.
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Because they were so thoroughly indoctrinated into the enemy belief system, idealistic people, no different than you and I but not having looked deeper, established and orchestrated death squads, which assassinated thousands of teachers, professors, labor leaders, cooperative leaders, and church leaders, the budding Washingtons, Jeffersons, Madisons, Lenins, Gandhis, and Martin Luther Kings of those countries. Then, to protect this exceptionally violent suppression of freedom and democracy by imperial centers, the Mighty Wurlitzers of those imperial nations created the image to the world that these primarily nonviolent, patriotic, and courageous people were terrorists and a threat to the world. Insurgents battling for freedom today, who would be praised as heroes if they had been fighting for America‘s revolution in 1776, or any other imperial nation‘s revolution, were dealt with by U.S.-supported military forces. Potential civilian leaders, whose only threat was winning at the ballot box, were dealt with by CIA-orchestrated death squads. One marvels at the courage of these men and women who kept standing up for freedom and rights in their country, and for their people, when they knew their name would go on a death squad list. How can one help but notice how those heroes on the periphery of trading empires are fighting for freedom just as America fought for its freedom in 1776. With U.S. military forces in over 130 countries around the world, with a military budget exceeding the entire rest of the world, and with the largest of those military powers allied with America as an empire, it is impossible for America to deny it is an empire. With their military and trading allies, neither can they deny they form an allied empire. Where America was originally one of the smaller colonial empires, today, along with their allied centers of capital, they are, although somewhat fragile due to internal contradictions and the potential of an economic collapse such as that currently ongoing [2008-2010]) the largest and most powerful empire in history. Trading empires expanded and protected by military might are true empires in its deepest and most original meaning. Today‘s empires are only hiding under the cover of new names, free trade, and new slogans, peace, freedom, justice, rights, and majority rule.
NSC-68, the Master Plan for the Cold War The Maoist-led revolution in China in 1949 triggering an intense study by the U.S. State Department culminated in National Security Council Directive 68 (NSC-68) being presented to President Truman on April 16, 1950. Although it was not signed until September 30, 1950 (as NSC-68/2), that document‘s master plan for the containment of those breaks for economic freedom—actually only an affirmation and expansion of the top secret policies of 1947, NSC-4, NSC4A, NSC-10/2, and others—officially became America‘s secret policy of covert and overt financial, economic, political, and military, warfare.9 The origin of this
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imperial Grand Strategy originated early in WW II (Google for, imperial, Grand Strategy, John Ikenberry). Although the world was theoretically at peace, this directive called for increasing the U.S. arms budget by 350%, from $13.5 billion to $46.5 billion. This was just under the $300 billion annual budget, measured in 1990 dollars, with which the United States fought the Cold War. U.S. economic and military power was being mustered to control the collapsed power structures of the former colonial empires and suppress those emerging nations‘ breaks for economic freedom.10 By 2010 that budget was $663.8 billion. While admitting there was no military threat to the West, Dean Acheson‘s memoir, Present at the Creation, unwittingly exposed NSC-68 as the master plan for the Cold War. It was a Grand Strategy for increasing the military budget of the United States by 350% to wage a worldwide covert war, or overt when necessary—Korea, Vietnam, the two Gulf Wars, the containment of Cuba, Iran, Iraq, Libya, and the destabilization and fragmentation of Yugoslavia—so as to suppress the rising tide of social and economic revolutions, which were intent on breaking the dependency imposed upon them, and turning their resources to the care of their own people. There are just and necessary covert operations such as those by the Office of Strategic Services (OSS) during WW II. However OSS officers, the primary designers of post-WW II covert actions, and other Western intelligence services had been carrying out major covert operations to suppress the freedom of colonial nations well before the CIA was officially established. Very large military efforts to reinstall or maintain the old ruling elite were undertaken in Greece and China before WW II ended. Tens of thousands of valiant patriots who had held two-thirds of Greece out of Hitler's control were slaughtered. At the same time, with U.S. support, Vietnam was being reclaimed by the French, who killed 20,000 in Haiphong harbor alone, and another million Indochinese before America took over suppressing that break for economic freedom, and slaughtered another three million in the 1960s and 1970s. Britain retained her claim to Malaysia, for a while, by slaughtering thousands. With American and British support, the Dutch slaughtered 150,000 Indonesians in an unsuccessful attempt to reclaim those resource-rich islands using Dutch SS battalions which had been fighting for Hitler just weeks earlier. In one bombardment alone, over 90,000 were killed in the suppression of Madagascar‘s bid for freedom. This is, of course, a very incomplete list. Researchers have concluded the CIA interfered deeply in over 50 countries and only a little softer in many more. OSS Cold Warriors were the primary staffers of the CIA when it was first established in 1947.11 The experiences of these Cold Warriors in suppressing breaks for economic freedom, called insurgencies, between 1945 and 1950 were codified into NSC-68. All previous Security Council directives were on a learning curve which built up to that April 1950 master plan. All later NSC directives
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were supplemental to it. Most ―insurgency‖ suppressions succeeded in maintaining the dependency status of the crucial ―countryside‖ with its precious natural resources. But China, with one-fifth of the world‘s people, was a big loss reverberating in the boardrooms of major corporations, and protective government policies were called for. Managers of state knew if these revolutions succeeded the imperial centers would lose those cheap resources and profitable markets. To maintain control, it was necessary to suppress (contain) both the rising socialist centers of capital to the East and the emerging countries who might take the rhetoric of democracy and freedom seriously and either form an independent trading bloc of nonaligned nations, or tie their economies to other emerging centers of capital. But, with the world at peace, the planners admitted there was no way to get even $1 billion a year out of either Congress or the American people, and NSC-68 called for an additional $33 billion per year, $300 billion in year-2000 dollars.12 Note the simultaneous occurrences of these major events: (1) The Korean War, proving communists were bent on world conquest. (2) The Congress for Cultural Freedom, along with other black ops of the CIA and other intelligence agencies, controlling the information flow to the world. (3) And McCarthyism silencing those with the credentials, and authority, to tell the people anything different. These mutually supporting events made their debut in the first half of 1950 and within two months of the finalization of NSC-68, the master plan for the Cold War.13 None of this was accidental or incidental. It was all part of the Grand Strategies of managers of state to lock society within a belief system (a strategy of tension). While McCarthyism, painting any progressive person, or philosophy, as communist was in full swing, it was political, social, and career suicide to be objective and intellectually balanced. During those 40 years of suppression of dissenting opinion, the CIA paid compliant professors to write 25 to 30 fraudulent books a year. Right-wing think tanks were set up to produce thousands of books based on those original planted volumes. Tens of thousands of CIA articles providing a base for those fraudulent books were planted in the media around the world. For example, to control the world‘s perceptions, 700 CIA articles were planted worldwide during the overthrow and assassination of Allende in Chile. Reporters were provided news scoops in exchange for publication of fraudulent articles. Some of the leading columnists in the world, therefore, were planting this nonsense. For over two generations social scientists have used, and are still using, those fraudulent books and articles as the foundation of their research. Such books have been cited by official textbooks for 50 years, and will be in the future. The intelligence agencies, corporate think tanks, and state departments of all powerful nations were busy writing the same distorted history. Intellectual figures and skillful writers throughout the Western world, supported and coordinated, build-
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ing a framework of orientation to encase society within that belief system. As the quotes above on the Congress for Cultural Freedom demonstrates, only academics and intellectuals on the fringe knew the difference and even they could only be very unsure of what was real and what was not. When it was learned the CIA had supported the printing of these thousands of books, sincere academics sued for the titles to be revealed. But the Supreme Court ruled this would expose CIA methods and endanger national security.14 The imperial nations of Europe also had to worry about the loss of their heartland by the vote. Post-WW II France and Italy were especially vulnerable to ballot box revolutions. Massive CIA funds were only barely able to avert that loss. It required more than money. WWII partisans who fought Hitler were the only effective political force left in Italy, and many were communist. Allied troops released Mafia leaders from Mussolini's prisons, armed them, and placed them in charge of the cities, as they reclaimed the Italian peninsula.15 Control of the Italian elections were still in question and, besides other methods of funding conservative Italian politicians, the CIA was deeply involved in the super-secret P2 lodge, the primary group trying to prevent that election disaster for the Western world's managers of state. The only way to obtain a seat of power in the Italian government was through that secret lodge. The risk of an overthrow by the vote was still high. For further belief system protection, the Bologna railway bombing which killed 84 people and injured 150, and other fatal bombings in Italy, were strategies of tension, planned and carried out by the CIAcontrolled Italian intelligence services, and right by the covert action training manuals that have since surfaced, blamed on the "left." The explosives from that bombing and others were traced to some of the 139 buried weapons and explosives caches for the CIA‘s ―Operation Gladio,‖ under which those bombings were carried out. In Italy alone, the right wing terrorist bombings blamed on the left numbered in the hundreds, killing several hundred and injuring many more.16 Run an Internet search for ―Gladio, Ukraine‖ and you will learn these strategies of tension have been refined to take control of former provinces of the Soviet Union and other strategic parts of the world. So far (2010) it has failed in Belarus, the Ukraine success has been reversed, and those externally supported regime-change battles are currently failing in other former provinces. Iraq is being shattered into two or more defenseless political entities at the cost of well over a million lives. The slaughter of several million in the Congo‘s mineral rich Katanga province, and mass rape of entire villages, still ongoing and designed to gain and retain control of their mineral wealth, has been largely kept out of the news and unknown. . ―The House of Horrors: Torture, Assassinations and Genocide,‖ chapter six in James Petras‘s newly released The Power of Israel in the United States is a great summary of those policies world wide by imperial America. The guidelines of empire have never changed. Besides the primary leaders and a substantial num-
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ber of secondary leaders, the assassinations of targeted regions‘ finest and most capable the past 60 years, before they gained political power, number in the many tens of thousands. Operation Gladio was the Italian segment of the CIA‘s ―Operation Statewatch‖ operating, with the support of other intelligence services, Operation Statewatch was, of course, worldwide and the same dirty tricks were used by the CIA to discredit socialist elements in Japan.17 Though the cover story, when exposed in September 1990, was these being ―stay behind forces‖ in case the Soviet Union overran those countries, they were really there to control elections, through strategies of tension and, if that failed, to take back by force, through assassinations, black ops, and military coups, any government lost by the vote. Their permanent in-place numbers ranged from 400 operatives in Belgium to 2,000 in Italy. The super-secret covert operation's bombings and blaming of the left in other European countries, within the Western alliance, were done more sensibly, where and when, no one would be hurt. The purpose of strategies of tension worldwide, creating terrorist acts and blaming the left, was, of course, to distort what the so-called left, primarily labor leaders, stood for and deny them any wins in the elections. In 1997-98, there were exposures of South Africa's secret service using and planting Soviet weapons in its own strategy of tension to blame the massacres of blacks on the African National Congress. Such framing of opponents is an old political trick. Planting counterfeit letters, documents, and weapons is standard black ops for intelligence services. The CIA‘s Mighty Wurlitzer had this all down to a science. Those bombings and other violence blamed on the left, within Europe and throughout the world, provided a base for planting articles on the violence of the left within the media of countries breaking free. Both actual and staged covert violence had been, and still are, used worldwide by imperial-centers-of-capital to control elections, both on the periphery and within their centers of empire. In dozens of CIA-staged attacks by supposed Communist Huks in the Philippines, the hamlets were rescued by General Magsasay. As planned, the general was popularized as a hero and became America‘s elected Philippine puppet.18 The famed march of the Black Shirts in Italy supposedly putting Mussolini in power was staged three days after Italy‘s powerbrokers handed to him the reins of power. That showing of unrest was to consolidate power. Germany‘s famous Reichstag fire was a month after Hitler had been given power in a secret January meeting of German powerbrokers. Again the purpose was to consolidate power by gaining followers through creating the belief of an imminent threat to social tranquility and security. In chapter seven we will be addressing how the Korean War was just such a strategy of tension staged to provide the loyalty base to support the expense and worldwide violence of the Cold War. Run a Google search for ―Assassinations of Iraqi academics McCrystal,‖ and learn about the decimation of Iraqi professors through assassinations. This is an exten-
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sion of the elimination of civilizations practiced by Western culture as they spread across the globe. Run a Google search for George Monbiot, ―Avatar and the Genocides We Will Not See.‖ That and Viassis Rassias‘s, ―Christian Persecutions of the Hellenes only starts one‘s education.‖
Corporate Funded Think Tanks Building Upon the Beliefs Created by the CIA The CovertAction Quarterly, put out by disaffected CIA agents, recognized corporate America was wrapping a large share of the world within a belief system, the same way America‘s beliefs of lurking enemies during the Cold War had been manufactured, and also the way Britain imposed Adam Smith free trade beliefs 200 years ago. We obtained permission to quote Sally Covington. Her description of corporate control of information locking society within a belief system is a close parallel to the post-WW II activities of intelligence services described above: Spearheading the assault has been a core group of 12 conservative foundations: the Lynde and Harry Bradley Foundation, the Carthage Foundation, the Charles G. Koch, David H. Koch and Claude R. Lambe charitable foundations, the Phillip M. McKenna Foundation, The JM Foundation, The John M. Olin Foundation, the Henry Salvatori Foundation, the Sarah Scaife Foundation, and the Smith Richardson Foundation.... From 1992-94, they awarded $300 million in grants, and targeted $210 million to support a wide array of projects and institutions…. The 12 have mounted an impressively coherent and concerted effort to shape public policy by undermining—and ultimately redirecting—what they regard as the institutional strongholds of modern American liberalism: academia, Congress, the judiciary, executive branch agencies, major media, religious institutions, and philanthropy itself. They channeled some $80 million to right-wing policy institutions actively promoting an antigovernment unregulated market agenda. Another $80 million supported conservative scholars and academic programs, with $27 million targeted to recruit and train the next generation of right-wing leaders in conservative legal principles, free-market economics, political journalism and policy analysis. And $41.5 million was invested to build a conservative media apparatus, support pro-market legal organizations, fund state-level think tanks and advocacy organizations, and mobilize new philanthropic resources for conservative policy change ... Conservative foundations also provided $2,734,263 to four right-of-center magazines between 1990 and 1993, including The National Interest, The Public Interest, The New Criterion, and The American Spectator.19
The conservative institutions have taken the political offensive on key social, economic, and regulatory policy issues.... These institutions have effectively repositioned the boundaries of national policy discussion, redefining key concepts, molding public opinion, and pushing for a variety of specific policy reforms.... These groups flood the media with hundreds of opinion editorials.
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Their top staff appears as political pundits and policy experts on dozens of television and radio shows across the country. And their lobbyists work the legislative arenas, distributing policy proposals, briefing papers, and position statements.... The American Enterprise Institute has ghost writers for scholars to produce op-ed articles that are sent to the one hundred and one cooperating newspapers—three pieces every two weeks.... The Hoover Institution‘s public affairs office ... links to 900 media centers across the U.S. and abroad. The Reason Foundation ... had 359 television and radio appearances in 1995 and more than 1,500 citations in national newspapers and magazines. The Manhatten Institute has held more than 600 forums or briefings for journalists and policy makers on multiple public policy issues and concerns, from tort reform to federal welfare policy.... The Free Congress Foundation, in addition to its National Empowerment Television, is publishing NetNewsNow, a broadcast fax letter sent around the country to more than 400 radio producers and news editors.20
As Karen Rothmyer wrote: ‗Layer upon layer of seminars, studies, conferences, and interviews do much to push along, if not create, the issues, which then become the national agenda of debate.... By multiplying the authorities to whom the media are prepared to give friendly hearing, [conservative donors] have helped to create an illusion of diversity where none exists. The result could be an increasing number of one-sided debates in which the challengers are far outnumbered, if indeed they are heard at all.‘... [The Heartland Institute] introduced Policy Fax ... a revolutionary public policy fax-on-demand research service that enables you to receive, by fax, the full text of thousands of documents from more than one hundred of the nation‘s leading think tanks, publications, and trade associations. Policy Fax is easy to use and it‘s free for elected officials and journalists.... The American Legislative Exchange Council and the newer State Policy Network provides technical assistance, develops model legislation, and reports about communications activities and conferences. ALEC, well funded by private foundations and corporate contributors, is a powerful and growing membership organization, with almost 26,000 state legislators—more than one-third of the nation‘s total. The organization, which has a staff of 30, responds to 700 information requests each month, and has developed more than 150 pieces of model legislation ranging from education to tax policy. It maintains legislative task forces on every important state policy issue, including education, health care, tax and fiscal policy, and criminal justice.21b [A Google search for ―Glen Greenwald language of social control, Congress stands exposed‖ will lead one to his blog showing how perception management as addressed in this subchapter, plus lobbyist money, controls the entire American Congress.]
During early histories of all developing democracies, powerbrokers bought up the major information systems, at that time primarily newspapers. Control The courts are also targeted. In ―A Hostile Takeover‖ (The American Prospect, Spring 2003, pp. A16-A18) Martin Garbus explains The Federalist Society for Law and Public Policy was highly successful in packing the federal courts. b
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moved from one center of power to others as media were sold or taken over; but they were never released to seriously inform the masses, the occasional, or even many, exposés notwithstanding. Until the recent advent of alternative TV news and internet bloggers, the foundation beliefs intended to protect wealth and power were unchallenged and heavily promoted. In late February 2002, the attempted establishment within the Pentagon of an Office of Strategic Influence (office of disinformation) to plant fraudulent and distorted news in the world press to control Muslim opinion worldwide was exposed. The media took the tack that this was something new. But it was not new. The U.S. Has 16 intelligence services, most other nations have several, the state departments of major countries practice disinformation, and corporations and politicians practice it to control who will be elected and what laws will be written. The corporate-owned media is there to push social-control corporate philosophies, and scholars have easy access to the massive literature put out by corporate-funded think tanks. Everyone everywhere feels he or she is thinking independently; but, when analyzed, most information and foundation beliefs come from those disinformation centers, or less-than-straight-forward government sources. When little other information is available, researchers stay safely inside permitted parameters of debate. For those who dare to write or speak truly independently, the market was once extremely limited. These heavily-funded schools of thought became the functioning beliefs of society, and all other views are crowded to the margins. Fortunately—though we have yet to see how far it goes—all this is changing. Alternative news (see Free Speech TV, Link TV, etc.) and informative books are forcing the corporate media to address injustice and inequalities within the system, and this has the potential of collapsing the monopoly system. Our assumptions are the changes will be revolutionary.
McCarthyism Suppressing Honest Thought After WW II the old imperial-centers-of-capital had shattered each other's power, and the former colonial world was revolting. The only wealth left to suppress those breaks for freedom was in America. At the end of that war the United States had two Grand Strategy choices: join the newly emerging nations in their break for freedom, or join the old imperial centers and suppress those insurgencies.c The behind-the-scenes cultural and financial ties to Western Christian, white, Europe were too great. America chose alignment with the old imperial nations; the historical record shows this choice was chiseled in stone decades before. Those same choices being available by other centers of capital and possibly being the final crisis that destroys the current monopoly system and bringing peace and prosperity to this world. c
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For 130 years British intelligence services, the British diplomatic service, and British industry had financed university systems, and think tanks, to teach neomercantilist free trade. U.S. intelligence services, State Department, and multinational corporations took over that role as the British Empire crumbled. Most universities and opinion makers in Europe, and America, then wrapped society within that belief system, most unwittingly, for the next 60 years (1947 to 2007) when the citizenry started to see through it. Within the old imperial centers it was not possible to remain in a position of influence, in either government or academia, if one promoted anything other than the belief systems protecting that society. The crisis of the Great Depression created openings for other social philosophies to be looked at, but WW II, and the Cold War, fought specifically to suppress those belief systems, permitted the re-imposing of the beliefs protecting empires. While McCarthyism was in full swing, painting any progressive philosophy as Communist, it was political, social, and career suicide to be objective and intellectually balanced. European professors, including, and especially, the classical philosophers, had for centuries been the carriers of the belief systems of imperialism; there was little else taught. There were conscientious professors in the American universities who knew the history of Americans gaining their economic freedom, who knew most other colonial nations were still under the control of imperial-centers-of-capital, and who recognized the potential of those former colonies joining the brotherhood of free nations. These idealistic, and conscientious, professors were recognized authorities whose views would be freely expressed through their classes and eventually the media. To take over the imperial mantle and suppress the post-WW II breaks for freedom, it was necessary for America to strip these potential carriers of truth out of the universities. McCarthyism was no aberration of one individual as recorded in history. Senator McCarthy was the chosen point man for the House Un-American Activities Committee, whose members themselves were point men for the wealthy and powerful, and the first echelon managers of state, who stripped those professors out of the universities, and their thoughts out of the media; thousands lost their jobs. The universities, the media, and lay intellectuals kept their heads down, their mouths shut, and their typewriters silent.22 The major universities' rehabilitation of the reputation of these persecuted souls when the Cold War was won (most were dead by then), proves even the powerbrokers of universities, the very people sworn to provide an honest education to the nation and the world, knew students, and everyone else, were being fed a controlled and fraudulent picture of the world. Professors took leaves of absence to organize the CIA, and then returned to their ivory towers.23 By not telling their students they had established a massive propaganda organization that was to put all others to shame, which would have
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been an honest education, they, and all who knew but remained silent, became propagandists just as surely as those within the massive intelligence system they had set up. The 1975-76 Church Committee and Pike Committee hearings exposed many of these black ops. Thousands of fraudulent books were financed by intelligence services of all imperial centers. Hundreds of thousands of articles were planted all over the world. Intelligence agencies of all imperial centers, including the CIA, were making movies as well as newsreels which the 50s and 60s generation watched with almost every movie. Massive literature was put out by subsidized think tanks and academics. Thousands of books were written by sincere academics sourcing fraudulent literature being passed off as honest scholarly work. On top of this were the massive fictions, novels and movies, written to ride the crest of the created hysteria. This was the rhetorical thunder of the Cold War. After 40 to 50 years of this hysteria, during which honest and sober works were dismissed as the works of radicals, misguided souls and conspiracy theorists, only a few on the fringes of academia understood how deeply they were involved in suppressing truth through ―parroting‖ these carefully created beliefs that democracy and freedom were under threat. The truth can be found only through intense research and dedication, and few have the time, money, or motivation to do it. Although good researchers are now pushing back, and their books are selling by the thousands, the legacy of McCarthyism and the orthodoxy it created still rules the halls of academia, the media, congressional bodies, and enough of the citizenry that there had not been a defining revolt at the ballot box, perhaps not even with President Barack Obama.
Corporate News Media Protecting Corporate Interests Citizens educated under those thought controlling conditions eventually moved into positions of power and, within the limitations of their power and misinterpretation of free trade, were likely sincere in their efforts to develop the world and eliminate poverty. But those who would question free trade as practiced by neomercantilists were silenced; at first by McCarthyism‘s threat to their career, and later by peer pressure and lack of financial or identity rewards. As opposed to the certainty of being cast into oblivion if one tried to stand up against the perception management, the majority staked their careers on promoting those belief systems and the high financial, career, and identity rewards that choice offered. While enjoying the followers and income gained by publishing Cold War hype created by the power structure, the media trapped themselves. They were now further controlled by their readers and advertisers. With the masses believing enemies were planning to attack them at any moment, and with intelligence services spending hundreds of millions of dollars continually reinforcing those
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beliefs, any media that would dare present a rationalization outside the Cold War belief system that the West was under serious threat would lose both their readers and advertisers in droves. The market then worked its magic. With the world programmed that enemies were lurking behind every bush, the occasional scholarly, honest, critique could not be sold. Meanwhile, paranoid and hysterical writings, as well as the total frauds we have been addressing, sold by the hundreds of millions. The world now understands the causes of world misery the past 60 years, and we are going on the assumption that reality will trump perception management and the world will break free. As sixty, once independent, national media merged into five, alert Americans turned to Internet blogs so as to stay up with world events. CNN eased Lou Dobbs out, hired charismatic new anchors, gave them their heads, and parroting the line has been replaced, at least on that 24 hour news channel, by serious, in-depth, reporting.
Destabilizing Internal Political Groups Just as imperial powers did not dare let any nation develop their own social philosophies, and become a beacon for other oppressed nations, they did not dare let the voices of the oppressed within the imperial centers be heard. Preventing awakened political voices from reaching others with their message required destabilizing internal political groups in all allied countries. In the United States, this assault was spearheaded by the House Un-American Activities Committee and McCarthyism. The black arts were employed within the FBI's Operation COINTELPRO, a replay of the post-WW I shattering of labor, primarily the destruction of the Wobblies (International Workers of the World [IWW]). CHAOS, Cable Splicer, and Garden Plot were CIA and military intelligence services (America has 16 of them) destabilizations carried out in cooperation with the FBI. These synchronized efforts of political police became urgent when over 500 periodicals critical of the Vietnam War, with a peak circulation of seven million, sprang up.24 Through agent provocateurs, counterfeited letters, planted narcotics, false arrests, poison-pen letters, malicious articles planted in the press, blacklisting from jobs, harassment, electronic surveillance, burglary, mail tampering, and other internal strategies of terrorist tension, hundreds of budding political groupings were destabilized. In March 1998, the Socialist Workers Party (SWP) and Young Socialist Alliance (YSA) won a 15 year legal battle against the FBI for decades of spying, harassment, and disruptions. During that trial, these two groups, out of hundreds spied upon and/or destabilized, proved the FBI had conducted 20,000 days of wiretaps and 12,000 days of listening "bugs" between 1943 and 1963, as well as 208 burglaries of offices and homes of their members and had photographed or stolen 9,864 private documents.25 These are only two
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groups out of hundreds that were compromised, and only events proven. The 2002 Patriot Act, legalizing all this and more, has so far been affirmed by the Obama administration.d The American government was ordered to pay Fred Hampton‘s family $3 million when it was proven in court that his December 4, 1969 death in Chicago was a political assassination of the above-described black-ops. After 27 years in a California prison, Geronimo Pratt was ordered released and he collected $4.5 million when, though other excuses were used by the courts, he proved his arraignment and conviction for murder was a conspiracy between the FBI and the Los Angeles District Attorney‘s Office. The FBI had him under surveillance, knew he was 400 miles away at the time of the murder, and the prosecutor knew his witnesses were government informers with no credibility. Proving these conspiracies required some of the longest court cases in American history. As few such targeted people had either resources or determined people behind them, many innocent people had their lives destroyed by what can only be called America‘s political police. Innocent political prisoners have died in U.S. prisons and others are still there.26 If the largest and most politically motivated of these hundreds of groups had been allowed to form and grow, some of their leaders would eventually have been elected to local, state, and national governments. From that position, they would have had platforms to speak to the masses. Social philosophies, not in the best interests of a citizenry, as had been accepted in the past when there were no other choices, are much harder to impose upon a population under conditions of true freedom. The independent views on national and international events being carried by the media when addressed by those new leaders—as opposed to the desired view of managers of state as they suppressed both internal dissent and the world‘s break for freedom—was the real threat. For exercising their democratic rights, these innocent people were systematically monitored, systematically destabilized, and some were sent to prison; their voices were never heard except by a few on the margins. Silencing those who stood up on the periphery of empire was a much harder job than silencing dissent-
Robert O‘Harrow Jr, No Place to Hide (New York: Free Press, 2005) alerts us that ―big brother‖ is here now. Each person name is electronically tagged. As they go about their daily business they leave electronic trails as to where they have been and what they have done. Every swipe of a debit or credit card is recorded. Written records are scanned into databases. Medical, legal, insurance activity, etc, is typed into major databases. Information corporations or governments can type names into a powerful computer and instantly see everything recorded that every person in America and a few million outside America‘s borders has done and is doing. d
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ing voices within the imperial center but, at least until the ongoing populist revolution on the periphery of empire, this too was, to a large extent, accomplished. No profound thoughts which ran counter to the mainstream were permitted on either side of the opposing Cold War blocs, rhetoric about a free, open, and unbiased educational system in the ―democratic‖ West notwithstanding. Classics of alternative thought were taught in the universities, but they were taught negatively, and the massive propaganda of the CIA's Mighty Wurlitzer, the weeding out of professors with independent thought through loyalty oaths, and the threat of—or actual—job loss, and the pressure of propagandized peers assured these philosophies would only be taught as being dictatorial, violent, and-or impractical. The violence of the Cold War was to suppress the implementation of any competing philosophies, so no such example could gain the allegiance of intellectuals, opinion makers, or voters.e Because the masses now have voting rights, their perception of the world had to be controlled. These gross fabrications wrapping society within a Cold War belief system are now not only a major part of Western literature and history; they are Western literature and history. After the Cold War was won, some major universities restored the good name of those who were forced out of academia and had their careers destroyed. This proved the innocence of these accused and shattered people were well understood all along by the information gatekeepers. Understanding the suppressions and oppressions of the Cold War is essential to understanding the primary thesis of Parts I and II; inequalities in world trade impoverish naturally wealthy regions, and imperial-center social philosophies are imposed to protect the system of laying claim to weak nations‘ wealth. History repeats itself because wealth and power are based on inequalities of both external and internal trade, the rules of which have been fine-tuned for centuries into unequal property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. For the powerful to permit the establishment of equality in trades would be to allow the loss of their massive accumulations of unearned wealth and power. The suppressions, and oppressions, of the Cold War were not aberrations. Whenever the threat to wealth and power is high, such violence against idealistic people and societies gaining their freedom is the norm. With all political, economic, financial, and military options blocked, the defeated, dependent, ―resource powers‖ (the developing world) had, until now, no options outside of what the imperial centers had to offer. All plans of the emerging world Again, Part III and the Conclusion will demonstrate that monopoly capitalism was designed as a system of theft, both in internal and external trade, and most classics were simply justifications for those unequal and unjust policies as opposed to true works of philosophy for an efficient and productive economy. e
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failed; the specific purpose of the covert actions of the Cold War. Realization takes hold that the only opportunities are those offered by the powerful, the imposed, reimposed, social philosophy takes hold, and the old order is restored. This is an exact description of the Cold War and the re-imposition of Adam Smith free trade philosophies and neoliberal economics upon the world that we will be addressing in depth. We have heard we have freedom, rights, and a free press all our lives. To impose that belief, America had, and has, a perception management system far more extensive than most empires in history. We write on the assumption this is changing. We are addressing this past history only so the reader will understand how the world came to believe what was little more than a fictitious world. After reading this book we suggest reading Mark Lane‘s Plausible Denial: Was the CIA Involved in the Assassination of JFK; L. Fletcher Prouty‘s JFK: The CIA, Vietnam and the Plot to Kill Kennedy; and Philip Willan‘s Puppet Masters: The Political Use of Terrorism in Italy. In Prouty‘s authoritative books, he was one of three authors who wrote the how-to books on U.S. covert actions, one will learn how staged violence, strategies of tension, are used worldwide to control the beliefs of voters so as to control elections both on the periphery of empire and within the imperial centers. When a strategy of tension fails and a power structure is faced with loss of power, actual violence is used, including assassinations of leaders of nations, covert destabilizations, and wars. Public knowledge of each violent event is controlled through carefully crafted press releases before, during, and following those implementations of policies of state. This is done so effectively that the FBI knew the identities of President Kennedy‘s assassins, though they did not dare move on this information because the plotters reached high into government circles, and the entire government would come crashing downf Members of the House Select ComEven though in charge of governments or departments of governments, these are just mortal men. A generation earlier, during the Great Depression, not even President Franklin D Roosevelt dared do anything when General Smedley Butler exposed that an organization composed of some of the wealthiest people in the United States had approached him to lead an overthrow of the American government and set up a fascist one as was being done all over Europe at the time. There were a lot more skeletons in the U.S. government‘s closet than President Kennedy‘s assassination. If that assassination had been truly investigated, many powerful people would have been destroyed. As those powerful people knew where the closet skeletons of any who dared attack them were, it is unlikely these people would go down without taking their attackers with them, and America‘s fascist covert violence all over the world and control of the media worldwide would have come to the surface. Both the CIA and the FBI knew about each others‘ illegal activities addressed above. Not only was there an unwritten agreement that neither would expose the other, each must cooperate to suppress any evidence of the other‘s illegal activities. f
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mittee on Assassinations sat on this same information in 1978 when they learned those same names from the same sources; and America‘s vaunted institutions, the Justice Department, the media, the universities, and its political leaders, all failed to inform the public even when everything the FBI and the House Select Committee knew was proven in a court of law when one of the assassins sued the Spotlight for publishing his name as one of those professional killers. The assassins were named in the courtroom of Judge James W. Kehoe, verdict February 5, 1985, United States District Court, Miami, Florida, case number 80-1121-civ-JWK, E Howard Hunt, of Watergate fame, plaintiff, versus Liberty Lobby, defendant. It was actually CIA agent E Howard Hunt‘s lawyers who irretrievably damaged their own client by asking specifically who these assassins were, and what the witness knew of their activities and whereabouts as they organized and carried out the assassination. Claudia Furiati came up with the same names as the assassins when she was allowed access to Cuban intelligence files to write her book, ZR Rifle: the Plot to Kill Kennedy and Castro. Part of the CIA‘s plans to overthrow the Cuban government included control of information reaching the people while the overthrow unfolded. All was in place for history to be written that this externally coached and financed invasion was an internal Cuban revolution. When the Cuban overthrow collapsed at the Bay of Pigs, and President Kennedy refused to rescue that covert operation with American air power, the Cubans of Miami, and their CIA handlers, were furious. To them President Kennedy was a traitor to what they viewed was a fight for the survival of the world as they knew it. Being hardened to orchestrating death squad activity worldwide these angry agents, under orders from higher up, assassinated President Kennedy; just as they had orchestrated the assassination of thousands of others worldwide so the imperial nations would not lose control of the periphery of empire. The same perception management machinery that was in place to control the world‘s belief of how the planned overthrow of the Cuban government was an internal event, was now turned to controlling the world‘s belief in who assassinated President Kennedy. When the above named trial concluded, the jury foreman, Leslie Armstrong, ―simply, eloquently, and painstakingly‖ explained to waiting print, radio, and televiThat suppression of evidence and placing blame elsewhere was the order of the day for all—the FBI, the CIA, the Warren Commission, the House Select Committee on Assassinations, and the entire U.S. government. Against such a phalanx of power, the media dutifully fell in line. Though the American people had accepted without question many false realities imposed upon them, the majority believed the assassination was a conspiracy. But the propaganda apparatus had accomplished its purpose. Through the mechanisms of collective denial, citizens looked everywhere for those conspirators except where they were, right in the top leadership of the American government, the U.S. military, and the CIA.
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sion reporters that ―the evidence was clear ... the CIA had killed President Kennedy, Hunt had been a part of it, and the evidence, so painstakingly presented, should now be examined by the relevant institutions of the United States Government so that those responsible for the assassination might be brought to justice.‖27 Lane points out that a Miami television station that evening reported only that Hunt had lost a libel case, and had ignored her eloquent description of the historic importance of this case. The Jury foreman challenged that station on their reporting. It was then accurately reported by that one station but was ignored by all other media, both local and national. In contrast, Hunt‘s winning of the first trial where none of this explosive testimony was given, and which was of no historic importance was widely reported. In William F. Pepper‘s An Act of State: The Execution of Martin Luther King we learn, in a suit brought by the King family against one of the assassins, and others unnamed, it had been proven in Judge Swearingen‘s courtroom in Memphis, Tennessee, between November 15, 1999 and March 2000, that Martin Luther King had been assassinated by elements of the Memphis police and the Tennessee State Police with the operation overseen by Army Intelligence, one of America‘s 16 intelligence services.28 King‘s murder was part of the well-known Operation COINTELPRO which was established specifically to destabilize rising political groups. We encourage the reader to read the story of the 70-plus witnesses bringing this political assassination to light. After Mark Lane‘s exposure of the CIA being behind the shooting of President Kennedy, I dismissed the other cited theorists. I should not have. The dynamite testimony of President Johnson‘s mistress—to avoid the taint of conspiracy theorists, never used in court—makes it clear most were on the right trail tracing the many threads of power directly involved in that assassination. Some of those same respected powerbrokers were behind both assassinations. Those movers and shakers were meeting to plan King‘s demise less then a month after President Kennedy was shot.29 The media was just as silent on this exposure of the violent elimination of African-American leaders as they were about the assassination of John F. Kennedy. The assassinations of up and coming leaders in periphery countries by death squads of imperial nations is standard practice, hundreds of Iraq‘s leading professors have been eliminated during this occupation and hundreds more fled to avoid the slaughter. We now know that, when the threat is high, this is also practiced within the imperial centers. Units within the intelligence communities are specially trained for these jobs and the relevant government structures stand ready to cover it up. Plausible Denial, the title of Lane‘s book but better explained in Pepper‘s, is the name of the game and the media, local and regional police, and the judicial system are, as you and I would be, too cowed to expose what they know.
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Bobby Kennedy was loved by Americans as much as his brother. If he was elected president and he had just won the California primary the eve he was assassinated, he would have had the will, the knowledge, and the power to expose the true assassins of his brother. That could not be permitted.30 How and why the true assassins got away with this can be summed up with another example: In chapter 16 we address that anyone in power, or within a Japanese company, who exposed Japan as running a pure mercantilist economy would be totally ostracized and destroyed. In the same way, if anyone in the media or academia in the West were ever a threat to exposing the power structure they would immediately face the full force of the system and be ostracized to the margins or, as we see by the Kennedy and King assassinations, worse. (Again we must point out that this is all changing fast as the entire world wakes up.) By studying the above books, one will begin to understand how belief systems are imposed upon an acclaimed ―free press‖ and academia; who then, largely unwittingly, impose it upon a population whose government, educational institutions, and press claim to be honest recorders of history.g For clear illumination as to who killed President Kennedy, first read the solidly authoritative Mark Lane, Plausible Denial: Was the CIA Involved in the Assassination of JFK? (New York: Thunder Mouth Press, 1991); William F. Pepper, An Act of State: The Execution of Martin Luther King (New York: Verso, 2003), p. 127 and Claudia Furiati, ZR Rifle: The Plot to Kill Kennedy and Castro (Melbourne: Ocean Press, 1994). For further information read Mathew Smith, Say Goodbye to America: The Sensational and untold Story of the Assassination of John F. Kennedy (London: Mainstream Publishing, 2001); L. Fletcher Prouty, JFK: The CIA, Vietnam, And the Plot to Kill Kennedy (New York: Carol Publishing, 1992); For a view of how the CIA used terrorism and assassinations all over the world, including Europe, to protect the old imperial-centers-ofcapital, read Philip Willan's Puppet Masters: The Political Use of Terrorism in Italy. After reading those four books, one can spot the solid evidence in the following books: Jim Garrison, On the Trail of the Assassins (New York: Sheridan Square Press, 1988); Walt Brown, Treachery in Dallas (New York: Carroll & Graf, 1995); Harrison Edward Livingston, Killing the Truth: Deceit and Deception in the JFK Case (New York: Carroll & Graf, 1993); Jim Marrs, Crossfire: The Plot that Killed Kennedy (New York: Carroll & Graf, 1989); Anthony Summers, Conspiracy (New York: Paragon House, 1989). Those books and a documentary—"The Men Who Killed Kennedy," made in Britain for release on the twenty-fifth anniversary of Kennedy's assassination (but selfcensored by the American media) was not shown in the U.S. until 11 years later— leave little doubt it was a political assassination (New Video Group, 250 Park Ave. S., NY, NY 10010, 212-532-3392, catalog number AAE-21201 through 21206, or A&E Home Video, Box Hv1, 233 E. 45th St, NY, NY 10017). See also Oliver Stone‘s outstanding move JFK, Prouty is the man X in that movie which would have been better yet, actually complete and unchallengeable, with the information of Mark Lane and Claudia Furiati. For Bobby Kennedy‘s assassination read James Dig
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It is hard to believe that a free media does not inform the public. But that they do not is reality. In The Best Democracy that Money can Buy, there are several editions and other titles, Greg Palast provides many examples with solid evidence of massive corruption that would have ended the careers of powerful politicians, and even brought down governments if exposed, but all that was glossed over and ignored. Through his efforts these stories get on British television but do not get on America‘s. Any American who wants to stay fully informed must turn to alternative news and the Internet.
Writing History to Protect Wealth and Power History is written by the powerful to protect their wealth and power. Carefully crafted press releases and recordings of events are the writings of history. Because all people are trained to be just, an unjust society could survive no other way, destabilizing other societies to lay claim to, or retain claim to, their wealth requires the imperial centers to create the belief that targeted and oppressed people are enemies and/or incompetents. To justify colonizing the world, confiscating much of the world‘s wealth, enslaving entire populations to produce that wealth, and wiping entire civilizations off the face of the earth in the process, it was necessary to expound the belief the natives of those besieged societies were not really people (they had no souls). When it was no longer possible to ignore the fact that they were people, it was necessary to expound the belief they were incompetent and unable to run their own affairs, a belief only now being slowly set aside. When the blatant injustices of mercantilist imperialism became too embarrassing, the belief that mercantilism had been abandoned and true free trade was in place is expounded. In reality the same wealth confiscation goes on, deeply buried within complex systems of monopolies and unequal trade hiding within the covers of the classics of capitalism. Many explanations have been given for wars between the imperial nations when there was really only one common thread: ―Who will control resources and trade and the wealth extracted through inequalities in trade?‖ The battles over the world‘s wealth have only kept hiding behind different protective philosophies each time the secrets of laying claim to the wealth of others have been exposed. Thus it is that students of statecraft and foreign policy are openly taught that what the people believe is happening is only a control mechanism created Eugenio and Lisa Pease, The Assassinations: Probe Magazine on JFK, MLK, RFK, and Malcolm X (Los Angeles: Feral House, 2003), run a Google search. James W. Douglas‘s JFK and the Unspeakable, 2008, ties it all together. One does not get too deep into that book until one realizes dozens of government officials knew who really killed President Kennedy but, for fear of their own life, dared not say a word.
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through a public education campaign, creating society‘s belief systems. Those planning the Grand Strategies of state are ―defensive realists‖ or ―offensive realists‖ trained to care for their nation‘s ―national interest.‖ Students with the right connections, along with many more who moved up through the corporate, political, and military world, move into the inner sanctums of government, take a pledge of secrecy, and become the managers of state we have been discussing throughout this treatise. Where upper echelon managers are not trained to care for the interests of either the poor within monopoly capitalism or the emerging world, they are deeply ingrained with the need to care for the corporate world and the imperial centers. For managers of state to care for those on the periphery of empire when the confiscation of the natural wealth and labors of that periphery are creating the wealth and power of the imperial center is an oxymoron. While powerful nations are controlling other people‘s resources, or denying the use of those resources to competing centers of capital, it is necessary to create the belief people targeted for covert or overt attack, economically or militarily, are a serious threat to ―national security.‖ Of course, the ones under threat are the already impoverished whose natural wealth and labor production are being siphoned to the powerful developed imperial-centers-of-capital. The belief that imperial nations are under military and terrorist threat and these "good" nations are supporting "good" people on the periphery of empire is accomplished through loudly proclaiming this through the CIA‘s still operational Mighty Wurlitzer. Those imposed belief systems establish the parameters of national and international debate and the real problem, monopolies and unequal trade, is not a politically correct subject of discussion. A low-key approach is used only when there is no serious threat. ―No serious threat‖ means the subject of injustices of imperial centers and unequal trades is far outside the permitted parameters of debate. However, when the threat of loss of power and wealth is high (meaning imperial injustices and unequal trades are being placed on the table for discussion on the periphery of empire as is happening as we speak) Western cultures engage in massive perception management and covert destabilizations, both internally and externally, which, of course, is exactly what we are taught is done in dictatorships. The line between the controllers and the controlled lies above the university system and the media and below the National Security Administration (NSA), the State Department, the intelligence services, the few in Congress with high security clearances, and other inner-sanctum managers of state.h The elite man-
In Confessions of an Economic Hit Man, John Perkins alerts us that the head of the snake is the huge National Security Administration. They keep track of everything h
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agers of state are well aware the masses are encased in a belief system cocoon. After all, they imposed the beliefs that encased them. The masses, and this includes most within the university system, the media, and elected officials outside the inner sanctums of government, are unaware they are being controlled through strategies of tension so their governments can do throughout the world just what they are warning that others wish to do to them, subvert their governments and steal their wealth. It would be a difficult task for a professor or journalist to step back and realize his or her entire education and life‘s work was little more than spreading socialcontrol beliefs which had been imposed upon society for generations. Nor could many accept that these fundamental beliefs, with little relevance to reality, had been kept in place by extreme violence. Those professors and journalists would instinctively and quickly realize that all the rewards, money, career advancement, acceptance of one‘s work for publication, acceptance by one‘s peers, and appointments to government posts were stacked totally in favor of parroting the social control beliefs. After observing those who did stand up, and the price they paid (totally ostracized by their peers and denied any of the above described rewards for their achievements), only an insignificant few will stand up. However, due to the Iraqi quagmire losing America the moral high ground, this is changing. Those who question those unjust and unequal policies and providing viable answers are finding an audience. That and the collapsing economies on the periphery of empire discrediting the beliefs imposed upon them accounted for President GW George Bush‘s advisors September 2000 study, ―Rebuilding America‘s Defenses: Strategies, Forces, and Resources for a New Century. That study concluded what was needed to retain dominance and control of the world‘s resources was ―some catastrophic and catalyzing event, like a new Pearl Harbor.i‖ That ―false flag event‖ occurred on September 11, 2001. While ignoring all other interpretations of world events as propaganda, crucial Western news comes directly from the CIA‘s Mighty Wurlitzer and other intelligence services‘ presentation of reality. Intelligence agencies‘ wordsmiths restructure every world event to the desired spin. It is this reality that ambassadors and other government agencies hand to reporters. Lower-level officials have to parrot the same words they hear from higher officials. With the many years required to reach such a position of authority, every government official happening in the world, alert the National Security Council, and orders are passed from there. i New Statesman, London, December 12, 2002, John Pilger. Legislation has been passed since that attack (the Patriot Act, a recreation of Hitler‘s Enabling Act) which legalizes all the internal surveillance and covert destabilizations just described. This act is, just as Hitler‘s, the legal structure of fascism.
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has been through this many times and knows what he or she is expected to say. To deviate from the proper script, no matter how much reality demands it, would incur immediate dismissal. During the Cold War, any accredited reporter seriously challenging these creations at a presidential news conference or any other high-level news briefing would quickly lose accreditation to attend such meetings. To seriously address these creations as the propaganda they were would immediately have placed one outside the loop, cost most their jobs, and be instant social and political suicide. Peer pressure is the primary control mechanism. Thus, children can quickly understand what adults find incomprehensible. Children are honest and have nothing to lose while adults have everything to lose and following the crowd quiets their conscience. No one challenges them there but they would face big challenges if they tried to peel aside any major portion of the belief system society was wrapped in and expose the truth.
“National Security” and the “National Interest” Three tenets of monopoly capitalism are: pay the lowest possible price, charge all the market will bear, and give nothing to anybody; a great philosophy for powerbrokers with a monopoly on capital, technology, markets, and military might. It takes no deep thought to realize these tenets of classical economic philosophy were implanted by an earlier power structure (that feudal residue in our philosophy, laws, and customs) to maximize its claims to the wealth of others. Landed aristocracy and financial aristocracy, through control of all positions of power in the Church and universities, had full control of what was taught. Those belief systems were philosophical tenets chosen for the protection of society‘s power structure. They were not philosophical tenets chosen by free thought to maximize the well-being of all within that society. The welfare of the rest of the world's citizens, whose natural wealth and labors were confiscated to create a large share of the wealth of the imperial centers, were certainly not considered. The trumpeting of peace, freedom, justice, rights, and majority rule, requires those Grand Strategies for controlling other people and their resources be kept secret. What is practiced is the total antithesis of what is preached.
Professors and Intellectuals are Conscientious and Sincere Professors are conscientious and sincerely want to teach true history, honest economics, and honest political science. However, when a society is under extreme threat, such as the managers of state of the imperial centers were all through the Cold War (and as they are now as the world again threatens to break free); honest expressions of threatening thoughts are not permitted. Professors and intellectuals who challenged the Cold War beliefs being imposed upon the
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world, as cover for those suppressions of economic freedom we are addressing, were stripped out of the universities and the media.31 (Again we must say, ―All this is changing fast.‖ Reality is pouring out faster and faster and the potential of a full fledged, worldwide, populist revolution keeps rising higher and higher. We retain this extended history in this continually updated book so future researchers will understand how our social mind was bent so far away from reality.) French economic students understood that economic theory, as taught, had no relation to reality, and in the fall of 2000, they protested and academic administrators agreed to address what heretofore had been ―controversial‖ subjects. Twenty-seven Ph.D. economic students at the University of Cambridge, UK, signed a similar, but milder, letter of protest in 2001. Biased and compliant historians of the winners of the hot wars, wars over who will set the rules of unequal trade, and thus who will be wealthy and powerful, wrote current history without an understanding of the real underlying causes. With the Cold War over, and especially with the loss of the moral high ground due to the quagmire in Iraq, opposing thought is surfacing. Most important, intellectuals throughout the emerging world are now fully aware of the inequalities of trade which have been imposed upon them and the covert destabilizations and overthrows of their governments. Our Conclusion is written under the assumption that the Asian centers of capital need to protect their economies, the developing world‘s need for sustainable development, and the rapid advance in cheap communications systems will bring an end to monopoly capitalism‘s 700-plus years of control of the belief systems within the old imperial centers, and that of all nations permitted within world trade. When those mental blinders fall away, professors and intellectuals will be stunned to learn that the classical philosophies they have been studying and teaching were only justifications for a system of theft carefully put in place over the past 700-plus years. Part III will document those economic classics are justifications for Monopoly Capitalism‘s system of appropriation of internally produced wealth through aristocratic exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. In Parts I and II, we are documenting that world trade theories are also only justifications for a system of theft (plunder by trade). Modern economies are nothing more than the strongest imposing their rules on weaker cultures. The Conclusion addresses how eliminating those monopolies— through restructuring imperial property rights—can bring peace to this world, eliminate poverty in 10 years, and provide a quality life for all within two generations.
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Providing a Beacon for Intellectuals Throughout the World Though one would never know it listening to the operational philosophic rhetoric, through perception management wrapping society within a belief system, the efficiencies of centralized planning were crucial to the West‘s post-WW II successes. The Cold War military buildup, the economic rebuilding of the old shattered imperial-centers-of-capital, Japan and Western Europe, and the rise of new allied centers of capital, Taiwan and South Korea, to prevent the expansion of socialism were all a part of the centralized plans of corporate capitalism. The question of whether socialism and central planning will work, or will not, work has been thoroughly established. The only two functioning economies during the Great Depression were Germany‘s and the Soviet federation‘s, both were centrally planned, Germany‘s only because it had to usurp the rhetoric of National Socialism or be forced by its politically aware labor movement to accept Soviet socialism, and both were building industrial capital faster than ever before. Because it is viable and thus threatening, socialism has always faced the full might of monopoly capitalism's perception management and military. If it were not viable, there would be no need to demonize it. Destabilizations have prevented socialist centers of capital from becoming established, and its efficiencies have been utilized by dictators attacking socialism (Hitler attacking the Soviet Union in WW II) and utilized by socialists when defending against not only those attacks but also against the ring of steel put around them by the entire allied developed centers of capital after that war. The Soviets were spending 45% of their earnings on infrastructure. The West‘s determination to destroy them forced them to spend 55% on arms. This left only 5% of their industry to care for their citizenry. Their successes proves our primary thesis, a full and equal rights society can be well cared for while utilizing less than half the labor and resources as does monopoly capitalism. While the well-funded think tanks were pouring out the rhetoric against central planning, covert and overt destabilizations and the enormous military expenditures of the targeted nations (defending against the threat of military overthrow by Western imperial centers) were preventing the Soviet Union, Cuba, all Africa and Latin America, and many other nations from putting their economies together. The hoped-for co-opting of China as she develops is still in place but we are assuming that these monopoly systems will collapse. How can such wasteful economies possibly hold when there are not enough resources in the world for each citizen of China to flagrantly waste the same amount of wealth as Americans? The reason for these destabilizations is obvious: an efficient social system, providing a better standard of living for its people, at a far lower cost, becomes a beacon drawing the loyalty of intellectuals and the impoverished worldwide.
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The rapid restructuring of the German economy, which successfully cared for its citizens during the depths of the Great Depression, even as they were being denied equality in world trade, caught the attention of the world. During the crisis of that depression, German ―Bunds‖ were forming in every corner of the globe. Both the rapidly developing Soviet form of socialism and Germany‘s rapidly developing fascist (corporate) socialism were drawing intellectual followers away from neoliberal (monopoly) capitalism which was collapsing under the weight of the Great Depression. Maintaining both power and wealth of established imperial powers required the containment of both socialism and fascist National Socialism, and both were contained by military force: WW II contained Germany, and the Cold War, as well as the severe Soviet losses in WW II, contained the Soviet Union and, until the current reawakening of the developing world to a new opportunity to break free, suppressed others‘ breaks for freedom worldwide. A close study can only conclude the imperial centers are poverty creating social structures. Yes they create great wealth but only a fraction of the wealth that would be created if they would restructure to a peaceful society, and we have yet to consider that the larger share of what monopoly capitalism does create is wasted. Even though most of those attempting to gain their freedom once looked to the United States as their political and economic model, they had the universal danger of popular leaders who knew better, were not puppets, and who would turn those resources to sustaining their own people. Empires whose economies depended upon the resources of those countries for raw material for their industries would be faced with a disaster of the first order if their countryside gained its economic freedom; thus any society who took democracy and freedom seriously had to be suppressed. As they now understand by whom, and how, they were destabilized the past 60 years, alliances of developing nations will no longer look to America or Europe for support for their current bids for freedom. Depleted uranium inhalation is not only a sentence of death it also destroys the genes. Iraqi children are playing in that depleted uranium dust, and it has been estimated that almost the entire gene pool of Iraq will eventually be destroyed. Those yet undamaged will intermarry with those who are damaged and over a period of three generations or so most Iraqis will be genetically defective to the extent they will not dare have children. Depleted uranium dust is blowing all around Iraqi population centers, its half life is 4.5 billion years (the age of the earth), and soon the genes of all Iraqis will be destroyed. Likewise, the gene quality of thousands of American soldiers, billeted in highly uranium oxide polluted areas, has been destroyed, and an increasing number of their children are also being born deformed. Bob Nichols, in PTSD, Infertility and Other Consequences of War, says ―Israeli sperm concentration has declined by 40 percent in less than 10 years….Israel will be sterile in less than [another] 10 years at this rate of decline.‖ As ―The poison gas [created when
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radioactive shells hit] cannot be contained, undone or recalled [and] there is no antidote. There is no cure. There is no escape…. [This] is just an example of what is happening to human sperm all over the Middle East and Central Asia, [and a few other places in the world] by the choice and force of will of successive U.S. presidents.‖ That story of genocide via nuclear sterilization will not be kept off mainstream news forever. South America is breaking free as we speak, Africa will not be far behind, these countries will be writing the honest history of imperialism, and they will be placing those nuclear proliferating imperial leaders on the docks of national courts and world courts charged with the worst war crimes in history. When that day arrives, few will dare set foot outside the borders of their home countries, and some will not be safe even there. Trials of imperialism‘s puppet leaders have been successfully held in various countries of South America. The full history is being documented, and it is only a matter of time when the planners of all these horrors, the leadership of the imperial centers, will be under threat of arrest in countries, such as Spain, with laws that cover war criminals.
Damage Control If one has any doubts as to how thorough perception management is, consider the 730 American airmen shot down or crashed as they were flying sabotage and assassination teams into Byelorussia and the Ukraine and photographing territory in the heart of the Soviet federation as addressed in depth in chapter seven.32 Much effort went into "damage control" to tone down that explosive story. In later documentaries and feature articles, the admission of over 730 airmen lost over the Soviet Union was downgraded to 130, but, knowing they had been deceived once, each documentary noted the story might be much bigger. A few years after the exposure of the air assaults on the Soviet Union, a military spokesman in a news interview said, "Americans would be surprised if they knew how many airmen had been lost over the Soviet Union and China." A documentary on the subject of the downed pilots showed their routes over the Baltic Sea and claimed all planes veered off before going over Soviet territory. That falsification of history, telling a part of the story as the full story, and ignoring the major story of over 10 thousand flights into the heart of that besieged federation, required both a careful selection of facts by the Pentagon, and a cooperative producer. Even as Western citizens were being brought to near hysteria that they were under dire threat of attack, there were no planes from either Eastern Europe or the Soviet Union flying towards the West with teams trained for sabotage, assassination, or any other kind of destabilization. No politician of substantial stature seriously believed the Soviets were going to attack anyone and
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our next two chapters will document that most emerging countries throughout the world were under attack from the West. Damage control was exercised again when CNN and Time magazine spent two years documenting over 20 instances of the use of nerve gas by Americans in Vietnam, at times against defecting U.S. Soldiers. The story, Operation Tailwind, due to be aired and printed in July 1998, was withdrawn, senior editors who stood by their story were fired, others demoted or chastised, and the story was successfully suppressed. That true history nearly surfacing was quickly erased from history. Such revelations have not been permitted in the mainstream media. However, again, this world is changing fast and this may yet happen. Whenever the powerful are challenged, the longstanding tradition of the owners of newspapers backing their editors and editors backing their reporters, at least we have always been told it is so, is blown out the window. Witness reporter Ray Bonner‘s banishment to obscurity by the New York Times for exposing the El Mozote massacre by U.S.-trained soldiers in El Salvador; Robert Parry‘s departure from Newsweek after ―path-breaking work on the Iran-Contra scandal‖; The San Jose Mercury News retraction of its exposure of CIA involvement in drug trafficking and subsequent resignation of its star reporter, Gary Webb; and James Fallows‘ disappearance from U.S. News & World Report for trying to insert a little reality into that publication. This author was especially appreciative of James Fallows‘ writings and wondered how his broad and sensible view of the world could ever be tolerated at U.S. News. It wasn‘t. And if all we have documented to this point is not enough to prove the West was never under threat of a military attack, that the managers of state knew this well, and that there was no need for intelligence agencies to alert the West about any such attack, consider this: Immediately after WW II, U.S. intelligence co-opted Switzerland‘s Crypto-Ag, and other encryption companies, to obtain the codes to the most secure encryption machines sold to nations all over the world. With these codes, U.S. intelligence officials read the most secret messages of most nations, friend and foe, as easily as they might read the morning newspaper.j The National Security Administration‘s ECHELON, now upgraded to
Wayne Madsen, ―Crypto Ag: The NSA‘s Trojan Whore?‖ CovertAction Quarterly (Winter 1998), pp. 36-42; William Blum, Rogue State: A Guide to the World’s Only Super Power (Monroe, ME: Common Courage Press, 2000), chapter 21. The CIA uses many methods for plausible denial. For example: Inter-Arms, established by excareer CIA agent Samuel Cummings, was supposedly separated from the CIA to establish the world‘s largest small arms dealership, Inter-Arms Incorporated, a plausibly deniable conduit for weapons shipments anywhere in the world. With an established arms conduit for covert actions, and a record of serial numbers, intellij
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CARNIVORE, EINSTEIN, and TEMPEST, listens in on almost every electronic conversation in the world. Its computers are keyed to detect key words and phrases and divert all communications with those words to be looked at or listened to. Important sources and destinations have all incoming and outgoing communications listened to or read. American intelligence services and managers of state not only knew well there was no planned attack against them, they also knew how weak and defenseless against the full power of the West these besieged people really were.k Assassinations and covert actions were the least of what interested the West as they read other nations‘ mail; they were responsible for most of them anyway. The economic plans of those nations were their primary interest. Playing the high-stakes diplomatic poker game of international trade with a mirror behind everyone‘s back gave the United States an insurmountable advantage in trade negotiations. They knew the most intimate secrets of nonaligned nations attempting to ally together to develop their industries and internal economies. Few of those nations had any intention of allying their economies with the Soviet federation. Although a nation embargoed by the West would be forced to trade with other unallied nations, their goal was freedom to control their resources and economies and trade freely with any nation. By 1998, long after the Cold War was over, 70 countries, 66% of the people on earth were under some form of American embargo or sanction.33 Control of trade hides behind a rhetorical cover of human rights abuses. If a nation is recalcitrant, those human rights abuses provide the legitimacy for sanctions, destabilizations, and wars. Though trillions of dollars have been spent the past 60 years to destabilize emerging nations and the Soviet Union, funds cannot be found in the imperial centers to rebuild either their own economies or those they had shattered. Without development funds and without access to technology and markets, the weak are still relegated to providing cheap commodities, and labor, to imperialcenters-of-capital. The emerging world now knows America has suppressed their bid for freedom the past 60 years. They understand the purpose was to control their regence agencies could keep track of who was using those arms; one would be in deep denial if they thought Cummings was really independent of the CIA. k The lead article in CovertAction Quarterly, Fall 2002, is titled ―Imperial Wizard: Soros is not just doling out cash—he‘s fleecing entire countries,‖ by Heather Cottin. This is a mustread for serious researchers on how propaganda works. While being portrayed, and portraying himself, as a great philanthropist, George Soros is obviously working closely with the IMF, the World Bank, the National Endowment for Democracy, and many other offshoots of American intelligence to subvert the economies of entire nations. He then picks up prime assets for pennies on the dollar. There has to be many others in on that blatant fleecing of the developing world.
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sources, they understand the alliance of wealthy nations to maintain the theft of their wealth, and today (2006-2010) they are allying together with the intent of successfully breaking free and gaining control of their resources and their destiny. Knowledge on how perception management works in the world‘s so-called ―free‖ press is sobering. The post 9-11 Patriot Act is a recreation of Germany‘s post Reichstag fire Enabling Act under which Hitler established fascism and took all rights away from, jailed, and executed, targeted people. The current world scene is a replay of Germany‘s recent history. Entire ethnic groups have been targeted; databases of potential enemies have been created; enemies are watched by newly reorganized, or newly created, internal intelligence service; communications are monitored; neighbors are asked to report on neighbors; people have disappeared with, as of this writing, no rights to lawyers and torture of suspects is openly discussed.34 We must remember that the overwhelming masses of the German citizens during WW II were not targeted. Instead they were told it was they who were under threat. It was not until fascism was defeated that their excesses and abuses were exposed to their own people. Similar to those exposures, powerbrokers‘ cover stories for the Iraqi war is in tatters. The Washington Post and the New York Times have admitted they were wrong in carrying the messages of this ―echo chamber‖ without challenge. Over 70% of Americans are now aware they were deceived. If the mainstream news ever gets the courage to tell the American people the truth about the outright lies justifying current and past wars, there would be an earthquake change. People are good and they will not tolerate such atrocities in their name. But the powerful always stay well protected. The Supreme Court Decision, 1/1/2010, permitting corporations unlimited funding for lobbyists is just such a protection. Americans will want both honest news and honest government and, under that ruling, massive funds will be spent to prevent that. If that ruling gives corporations the power to control Congress even as 70 to 80% of the people are now aware and want change, that has the makings of a revolution. In Banana Republicans: How the Right Wing is Turning America into a One-Party State by Sheldon Rampton & John Stauber expands upon this chapter. As of its writing, corporations and the hard right had firm control of what the American people believe. To understand that control, this is a must read. Pay special attention to pages 4-5 on how the hard right coordinates perception management, which pours out simultaneously over their media channels, especially Fox News and hard-right radio talk shows. This misinformation reverberates back and forth through this ―echo chamber‖ to become the firm beliefs of the nation. Run a Google search using the keywords ―Fred Goldstein, Abramoff, Thieves fall out‖ to follow more of that story.
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Perception management, which is what is going on in the above descriptions of current events, being grotesquely reported, has been practiced for centuries. Those who consider themselves ―liberal‖ are actually held well to the right of the political spectrum. Even a large share of the so-called left do not realize how far away from reality society is kept so as to protect wealth and power. The few who do see that reality gap have been, up to this point in time, voiceless. Though hopefully it may change this time, there has been no left in Western political culture. There has been only a voiceless few who saw—or at least suspected—that distortion of reality, a small center, a right and an extreme right. The right (but known as the left) and extreme right have had firm control of the policies of Western nations. President George W Bush‘s blunder in blindly following the neocons‘ long held plans for rapid-fire regime changes across the world (7 regime changes planned and we have been fighting the first two the past 8 years) carried out both covertly and openly by the military, along with the current (2008-2010) financial collapse, has woke up the once trusting population. Enough of the citizenry have a view of how violent and dangerous monopoly capitalism really is (reality books by the hundreds are being published and selling by the thousands per title) so plans for fascist control of the populations (the Patriot Act, permissive surveillance laws, and much more) have been placed into law. That we and the entire world break free this time makes these the most important moments in all history. Errol E Harris, Earth Federation Now: Tomorrow is too Late (www.ied.info: the Institute for Economic Democracy, 2005; Glen Martin, Basic Documents of the Emerging Earth Federation (www.ied.info: the Institute for Economic Democracy, 2006). 2 Peter Coleman, Liberal Conspiracy (London: Collier Macmillan Publishers), dustjacket; Frances Stoner Saunders, The Cultural Cold War: The CIA and the World of Arts and Letters (New York: The Free Press, 1999). 3 Saunders, The Cultural Cold War, pp. 1-3, 197. 4 William F. Pepper, An Act of State: The Execution of Martin Luther King (New York: Verso, 2003), p. 135. 5 George Soros, Imperial Wizard, Master-Builder of the New Bribe Sector, Systematically Bilking the World,‖ CovertAction Quarterly, fall 2002. 6 Saunders, The Cultural Cold War, pp. 1-3, 37, 60-63, 68, 71, 91, 101-39, 142, 150-51, 166, 201, 206, 245, 29499, 353-58, 382, 403-403, 409-411, 420, more author‘s names were listed on the dustjacket; Angus MacKenzie, Secrets: The CIA's War at Home (Berkeley: University of California Press, 1997), pp. 2, 29, 40, 61-72, 185; See also, Coleman, Liberal Conspiracy. 7 Run a Google/Nexus-Lexus Internet search using keywords, names, and countries on these pages. The history of America‘s state terrorism worldwide is deeply hidden and most records have been destroyed. (Witness Bamford‘s exposure on how General Lemnitzer destroyed the records on the Pentagon‘s plans for staging an attack on America, which included American deaths, to create an excuse to over throw Fidel Castro of Cuba.) The following books provide a good view of that history: Chalmers Johnson, The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic (New York: Metropolitan Books, 2004); Clara Nieto, Masters of War: Latin America and U.S. Aggression (New York: Michel Chossudovsky The Globalization of Poverty and the New World Order 2nd edition (Ontario: Global outlook, 2003); (Samantha Power, “A Problem from Hell”: America and the Age of Genocide (New York: Basic Books, 2002); Franken, Al, Lies and the Lying Liars who tell them; A Fair and Balanced Look at the Right (New York: Penguin, 2003); Jones, Dorothy N., Toward a Just World (Chicago: 1
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University of Chicago Press, 2002); Hartmann, Thom, Unequal Protection: The rise of Corporate Dominance and the Theft of Human Rights (Mythical Research Inc, 2002); Mearsheimer, John J., The Tragedy of Great Power Politics (New York: W.W. Norton, 2001; Mead, Walter Russell, Special Providence: American Foreign Policy and How it Changed the World (UK: Routledge, 2002); Chang, Nancy, Silencing Political Dissent: How September 11 Anti-Terrorism Measures Threaten Our Civil Liberties (New York: Seven Stories Press, 2002); Austin Murphy, The Triumph of Evil: The Reality of the USA’s Cold War Victory (Italy: European Press Academic Publishing, 2000); James Bamford, Body of Secrets: Anatomy of the Ultra-Secret National Security Agency (New York: Doubleday, 2001), especially pp. 70-75; John Quigley, The Ruses for War: American Interventionism Since World War II (Buffalo: Prometheus Books, 1992); L. Fletcher Prouty, The Secret Team (Englewood Cliffs, NJ: Prentice-Hall, 1973); Peter Coleman, Liberal Conspiracy; Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (New York: Henry Holt and Company, 2001); Michel Chossudovsky, The Globalization of Poverty: Impacts of IMF and World Bank Reforms (London: Zed Books, 1997); William Blum, Rogue State: A Guide to the World’s Only Super Power (Monroe, ME: Common Courage Press, 2000), Killing Hope: U.S. Military Interventions Since World War II (Monroe, ME: Common Courage Press, 1995), and The CIA: A Forgotten History (London: Zed Press, 1986), pp. 127-28, 131, 185; Chalmers Johnson, Blowback: The Cost and Consequences of American Empire (New York: Henry Holt & Company, 2000), p. 117; John Prados, The Presidents' Secret Wars (New York: William Morrow, 1986) and The President’ Secret Wars: CIA and Pentagon Covert Operations From World War II Through the Persian Gulf War Warwick: Elephant Paperbacks, 1996); John Stockwell, The Praetorian Guard (Boston: South End Press, 1991), pp. 100-101; Ted Gup, The Book of Honor: Covert Lives and Classified Deaths at the CIA (New York: Doubleday, 2,000); Dan Jacobs, The Brutality of Nations (New York: Alfred A. Knopf, 1987); P.V. Parakal, Secret Wars of the CIA (New Delhi: Sterling Publishers, 1984); K. Nair, Devil and His Dart: How the CIA is Plotting in the Third World (New Delhi: Sterling, 1986); I.F. Stone, The Hidden History of the Korean War (Boston: Little Brown and Company, 1952); Victor Marchetti and John D. Marks, The CIA and the Cult of Intelligence (New York: Dell, 1980), chapter 6, especially pp. 152-56, also pp. 53-54, 62-63, 541-42; Ralph W. McGehee, Deadly Deceits (New York: Sheridan Square Press, 1983), especially pp. 30, 58, 62, 189; Philip Agee and Louis Wolf, Dirty Work (London: Zed Press, 1978), especially p. 262; Loch .K. Johnson, America's Secret Power (New York: Oxford University Press, 1989); David Wise, Thomas B. Ross, The Espionage Establishment (New York: Bantam Books, 1978), pp. 256, 257; H.B. Westerfield, Inside CIA's Private World: Declassified Articles from the Agency's Internal Journal 1955-1992 (New Haven, CT. Yale University Press, 1995); Frank J. Donner, The Age of Surveillance: The Aims and Methods of America’s Political Intelligence System (New York: Random House, 1981); John Prados, Keepers of the Keys: A History of the National Security Council from Truman to Bush (New York: William Morrow, 1991); C.D. Ameringer, U.S. Foreign Intelligence (Lexington, MA: Lexington Books, 1990); J. Adams, Secret Armies (New York: Atlantic Monthly Press, 1987); T. Powers, The Man Who Kept the Secrets (New York: Alfred A. Knopf, 1979); Christopher Simpson, Blowback (New York: Weidenfeld & Nicolson, 1988); Ernest Volkman, Blaine Baggett, Secret Intelligence (New York: Doubleday, 1989); John Ranelagh, The Agency: The Rise and Decline of the CIA (New York: Simon & Schuster, 1987); Darrell Garwood, Under Cover: Thirty-Five Years of CIA Deception (New York: Grove Press Inc., 1985); Philip Agee, Inside the Company: CIA Diary (New York: Bantam Books, 1975); B. Hersh, The Old Boys: The American Elite and the Origins of the CIA (New York: Charles Scribner's Sons, 1992); H. Rositzke, The CIA's Secret Operations (New York: Thomas Y. Crowell Company, 1977); E. Thomas, The Very Best Men Four Who Dared: The Early Years of the CIA (New York: Simon & Schuster, 1995); D.S. Blaufarb, The Counterinsurgency Era: U.S. Doctrine and Performance 1950 to Present (New York: The Free Press, 1977); Michael T. Klare and P. Kornbluh, Low Intensity Warfare (New York: Pantheon Books, 1988); Alexander Cockburn and Jeffrey St. Clair, Whiteout: The CIA, Drugs and the Press (New York: Verso, 1998); S.E. Ambrose, Ike's Spies (Garden City, New York: Doubleday & Company, 1981); Susanne Jonas, The Battle for Guatemala: Rebels, Death Squads, and U.S. Power (San Francisco: Westview Press, 1991); C. Andrew, For the President's Eyes Only: Secret Intelligence and the American Presidency from Washington to Bush (New York: HarperCollins Publishers 1995); H. Frazier, ed., Uncloaking the CIA (New York: The Free Press, 1978); Covert Action Information Bulletin, all issues; Counterspy, all issues. See also, Wendell Minnick, Spies and Provocateurs: A Worldwide Encyclopedia of Persons Conducting Espionage
They Who Write History Control History
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and Covert Action, 1946-1991 (Jefferson, North Carolina: McFarland & Company,1992); John Loftus, The Belarus Secret (New York: Alfred A. Knopf, 1982); Robin W. Winks, Cloak & Gown: Scholars in the Secret War, 19391961 (New York: Quill, 1987); D.F. Fleming, The Cold War and Its Origins (New York: Doubleday & Company, 1961); Nora Sayre, Running Time: Films of the Cold War (New York: Dial Press, 1980); Milton Mayer, They Thought They Were Free (Chicago: University of Chicago Press, 1955). To understand financial and economic warfare, read Peter Gowan, The Global Gamble: Washington’s Faustian Bid for World Dominance (New York: verso, 1999); John Gray, False Dawn (New York: The Free Press, 1998); Robert A. Pastor, Ed., A Century’s Journey: How the Great Powers Shape the World (New York: Basic Books, 1999); Anders Stephanson, Kennan and the Art of Foreign Policy (Cambridge: Harvard University Press, 1989); David Mayers, George Kennan and the Dilemmas of US Foreign Policy (New York: Oxford University Press, 1988); John R. Commons, Legal Foundations of Capitalism (New Brunswick/London: Transaction Publishers, 1995); John R. Commons, Institutional Economics (New Brunswick/London: Transaction Publishers, 1995); Carey B. Joynt and Percy E. Corbett, Theory and Reality in World Politics (Pittsburgh: University of Pittsburgh Press, 1978); Richard L. Rubenstein, The Age of Triage (Boston: Beacon Press, 1983); Peter Rodman, More Precious than Peace (New York: Charles Scribner & Sons, 1994); Angelo Codevilla, Informing Statecraft (New York: The Free Press, 1992); Arie E. David, The Strategy of Treaty Termination (New Haven: Yale University Press, 1975); Francis Neilson, How Diplomats Make War (San Francisco: Cobden Press); Jerry Fresia, Toward an American Revolution: Exposing the Constitution and Other Illusions (Boston, South End Press), 1988. For how the purpose of Western intelligence services are to control the beliefs of its citizens, and how much of the violence are covert operations to maintain this control, read L. Fletcher Prouty, JFK: The CIA, Vietnam, And the Plot to Kill Kennedy (New York: Carol Publishing, 1992) and Philip. Willan, Puppetmasters: The Political Use of Terrorism in Italy (London: Constable, 1991), provides a short description of how strategies of tension are used worldwide to control beliefs and thus control elections. Alex Carey‘s Taking the Risk out of Democracy; Corporate Propaganda versus Freedom and Liberty (Chicago: University of Illinois Press, 1995) is an in-depth analysis of corporate propaganda pushed through the government, media, and academia throughout the 20th century. For more scholarly studies on the media read: Richard O Curry, An Uncertain Future: Thought Control and Repression During the Reagan-Bush Era (Los Angeles: First Amendment Foundation, 1992); John Downing, Radical Media.(Boston: South End Press, 1984); Edward S. Herman and Noam Chomsky, Manufacturing Consent: The Political Economy of the Mass Media (New York: Pantheon, 1988); Brooks Jackson, Honest Graft: Big Money and the American Political Process (New York: Alfred A Knopf, 1988); Naomi Klein, No Logo (New York: Random House, 1999); Martin A. Lee and Norman Solomon, Unreliable Sources: A Guide to Detecting Bias in the news (New York: Carol Publishing, 1990);. Walter Lippmann, Public Opinion (New York: Simon & Schuster, 1949); David W. Moore, The Super Pollsters: How they Measure and Manipulate Public Opinion in America (New York: Four Walls Eight Windows, 1992); Michael Parenti, Inventing Reality: The Politics of the Mass Media (New York: St Martins‘s Press, 1986); John Stauber and Sheldon Ramption, Toxic Sludge is Good for You: Lies, Damn Lies and the Public Relations Industry (Monroe, ME: Common Courage Press, 1995). 8 Ralph McGehee, Deadly Deceit. (New York: Sheridan Square Press, 1983), p. 192. 9 Dean Acheson, Present at the Creation (New York: W.W. Norton & Company, 1987), pp. 373-379; the complete NSC-68 document can be found in Thomas H. Etzold and John Lewis Gaddis, Containment: Documents on American Policy and Strategy, 1945-50, (New York: Columbia University Press, 1978), chapter 7. 10 Acheson, Present at the Creation p. 377; Etzold and Gaddis, Containment, chapter 7. 11 Run a Google/Nexus-Lexus Internet search using keywords on these pages 12 Acheson, Present at the Creation, p. 377. See also Stone, Hidden History, and Etzold and Gaddis, Containment. 13 Stone, Hidden History; Coleman, Liberal Conspiracy; Saunders, The Cultural Cold War; Schrecker, No Ivory Tower; Etzold and Gaddis, Containment, chapter 7. 14 Coleman‘s Liberal Conspiracy, especially Appendix D, lists almost 200 of these thought-control books); Saunders, The Cultural Cold War, pp. 60, 63, 111, 140, 294-96, 105-106; see chapters 6-7-9 of this work. 15 Run a Google/Nexus-Lexus Internet search using keywords, names, and countries on these pages
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William Blum, Rogue State:, chapter 4; Willan, Puppetmasters, chapters 1-3, pp. 146-159; Thomas, Very Best Men, pp. 65-66; David A. Yallop, In God's Name (New York: Bantam Books, 1984); Saunders, The Cultural Cold War, p. 143; Gladio and Operation Statewatch was not uncovered until November 1990, too late for most books listed here so one must go to later sources. See also Prouty, JFK, chapter 3 and Blum, Rogue State, chapters 4 and 16. 17 Chalmers Johnson, Blowback: The Cost and Consequences of American Empire (New York: Henry Holt & Company, 2000), p. 117. 18 Prouty, JFK, chapter 3 and Blum, Rogue State, chapter 4. 19 Sally Covington, ―Right Thinking, Big Grants, and Long Term Strategy: How Conservative Philanthropies and Think Tanks Transform U.S. Policy,‖ CovertAction Quarterly (Winter 1998), pp. 6-16; see also Frances Stoner Saunders, The Cultural Cold War: The CIA and the World of Arts and Letters (New York: The Free Press, 1999), pp. 116, 135, 138-39, 142, 353-58, 409. 20 Ibid. Run a Google/Nexus-Lexus Internet search using keywords, names, and countries on these pages 21 Ibid. Run a Google/Nexus-Lexus Internet search using keywords, names, and countries on these pages 22 Ellen Schrecker, No ivory tower: McCarthyism and the Universities (New York: Oxford University Press, 1986). 23 Robin W. Winks, Cloak and Gown; Saunders, The Cultural Cold War. 24 Ibid; MacKenzie, Secrets, pp. 2, 4-6, 27, 29-41; Michael Parenti, History as Mystery (San Francisco: City Lights Books, 2000), pp. 178, 183-89; Holly Sklar, Washington’s War on Nicaragua (Boston: South End Press, 1988), p. 359; Rositzke, CIA's Secret Operations, pp. 218-20; Powers, Man Who Kept the Secrets, pp. 246-70, 364. 25 Angus MacKenzie and David Weir, Secrets: The CIA's War at Home (University of California Press, 1997); M. Wesley Swearingen, FBI Secrets: An Agent's Exposé (Boston: South End Press, 1995); Ward Churchhill, Cointelpro Papers: Documents from the FBI's Secret Wars Against Domestic Dissent (South End Press, 1990); Margaret Jayko, FBI on Trial: The Victory in the Socialist Workers Party Suit against Government Spying (New York: Pathfinder Press, 1989); Nelson Blackstock, Cointelpro: The FBI's Secret War on Political Freedom (New York: Anchor Foundation, 1988); Margaret Jayko, FBI on Trial: The Victory of the Socialist Workers Party Suit Against Government Spying (New York: Pathfinder Press, 1989): Nelson Blackstock, Cointelpro: The FBI’s Secret War on Political Freedom (New York: Anchor Foundation, 1988); Ward Churchhill, Agents of Repression : The FBI's Secret Wars Against the Black Panther Party and the American Indian Movement (Boston South End Press, 1989); Martin Luther King Jr, Philip S. Foner, editor, The Black Panthers Speak (New York: Da Capo Press, 1995); Hugh Pearson, The Shadow of the Panther: Huey Newton and the Price of Black Power in America (Readings, MA: Perseus Press, 1995); run a Google/NexusLexus Internet search. 26 Blum, Rogue State, pp. 258-59. The full story of Post World War II suppression of dissent in America has not been written yet: Stephen M. Kohn, American Political Prisoners: Prosecution under the Espionage and Sedition Acts (Westport: Praeger Publishers, 1994), covers that history before and after WW I. 27 Lane, Plausible Denial, pp. 239-323, especially 320-22. 28 William F. Pepper, An Act of State: The Execution of Martin Luther King (New York: Verso, 2003), pp. 11, 15, 65, 76, 107. 29 Ibid, p. 127. 30 Run a Google/Nexus-Lexus Internet search. 31 Ellen Schrecker, No Ivory Tower (New York: Oxford University Press, 1986). 32 Michael Ross, "Yeltsin: POWs 'Summarily Executed'," The Spokesman Review (November 12, 1992): pp. B1, A10; Ernest Volkman, Blaine Baggett, Secret Intelligence (New York: Doubleday, 1989), p. 187; John Loftus, The Belarus Secret (New York: Alfred A. Knopf, 1982), chapters 5-8, pp. 109-10; William Blum, The CIA, chapters 6-7-8-15-17, especially p. 124. 33 Thomas Omestat, "Addicted to Sanctions," U.S. News & World Report, June 15, 1998, pp. 30-31. 34 Seymour M. Hersh, Chain of Command: The Road from 9/11 to Abu Ghraib (New York: Harper Collins, 2004), chap. 1; Stan Goff, Full Spectrum Disorder: The Military in the New American Century (Brooklyn, Soft Skull press, 2004), a analysis of U.S. Special Forces by one. 16
The World Breaking Free Frightened the Security Councils of Every Western Nation 95
7. The World Breaking Free Frightened the Security Councils of Every Imperial Nation
The security councils of the historical colonial empires were horrified to observe that populations on the periphery of empire, those who provided their cheap resources, were taking the rhetoric of democracy seriously and breaking free. Worse yet, the empires were also losing traditional allies. With Hitler‘s armies driven from Eastern Europe by Soviet armies, their system of government was installed in all but Hungary and Czechoslovakia. The security councils of all major Western nations were traumatized as: 1 Hungary and Czechoslovakia, with diplomatic pressure from the Soviet Union but still of their own choice, quickly slipped into the Soviet orbit. Labor now governed half of Europe.a 2 In Greece, only an alliance with Hitler‘s puppets, massive repression, and massacres of the partisans—who had kept two-thirds of the country out of Hitler‘s control throughout WW II—kept the Greek nation in the Western orbit (this first battle of the Cold War started before WW II ended and was fought strictly against our former allies; the awakened workers of Greece).1 3 Through nonviolent protest, Gandhi freed India from Britain two years later. 4 In spite of large expenditures of money and arms, military advisors, and the United States transporting Chiang Kai-shek‘s troops back and forth across China, one-fifth of the world‘s population was lost to the West: By 1949, China was suddenly free to chart her own destiny. 5 World opinion forced the dictation of the U.S. presidential ―white paper‖ that would return Taiwan (Formosa) to China.2 6 South Korea was having massive riots, over 100,000 killed.b The collaborationists of the United States installed Dictator Syngman Rhee, who before Certainly there was repression within Hungary and Czechoslovakia as the Soviet Union suppressed the political elements who wished to ally with their cultural and religious cousins in the West. But the repression exercised to maintain the Eastern European bloc pales alongside the massive repression required worldwide, including the black ops in Western Europe, to suppress the many attempted breaks for freedom from imperial capital. a
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elected had spent 20 years in exile in Hawaii, were overwhelmingly voted out of parliament, ―several crack South Korean military units [had] defected to leftist forces,‖ and South and North Korea were rejoining as one nation outside the control of imperial capital.3 7 Japan, Germany, and Italy, being far from friends with their recent conquerors, made it uncertain if the facade of democratic control of those populations would hold, and France was equally insecure.4 8 Workers in all nations of Europe were developing a political consciousness and their economies were moribund. The beacon of capitalism, the receptacle of power for the descendants of the old First and Second Estates and philosophical foundation for their imposed belief systems, was not shining brightly enough to claim the loyalties of either the world‘s intellectuals or the stirring masses. The Marshall Plan to rebuild Europe and retain its loyalty went forward at full speed, and only by expenditure of tens of millions of dollars in the Italian and French elections—a practice which lasted two decades in France and four decades in Italy--were those two countries kept within the system of allied imperial-centers-of-capital. 9 The entire colonial world was breaking free, their resources would be turned to the care of their own people, and that natural wealth would no longer be available to the imperial centers for a fraction of its true value. 10 China and Eastern Europe were now allied with the fully federated Soviet Union. If the world‘s former colonies continued to take the rhetoric of democracy seriously and form the nonaligned bloc as they were planning, over 80% of the world‘s population would be independent or on the other side of the ideological battle. And, if Japan, Germany, Italy, and France could not be held, it was far from sure they could be; that would leave only the United States, Britain, Canada, and Australia—about 10% of the world‘s population—still under the old operational philosophies and the ideological hold would be tenuous at best. After all, if there were no countryside under the firm control of an imperial center, the entire neoliberal-neo-mercantilist philosophical system will have disappeared. What Western nations were observing, of course, was the same potential loss of resources and markets, their ―countryside,‖ as the city states of Europe had experienced centuries earlier.
These slaughters of dissidents to maintain control of South Korea and prevent its rejoining the North were still going on as late as 1980 (Lee Jai-eui, Kwangju Diary: Beyond Death, Beyond the Darkness of Age. (Los Angeles: University of California, 1999). b
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A Crisis of Overproduction had to be Averted With industrial capacity increasing 50% during WW II, U.S. industry was calculated to be twice what was necessary for America's needs, and almost enough to produce for the entire world at its pre-war level of consumption.5 One of the primary tenets of capitalist market economics is much smaller production surpluses than they faced leads to an economic depression. Noting the threat to their commerce and wealth as the entire world was taking the rhetoric of freedom and democracy seriously, corporations, through control of policy of the one remaining wealthy nation, America, and the devastated nations of Europe and Japan, made the same decision as the free cities of Europe centuries earlier. Threatened with loss of their cheap, but valuable, resources and profitable markets; they had to reclaim control of their countryside: Fostering a world environment in which the American system can flourish ... embraces two subsidiary policies. One is a policy which we would probably pursue even if there was no Soviet threat. It is a policy of attempting to create a healthy international community. The other is a policy of ―containing‖ the Soviet system. These two policies closely … interact with one another.6
Of course, the ―healthy international community‖ Secretary of State Dean Acheson, one of the primary architects of the Cold War, had in mind as he was justifying NSC-68 was only from the perspective of those who watch the wealth of others roll into their vaults. A healthy community, as enforced by the Free cities of Europe 800 years ago, meant wealth to them and poverty for the defeated countryside and neighboring cities. A healthy international community, from the perspective of corporate imperialism, means wealth for the developed corporate world and poverty for the formerly colonized, still defeated, and re-colonized resource powers. Control had to be re-established. Although done in the name of peace, freedom, justice, rights, and majority rule, all perception management rhetoric; the fundamental goal of the forming IMF-World Bank-GATT-NAFTA-WTOMAI-GATS-FTAA-CAFTA-Military colossus and the covert actions authorized by NSC-68, and many lesser Security Council directives both before and after that master plan, was a super-cartel reclaiming and maintaining control over valuable resources and profitable markets and the very negation of the principles so loudly touted as their rationale.c The real fear was people taking democracy se-
The meaning of cartel is ―A group of parties, factions, or nations united in a common cause; a bloc. That is a perfect description of both the city states of Europe controlling resources and the wealth producing process 800 to 1,000 c
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riously, deciding their own destiny, and corporations losing access to those cheap resources and valuable markets.
Fabricating Incidents to Start Wars Fabricating incidents to start wars empires feel they can win similar to Hitler‘s strategy of tension through faking an attack by Poland on a German radio station. Likewise, America's strategy of tension through creating the Gulf of Tonkin incident in order for President Johnson to get congressional backing to widen the war in Vietnam, the totally discredited ever-changing rationalizations for attacking Iraq, etc, is standard practice. This is the careful writing of, actually falsification of, history by the powerful United States. Documents on the destabilization of Cuba, declassified in 1998 and titled, ―Pretexts to Justify U.S. Military Intervention in Cuba,‖ demonstrate how it is done. Plans for those in-depth deceptions were to, fake an attack on the U.S. naval base in Guantanamo, Cuba, with friendly Cubans masquerading as attackers.... Arrange for an unmanned vessel to be blown up near a major Cuban city.... Stage a ‗Communist Cuban terror campaign‘ in the Miami area.... Plant arms in a Caribbean country and send jets painted to look like Cuban Migs, creating the appearance of a ‗Cuban based, Castro supported‘ subversion.... Blow up an unmanned U.S. plane that would surreptitiously replace a charter flight of civilians (and much more).7
L. Fletcher Prouty was one of three officers who wrote the how-to books on covert operations for the CIA. In his JFK: The CIA, Vietnam, And the Plot to Assassinate John F. Kennedy, we learn that strategies of tensions, terrorist bombings, attacks by our own covert forces dressed as the enemy, counterfeit papers, and the drumbeat of the CIA‘s Mighty Wurlitzer, were managing perception throughout the world to control elections and to gain acceptance for the military suppressions of the many breaks for freedom. In fact, American intelligence service manuals on terrorism teach that, at the sites of their many acts of state terrorism, always leave evidence the opposition was responsible.8
years ago, as addressed in chapter two, and the control of resources and the wealth producing process after WW II by the imperial-centers-of-capital. All history between those two eras, when honestly written, will show that protection of wealth and power as the causes of most wars, both internal and external.
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National Security Council Directive 68, Master Plan for the Cold War, Was a Strategy of Tension A study of NSC-68 will conclude that, besides being a master plan for the Cold War, this directive was a perception management instrument to stampede government officials into accepting a high military posture. That analysis and the crisis facing the developed Western world are confirmed. Secretary of State Dean Acheson, one of the primary architects of NSC-68, sums it up for us: Western Europe ... shattered by its civil war, was disintegrating politically, economically, socially, and psychologically. Every effort to bestir itself was paralyzed by two devastating winters and the overshadowing fear of the Soviet Union no longer contained by the stoppers on the east, west, and south—Japan, Germany, and British India.... It was in this period [the first 3 years after the beginning of the Cold War] that we awakened fully to the facts of the surrounding world and to the scope and kind of action required by the interests of the United States; the second period, that of President Truman‘s second administration, became the time for full action upon those conclusions and for meeting the whole gamut of reactions—favorable, hostile, and merely recalcitrant foreign and domestic—that they produced. In the first period, the main lines of policy were set and begun; in the second, they were put into full effect amid the smoke and confusion of battle.... The purpose of NSC-68 [the master plan for the Cold War] was to so bludgeon the mass mind of “top government” that not only could the president make a decision but that the decision could be carried out.9
Although President Truman may have been fully aware, the fact that the finalized NSC-68 was presented to him on April 16, 1950, but it not being signed until September 30, 1950, as NSC-68/2, three months after the start of the Korean War, demonstrates the likelihood the American president was one of the ―top government officials‖ the designers of the Cold War were stampeding into a war posture through the strategy of tension of the communists as the aggressor of the Korean war and this foretelling more communist aggressions worldwide.
The Korean War, a Strategy of Tension to Attain Backing and Financing for the Cold War Any power structure, ―democratic‖ or dictatorship, facing the loss of control on the periphery of empire, will find or create an excuse for war. Because all the records were not destroyed as ordered; it is now known the American Joint Chiefs of Staff had just such a strategy of tension planned to create support for a war with Cuba. They urged President Kennedy to justify their planned war by
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staged covert terrorist acts, some of which would have caused the deaths of innocent Americans d: In the name of anticommunism, they proposed launching a secret and bloody war of terrorism against their own country in order to trick the American public into supporting an ill-conceived war they intended to launch against Cuba. Codenamed Operation Northwoods, the plans which had the approval of the Chairman and every member of the Joint Chiefs of Staff, called for innocent Americans to be shot on American streets; for boats carrying refugees from Cuba to be sunk in the high seas; for a wave of violent terrorism to be launched in Washington D.C., Miami, and elsewhere. People would be blamed for bombings they did not commit; planes would be hijacked. Using phony evidence, all of it would be blamed on Castro, thus giving Lemnitzer and his cabal the excuse, as well as the public and international backing, they needed to launch their war.10 [A Google search for Sean McBride 911 false flag‖ will alert one that the 9/11 attack on America was a false flag operation to trigger America‘s current War on Terror.]
The political instrument to put NSC-68 into effect was the Korean War starting 72 days after the directive was finalized and presented to President Truman. When I.F. Stone wrote The Hidden History of the Korean War in 1952, NSC-68 was still classified. But his book demonstrates the Korean War was a strategy of tension imposing the policies of America's managers of state upon the world. It was distinctly the most important political event between WW II and the fall of the Soviet Union. That, of course, was one of the distant goals of that Asian war. No empire, or nation, instigates a war on the periphery that is already politically won, but they do instigate actual wars when loss of control is imminent. This planned war was not only to save an outpost on the periphery of empire; but was also a war to save the empire. There was nothing to lose in Korea; without a war it was going to be lost anyway and there was an entire world to gain through a strategy of tension mobilizing the citizens of the imperial centers for a war to suppress the renewed breaks for economic freedom of the emerging world. Though the plans were made in State, an analysis of our sources will conclude the excuse for the Korean War was obviously staged by General Douglas MacArthur, South Korean President Syngman Rhee, and Chiang Kai-shek of
Historians should look closely at the anthrax scare after the 9/11/2001 terrorist attack on America. Those anthrax spores were proven to be genetically identical to that produced at the U.S. germ warfare facility at America‘s bio-warfare facilities at Fort Dietrich. The source of that anthrax is not in dispute. The probability is very high that propagandists took advantage of the September 11 th terrorist attack to further their strategies of tension. Run Google searches for five dancing Israelis. What happens at Mossad is at least known by the CIA; they normally work together. d
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Formosa under the political cover of the American hard right, called the China Lobby, with the support of McCarthyism and the CIA's Mighty Wurlitzer.‖ Highlights from Stone's book outline a war created by those threatened with the loss of their power and wealth. Massive riots were breaking out all over South Korea with the goal of North and South Korea reuniting; over 100,000 were killed. Crack military units were defecting to the so-called left, and the CIA and South Korean government were unable to control the elections. Syngman Rhee's puppet government was voted out wholesale, and the next to go would be Syngman Rhee. North and South Korea were going to rejoin outside Western control; South Korean troops had pulled back from the 38th parallel the day before the war started; South Korean government press releases were saying a North Korean attack was imminent; the UN had inspected the 38th parallel just hours before the war started and concluded there was no imminent attack. Intelligence briefings stated North Korea was not prepared for war. Yet ships were in place to evacuate American families. Everything was set to fabricate an excuse for war, a strategy of tension imposing a belief system to gain followers for the immense military budget and casualties it would take to suppress the world‘s breaks for freedom. The invasion of South Korea was a much more elaborately staged war than Hitler's staged invasion of Poland. North Korea announced that South Korea had invaded in three places and had been hurled back. Author John Gunther, General Douglas MacArthur's personal biographer, just happened to be in the General‘s personal railroad car when a high-level occupation official returned from being called to a phone, saying, "A big story has just broken. The South Koreans have attacked North Korea."11 That verification, which accidentally slipped into history, and Stone‘s cold political analysis, verifies the North Korean claim that South Korea, under American guidance and promise of protection by America‘s full military might, started that war. A third verification was the few days it took to dislodge South Korea from Heiju, several miles above the 38th parallel. I.F. Stone describes how many of the battles, with hordes of Koreans and Chinese attacking, were nothing more than military press releases manufactured by intelligence service wordsmiths and passed out through military and government channels.e Stone would quote the headlines built from those press releases and then cite the communiqués from ground commanders who were searching for enemies they could not find. When China joined the war and pushed the Americans back to the 38th parallel, the West did face a capable enemy. But only 35,000 Americans killed while 4 million North Koreans and Chinese were killed fully supports I.F. Stone‘s analysis. e
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Certainly four million were killed but they were primarily killed by an unopposed air force napalming North Korea to the ground, an unopposed navy shelling North Korean coastal cities to rubble, and massive artillery extracting a horrendous price in lives when a real attack was faced. This accounts for only 35,000 Americans being among the four million who died. Half those numbers were women and children who died in this carnage when defenseless and totally undefended North Korean cities and villages were napalmed and bombarded to the ground. Neither China nor the Soviet Union provided any great support to North Korea until that tiny impoverished nation was essentially destroyed. Couple perception management press releases with the documented efforts of the North Koreans, Chinese, and Soviets to bring the Korean War to an end, every such effort unreported in Western media and thwarted by either a massive air attack or ground offensive, clearly mark it as a political event. In 1992 John Quigley wrote The Ruses for War: American Interventionism since World War II and came up with the same conclusions: The Korean war was started under NSC-68 by the West as a strategy of tension, the primary framework of orientation, so citizens and governments would support the militarization of the West for control of the world‘s resources. Besides unearthing evidence we missed on America instituting that war, Quigley agrees the West was at all times militarily superior to the North Koreans. He recognized the North Koreans were not ready for war and Western armies were many times looking for forces that simply were not there.12 Thanks to the hysteria of the Korean War, which locked Western citizenry within a belief system saying the West was under imminent threat of attack, South Korea and Taiwan were kept within the sphere of Western influence. So called ―leftist‖ dissidents in Germany, Italy, France, and Japan were totally suppressed by a strategy of tension identical to American McCarthyism, the military budget did increase 350% as planned in NSC-68, the Cold War was on full force, and after an intense 40 year battle, that struggle to regain control worldwide to protect those cheap resources, those markets, and the very right to govern the imperial centers, was won.f But only temporarily: After successful suppression of breaks for freedom all over the world at a massive cost of money and lives, as we will be addressing in the next chapter, suddenly, in 2005-10, alliances are again being made throughout Latin America (Venezuela, Bolivia, Brazil, Ecuador, Cuba; and other alliances are forming) as the suppressed and impoverished continue their battle for freedom and full and equal rights. Brazil, Russia, India China, and South Africa (BRICS) are forming a trade-energy bloc and many more such blocs will form. Some of those blocs will unravel as the entrenched Imperial Bloc does everything in their power to prevent their successful formation. But, when a large enough bloc of the developing world allies together, their ability to sanction the wealthy world will force powerful nations to negotiate honestly and fairly. f
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That four million people were killed, half of them women and children, and millions more wounded, that the entire Korean peninsula was scorched earth, that another 10 million would be violently killed as other breaks for economic freedom were suppressed, that hundreds of millions would die from starvation and disease as the economies of already impoverished countries were shattered, or that trillions of dollars of the world‘s resources would be wasted, could not deflect the managers of state from their decisions. They, like imperial-centers-of-capital for centuries, felt they had no other choices. To lose those natural resources, cheap labor, and those markets, was to lose their power and their wealth. With the entire world understanding this past history, massive readjustment of economies is imperative. The security councils of all the Western European nations had long since realized they could neither rebuild their WW II-devastated societies if they lost control of the resources of the world, nor could they rebuild if their industry, money, and labor were expended on arms. British Prime Minister Winston Churchill made it clear that, even though Britain was damaged less than 10% as much as Eastern Europe, and Western Europe was damaged possibly only 20% as much, "if rearmament is not spread out over a longer time the nations of Western Europe will be rushing to bankruptcy and starvation."13 The Grand Strategy paid off. Except for all Asia slipping in under the umbrella of protection provided to Japan, Taiwan, and South Korea, the naturalresource-wealthy developing world remained poor. This left those resources available for the use of the imperial centers and the resource-depleted developed world rebuilt its wealth to a level far higher than before.
Peace in Korea Could Not be Permitted Attacks on defenseless civilians in North Korea were specifically to create anger and prevent negotiation. For a government to sign a peace treaty under such conditions is essentially unconditional surrender. During two years of negotiations at Panmunjom, every time it appeared a peace settlement was near, there would be a massive air raid, a ground offensive, a naval bombardment, or all three. When it appeared that the Chinese were willing for a cessation of hostilities at the 38th parallel, where it all began, three defenseless North Korean port cities were subjected to 41 straight days and nights of bombardment by the navies of three nations and America‘s Air Force. That most intense naval and air bombardment of any city in history, against totally defenseless women and children, went totally unreported in the Western press.14 Instead of dictatorial powers planning to overwhelm the West militarily, those who we were told were a dreaded dictatorial enemy were making every effort to return to peace and were being bombed and shelled to prevent a peace settlement.
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The Korean War could not be permitted to end until the West‘s war machine was fully rebuilt, not until treaties were signed with Japan and Germany fully committing them to the West; not until the entire Western world was raised to a high level of tension believing they were at high risk of being attacked. The Korean War was necessary to gain full support from governments and the masses so that other overt and covert wars to suppress the world‘s break for economic freedom could be successfully fought. The deciding factor in imposition of beliefs to control people is military power. Read this book on how inequalities of trade are militarily imposed, then read NSC-68 and note Acheson‘s statement quoted above that its purpose was to ―bludgeon the mass mind of top government that not only could the President make a decision but that the decision could be carried out.‖ Then read I.F. Stone‘s The Hidden History of the Korean War. We are not exaggerating. These false flag wars, in which we were told we were in such imminent danger of being attacked, were covertly instigated by imperial powers to maintain control of the developed world‘s countryside with their immense natural resources and markets so crucial to their corporate industries. Voters would quickly change leaders if they knew the Grand Strategy was to maintain control of the countryside through violence. Thus, it was necessary to lock the masses in a belief system designed by the national security states blaming the violence on the very people being suppressed. The decisions had been made. America's managers of state were accepting the reality that only they had the economic and military power to re-impose control upon the world. Though most of the planning, beyond NSC-4, NSC-4A, NSC-10/2 and NSC-68, had yet to be done, most world history since Churchill‘s famous 1946 Iron Curtain speech has been efforts to re-impose control on others and they to gain or retain their freedom. We know this struggle as the Cold War and it was fought even more fiercely around the world than it was against the Soviet Union. It continues under the cover of a ―War on Terrorism.‖
Containing the Soviet Federation To understand how even powerful rising centers of capital can be destroyed, we will encapsulate the short 73 year history of the former Soviet federation. The Soviet reorganization to unwieldy community ownership, yet sensible mutual support principles, had barely begun when 14 countries sent in 180,000 troops, and armed 300,000 dissidents within Russia, for the purpose of overthrowing that revolution.15 Reclaiming this breakaway nation for monopoly capitalism's managers of state almost succeeded; nearly two-thirds of the European region of the Soviet Union came under interventionist and counter-revolutionary control before the Soviets defeated the allied invaders.
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The effort was more successful than the history books acknowledge, Finland, Latvia, Lithuania and Estonia, these four countries having been a part of the Old Russian Empire for over 100 years, and the Eastern half of Poland, and Bessarabia as being carved from the forming Soviet federation by that intervention.16 Except for Leningrad, this barred the Soviet Union from Atlantic ports and restricted its access to world trade. Note the similarity of the carving off of these historic sectors of Russia from 1917 to 1921 to the later carving up of the Soviet federation after 1991, the carving up of Yugoslavia, still on-going covertly (2009-2010), and the continued moving East of the line between Eastern Orthodox Christianity and Western Christianity. As of 2010, Western successes in the Ukraine, the orange revolution, were partially reversed, an attempt to covertly swing the Belarus election failed, and those same covert struggles are ongoing in other former Eastern Soviet Provinces; witness the little war in Georgia‘ South Ossetia and Abkhazia provinces in August 2008, orchestrated by the major powers essentially backing each religion. The suppression of competing religions has a long and repetitive history. Whereas, only a few thousand died in the Bolshevik Revolution, a few million Soviets died of disease and starvation in the interventionist battles between 1918 and the withdrawal of the last foreign forces in 1922.17 We hear of the millions who then died from famine in the decade of the 1930s in the wake of social disruptions caused by putting farms under collective or state ownership. But we are now alert to how intelligence services, furthering the policies of managers of state of imperial centers, expand upon, or even create, these images of rising centers of capital as terrorist states. The truth is the citizens of the former Soviet Union were fiercely loyal to, and worked hard for, their revolution and one should be very skeptical of those figures. The real threat was the potential for success of this new economic system which practiced participatory democracy. To prevent the subjects of the West’s representative democracies from realizing the possibilities of full and equal economic rights under a participatory or direct democracy was the primary purpose of massive perception management demonizing the Soviet federation as a bloody dictatorship. Russian pre-WW I industrial capacity, 3% that of America, was not replaced until 1928 (ten years after that ―intervention‖). But, once the people were educated and the political and industrial bases were laid, the successes came quickly. In the next 12 years the Soviets soared well past France, Japan, and Italy, matched Britain, and their industrial capacity was then 25% that of the United States.18 The Soviet Union's rapid development was matched by Germany. The plans of the managers of state are too well hidden to fully document, but the similarities between the wars against these emerging centers of capital and previous such threats to
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imperial centers are high. Germany's second in command, Rudolf Hess, supposedly ―fled‖ to England 43 days before Germany's attack on the Soviet Union.g His lifetime incarceration at Spandau prison, where he was denied the right to speak except on the most mundane subjects, allows only a glimpse of the hopes of fascists in Germany and Britain for an alliance against the Soviet federation ruled by labor and a reallocation of the world's industries, resources, and markets among Western powers. The nations already overrun by Hitler were of Aryan descent, and many countries of Europe had accepted fascist governments during the recent Great Depression. So a restructured European fascist alliance, the real purpose of Hess‘s flight, would have been easily organized if Britain had agreed. Except for German sympathizers being automatically kept out of the British government, both before and during the war, a defecting Hess would have been welcomed by fascist elements in Britain. There are no other logical reasons for his flight except to get a prewar agreement to destroy the Soviet Union back on track. There were elements in Britain‘s power structure amenable to such plans to destroy the soviet system. Germany's fascist violence, Britain's treaty commitments with countries invaded by Germany; the impossibility of restructuring the belief systems of the masses of Britain in such a short time; and the almost certain eclipse of British economic, financial, and military power as Germany drew on a defeated Soviet Union's vast resources, and sold the manufactured products on Britain's historic markets, precluded any such alliance. While the Germans felt for a political settlement in the West, their June 22, 1941 offensive against the Soviet federation, Operation Barbarossa, took the invading troops to the outskirts of Stalingrad and within sight of Moscow. In desperation, the Soviets moved their industrial machinery ahead of the invading army, and rebuilt beyond the Ural Mountains. Industrial technology is not only the key to a wealthy economy; it is also the key to modern warfare. The Soviets, who only 13 years earlier were a minor industrial power, produced far more weapons than Germany for the remainder of the war. By the beginning of 1945, "on the Byelorussian and Ukrainian fronts alone, Soviet superiority was both absolute and awesome, fivefold in manpower, fivefold in armor, over sevenfold in artillery and 17-times the German strength in the air."19 Unrecorded in Western history is what the West owes the Soviets in that war. The estimation of 85% of Germany's firepower being expended against the Soviet Union alerts the serious researcher. Simple history and battlefield statistics tell the James Douglas-Hamilton, Motive for a Mission: The Story behind Rudolf Hess's Flight to Britain, (New York: Paragon House, 1979). As it does not even mention the "Clivedon Set" of Britain who were supporters of fascism, this book's analysis is far too soft. There is a serious school of thought on the pre-World War II worldwide alliance of fascists but that history is too well hidden and unsure for us to address g
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story well: Once the Germans were stopped, the massive 17-month battle for Stalingrad—liberated on February 2, 1943—ended with the death or capture of 1.5 million Germans, the death of 800,000 Soviets, and the wounding of hundreds of thousands more. That victory was followed by the greatest tank and artillery battle in history at Kursk, and the immense battles at Kharkov and Orel; the Soviets decisively won them all. The Soviet federation had been holding off the Germans for three years and had cleared them from half the occupied area six months before the Allies landed at Normandy on June 6, 1944. As the Allies fought inland the last year of the war, over two German soldiers out of every three were still on the Soviet front. In a replay of their 1944 offensive to take the pressure off the West‘s Normandy beachhead, the Soviets launched an all-out attack on January 11, 1945, to take the pressure off the West‘s Battle of the Bulge. The German counterattack collapsed five days later as they rushed troops to the Eastern front to stem the Soviet offensive. By the end of March, six weeks before the German surrender, there were seven German soldiers on the Eastern front for every one in the West and the Soviets would still reach Berlin first.20
World War It’s Huge Costs for the Soviet Federation But a huge price was paid for that victory. The Soviets destroyed industries, railroads, and bridges as they were pushed east and the Germans destroyed what basic infrastructure the Soviets missed, oil wells, coal mines, dams, etc, as they were forced back West. The Germans burned the cities and villages to the ground and hauled seven million horses, 17 million cattle, 20 million hogs, 27 million sheep and goats and 110 million poultry away to feed Germany.21 That the Soviet Union was scorched earth, there can be no doubt. The destruction was there for all to see and 25 million Soviets were eating sunflower seeds and living in holes in the ground. By comparison, the United States had only 12.3 million men and women under arms, lost 405,399, its homeland was untouched, and its industrial capacity had increased 50%.22 The imposition of beliefs to protect power and wealth is never-ending. The first figure of 20.6 million for total Soviet citizens killed was quickly upgraded to 27 million. But Stalin‘s response to Churchill‘s 1946 Iron Curtain speech in Fulton, Missouri, states the true losses at seven million. World War II was over and the Soviet Union was again reduced to less than 20% of the industrial capacity of the U.S. More importantly, social infrastructure is much more expensive to build than industrial capacity, and the Soviets had to remove all the rubble first. In 1947, U.S. Secretary of State General George C. Marshall made a trip across Western Europe and Eastern Europe, all the way to Moscow. Western Eu-
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rope—damaged possibly 20% as much as Eastern Europe and Russia—was prostrate under monopoly capitalism‘s laissez-faire principles while the shattered Eastern Europeans and even more badly damaged Soviets with their community support structures were rapidly rebuilding. Marshall rushed back to Washington to report capitalism's security interests, meaning unearned wealth extracted through unjust property rights descended directly from aristocratic law (see Part III), were in serious danger. His comments mirrored the concerns of all managers of state: ―All the way back to Washington,‖ [fellow diplomat] Bohlen wrote, ―Marshall talked of the importance of finding some initiative to prevent the complete breakdown of Western Europe.‖... [In a speech to the nation, Marshall gave a bleak report.] We cannot ignore the factor of time. The recovery of Europe has been far slower than had been anticipated. Disintegrating forces are becoming evident. The patient is sinking while the doctors deliberate. So I believe that action cannot [a]wait compromise through exhaustion. New issues arise daily. Whatever action is possible to meet these pressing problems must be taken without delay.23
Those managers of state placed the Marshall Plan into effect in 1948 and, under those Friedrich List protection principles; Europe was rebuilt in about five years. The race for industrial and technological supremacy to control the world‘s resources and wealth producing processes, triggering the recent world war and most other wars, was on again. The containment of the Soviet federation and the simultaneous suppression of the world's break for economic freedom were going to require an enormous amount of expensive arms. The Korean War and the CIA's Mighty Wurlitzer were to lock society within the belief system that the West was under imminent threat of attack from the Soviet Union. The increasingly tensed citizens of the West would then support the expensive arms race and the required violence. Monopoly capitalism‘s philosophy to not give anything to anyone is why Western Europe at first was not rebuilding as just addressed. Each person and each country are to succeed on their own in competition with all others and, supposedly, the fittest accumulate the wealth. The West has long been boasting their welfare capitalism as superior to the Soviet federation‘s communism. Not only was that not true, they fail to mention that welfare capitalism only exists because the West needed a philosophy to counter the obvious superiority of a cooperative-sharing philosophy over raw capitalism‘s winner take all. Thus the unwritten contract in the West between labor and capital that organized labor would be well paid to fight capitalism‘s battle. Without the threat from the East, labor in the West would not have been given the high wages which provided the quality life they came to believe was normal and their right. As demonstrated by the steady loss in wages of American labor since 1973; as soon as capital was sure they would win this battle, they immediately started lo-
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wering labor‘s share of the wealth produced. Since that date, all the wealth produced by the efficiency gains of technology and a part of what once went to labor now goes to capital. Labor in most of Europe has been able to hold the line. But workers in America are watching their earnings decline. For a while the wages of labor in both South America and Africa were taking a hit but, as the crisis if capitalism within the imperial centers builds; the rights of South American labor are rising fast and those in Africa are starting to improve.
Fictional Missile Gaps were Strategies of Tension Professor George Kistiakowsky's impeccable credentials as head of the explosives division for the Manhattan Project building the atomic bomb, professor of chemistry at Harvard University; and science advisor to Presidents Eisenhower, Kennedy, and Johnson, had a rude awakening as he observed the workings of the ―defense‖ planners from the inside. I attended all the National Security Council meetings, by order of the President. I began to realize that policy was being formed in a way which really was quite questionable. It was being formed by people who didn‘t really know the facts and didn‘t have time to learn them because of bureaucratic preoccupation.... But it took time for all this to sink in. And then I began to see all of the lies, such as the so-called missile gap. I knew there was no missile gap, because our U-2 reconnaissance flights over the Soviet Union could not find any missile deployment. This was 1958—after the U-2s began flying. We put a lot of effort into detecting possible deployment sites. And we could find only one, north of Moscow. This was really a test site. … Those first ICBMs were so huge that you couldn‘t hide them.24
With full knowledge that the Soviets had no missiles pointed at anyone, the managers of state requested the CIA crank up their Mighty Wurlitzer and propagandize American citizens that the Soviets had them targeted with 50 intercontinental ballistic missiles (ICBMs). The truth of the arms race was that the West led the Soviets by five to ten years in the development of every super weapon and that the devastated Soviets, who desperately both wanted and needed peace, who were encircled with immense firepower by many of the very nations that had invaded them in 1918 in an attempt to overthrow their government and that still loudly proclaimed they were evil and should be destroyed. The Soviet federation had paid a huge price and was owed an enormous debt for saving the world from fascism. The imperial centers repaid that debt by encircling the Soviets with steel, embargoing them from technology and trade, and through the CIA's Mighty Wurlitzer and those of other Western intelligence services, vilified those great and highly moral people throughout the world. The
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basic principles of world trade had not changed. A rising center of capital will take over scarce resources and markets, the base of wealth and power of established imperial centers, so they must be destroyed. Proof of this is the West's military actually expanding since the Soviet Union‘s successful destabilization. The rest of the world‘s breaks for freedom must be contained. Eighteen years after that success, America alone was spending as much for arms as the entire rest of the world and the most powerful of those nations are allied with America as one imperial-center-of-capital. The combined military power of the allied, but not federated, centers of capital is truly immense. Military expenditures are rising rapidly as, under the flag of the War on Terrorism, the struggle for control of crucial resources and markets continues. That this centuries-old struggle will likely be lost this time around means the risk of WWIII is high.
The Massive Resources of the Soviet Federation and the More Massive and Cheaper Resources of the West Soviet successes under extremely harsh conditions were what was worrying Western managers of state. Covering one-sixth of the world's land surface, the Soviet Union had massive natural resources. However, its citizens lived primarily in Europe while its major natural resources were in Asia, 3,000 miles away and much it under frozen tundra. To mine and process those resources, entire cities had to be built in a cold and hostile climate. Shipping raw materials to the Soviet heartland and building the new cities in their Eastern tundra, required expensive roads, railroads, and other infrastructure. The Soviets estimated their costs of production at 1.8-times those in America, and Americans and other Western nations obtain much of their resource needs from their even cheaper empirical peripheries. We discussed Britain‘s rich coal and iron ore deposits being only 15 miles apart and her cheap water transportation to anywhere in the world. Those largely unspoken-of advantages allowed Britain to produce more cheaply, sell more cheaply, and thus accumulate more capital and industrialize more quickly, than other nations. The entire West had the same advantage over the Soviet Union and their advantage over that region continues to this day. Not only were the natural resources of America closer to population centers and cheaper to mine and process, their roads, railroads, and factories were already in place. And the West has even more advantages. Paying equally-productive developing world labor 20% the wages of developed world labor, or less, denies buying power to the periphery of empire. This leaves the only market for resources and products in the well-paid developed world and effectively gives the West title to the richest resources all over the world.
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The harvesting of Soviet resources and the production of Soviet wealth was far more labor-intensive than in the West. Yet the Soviets 15 provinces provided resources and industrial technology to the periphery of their sphere of influence—Eastern Europe, China, Mongolia, Cuba, etc—at 20%-30% of world values. As the Soviets denied themselves a large share of the wealth produced by their own labors and offered that wealth at low cost to their periphery, the Soviets were not an empire. With adequate resources within their borders, they were taxing their center to build their periphery. Meantime, through underpaying and overcharging, the West taxes their periphery to build their imperial centers. This, of course, is exactly the opposite of what we have been told. Instead of being an empire, it was a federation of diverse people who had broken free of the world control system, and they were intent on building their society primarily utilizing their own resources. By the 1980s Soviet industrial production was approaching that of the United States; they had pulled ahead in steel, oil, coal, and a few other industries. In only 70 years the Soviets had moved from the bottom among industrial nations to number two and they had accomplished this while fighting off the four year effort of 14 nations to overthrow her, under the massive losses of WW II, and while being forced to arm to offset the ring of steel being placed around her by the West. As addressed below, destabilization by the West short-circuited their plans to restructure to the highly productive Norwegian/Swedish economic model.
Containing the Soviet Federation through forcing it to Waste its Industrial Production The original efficiencies of the Soviet Union‘s huge factories freed labor and capital for rebuilding their shattered nation. The rubble of WW II had to be cleared away. Homes, stores, and their complete economic infrastructure had to be rebuilt to the level of a modern nation. The Soviets had made the decision to sacrifice the present to build for the future. But the arms race short-circuited those plans. We must remember British Prime Minister Churchill's warning that Britain and Western Europe could not rearm quickly without facing poverty and starvation. Britain and Western Europe were damaged only 20% as much as the Soviet Union and Eastern Europe. The result of offsetting the ring of steel being placed around the Soviets while simultaneously cleaning up the rubble, building homes (25 million were homeless), repairing the damaged infrastructure and building new dams, highways, railroads, and industry was a monumental task. The estimate of a Soviet economist is that ―51.4% of total Soviet industrial investment between 1950 and 1985 went into military production.‖ A large share of
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the rest, roughly 43%, was going into building and rebuilding infrastructure while providing industry and resources to the embattled periphery, China, Eastern Europe, Cuba, etc, left a minuscule 5% for producing consumer durables.h The Soviet socialist system accumulated capital and industry far faster than any capitalist country except those essentially given capital and technology after WW II so as to contain fast expanding socialism. Before they were successfully destabilized in 1990-91, the Soviets were able to raise their technology to about 1982-83 U.S. levels.25 But their expenditure of labor and resources toward rebuilding from the rubble of WW II, their building of expensive infrastructure, the necessity of turning their industry to producing arms to offset the West‘s determination to destroy them, and their transfer of a share of their production to the periphery denied them the opportunity to apply their technology and labors to consumer production. The mining of resources and land transportation in the arctic tundra thousands of miles away from their population centers were simply too expensive to overcome those hurdles. Though it ended up a close race militarily and technologically as the Soviets fought for survival, the enormously expensive arms race imposed by the wealthy and undamaged United States precluded the development of a Soviet consumer economy. Wasting the resources of the entire world building arms has been very profitable for corporate imperialists. America‘s President Eisenhower recognized that, in the final analysis, this is all ―paid for by the world‘s poor.‖ Where building arms is highly profitable for capitalists, processing resources into arms is always an enormous loss to a socialist economy. As the money spent on arms circulated (the economic multiplier), fully 30% of American jobs were attributable to arms expenditures. Thus the waste of the arms race was a wealth distribution mechanism for citizens in the West even as it greatly reduced real wealth both within the countries threatening war (the wealthy imperial centers) and within the emerging world forced to spend money on arms in their ever-failing attempts to break free of the strangle holds on their economies, their financial political structures.
Patrick Flaherty, “Behind Shatalinomics: Politics of Privatization,” Guardian. Oct. 10, 1990, p. 11. With the cost of Soviet resources 1.8 times that of America, with the cost of defense protecting them from the determination of the West to destroy them consuming over half their industrial efforts, with infrastructure building consuming another 45% of their efforts, with they providing energy and resources to Eastern Europe at 29% to 39% of the world price, with only five percent their industry caring for consumer needs, and the Soviets still rapidly overtaking the West, fully proves this thesis that an efficient economy will produce a quality life for all citizens at a labor and resource costs of well under half that of the current monopoly system. h
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Destabilizing Eastern Europe and the Soviet Union Peter Gowan, senior lecturer in European politics at the University of North London, describes the neo-mercantilist policy towards the East which eventually shattered the Soviet Bloc: [I]n the closing decades of the Cold War, the Atlantic Alliance had combined a formidable economic blockade against Eastern Europe.... The West possessed two principal means of control. Through the IMF, it exerted political control over international finance and currency matters. Furthermore, it could restrict commercial access to Western markets through bilateral export policy, through the Coordinating Committee for Multilateral Export Controls (Cocom) on high technology, and through import duties, largely imposed by the European Community (EC), on ECE goods.... It is scarcely an exaggeration, therefore, to say that following the upheaval of 1989 the West had the capacity to shape events in ECE to an extent comparable to that enjoyed by the Soviet government in the region after 1945. In field after field the ability of governments to deliver to their people depended on the intervening decisions of the G7 [the 7, then 8, now 20, leading countries]. Employing this power, Western policy makers could shape the destiny of the region according to a very particular, and very political, agenda. The Western powers did not respond to the challenge of 1989 in a piecemeal fashion. Although the form and speed of the collapse [destabilization] took most policy makers by surprise, the G7 had, by the summer of 1989, established new machinery for handling the political transformation of Poland and Hungary and had worked out both the goals and the means of policy. Even before the region‘s first noncommunist government ... took power in Poland in September 1989, the G7 framework was in place.... Coercive diplomacy, not persuasion, became the tool by which the West established market economies in the East.26
Peter Gowan explains further how coercion was practiced by outside powers: The EC, the G7 [now G8], and the IMF treated each country separately according to its domestic program, setting off a race among the governments of the region to achieve the closest relations with, and best terms from, the West.... The economic ―liberalization‖ measures urged upon the new governments of ECE by Western agencies were bound to push these economies into serious recession, a situation only made worse by the disruption of regional economic links and the collapse [successful destabilization] of the Soviet Union. The result has been less a move to the market than a large-scale market destruction.... G7 experts were well aware that the drive for social system change would thoroughly destabilize ECE economies.27
The East was destabilized; the Soviet system did not just collapse. The above destabilizations were the policy decisions of America's 1982 National Security Council Directive 54 (NSD-54) to destabilize all East European countries except Yugoslavia. Throughout the Cold War that nation was provided financial aid, and some
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access to markets, so as to wean it away from the Soviet Union, and they prospered. They had a respectable standard of living, education and medical care were free, and each citizen was guaranteed a job with 30 days paid vacation. This multiethnic melting pot provided cheap transportation, cheap housing, and inexpensive utilities. Such wealthy socialist societies could not be permitted.
Now it was Yugoslavia’s Turn to be Destabilized The opening guns of financial warfare for the destabilization of the prosperous Yugoslavia were the IMF‘s 1980-84 demands for currency devaluation, and an increase in the Yugoslavian Central Bank‘s discount rate. That currency devaluation immediately increased the debt; the interest rate hike slowed the Yugoslav economy. The drop in living standards created by those structural adjustments led to economic and political turmoil. Then the 1984 U.S. National Security Council Directive 133 (NSD-133) titled ―United States Policy towards Yugoslavia‖ and labeled ―SECRET SENSITIVE,‖ contained the marching orders for the final fragmentation of that nation. Further IMF-imposed structural adjustments denied the Yugoslav government the right to credit (money creation) from its own central bank, thus losing them the ability to fund crucial economic and social programs—industry, universal health care, education, etc.—that we demonstrate in the Conclusion is possible also in our economy. Those structural adjustment policies included imposing a freeze on all transfer payments from the central governments to the outlying provinces. A growth rate of 7.1% from 1966 to 1979 ―plummeted to 2.8% in the 198087 period, plunging to zero in 1987-88, and to a minus 10.6% in 1990.‖ Another currency devaluation (30%) accelerated the 140% inflation to 937% in 1992 and 1,134% in 1993, with GDP dropping 50% in four years. Imported commodities flooded in to further disrupt domestic production and drain Yugoslavia‘s hard currency reserves. It was calculated that, under those policies, 1.9 million workers, out of a total workforce of 2.7 million, were headed for unemployment.28 (Chapter 20 and the Conclusion demonstrate the simplicity of an honest monetary/economic system such as Yugoslavia had before being destabilized by the West.) Simultaneous with the denial of Yugoslavia‘s right to fund her outlying regions were offers to those provinces for funds and trade if they declared their independence. German foreign minister Hans Dietrich Genscher was in almost daily contact with his Croatian counterpart, promoting independence. The 199091 U.S. ―Foreign Operations Appropriations Bill,‖ an annual event funding destabilizations, demanded separate elections in each of the six Yugoslav provinces, with State Department approval of their conduct and outcome, and again all aid was to go to independent republics and none to the central government. A total
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embargo imposed in 1991 was still in effect in June 1999, during the final breakup of Yugoslavia. Independence meant funding and trade for the provinces, while continued federation with Yugoslavia meant continued embargoes and no funds. A country that had been peaceful and relatively prosperous since WW II, with 30% of the marriages interethnic (26 ethnic groups), erupted into civil war and—with continued overt and covert support from Germany and America— Macedonia, Slovenia, and Croatia were torn away from the Yugoslav federation. The Serbian populations of the seceding provinces, who had forgiven the Western Christians for the slaughter of one-third of the Serbian men during Hitler‘s holocaust and formed the multiethnic nation of Yugoslavia after WW II, were again facing second-class citizenship.
Now it was Bosnia-Herzegovina’s Turn Western Christians allied with Muslims to give the Bosnia-Herzegovina secession the necessary majority voice. The November 1995 Dayton Accords, established under the threat of NATO intervention to suppress the ensuing struggle over who should govern, created a virtual colonial government which allowed the U.S. and the European Union to appoint a High Representative (HR) with full executive powers in civilian matters. A constitution for Bosnia was written at those peace talks, by the U.S. State Department, stipulating the HR could overrule the government. That façade of democracy, the Parliamentary Assembly, simply rubber-stamped the decisions of the HR and his expatriate advisors. Those dictates, called ―Accords,‖ actually stipulated, ―the first governor of the Central Bank of Bosnia and Herzegovina is to be appointed by the IMF and ‗shall not be a citizen of Bosnia and Herzegovina or a neighboring state.‘ ‖ The elected president of the Serbian segment of Bosnia, who objected to forcibly selling off banks, water, energy, telecommunications, transportation, and metal industries, at firesale prices, was forcibly removed by NATO.29 Of course, these dictates were all carried out under the flag of ―democracy.‖
Then it was Kosovo’s Turn As Bosnia-Herzegovina was being digested by the NATO alliance, the foundation for the breaking away of Kosovo was being laid. Due to fear of secession, the autonomous status of Kosovo had been revoked by Yugoslavia as ethnic Albanians increased from 40% of the population at the end of WW II to 80%. That political stalemate became violent when German and American intelligence armed the Kosovo Liberation Army (KLA). Before that arming and training of the KLA into a force of 30,000 by outside powers, the Kosovar rebellion had
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been a peaceful one, similar to Gandhi‘s peaceful rebellion in India 50 years earlier. Armed by German intelligence for years, the KLA surfaced in 1997 and started assassinating Serbian police officers and ethnic Albanian collaborators. Yugoslavia sent in the army to suppress those externally armed insurrections. In February 1998, Germany‘s BND and the Military Professional Resources (MPRI), retired U.S. generals under Pentagon contract, was a sure sign America‘s CIA was still orchestrating this destabilization. The Croatian General, Agim Ceku, in command of artillery in the ethnic cleansing of Serbs from the Krajina region of Croatia, taking over command of the KLA was more proof.30 In a replay of the Dayton Accords, an assembly was convened in Rambouillet, France, to essentially dictate the carving off of Kosovo. The prepared accords allowed for 50,000 NATO troops overseeing that autonomous republic. NATO was to be granted the use of airports, roads, rail, and ports, free of any charges. NATO troops were not to be subject to Yugoslav law and were to have supremacy over Yugoslav police and authorities. They were to be given the right to inspect any part of not just Kosovo, but Serbia itself, and the Kosovo economy was to be structurally adjusted as per the Bosnian-Herzegovenan economy described above. NATO gave Yugoslavia only two choices: sign the accords (actually dictates) or be bombed. Virtually every serious diplomat of good conscience agreed; they were articles of surrender that no sovereign nation could sign. Those accords were little more than a disguised declaration of war. The world, of course, heard only the prepared press releases of an intransigent Yugoslavia as, with the support of the majority of their citizens who patriotically believed what they were told about Serbian atrocities, NATO proceeded to bomb the regional Orthodox Christians back to the 19th century.31 The destabilization of Yugoslavia is a classic on how perception management is accomplished in what are called ―democracies‖ with ―freedom of the press.‖ Before the bombing, Yugoslavia had several major political parties, opposition radio stations, and dissident publications. Each political party had its own newspapers, radio stations, and TV stations. Milosevic had been elected three times, twice as president of Serbia and later as president of Yugoslavia. The Yugoslav president had a cabinet to discuss and decide policy. He was president of a nation with an elected coalition parliament which included four major political parties, more than any other country in Europe, ranging fully from the left political spectrum to the right, and that approved all decisions. During that war, this governing process had even been shown occasionally on Western TV. During the Western orchestrated coup overthrowing Milosevic, armed units seized all major TV, Radio, and newspaper outlets. There remained essentially only one media. Just as in the West, all papers published the same stories and all were written the same. Just as Americans see the same news with the same slant on all TV channels, Serbs now found the same news with the same slant on all
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their TV channels. A nation which once had a wide choice of views, suddenly had only one view; that of the West. On news beamed into Yugoslavia, and to the citizens of the West, Milosevic was labeled a ―dictator‖ in almost every news report. Meanwhile, Croatian descendants of Hitler‘s Ustase,i who ethnically cleansed Jews, Gypsies, and Serbs during WW II—the Three-Thirds Doctrine: one-third of the Serbs to be deported, one-third forced to become Catholics, and one-third to be annihilated— who had just imposed a one-party press, and who had just ethnically cleansed several hundred thousand Serbs from Croatia and Bosnia, were simultaneously labeled democratic. Western puppets purged their territory of ethnic minorities even as the West was accusing Serbia of these atrocities. That besieged nation was the home to 26 ethnic groups, one million which were refugees ethnically cleansed from former provinces of Yugoslavia. This included 350,000 Serbs and others who fled Kosovo after NATO‘s takeover of that province.32 By 2005, there were so few Serbs left in Kosovo it was essentially ethnically cleansed. The long and short of it is that a highly moral society, giving full and equal economic rights to all, was presented to the world as ethnic-cleansing dictators while essentially fascist structures, covertly supported and coached by Western intelligence and Western military might, were ethnically cleansing the Serbs out of the birthplace of their culture. There will be an occasional mild analysis of this perception management process after the fact but, as every social system protects itself and its own, even those cautious reflections will not become part of assigned, well-read history. Thus, it will remain largely unknown to most that the Kosovo rebellion was a civil war covertly organized and supported by the same governments militarily imposing the Rambouillet Accords. Some reality was expressed in Germany. [On Feb. 8, 2001] The major German television network ARD broadcast a special on the war entitled "It Began with a Lie." This showed that the charges of mass murder, genocide and organized "ethnic cleansing" made against Belgrade were inventions of the U.S., German and other governments.33
The Serbs knew the KLA had been armed and coached by U.S. and German intelligence to carve Kosovo off from Yugoslavia. They refused to sign the capitulation Rambouillet Accords, and when the bombing began with the purpose of forcing Yugoslavians to sign away their sovereignty, were accused to have reacted by expelling the Albanian Kosovo population.j The Romanian death squads under Hitler‘s occupation were called The Iron Guard. In Latvia they were called Vanagas. j The KLA engineered the ethnic Albanian exodus from Kosovo under the coaching of imperial intelligence services who were carefully writing history to justify the dei
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The excuse for bombing Yugoslavia was the fictional ethnic cleansing and genocide of Kosovar Albanians. The actual ethnic cleansing of Serbians, which took place as soon as that war was over, went unreported in the American press. The ―free‖ press should be called to account for not alerting the public to the fictions justifying that war. NATO was aggressing against a peaceful society and Yugoslavia reacted just as any student of foreign policy would expect. They were not threatening anyone inside or outside their borders before the external orchestration of the KLA for a civil war, over 1,100 attacks on Serb police and Kosovar Albanian collaborationists, many fatal. What struggles there were within their borders were reactions to this destabilization and forthcoming loss of a province Serbians consider the ―cradle of their civilization.‖ Houses were destroyed as the KLA were rooted out from where they were firing on Serb soldiers, but no ethnic cleansing occurred until after NATO took over Kosovo, and then it was an ethnic cleansing of Serbs. That will make no difference. The bombings were Western pressures to force the Serbs to accept the loss of the heart of their culture. Those fictional reported atrocities demonizing of the Serbs were kept in the world news throughout the war crimes trials. The far greater war crimes of the aggressors, the total shattering of their country with the deaths of tens of thousands, disappeared from all except the most deeply researched history. The original perception management figures of over 100 massacres with 100,000 to 500,000 Albanian men missing, and thought to be slaughtered, were reduced to a still sensationalized 10,000 expected to be found in mass graves when NATO first entered Kosovo. Inspection of the alleged 30 mass gravesites by an FBI team turned up 200 bodies, and dropped the Kosovar externally orchestrated civil war body count to 2,108 killed by all participants, the Serbs, the KLA, local grudge settlements, and NATO bombs. Emilio Perez Pujol, the head of the Spanish Forensic team conducting the Kosovar investigation, said ―not one mass grave was found.‖34 No mass graves in Kosovo and this rather low body count, when an entire nation was being militarily fragmented by covertly funded and orchestrated opposition forces, when under direct attack by those same foreign military forces, struction of Yugoslavia. Only an alert researcher on the ground in Kosovo can research the truth. Jared Israel‘s Internet posting, ―Why Albanians Fled During the NATO Bombing: The Truth about What Happened,‖ Interview with Cedda Pralinchevich, will provide insights. Cedda Pralinchevich is very persuasive that Albanians were fleeing upon orders of their leaders and, in their culture; not obeying was not an option. Kosovo declaring their independence backs up our first analysis at the time that NATO preserving Kosovo as a Serbian province were only cover stories for that province being carved from that nation.
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as well as the one million refugees within Serbia from the destabilization and fragmentation of Yugoslavia, testifies to a successful NATO propaganda blitz; that Mighty Wurlitzer wrapping society within a belief system, which is never addressed in depth by the media of record, and thus does not get into history. When to the above disinformation we add the Pentagon wordsmiths‘ claim of the destruction of one-third of the Serbian military, 122 tanks, 454 artillery pieces, and 222 armored personnel carriers, and the postwar investigation by General Wesley Clark, the NATO commander of that war, alerting us ―only 14 tanks, 20 artillery pieces, and 18 armored personnel carriers‖ were destroyed, the outline of a planned perception management campaign becomes clear.35 Quite simply, the American-NATO assault on Serbia-Kosovo destroyed about 50 of Serbia's major weapons of war and very few soldiers while, killing more civilians than Serbia. The real target was obvious, Serbia's economic infrastructure and their government. Under the ultimate oxymoron of a humanitarian war, which depicted the West as saviors, they bombed 15 defenseless cities around the clock for 78 days. The successfully destroyed real targets of precision bombing were heating plants for entire cities, 344 schools, 33 clinics and hospitals, power plants, food processing plants, pharmaceutical plants, bus and train depots, electrical grids, bridges, factories, power stations, trains, airports, water supply systems, warehouses, oil refineries, fuel storage, chemical factories, museums, and TV and radio stations. Among the commercial buildings destroyed were twin tower skyscrapers eerily reminiscent of the World Trade Center destroyed in the 9/11/2001 terrorist attack on America. After the destruction of Yugoslavia was carried out under the false flag of oppression and genocide in Kosovo, 350,000 Serbs, Gypsies, Slavic Muslims, Croations, Jews, Turks and anti-fascist Ethnic Albanians were driven out of Kosovo. After defeating the defending Serbian army, the Kosovo occupation army claims not to have been able to prevent this ethnic cleansing by the very forces they were financing, arming, and coaching. Kosovo declaring independence in February 2008 and Montenegro operating independently, the ―Great Game‖ of keeping those dozens of ethnic groups ―Balkanized‖ goes on. Powerbrokers within NATO are concerned with Yugoslavia only as a small battle within one or more of the four major, ongoing, worldwide struggles: 1 The splitting of the Roman Empire into Eastern Orthodox Christianity and Western Christianity starting in the 4th century. This created the Eastern Orthodox Christian East and Christian West fighting over territory on the boundaries between those religions yet today, and it is obvious that, without the support of NATO nations, Yugoslavia‘s Western Christians would not have had either the desire or the political strength to shatter that once peaceful federation.
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2 The 1,300 year struggle between both Eastern and Western Christians and Muslims, a battle between the Muslim East and the same Christian West. The current alliance of the West with Balkan Muslims is only a temporary strategic decision of managers of state. 3 The 73-year-battle between communism and monopoly capitalism, the Cold War. Most, but not all, communist Russians were Eastern Orthodox and most, but not all, East European capitalist believers were Western Christian. This is the historic in-step march of religion and governments. 4 And then, the centuries of battles over who will control world trade and thus who will claim title to wealth. This battle over the world‘s wealth is between the fragmented periphery of empire and the same allied, coordinated, and powerful Western alliance. That last struggle, managers of state utilizing religious and political loyalties to control the wealth producing process within Eastern Europe, is the one that counts. Fragmenting Yugoslavia was a replay of previous Balkanizations, the fragmenting of the Ottoman Empire into small, defenseless, emirates beholden to imperial centers, and the establishment of puppet governments throughout the world. James Petras‘s, The Power of Israel in the United States, chapter six, The House of Horrors: Torture, Assassinations and Genocide, summarizes this process. President Clinton's Energy Secretary Bill Richardson spelled out America‘s Balkan policy a few months prior to the 1999 bombing of Yugoslavia: This is about America's energy security.… It's also about preventing strategic inroads by those who don't share our values. We're trying to move these newly independent countries toward the west…. We would like to see them reliant on western commercial and political interests rather than going another way. We've made a substantial political investment in the Caspian, and it's very important to us that both the pipeline map and the politics come out right.36
The policies of state here are obvious: isolating Russia politically, reducing its control over the oil and gas deposits in the Caspian basin, and piping those hydrocarbons to Europe. Germany reached an agreement with Croatia, announced in the UN, for a pipeline through its territory and, even as the bombs were falling on Yugoslavia, officials of Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova (GUUAM) were in Washington, DC, signing a regional alliance which included discussions of oil pipeline export routes to the West. There was also high interest in the rich minerals of Kosovo, the Trepca mining-manufacturing complex which was too valuable to bomb and was arbitrarily turned over to Albanian Kosovars. The suspected oil and gas deposits within the Dinarides Thrust, and other mineral wealth of Yugoslavia like coal and bauxite, planned for diversion to the West which will deprive Eastern Orthodox Christians of their
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wealth, will fatally weaken that tiny enclave of socialism, while simultaneously increasing the wealth of Western Europe.37 The final arbiter of property rights is military power. While the Trepca mines rich in gold, lead, zinc, cadmium, silver, and coal were considered the most valuable piece of real estate in the Balkans and Soros tried to gain title to them. All knew the world‘s great oil-bearing sands go from the Middle East, through the Caspian Basin, and end at Romania. The straightest route to Europe for that oil is through Yugoslavia. By 2005 Russia was the world‘s greatest exporter of oil. As the standard of living of Russians dropped possibly 50% as discussed earlier, the resource wealth of the former Soviet federation was pouring into the victorious West. Control of regions and populations so as to control resources and the wealth producing process was the major part of what the battle was about all along. Though the human cost is greater today, the destruction of the economic infrastructure of Yugoslavia and the demonstration in Iraq of the ability to decapitate any leadership and destroy an entire army from a safe distance is a replay of the raiding parties of the cities in the Middle Ages controlling the countryside to maintain its dependency upon the city. Documented history proves that empires manufacture excuses to gain the support of the people to destroy a potential rival.38 One need only analyze how other human slaughters failed to affect strategic decisions to convince one that the death of 2,108 Kosovars—both Albanian and Serbs killed by the Serb military, the Kosovo Liberation Army, and by Western bombs—in Kosovo‘s NATO-designed and supported civil war, was not the reason for NATO‘s bombing of Yugoslavia. Over one million children and weaker old people have died in Iraq due to American-enforced sanctions, and over a million more in the two American-led Gulf Wars.39 One-third of the East Timorese (200,000) died in the Indonesian suppression of their independence utilizing American-supplied weapons. The estimated number killed in five years of ethnic cleansing in Rwanda is 500,000. Fifty thousand have perished in the 20 year conflict between Ethiopia and Eritrea, a province of Ethiopia, the independence of which was covertly supported by America during the Cold War. Two million have perished in the 16 year struggle in neighboring Sudan. The estimated number killed in Russia‘s ongoing Chechnya suppression is 100,000, and counting. Thousands were killed when Croatia, with the backing of the United States and Germany, ―ethnicallycleansed‖ her territory of over 500,000 Serbs when breaking from Yugoslavia, and the on-going, Western designed and supported, imperial slaughter in the Katanga province of the Congo, known about by only a few in the West, is over five million with more added every day.40 Note how, after the fragmentation of Yugoslavia, the Eastern Orthodox Serbs are surrounded by the Western Christian nations of Romania, Bulgaria, Hungary,
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Slovenia, and Croatia, all of which are now a part of NATO. The West had Yugoslavia embargoed throughout the decade of the 1990s, as she was being destabilized, and the Serbs simply refused to collapse. Until its destabilization, and despite the embargo, Yugoslavia was quite prosperous before the total shattering of her industry by NATO bombs, and her subsequent loss of access to resources. That successful cooperative political system could not be permitted to stand. Just as Cuba is still under economic and financial assault to prevent the world from observing the higher standard of living obtained by her citizens when free of domination by Western capital, Eastern Europe could not be totally restructured along Western political and economic lines so long as Yugoslavia remained intact with her citizens well cared for and her industry underselling Western products throughout Eastern Europe. Nor could NATO permit an opposing ideology with an intact military west of the planned new line of defense, Romania, Bulgaria, and Greece. It is for this reason the Serbian economic infrastructure was pulverized by NATO bombs and missiles. Once the richest, Serbia is now expected to become one of the poorest nations in Eastern Europe, her citizens cannot be properly cared for, she cannot arise as an example for other dependent countries for generations, and she cannot afford to maintain a powerful military. If Western capital dominates the economies and controls the governments of the fragmented former Yugoslavia, if oil pipelines from the Caspian oil basin and the Middle East are built across Turkey and the former Yugoslavia to reach Europe, if Montenegro is successfully separated from Serbia, if the natural resources of the Balkans comfort Western consumers, and if that once relatively prosperous region becomes a market for Western industries, we will be observing the success of the Grand Strategy of the breakup and impoverishment of Yugoslavia by international capital. In Part III, Internal Trade, we will learn that roughly half the American economy is the waste of monopolization doubling the cost of products and services. The Yugoslav economy did not have those massive unearned monopoly profits, or the highly wasteful management superstructure, as in a monopolized capitalist economy. As products and services—produced under the management of labor and direct financing of industry by the central bank—could be sold or contracted much cheaper than Western products; without the fragmentation and embargo of Yugoslavia, it is the Yugoslavs who would have dominated those markets. It is they who would have become wealthy, and the most dangerous of all, the rest of Eastern Europe had a similar industry-labor history. They, and the entire world, would have observed the Yugoslav success under their alternative form of government and labor-management relations and many would reestablish a similar socialist market economy.
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Totally ignored in the Western press is that the standard of living of virtually all of Eastern Europe today is substantially below what it was before their reabsorption by the West, even as Russia still provided resources to those countries at 20 to 30% of world prices. Only a massive reallocation of world resources and markets to that region can improve their standard of living. This is demonstrated in analyzing the only partially successful East German assimilation by West Germany, even with $1.5 trillion spent subsidizing the East Germans. With Russia, ten years after their collapse, slowly increasing the price of their resources to Eastern Europe to world levels over a ten year period, allocation of resources to the struggling East Europeans is declining, not expanding. The survival of Western neoliberal economic philosophy required the destabilization of Yugoslavia, and the severe crippling of their industrial infrastructure, as well as that of any other nation daring to maintain their independence, Cuba for example. As you read Part III, theorize on the unearned 95% of America‘s finance capital (supports on p. 3) being left in place while created money built and maintained infrastructure, as we—and many others—have been advocating is the most efficient way to create money. With monopolists not being able to invest their massive sums of unearned money in water, sewer, and other secure investments, due to they being cared for with both created and honestly earned money, those huge blocs of capital would be free to buy up the wealth of the rest of the world. Through Western banks financing Eastern Europe for low-labor-cost exports, very little buying power was generated within those Eastern nations. That, and the VSZ steel complex story you will come to shortly, explains why Eastern Europe is in such a deep crisis today. A full accounting of the profits from those Eastern markets, as well as the multiplier factor as the money from locally employed labor circulates within the economies of Western nations (Before the 2008-2010 financial collapse, America‘s base money circulated 15 times annually), will show that, to the winners, the breakup of Yugoslavia was one of the most profitable combinations of economic, financial, covert, and overt warfare in history. It is nothing less than Germany‘s 100 year dream of gaining control of Eastern and Central Europe to obtain their resources and markets for the 1000 year Reich. The only difference is the Western imperial nations have given up on battling between themselves over the world‘s resources, have allied together to maintain control of the wealth producing process, and hoping to get their share, their East European religious Cousins are joining that Western alliance. In September, 2000, the very month this author‘s original work came out with the above revelations, that American money was covertly financing elections in both Serbia and Montenegro became common knowledge. The U.S.
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Congress then openly authorized $10 million to Serbs and Montenegrins economically and politically breaking ranks with their government. Obviously these were prime prospects for puppets to run ―imperial democracies‖ in that part of the world. These secret covert policies of the Cold War are normally unknown to citizens of Western imperial nations. With the exception of China and a few others—the U.S. has been both covertly and overtly financing elections of emerging nations throughout the world. These struggles to control electoral processes by imperial nations are far more intense than we address here. Run an Internet search for ―Ukraine, Belarus, elections,‖ keep refining those key words and keep broadening out to other parts of the world. There are many more well-funded NGOs than George Soros‘ destabilization foundations printing textbooks and organizing political groupings around the world. The final destabilization of Yugoslavia provides a textbook example of what has been standard covert practice of destabilizing functional democratic governments worldwide throughout the Cold War that were not accepting control from the imperial centers: 1 A ring of radio stations were established around Serbia, beaming in perception management propaganda (control of beliefs, and thus control of elections, is standard practice worldwide). 2 Suitcases full of American and German cash supporting opposing newspapers, news agencies, broadcasters, political parties, think tanks, student groups, ―human rights‖ organizations, and trade unions were passed out (again control of beliefs and control of elections). 3 Opposition forces were given access to satellite communications while Yugoslav loyalists were denied access (this is why President Chavez of Venezuela and others are putting up their own satellites).k 4 In the final push, mobs were armed, coached, and financed to take over the media. The Serbs no longer controlled any major media within their own country. Again, this was to control beliefs, thus to control elections, and all to control resources and the wealth producing process. All who followed ―how overthrows of governments were accomplished all over the world by the imperial nations during the Cold War,‖ knew the leaders of the mobs which burned the Yugoslav parliament, and other centers of power Los Angeles Times, September 26, 2000; New York Times, September 20, 2000; Senator Joseph Biden‘s Senate Hearings on Serbia, July 29, 1999; Serbian Democratization Act, HR1064, September 5, 2000; sourced on various webpages. The definitive books have not yet been written on this hidden history. Watch for books and articles by Michel Chossudovsky, Jared Israel, Peter Gowan, Greg Palast, Michael Parenti, Noam Chomsky, and authors in Eastern Europe, Yugoslavia, and Russia. k
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of the Milosevic government, were coached, financed, and even armed, by German and American intelligence.l In any of the nations allied against Yugoslavia, any opposition political group would be arrested if they were funded by outside powers trying to overthrow the government. Yet, even as they were being labeled as dictators, the Yugoslav government was not even arresting those that were openly funded by the very outside powers overthrowing them, even though how this money was pouring in and funding the opposition was discussed over the Yugoslav national news. Even as Western media parroted Western intelligence service wordsmiths as Yugoslavia being a ―dictatorship,‖ Canadian observers reported the election as open as any election in Canada, with no police visible, and opposition literature widely distributed. When a nation is targeted for destabilization, or there is need to suppress a tendency for independence in countries already under control, the National Endowment for Democracy (NED), George Soros‘ destabilization foundations, such as the Open Society Institute and others, fund opposition groups, such as the Center for International Private Enterprise, Humanitarian Law Center, Center for Democracy Foundation, Belgrade Center for Human Rights, European Movement of Serbia, G-17 economists, Center for Anti-War Action and Media, think tanks, student groups, and many others, all claiming to be private groups. But they, and many more, are actually funded by the American Congress through the NED, which provides the crucial service of funding puppet media and politicians.m This covert funding of opposition forces through NED, and other means, is standard practice worldwide. In short, Western powers were practicing total control of governments, of media, and of military suppression of dissent. These are the very accusations of dictatorship they level at every country not safely under their imperial umbrella. This was Milosevic‘s first defense. His continued defense outlined the entire process of the West‘s destabilization of Yugoslavia far more thorough than we have outlined here. A lady spectator who came for the purpose of seeing Milosevic convicted said, ―We have been deceived.‖ Milosevic‘s death conveniently saved that court from having to make a decision. For the reasons outlined, sincere researchers will have to study Milosevic‘s defense to write honest history. m Heather Cottin, ―Imperial Wizard: Soros is not just doling out cash—he‘s fleecing entire countries‖ CovertAction Quarterly (Fall 2002, pp. 1-6). In ―Regime Change: A Look at Washington‘s Methods and Degrees of Success in Dislodging Foreign Leaders,‖ The Christian Science Monitor, January 27, 2003, Peter Ford outlines the 50 years of America destabilizing other governments we are addressing, including the demonization of progressive leaders like Milosevic and how George Soros‘ destabilization foundations work. When knowledge of American covert funding of other nations‘ elections surfaced, the U.S. Congress established the National Endowment for Democracy (NED) in 1983 to fund openly a part of what the CIA had been funding covertly (Washington Post, September 21 and 22, 1991 and William Blum, Rogue State: A Guide to the World’s Only Super Power (Monroe, ME: Common Courage Press, 2000), chapter 19. l
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Before they had even taken office, Serbian opposition leaders met in Bulgaria with the IMF, the World Bank, and the leaders of NATO to finalize the fine points on the takeover of Yugoslavia. This included the same structural adjustments imposed upon most nations on the periphery of empire, such as the abandonment of economic protections, including the takeover of their economy by the Euro. With various former Yugoslav provinces using the Euro as their currency, Serbians no longer creating their own money severely curbed their funding of all sectors of her economy. Where the Western-imposed new leaders of Croatia, Slovenia, and other regions were direct descendents of Hitler‘s Ustase death squads, with every intention of making second class citizens of their Eastern Orthodox neighbors; the new leaders being installed in Serbia can have no illusions as to the hard future being imposed upon them. After all, poverty is far higher in Eastern Europe and, for the first 10 years, the successfully destabilized Soviet Union than it was under Communism. Even the Ukraine, the breadbasket and industrial heartland of the East, which dutifully followed all the prescriptions of the IMF, the World Bank, and NATO, was prostrate and essentially begging the West for food. These leaders surely realize imposed Western structural adjustment created their poverty. This is being partially rectified as the Ukraine, and others, push aside the puppets and realign with Russia. The key to any destabilization is the writing of history. Personal friends of Milosevic were being assassinated while his opposition leaders were untouched. These opposition leaders, even Ibrahim Rugova, the Albanian secessionist leader, had their own media, and were openly campaigning against the government. Yet Milosevic was portrayed as a killer of his democratic opponents. The truth was a lot of money was spent to finance assassinations of key members of the Yugoslav government and those positions were taken over by Western-backed puppets. At his trial Milosevic brilliantly proved it was NATO that was the war criminal. NATO‘s prime witness, Rade Markovic, former head of the Serbian secret service, took the stand. Prosecutor Jeffrey Nice was shocked when his prime witness described how his torture in the Belgrade jail had been overseen by two US-West European agents, Mihailovic and Petrovic, and he was finally offered a good life with a new identity if he would testify against Milosevic. Even realizing he was in mortal danger, Markovic testified that, far from being guilty of causing the exodus from Kosovo, Milosevic had ordered the flow of refugees to be stopped. As the prosecution desperately tried to stop their own witness, he went on to testify that Milosevic ―came down hard on hate crimes and more than 200 such charges were filed against police and a like number against the army.‖ Any testimony in which the prime witness had been tortured to testify for the prosecution should have shut down the trial and placed the witness under protection. Instead, the testimony was ignored, and Markovic was returned to
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the Belgrade prison. Although Markovic‘s earth-shaking testimony at the trial of the century was totally ignored by the wire services, on September 6, 2002 some news about Markovic favorable to the prosecution was reported: ―According to Markovic‘s signed statement from a Belgrade jail Milosevic ordered him to remove bodies of civilians killed in Kosovo.‖ Obviously their witness was again tortured and this time the prosecution was not going to take a chance on his live testimony. No legal body can justify returning a prisoner to torturers and an honest court would have thrown the case out as soon as such dictatorship tactics were exposed. But this is not an honest tribunal. It was established by NATO, paid for by NATO, and staffed with prosecutors and judges who knew what they were there for. They were there to write history as NATO wanted it written. The designers of the destruction of Yugoslavia write their own history, and Milosevic‘s death while at trial solved many problems.41 America executed the same plans for Saddam Hussein, which, even though he was a US ally for years, had at least some relevance to reality. It has no reality in Yugoslavia. The war against the Taliban in Afghanistan is instructive. It seems the policy was primarily to take no prisoners, openly stated on TV by U.S. Secretary of Defense Donald Rumsfeld, and relatively few were taken. Those essentially executed rather than taken as prisoners are enemies of the countries financing the International Criminal Tribunal.n Although this is against the rules of both decency and war, one can be sure there will be no war crimes charges against those responsible. The managers of state of the now-allied imperial-centers-of-capital know well their power; they use it ruthlessly, and leave weak countries no alternative. Once the powerful Soviet federation was destabilized, virtually every country in the world was at the mercy of the well organized, and allied, imperial centers. This highlights why only by ―allying together‖ can the developing world, within whose borders are most of the world‘s resources, gain the negotiating power to attain full freedom and equal economic rights. The guarantees of all Yugoslav workers for jobs, free health care, education, pensions, paid maternity leave, and vacations, low-cost recreation, cheap food, For a view of the threat to the West of an unbiased International Criminal Court read: Tuva Raanes, ―A Divine Country All on Its Own,‖ World Press Review, October 2002, p. 17. As the year 2000 came to a close, 139 nations had signed a treaty to create that court. It was also established at the Hague, assumed legal jurisdiction in July 2002, and has major war crimes on its docket (run a Google search). Due to the history of immense terror imposed worldwide that we have been addressing, the U.S. is, under threat of severe economic and financial sanctions, thus the pressuring of countries to sign that they will not extradite Americans for war crimes to that court. n
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and low rents were replaced in the breakaway provinces with 20% unemployment and a vastly lowered standard of living. Analyzing the sharply lowered living standards of the dozen Eastern European countries religiously and culturally tied to the West, and slated to be allies, provides a clue to the bleak future of countries not religiously and culturally tied to the West, and not viewed as natural allies.o The very word ―slave‖ is derived from what are now the Eastern Orthodox Slavic people of Eastern Europe (check the root word in a dictionary). The fate of the highly efficient VSZ steel complex in Slovakia provides another glimpse. With the breakup of Czechoslovakia, the collapse of all Eastern European countries, and the imposition of IMF-World Bank structural adjustments, the local markets for VSZ steel disappeared; markets in the West were protected from VSZ‘s low priced, high quality, steel; the once-booming steel complex ran out of money, and under IMF-World Bank rules, they could not be financed by the Slovakian central bank. This prostrate industrial jewel was picked up by America‘s U.S. Steel for the bargain basement price of $450 million, and now provides 25% of their steel making capacity. Slovak steel workers are paid roughly $2 an hour, against U.S. Steel workers pay in America of $35 to $45 an hour.42 High quality Slovakian steel will be sold on the world market; those mills will operate at full capacity; any overcapacity will be alleviated through lowered production in America, West Europe, and Japan, and the huge profits generated in the Slovakian mills will disappear into the accounting books of U.S. Steel. The labor of both Slovakia and America will take a loss, and all gains will go to the owners of U.S. Steel. This same scenario will play out in other industries. Like the underpaid emerging world, Eastern Europe will gain only a little because their pay is too low to provide adequate buying power; labor in the developed world will eventually lose buying power as their jobs are taken by underpaid Eastern European workers, and Japanese and other steel producers will have to lower steel and labor prices or lose market share. This will be the wellunderstood cyclical crisis of over production of monopoly capitalism, compounded by the abandonment of economies once seen as crucial to protect Russia fears the Muslims on her Eastern borders. After all, it is they who pushed Eastern Orthodox Christianity out of their birthplace around Constantinople and it is they, as well as Western Christianity, which has been their primary enemy. Russia‘s arming of Iran and China with currently unstoppable, ship sinking, sunburn missiles (also possibly the S-300 air defense system capable of tracking and firing on 100 attacking planes at one time) and they signing treaties with China, India, and Central Asian oil nations is the countervailing plan offsetting America‘s plans to control Middle East and Central Asian oil. The BRIC club - Brazil, Russia, India and China, their first meeting in May 2008, is also an alliance to avoid control of their economies by Western nations. o
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against fast expanding socialism, and further compounded by the melding of high-paid capitalist economies with low-paid former socialist economies. Eliminating monopolies through full and equal economic rights—outlined in the chapters 20 through 27—permits economic efficiency increases equal to the invention of money, printing press and electricity. Monopolization by the powerful has been the cause of poverty of the citizenry throughout history, and still is today. The continual preaching of the necessity and efficiencies of massive blocks of capital is only parroting of long-standing protections of wealth and power. The concluding chapters will demonstrate fully 95% of America‘s finance capital structure as actually lowering economic efficiency over 50%, and alerts us to simpler and cheaper ways to accumulate capital for building and operating tangible, productive, industry and services. Economic statistics, before the current worldwide crash, showing a steadily advancing world economy can only be through ignoring the shrinking of 40% of the world economy.43 The standard of living of all Eastern Europe, and the destabilized former Soviet federation was, and is, far lower than 25 years ago. The collapse of currencies, buying power, and industries in Mexico, Southeast Asia, parts of Latin America, and the former Soviet Union meant their citizens were impoverished as their resources and production of their labor were purchased by the imperial centers well below the previous norm. Previous low-priced oil contributed to maintaining healthy economies for the imperial centers. Thus a lowering of resource prices from the periphery of empire will, so long as the markets of the imperial center can be protected, be a boon to those economies, even though the periphery may be devastated. However, if China, India, Japan and the Asian Tigers ally with the developing world, and develop them in trade for resources; containing that powerhouse will be the biggest threat imperial monopolists ever faced. Under that structure, those nations would produce far more consumer products for their citizenry then that earned trading with America and Europe.
Making a Deal with the Corrupt of Russia The majority of the Russian people wanted change, but only slowly and carefully. They were not so foolish as to throw away their livelihood and the natural wealth of their nation. But Russian powerbrokers were given the opportunity to immediately own the vast natural wealth of that nation. Fifty percent of Russia‘s GDP came under the control of what became known as the ―Russian Mafia.‖ These thieves sent the money out of Russia as fast as it came into their hands. Mansions were purchased with this money in Spain, France, Cyprus, Austria, and many other countries and purchasers of each of these homes had many times that value stashed in overseas bank accounts. Fidel Castro estimates that 200 to $500 billion fled Russia; former President Gorbachev estimates $1 trillion.44
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When the Soviet borders crumbled, subversive funds flowed in, much of them from the National Endowment for Democracy (NED) and George Soros, and other, destabilization foundations, political allies were organized; those heavily-funded politicians won enough control to pass the necessary laws. Corrupt oligarchs gained title to valuable properties by various subterfuges. Predatory capital came across the border to buy up resources at a fraction of its value. Massive consumer products produced in the West were sold to Russian citizens to return to the Western imperial-centers-of-capital even the small amount of wealth accumulating within that defeated nation. Western managers of state made the same alliance with powerbrokers of the defeated former Soviet Union as they had with corrupt leaders throughout the former colonial world. The wealth and power of those corrupt leaders were protected so long as the West had access to their nation's resources at a fraction of its value and so long as there were access to their markets for the wealthy world's manufactured goods. That economic shock therapy in the Russian sector of the former Soviet Union was an attempt to compress the 70 years of America‘s age of the robber barons into 10 years.45 As the Russians understood all this, Vladimar Putin regained control of their economy. If they successfully restructure to efficient economic principles, which some were trying to do, the stolen wealth currently held in the form of exclusive titles may be reclaimed. Through recovering the funds which fled across the border will be problematic, world law says they can. If they do, Russians may again collectively own their natural wealth. The ―resource powers‖ can also gain their freedom and full and equal economic rights through conditional titles to their land and resources. This outlines clearly why the imperial monopolists so violently and tenaciously protect their unequal property rights, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. It is the heart of the monopoly system. On an evening news show, Harvard economist Jeffrey Sachs, who was in charge of the U.S. economic team coaching the former Soviets in their shocktherapy economic collapse, said, ―the problem is they do not yet have enough free enterprise.‖ Having just cut economic arteries in Russia with abandon, this same economist, in a later statement, had deep concerns over the ―fragility of the world economic system‖ and expressed fears about U.S. efforts to penetrate the Japanese market. He described that as ―reckless.‖ Simultaneously advocating opposite policies for the destabilized East, as under which the wealthy West‘s economy operates, indicates the economic health of the Russians was of no concern. Sachs was in charge of the Harvard Institute for International Development which oversaw their destabilization. We do not know if there is a connection between the CIA hiring economists during the middle and
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late 1980s and the Soviet destabilization. Nor do we know if that institute was one established by the CIA as addressed above. But consider these points: 1 The wholesale shutdown of Russian industry was done following the advice of that institute. 2 These same economists would surely not offer the same advice to an allied nation, as the comment on opening Japan‘s markets demonstrates. 3 Any student of mercantilism would have recognized these suggestions would destroy Russia‘s industry and commerce and create a dependency. 4 Economists can analyze there was virtually nothing anywhere to replace the industry being defunded and shut down except imports from the West. 5 And we know imposing beliefs to protect an imperial nation‘s ―national interest‖ (the way Adam Smith free trade was imposed upon the world) is an oft-used tactic of managers of state of already developed nations. So, how else can the guided collapse of the Russian economy be interpreted? Any nation which tried such a thoughtless plan would revert to developing world status with its wealth steadily confiscated by intact imperial-centers-ofcapital. As would be expected, the Soviet collapse rapidly worsened as industries were shut down and massive amounts of minerals and oil were shipped west to run their booming economies. The Russians figured that out after it was too late and those advisors were expelled from Russia.46 When the Soviets were successfully destabilized in the 1990s, imports rose to an unsustainable, officially-acknowledged, 39% of Russian consumer products imported in 1996. It then climbed to an official 50%, and an estimated 60%, by 1998, with no compensating manufactured exports. Documentaries showing both impoverished Russian soldiers begging for food, and other soldiers unloading cases of food with American labels on them, unwittingly exposed the cause of Russia‘s impoverishment. The second most powerful country in the world, totally self-sufficient—except for bananas, coffee and coconuts—was quickly impoverished through massive consumer imports. A country‘s economic multiplier is its economic health, and Russia‘s economic multiplier collapsed when its operating currency (base money) was spent on importing 50% of its consumer needs. With other countries‘ labor producing their consumer needs, Russian labor was unpaid; there was simply too little money left circulating in Russia to run their economy. Couple the impoverishing 50%-60% consumer product import statistic with the fact that Russia had a $35 billion per year trade surplus, at the same time its industrial production had fallen 80%, and its capital investment fell nearly 90%. This touted Russian success was really an enormous success for the Grand Strategy for destabilization of its feared enemy and the turning of its resources towards the West.
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Naomi Klein‘s The Shock Doctrine: The Rise of Disaster Capitalism, especially chapters 11 and 12, is the book to read to understand the many ramifications of the destabilization of the Soviet Union. It seems possible Jeffrey Sachs was sincere, and only realized the errors of economic shock therapy after that experience. The sincerity of many was only their intention to destabilize them as an opposing exemplary center of capital; others wanted to open up the Soviet Union to the wealth extraction principles of monopoly capitalism. Most Soviet citizens had money in the bank, and considering all we have outlined above as to production costs under harsh conditions and long supply lines being expensive, were reasonably comfortable. If that federation had been permitted to restructure to the Norwegian/Swedish economic model as they were planning, their 8-year shortfall in technological inequality could have been quickly closed. There would have been no effort to disturb the basic equality of rights firmly in place. Their rapid rise in living standards would be noticed by all, and that was the threat that had to be destroyed. Before their successful destabilization, one Ruble equaled $1 in value, and would buy more than $1 could within the Soviet Union. The ruble then would buy breakfast, lunch, and dinner with change left over. After the destabilization, it required 6,000 rubles to buy $1. The Russians traded those old rubles for new ones at the rate of 1,000 to 1, and that brought the exchange rate down to six of the new rubles for $1. The value of the new ruble then fell by another two-thirds. Most Russian savings were wiped out in the first currency collapse and the second collapse took twothirds of what was left.47 One of the old rubles now would not buy a cup of tea. Thirteen years later, 2010, Russians are many times better off but its citizens have still not reached the security the Soviet Union‘s citizenry had in 1985. A healthy economy requires faith in a nation‘s currency. Without trust in a nation‘s banks, the money will flee, which is exactly what it did in Russia. Worse yet, once a population has lost their money they thought safely stored in the bank, trust in a nation‘s banking system cannot be restored for at least one to two generations. Lost faith in banks means efficient capitalism cannot be established in Russia for a very long time. This is the outline of a very successful periphery destabilization policy by imperial centers. This has all the marks of a planned destabilization. Jeffrey Sachs knew Russian citizens had massive savings in the bank. In any other society this would be considered a big plus. Not realizing his errors, Sachs referred to those savings as, that ―pesky overhang.‖ Those private funds would have been a natural to purchase shares in Russian Industry. But the goal was to transfer most social wealth to Russian oligarchs; the rights and well-being of the masses were of no concern. To eliminate that ―pesky overhang‖ it was necessary to collapse Soviet industries through flooding the markets with imported products. That, and the resulting inflation addressed above, stripped Russian citizens of their ―pesky‖ savings.48
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The First Destabilization of Afghanistan was Aimed at the Soviet Federation The CIA‘s largest covert operation was the National Security Council Directive 166, in 1985, ordering the destabilization of Afghanistan. However, that directive was only a massive expansion of what the CIA had already been doing since 1980 under a finding signed by President Carter on July 3, 1979, five months before the Soviet forces were invited into Afghanistan to suppress that destabilization. The CIA, working behind the scenes through Pakistani intelligence, provided massive arms (eventually reaching 65,000 tons a year) and training to Afghanistan‘s Mujahideen and 40,000 Muslim zealots recruited from over 40 countries. All support seemed to be coming from Pakistan, and most Muslims would have been unaware that their terrorist operation against Afghanistan, and the Soviet Union, was a CIA designed, funded, and coordinated operation. Afghanistan was not the primary target. The goal was to destabilize the six Eastern Muslim provinces of the Soviet federation by smuggling in subversive propaganda, fraudulent books on Soviet atrocities against Muslim people, and by sabotage teams focused on assassinating Soviet officers, destroying factories and supply depots, etc. The Mujahideen rebels were based safely in Pakistan from which as many as 11 teams at a time would infiltrate across the borders to attack airports, railroads, fuel depots, electricity pylons, bridges, and roads. Satellite reconnaissance guided the Afghan resistance to Soviet targets. They were equipped with hand held stinger missiles to shoot down Soviet helicopter gunships and other aircraft. A stinger missile electronic simulator was brought to Pakistan to train the Mujahideen. Soviet battle plans were intercepted by spy satellites, which was then relayed to the resistance which through secure communications technology. Massive amounts of perception management (propaganda) books were distributed to the population. It worked; the progressive government of Afghanistan, and the Soviet forces supporting them at the request of the freely elected government, were defeated. Those Muslim ―freedom fighters‖ then went on to destabilize Eastern Soviet provinces. Today‘s civil war in Russia‘s Muslim Chechnya, is a residual of that CIA master plan. Those destabilizations were directly coached, and financed, by Western intelligence services.p Energized by the CIA designed Jihad to push Soviet influence out of Afghanistan and the Soviet Union‘s Eastern provinces, the ―freedom fighters‖ restructured their newly gained knowledge into a Jihad to free all Muslim nations from imperial domination. The bombs that fell on Afghanistan in October 2001 were blowing apart the terrorist training camps built by the CIA in the 1980s to train terrorists to destabilize the Soviet Union. These students of terrorism have p
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In 1998, after the successful destabilization of Afghanistan, Zbigniew Brzezinski, President Carter‘s National Security Advisor at the time, admitted that covert U.S. intervention began long before the USSR sent in troops at the request of the Afghanistan government: ―‗That secret operation [National Security Council Directive 166] was an excellent idea,‖ he explained. ―The effect was to draw the Russians into the Afghan trap.‖49 Take note of what was ―an excellent idea.‖ It was the peaceful, rapid, successes of Afghanistan that was a problem for imperial America. To subvert those successes, a country rapidly developing and moving towards modernization was politically and economically shattered, two million Afghanistani, out of a population of 15 million, were killed, millions more became refugees, and the struggle today is more violent than ever. One of the many forces financed, and armed, by the CIA, to suppress the progress of that impoverished nation, were the Taliban; the very people they are now battling as terrorists. Activist Muslims worldwide, some of America's most implacable enemies, trained in Afghanistan by the CIA, used their CIA terrorist training to blow up American embassies worldwide. They then reached into the heart of America, hijack planes, and flew them into New York‘s World Trade Center and the Pentagon. They killed 260 passengers and almost 3,000 on the ground; the greatest terrorist act ever, at the time, against the West.q However, that act pales alongside the acts of wholesale terror instituted by the West, all over the world, to suppress the periphery of empire‘s breaks for freedom. The destabilization of Afghanistan was only one, of many, covert actions undertaken with the primary goal of destabilizing the Soviet Union. If outside powers would stay out of the political conflicts of most countries; most those struggles would be settled peacefully and quickly. But, when powerful outside powers offer to finance and arm radical groups to take over and govern; there are leaders in every society willing to take that offer. These impoverished people turned their deadly skills towards destabilizing the nation who trained them and America is now searching out and killing the very terrorists they trained. Control of discourse, and self-censorship by the media, is so thorough that, even as their nation gears up for war against terrorism, the immorality, the injustice, and the lawlessness of the West‘s training of terrorists to destabilize fundamentally peaceful nations is not even discussed. It is crucial to the West that their state terrorism not be recorded in history. This accounts for terrorists being tried in military tribunals rather than civilian courts. A civilian court would record terrorist testimony that they were trained and financed by America while any such testimony will be suppressed in a military tribunal. q See the endnote to the above paragraph. CIA Director William Casey suggested to the Muslim terrorists they were training that, after overthrowing the Afghanistan government, the U.S. would support their terrorizing and destabilizing the Muslim provinces of the Soviet Union. Though virtually every CIA covert action must be plausibly denied, a Google search using various keywords on these pages will come up with the documentation.
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are given massive funds to fight proxy battles. Even the inexperienced can quickly make a value judgment: ―If they are currently in poverty with little opportunity for a quality life, if the world's greatest power is opening up the opportunity for they to be their nation‘s leaders, and if they automatically become personally rich and powerful in the process,‖ many will take that offer.‖ Would not the same thing happen in America, or Europe, if outside forces supported political groupings, with immense funds and arms to sabotage and destabilize them? As addressed above, the same Muslim terrorists America, trained in Afghanistan, were later destabilizing Kosovo and Macedonia, under the funding and guidance of American and German intelligence services. Later these same intelligence services, MPRI, and other supposedly private armies under the supervision of the Pentagon‘s Special Operations Command (SOCOM),r were organizing the Ethnic Albanian insurgency in Macedonia, utilizing some of these same Western trained Muslim extremists. The escort to safety of surrounded, and trapped, Ethnic Albanian insurgents, by American troops, provides strong support for these reports. For those sources in the media of record, the reader will have to do an Internet search and check future quality books.50 The Soviets withdrew from Afghanistan in 1989, the government was soon overthrown, and those progressive leaders, who were attempting to build a modern Afghanistan, were promptly hanged. All this was made palatable to the world by intelligence agency wordsmith‘s, that Mighty Wurlitzer again, use of terrorist nouns and adjectives (dictators, terrorists, butchers) to describe the progressive, peaceful, leaders they had overthrown and assassinated. The CIA, and all managers of state, knew better. CIA statistical books, available in most libraries, described this government as ―freeing women and peasants, establishing clinics and schools, with massive literacy programs, returning the land to those who farmed it, canceling the mortgage debts of small farmers, and canceling usurious debts. Sale of brides was prohibited, and women were able to choose their own husbands.‖ In fact, Afghanistan was then one of Linda Robinson, America‘s Secret Armies, U.S. News & World Report (Nov. 4, 2002), pp. 38-43. In Dollars for Terror (New York: Algora Publishing, 2000), chapter 10, Richard Labeviere explains that Special Operations Command (SOCOM) overseas MPRI, and other private military groups, interfaces between those groups and the Pentagon. Occasionally a news broadcast or talk show will address lightly the covert activities of the CIA. On one of those occasions, the TV camera turned to a younger Congressman who evidently had been in on covert activity briefings. He said, ―We think of the CIA as carrying out these covert operations but the really big covert operations are carried out by the military.‖ Of course, it is in support of the CIA that special operations forces of the military are called upon. These are the military covert operations that have gone under the deeper cover of MPRI and other supposedly private armies. r
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the leading nations in the world for providing women‘s rights. More women were in universities than men. Because one imperial-center-of-capital had targeted another powerful emerging center of capital (the Soviet Union), Afghanistan went from one of the fastest developing nations in the world, with full rights extended to all citizens, to one of the most repressive in the world where a woman did not dare show her uncovered face in public, could not go to school, and could not hold a job. Take note of how the label ―butchers‖ was placed upon what was undoubtedly the most progressive government in the Muslim world. Research very deep before accepting one of the labels placed on people, or nations, by any nation‘s Mighty Wurlitzer. The feudal structure of much of the Muslim world today is specifically because Western imperial centers re-established feudal structures when they destabilized the Ottoman Empire and overthrew, or contained, every democratic government that emerged. After the collapse of previous cover stories, this makes a mockery of the stated objective of the Iraq occupation, ―bringing democracy to the Middle East.‖ Afghanistan is of strategic importance for the allied imperial centers to control oil and other resources in the Middle East and Central Asia. We were told immense funds would be spent to rebuild those shattered nations, and incorporate them into world trade and the wealth producing process. True to form, this is not happening. Money for destabilization is plentiful while money for rebuilding is scarce to unavailable. We must remember General Wesley Clark being told by Pentagon contacts that President Bush‘s orders were out in 2001 for regime change in Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. The risks to the world were then, and are yet, very high. President Obama does not yet have the war parties under control. Exactly what the deepest secrets of the current War on Terrorism are, we cannot be sure. But this we do know: ―Terrorists had already attacked American embassies and infrastructure overseas, and that they were going to attack targets within mainland America was known. After all, such terrorist efforts generate a lot of phone traffic and ECHELON, CARNIVORE, EINSTEIN, and TEMPEST, America‘s electronic intelligence gathering software, intercepts and analyzes, through keywords picked out by powerful computers, virtually every message in the world sent through space and much of what is sent by ground. Clearly dangerous messages lead to detailed analysis of all traffic to and from those phone numbers. Over time, almost all terrorist cells and a rough outline of their plans is known. The current prime target of the War on Terrorism, Osama Bin Laden, worked with the CIA and Pakistani Intelligence in establishing those terrorist training camps in Afghanistan. So long as he and Al Qaeda members were terrorizing monopoly capitalism‘s competitors, as we were financing and training them to do, they were classed as ―freedom fighters.‖ As soon as they turned
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their training to blowing up American political and economic emblems, they became terrorists. Terrorists, of course, are what they were all along. Western media simply ignored the destruction of political and economic infrastructure of ideological competitors. We know every empire creates enemies to justify expansionist and suppressionist policies. We know that excuses for war are created so as to gain the political backing of a nation‘s citizens; these excuses include attacks on, and deaths of, American citizens. History is rife with examples, and America has its destruction of the battleship Maine in Havana, to rally citizens for the Spanish American War; and there was Pearl Harbor, which rallied them for WW II. So much terrorism of others, by the imperial centers, has been neglected by the media, and there has been so much distortion of reality by the greatest perception management (propaganda) system in history, that figuring out what is real is very slippery. We do know Osama Bin Laden praised the terrorist attacks on America. But, so did Western leaders praise their terrorist attacks on the empire‘s competitors. We do know Al Qaeda is dedicated to the destruction of America. But, America trained them to terrorize, and destabilize, both Afghanistan and the Soviet federation, and millions were killed in the process. In contrast, only a few thousand American were killed so far, as these terrorists turned on their trainers and benefactors. We know the West feels they must control the vast oil fields in Central Asia, and Afghanistan is one of the keys to controlling pipelines to India and China. Many of the former Eastern provinces of the Soviet Union joined NATO's Orwellian-named Partnership for Peace (PfP) military bloc. The Iraq invasion has alerted those nations that the goal was to control them and that alliance is falling apart. Major wars have been fought over far fewer resources. Sincere researchers should look closely at the War on Terrorism as being a cover for control of those largely untouched resources. But, they will have to look deep; this will not be the analysis recorded in history. Instead of the destabilization of the Soviet Union and Afghanistan by the West, Western history will record only a collapse of the Soviet Union and a War on Terror. Running a Google search, using the keywords: ―Defense Planning Guide, Cheney, Wolfowitz, 1992,‖ will alert one that the overthrow of Saddam Hussein was planned 11 years before the World Trade Center bombing. These terrorists must be neutralized; but the quickest way to do so is to abandon the massive violence, suppressions, and oppressions, of the West. President Barack Obama meeting with Muslim leaders, hopefully, will be the start in that change in America‘s foreign policy. The one aspect of this history that stands out is these American-trained terrorists being freedom fighters when terrorizing and destabilizing America‘s competitors and terrorists when they turned on America.
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The Decision to Restructure to a Market Economy was made by Soviet Intellectuals Soviet intellectuals studied both their economy and that of the West closely, and made a conscious decision for change. But, in the restructuring, these intellectuals‘ plans to establish Swedish-Norwegian capitalism were ignored: When I [Fred Weir] came here seven years ago at the outset of perestroika, there was very little belief in socialism among the generation dubbed the golden children. These sons and daughters of the Communist party elite had received excellent educations, had the best that the society could give them, and only aspired to live like their Western counterparts. Many had high positions in the Communist Party, but were absolutely exuberant Westernizes, pro-capitalists, and from very early in the perestroika period, this was their agenda.... People who thought they were going to be the governing strata in a new society are [now] losing their jobs, being impoverished and becoming bitter. The intellectuals, for instance—whose themes during the Cold War were intellectual freedom, human rights, and so on—had a very idealized view of Western capitalism. They have been among the groups to suffer the most from the early stages of marketization as their huge network of institutes and universities are defunded.51
Those golden children, of the communist elite, were undoubtedly quite silent as they gazed at their once proud country, lying prostrate at the feet of imperial capital. For the first ten years, the population of Russia fell at the astounding rate of 800,000 a year, birth rates plummeted to the lowest in the world, and only 1-in-4 children were born healthy. There were dramatic increases in the number of children born with physical and mental impairment, disease was rampant, and the average lifespan of Russian men fell from 65 years to 58; below that of Ghana.52 Sale of the Century, by Chrystia Freeland, is a highly recommended masterly study on the collapse of the Soviet Union.53 However, as a correspondent for the Financial Times when doing her research, the author focuses only on finance and politics, and ignores basic political science and economics: ―The National Endowment for Democracy‘s funding and management of Yeltsin‘s election, the American election specialists orchestrating of that election,s the Harvard Institute for International Development‘s advising Russia‘s ―young reformers‖ throughout that destabilization, and the massive imports of consumer products that collapsed the economic multiplier and sucked the wealth out of Russia.‖ Without the economic multiplier as money circulates, a country has no economy. Freeland fails to notice that the Soviet Union‘s ―young reformers‖ This was very successful. Through covert black ops and political pressure, even President Michael Gorbachev was denied access to local reporters, media, or even an audience to speak to, wherever they went. Freeland, Sale of the Century, chapter 9. s
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paid no attention to production in Russia for Russians. These neophytes were so immersed in classical Western philosophy, they thought all there was to establishing capitalism was to create rich capitalists by giving title of valuable resource industries and banks to a few ―oligarchs,‖ who, without a doubt, pulled off the greatest theft of social wealth in history. In the West, preventing the rise to political power of labor is a primary consideration. With such undemocratic views, the neophyte agents of capitalism, the ―young reformers,‖ were intent on the obviously impossible job of telescoping the 70 years of America‘s robber barons into less than 10 years. The only people offered a serious opportunity to buy Russia‘s productive industries, for a fraction of its true value, were the new ―oligarchs‖ who were expected to become the leading capitalists of Russia. As we have thoroughly documented, and as Naomi Klein has done from another perspective, no country has ever developed under the principles imposed upon post-Soviet Russia. In fact, economic protections for the developed world are all in place, and functioning, and no wealthy nation would consider subjecting their economies to such harsh economic medicine as was imposed on the Soviet Union. To double, triple, and quadruple prices while shutting down industry right and left and destroying consumer savings would be taught as a recipe for disaster in any honest economics classroom. We do not consider Milton Freidman‘s classes in neoliberal economics honest, and the record all over the world, again documented by Naomi Klein, is thorough proof. Not only were neoliberal economics total failures wherever tried, they were also partly responsible for a large share of the 16 to 20 million people slaughtered around the world by imperialism since WW II. For example: The Iraq war, ongoing as we speak, was to be the first of a rapid fire overthrow of governments across the world and Milton Friedman‘s economic ―shock therapy,‖ as was applied to the Soviet Union, was to be applied to each of those countries. The easiest way to understand the failure of the restructuring of the Russian economy is by outlining a sensible restructuring plan: 1 Banks were already socially owned, and should have remained so, as per Chapter 20 and the Conclusion 2 The massive savings of Russian citizens should have been protected. 3 Industry and media shares should have been distributed to all citizens.t 4 Modern industries should have been built, the bonds to be repaid from profits, while the workers, being owners, would help insure those profits. 5 Until those industries were established, and the economy competitive, imports should have been restricted on all except technology; This was done through vouchers. But, there were many schemes for the oligarchs to buy up those vouchers, not the least was they had to be sold for survival. t
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6 With imports restricted, the Russian Central Bank could create base money for both economic infrastructure and modern industry if savings are too limited or the needs too demanding (see chapter 20 and Conclusion). 7 As fast as modern industries came on stream, Russia‘s huge factories would have shut down or, even cheaper and more efficient, they could have retooled and established a feedback mechanism to maintain efficiency. 8 An inescapable monthly collection of resource rent, paid to themselves (society), as per chapter 21, should have been placed into law, including royalties on natural resources such as oil, minerals, timber, and communication spectrums. 9 Citizens should have received title to their homes through paying resource rents in monthly payments (again as per chapter 21 and Conclusion). They had massive savings with which to do that, and those funds would have returned right back to them five fold in the form of no taxes to pay, efficient infrastructure built, free education, universal health care, retirements, and funding of governments. 10 Farmers, businesses and industry should have been given title to their land with the understanding they would pay annual resource rents to society (which is to themselves, and they will be quintuply repaid as per above). 11 With massive consumer savings and financing available, retailers would spring up automatically, and this would be the ideal moment to establish efficient education and distribution systems through communications superhighways as per chapters 22 and 24. Any successful restructure plan must provide access to technology, resources and markets, and Russia‘s massive resources could have been bartered for technology, as opposed to its massive hemorrhaging of resources to the West. Patents in the public domain should have been imposed. This is accepted as legal in international law, was being tested in court with AIDS drugs in South Africa, and the major drug companies capitulated rather than go to trial. Then they reneged on their capitulation The reason these sensible restructurings were not put in place is obvious; as our opening 170 word thesis on page three demonstrated, labor would have ended up with enormous wealth and political power. There is no social problem (not personal problem) that will not have been alleviated or fully resolved within that economic structure: Funding for Universal Health care, retirement, infrastructure, education, and operating governments would all be in plentiful supply. Waste of labor and resources, as within monopolized economies, will not take place. Poverty and famines would be quaint history; free times for family interactions will be double that within the current, developed, monopolized, economies.
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Could the Soviet Union have Avoided the Cold War? From the Soviet side it certainly looked as if war was coming. From 1945, and up to at least 1956, when the U-2 spy flights started, thousands of U.S. ―ferret‖ spy flights photographed Soviet territory and raced back before they could be identified and attacked. In 1946 and 1947 alone, this was before the Cold War officially started, 30 such planes were shot down and at least 20 U.S. airmen were captured alive, never acknowledged by their government, and finished out their lives in Soviet prisons, while their families were told they died in various accidents. As acknowledged by the highly respected U.S. News and World Report, between 1950 and 1970, after the Cold War officially started, but those overflights had been going on since the end of WW II, there were over 10,000, and possibly over 20,000, such overflights deep into Soviet and Chinese territory by military aircraft. There was much more going on than the photographing of Soviet territory. Sabotage and assassination teams were being dropped in to hide among their Western Christian brothers. These acts of war failed universally, with large losses among the agents and their relatives who were to hide them.54 In June 1992, when Russian President Boris Yeltsin met with President HW Bush and said, ―We may have American prisoners yet,‖ quite a stir was created. News anchor Tom Brocaw reported this disturbing news and the congressional uproar over these possible prisoners. The next night Brocaw said, ―These were American airmen shot down during the Cold War. This is the first time Americans have been apprised of this.‖ Then for weeks, except for an occasional highly sanitized statement, all went silent on that explosive subject. A few months later, the headlines read, ―Yeltsin: POWs ‗Summarily Executed.‘‖ But the last line of that front-page article depicting these execution horrors told the real story. ―The largest group of Americans imprisoned or who died in the Soviet Union were more than 730 airmen who either made forced landings on Soviet territory or were shot down on Cold War spy and sabotage flights.‖55 As they were finishing out their lives in prison, their families were told they had died in accidents. The intelligence agencies of Britain, France, and Germany were running similar, but smaller, covert operations against the Soviet Union and other nations of the Eastern bloc. This was a massive assault on Soviet sovereignty, actually outright acts of war, by essentially the same powers that had invaded Russia 25 years earlier and also the same powers who owed an enormous debt to the Soviets for saving them from fascism in WW II. That there were no Soviet spy planes carrying assassination and sabotage teams overflying Western territory, during this period, is something scholars
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should note. Nor should the internment of U.S. pilots in the Soviet Union have been news to U.S. newscasters. With the Soviets complaining to Washington, DC, to the United Nations, and they holding many trials, for the American people not to be informed of these assaults on Soviet territory can only be through cooperation by the major media of record. These illegal flights, remaining a secret only to Western citizens, testifies to how locking society within a belief system requires suppression of information about acts of war by managers of state and news media cooperating in portraying the targeted society as a threat to Americans. That is, of course, the creation of enemies to protect a power structure. As in any society after a revolution, there were those within the Soviet Union who were sympathetic to, and subject to manipulation by, their religious and cultural cousins in the West. Thus, when Germany invaded the Soviet Union, whole communities of ethnic Germans, and other communities with religious ties and loyalties to the West, joined the invading army. When that war was over, entire Western Christian communities were resettled in Siberia where they could not link up with outside Western Christian powers threatening to overthrow the Soviet government. Millions of innocent people, even many dedicated and loyal communists, were rounded up for resettlement, many were executed. But, those executed, had been harboring trained saboteurs who had parachuted into the Eastern European countries all the way to Byelorussia.u Struggles for power became mixed with the legitimate battle to defend the revolution, and many innocents were swallowed up in the holocaust. America today, facing a much weaker terrorist threat, is reacting far more violently, primarily outside its borders as we have been documenting, but also within them. But note! It was protecting their country from being overthrown, by external powers manipulating internal ethnic groups, which created these suppressions. Where America faced no such threat after its revolution, or even since, the cooperative efforts of many nations to overthrow the Soviets had been ongoing for 70 years. These included direct intervention in their revolution, the WW II effort to exterminate them, years of covert actions such as training and flying in assassins and saboteurs, poisoning 7,000 East German dairy cattle, being embargoed from world trade, and their post-WW II military encirclement. Besides those with ethnic ties to the West who betrayed their new country by joining forces with the Nazi invaders (such as Vlasov‘s army and Byelorussian, Ukrainian, Croatian, and Polish volunteers for the mobile death squads; 20,000 were volunteers; the rest were conscripts who were granted amnesty). John Prados, The Presidents’ Secret Wars (New York: William Morrow, 1986), chapters 2-3; Loftus, Belarus Secret, chapters 1-3, pp. 51-53, 49, 102-03, especially p. 43; Ranelagh, Agency, p. 156. u
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Ignoring the background behind the forced migrations to Siberia, and in its constant search for drama, the Western press openly pushed the governing belief system that the WWII Soviet death toll was 60 million. But then it became 40 million, then 20 million, then 10 million, and the figures are still coming down towards the true number killed under ―Stalinism,‖ certainly under 100,000, most likely fewer than 50,000, primarily those harboring their cousins from the West intent on overthrowing that government.56 These are the same principles peddlers of crisis have been using for thousands of years. The greater the lie, the more surely it will be believed. Even if it is done only verbally and the accuser is in no personal physical danger, the surest way to be recognized as a leader is to lead an attack against an enemy. There has been so much fabrication it is impossible to know what is true. We are satisfied that a large share of the citizens of those Soviet communities, who welcomed the German armies, who were contacts for the saboteurs the West was infiltrating into those countries, and who were a threat to the security of this new federation, were relocated to Siberia. This was a full-fledged war, the Soviets knew it, and many innocent people died from the 70 years of intense destabilization efforts and outright wars. The names of the now declassified plans for war against the Soviet federation, Bushwhacker, Broiler, Sizzle, Shakedown, Dropshot, Trojan, Pincher, and Frolic graphically portray their offensive purpose. Some of those plans included the actual occupation of the Soviet Union.57 Papers in President Johnson‘s library testify to a planned nuclear strike to destroy the rising economic and philosophical threat. Make no mistake about it, the intention was to both destroy the Soviet federation, suppress any other breaks for freedom, and both goals were reached. However, only temporarily, periphery nations are allying, again making a break for freedom, and assuming we avoid nuclear war, the chance of success this time around is on their side. Those destabilizations cost trillions of dollars, 16 to 20 million lives (slaughters in Iraq and the Congo alone added over 6 million). Analysts are right when they say the West would not have attacked the Soviet Union. But that is only because the Soviets developed the atomic bomb too quick. One hydrogen bomb getting through to America would be one too many, and that is what may also save us from WW III. There is no way to intercept most incoming missiles, let alone all of them. Most wars came from the imperial centers, not from other nations. Thus it is the imperial nations who must be persuaded to give up war. All other nations would sign on the dotted line immediately, and President Barack Obama seems to be leading the parade to lower, and possibly eliminate, nuclear weapons.
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Study the history of suppressions worldwide, study why tiny impoverished Vietnam faced such an assault. Study why Cuba is under such an assault even as their revolutionary government provided Cubans with universal health care, are credited with the highest educated population in the world, and they eliminated hunger. We also need to understand why every offer of the Soviets for mutual disarmament was ignored, and not even reported in the American press. A key part of Western perception management was the lack of rights in the Soviet Union and secret police everywhere. This was true only for Western visitors of which many were spies. America, and most of Western Europe, could give more freedom and rights to their citizens because they were not subject to bombings, assassinations, and threats of invasion, the CIA‘s Mighty Wurlitzer saying otherwise notwithstanding. Take note how, under a far lower threat level, group terrorism as opposed to state sponsored terrorism, America is reacting at a far higher level of repression and suppression of rights than the Soviets ever did.
Imperial, Representative, Participatory and Direct Democracies An internet search using the keywords ―republic, not a democracy‖ is an education. America describes itself as a democracy, conservatives openly state this is a republic and that it was never intended to be, and it is not today, a democracy. Of course word meanings change over time. If a majority of the people perceive a word as meaning something that becomes its new meaning. Western nations have described themselves as democracies for so long their citizens, and the world, generally take this claim for granted. However, because early settlers and frontiersman only came to town once or twice a year, only a ―representative democracy could function and, even though they now have rapid communication and could practice direct democracy, a republic, not a democracy, is what America is yet today. Democracy, as understood by U.S. citizens, does not conform to reality; it never did. Most voters think the winners of elections are representing them. But that is seldom true. Winners of elections at the state and national levels, where those crucial laws are enacted, are normally determined by who spends the most money and who controls the various media. Thus the winners of elections represent wealth and power far more so than the citizenry at large. On the other hand, the Soviet Union, even under hostile conditions of foreign imperial powers bent on their destruction, had a participatory democracy. They were true democracies with the citizenry sending ―representatives‖ to their legislatures with instructions on how to vote. This, of course, has been kept out of Western media and history books. Under their participatory democracies, suggested laws were discussed within the communities, voted on, and a repre-
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sentative was sent to the legislatures with specific instructions to vote yes or no on each aspect of each law. It was not for a legislator to decide on their own how to vote. At the North American-Cuban Philosophy conference, June 2002, Western scholars watched mesmerized as the nation shut down for three days and Cuban citizens of all ages gave impassioned televised speeches on the pros and cons of changes in their constitution. Modern communications permitted them to practice direct democracy. True democracy, in its fullest meaning, participatory and direct democracies of the Soviet Union and Cuba, have been censored from Western media and history books.v Though the words are never used within an empire‘s mainstream media or educational system, the world has many imperial democracies. These puppets, on the periphery of empire, are supposedly elected by the citizenry. In reality, the powerbrokers within the imperial centers determining who shall rule disenfranchise the electorate of those countries. The media and historians of the imperial centers again reverse reality, and call these puppet dictators, kept in power by Western intrigue and military might, democratic; and those who temporarily break free are called dictators and killers. As most citizenry believe they have democratic rights, both representative and imperial democracies have the potential to, through ballot box revolutions, become true democracies. Our fingers are crossed that this is happening as we speak. And it may be! Labor within Greece, Spain, Portugal, Italy, Ireland, and Iceland are getting close to open revolt as their wages, pensions, and services are slashed to pay debts to German, French, and English banks. All Eastern Europe is in worse financial shape than those six periphery Western European nations. If those periphery nations default on their debts to major banks of Europe, those financial institutions will collapse and bring the economies of those major nations down with them. This is because the money is not owed to those major nations or their banks. In final analysis, the money is owed to the ethereal world of high finance which is searching the world for safe places to invest the 95% of their finance capital that is both unearned and unproductive. That ethereal world of high finance had only loaned back to those people the massive sums of money that should never have been extracted from them in the first place. On balance, those excess, un-
The bigger the lie, the deeper it is believed. The true numbers killed were well under 100,000 and those were only caught up in the paranoia and confusion as the West never wavered in their goal to destroy that democracy. The famous Soviet gulags were entire communities moved to Siberia to eliminate imperial Saboteurs and assassins hiding in the midst Western Christian communities. v
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earned, funds were only loaning what is properly the borrowers own money so they could fund the purchases of their life style. If that money had not been unjustly extracted from them in the first place, those consumers could have lived a quality life with only modest borrowing for major purchases. Unearned wealth is being extracted in both world trade and within internal economies. We go into the wealth extracted within internal economies in Part III.
The Essence of the Cold War: Perception Management (Propaganda) Encasing Society within a Belief System Former attaché to the Soviet Embassy George Kennan, undoubtedly the U.S. citizen most knowledgeable about the Soviet Union, one of the prime promoters of the Cold War, and one who eventually had a change of heart about the morality of that deception, is quoted as saying ―those executed in the Soviets were in the tens of thousands.‖58 Tens of thousands is still a large number to be sure, but, even though many, even possibly most, were innocent, a large number were attempting to overthrow that new government, which is a capital offense in any country. For a balanced perspective, compare the under 100,000 killed, almost surely under 50,000, within the former Soviet Union, as they searched for those supporting the West to overthrow the government with the 16 to 20 million killed, and still rising, on the periphery of empire by the West (2010), as documented above and in the next chapter. Many innocent people within the Soviet Union were swallowed up in this mass hysteria. The Soviets opened their records and restored the good names of these people. Historians are tracing what happened to each individual, so their families can know their fates. Perhaps the world may someday know the true numbers of those unjustly persecuted souls. We caution the reader on the statistics that will be published. The slaughters within defeated centers of capital, and others threatening to break free, are exaggerated, while the suppressions and oppressions by the dominant centers of capital are camouflaged as defensive actions. As they write their own history, their slaughters of innocents are recorded as suppressing their aggressions. When Hitler was planning WW II, Reinhard Heydrich, deputy chief of Hitler‘s SS, operated a covert operation counterfeiting letters from top Soviet military officers to indicate a counter-revolution by these officers.59 Possibly 35,000 highly loyal officers were executed. We say possibly because we must remember how intelligence services create and exaggerate facts to demonize enemies; these exaggerated figures then become recorded history. After WW II, copying Heydrich‘s successful destabilization efforts, Western secret services counterfeited papers and letters; that caused massive arrests of
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innocent people in Eastern Europe and the Soviet Union. Citizens of the West heard about the repressions but nothing about the causes. When the Soviets caught on to the scam, they released those imprisoned, and even paid compensation to an innocent American couple who were caught up in that intrigue and imprisoned for several years.60 Even as the Russian revolution, with its participatory democracy and full and equal economic rights for all succeeding, the British were attempting to destroy Lenin‘s reputation to the world. By the same methods that placed Napoleon in history books as a megalomaniac, the leaders of the Bolshevik Revolution will be in future history books as mass terrorists.61 That falsification of history will be accomplished through financing already highly-biased (or unwitting) historians to research executions, point out the total innocence of those executed, and will simultaneously ignore the counterfeit papers fingering innocent people, the destabilization-assassination teams inserted, the many who were guilty, or the massive amounts of money spent placing a ring of steel around the Soviet federation. A participatory democracy, with full and equal economic rights for all, was a threat to representative democracies with their excessive economic rights for a few, and limited economic rights for the many. The intentions were to take the Soviet Union out and those goals were finally accomplished. Due to broad sharing of the wealth stolen from the periphery of empire through plunder by trade, limited rights for the many within imperial democracies are not immediately apparent.
Conceptually Reversing the Process Remembering how close the Soviets came to winning the arms race, and thus winning the Cold War, does anyone doubt what would have happened if the Soviet Union was untouched and America was the one that had been invaded, had been the nation which lost 30% of its prime labor, and had been the nation in which everything above the Mason-Dixon line, and east of the Mississippi River, had been blown up or burned to the ground? The conclusions are obvious. WW II and the arms race imposed upon the Soviets is all that prevented them from far outperforming monopoly capitalism. Their cooperative ways explain why the Soviets developed so fast under such adverse conditions; development would have been much faster yet under the inclusive philosophies of a full and equal rights economy. If the Soviets had been incompetent, as we hear so often, they would have been no threat and there would have been no Cold War. They would have simply been quietly overwhelmed by capitalism. It was their competency that was the problem. To have advanced as far as they did under such adverse conditions, before finally being overwhelmed by assaults from the Western world, testifies
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to a fiercely loyal population working hard for their country. They were not a terrorized and sullen population as we have been told.
Keeping the World in Chains Patriotic forces in the former Soviet Union have taken back their country and are rapidly rebuilding. Some of the property titles of those who bought Russia's wealth for pennies on the dollar have been reclaimed. But for a quick lesson on what Marx meant by "monopoly capital" (our ―unearned capitalized values‖), and what "debt traps" mean, look at what those shattered economies face. If they repudiate or default on any external debts, any assets outside their borders can be, and will be, attached. This means businesses, property titles, bank accounts, goods-in-transit, ships, or planes. Because monopoly capitalism still rules the world, even though that control is weakening fast, those beleaguered societies would be in one of the tightest containment traps ever devised. Every ship or plane leaving their ports would be subject to seizure to repay those debts. Without unimpeded access to the world, no economy of any country can function efficiently. Through this example, the traps structured within unequal property rights laws, designed to keep the world in chains, become fully visible. It is obvious that, so long as the wealthy have title to an excessive share of wealth, and especially considering it is appropriated wealth, neither ―rule of law‖ nor ―property rights law‖ means equality under the law. It only means ―that is the law.‖ The weaker, poorer, and not yet organized countries of the world may yet gain their freedom. Michael Hudson, in, ―The European Debt Wars,‖ and William Engdahl in ―US Won‘t Recover for 15 Years,‖ tell us that Eastern Europe, Western Europe, and America [which means most the wealthy world] is due to collapse in the very near future (this author‘s thesis, and writings, for five years). Engdhal bluntly says, ―If Europe goes with the Russia-Asia axis, where their energy sources are, they get hit over the head by America. If they go with America [which is collapsing] they are gone.‖ A Google search for ―Matt Taibbi Greece Birmingham‖ alerts one to that same oncoming crash from a different perspective. Birmingham, Alabama‘s new sewer system, estimated to cost $250 million but, in a financing charade comparable only to payday loans, ended up costing $3 billion. This has Bankrupted Birmingham and, on Democracy Now, Taibbi said ―cities, counties and states all over America and Europe were suckered into the same traps, in which they got nothing for their money, they too are bankrupt, and we will soon be hearing about them.‖ Birmingham just happened to be the first community that realizes what had been done to them. In essence, entire countries have been caught in these ―payday loan‖ schemes of corrupt finance capital, loan-
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ing unearned money right back to the people from which it was unjustly appropriated. The chains kept upon weak nations, and the earlier suppression of their breaks for freedom we will be addressing next, proves imperialism is still the policy of powerful nations. The imperial-colonial masters only put on a cloak called Adam Smith free trade and speak fine words of peace, freedom, democracy, justice, equality, and rights while all the time covertly suppressing those breaks for freedom and rights. We now go to that story. Lawrence Wittner, American Intervention in Greece (New York: Columbia University Press, 1982), especially pp. 162, 283; Kati Marton, The Polk Conspiracy: Murder and Cover-up in the case of Correspondent George Polk, (New York: Farrar, Straus, and Giroux, 1990); C.M. Woodhouse, The Rise and Fall of the Greek Colonels, (New York: Franklin Watts, 1985); Stephan Rosskamm Shalom, Imperial Alibis (Boston: South End Press, 1993) pp. 26, 26; William Blum, CIA: A Forgotten History (London: Zed Books, 1986), pp. 31-36; David Leigh, The Wilson Plot (New York; Pantheon, 1988), pp. 17-18; William Manchester, The Glory and the Dream (New York: Bantam Books, 1990), pp. 433-43; Michael McClintock, Instruments of Statecraft (New York: Pantheon, 1992), pp. 11-17. 2 Eric Wolf, Europe and the People Without History (Berkeley: University of California Press, 1982), pp. 99-100. 3 Ibid, pp. 99-100; I.F. Stone, The Hidden History of the Korean War (Boston: Little Brown and Company, 1952); Chalmers Johnson, Blowback: The Costs and Consequences of the American Empire (New York: Henry Holt & Company, 2000), chapter 4. 4 Ibid, chapter 3, pp. 43, 61, 97, 108, 110, 119; Gabriel Kolko, The Politics of War (New York: Pantheon, 1990), chapters 3-4. 5 Sidney Lens, Permanent War (New York: Schocken Books, 1987), pp. 20-21;William Appleman Williams, The Tragedy of American Diplomacy, (New York: W.W. Norton, 1988), pp. 208, 235. 6 Arjun Makhijani, From Global Capitalism to Economic Justice (New York: Apex Press, 1992), pp. 25-26, quoting a memorandum on NSC-68. 7 Linda Robinson, ―What didn‘t we do to get rid of Castro,‖ U.S. News & World Report, October 26, 98, p. 41; Fidel Castro, Capitalism in Crisis: Globalization and World Politics Today (New York: Ocean Press, 2000), p. 215-17. See also, John Quigley, The Ruses for War: American Intervention Since World War II (Buffalo: Prometheus Books, 1992). 8 L. Fletcher Prouty, JFK: The CIA, Vietnam, And the Plot to Kill Kennedy (New York: Birch Lane Press, 1992), chapter 3; James Bamford, Body of Secrets: Anatomy of the Ultra-Secret National Security Agency (New York: Doubleday, 2001), especially pp. 70-75. 9 Dean Acheson, Present at the Creation (New York: W.W. Norton, 1987), pp. 374, 726; see also p. 377, emphasis added. 10 James Bamford, Body of Secrets: Anatomy of the Ultra-Secret National Security Agency (New York: Doubleday, 2001), pp. 70-91, especially p. 82; Linda Robinson, ―What didn‘t we do to get rid of Castro,‖ U.S. News & World Report, October 26, 98, p. 41; Castro, Capitalism in Crisis, p. 215-17; John Quigley, The Ruses for War: American Intervention Since World War II (Buffalo: Prometheus Books, 1992). 11 Stone, Hidden History, pp. 1-3 12 Quigley, Ruses for War, chapter 3. 13 John Ranelagh, The Agency: The Rise and Decline of the CIA (New York: Simon & Schuster, 1987), p. 257. 14 Stone, Hidden History, pp. 263-64. 15 Lloyd C. Gardner, Safe for Democracy (New York: Oxford University Press, 1984), pp. 197-8; Philip Knightley, The First Casualty (New York: Harcourt Brace Jovanovich, Publishers, 1975), chapter 7; Mikhail Gorbachev, Perestroika (New York: Harper and Row, 1987), p. 33, note 2; Edmond Taylor, The Fall of the Dynasties (New 1
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York: Dorset Press, 1989), p. 359; Ernest Volkman, Blaine Baggett, Secret Intelligence (New York: Doubleday, 1989), chapter 1. 16 Walter Isaacson, Evan Thomas, The Wise Men (New York: Simon and Schuster, 1986), p. 150; Michael Kettle, The Allies and the Russian Collapse (Minneapolis, University of Minnesota Press, 1981), p.15; Taylor, Fall of the Dynasties, p. 381. 17 Philip Knightley, First Casualty, p. 138; D. F. Fleming, The Cold War and its Origins (New York: Doubleday, 1961, 2 vols.), pp. 26, 1038 18 Paul Kennedy, The Rise and Fall of the Great Powers, (New York: Random House, 1987), pp. 321, 323. 19 Vilnis Sipols, The Road to Great Victory (Moscow: Progress Publishers, 1985), pp. 109, 132, 179-80; Kennedy, Rise and Fall, especially pp. 321, 323, 352, in part quoting J. Erickson, The Road to Berlin (London: 1983), p. 447. 20 Jeffrey Jukes, Stalingrad at the Turning Point (New York: Ballantine Books, 1968), p. 154; National Geographic TV (August 23, 1987); Fleming, Cold War and its Origins, p. 157; Kolko, Politics of War, pp. 19, 351, 372. 21 Kennedy, Rise and Fall, pp. 357-58; David Mayers, George Kennan (New York: Oxford University Press, 1988), pp. 190-91; Oleg Rzheshevsky, World War II: Myths and the Realities (Moscow, USSR: Progress Publishers, 1984), p. 175. 22 Lens, Permanent War, pp. 20-21; Williams, Tragedy of American Diplomacy, pp. 208, 235. 23 Don Cook, Forging the Alliance, (London: Seeker and Warburg, 1989), pp. 78-9. 24 E.P. Thompson and Dan Smith, Protest and Survive, (New York: Monthly Review Press, 1981), p. 123. 25 Rich Thomas, ―From Russia, with Chips,‖ Newsweek, August 6, 1990. 26 Peter Gowan, ―Old Medicine in New Bottles,‖ World Policy Journal (Winter 1991-92), pp. 3-5. 27 Gowan, ―Old Medicine in New Bottles,‖ pp. 6-8, 13. 28 Ramsey Clark, Hidden Agenda: U.S./NATO Takeover of Yugoslavia (New York: International action Center, 2002); Michel Collon, Liars Poker: The Great Powers, Yugoslavia and the Wars of the future (New York:: International action Center, 2002); Michel Chossudovsky, The Globalization of Poverty: Impacts of IMF and World Bank Reforms (London: Zed Books, 1997), chapter 13; Michel Chossudovsky, ―Dismantling Yugoslavia, Colonizing Bosnia,‖ CovertAction Quarterly (Spring, 1996), pp. 31-37; Michael Parenti, To Kill a Nation: The Attack on Yugoslavia (New York: Verso, 2000), p. 26; William Tabb, The Amoral Elephant: Globalization and the Struggle for Social Justice in the Twenty-First Century (New York: Monthly Review Press, 2001), chapter 6, espec. pp. 149, 153-54; Sean Gervasi, ―Germany, U.S., and the Yugoslavian Crisis,‖ CovertAction Quarterly (Winter 1992-93), pp. 41-45, 64-66; David Lorge Parnas, ―Con: Dayton‘s a Step Back—Way Back,‖ Peace (March/April 1996), pp. 17-22; McClintock, Instruments of Statecraft, pp. 71-82; Catherine Samaray, Yugoslavia Dismembered (New York: Monthly Review Press, 1995; Charles Lane, Theodore Stranger, Tom Post, ―The Ghosts of Serbia,‖ Newsweek. April 19, 1993, pp. 30-31; Dusko Doder, Yugoslavia: ―New War, Old Hatreds,‖ Foreign Policy (Summer 1993), pp. 4, 911, 18-19; Thomas Kielinger, Max Otte, ―Germany: The Presumed Power,‖ Foreign Policy (Summer 1993), p. 55. This was essentially acknowledged by former Acting Secretary of State Lawrence Eagleburger on the McNeil/Lehrer Report (May 6, 1993), and many other talk shows and news programs, pointing out that there were those who pushed for the collapse of Yugoslavia, specifically pointing to Germany. On that same show, Michael Elliot of the respected British publication, The Economist, agreed. 29 Ibid 30 Ibid and Parenti, To Kill a Nation, chapter 10, p. 105. check Jane’s Defense Weekly, especially May 10, 1999; Linda Robinson, ―America‘s Secret Armies,‖ U.S. News & World Report (November 4, 2002), pp. 38-43. 31 Ibid; Check later articles and books by those same authors; Parenti, To Kill a Nation, chapter 11. 32 Parenti, To Kill a Nation, chapter 15, p. 12, 28-29; Fidel Castro, Capitalism in Crisis: Globalization and World Politics Today (New York: Ocean Press, 2000), p. 209. 33 ―Big Lie Exposed,‖ Workers World, April 12, 2001. 34 Parenti, To Kill a Nation, chapter 14. 35 See endnote 32. For reduced Serbian losses: Parenti, To Kill a Nation, chapter 16; Richard J. Newman, ―A Kosovo Numbers Game,‖ U.S. News & World Report, July 12, 1999, p. 36.
The World Breaking Free Frightened the Security Councils of Every Western Nation 151 George Monbiot, A Discreet Deal in the Pipeline, The Guardian, 15 February 2001. See endnote 32; Parenti, To Kill a Nation, chapter 16. Run a Google/Nexus-Lexus Internet search. 38 Castro, Capitalism in Crisis, pp. 215-17; James Bamford, Body of Secrets: Anatomy of the Ultra Secret National Security Agency (New York: Doubleday, 2001), pp. 70-75. 39 Anthony Arnove, Iraq Under Siege (Cambridge: South End Press, 2002). 40 Parenti, To Kill a Nation, pp. 12, 28-29, chapter 15.; 60 minutes and Democracy Now featured the Congo slaughter. David Smith, ―Path of Genocide: The Rwanda Crisis from Uganda to Zaire, International Journal of Comparative Sociology, Vol. 62, 2001; Alison Des Forges, Leave None to Tell the Story, 1999, ISBN 9781564321718. 41 David Peterson, ―Milosevic‘s Death in the Propaganda System,‖ Z Magazine (May 2006). 42 Deirdre Griswold, ―Marxism, Reformism and Anarchism: Lessons from a Steel Mill in Slovakia,‖ Workers World (December 14, 2000). 43 Mark Weisbrot, ―The Mirage of Progress.‖ The American Prospect (Winter 2002), pp. A10-A123. 44 Castro, Capitalism in Crisis, pp. 42, 104. 45 John Gray, False Dawn (New York: The Free Press, 1998), chapter 6; Alexander Buzgalin and Andrei Kolganov, Bloody October in Moscow: Political Repression in the Name of Reform (New York: Monthly Review Press, 1994); Boris Kagarlitsky, Square Wheels: How Russian Democracy Got Derailed, (New York: Monthly Review Press, 1994). The tables of contents of most good magazines, mainstream and alternative news. 46 Janine R. Wedel, "The Harvard Boys Do Russia," The Nation. June 1, 1998, pp. 11-16. 47 Castro, Capitalism in Crisis, pp. 99-104. 48 Ann Williamson, ―An Inconvenient History,‖ run a Google search 49 Greg Guma, ―Cracks in the Covert Iceberg‖ Toward Freedom (May 1998), p. 2; Yousai Mohammad and M. Adkin, The Beartrap: Afghanistan's Untold Story (London, England: Leo Cooper, 1992); Blum, Rogue State, chapter 2; K. Lohbeck, Holy War, Unholy Victory: Eyewitness to the CIA's Secret War in Afghanistan (Washington DC: Regnery Gateway, 1993); J. Peterzell, Reagan's Secret Wars, CNSS Report 108 (Washington, DC: Center for National Security Studies, 1984); T. Weiner, Blank Check: The Pentagon's Black Budget (New York: Warners Books, 1990); E.T. Chester, Covert Network: Progressives, the International Rescue Committee, and the CIA (New York: M.E. Sharpe, 1995); D. Cordovez, and S.S. Harrison, Out of Afghanistan: The Inside Story of the Soviet Withdrawal (New York: Oxford University Press, 1995); S. Emerson, Secret Warriors (New York: G.P. Putnam, 1988); Westerfield, Inside CIA's Private World; L.K. Johnson, America's Secret Power; R. Kessler, Inside the CIA: Revealing the Secrets of the World's Most Powerful Spy Agency (New York: Pocket Books, 1992); Duane A. Clarridge, A Spy for all Seasons: My Life in the CIA (New York: Scribner, 1997). 50 Linda Robinson, ―America‘s Secret Armies,‖ U.S. News & World Report (November 4, 2002), pp. 38-43; Greg Guma, ―Cracks in the Covert Iceberg‖ Toward Freedom (May 1998), p. 2; Ahmed Rashid, Taliban: Militant Islam, Oil and Fundamentalism in Central Asia (New York: Yale University Press, 2001); Michael Griffin, Reaping the Whirlwind: The Taliban Movement in Afghanistan (Sterling, VA: Pluto Press, 2001); John Cooley, Afghanistan, America, and International Terrorism (Sterling, VA: Pluto Press, 2000); Yousai Mohammad and M. Adkin, The Beartrap; William Blum, Rogue State: A Guide to the World’s Only Super Power (Monroe, ME: Common Courage Press, 2000), chapter 2; K. Lohbeck, Holy War, Unholy Victory: Eyewitness to the CIA's Secret War in Afghanistan (Washington DC: Regnery Gateway, 1993); J. Peterzell, Reagan's Secret Wars, CNSS Report 108 (Washington, DC: Center for National Security Studies, 1984); T. Weiner, Blank Check: The Pentagon's Black Budget (New York: Warners Books, 1990); E.T. Chester, Covert Network: Progressives, the International Rescue Committee, and the CIA (New York: M.E. Sharpe, 1995); D. Cordovez, and S.S. Harrison, Out of Afghanistan: The Inside Story of the Soviet Withdrawal (New York: Oxford University Press, 1995); Yonah Alexander and Michael S. Swetnam. Osama Bin Laden’s al-Queda: Profile of a Terrorist Network (Ardsley NY: Transnational Publishers, 2001); Peter L. Bergen, Holy War Inc.: Inside the Secret World of Osama Bin Laden (New York: Simon & Schuster, 2001); John K. Cooley, Unholy Wars: Afghanistan, America, and International Terrorism, 2nd edition (London: Pluto Press, 2000); M.J. Gohari, The Taliban: Ascent to Power (New York: Oxford University Press, 2000); Larry P. Goodson, Afghanistan‘s 36 37
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Endless War: State failure, Regional Politics, and the Rise of the Taliban (Seattle: University of Washington Press, 2001; Robin Wright, Sacred Rage: The Wrath of Militant Islam (New York: Simon & Schuster, 1985; S. Emerson, Secret Warriors (New York: G.P. Putnam, 1988); Westerfield, Inside CIA's Private World; L.K. Johnson, America's Secret Power; R. Kessler, Inside the CIA: Revealing the Secrets of the World's Most Powerful Spy Agency (New York: Pocket Books, 1992); Duane A. Clarridge, A Spy for all Seasons: My Life in the CIA (New York: Scribner, 1997). 51 Fred Weir, ―Interview: Fred Weir in Russia,‖ CovertAction Quarterly (Summer 1993), pp. 54-55. 52 Castro, Capitalism in Crisis, pp. 42, 99-104; 60 minutes, May 19th, 1996. 53 Chrystia Freeland, Sale of the Century: Russia’s Wild Ride From Communism to Capitalism (New York: Crown Publishers, 2000. See also, Stephen Cohen, Failed Crusade: America and the Tragedy of Post-Communist Russia. (New York: W.W. Norton, 2000). 54 Michael Ross, ―Yeltsin: POWs ‗Summarily Executed‘,‖ The Spokesman Review (November 12, 1992), pp. B1, A10; Volkman and Baggett, Secret Intelligence, p. 187; John Loftus, Belarus Secret (New York: Alfred A. Knopf, 1982), especially chapters 5-8, pp. 109-10; Blum, A Forgotten History, chapters 6-7-8-15-17, especially p. 124; U.S. News & World Report, March 15, 1993, pp. 30-56. 55 Ross, ―POWs ―Summarily Executed,‘‖ pp.B1, A10. Later TV documentaries on this episode claimed 130 airmen lost, the above referenced U.S. News article claimed 252, but all pointed out that the losses may have been much higher. 56 Blum, The CIA: A Forgotten History, pp. 127-28, 131, 185; Victor Marchetti and John D. Marks, The CIA and the Cult of Intelligence (New York: Dell Publishing Co., 1980), chapter 6, especially pp. 152-56; Philip Agee, Inside the Company (New York: Bantam Books, 1975), especially pp. 53-54, 62-63, 541-42; John Stockwell, The Praetorian Guard (Boston: South End Press, 1991), pp. 100-1; Ralph W. McGehee, Deadly Deceits (New York: Sheridan Square Press, 1983), especially pp. 30, 58, 62, 189; Philip Agee, Louis Wolf, Dirty Work (London: Zed Press, 1978), especially p. 262; David Wise, Thomas B. Ross, The Espionage Establishment (New York: Bantam Books, 1978), pp. 256, 257; Ellen Schrecker, No ivory tower: McCarthyism and the Universities (New York: Oxford University Press, 1986); Frank J. Donner, The Age of Surveillance: The Aims and Methods of America’s Political Intelligence System (New York: Random House, 1981). 57 Michio Kaku and Daniel Axelrod, To Win A Nuclear War, (Boston: South End Press, 1987), especially p. x. 58 Alexander Cockburn, ―Beat the Devil,‖ The Nation, March 6, 1989, p. 294; David Corn and Jefferson Morley, ―Beltway Bandits,‖ The Nation, April 9, 1988, p. 488. An interesting appraisal of Stalinist terror is made by Soviet dissident Roy Medvedev, ―Parallels Inappropriate,‖ New Times (July 1989), pp. 46-47. See also Volkman and Baggett, Secret Intelligence, p. 187; Loftus, Belarus Secret, especially chapters 5-8, pp. 109-10; Blum, The CIA: A Forgotten History, chapters 6-7-8-15-17. 59 Donald Cameron Watt, How War Came: The Immediate Origins of the Second World War (New York: Pantheon Books, 1989), p. 45. 60 Blum, A Forgotten History, chapter 7. 61 Volkman and Baggett, Secret Intelligence, p. 9.
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8. Suppressing the World's Breaks for Freedom
The public has, through strategies of tension, been conditioned to believe they were battling communism all over the world but, of the governments overthrown; only Afghanistan was originally communist and it was not a military threat to anyone. During the seven years William Casey was CIA director (1981 to 1987), 50 major CIA covert operations were initiated throughout the world and thousands of minor ones.1 Those major destabilizations caused massive deaths and destruction, while the minor operations controlled the media on both the periphery and in the imperial center and also destabilized small democratic groups before they could gain a following. As Casey was director for only seven of the CIA‘s 55 years, one starts to get a sense of the massive covert destabilizations it took to suppress these breaks for freedom.
America as an Empire Predates the Cold War Not totally ignored in history, is that the Philippine patriots‘ struggle for freedom from America was violently suppressed from 1899 through 1903 in a manner very similar in tactics and level of violence as in the Vietnam War. In that battle for freedom, an estimated 600,000 Filipinos died from combat and starvation. The Filipinos again fought for their freedom after WW II. Tens of thousands were killed, primarily by private death squads, orchestrated by the CIA‘s General Edward G. Landsdale, as the elite fought to retain control of the government and the land. That suppression of true independence, through covert American support, is still ongoing.2 History, as General Smedley Butler knew while he was helping create it, does not get into high school, or even university, history books: I spent thirty-three years and four months in active service as a member of our country‘s most agile military force—the US Marine Corps…. And during that period I spent most of my time being a high-class muscle man for big business, for Wall Street and for the bankers. In short, I was a racketeer for capitalism. Thus I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-12. I brought light to the Dominican
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Republic for American sugar interests in 1916. I helped make Honduras ‗right‘ for American fruit companies in 1913. In China in 1927 I helped see to it that Standard Oil went its way unmolested.3
The recorders of history have not had the honesty of General Smedley Butler. The immensely rich veins of gold and copper ore in West Papua, leading to decades of genocide and environmental destruction, all for the benefit of a cartel of wealthy corporations, has essentially been left out of history books. The slaughter of one-third of East Timorese, in a failed attempt to control what are thought to be vast off shore oil deposits, escaped notice by most of the world. Darfur, in the Sudan is addressed as a genocidal disaster, while almost no media mentions who the hidden players are, or that the underlying struggle is to control anticipated oil reserves. And so it goes across the world, struggles for resources and control of the wealth producing process, just as it has for centuries. Most of the destabilizations we will be addressing were over who would control resources and wealth. No nation on the periphery of empire could be permitted their freedom; others would see the rapid increase in their living standards and demand their economic freedom Their destabilizations were by good people, just like you and I, who believed fully in what they were doing. Quality people throughout the world were firmly locked within a belief system by a political, academic, and media system from which many conscientious professors had been either purged or silenced. Those carrying out the orders of managers of state had never heard anything other than that they were battling the world‘s worst elements, those attempting to take away ―our‖ democratic freedoms.
Iran Breaks Free Iranians were America‘s friends, and wished to emulate both its democratic government, and its economic success. Operation Ajax, with Kermit Roosevelt, future Vice President of Gulf Oil, in charge of reinstalling the Shah and training SAVAK (the Iranian Secret Service), was the CIA's covert operation to stem that burst of democracy. Under the reinstalled Shah, Gulf Oil, Standard Oil of New Jersey, Texaco, and Socony-Mobil gained a 40% share of Iranian oil rights. Britain, the original planner of this regime change, claimed the remaining rights. Thousands of Iranians were tortured by SAVAK and a few thousand were killed.4 The Iranians were as angry as any American would be if a powerful nation overthrew their government and put Britain back in power. But government press releases (most news can be traced to press releases of governments or corporate-funded think tanks), and planted articles, the CIA‘s Mighty Wurlitzer, built the image of Iran as a dangerous enemy. After the overthrow of the Iranian
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government, that enemy is then, of course, not hard to prove. The overthrow of its government to control its oil and its destiny made Iran that enemy. Kermit Roosevelt was in charge of the overthrowing Iran‘s Prime Minister Mohammed Mossadegh in 1953. The dictatorial Shah fled in January, 1979. On November 4, the same year, activist Iranian Muslims overran the American embassy, and held 52 Americans hostage for 444 days.5 This was the greatest peacetime tweak of America‘s nose in its history. Considering the imperial nations were actively fomenting intrigues, overthrowing budding democracies with immense loss of life, and installing and supporting puppet dictators and ―imperial democracies‖ all over the world to control resources and markets; to think America would peacefully take that nose tweaking, along with the loss of control of Iranian oil, would be an exercise in extreme denial. The Iran-Iraq War started four months before those hostages were released. Through the CIA‘s Mighty Wurlitzer, the American people were being told the Soviet Union was backing Iraq. The truth came out when the Iraqis gassed their own Kurdish population. A U.S. senator angrily fumed, ―We have $800 million of arms in the pipeline to Iraq and we should cancel it all.‖ Iraq was surely coached into that invasion, with the promise of backing, for they owning the oil fields right across its borders. With the strongest nation in the world behind it, and Iran in turmoil, Iraq would have felt assured of success. Middle East and Central Asian oil is central to controlling the policies of other nations. Only world opinion, and the Iraqi‘s intense defense of their land, as an example of what might happen in this much stronger nation, has kept Israel or America, or both, from destroying Iran. President Obama‘s policies are still unknown as we go to press, but it is becoming more and more possible that he will avoid going to war with that besieged nation.
Containing Iraq Before the early 20th century subdivision of the Middle East, Kuwait was a province of Iraq. Badly bruised from the Iran-Iraq war, upset about Kuwait‘s horizontal, cross-border drilling stealing oil, and feeling America was now their friend, Iraq moved to bring her lost province back into the fold. This led to the 1991 Gulf War which cost Iraq 200,000 killed, destruction of her industry and infrastructure, a 12 year embargo in which another million Iraqis died for lack of food and medicine, and the destruction of a 2nd Gulf War in 2003 which is still on-going (2010), with over 1.3 million civilians succumbing to the violence and
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disease, over three million becoming refugees, half within Iraq and half in neighboring countries.a Oil rising to as high as $140 a barrel threatened world economies while $40 oil (it is around $75, first quarter of 2010, and rising) would give the imperial economies a boost.6 But there are deeper reasons for that war. According to Neil Mackay of The Sunday Herald in Scotland, a meeting of President GW Bush‘s advisors was held within days after his election in 2000 in which the decision to depose Saddam Hussein was made. U.S. Intelligence would have known Iraq, Venezuela, and Iran were considering switching to euros as their reserve currency, which could crash the American dollar (economy).7 Once Iraq‘s and Central Asia‘s oil was under U.S. control, no nation, large or small, could challenge America. Those imperial dreams were shattered by the fierce resistance of the Iraqis, and by the immediate realignment of China, India, and Russia with Central Asian oilproducing nations when all saw through the cover stories. This is the struggle of the future, and can best be kept track of by keyword searches (Oil, SCO, Eurasia, China, Russia, India, alliances, etc.) NATO bases moving east have been a part of that struggle. Iraq‘s oil fields, costing under $1 a barrel to pump out of the ground, being privatized, alerts us that massive unearned sums are already being claimed by oil companies, which means the Iraq war has, so far, been a huge success. .Naomi Klein‘s beautifully told story in The Shock Doctrine: The Rise of Disaster Capitalism, 2007, on the plan to privatize the economies of several countries at a time ties in with our explanation that imperial unequal property rights laws are aristocratic laws, hiding under beautiful names (capitalism, freedom, etc).8 Every aspect of the economies several countries were to be privatized; but the Iraqi‘s, and the Afghanistanis, stopped them cold. Lieven de Cauter, ―Cultural Cleansing in Iraq,‖ alerts us that the plan of empire was to destroy the culture of Iraq. Dahr Jarmail, in ―Operation Enduring Occupation,‖ tells us there is no intention, yet, of American troops fully exiting Iraq. The blogs of Michael Hudson and William Engdahl above, page 148, alerts us the empire may be bankrupt, and we have no choice in the matter.
Economic Freedom for Indonesia was a Big Threat Indonesia was taking control of its destiny. Besides having massive resources coveted by the imperial nations, she was establishing an honest democracy. Over 400 doctors and professors have been assassinated without one assassin being caught. This is ―The El Salvador Option‖ (death squads) in action intentionally destroying the culture of a nation. That plan included stealing priceless 1,000 to 5,000 year old artifacts from Iraq‘s museums and flying them out of the country the first few days of the invasion. Run a Google search. President Barack Obama has promised to start exiting Iraq in July this year, 2010. a
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Twenty-five percent of the nation‘s citizens were following the Communist Party so they were to be entitled to 25% representation in the government. Such a fully democratic choice could not be permitted. On the second try, the CIA overthrew Sukarno and installed Suharto. The managers of the American state were still not fully secure; their newly installed puppet was not actively suppressing that 25% of the voters who were such a threat. How Indonesians were coached into slaughtering their own innocent civilians is a textbook example of how strategies of tensions work. Arms were beached on the islands, papers were counterfeited to make it appear a revolution was imminent, and a list of over 4,000 political leaders and activists targeted for assassination was passed to the Indonesian military. By the lowest estimate, 500,000 Indonesians were slaughtered, by the highest, 1,000,000, and by the CIA's own estimate 800,000. Indonesia‘s Special Forces Command, Kopassus, the military forces responsible, has not denied these atrocities, and they have assassinated more civilians in 2009-10 (Google Search Alan Nairn Kopassus). Sukarno was overthrown because, with their enormous resources, there was a high potential for both political and economic success which would catch the attention of other nations, and they too would insist on their freedom. Indonesia‘s massive resources have been pouring to the West ever since Sukarno‘s overthrow.
Nigeria Did Not Break Free In Nigeria, from 1966 to 1971, it was oil again. Possibly two million Biafrans, mostly children, starved as, during that nation‘s destabilization, relief was prevented from reaching the starving Ibo people. Dan Jacobs, a United Nations relief worker trying to help avert that tragedy, who later researched its causes, was aghast to discover British managers of state, with the passive support of America, were behind that disaster: ―I went to a National Security Council staff man and said: ‗The British did this.‘ ‗Oh, of course,‘ he responded. ‗The British orchestrated the whole thing.‘‖ Newsreels showed footage of starving Nigerians. But not a hint did one see, that, to prevent a nation with huge natural resources and oil from gaining control of its own destiny, this civil war was externally orchestrated by Britain with the passive diplomatic support of the United States.9
Vietnam Gained Political, but not Economic, Freedom During WW II, while working directly with American agents to rescue downed U.S. pilots, Ho Chi Minh sent six letters to the U.S. government asking for support. He stated, ―the Vietnamese wished to pattern their constitution after America‘s.‖ Only after America refused to recognize their rights and supported
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the French suppression, did the Vietnamese turn to China and the Soviet Union.10 A treaty was signed in Paris in 1954 for the future of that nation to be decided by free elections. The South Vietnamese puppet government and their new backers, America, knew well that over 80% of the votes would be for rejoining with North Vietnam. So the treaty was ignored and that tiny country and its theoretically neutral neighbors, Laos and Cambodia, were pummeled with more firepower, 15.5 million tons, than was expended in WW II. The 6.3 million tons of bombs dropped were 50% more than dropped in that world war, and created over 5,000 square miles of craters. At the officially acknowledged cost of $2 trillion, 2010 dollars, to conduct that war and another $2 trillion for the cost and damage incurred by the Vietnamese, for which an aggressor is surely responsible, for a total of $4 trillion; America could have given every man, woman, and child in Vietnam, 62 million people, just under $70,000 or almost $450,000 per family.11 Three million people were slaughtered, four million if one included the previous 15 years of French suppression, millions of acres of forest poisoned with herbicides were destroyed, and after winning its freedom, Vietnam was further decimated by embargoes.12
Guatemala Broke Free Briefly In 1951, the Communist Party was one of the smallest of four parties which supported the election of Jacobo Arbenz as president of Guatemala. Knowing that foreign-owned land titles had been obtained under far from free market conditions, President Arbenz started the legal process of reclaiming several hundred thousand acres of idle land from America‘s United Fruit Company. For the first block of 178,000 acres, United Fruit was offered a 24-year bond valued at $525,000, its valuation on United Fruit's tax records. But United Fruit had close connections to the old-boy network of the National Security Council and the CIA. John Foster Dulles was appointed Secretary of State one year before the overthrow of Arbenz. General Walter Bedell Smith was director of the CIA at the time, and John J. McCloy was World Bank president, refusing loans to Guatemala during its destabilization. In a replay of Vice President of Gulf Oil, Kermit Roosevelt, overseeing the overthrow of Iran, all four of these powerful men in American intelligence and the World Bank, either had a longstanding connection to United Fruit before Arbenz's overthrow, or they became directors of that company shortly afterwards.13 After an earlier coup failure, a perception management (propaganda) campaign was launched throughout Latin America claiming Arbenz was a Communist. Russian-made arms were parachuted into Guatemala to be found and sup-
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port the claim of a Communist takeover. The CIA and the United States Information Agency, USIA, an integral part of the Mighty Wurlitzer, cooperated in a media blitz. Over 200 perception management articles were sent to Latin American newspapers for anonymous use. Over 100,000 pamphlets titled "Chronology of Communism in Guatemala" and 27,000 copies of anticommunist cartoons and posters were distributed. The USIA produced three perception management movies on Guatemala. Seven weeks before the successful coup, the CIA launched a clandestine radio misinformation campaign.14 When all was ready, powerful transmitters broadcasting messages of confusion overrode Guatemala's national radio while fighter aircraft bombed oil and ammunition dumps, strafed Guatemala City, and dropped smoke bombs to make it appear the attack was even larger. Although the CIA army of expatriate Guatemalans never numbered over 400 and were staying close to the Honduran border so they could escape if the Guatemalan army was activated, the bluff worked. Arbenz was overthrown.15 Undestroyed documents show 58 of Guatemala's freely elected officials were targeted for assassination. With 200,000 killed and unaccounted for during the 35 years Guatemalans attempted to wrest back their government, and with Guatemala's U.S.-supported military and CIA-orchestrated death squads being responsible for a documented 93% of the slaughters, it is highly likely most were.16
Chile Broke Free Very Briefly Thinking there were no serious problems in Chile, and spending only a modest amount of money to influence its 1972 election, Cold War managers of state went into shock when Salvadore Allende was freely elected president on a platform of control of Chilean resources for Chileans. The CIA immediately financed 10 economists, primarily from the Chicago School of Economics, to put together an alternative economic program for Chile to assure stability once that errant nation was brought back within the fold (see Naomi Klein‘s The Shock Doctrine). The managers of state embargoed Chile and the CIA and America's military, primarily the Navy, coordinated plans for Allende's overthrow. This included picking Chilean military personnel for training at the School of the Americas, then in Panama and later in Fort Benning Georgia, renamed to the Center for Inter-American Security Cooperation, but properly nicknamed The School of Assassins or School of Coups. Among those handpicked recruits were dependable supporters for a coup when the time was ripe. Guns used to assassinate President Allende were proven to have been given to the assassins by the CIA, which then must abide by the rules of plausible denial and disclaim any responsibility.17 Among those killed the first year of Pinochet's regime were citizens of the United States, Spain, and a
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few other countries. The Chilean government's official figure of 3,197 killed by its security forces in the suppression is almost certainly far too low.18 Pinochet was under house arrest in Britain for over a year in response to a petition he be extradited to Spain to stand trial for killing 300 Spanish citizens.b Although escaping that attempt to put him on trial, he, eight Chilean generals, and 80 military and intelligence officials were later indicted in Chile. Virtually everyone agrees Pinochet will be recorded in history as being in charge of the torture and slaughter of many thousand innocent Chileans.19 Argentineans have similarly been able to correct the history of the suppression of democratic voice in their country, but most such suppressions get falsely recorded as civil wars and uprisings. Since the overthrow of Allende, Chile is trumpeted as a great success story of Adam Smith free trade. But when all wealth is accounted for, it is a testimonial to Chilean resources and wealth going to the imperial-centers-of-capital and their wealthy puppets then running Chile. In statistics, where you start and where you quit is everything. After Allende's overthrow, national output dropped 15%, the unemployment rate rose to 20%, wage reductions averaged 15%, and that low level provides the base for most statistics. A proper statistical base would start from Chile's production level under Allende. In 1986, 16 years after Allende‘s overthrow, Chile's GDP had only regained that 1970 level, real wages were still below, and per-capita consumption was 15% lower, some calculate 23% lower. Between 1985 and 1990, the income of the top 10% of Chileans rose 90%, while the share of Chile's wealth for the poorest 25% fell from 11% to 7%.20 The percentage share of national income going to labor dropped from 47.7% in 1970 to 19% 20 years later. Likewise, Argentina‘s labor share dropped A part of those assassinations were carried out under Operation Condor, a joint operation set up by Chilean, Argentinean, Brazilian, Uruguayan, Paraguayan, Ecuadorian and Bolivian intelligence (The Nation August 9, 1999 and the New York Times March 6, 2001) to assassinate expatriates whom they considered a danger to the security of their then fascist governments and who had fled their home country, including some in Spain, Italy, the United States, and other countries,. The problem, of course, was that these people knew too much about the fascist suppressions in these countries. The assassination in Washington DC of former Chilean official Orlando Letelier was carried out under Operation Condor. American Ronni Moffit riding in the car alongside Letelier was also killed. Nuns, priests, veterans, students, grandmothers, and grandfathers have been sentenced for protesting at the gates of that terrorist training center (School of the Americas addressed above) operating in America. This is an annual event essentially unreported in the American media. As the imperial centers write history through placing defeated leaders on trial as mass murderers, the defendants were denied the right to use an international law defense. But these courageous people would not be silenced and spoke forcefully on the atrocities committed worldwide by graduates of this terrorist training center. b
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from 40.9% to 24.9%, Ecuador‘s from 34.4% to 15.8%, Mexico‘s from 37.5% to 27.3%, and Peru‘s from 40% to 16.8%.21 The real story of Chile and other emerging nations is that, under Milton Friedman‘s neoliberalism, the earnings of laborers declined significantly, their rights declined rapidly, the earnings of the already wealthy climbed astronomically, and the natural wealth of Chile and the rest of Latin America were being rapidly claimed by the imperial centers, a classic example of a successful neo-mercantilist policy. As addressed in Part III, all this is changing fast as South American ballot box revolutions throw out the puppet governments and install honest leaders. The US has been forced to vacate its military base in Bolivia. Chile may yet join Hugo Chavez‘s Bolivarian Revolution, as they and a few other Latin American nations call previous political and military leaders to account for atrocities against their own people, while they were puppets for America‘s destabilization policies.
El Salvador Did Not Gain Even Its Political Freedom With the exception that a free election was never permitted, the 1980 through 1992 suppression of El Salvador‘s break for freedom paralleled that of Guatemala as described above. When tortured bodies with their thumbs wired behind their backs, a death squad marker, showed up outside the El Salvadoran capital almost daily, and since there was no serious effort by the officials to get to the bottom of those tortures, one can safely assume those were government assassinations of the political opposition. The United Nations El Salvador Truth Commission placed responsibility for 85% of the 70,000-plus deaths on security forces trained, armed, and advised by the American military, and another 10% upon the El Salvadoran elite‘s private death squads, which could only function with the support of both the El Salvadoran and American governments. The suppressions were successful, and El Salvador remains as a provider of cheap resources and labor to the imperial centers.22 In 2006 it shipped 268 million garments; A Google search for Truth Commissions will be an education.
Nicaragua Never Attained Economic Freedom Nicaragua gained its freedom on July 19, 1979, when the Sandinista liberation forces overthrew President Somoza. The CIA armed, trained, and oversaw the sabotage and assassinations within Nicaragua by Nicaraguan defectors called Contras. While tens of thousands of people were killed under the oppressive, U.S. sponsored, Somoza dictatorship, only a few thousand died, all at the hands of the Contras, as Nicaragua fought for its freedom. The Nicaraguan government was protecting its citizens, as opposed to being the primary source of murderous as-
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sault upon its own people, as in Chile, Guatemala, El Salvador and Nicaragua under Somoza. The immediate improvement in education, health, and living standards under the Sandinistas was reversed by the destabilization process. As massive U.S. funds illegally financed the opposition, the beleaguered Sandinistas eventually agreed to an election. The people knew the war of attrition would continue if Ortega, and the Sandinistas, still governed; the Americanbacked Violeta Chammoro became president of Nicaragua in February 1990.23 One-in-nine Nicaraguan children face serious malnutrition; BBC news used the word starving. Ortega won the election in 2006 and Nicaragua, Cuba, and other Caribbean island nations joined Hugo Chavez‘s Bolivarian Revolution, which is sweeping South America. Nicaraguans should soon be living better.
Southern Africa’s Frontline States John Stockwell, former CIA officer in Langley, Virginia, overseeing the destabilization of Angola, emphatically points out that America was supporting the National Union for Total Independence of Angola (UNITA), while the vast majority of Angolans supported the Popular Movement for the Liberation of Angola (MPLA). Moreover, it was well recognized the MPLA was ―best-qualified to run Angola; nor was it hostile to the United States,‖ while the leader of UNITA, Jonas Savimbi, had taken training in the Soviet Union and was distinctly more ideologically tuned to that federation than MPLA. Obviously the political and economic shattering of Angola was the purpose of supporting Savimbi, not the establishment of a functional, friendly, government.24 Facing the greatest threat from black Africans gaining their freedom, South Africa‘s white minority government orchestrated Renamo‘s terror campaign in Mozambique, and, in conjunction with the remnant colonial power structures, ran similar covert destabilization campaigns in Zambia, Namibia, Zimbabwe, and Botswana.25 The CIA, with support from Belgium, destabilized the Democratic Republic of the Congo and assassinated the charismatic and popular Patrice Lumumba before he could be legitimized as their leader through elections (run a Google search). Control still could not be assured, so Zaire was created to remove those rich mineral deposits from the uncontrollable Congolese, and Joseph Mobutu was installed as the Belgian-American puppet.26 Sixty minutes, January 13, 2008, addressed the Congo‘s four million (today five million and rising) slaughtered in the struggle to retain control of the enormously valuable mineral resources. A picture of the spit polished rebel army commander responsible alerts any rational person that lots of money stood behind those supposed ―jungle rebel‖ forces. As they were breaking free after WW II, many countries of Africa were looking forward to federating as a United States of Africa, building their infra-
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structure, educating their citizens, building modern industry, and joining the world of developed nations. The suppressions of those breaks for freedom on the southern cone of Africa cost many millions of innocent lives (see Wind of Change at Films for Humanity & Sciences 800.257.5126, item # BVL30750). We have yet to see if President Barack Obama will open space for his African ancestry to organize and develop.
The Libyan Threat After Libya declared its freedom, Britain tried several times to covertly overthrow their leader who responded by supporting violent anti-Western political movements. After direct bomber attacks, which killed President Muammar Khadaffi‘s adopted daughter, such support was abandoned. Though Libya‘s human losses have been small, there have been some killed and, through embargoes, their economy was successfully contained. Libyan, Iranian, and Iraqi economic freedom meant they, along with other newly developing oil-rich nations which would follow their lead, would build their own refineries, and take over a significant share of the world's oil industry. With their cheap oil and massive reserves, pennies per barrel as both raw material and fuel for their refineries and factories, against $50 to $100 a barrel for others to import, they could not only control the world‘s fuel, they could control other fuel-intensive production processes. Under the guidelines of Muammar Khadaffi‘s Green Book and its oil wealth, Libya is successfully maintaining its freedom and taking control of its destiny. Through their People‘s Assemblies, they and Cuba may be the only two countries whose people vote directly on their laws (direct democracy).
Cuba: Under President Barack Obama, They May Gain Their Freedom In 1959 the American-backed Cuban dictator, General Batista, fled as Fidel Castro‘s forces freed Cuba. The new Cuban government was not Communist, and attempted to maintain friendly relations with America. But the redistribution of the wealth producing processes in Cuba from foreign ownership to Cubans, and they regaining control of their destiny, was a threat to American managers of state. Embargoes were put into effect to force a rescinding of those policies. Cuba promptly turned to the Soviet Union for technological and economic support and embraced the Communist ideology. The Cuban economy developed rapidly. Cuban students now lead the world in education; their health care is comparable with the world‘s best, even as it is the world‘s cheapest. No Cubans are hungry,
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housing is being rapidly built, and a sign outside Havana reads, ―Millions of children in the world sleep in the street and not one is Cuban.‖ All this was accomplished even as Cuba was totally embargoed by the West. No ship trading with America dared dock in a Cuban port; if they did they could not dock in the United States. No corporation dared trade with Cuba, to do so would result in fines and/or withdrawal of trading rights in the United States. Such rapid development of a nation breaking free was the great fear of managers of state. Saboteurs—trained, armed, financed, and managed by the CIA— counterfeited Cuban money and ration books, burned cane fields, infected them with fungus, infected tobacco fields with mildew, and infected potato fields with the potato-ravaging insect Thrips palmi. African swine fever, never before seen in the Western hemisphere, ravaged Cuba twice and 500,000 pigs had to be destroyed. Over 300,000 Cubans were infected with dengue fever, 158 died, of which 101 were children under 15 years old. Enough operatives have acknowledged their part in this biological warfare that serious researchers accept the accuracy of these allegations. Newly released CIA documents alerted researchers that crop warfare was also practiced against a number of other countries whose freedom and potential economic successes would threaten the imperial centers.27 This author watched a news broadcast where one operative boasted of over 50 forays into Cuba creating such havoc, including blowing up a Cuban railroad trestle and ―watching the train go into the ravine just like in the movies.‖ Until the 9/11/2001 terrorist attack on America, no one was blowing up American or European trains and refineries, no one was burning American or European grain fields, no one was poisoning the West‘s dairy cattle (in East Germany 7,000 were poisoned by the CIA), and no one was practicing germ and crop warfare against the West. In short, the truth is exactly the apposite of what the CIA‘s Mighty Wurlitzer has propagandized the world to believe. No countries were attempting to overthrow Western nations. It is the rest of the world which was under assault for the purpose of controlling their governments, their resources, and the wealth producing process. Note how successful these strategies of tension are for controlling the mindset of a population. Talk to any American on the street and most will know nothing of Cuba‘s successes and, even though it is Cuba being terrorized by America, and Cuba is not terrorizing anyone, they believe Cuba is a terrorist state in poverty. Many times this author would test his peers by bringing up the subject of Cuba. Their immediate angry response, casting Castro as a dictator and killer, testify to the effectiveness of the American perception management ―Mighty Wurlitzer.‖ Rather than being an autocratic dictator, any leader that led a country to freedom, and made such great progress in eliminating poverty and hunger would gain the very loyalty and respect the Cuban people give their government.
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Far fewer people died in the Cuban revolution than in most, and those who were killed were Cubans cooperating with the American government in the attempted suppression of Cuban freedom. That Cuba was ever a military threat is totally silly. No serious diplomat of state thought the Soviets, China, or anyone else was going to invade any country in the powerful Western bloc. It was Cuba‘s rapid, exemplary successes in bettering the living standards of her people, which, if allowed to succeed, would have made it impossible to control the governments and resources of other impoverished nations that was the threat. After the Soviet Union was destabilized, one of the conditions for financial help was that it withdraws its support of Cuba. This effectively isolated their economy. Building cranes went silent for lack of building materials, machinery was idled for lack of spare parts, and the once prosperous Cuban economy rapidly regressed. Their economy has turned back up as a trade alliance of Venezuela, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, and China, who are bringing them into their trade agreements. As these countries now understand how they have been destabilized in the past and denied their right for economic development, the only way their alliance and economic development—the on-going Bolivarian Revolution—can be prevented, is by direct military conquest. The same scene is rapidly developing in Africa, triggering U.S. attempted establishment of AFRICOM, which so far has been denied bases on African soil. Meantime, Cuban doctors are going to the poorest regions of the world‘s poorest countries to provide medical care. Cuba is now providing free medical scholarships to students from poor nations, and has provided 50 free scholarships to poor American students with the understanding they will practice in the poorer parts of the U.S., which are currently short of good doctors.28 By 2015, 4.5 million blind Latin Americans will have their sight restored by Cuban doctors, all without charge. Forty percent of Cuba‘s 70,000 doctors are in impoverished countries providing medical care. Cuban educators set up schools in Venezuela, and in 2005 that country was declared fully literate. The program has expanded to Bolivia which is planning on their citizens being fully literate within five more years. There is the high possibility most Latin Americans will be literate within 20 years. If that education program is expanded to the Telesur-Bolivar satellite systems, and fiber-optic land lines as outlined in Chapter 24, they will be educated both quicker and better. Under their direct democracy that country was shut down for three days to debate a change in their constitution. We were mesmerized watching 15-year-olds, 20-year-olds, 30-year-olds, and 60-year-olds give passionate televised speeches on the merits of those changes. In a country that we are taught is a violent and ab-
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usive dictatorship; its citizens debate, and vote, directly on their laws. These welleducated passionate people would have been uneducated, impoverished and shoeless under any typical Western puppet government. Today they are, except for America‘s embargo trying to strangle their economy, fully free, equal, and trying to build a peaceful and productive society. So much for Cuban terrorists! An incomplete list of other destabilizations would be: One coup per year for 16 years in Laos; in Haiti, the installation of the brutal "Papa Doc" Duvalier; in the Dominican Republic, the assassination of Rafael Trujillo; the overthrow of freelyelected Juan Bosch; in Ecuador; the overthrow of Jose Velasco; in the Congo, assassination of the freely elected Patrice Lumumba; in Brazil, the overthrow of the freely-elected government of Joao Goulart; a military coup in Greece to prevent a labor government after WWII; in Cambodia, the overthrow of Prince Sahounek; in Bolivia, the overthrow of Juan Torres, and that is a small part of the list..
Orchestration of Death Squads and Writing History Those who control history control the future. It is understandable the United States is using its immense power to prevent the establishment of an ―International Criminal Court‖ with authority to judge the planners and perpetrators of these atrocities. If such a court replaced the current ―International War Crimes Tribunal,‖ the assassins and torturers of the imperial nations, and the leaders who ordered those criminal secret operations may still be recorded in history for the horrors and atrocities they committed. The powerful, currently protected because their acts are unrecorded in history, and thus largely unknown, would be immediately weakened as their illegal acts were put on record. The power of the suppressed masses would be simultaneously strengthened. When U.S.-trained covert operatives are caught in criminal acts that are extensions of these operations, typically they are not charged in U.S. courts. To do so would require opening those CIA records so—even though every operation is the total antithesis of law, justice, honesty, and right—these charges are dismissed, or never brought to court in the first place. We saw this scene played out with seven Cuban defectors set for trial in Puerto Rico for plotting to kill Fidel Castro of Cuba. Threatening to expose the fact that their assassination project was only an extension of the spreading of exotic livestock and human diseases in Cuba, burning Cuban cane fields, blowing an airliner with a champion Cuban fencing team, and other innocent people, out of the sky, and the many other covert operations they were trained for by the CIA, including the now well-known 30-year-effort to assassinate Castro, naturally they were acquitted. An attempt was made to assassinate Chou En Lai of China, second in power only to Mao Zedong. The plane was successfully sabotaged when it landed to refuel outside of China; all aboard were killed. However, Chou En Lai had taken
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another plane. This was a precursor to sabotaging the plane with the Cuban champion fencing team, and these were far from the only such Western statesponsored assassinations of fundamentally nonviolent and peaceful leaders and potential leaders.29 In Confessions of an Economic Hit Man John Perkins alerts us that Panama‘s President Omar Torrijos and Ecuador‘s President Jamie Roldos were assassinated by the CIA because they refused to be corrupted. Those highlevel assassinations were professional hit men, called on when there was no other way to control a nation or its leaders. At the level of control of the masses, death squads were killing teachers, professors, labor leaders, cooperative leaders, and church leaders. Those killed were not the terrorists and killers we are told. They were the budding Washingtons, Jeffersons, Madisons, Gandhis, and Martin Luther Kings of those countries who were gaining followers. As they may some day lead their countries to freedom, they had to be eliminated. U.S.-sponsored state terrorism was greater than all other world terrorisms combined, state and private. Western nations together supported and guided many times more terrorism than the entire rest of the world.c And remember, much, if not most, private world terrorism is in reaction to these assaults—overt, covert, financial, and economic—that subvert the governments and economies of defenseless societies. On May 10th, 2000, at a speech in Berkeley, California, Secretary of State Madeleine Albright, one of the primary designers of trying Yugoslavs for war crimes, admitted what all diplomats knew: The U.S. ―raised the bar‖ high enough during the Rambouillet negotiations so ―Milosevic could not jump over it‖ because Yugoslavia needed a little bombing.‖ The U.S. dictated at Rambouillet that Yugoslavia either accepts the total occupation of Yugoslavia by NATO, or be bombed. As all diplomats agree that no nation could sign such an agreement, Rambouillet was a declaration of war, not a negotiation, and this means all who planned that war, and the massive destruction of Yugoslavia‘s civilian infrastructure, are war criminals. Though a few officers of the puppet forces in the Yugoslav destabilization had to be sacrificed, the focus was on indicting and convicting Serbian leaders Feisal Mansoor of Sri Lanka informed us that ―idealistic youths were being murdered by the SL state in 1987-1992, the elite did not move until one of their own (Richard De Zoysa, journalist and doyen of Colombo society) was taken away from his home at night, and found the next morning shot through the head on a beach South of Colombo.‖ Orchestrated death squads were operating in many countries we have not addressed. This is all being repeated in Iraq as I write; keywords ―let a thousand militias bloom, A.K. Gupta‖ or ―Iraq, Salvador Option,‖ for articles exposing these private militias as death squads. c
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and military officers, while the primary planners and enforcers of this externally planned destabilization of Yugoslavia were untouched. This court feigned balance by investigating the Rwandan slaughter of 500,000, but the terrorist acts of imperial centers—such as the slaughter of 5 million, and still counting, of the population of the Eastern Congo so they can steal their massive mineral wealth unhindered—will not go on this court‘s calendar. Quite simply, those court records are the writing of history, and these court decisions are designed to lock society within a belief system through destroying the reputation of targeted societies while leaving the imperial nations unblemished.d
Future Leaders of Nations Picked and Trained The CIA picked candidates in the emerging world for all-expense-paid educations at Milton Friedman's Chicago School of [neoliberal] Economics and other conservative institutions; these students went back to teach and run governments. To regain control of Chile, the CIA handpicked several hundred Chilean students for training at that School. So it went with military officers and students from all over the world. Money was always available for the "right students‖ to take the "right classes‖ under the "right professors‖ in America, others must fend for themselves.30 This was a continuation of William Pitt's imposition of Adam Smith free trade philosophy, as interpreted by neo-mercantilists, upon the defeated world to maintain its dependency. History is then written through the lens of that ‗belief system.‖ Those graduates which once found their way into power are now being pushed aside as new leaders, knowing America works through many of those same students to overthrow governments, push them to the margins. Steve Kangas provides an outline of how the world‘s breaks for freedom were suppressed: CIA operations follow the same recurring script. First, American business interests abroad are threatened by a popular or democratically elected leader. The people support their leader because he intends to conduct land reform, strengthen unions, redistribute wealth, nationalize foreign-owned industry, and regulate business to protect workers, consumers and the environment. So, on behalf of American business, and often with their help, the CIA mobilizes the opposition. First it identifies right-wing groups within the country (usually the military), and offers them a deal: "We'll put you in power if you maintain a favorable business climate for us." The Agency then hires, trains and works with them to overthrow the existing governFree Speech TVm Link TV, and list serves are exposing a lot. Go deeper through Google searches using keywords off these pages to find the information to decipher the true policies of state. William Blum, Rogue State: A Guide to the World’s Only Super Power (Monroe, ME: Common Courage Press, 2000), especially pp. 73-77, addresses the subject well. d
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ment (usually a democracy). It uses every trick in the book: propaganda, stuffed ballot boxes, purchased elections, extortion, blackmail, sexual intrigue, false stories about opponents in the local media, infiltration and disruption of opposing political parties, kidnapping, beating, torture, intimidation, economic sabotage, death squads and even assassination. These efforts culminate in a military coup, which installs a right-wing dictator. The CIA trains the dictator‘s security apparatus to crack down on the traditional enemies of big business, using interrogation, torture and murder. The victims are said to be "communists," but almost always they are just peasants, liberals, moderates, labor union leaders, political opponents and advocates of free speech and democracy.
Erasing the Records Also Writes History Strategies of Tension would fail if exposed. CIA agents are trained on how to write the historical record to protect themselves, and purging the records of damaging information is standard practice. In the Iran-Contra hearings, Americans watched on their nightly news as Colonel Oliver North testified he had shredded all records of that covert operation. When Congress was questioning the covert actions in Angola, John Stockwell, in charge of that destabilization, explained the CIA director, HW Bush, sent a young lawyer to his office to purge his files of any such records. Bush then testified to Congress, ―No files in the Agency corroborated any of the Congressional allegations.‖ The CIA and other intelligence agencies are going even further. They are finishing their writing of this history by destroying their covert action records, which, of course, then leaves only these tens of thousands of fraudulent articles and books, and no record of their dishonest creation or the orchestration of those destabilizations by powerful imperial centers.31 Argentina has also destroyed their records on assassinating 30,000 essentially peaceful people. Among them were nuns and teenagers with about 500 of them pregnant women who, after giving birth, went straight to the plane which dropped these drugged people into the Atlantic Ocean.32 Local operatives within those targeted countries did a sloppy job destroying records, and slowly those former leaders and their death squad operatives are being sentenced to prison. Only what is acknowledged or proven can be a part of the historical record. When someone does bring this government-imposed violence to light, the very people planning, or carrying out this violence, testify in front of Congress that it is not happening, the government denies to the people, and to the world, it is involved, and most of those records are erased before the 30 to 100 years the secrets legally run out. So, even if recorders of history, the media, are somehow informed that their government is responsible for extreme violence against innocent people, it does not get recorded in the papers and magazines of record, and thus does not get recorded in history. We owe defecting CIA agents and
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good researchers an enormous debt for bringing enough to light so the story can be told. South Africa‘s policy of amnesty for all who fully tell the story of their involvement in that country‘s state terrorism has also exposed these practices. But the South African government‘s poisonings, tortures, and assassinations pale into insignificance alongside those carried out under Western destabilization policies. We must remember the title of George Seldes‘s book, Even the Gods Can’t Change History, and his many examples of totally falsified events recorded as fact simply cannot get changed in the history books. Quite simply, the winners of wars write history, claims of a free press and free thought notwithstanding. Those old history books become the source for new history books, and the same falsifications of history are repeated. When listening to someone on a podium mouthing the politically correct statements of dictators and killers in Cuba or any other country that has been demonized as wanting to rule the world, you as an individual can break through that perception management (propaganda) blockade. When recognized to ask questions from the floor, here are some questions that will alert an audience that much in world history and world politics they took for granted was far from true: 1 ―How come our media and our political leaders did not inform us that Cuba, once as impoverished as other Latin American nations, attained the education and health care level of America, and is now spreading those skills to other poor nations? 2 How come only the countries of Latin America breaking free are able to end hunger and provide health care and education to their citizenry? 3 How come tens of millions of children in the world sleep in the street, including in America, and not one is Cuban? 4 How did Cubans rapidly increase their quality of life even as they were under total embargo by the West and American covert assaults burned their cane fields, spread exotic diseases to their livestock and the human population, killing over 150 Cuban children and forcing the slaughter of thousands of livestock, blew up railroad trestles dumping trains into the ravine, and blowing a Cuban airliner out of the sky with Cuba‘s champion fencing team aboard? 5 Why were we not informed of the over 730 American airmen who were shot down over the Soviet Union during the Cold War, were either killed in the crash, or finished out their lives in Soviet prisons, while their family were told any of dozens of cover stories of how they died? 6 It is undemocratic and illegal in America and any other country for another country to be involved in their elections. How come America heavily financed
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and guided elections in almost every country of the world, including those in Western Europe after WW II? 7 By what right did America orchestrate the assassination by death squads of thousands of budding Washingtons, Jeffersons, Martin Luther Kings, and Gandhis when they were losing control of elections in El Salvador, Guatemala, Nicaragua, and dozens of other tiny countries? 8 By what right did America destabilize governments that, in spite of the above named covert U.S. efforts, were democratically elected, Chile, Guatemala, Ecuador, Panama, Iran, and Indonesia is an incomplete list? 9 What does dictating policy to the world do to our language when those assaulted countries, with multiple political parties, and some—such as the former Soviet Union‘s participatory democracy whose citizens‘ representatives had direct instructions from the voters on how to vote on issues, very similar to American ballot initiatives? Why is Cuba labeled a dictatorship when they vote directly on the laws, a direct democracy, while the countries which did all I have just described, and which have effectively kept direct voting on laws out of their political systems, are labeled as democracies?
The Battle for Trade Supremacy Continues As a participant writing the training manuals and briefing presidents and pentagon chiefs on these covert operations, Colonel Prouty points out: One of the least-known divisions of the CIA is that headed by the Deputy Director of Economics. This division moves into a country to work with a new regime and to begin the task of selecting and setting up new franchise holders for as many goods as possible to assure that they are imported from American companies and that those from other sources, formerly the Soviet sphere in particular, are excluded.... The CIA screens and selects these new ―millionaires‘ and arranges for them to meet with various companies they will front for under the new regime. It might be said that this cleansing of the economic system is the real reason for most of the coups d‘état and that political ideology has very little to do with it.... Some of the more daring, in an attempt to escape the severe financial and profit-making controls placed upon them and their government by U.S. manufacturers and by the canopy of international banks that is spread over all imports and exports to their country, attempt to make deals with other countries. They believe they may be able to buy essential goods cheaper that way and to sell their labor and resources at better rates.... As such actions increase, the national leadership will be increasingly attacked by the United States on the grounds that it is turning toward communism and becoming a base for the infiltration of the communist ideology and military system into the hemisphere.33
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Various countries have proven America‘s worldwide listening posts, utilizing ECHELON, CARNIVORE, EINSTEIN, and TEMPEST, software operated by the National Security Administration, have stolen proprietary corporate and government information and passed that information on to American corporations and trade negotiators. American corporations were then able to patent what others invented and American trade negotiators knowledge of other governments‘ bottom lines gave them an unassailable advantage in negotiations.34 Throughout much of the Cold War the entire world was kept track of through Operation Statewatch. Those breaking free via the ballot box were targeted for destabilization. Countries alert enough to avoid covert takeovers of their economies faced open warfare. The cover stories justifying the invasion of Iraq in 2003 were in tatters so the final cover is that America is bringing democracy to the Middle East. Expanding upon this bold view, on August 5, 2004, the Office of the Coordinator for Reconstruction and Stabilization was established. Their mandate was to keep track of nations, just as Operation Statewatch had formerly done, and privatize the economies of up to three nations at a time. The legal structure of nations would be changed before the citizenry would realize what was happening.e Total privatization was the plan, property rights laws establishing aristocratic exclusive titles to all nature’s resources and technologies, so as to deny others their rightful share of what nature offers to all for free. The bottom line is always the same, lock the world into monopoly capital‘s legal structure, Adam Smith fictional free trade and aristocratic exclusive title to nature‘s resources and technologies properly shared by all, hold down the price of labor, control the price of commodities required to run industry, through those low wages prevent the development of consumer markets on the periphery of empire, and thus siphon the wealth of the world to the imperial-centers-of-capital. There we have it. All Western intelligence agencies have been, and are still in, the business of destabilizing developing ―resource powers‖ so as to maintain their dependency. It is the dependency of weak nations that maintains the flow of the world‘s natural wealth to powerful nations‘ industries at a low price and provides markets for those industrial products at a relatively high price. The military forces of today‘s powerful nations are for the same purpose as those raiding parties from the city states 800 years ago, as addressed in chapter two. Those are attributes of fascism, and everything is in place for that in America itself. In End of America Naomi Wolf explains the ten steps that all such societies In The Shock Doctrine: The Rise of Disaster Capitalism, 2007, Naomi Klein thoroughly addresses the philosophical foundation for the covert actions discussed in this chapter and their horrors. Countries will be waiting to try the designers and managers of these war crimes if they ever set foot on their soil. e
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went through to reach that stage: 1) Evoke an external and internal threat. 2) Establish secret prisons. 3) Surveil ordinary citizens. 4) Develop a paramilitary force. 5) Infiltrate citizen groups. 6) Arbitrarily detain and release citizens. 7) Target key individuals. 8) Restrict the press. 9) Cast criticism as espionage and dissent as treason. 10) Subvert the rule of law.35 All that was taking place in America under George W Bush‘s presidency, and our fingers are crossed that President Barack Obama will change those policies which have been in place for 65 years in America, and for centuries in Europe. Covert Action Information Bulletin (Summer 1987): p. 28. Bernard Grun, Timetables of American History (New York: Simon and Schuster, 1979); L. Fletcher Prouty, JFK: The CIA, Vietnam, and the Plot to Assassinate John F. Kennedy (New York: Birch Lane Press, 1992), pp. 33-36; W. Bello, U.S. Sponsored Low Intensity Conflict in the Philippines ( San Francisco: Institute for Food & Development Policy December, 1987); S. Karnow, In Our Image: America's Empire in the Philippines (New York: Random House, 1989); Fred Poole, and Max Vanzi, Revolution in the Philippines: The United States in A Hall of Cracked Mirrors (New York: McGraw-Hill, 1984); Daniel B. Schirmer and Stephen Rosskamm Shalom, The Philippines Reader: A History of Colonialism, Dictatorship, and Resistance (Boston: South End Press, 1987); William Blum, The CIA: A Forgotten History (London: Zed Books, 1986); C.B. Currey, Edward Lansdale: The Unquiet American (Boston: Houghton Mifflin Company, 1988); R. Constantino and L.R. Constantino, The Philippines: The Continuing Past (Quezon City, Philippines: The Foundation for Nationalist Studies, 1978); G. Porter, "The politics of counterinsurgency in the Philippines: Military and Political Options," Philippine Studies Occasional Paper No. 9 (Honolulu, HI: University of Hawaii, Center for Philippine Studies, 1987); R. Bonner, Waltzing with a Dictator (New York: Times Books 1987); J. Prados, The Presidents' Secret Wars (New York: William Morrow, 1986) and The President’s Secret Wars, rev. Warwick: Elephant Paperbacks, 1996; K. Nair, Devil and His Dart: How the CIA is Plotting in the Third World (New Delhi: Sterling Publishers, 1986); Bulletin of Concerned Asian Scholars, Boulder, CO, many issues; E. G. Lansdale, In the Midst of Wars (New York: Harper & Row, 1972); D.S. Blaufarb, The Counterinsurgency Era: U.S. Doctrine and Performance 1950 to Present (New York: The Free Press, 1977); E. Thomas, The Very Best Men, Four Who Dared: The Early Years of the CIA (New York: Simon & Schuster, 1995); J. Ranelagh, The Agency (New York: Simon & Schuster, 1986); Michael T. Klare and P. Kornbluh, Low Intensity Warfare (NY: Pantheon Books, 1988). 3 Frederic F. Clairmont, Rise and Fall of Economic Liberalism (Goa, India: The Other India Press, 1996), p. 223. Smedley D. Butler, War is a Racket (Los Angeles: Feral House, 2003) 4 Amir Taheri, Nest of Spies: America's Journey to Disaster in Iran (New York: Pantheon Books, 1988); Said K. Aburish, A Brutal Friendship: The West and the Arab Elite (New York: St. Martin‘s Press, 1998); Richard Labeviere, Dollars for Terror: The United States and Iran (New York: Algora Publishing, 2000), p. 44; Burton Hersh, The Old Boys: The American Elite and the Origins of the CIA (New York: Charles Scribner's Sons, 1992), 330-34; Kermit Roosevelt, Countercoup: The Struggle for the Control of Iran (New York: McGraw-Hill 1979): C. Andrew, For the President's Eyes Only: Secret Intelligence and the American Presidency from Washington to Bush (New York: HarperCollins Publishers, 1995), pp. 203-05. 5 Taheri, Nest of Spies, pp. 122-126. 6 Clifford E Singer, Energy and International War, 2008, volume 6, and similar books on Amazon.com; Larry Everest, Oil, Power, and Empire: Iraq and the U.S. Global Agenda (Common Courage Press, Monroe, 2004); Lutz Kleveman, The New Great Game: Blood and Oil in Central Asia (New York: Atlantic Monthly Press, 2003); Kevin Phillips, American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush (New York: Penguin Books, 2003); Christopher Scheer, Robert Scheer, and 1
2
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Lakshmi Chaudhry, The Five Biggest Lies Bush Told us About Iraq (Seven Stories Press, 2003); Michel Chossudovsky, War and Globalization: The Truth Behind September 11 (Ontario: Global Outlook, 2002); Neil Mackay, ―Bush Planned Iraq ‗Regime Change‘ Before Coming President,‖ The Sunday Herald (Scotland), September 15, 2002; Dan Morgan and David B Ottaway, ―In Iraqi Oil Scenario, Oil is Key Issue: U.S. Drillers Eye Huge Petroleum Pool,‖ Washington Post, September 14, 2002; Scott Peterson, ―In War, Some Facts Less Factual,‖ The Christian Science Monitor September 6, 2002; Milan, Rai, Regime Unchanged (Sterling: Pluto Press, 2003); Solomon, Norman, Target Iraq: What the News Media Didn’t Tell you (New York: Context Books, 2003); Ali, Tariq, Bush in Babylon: The Recolonization of Iraq (New York: Verso, 2003); Hiro, Dilip, Secrets and Lies: Operation Iraqi Freedom and After, A Prelude to the Fall of U.S. Power in the Middle East (New York: Nation Books, 2004); Ali, Tariq, The Clash of Fundamentalisms: Crusades, Jihads and Modernity (New York: Verso, 2002); Briody, Dan, The Iron Triangle: Inside the Secret World of the Carlyle Group (Hoboken, Wiley and Sons, 2003); Ivins, Molly, and Lou Dubose, Bushwhacked: Life in George Bush’s America (New York: Random House, 2003); Chossudovsky, Michel, War and Globalization: The Truth Behind September 11(Shanty Bay, Ontario: Global Outlook, 2002); Chomsky, Noam, 9-11 (New York: Seven Stories Press, 2002); Zinn, Howard, Terrorism and War (New York: Seven Stories Press, 2002); Parenti, Michael, The Terrorism Trap: September 11 and Beyond (San Francisco: City Lights Books, 2002); Bill Powell, ―Iraq We Win, Then What, Fortune November 5, 2002, pp. 61-72; Milan Rai, War Plan Iraq (London: Verso Press, 2002); William Rivers Pitt, Scott Ritter, War on Iraq (New York: Context Books, 2002). 7 Mackay, ―Bush Planned Iraq ‗Regime Change‘‖; W. Clark, ―The Real Reason for the upcoming War with Iraq, Run a Google Search 8 Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Metropolitan Books, 2007). 9 Dan Jacobs, The Brutality of Nations (New York: Alfred A. Knopf, 1987), especially p. 5. 10 Stockwell, Praetorian Guard, p. 78. 11 The Costs of War,‖ The Nation, December 24, 1990: p. 793; Matthew Cooper, ―Give Trade a Chance,‖ U.S. News & World Report, February 14, 1994, p. 20; C. Robbins, The Ravens: The Men Who Flew in America's Secret War (New York: Crown Publishers, 1987), p. 332; Prouty, JFK, p. 55; V. Levant, Quiet Complicity: Canadian Involvement in the Vietnam War (Toronto, Canada: Between the Lines, 1986), p.46. 12 John Prados, The Hidden History of the Vietnam War (Chicago: Elephant Paperbacks, 1995); G.M. Kahin and J.W. Lewis, United States in Vietnam (New York: Dell Publishing Company, 1969); M. Gettleman, J. Franklin, M. Young, and B. Franklin, Vietnam and America: The Most Comprehensive Documented History of the Vietnam War (New York: Grove Press, 1995); Pentagon Papers: The Defense Department History of United States Decision Making on Vietnam, Senator Gravel, ed. (Boston: Beacon Press, 1971); L. Ackland, Credibility Gap: A Digest of the Pentagon Papers (Philadelphia, PA: The National Literature Service. 1972); O. DeForest and D. Chanoff, Slow Burn (New York: Simon and Schuster, 1990); N. Sheehan, A Bright Shining Lie (New York: Random House, 1988); Currey, Edward Lansdale; Prouty, JFK; Committee of Concerned Asian Scholars, The Indochina Story: A Fully Documented Account (New York: Pantheon Books, 1970); Frank Snepp, Decent Interval (New York: Random House, 1977); M. Young, The Vietnam Wars 1945-1990 (New York: HarperCollins, 1991); Douglas Valentine, The Phoenix Program (New York: William Morrow, 1990); D. Kaplan, Fires of the Dragon: Politics, Murder and the Kuomintang (NY: Atheneum, 1992); K. Conboy and J. Morrison, Shadow War: The CIA's Secret War in Laos (Bolder, CO: Paladin Press, 1995); Bulletin of Concerned Asian Scholars. 13 B. Cook, The Declassified Eisenhower (Garden City, NY: Doubleday, 1981), pp. 228-29; see also L. Shoup, W. Minter, Imperial Brain Trust: The Council on Foreign Relations & United States Foreign Policy (New York: Monthly Review Press, 1977); Hersh, Old Boys; Robin Winks, Cloak & Gown: Scholars in the Secret War, 1939-1961 (New York: Quill, 1987).
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Stephen Schlesinger and Stephen Kinzer, Bitter Fruit (New York: Anchor Press/Doubleday, 1984); Peter Grose, Gentleman Spy : The Life of Allen Dulles (Boston: University of Massachusetts Press, 1996). 15 N. Miller, Spying for America (New York: Paragon House, 1989); P. Gleijeses, Shattered Hope: The Guatemalan Revolution and the United States 1944-1954 (Princeton, NJ: Princeton University Press, 1991); H.J. Hunt, Undercover: Memoirs of an American Secret Agent (New York: Berkeley Publishing, 1974). 16 United Nations Guatemalan Truth Commission Report carried on AP wires February 25, 1999; Beatriz Manz Refugees of A Hidden War: The Aftermath of Counterinsurgency in Guatemala (New York: State University of New York, 1988); Jean-Marie Simon, Guatemala: Eternal Spring Eternal Tyranny (New York: W. W. Norton, 1988); Susanne Jonas, The Battle for Guatemala: Rebels, Death Squads, and U.S. Power (San Francisco: Westview Press, 1991); Michael McClintock, The American Connection: State Terror and Popular Resistance in Guatemala (London: Zed Books, 1985); B. Cook, The Declassified Eisenhower; Thomas, Very Best Men; D.A, Phillips, The Night Watch (New York: Atheneum 1977); T. McCann, An American Company: The Tragedy of United Fruit (New York: Crown Publishers, 1976); Andrew, For the President's Eyes Only; Eduardo Galeano, Guatemala: Occupied Country (New York: Monthly Review Press, 1969); J. Heidenry, Theirs Was the Kingdom: Lila and Dewitt Wallace and the Story of the Reader's Digest (New York: W.W. Norton, 1993), pp. 594-97; CovertAction Quarterly; Counterspy; run library database searches for anything written by Allen Nairn; Blum, The CIA; Blum, Rogue State, chapters 3-10 and chapter 17; and his book Killing Hope: U.S. Military Interventions Since World War II (Monroe, Me: Common Courage Press, 1995). 17 Lucy Komisar, ―Documented Complicity: Newly Released Files set the Record Straight on U.S. Support for Pinochet,‖ The Progressive, September, 1999, pp. 24-27; Blum, Rogue State, chapter 17; Samuel Chavkin, The Murder of Chile (New York: Everest House, 1982); John Dinges, Saul Landau, Assassination on Embassy Row (New York: Pantheon Books, 1980); Blum, Forgotten History, pp. 232-43; Blum, Killing Hope; R.L. Borosage and J. Marks, ed., The CIA File (New York: Grossman Publishers, 1976); Church Committee Report (1975-1976); William Colby, Honorable Men (New York: Simon & Schuster, 1978), pp. 302-06; M. Copeland, Beyond Cloak and Dagger (New York: Pinnacle Books, 1975), note 221; Counterspy, Spring/Summer 1975, pp. 43-47; Louis Wolf, review of The American Federation of Teachers and the CIA, by George Schmidt, CovertAction Quarterly 2 (October 1978); Fred Landis, ―CIA Media Operations in Chile, Jamaica, and Nicaragua,‖ CovertAction Quarterly 16 (March 1982), pp. 42-43; Fred Landis, ―Opus Dei: Secret Order Vies for Power,‖ CovertAction Quarterly 18 (Winter 1983), pp. 14-15; Louis Wolf, ―Inaccuracy in the Media: Accuracy in Media Rewrites the News and History,‖ CovertAction Quarterly 21 (Spring 1984), pp. 31-32; Fred Landis, ―Moscow Rules Moss‘s Mind,‖ CovertAction Quarterly 4 (Summer 1985), pp. 37-38; Stella Calloni, ―The Horror Archives of Operation Condor,‖ CovertAction Quarterly 50 (Fall 1994), pp. 11, 13, 58-59; Darrin Wood, ―Mexico Practices What School of America Teaches,‖ CovertAction Quarterly 59 (Winter 1996-97), pp. 38-53; Lisa Haugaard, ―Textbook Repression: US Training Manuals Declassified,‖ CovertAction Quarterly 61 (Summer 1997), pp. 29-38; Michael Ratner, ―The Pinochet Principle,‖ CovertAction Quarterly 66 (Winter 1999), pp. 46-48; H. Frazier, ed, Uncloaking the CIA (New York: The Free Press, 1978), 34-54, 6063; F.S. Landis, ―Psychological Warfare and Media Operations in Chile 1970-1973‖ (Doctoral dissertation, University of Illinois, 1975): pp. 4, 14, 235, 254, 309-312; Victor Marchetti, J.D. Marks, The CIA and the Cult of Intelligence ( New York: Alfred A. Knopf, 1974), especially p. 17; Nair, Devil and His Dart; Prados, Presidents' Secret Wars, 1996 ed., p. 319; Ranelagh, Agency, pp. 514-520; J. Richelson, American Espionage and the Soviet Target (New York: William Morrow, 1987), pp. 232-33; R.R. Sandford, The Murder of Allende, trans. A. Conrad (New York: Harper & Row, 1975); Stansfield Turner, Secrecy and Democracy: The CIA in Transition (Boston: Houghton Mifflin Company, 1985), pp. 80-81, 113, 191; A. Uribe, The Black Book of American Intervention in Chile (Boston, MA: Beacon Press, 1975); Rayack, Not 14
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So Free to Choose: The Political Economy of Milton Friedman and Ronald Reagan (Westport, Conn: Praeger, 1986); Hersh, Old Boys; Winks, Cloak & Gown; Juan José Arévalo, Anti-Kommunism in Latin America (New York: Lyle Stewart, 1963). 18 P. Gunson, A. Thompson, G. Chamberlain, The Dictionary of Contemporary Politics of South America (NY: Routledge, 1989), p. 228; Rayack, Not so Free to Choose. 19 Marc Cooper, Chile and the End of Pinochet,‖ The Nation (February 26, 2001), pp. 11-18. 20 Greg Palast, The Best Democracy Money Can Buy, has a much deeper analysis that is a must read for the serious researcher. Duncan Green, Silent Revolution (London: Cassel, 1995), pp. 101, 108; Noam Chomsky, Deterring Democracy (New York: Verso, 1992), p. 231; Thomas Skidmore, Peter Smith, ―The Pinochet Regime,” Modern Latin America (New York: Oxford University Press, 1989), pp. 137-38.; Rayack, Not so Free to Choose; Silvia Bortzutzky, "The Chicago Boys, Social Security and Welfare in Chile," The Radical Right and the Welfare State; Howard Glennerster, James Midgley, editors (Barnes and Noble import, 1991), pp. 88, 91, 96.. 21 Rayack, Not so Free to Choose; Bortzutzky, " Chicago Boys,‖ pp. 88, 91, 96; Walden Bello, Dark Victory: The United States and Global Poverty (San Francisco: Institute for Food and Development Policy, 1999), pp. 42-45, 58-59. See also above three notes. Statistics on labor‘s share of income is from James Petras and Henry Veltmeyer, ―Latin America at the End of the Millennium,‖ Monthly review (July/Aug. 1999), p. 44. 22 United Nations Commission on the Truth in El Salvador, From Madness to Hope: The 12-Year War in El Salvador (U.N. Security Council, 1993); Charles Kernaghan, ―Sweatshop Blues,‖ Dollars and Sense (March/April, 1999); Blum, Rogue State, chapter 17; Michael McClintock, The American Connection: State Terror and Popular Resistance in El Salvador (London: Zed Books, 1985); Blum, The CIA, pp. 23243; Blum, Killing Hope; Dennis Volman, "Salvador Death Squads, a CIA connection?" The Christian Science Monitor, May 8, 1984, p. 1; many issues of the CovertAction Quarterly and Counterspy; Klare & Kornbluh, Low Intensity Warfare; Edward S. Herman, F. Broadhead, Demonstration Elections: U.S. Staged Elections in the Dominican Republic, Vietnam, and El Salvador (Boston: South End Press, 1984); Jonathan Kwitny, Endless Enemies: The Making of an Unfriendly World (New York: Congdon & Weed, 1984) . 23 Blum, Rogue State, chapter 17; William I. Robinson, A Faustian Bargain: U.S. Intervention in the Nicaraguan Elections and American Foreign Policy in the Post-Cold War Era (Boulder, CO: Westview Press, 1992); Peter Kornblush, Nicaragua, The Price of Intervention: Reagan’s War Against the Sandinistas (Washington, DC: Institute for Policy Studies, 1987); Reed Brody, Contra Terror in Nicaragua: Report of A Fact Finding Mission: September 1984-January 1985 (Boston: South End Press, 1985); The Rise and Fall of the Nicaraguan Revolution (New York: New International, 1994); Garvin, G., Everybody Has His Own Gringo: The CIA and the Contras (New York: Brassey's,1992); Peter Kornbluth and M. Byrne, The IranContra Scandal: The Declassified History (New York: A National Security Archive Documents Reader, The New Press, 1993); Twentieth Century Fund, The Need to Know: The Report of the Twentieth Century Fund Task Force on Covert Action and American Democracy (New York: The Twentieth Century Fund Press, 1992); E. Chamorro, "Packaging the Contras: A Case of CIA Disinformation." Institute for Media Analysis, Inc. Monograph Series Number 2 (New York, Institute for Media Analysis, Inc, 1987); Minnick, Spies and Provocateurs; John Prados, Keepers of the Keys: A History of the National Security Council from Truman to Bush (New York: William Morrow, 1991); Loch .K. Johnson, America's Secret Power (New York: Oxford University Press, 1989); C,D. Ameringer, U.S. Foreign Intelligence (Lexington, MA: Lexington Books, 1990); H.B. Westerfield, ed., Inside CIA's Private World: Declassified Articles from the Agency's Internal Journal 1955-1992 (New Haven, CT. Yale University Press, 1995); J. Marshall, P.D. Scott, and J. Hunter, The Iran-Contra Connection (Boston, MA: South End Press, 1987); P.V. Parakal, Secret Wars of the CIA (New Delhi: Sterling Publishers, 1984); Christopher Simpson, Blowback (New York: Weidenfeld & Nicolson, 1988); National Endowment for Democracy, Annual Report.
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Blum, Rogue State, chapters 3-10; John Stockwell, In Search of Enemies (New York: W.W. Norton, 1978), especially pp. 43, 63-64, 272; Stockwell, Praetorian Guard; Jonathan Kwitny, The Crimes of Patriots (New York: W. W. Norton, 1987); Clarridge, A Spy for all Seasons; H. Rositzke, The CIA's Secret Operations (New York: Thomas Y. Crowell Company, 1977); S. Gervasi and S. Wong, ―The Reagan Doctrine and the Destabilization of Southern Africa‖ (Unpublished paper from McGehee's CIABASE, April 1990); B. Freemantle, CIA (New York: Stein and Day, 1983), p. 68. 25 Blum, Rogue State, chapter 17; Gervasi and Wong, Reagan Doctrine, pp. 56-57; W. Minter, Apartheid's Contras: An Inquiry into the Roots of War in Angola and Mozambique (London, ZED Books, 1994). 26 Stockwell, In Search of Enemies, pp. 10, 105, 137, 169, 172, 236-37; Blum, Rogue State, chapter 17; Sean Kelly, America’s Tyrant: The CIA and Mobutu of Zaire (Washington DC: American University Press, 1993); D. Gibbs, The Political Economy of Third World Intervention: Mines, Money and U.S. Policy in the Congo Crisis (Chicago, IL: University of Chicago Press, 1991); R. L. Borosage, J. Marks, The CIA File (New York: Grossman Publishers, 1976); Gervasi and Wong, Reagan Doctrine; Prados, Presidents Secret Wars; Kwitny, Endless Enemies; Blum, Killing Hope. 27 Blum, Rogue State, chapters 3-10; Stephen Endicott and Edward Hagerman, The United States and Biological Warfare: Secrets from the Early Cold War and Korea (Bloomington, IN: Indiana University Press, 1998); Minnick, Spies and Provocateurs, especially p. 262; R. Ridenour, Back Fire: The CIA's Biggest Burn (Havana, Cuba: Jose Marti Publishing House, 1991), especially pp. 73, 77-78, 145-49; Prados, Presidents Secret Wars, 1996 ed., pp. 333, 337, 349; Prados, Keepers of the Keys, especially pp. 142-44, 203-317; J.T. Richelson, The U.S. Intelligence Community (Cambridge, MA: Ballinger Publishing Company, 1985), especially p. 231; P.V. Parakal, Secret Wars of the CIA (New Delhi: Sterling Publishers, 1984); R. S. Cline, Secrets, Spies, and Scholars (Washington, DC: Acropolis Books, 1976), especially p. 195; Garwood, Under Cover, especially p. 92; P. Wyden, Bay of Pigs, the Untold Story (New York: Simon and Schuster, 1979); D. Martin, Wilderness of Mirrors (New York: Harper & Row, 1980), especially pp. 151-53; Ranelagh, Agency, especially pp. 356-60; G. Treverton, Covert Action, The Limits of Intervention in the Postwar World (New York, NY: Basic Books, Inc., Publishers, 1987); D. Corn, Blond Ghost: Ted Shackley and the CIA's Crusades (New York: Simon & Schuster, 1994); L.F. Prouty, The Secret Team (Englewood Cliffs, NJ: Prentice-Hall, 1973); Borosage and Marks, CIA File; Hersh, Old Boys; Thomas, Very Best Men; Jeffreys-Jones, R., The CIA & American Democracy (New Haven: Yale University Press), 1989; B. Watson, S. Watson, and G. Hopple, United States Intelligence: An Encyclopedia (New York: Garland Publishing, 1990); Covert Action Information Bulletin; Counterspy. 28 Castro, Capitalism in Crisis, p. 138; Nadia Marsh, M.D., ―U.S. Med Students Arrive in Cuba,‖ The Workers’ World, April 19, 2001. 29 Blum, Rogue State, chapters 3-10; Prados, Presidents’ Secret Wars, 1996 ed., pp. 333, 337, 349; Garwood, Under Cover, pp. 60-64; Church Committee Report (1976), Congressional Record; Blum, The CIA, p. 108. 30 Prouty, JFK, pp. 244-45. 31 Stephen Schlesinger, "The CIA Censor's History," The Nation, July 14, 1997, pp. 20-22; Stockwell, Praetorian Guard, p. 21. 32 Epstein, Jack, ―Argentina‘s ‗Dirty War‘ Laundry May Get a Public Airing,‖ The Christian Science Monitor, December 4, 1997,p. 7; Blum, Rogue State, chapters 3-5-14-17, and 18. 33 Prouty, JFK, pp. 236-37, 341. 34 Blum, Rogue State, chapter 21. 35 Naomi Wolf, End of America, White River Jct, VT, Chelsea Green Pub, 2007 24
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9. Creating Enemies for the Masses Locks Society Within A Belief System
Controlling the thoughts of a citizenry has been going on probably forever. If we are to understand the process today, we must understand how it was accomplished through the centuries.
The Inquisitions of the Middle Ages The Inquisitions of the Middle Ages were, and the Inquisitions of today still are, to prevent democratic choice. The Roman emperors Constantine and Theodosius I, in the early 4th century AD, along with Justinian I, made the Catholic Church the state religion. Over the next 700 years aristocracy migrated towards positions of power in the higher offices of the church, those of bishops, cardinals, and pope. Where the church and its people were once one, the church hierarchy, First Estate, and aristocracy, Second Estate, were now one; there was now a distinct division between the church leaders and the common people. From their new power base running the church, the combined First and Second Estates sold indulgencies and salvations. The common people were terrified of Purgatory; the last bit of wealth could be extracted from those who hoped to be saved, and go straight to heaven. Edward Burman, in The Inquisition, from which this chronology is taken, explains that, with the returning Crusaders, in the late 11th and early 12th centuries, came various unorthodox Christian beliefs filtering into Europe from Jerusalem. Some of these beliefs permitted each person to find his or her own way to heaven and, primarily the well-organized and rapidly expanding Cathars and Waldensians, openly frowned on a wealthy, licentious, church. Others were drawing away church members by competing claims of miraculous cures. All powerbrokers fear the expansion of the political power of others while their own power shrinks. Such was the Church‘s fear of these competing beliefs. The Albigensian Crusade (1209-1229) was organized by Pope Innocent III to destroy the Cathars of southern France with their threatening doctrines, and parallel organization of dioceses, headed by bishops. This was the largest of various efforts to suppress heresies since the middle of the 10th century. Retaining control required locking
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the masses within a belief system, through a strategy of tension, portraying the Cathars as a dangerous enemy, in this case as infidels and heretics, to justify their slaughter and the theft of their wealth. The burning of heretics at the stake for 200 years, coalesced, between 1123 and 1206, into the formal Inquisition. In 1206 and 1210, Pope Innocent III founded the Franciscan and Dominican Mendicant Orders to preach against heresy; and in 1215, the Latern Council was held which listed, ―clause by clause,‖ heretical interpretations of the faith, the removal from office of heretics, confiscation of their property, excommunication, and their referral to the feudal lords for punishment. With the Cathars fleeing to other sections of Europe, to escape certain death from zealous inquisitors and secular lords, between 1227 and 1252, Pope Gregory IX and Pope Innocent IV issued several bulls further encoding, and formalizing, the form of the Inquisition. ―The Inquisition was ready to start work on a grand scale shortly after the mid-point of the 13th century‖ and, as the threatened Christian sects went underground, Popes Alexander IX, Urban IV, Clement IV, and Boniface VIII, issued bulls to maintain momentum and root out the last vestiges of threat to their power. Franciscan and Dominican priests, organized to lead heretics back to the fold, evolved into a few zealous priests becoming inquisitors and torturers. They condemned hundreds of thousands of heretics to burn at the stake over a period of 700 years; the majority being Cathars, Waldensians, Jews, and Muslims. As religious competitors disappeared regionally, Freemasons, alleged witches, midwives, and personal enemies, were targeted. ―Only the fear of losing power acquired over a period of a thousand years can explain such violent reactions.‖1 Because, not having to believe in buying one's way out of salvation would draw people from the state church, the Cathars were headed for extinction. The Cathars, the Waldensians, and smaller sects throughout Europe were suppressed by 1270, but Jews and Muslims survived as a political force on an ever-shrinking part of the Iberian Peninsula. We are taught that Roman pagans tortured Christians. But, in reality, the alliance between Church and state extinguished both paganism and competing Christian sects through extreme violence and ―the number of Christians executed by other Christians in a single province during the reign of Charles V [alone] far exceeded that of all the martyrs who perished at the hands of the pagans throughout the Roman Empire in the space of three centuries.‖2
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The Spanish Inquisition With the inquisitorial pattern well established, starting in 1478, the Christian secular powers of Spain proceeded to eradicate Jews and Muslims from their territory. The choice was, leaving Spain, converting to Christianity, or being burnt at the stake. It is only because the power of the Spanish empire was a threat to British, and other, empires that the world knows so much about the Spanish Inquisition, and so little about the French, Italian, and other Inquisitions. Although, all were equally violent, the history of each culture suppressed the exposure of their inquisitorial violence, and emphasized the violence in their archenemy Spain. This is the ―creation of enemies,‖ through a strategy of tension, to protect a power structure, as it has functioned throughout history.
The Inquisitorial Suppression of the Templars The Knights Templar were industrious, faithful servants of Christianity. Their history began in 1119, when nine knights formed an association to protect pilgrims in the Holy Land. They fought so valiantly that gifts in abundance flowed in on the Order; large possessions were bestowed on it in all countries of the west.... By the Bull, Omne datum optimum, granted by Pope Alexander III in 1162, the Order of the Templars acquired great importance, and from this time forth, it may be regarded as totally independent, acknowledging no authority but that ... of the supreme pontiff.3
The Templars fought many battles for Christianity. By 1302 they had spread over much of Europe, and were enormously wealthy and powerful. Much of the land owned by the Templars had been given to their forebears by the grateful ancestors of local aristocracy, in trade for the slaughter of non-Christian, or heretical Christian, populations, and by the Church whose successors resented, and feared, the power of this great order. Local bishops and clergy made many complaints to the pope about the Templars‘ refusal to recognize local religious authority. When a French pope was consecrated in 1305, he rewarded King Philip IV of France, and other nobles, by supporting an intrigue against the respected Templars. The French secret service created a ―strategy of tension‖ to protect the power structure as they destroyed the Templars and stole their wealth. They spread vicious rumors and on the night of the 13th of October, [1307], all the Templars in the French dominions were simultaneously arrested.... They were accused of worshipping an idol covered with an old skin, embalmed, having the appearance of a piece of polished oil-cloth. ―In this idol,‖ we are assured, ―there were two carbuncles for eyes, bright
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as the brightness of heaven, and it is certain that all hope of the Templars was placed in it: it was their sovereign god, and they trusted in it with all their heart.‖ They are accused of burning the bodies of the deceased brethren, and making the ashes into a powder, which they administered to the younger brethren in their food and drink, to make them hold fast their faith and idolatry; of cooking and roasting infants, and anointing their idols with the fat; of celebrating hidden rites and mysteries, to which the young and tender virgins were introduced, and of a variety of abominations too absurd and horrible to be named.4
Like all inquisition charges, the fabrications of the belief systems society was wrapped in could not be defended against, and confessions were obtained by torture. King Philip then sent the findings to other European countries. These preposterous accusations were at first rejected, but, by 1314, the Templars were totally discredited and destroyed; over 2,000 of them confessed under torture and were quartered or burned at the stake. In only nine years, the Templars, who had been perceived for centuries as elite warriors and builders of the Christian world, and who commanded both large resources and respect, were labeled enemies, and cast into oblivion. The First and Second Estates had acted together to reclaim their wealth and power.5
Winding Down the Inquisitions of the Middle Ages As the Inquisition wound down in Europe in the 18th century, except in Spain, its dying flame, now picked up by Protestant evangelists, reached America in the form of the Salem witch trials. Small inquisitorial flames in Peru and Columbia died out in the 17th century, but in Spain and Mexico, it was a primary political tool well into the 19th century where it effectively destroyed the Mayan culture to the extent of erasing their written language. Although, under a different name, changed twice, in 1908 and 1965; the Inquisition still exists as ―The Sacred Congregation for the Doctrine of the Faith," the conservative political arm which suppresses liberal elements within the Church, and whose leader became Pope in April 2005.6 The world will never know the true number slaughtered. Some authors claim reliable estimates of between 200,000 and one million, burned at the stake in the witchcraft craze of the 16th and 17th centuries alone. Others claim 500,000 burned at the stake, over a period of 400 years, before the witchcraft craze even started. There was a far greater number killed in the sweeps of military forces, organized specifically to slaughter entire communities of Cathars, Waldensians, Jews, and Muslims. Templar and Hospitaler knights gained much of their land through local Christian feudal lords, giving them free rein to slaughter heretical populations, and sharing with them the spoils.
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When one includes those killed other than by burning at the stake, which is by far the greater number, deaths at the hands of inquisitors, to increase the power of the already powerful, throughout the full 700-year inquisition history, the total numbers are truly massive.
The Inquisitorial Suppression of the Illuminati In 1776 Professor Adam Weishaupt of the University of Ingolstadt in Bavaria, Germany, established the Bavarian Illuminati, ―enlightened ones,‖ a secret group to expand the rights of the people. Thirteen years later, the French Revolution‘s promise of more extensive rights created even greater fear in the First and Second Estates. The Third Estate, the bourgeoisie, with the support of the common people, now ruled France. The potential for full rights for everybody could have become contagious, and the Illuminati supported those increased rights. In a replay of earlier inquisitions, managers of the religious state immediately locked society within a belief system by frightening the population into a witch hunt. The war cry went out, in effect it said, ―Look out for the Illuminati! Look out for the Illuminati! They want to take over your country! Your church! The world!‖7 No one today will dispute that it was the king, aristocracy, and church, those who created those strategies of tension, who controlled the so-called civilized world. That the Illuminati are active today and a threat to freedom is a fiction kept alive by the far right wing, whose politics are too extreme, even for most of those who do hold the reins of power. It was the ruling powers who created, and imposed, this belief system (perception management), so as to control the masses, and protect their wealth and power. It is ironic how people without sufficient education, or of radical bend, dig up those old writings about the Illuminati. They then point to the current organizations of the powerful, such as the Trilateralists, as being the Illuminati attempting to rule the world. Poetic justice! However, the forward march of history could not be stopped. The intense efforts of the Church, and aristocracy, to overthrow the French Revolution, resulted in Napoleon Bonaparte taking the reins of power in France. Through the conquest of many of the nations that had conspired to overthrow the French Revolution, and were conspiring to overthrow this latest upstart, Napoleon spread, throughout Europe, many of the rights declared for all men by that revolution. Known as the Napoleonic Codes, ―they are the legal base for over thirty nations of Europe today.‖8 The twin threats of loss of trading rights in Europe, Napoleon‘s Continental System, and the threat of replacing aristocratic privilege with rights for all people, led to a ―Holy Alliance,‖ sometimes called a ―Monarchical Alliance‖ but the
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church was always a crucial ally, between European monarchies, and the church, to reclaim their aristocratic rights. Though Napoleon freed most of Europe, he was ultimately defeated at Waterloo in 1815. Aristocracy and European monarchies immediately convened the Congress of Vienna to abrogate the newly gained rights of the masses. However, ―Napoleon‘s omelet couldn‘t be unscrambled.... It was a force destined to destroy the dynastic system.‖9 (In the same manner, industrialization of the world will doom monopoly capitalism, which is little more than the aristocratic, dynastic, system hiding behind beautiful words.) History teaches of Napoleon‘s desire to be a world dictator; he was really destroying the power of the First and Second Estates, who did rule the world. Because Napoleon was such a threat to the powerful, the secret services, and state departments, of the European monarchies, guided the writing and publication of books depicting Napoleon as a megalomaniac, and tyrannical dictator. These concepts saturated the literature of the time, and still saturate the literature of today. In a replay of the Illuminati nonsense, once Napoleon was demonized as an enemy of the people, the masses remained, and still are, unaware that Napoleon really stood for reclaiming their rights.
Czarist Secret Police Demonize the Jews The Protocols of the Learned Elders of Zion is an example of a strategy of tension creating a belief system (perception management), to justify assaults on a specific people, to destroy their power, and to steal their wealth. The Czarist (Russian) secret police created this alleged Jewish-Zionist master plan for world domination out of thin air in 1903, so as to condition the population for pogroms (government-sponsored riots) against their created enemy, the Jews. English and French translations appeared in 1920, but in 1921, a correspondent for the Times, Philip Graves, proved they were forgeries. With the cooperation of a Russian refugee, who had helped create the deception, it was shown the forgers had ―plagiarized paraphrases from a satire on Napoleon.‖10 That satire was, no doubt, a previous creation intended, as explained above, to demonize Napoleon because his egalitarian concepts of justice were a threat to the privileged groups. Though the fraud of the Protocols of Zion is well known, there are many instances of such hoaxes recorded in history and accepted as fact. Those tens of thousands of CIA-created fraudulent articles, and thousands of fraudulent books put out by compliant professors and reporters, as addressed in Chapter six, are good examples. As intelligence services of all imperial centers do this, one society will have its created version of history, and another society will have a different history, favorable to its desired view of the world. The holocaust of WW II
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was the climactic finale of over 1,000 years of hate rhetoric against the Jews, preached from the pulpit, supposedly for killing Jesus. Just as the power of rightwing extremists in U.S. society ebb and flow, the power of church right-wing extremists ebbed and flowed. Where it was once common to persecute the Jews openly, the horrors of the holocaust made it no longer acceptable. All who would advocate such a thing are now outside the permitted parameters of political or religious debate. Today most Christians are supportive of the rights of Jewish people. But the world should not be too complacent. The fervent supporters firmly believe, ―all Jews shall return to Israel, where most will be slaughtered, and the remainder will fall to their knees and accept Christ.‖ Barnet Litvinoff, in his masterly work on the 2,000 years of Jewish persecution, The Burning Bush, points out the persecutors and supporters of the Jews have periodically changed sides.11 Each of these changes required the targeted population to be programmed either as an enemy or a friend. That change is the necessary paradigm shift to gain a following that telegraphs the intentions of the managers of church and state.
The World Starts Breaking Free From Imperial Centers Fear gripped the powerful when Russia broke free in the 1917 Bolshevik Revolution. The Third Estate, the bourgeoisie, with the support of the common people, had revolted and taken the reins of power from the 1st and 2nd Estates. As WW I ground to a halt, Communist revolutionaries were taking over railroads and factories as Germany collapsed. The disillusioned German navy, and much of the army, were hoisting the red flag. Only an alliance between Social Democrats, and the socialist wing of labor, gave private armies, called ―free corps‖, enough time to wrestle those railroads, factories, and disaffected military, from the Communists.12 That Social Democratic-Socialist alliance was broken when the old powerbrokers reclaimed control through the installation of Hitler and his fascists. The managers of state of the old imperial nations knew how close the Bolshevik Revolution in Russia came to spilling over into Poland, Austria, Germany, and even Italy. They knew that, if those major nations were lost, the rest of Europe was sure to follow. A firewall to prevent that threatening philosophy from sweeping them from power had to be built. The scourge of Bolshevism (Communism) as a dictatorial power dedicated to ruling the world was created to lock much of the world into that belief system. Copied from the old Illuminati and Zionist scare, the message, increasing the level of tension, so the masses could be controlled, was the same, ―Communism! Communism! They want to take over your country! Your church! The world!‖ Under that call to arms between
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the two world wars, most of the governments of Europe were turned over to fascists. In the United States, in 1920, the suppression of American political rights took the form of the Palmer Raids, in which thousands, mostly labor unionists suspected of Soviet sympathies, were arrested in the middle of the night. Hundreds were deported, and hundreds more were sent to prison.13 Meantime, most of the world was still under the control of the managers of state of those countries sounding the warning. The country breaking free from monopoly capitalism‘s control was, by comparison, extremely weak.a What the managers of state really feared was the failure of the 14-nation attempt to overthrow the Bolshevik Revolution; the governing of that country by the common people, and how close Germany, Italy, and a few other countries had come to being lost to the same revolutionary forces. Lest taking democracy seriously would spread, and destroy the power structure of the imperial nations operating under representative democracy, an extremely limited democracy at best, the masses of these ―free‖ countries had to be inoculated against the ideology of that revolution through creation of the Bolshevik (Communist) ―enemy.‖ But during the crisis of the following, 1930s, Great Depression the inoculation was quickly wearing off. The managers of state of European countries knew the leaders of labor would govern if honest elections were permitted, so they turned the governments over to fascists. Managers of state all over Europe acted to avoid a ballot-box revolution such as occurred in Spain. The fascist takeovers of the governments of Europe were a sham to suppress the democratic voice of the people: Hitler was eventually put in power by the feudalist clique around President Hindenburg, just as Mussolini and Primo de Rivera were ushered into office by their respective sovereigns.... In no case was an actual revolution against constituted authority launched; fascist tactics were those of a sham rebellion arranged with the tacit approval of the authorities who pretended to have been overwhelmed by force.14
The fascists were put in power by ―back-room‖ political deals, specifically for the protection of power and wealth, and to avoid democratic solutions; yet are recorded in history as only fascism, and only in Germany and Italy, ignoring all How close the world came to breaking free from imperialism is hidden history. Besides the imminent loss of control within the imperial centers, all across South America, Asia, and Africa, throughout the Cold War (50 years), maintaining control of the impoverished world was nip and tuck. When the Soviet Union collapsed it was assumed the battle was won. But Latin America is suddenly closer to breaking free than ever; Asia, Russia, Brazil, and others, have the technology to establish totally new trade patterns, and such an alliance would quickly bring in Africa and South America. a
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other such states. The preceding quotation was from economic historian Karl Polanyi, who recognized desperate powerbrokers‘ use of violent fascism to suppress democracy. Hitler was a German intelligence officer throughout Germany‘s post-WW I crisis, and it is highly likely his rise to power was orchestrated by German intelligence to protect a crumbling power structure.15 These realities can be found only by in-depth reading because much of history has been written, and is being written, to protect a power structure. The famed march of the Black Shirts supposedly putting Mussolini in power took place three days after Italy had been effectively handed over to fascist control. Germany‘s famous Reichstag fire was almost a month after Hitler had been given power in a secret January meeting of German powerbrokers.16 Those acts were part of creating the belief system of the opposition as terrorists and enemies, and thus weakening them politically so the national elections would legitimize Hitler‘s rule. Only in Spain were free elections permitted, and to the horror of the captains of monopoly capitalism; labor won the right to govern. The connection between the powerbrokers, fascism, and the fear of ballot-box revolutions was evident when troops from Germany and Italy—with unspoken, but real, support from America, Britain, and France—supported the dictator Franco, and in a bloody foreshadow of WW II, overthrew that election.b The real target of the back-room political deal in Germany was labor; they were poised to take over the reins of the German government by the vote. When Hitler seized power in 1933, police were ordered to shoot key labor leaders on sight. Within a year, 100,000 politically aware persons were in prison.17 Witness the comments of a member of Hitler‘s cabinet, Colonel Walther von Reichenau. His analysis of the crisis in Germany could be used, almost without changing a word, to describe labor‘s position in America since 1980, in the colThe wrongly titled Spanish Civil War is a textbook study of how the battle cry of communism has been used to motivate populations to support the overthrow of some of the world‘s most democratic elections. The competing parties in Spain‘s election ―consisted of two Republican parties with 126 representatives in the Cortez, ninety-nine socialists, thirty-five Catalan Separatists, and just seventeen Communists‖ (George Seldes, ―The Roman Church and Franco,‖ The Human Quest, MarchApril, 1994, pp. 16-18). George Seldes, Even the Gods can’t Change History (Secaucus, N.J: Lyle Stuart, Inc., 1976), part II, chapter 3). Likewise, due to the CIA‘s Mighty Wurlitzer propaganda tagging them as communist, Americans were unaware that the Communist Party was one of the smallest of 14 political parties in the 1984 Nicaraguan election that legitimized the Sandinista government. b
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lapsed economies on the periphery of empire since 1997, and in the U.S. today as the economy slows: The trade unions have been smashed, the communists driven into a corner and provisionally neutralized; the Reichstag has surrendered its rights with the Enabling Law. The workers are keeping their heads down and, after the previous slump, their wage packets will be more important to them than any politics.18
Although there had previously been much rhetoric against, and individual persecution of the Jews within Germany, organized attacks against Jews did not start until November 9, 1938, and known as Kristallnacht, The Night of Broken Glass.19 The onslaught against the Jews, by fascists, was undertaken to repay the super-secret Thule Society, surely now rebuilding in Europe and closely related to America‘s Aryan Nations, for their early financial support of Hitler. The Thule Society organized Hitler‘s German Workers‘ Party and supported it financially. Their symbol was the swastika, and this became the symbol of German fascism. Hitler put these fanatics into positions of power because they were the power behind him.20 When the original targets of the Inquisition, Christian Cathars and Waldensians, were eliminated, the inquisitors turned towards searching for witches and satanic cults to justify their existence and maintain their power.21 Those first accused of practicing the ―black arts‖ and burned at the stake were rather defenseless people. However, as the hysteria continued, the accusatory finger pointed higher, and higher and eventually pointed towards those in power. When these powerful became the target, the hysteria died down. After a respite, the witch hunts would start again. The same pattern was observed when McCarthy‘s ―witch hunts‖ started destroying those in power, the powerful turned, destroyed him, and the hysteria died down. Whenever personal risk to leaders is high, they defend themselves. This demonstrates how the process can be controlled and the public protected if the leaders ever decide they wish to do so. There are many historical examples of prosperous societies regressing, and even disappearing. Jared Diamond‘s Collapse: How Societies Choose to Fail or Succeed alerts us that many cultures disappeared through destroying the fertility of their soils. That is the biggest threat to our world today. Our effort is to alert the reader as to the waste, both within world trade and internal trade, which can be eliminated, and give societies the space, time, and resources to address both global warming and soil fertility losses. A millennium ago, Chinese culture had matches, wheelbarrows, wheeled metal plows, mechanical seeders, horse collars, rotary threshing machines, a drill to tap into natural gas, and much more. What collapsed that society is unknown.
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Seventeen hundred years ago libraries and culture centers were all around the perimeter of the Mediterranean. People were educated just as we are today. In 314 Constantine allied with the Christian church, and one by one that alliance burned every library, destroyed those culture centers, and killed off the educated. No one dared study or admit to being educated, (www.rassias.gr/9011.html or search for ―Christian Persecutions Against the Hellenes‖ or ―Christians, Libraries, Burned‖). Over a period of 266 years, every library was burned and every culture center destroyed. With no educated people left to run society, Western society dropped into the 700 years of the dark ages. In the Library of Alexandria was a functioning steam engine. An artifact dating back to those times was determined to have been a battery. Obviously, if the learned classes had not been under assault, over the next two centuries they could have invented cars, trains, planes, TVs, phones, and all other amenities of a modern society. The decision of one culture to destroy another had set the Industrial Revolution back 1,300 years. The history of the destruction of the Hellene‘s over a period of 266 years is reminiscent of the suppression of all cultures who might challenge Western culture the past 70 years. The emerging fundamentalist Christian beliefs that the world will be destroyed, that they will be the only survivors through being ―raptured‖ to heaven, and they influencing the nuclear-armed American government from 2002 through 2008 was uniquely dangerous. With those weapons, the world could have been destroyed in a matter of hours. For those who would dismiss that risk, study Naomi Klein‘s The Shock Doctrine: The Rise of Disaster Capitalism and study how the corporate hard right‘s funding of think tanks and Milton Friedman‘s view (also Leo Strauss‘s) of a totally privatized world led to America‘s plan to remake governments, three or more countries at a time. The current Iraqi debacle was the first full fledged implementation of that plan; Afghanistan, Iraq, and Somalia, the first three on the list of seven, have, so far, stopped them cold. It is time we abandoned these battles whose only purpose is to appropriate others‘ wealth and live together peacefully. Our concluding chapters outline the enormous gains of such a peaceful world. 1 Edward Burman, The Inquisition: Hammer of Heresy (New York: Dorset Press, 1992), p. 39. 2 Michael Parenti, History as Mystery (San Francisco, City Lights Books, 1999), p. 38.
James Burnes, The Knights Templar (London: Paybe and Foss, 1840), pp. 12-14. See also Stephen Howarth‘s Knights Templar (New York: Dorset Press, 1982). 4 Charles G. Addison, The Knights Templar (London: Longman, Brown, Green, and Longman, 1842), pp. 194-203, especially p. 203. See also Burman, Inquisition, pp. 95-99. 5 Burman, Inquisition, pp. 95-99. 6 Ibid, pp. 213-14. 3
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David Caute, The Great Fear (New York: Simon and Schuster, 1978), pp. 18-19; Richard Hofstadter, The Paranoid Style in American Politics (Chicago: University of Chicago Press, 1979), pp. 10-11; Arkon Daraul, A History of Secret Societies (Secaucus, NJ: Citadel Press, 1961); James and Suzanne Pool, Who Financed Hitler? (New York: Dial Press, 1978); Barnet Litvinoff, The Burning Bush (New York: E.P. Dutton, 1988); Heiko Oberman, The Roots of Anti-Semitism (Philadelphia: Fortress Press, 1984); David H. Bennet, The Party of Fear (London: University of North Carolina Press, 1988), pp. 23-26, 205-06. 8 Daniel J. Boorstin, ―History‘s Hidden Turning Points,‖ U.S. News & W Report, April 22, 1991, cover story. 9 Ibid, p. 61. 10 David Fromkin, A Peace to End all Peace (New York: Avon Books, 1989), pp. 468-69; Michael Kettle, The Allies and the Russian Collapse (Minneapolis, University of Minnesota Press, 1981), p. 17. For how the Protocols evolved further to support Fascism in Europe read F.L. Carsten, The Rise of Fascism (Berkeley: University of California Press, 1982), pp. 24, 29, 118. 184. The Thule Society‘s efforts to promote anti-Semitism through Hitler would likely have not had much effect on the world except for Henry Ford, through his Dearborn Independent newspaper, spreading those Protocols to every corner of the world, and imprinting anti-Semitism into the world‘s mind (Pool and Pool, Who Financed Hitler, pp. 3, 23, chapter 3). 11 Litvinoff, Burning Bush. 12 Edmond Taylor, The Fall of the Dynasties: The Collapse of the Old Order, 1905-1922 (New York: Dorset Press, 1989), chapters 17-19. 13 Bennet, Party of Fear, pp. 191-98, 205-206. 14 Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), pp. 237-241; see also F. L. Carsten, Britain and the Weimar Republic (New York: Schocken Books, 1984), chapter 8; Carsten, Rise of Fascism. 15 Taylor, Fall of the Dynasties, p. 366. 16 Carsten, Rise of Fascism, pp.150-55. 17 Carsten, Weimar Republic, especially chapter 8; also Michael N. Dobbowski and Isodor Wallimann, Radical Perspectives on the Rise of Fascism in Germany (New York: Monthly Review Press, 1989), especially pp. 194-209. 18 J. Noakes and G. Pridham, eds., Nazism 1919-1945, vol. 2 (New York: Schocken Books, 1988), p. 626. 19 Ibid 20 Pool and Pool, Who Financed Hitler? pp. 7-8, 19-21. 21 Burman, Inquisition; Henry Charles Lea, The Inquisition of the Middle Ages (New York: Citadel Press, 1954), a condensation of his 1887 three-volume monumental work, A History of the Inquisition of the Middle Ages. 7
Part II. Capital Destroying Capital Within World Trade
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10. The Enforcers of Unequal Trade Hopefully, the plunder by trade history, outlined in Part I, and II, is coming to an end. This authors last two books were written under the assumption the worldwide populist revolution would this time prevail. Debt is an efficient tool. It ensures access to other peoples‘ raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market saturation ensues, reducing exporters‘ income to a bare minimum while the North enjoys huge savings.... The IMF cannot seem to understand that investing in ... [a] healthy, well-fed, literate population ... is the most intelligent economic choice a country can make.1
―The heart of the GATT-Bretton Woods system is what is known as MFN, most favored nation.‖2 GATT, NAFTA, WTO, MAI, GATS, and FTAA, bend weak nations to the will of powerful nations. But six developed centers of capital competing for resources, and those debts now being repaid, is rapidly changing the rules of world trade, and this may eliminate the 700-year-norm of plunder by trade. Part III is a guideline for true statesmen to establish peaceful, prosperous economies with a quality life for all citizens of this world. As we continue with the economics and history of those causes; the cures will be self evident. An IMF managing director claimed, ―An international institution, such as the fund cannot take upon itself the role of dictating social policy and political objectives to sovereign governments.‖ That this, ―politely put, is rubbish‖ is obvious, given the control exerted by the IMF-World Bank-GATT-NAFTAWTO-MAI-GATS-FTAA-Military colossus:3 Many people learned for the first time at Seattle [the first major anti-globalization protest] of the existence of the QUAD, the Quadrilateral Group of Trade Ministers, which was formed in 1981 and acts as an informal committee guiding the global trade regime. Before public meetings of the WTO, members of the Quad— the United States, The European Union, Japan, and Canada [all CEOs of, or closely connected with, global corporations]—meet privately, making key decisions without the participation of other representatives of the world community. Once the QUAD reaches agreement, a larger, select group of twenty to thirty countries are invited to come together in informal meetings. Only after that do the 143 members of the WTO discuss and vote on proposals that are typically, by this point, faits accomplis. The poor countries of the world are forced to fall in line by the pressure of the economic and political muscle arrayed against them.4
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Howard Wachtel explains further: When the WTO replaced GATT on January 1, 1995, all of the GATT rules and its 47 years of precedents were folded into the WTO…. The WTO is an organization of some 500 highly paid professionals, mostly lawyers ... [which] make significant decisions about international trade out of the public‘s view. It has no written bylaws, makes decisions by consensus, and has never taken a vote on any issue. It holds no public hearings, and in fact has never opened its processes to the public. … Its court-like rulings are not made by U.S.-style due process. Yet WTO today [because it has a dispute settlement mechanism with enforcement powers] rivals the World Bank and International Monetary Fund in global importance…. Three minimalist GATT principles continue to operate through the WTO. The first is the famous most-favored-nation status (MFN): Products traded among GATT members must receive the best terms that exist in any bilateral trading agreement.... [The second:] Goods produced domestically and abroad must receive the same ―national treatment‖—equal access to markets.... [The third] is ―transparency,‖ which requires that any trade protection be obvious and quantifiable—like a tariff.... The WTO has the authority to resolve disputes and to issue penalties and sanctions.5
A further attempt to structure inequality into law, the Multilateral Agreement on Investments (MAI), was described by Business Week as, ―The Explosive Trade Deal You‘ve Never Heard Of.‖ The then Director General of the WTO called the secretive MAI rules as, a ―Constitution for a single global economy.‖6 Structural adjustments demanded by the IMF-World Bank-GATT-NAFTA-WTOMAI-GATS-FTAA strictly forbid government support of developing world industry. Yet Japan‘s industry paid possibly only 30% for its first industrial capital, the public paid the rest. U.S. states and cities pay ransoms in the form of tax breaks, land donations, below cost services, wage subsidies, and outright cash incentives, for industries to be built in their region. And high tariffs were placed on imported manufactured products, low, or no tariffs, on raw materials. An established infrastructure—roads, airports, railroads, harbors, communications, etc—is already in place in the developed world, built and maintained with public funds. Agriculture and industry in the wealthy world receive enormous support in the form of payments for land development, price supports, export supports, payments for leaving land idle, as well as major tax breaks. Germany subsidizes her mining industries to the tune of $85,000 per miner and "more than a third of annual U.S. government spending, an estimated $448billion, consists of direct and indirect subsidies for corporations and wealthy individuals, in direct violation of free-market principles."7 Nearly half of U.S. agriculture income is derived from government subsidy.8 Not only are there massive subsidies and protections for imperial-centers-of-capital, but also the United States has some level of embargo against over 70 countries, 66% of the people on earth.9
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Society is a machine efficiently producing social needs and the welldeveloped, highly-subsidized, transportation, education, and research systems of the developed world means they can produce much more efficiently and cheaply than the developing world. This gives insight into why structural adjustments insisted on by the IMF-World Bank-GATT- NAFTA- WTO- MAI- GATSFTAA-Military colossus insists on reduced supports in these crucial areas. So long as a belief can be imposed upon emerging nations that is the opposite of how every successful nation developed, they can never be a serious industrial threat to the imperial-centers-of-capital, and their resources will always be available to the imperial nations for less than full value. Cuba was able to develop education and health systems equal to America precisely because she escaped the clutches of the IMF-World Bank, and the structural adjustments they would have imposed.10 When former World Bank Chief Economist, Joseph Stiglitz, was eased out of the World Bank for suggesting they relax those structural adjustment rules, he was asked by interviewer, Greg Palast of the London Observer, if any nation avoided the fate of structural adjustments. Stiglitz replied, ―Yes! Botswana. Their trick? They told the IMF to go packing;‖ a hint of coming changes. A reading of Palast‘s The Best Democracy that Money can Buy: The Truth about Corporate Cons, Globalization, and High-Finance Fraudsters, several editions, tell us the purpose of this unspoken, and disguised, economic warfare, through imposed structural adjustments, is specifically to hold down the price of emerging world resources and labor, and to transfer that wealth, natural and processed, to the imperial centers. Joseph Stiglitz was awarded a Nobel Prize in economics in 2001. We would hope the primary reason was to reward him for his courageous stand.
The Greatest Peacetime Transfer of Wealth in History The corporate assault on labor started in earnest in 1972, and gained substantially more momentum under Reagan in the early 1980s. Even as ―the real per-capita gross domestic product ... climbed by a third,‖ before the 1997-99 increase in labor pay, that policy had reduced wages for 80% of Americans. The share of the national income and national wealth held by the wealthy in 1973 (30%) climbed to 50%, levels normally seen only before collapses of economic bubbles or revolutions. ―Probably no country has ever had as large a shift in the distribution of earnings without having gone through a revolution or losing a major war.‖11 This worldwide bubble appears to be collapsing as we speak (2008-10). IMF-World Bank loans came with structural adjustment conditions: all who take such loans to devalue their currency, lower their import barriers, remove restrictions on foreign investments, remove subsidies for local industry, lower their social welfare funding, pay lower wages, reduce government in general, and
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expand production and export of their timber, minerals, and agriculture. The result was almost universally the same: wages went down, hunger increased, health care decreased, education decreased, and the price of developing world export commodities went down. The purchasing power of commodities exported by poor nations in the year 2000 was 40% of their purchasing power 30 years earlier.12 Since then those nations started gaining control of their destiny, resource prices started up, and many countries started advancing. As an example that powerbrokers know very well what must be done to eliminate poverty and war, these same managers of state did precisely the opposite for poorer nations within their trading blocs. They easily agreed West Germany must put $1.5-trillion into the former East Germany to simultaneously build industry, social infrastructure, and buying power.13 When Greece, Portugal, and Spain, relatively poorer than the rest of Europe, wanted to join the Common Market, these leaders implemented a 15-year plan reading as if it came right out of Friedrich List‘s protectionist classic. This included ―massive transfers of direct aid ... to accelerate development, raise wages, regularize safety and environmental standards, and improve living conditions in the poorer nations.‖14 During the 2008-10 worldwide financial crash, tens of trillions of dollars were poured at the economies of the imperial centers. Enforced belt tightening, the cure forced on others is no where to be found within those developed nations now that they are in trouble. The inefficiency of capitalism, as currently structured, is highly visible in the earlier discussed rejoining of West and East Germany. The expenditure of over $1.5-trillion failed to modernize the East German economy. Even as massive amounts of money were being transferred from West to East, 1.7 million East Germans moved to West Germany in order to find employment. West German labor and industry can produce all the products necessary for East Germany; no West German industry is going to voluntarily release a part of its market share to any other company, and no West German worker is going to voluntarily give up his or her job. Both industry owners and workers are solidly within the current flow of commerce, and they are not about to give any of that up. Without a change in capitalism‘s philosophy similar to the support and protection provided by Germany for East Germans, and that provided by the European Union to Spain, Greece, and Portugal, the economies of other East European and, because they have neither finance capital nor resources, Central European countries cannot gain equality with Western Europe. After 15 years of stagnant East European economies, should have figured out that there is something seriously wrong with monopoly capitalism. Greece may balk at paying debts to Britain and the European Union, what are effectively monies stolen from them then loaned back to them. Look for all Eastern Europe, and then the world, to expand upon what these first-to-collapse nations have taught them (Google Hudson, Iceland Latvia Greece Ellen Brown).
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If Iceland, all Eastern Europe, Greece, Portugal, Italy, and Spain had paid the rental values of nature‘s resources and technologies to themselves, as opposed it going to ―exclusive title holders‖ as unearned wealth, that would have funded their society, and given them time to restructure their industries to compete efficiently across the world. In fact, the imposed low values of their currencies would have given those then-efficient economies an advantage in world trade. This could have been accomplished with low levels of internal debt, and no external debt. Instead, they chose to borrow from Western banks, and due to the impossibility of competing on Western terms, as addressed above, are in a greater crisis today than any other sectors of the world. As sovereign nations, they can break out of that trap by declaring bankruptcy, rejecting all debts which did nothing to build their economies, go full bore social collection of resource and technology rents, and use those social-credits to fund infrastructure, education, health care, operating governments, funding new industries, etc. In 2009, the poorest 20% of the world‘s people purchased 1.3% of the world‘s products, while the richest 20% consumed 86%. When the universal result is low resource export prices, and increased poverty in the developing world, the IMF-World Bank- GATT-NAFTA-WTO-MAI- GATS-FTAAMilitary colossus can hardly claim its intent was to develop those countries and alleviate poverty and hunger: Structural Adjustment [demanded by the IMF] is best summed up in four words: earn more, spend less. While such advice might be valid if it were given to only a few countries at once, dozens of debtors are now attempting to earn more by exporting whatever they have at hand; particularly natural resources including minerals, tropical crops, timber, meat and fish. With so many jostling for a share of limited world markets, prices plummet, forcing governments to seek ever-higher levels of exports in a desperate attempt to keep their hard currency revenues stable. The ―export-led growth‖ model on which the fund and the World Bank insist is a purely extractive one involving more the ―mining‖ than the management—much less conservation—of resources.15
The Purpose of IMF-World Bank Loans to the Periphery of Empire ―The IMF has repeatedly stated that it is not, and was never intended to be, a development institution.‖ Neither was the World Bank: ―The fundamental goal of creating markets for industrialized countries‘ exports was written into [its] charter.‖16 This means debt traps and mercantilist dependency were the goals all along. Most investment in the developing world has been geared towards producing low-priced commodities for corporate industries to fabricate into products for the developed world. Investing in development of resources to produce
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the same product in various parts of the world ensures a surplus of those commodities at low, or very low, prices. The need to service their debts compels the dependent emerging world to produce more and more of the commodities desired by the developed world. Through simultaneous investments in various parts of the world in commodities desired by the developed world, surpluses develop, and as low wages ensure there is little buying power—thus no markets—in the developing world, prices are kept low for the imperial-centers-ofcapital. It is the colonial plantation system, once producing for Europe, restructured on a massive scale to produce for the industrialized world.17 Power balances are rapidly changing. Historically the IMF-World Bank-GATTNAFTA-WTO-MAI-GATS-FTAA-Military colossus established the rules of unequal trade. The emerging world is expected to lower its living standards and export more minerals, lumber, and food, all to pay debts which did little, or nothing, for their economic development. Typically those debts were incurred for investments to extract resources, produce agricultural exports, and build the infrastructure to ship these commodities to the developed world. From the late 19th-Century to shortly before WW II, the price of primary commodities dropped 60%, relative to manufactured commodity prices.18 During the latest battle between the imperial centers over the wealth of the emerging world (WW II), the developing world was better paid for their resources and labor, and they paid off their debts. But imperial capital again gained control of trade, and that pre WW II success of low import prices and high export prices for the imperial-centers-of-capital in the first half of the 20th-Century, was far exceeded in the second half. America‘s Foreign Trade Act discriminates, allied imperial nations‘ trade laws are similarly unequal, and under these discriminatory laws the buying power of developing world commodity exports in the year 2000 dropped to a fraction of that in 1960. The low pay for their resources and labor created the developing world‘s debt of $1.8 trillion; it is that debt which was designed to place the final chain of low-wage slavery upon the emerging world. Those final chains are the courts. Any who attempted to break out would have their commerce in world trade attached. That will bring the economy of any country to an immediate halt.a
As commodity prices rise, a large share of those debts are now being paid off. To maintain prosperity, the developed world knows they must educate their citizens; they must provide them with universal health care; they must build transportation systems so people and goods can be moved; they must support the building of efficient industries to process their natural resources; they must pay their labor well to generate consumer buying power; they must maintain a healthy economic multiplier through a proper balance between manufacture of their own consumer products and their imports and exports; and they must not permit their wealth to be claimed by imperial-centers-of-capital through unequal trades. a
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Investment in the same primary-export commodities throughout the developing world competes for markets, creating surpluses and low export prices. As those export commodity surpluses build, there is little investment in local industry for local consumers. As wages are too low to provide buying power, the products and services needed for the local population‘s everyday use are not produced within that society, and thus there is no balance of industry, social capital, local purchasing power, commerce, or markets for a prosperous market economy. The dependent countries end up ―producing too much of what [they do not] consume, and consuming too much of what [they do not] produce.‖ This denies these people their natural comparative advantage, and creates dependent economies. Then, while the prices of emerging world commodities plummet, because of excessive investments in export products, as opposed to balanced investments and adequate pay in a regional economy to create buying power, the prices of developed world products soar, the very signature of a successful mercantilist dependency policy. As the world breaks free, this is all changing fast. 19 Before the current sea change, in only seven years, the price of a tractor for Tanzania, measured by the export value of Tanzanian sisal, doubled. The relative value for rubber exporters dropped 300% between 1960 and 1975. Cotton exporters lost 60% of their buying power in the same time span.20 In 1996, prices for primary commodities exported by the developing world were the same price as 21 years earlier, while prices for their imported manufactured products had soared, forcing the emerging world to export more and more, while importing less and less. Managers of state of the imperial centers do not acknowledge that what is right for wealthy nations is even more right for the emerging world whose resources and labor are exploited for their benefit. Their slogans of peace and rights are not only meaningless; they are actually covers for financial, economic, diplomatic, covert, and overt, warfare. After all, these managers of state have spent centuries perfecting the political, legal, and military mechanisms maintaining the rules of trade in their favor. These managers of state are highly intelligent, have massive resources, are not working in a vacuum, and they are not reacting to oppression upon the imperial center. They are only reacting to others‘ efforts to break out from under their oppressions. Author, Robin Hahnel, explains what happens when financial warfare plans, economic warfare plans, and the diplomatic warfare plans succeed; all the ducks are lined up in a row for the corporate imperialists to slaughter: Multinational corporations and banks will soon have reacquired the most attractive economic assets the developing world has to offer, at bargain basement prices. They may succeed in doing this in a fraction of the time—the next 3 to 5 years—it took progressive and nationalist developing world movements and governments to [regain] control of their natural resources from colonial powers—50 to 100 years.... All of the gains of
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the great anti-imperialist movements of the 20th-Century may soon be wiped out by the policies of neoliberalism [corporate imperialism] and its ensuing global crisis. What may become the greatest asset swindle of all time works like this: International investors lose confidence in a developing world economy, dumping its currency, bonds, and stocks. At the insistence of the IMF, the central bank in the developing country tightens the money supply to boost domestic interest rates to prevent further capital outflow in an unsuccessful attempt to protect the currency. Even healthy domestic companies can no longer obtain or afford loans so they join the ranks of bankrupted domestic businesses available for purchase. As a precondition for receiving the IMF bailout the government abolishes any remaining restrictions on foreign ownership of corporations, banks, and land. With a depreciated currency and a long list of bankrupt local businesses, the economy is ready for the acquisition experts from Western multinational corporations and banks who came to the fire sale with a thick wad of almighty dollars in their pockets.... [In Thailand alone,] ‗foreign investors have gone on a $6.5-billion shopping spree this year [1999], snapping up bargain basement steel mills, securities companies, supermarket chains, and other assets.‘21 (Compare this quote with Heather Cottin‘s article on George Soros destabilization foundations, ―George Soros, Imperial Wizard, Master-Builder of the New Bribe Sector, Systematically Bilking the World,‖ see CovertAction Quarterly, fall 2002.
Friedrich List Supports for the Developed World, Adam Smith Structural Adjustments for the Emerging world "The emerging world has a simple answer to the question of primitive accumulation [of capital]: the West stole it."22 The wars struggling over resources and markets, the poverty within the underdeveloped World, and the poverty remaining in the "wealthy" countries all testify to the bankruptcy of this residual-feudal, neo-mercantilist, corporate-mercantilist, policy as a route to a truly free and prosperous world. The IMF-World Bank-GATT- NAFTA- WTO- MAI- GATS- FTAA colossus historically insisted that nations on the periphery of empire reduce their education, reduce their health care, eliminate supports for industry, reduce the wages of an already impoverished labor force, and enforce the developed world‘s monopoly on industrial technology. (This is changing rapidly, [2010] and only another World War can head off this worldwide break for freedom.) Before the recent economic advances within the developing world, the funds to purchase industries, when weak nations were forced to privatize publicly-owned businesses, were primarily in the developed world. Thus, the same powerful people who impose these harsh conditions upon the weak are the ones who buy up their resources and industries at a fraction of true value when those harsh conditions trigger a collapse. Not only did privatizing the world‘s industries and resources under corporate imperialism provide opportunities for the investment of monopolized capital and control of industries, resources, and markets, but also a portion of monopolized capital, a small portion, owned by the emerging ―robber
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barons‖ of the dependent nations gives the appearance of wealth and private ownership and made it difficult to identify and target a nation, or bloc of nations, as an enemy imposing the harsh conditions of financial warfare. The structural adjustments forced upon the emerging world, being exactly opposite the policies under which every wealthy nation developed, tells us the managers of state of the imperial centers knew exactly what they were doing. Every time a developing country run into difficulties the IMF-World BankGATT-NAFTA-WTO-MAI-GATS-FTAA-Military colossus insisted they reduce supports to all sectors of their economies and privatize everything in sight. Then, when the current worldwide financial collapse hit them, they did the opposite, pouring trillions of newly created dollars into their economies.
The Privatization of the Commons of other Societies If land, energy, water, or other basic needs are privatized (monopolized), others must pay a monopoly price. That railroads, water companies, electric companies, natural gas companies, cable and telephone companies, or garbage companies, can provide cheaper services because of competition is pure fiction. Two railroads, two water lines, two electric lines, two gas lines, two TV cables, two telephone lines, two sewer lines, and two garbage companies serving the same customers would be economic insanity. Structural adjustments, and the violence outlined in previous chapters, suppressing weak nations‘ breaks for freedom are only extensions of the violent privatizations of the commons during the Middle Ages. The one difference is that it is primarily the commons of other societies, which are being privatized by the wealthy of the imperial centers. The real purpose of the IMF-World BankGATT-NAFTA-WTO-MAI-GATS-FTAA-Military colossus is to monopolize (privatize) resources and services worldwide for the owners of capital. Monopoly capital insists on privatizing the world‘s water systems, electric systems, natural gas systems, etc, and then doubling, tripling, and even quadrupling the charges? In spite of the enormous waste of capital destroying capital, despite the waste of wars, and despite the waste of monopolies within internal economies (chapters 20 through 27), unearned capital accumulations are so enormous, and their expansions of unearned wealth so continuous, that there are limited places they can safely and profitably invest it. As it is both surplus and unproductive, that wealth should never have been extracted from labor and the periphery of empire in the first place. If the commoners had won those privatization battles of the Middle Ages and established cooperative societies, consumer production, utilizing emerging technology, would have doubled. In a few years it will have doubled again, and again, and again. As most of their cultures were already communal, the same sharing of education and tech-
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nology with the rest of the world would have quickly eliminated poverty worldwide, and provided all a quality lifestyle even as labor time and resource consumptions were reduced by 50% or more. 1 Susan George, A Fate Worse Than Debt, (New York: Grove Weidenfeld, 1990), pp. 143, 187, 235.
2 Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996),
p. 131, 137. 3 George, Fate Worse Than Debt, chapter 3, especially pp. 53, 93. 4 William K. Tabb, The Amoral Elephant: Globalization and the Struggle for Social Justice in the Twenty-First Century (New York: Monthly Review Press, 2001), pp. 9-10. 5 Howard Wachtel, ―Labor‘s Stake in WTO,‖ The American Prospect (March/April 1998), pp. 34-38. 6 Tabb, The Amoral Elephant, p. 196. 7 Frances Moore Lappé, World Hunger: Twelve Myths (New York: Grove Press: 1998), p. 98; Ousseynu Gueye, ―Let African Farmers Compete,‖ World Press Review (October 2002), p. 12. 8 Michael Hudson, Super Imperialism: The origin and Fundamentals of U.S. World Domination (London: Pluto Press, 2003), p. 25. 9 Laura Karmatz, Alisha Labi, Joan Levinstein, Special Report, ―States at War,‖ Time (November 9, 1998), pp. 40-54; Donald L, Bartlett, James B. Steele, ―Fantasy Island and Other Perfectly Legal Ways that Big companies Manage to avoid Billions in Federal Taxes,‖ Time (November 16, 1998), pp. 79-93; Donald L Bartlett, James B. Steele, ―Paying a Price for Polluters,‖ Time (November 23, 1998), pp. 72-82; The Banneker Center‘s Corporate Welfare Shame Links, http://www.progress.org/banneker/cw.html; Thomas Omestat, "Addicted to Sanctions," U.S. News & World Report, June 15, 1998, pp. 30-31. 10 Speech by Cuban President Fidel Castro at the Group of 77 South Summit Conference, April, 2, 2000. 11 Richard Douthwaite, ―Community Money,‖ Yes, Spring 1999, pp. 35-37; ―In Fact,‖ The Nation, March 25, 1996, p. 7. Read also John Gray, False Dawn (New York: The Free Press, 1998), especially chapter 2, and Peter Gowan, The Global Gamble: Washington’s Faustian Bid for World Dominance (New York: verso, 1999). 12 Thurow, The Future of Capitalism, p. 67; Frederic F. Clairmont, The Rise and Fall of Economic Liberalism (Goa India: The Other India Press, 1996), p. 308. See also: Fidel Castro, Capitalism in Crisis: Globalization and World Politics Today (New York: Ocean Press, 2000), p. 57; speech by Cuban President Fidel Castro at the Group of 77 South Summit Conference, April, 2, 2000; Gray, False Dawn, pp. 39-54. See also: Duncan Green, Silent Revolution (London: Cassel, 1995), pp. 22-57, especially pp. 44, 50, 100-111, 131-36, 200-22; Susan George and Fabrizio Sabelli, Faith and Credit (San Francisco: Westview Press, 1994), pp. 1819, 31-33, 65-72, 126-25, especially 130-34, 161, 216-22; Graham Hancock, Lords of Poverty (New York: Atlantic Monthly Press, 1989). 13 Lester Thurow, Head to Head: The Coming Economic Battle Between Japan, Europe, and America (New York: William Morrow, 1992), p. 89. 14 AFL-CIO Task Force Bulletin on Trade (1992). 15 Susan George, The Debt Boomerang (San Francisco: Westview Press, 1992), pp. 2-3. 16 Arnold J. Chien, ―Tanzanian Tales,‖ Lies of Our Times, January 1991, p. 9. See also Michael Barratt Brown, Fair Trade (London: Zed Books, 1993), p. 108. 17 subchapters ―Conceptually Reversing the Process‖ and ―The Periphery of Empire Functions as a Huge Plantation System‖ in chapter 13; also Duncan Green, Silent Revolution, especially chapter 4; Hancock, Lords of Poverty; George and Sabelli, Faith and Credit; Philip Agee, Louis Wolf, Dirty Work (London: Zed Books, 1978), chapter 11. 18 Thurow, The Future of Capitalism, p. 67; Fidel Castro, Capitalism in Crisis: Globalization and World Politics Today (New York: Ocean Press, 2000), p. 57; Clairmont, The Rise and Fall of Economic Liberalism, p. 308. 19 Hancock, Lords of Poverty, pp. 47-75, especially p. 65; George, Fate Worse Than Debt, especially pp. 62, 78. 20 Susan George, How the Other Half Dies (Montclair, NJ: Allen Osmun, 1977), p. 17. The developing world exports sugar and imports candy, exports iron and imports machinery, exports timber and imports paper, exports oil and imports fuel and petroleum products, etc. As we move into the 21st century, the rules of world trade are changing fast. Raw material prices tripled between 2004 and 2006 and, so long as Asia maintains its rapid development, is expected to rise far higher. This is addressed in the Summary and Conclusion. 21 Robin Hahnel, ―Capitalist Globalism in Crisis,‖ Z Magazine, March 1999, pp. 52-57. 22 Walter Russell Mead, Mortal Splendor (Boston: Houghton Mifflin, 1987), p. 197.
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11. Corporate Imperialism Insert on fast changing events: If the developing world continues to gain control of their destiny through contracting with the newly emerging centers of capital of Asia, India, Brazil, or other developing center of capital, corporations and imperial centers will face a crisis. Domestic security of those emerging centers will override corporate and imperial interests. The current trade structures described below are rapidly collapsing as other societies gain control of their destiny.
With corporate fronts established in over 39 tax havens around the world and firm neo-mercantilist control of the national policies of both strong and weak nations, reversible if full and true democracies evolve, corporate industries began moving offshore, essentially becoming stateless, and laying the foundation for corporate imperialism. To avoid sharing those quasi-aristocratic privileges with labor, control of the economies of other countries from the bastion of protective laws of another nation is the norm. Different forms of this process have constituted protomercantilism, mercantilism, and neo-mercantilism for 800 years. Today it is taking the form of corporate imperialists moving their wealth offshore where they can avoid paying taxes, avoid environmental laws, extort subsidies from desperate communities, pay subsistence wages to extract and process rich natural resources, and sell their manufactured products in any market. Mercantilist unequal trade, enforced by the military power of the state, is the very signature of a colonial empire. Fifty years after the Bretton Woods agreement established the rules for postWW II banking, the respected U.S. News and World Report commented: ―Under the Bretton Woods system, the Federal Reserve acted as the world's central bank. This gave America enormous leverage over economic policies of its principal trading partners:‖1 Currencies produced by one group for use by another have been instruments of exploitation and control. For example, whenever Britain, France, or one of the other colonial powers took over a territory during the ―scramble for Africa‖ towards the end of the [18th] Century, one of their first actions was to introduce a tax on every household that had to be paid in a currency that the conquerors had developed for the purpose. The only way the Africans could get the money to pay the tax was to work for their new rulers or supply them with crops. In other words, the tax
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destroyed local self-reliance, exactly as it was designed to do.... Very little has changed.a
The rules of modern world trade, the IMF-World Bank-GATT- NAFTAWTO-MAI-GATS-FTAA, defined by corporations, and those rules enforced by the financial and military might of powerful nations, essentially governed by those same corporations, define today‘s world trade as corporate imperialism. Besides the military, which is the final arbiter, the power of the imperialcenters-of-capital to lay claim to the wealth of the emerging world (those resource powers) is in their monopolization of finance capital. No bank in the world will loan to a country blacklisted by the World Bank. To obtain funding from any bank, developing world governments must adjust their policies, called structural adjustments, to the dictates of the above named acronymic trade structures. It is specifically under their imposed structural adjustments that protections for the developing nations were denied. Not only is the developing world locked within the parameters of the decisions of international capital, if any developing country veers from the prescribed path, enough capital will flee to turn the economy downward. The Cold War was only an instrument of interim control as those acronymic trade structures extracted wealth from the emerging world. The pre-WW II power-structure of both Germany and Japan were corporate-dominated alliance of wealth and government to protect, and expand, their empires. Those alliances, and the violence of those empires, are the defining attributes of fascism. Under the umbrella of the Cold War, those colossuses established an unseen, except when the military is activated, world government ruled by stateless multinational corporations, superseding the laws of the most powerful countries.b
The Legal Structure for Corporate Imperialism’s Massive Wealth Extraction Averell Harriman, Dean Acheson, and George Marshall, three of America‘s leading post-WW II State Department Cold War planners, ―devoted a great deal of time and energy formulating the legal structure for the transition to corporate
Richard Douthwaite, ―Community Money,‖ Yes (Spring 1999), pp. 35-37. We recognize that much of the world now understands much of what we address in this Part II. But there are always a few that do not, and readers two generations from now may want to understand these turbulent times. a
b
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imperialism.c The General Agreement on Tariffs and Trade (GATT), signed by 28 nations in Geneva on October 30, 1947, its basics rolled into the World Trade Organization (WTO), and strengthened further by the Multilateral Agreement on Investments, MAI, stalled when the world learned its true purpose. But, it resurfaced under the General Agreement on Trade in Services (GATS) and continued privatizing the commons, the legal cornerstone of this new world order:‖2 [A]ny member can challenge, through the WTO, any law of another member coun-
try that it believes deprives it of benefits it is expected to receive from the new trade rules. This includes virtually any law that requires import goods to meet local or national health, safety, labor, or environmental standards that exceed WTO accepted international standards.... [Both national and local governments] must bring its laws into line with the lower international standard or be subject to perpetual fines or trade sanctions.... Conservation practices that restrict the export of a country‘s own resources—such as forestry products, minerals, and fish products—could be ruled unfair trade practices, as could requirements that locally harvested timber and other resources be processed locally to provide local employment.3
The equality and transparency in world trade supposedly guaranteed by GATT, NAFTA, The WTO, GATS, or FTAA, etc, were fraudulent. Impoverished, potentially wealthy, nations were forced to open their markets, legal structures, and financial institutions, while tariffs between the organized, and allied, imperial centers remained one-quarter that as between themselves and the developing world. The buying power of ―resource powers’ ‖ export commodities, and labor, continued to fall as the imperial nations further tighten the screws of financial, economic, diplomatic, covert, and overt warfare. This disguised warfare, holding down the price of developing world resources and labor, and the transferring of that wealth, natural and processed, to the imperial centers, and capitalizing those stolen values to ever higher values, is now understood and the ―resource powers‖ are pushing back hard.d With the intention of imposing a fait accompli upon an unaware world, negotiations on the Multilateral Agreement on Investment (MAI) were trying for transnational investors to retain the "right" to buy, sell, and move businesses and Part III, addressing the U.S. economy, goes deeply into how exclusive titles to nature‘s resources and technologies, denying others their share, of what nature offers to all for free. This is the foundation of the monopoly system; corporate imperialism only builds further upon that legal base. d China has signed 50 cooperation agreements, and 800 Chinese firms have invested in Africa threatening that control. President George Bush established U.S. Africa Command (AFRICOM, 02/06/07) with 24 military bases planned. The cover story was to be health, education, democracy, and economic growth while all understand the real purpose was to install puppet governments to maintain access to resources below their real values. c
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other assets wherever they want, whenever they want. They wanted to ban regulatory laws around the globe, and preempt future efforts to hold transnational corporations and investors accountable to the public. The intent of the backers, the United States and the European Union, were to gain the agreement of the 29 countries comprising the OECD (Organization for Economic Cooperation and Development) and then push the new accord on the rest of the world. GATT-NAFTA-WTO guidelines for food purity standards were to be those of the heavily corporate-influenced Codex Alimentarius Commission, an obscure agency in Rome issuing advisory food standards often much weaker than those of the United States.‖4 Labor leaders were essentially excluded from designing and negotiating GATT-NAFTA-WTO-MAI-GATS-FTAA agreements; their rights were only addressed in the breach. World banking and trade rules were designed for corporations, by corporate lawyers, to obscure the real meaning. This left affected parties all over the world to decipher what those agreements really say. For example, it was a requirement of the 1974 Trade Act that labor be included in trade negotiations. However, the Labor Advisory Committee was given a text of the NAFTA agreement only 24 hours before their comments were due to be filed. Those several hundred pages would have required weeks of study by the world‘s best minds to be fully understood.5 That Dunkel Plan, if approved, would give GATT a ―legal personality,‖ known as the Multilateral Trading Organization (MTO) [later organized as the World Trade Organization or WTO], that could strictly enforce global trading laws.... MTO [now WTO] will have the power to pry open markets throughout the world.... The proposed agreement would also extend GATT oversight from ―goods‖ (machinery for instance) to ―services‖ (insurance, banking). In order to protect trade in services, GATT would guarantee intellectual property rights—granting protection for patents and copyrights.... MTO would have the authority to restrict a developing nation‘s trade in natural resources (goods) if it didn‘t allow a first world country‘s financial service company sufficient access to its markets.... GATT panels may some day rule on the trade consequences of municipal recycling laws or state and local minority set-aside programs. In any trade dispute, the nation whose law is challenged must prove its law is not a trade barrier in secret hearings. The new GATT says plainly, ―Panel deliberations shall be secret.‖ Under this system, newly elected federal executives could allow the trade or environmental laws of their predecessors to be overturned by mounting a lackluster defense of the laws. And since the defense would occur in secret, without transcripts, interest groups and the public would never know the quality and vigor of the defense. Environmental or health and safety laws (and possibly labor rights and human rights laws) affecting another nation‘s commerce, no matter how well intended, will be more easily challenged. Again, the executive
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branch from the challenged nation would defend the law in star-chamber proceedings in Geneva—out of view of media and interest groups back home.6e
David C. Korten‘s book, When Corporations Rule the World, points out, the burden of proof is on the defendant to prove the law in question is not a restriction of trade as defined by the GATT.... Countries that fail to make the recommended change within a prescribed period face financial penalties, trade sanctions, or both.... The WTO is, in effect, a global parliament composed of unelected bureaucrats with the power to amend its own charter without referral to legislative bodies.... [It] will become the highest court and most powerful legislative body, to which the judgments and authority of all other courts and legislatures will be subordinated.7
Developing countries having equal representation made it appear the WTO was democratic. But the developing countries go into those meetings knowing exactly what they want and ―among the one hundred or so developing countries hardly five to ten get a place in these informal discussions and negotiations.‖ Weak nations‘ representatives are isolated, and individualized, at the meetings. If that fails, pressure is brought for a positional change and the end results are plans of the developed world being enacted almost unopposed (Run a Google search for WTO decisions, Third World Network). As the primary tool for penetration of other markets is the wealthy world subsidizing their producers, simultaneous with imposed structural adjustments denying that right to the emerging world, this left the world trade structure unchanged. If the world is ever to gain its freedom, and full and equal economic rights, the subsidies to the industries by wealthy nations must end. Through the above-described colossus, multinational corporations have gained control of other countries‘ internal policies, and have colonized both the developed and developing worlds in the process. These laws, essentially created by corporations, can bypass national laws protecting environments, and economies, throughout the world. Legal challenges are now starting to come in, and the rulings, all made behind closed doors, not subject to challenge or appeal, and have sided with the corporations. Early examples are the governments prevented from protecting Pacific salmon runs; forced to abandon strengthening pesticide laws; blocked from enacting laws to reduce emissions of lead, zinc, and copper eVery
few corporations will be directly involved in covertly controlling thoughts of others. But there is a hard core that does. Trace the covert and overt foreign policy violence to its source, and one will arrive at that hard core. Trace the funding of the think-tanks which pour out the books and articles and the lobbyists which essentially write our laws, and one arrives at the door of the same hard core.
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from smelters, and blocked from banning dangerous chemicals in fuels.8 Nations‘ laws denying the right to market fish catches by trawlers—using netting methods that fail to protect turtles, dolphins and other endangered species, and thousands of other environmental protection laws—can be overruled by what amounts to a court system established, run by corporations. The legal changes necessary to break the multinational corporations‘ control of world resources and profitable markets, and their control over labor, are not permitted under corporate-utopian world banking and trade agreement guidelines. Wealthy citizens domiciled in mother countries, and subject to the laws of that country, are being replaced by a legal system to siphon the wealth of both the developed and developing world to stateless corporations domiciled in offshore tax havens; they are subject to no law but their own. Thus corporations, 1 On paper, move their headquarters to, or establish a subsidiary in, a third country tax haven; 2 build their factory in a low-wage developing country with a low unit cost of production, say $10; 3 invoice (bill) their production to the offshore tax haven at a price that leaves no profit, that same $10 production cost; 4 invoice that production from the tax haven to a high-wage country at a price showing a profit in the tax haven and none in the real corporation in the high-wage country; let‘s say $30 per unit; 5 ship their products directly from the low-wage developing country to the high-wage developed country; 6 and bank those tax-free profits in the tax haven which is nothing more than a mailing address with the plaques of maybe 30 corporations on each door. No products touch that offshore entity; even the paperwork is done in corporate home offices. There are over 12,000 such corporations registered in one building in the Cayman Islands alone, which has a population of only 10,000. William Walker says, ―We are directors of about 500 of them.... We funnel a lot of money out of Central and South America.‖ Corporate imperialists are doubly insulated from accountability. ―Of the thousand American holding companies that control U.S. firms and their subsidiaries throughout the world, six hundred have their registered offices in Switzerland.‖9 With over 39 tax havens worldwide, this is a conservative analysis.10 A corporation practicing this ―transfer pricing‖—almost all do, 40 to 50% of world trade is intra-firm trade between their subsidiaries—could pocket the greater share of the value of production. The wealth of the low-wage country would continue to be siphoned to the imperial-centers-of-capital, and the highwage country also would have its wealth siphoned to the powerful company‘s
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bank account in the offshore tax haven. Corporations have formed enclosed, and controlled, trading systems which create comparative advantage within corporate structures; which are complex words meaning they have created monopolies.11 This is neo-mercantilism, restructured into corporate imperialism, functioning to perfection, extracting both the wealth of the imperial center, and that of the resource wealthy periphery, to corporate bank accounts. A friend purchased a power tool for $75 from Harbor Freight that was advertised by another store for $250. Another friend paid $330 for a rotary drill press which he knew should cost $800. Obviously the tools at Harbor Freight were manufactured in China and only a normal price markup was applied. This bypassed the above-described monopoly process (high pay divided by low pay squared with traders pocketing most the profits as outlined in chapter one) and permitted the final buyer in the imperial center, but not the labor on the periphery of empire who produced it, to gain the greater share of that wealth. Assuming the tools were imported for the same low import price but the traders lowered the retail price only a little, which is what happens normally; it is the trader who will have gained that wealth, not the final consumer. But, in both instances, that wealth would have been gained by the imperial centers. In this unusual example, the final buyer ended up with maximum use-value where the norm is for the trader to end up with maximum capitalized value (the increased value of corporate stock) which is 10 to 30 times use-values, or more. Maximizing capitalized value accounts for the massive unearned wealth, we keep pointing to, continually accumulated through, both, plunder by trade and the monopoly structure of property rights law as applied to nature‘s resources and technologies. Under honest property rights law, there are no capitalized values. When all waste and thefts outlined in this book are eliminated, all values will be use-values. At the moment of invention, inventors should be paid well for his or her invention; the invention should then be placed in the public domain (Chapter 22). An economy producing, transporting, and selling only use values, provides a higher quality life to all citizens at under 50% the cost of a monopolized economy producing capitalized values on unearned wealth. Here is where the logic of capital—as currently structured and taught—falls apart, and exposes massive accumulations of the world‘s wealth as being necessary for an efficient economy as being only a cover for the same greed that has collapsed societies since time immemorial.12 As the buying power of the middle class declines, capital will continue to destroy capital battling for that limited, or even shrinking, market. The world will continue its equalization march towards the lowest common denominator; the subsistence wages of the steadily declining labor requirements necessary to operate a steadily declining economic system.
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The logic of capital grasps for every surplus in every niche in the economy, reaches into the mass of unemployed humanity for lower-paid labor, and the march towards the lowest common denominator continues. The flaw is in (monopoly) capitalism's foundation philosophy. Surplus, by Adam Smith‘s law of wages, is nothing more than wealth produced above subsistence goes to the owners of capital. If labor is to be paid only a subsistence wage, we are following a philosophy of no middle class; there will only be the impoverished masses, the enormously wealthy, and a few well-to-do managing the wealth extraction, surplus appropriation, system. The current middle classes of the imperial centers, Europe and America, developed only because of the strangle hold those empires had on world trade. That massive wealth was obtained through plunder by trade and—assuming the ―resource powers” ally together and ends that theft of their wealth—those massive sums of unearned wealth will be transformed into use-values shared relatively equally by all citizens of this earth.
Thinking in terms of Units of Production To understand how today‘s competitive monopolies are a massive throwing away of wealth, one need only think in terms of ―units of production,‖ such as a farm. No one would shut down, and abandon, a farm, a unit of production, and move to an equally-productive farm, an equal unit of production, on the other side of the world because labor is cheaper. The farm is sold to another farmer; the first farmer moves to the other farm, in this example in another country, and both units of production keep producing food for their regions, and selling their surplus within that region, and to the world. Idle land alongside of hungry people would be an oxymoron and so is an idle, or dismantled, factory. Yet industries have been abandoned, and rebuilt across borders, or on the other side of the world, at a breath taking pace. Hunger while a region‘s most productive land is producing for export to the developed imperial-centers-of-capital outlines the obvious: the developed world has firm control over the resources of its countryside, the resource wealthy developing world. Pick any consumer item—stoves, refrigerators, utensils, tractors, trucks, shoes, cloth, clothes, cars, or steel—virtually any item you think of is desired and typically badly needed by people in many parts of the world. If the previous perfectly good factory producing any one of those consumer items had continued producing instead of shutting down, the productive capacity of those ―units of capital‖ would be double today‘s monopolized system and, through payment of adequate wages so labor would have buying power, and the circulation of that money within the local economy producing more buying power year after year, the multiplier factor, those new factories could be producing for the emerging world, not shipping their production back to the imperial centers.
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We need to evaluate: wasted capital, rights of all people to their share of both employment and production, the logic of increasing the buying power of needy people through expanding the jobs to them rather than shutting down perfectly good factories (productive units), rebuilding those factories in the resource wealthy, impoverished, world, and then shipping the production back around the world to the original consumers. The system, as structured, is designed to monopolize the tools of production, maintain the flow of resources to developed world industries at a fraction of their value, and maintain the flow of manufactures to the same wealthy world consumers. This is identical to the monopolization of the tools of production and control of industrial capital, resources, and trade that took place within the Free Cities of Europe where siphoning the wealth of their countryside to nascent imperial-centers-of-capital began centuries ago (see chapter two). Although using the comparative advantages of soil and climate to trade bananas, grapes, wool, cotton etc, is fine, shipping manufactured products halfway around the world to another industrial society, when that region has the surplus resources and labor to produce its own is economic and ecological insanity. There is no gain to the world in destroying an already efficiently operating factory and rebuilding an identical one elsewhere because the corporate imperialists wish to move to areas without labor rights, environmental protection laws, or adequate taxes (better yet social collection of land and resource rents) to build and maintain social infrastructure. Today's policies only look efficient because the primary measurement used is the corporate bottom line, which measures excessive accumulation of wealth produced by, and extracted from, others. It does not measure the well being of the citizenry. Chapters 10 through 18 further outlines the world trade scene which seems to be fast coming to an end. Those monopolies must collapse if we are to ever have peace, if poverty is to ever be eliminated, and if each world citizen is to ever have a quality life with full and equal rights for all. Bookworld, Washington Post (April 14, 1994), p. 14 (From McGehee‘s Database). John Ranelagh, The Agency: The Rise and Decline of the CIA (New York: Simon and Schuster, 1986), p. 120. 3 David C. Korten, When Corporations Rule the World (West Hartford, CT, Kumarian Press and San Francisco, Berrett-Koehler, 1995), pp. 174-75; Susan Strange, The Retreat of the State: The Diffusion of Power in the Global Economy (Cambridge, UK: Cambridge Studies in International Relations, number 49, 1998); Chakravarthi Raghavan, Recolonization: GATT, the Uruguay Round & the Developing World (London: Zed Books, 1990). 4 Korten, When Corporations Rule, p. 179; Kathy Collmer, ―Guess Who‘s Coming to Dinner?‖ Utne Reader, July/August, 1992, pp. 18-20. 5 Noam Chomsky, The Prosperous Few and the Restless Many (Berkeley: Odonian Press, 1993), p. 23. 6 Don Wiener, ―Will GATT Negotiators Trade Away the Future?‖ In These Times, February 12-18, 1992, p. 7. See also Raghavan, Recolonization. 7 Korten, When Corporations Rule, pp. 174-77. 1 2
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Noam Chomsky, Year 501: The Conquest Continues (Boston: South End Press, 1993), pp. 57-58; Andrew A. Reding, ―Bolstering Democracy in the Americas,‖ World Policy Journal (Summer, 1992), p. 410. 9 Jean Zeagler, Switzerland Exposed (New York: Allison & Busby, 1981), p. 35, emphasis in original. 10 Ingo Walter, The Secret Money Market (New York: HarperCollins, 1990), p. 187, chapter 8. 11 Alfred E. Eckes, Jr., Opening America’s Markets: U.S. Foreign Trade Policy Since 1776 (no city named: University of North Carolina Press, 1995), p. xviii; Richard C. Longworth, Global Squeeze: The Coming Crisis of First-World Nations (Chicago: Contemporary Books, 1999), pp. 31, 259-60. 12 William H. Kötke, The Final Empire: The Collapse of Civilization and the Seed of the Future (Portland, OR: Arrow Point Press, 1993). 8
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12. Impoverishing Labor and Eventually Capital
Wages of non-supervisory labor in the United States declined 11% between 1972 and 2007 even as labor efficiency steadily increased 28% per decade. Capital and management‘s share of the national income doubling in that time period; including all the efficiency gains of technology (above 100% over those 35 years), plus 11% of what once went to labor. Just as Britain, 100 years ago, sold industrial technology to Germany, who then used it to take over Britain‘s world markets, leading to WW I. U.S. labor has lost both industrial jobs, and buying power through American technology and capital employing labor in other countries. The ―miracle‖ of more Americans employed than ever before, even as high-paying primary jobs shrank, has been accomplished by expansion of lower-paying service jobs—cooking each other meals, washing each other‘s clothes, giving each other heart transplants (see chapters 22 through 25), and wives going to work to make up the shortfall in pay. During those 38 years, the buying power of low-paid American labor declined at a rate exceeding 1% per year.1 Due to the lower cost of imports, the buying power of American labor initially rose when the Asian tigers, and Russia, underwent their 1997-98 financial meltdown. At the same time, through the price spread between production costs on the periphery, and sales prices in the imperial centers, the buying power of those who owned stocks rose sharply. This cannot continue. After all, if labor is to have purchasing power, they must be well paid, and they will not be paid at all if others produce everything they consume. . In 1987, it took only 40% as much labor to produce the same amount of goods as in 1973 and that efficiency process has quickened. During that time span, the earnings of German and other European labor increased. The industrial wages of 14 nations are now greater than the industrial wages in the United States. At $23 an hour in 1999, as opposed to $14 an hour, Germany‘s industrial labor was 64%, $17,000 a year, better paid.2 In 1979, a U.S. worker had to work
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23 weeks to earn enough to buy an average-priced car. Having to work 32 weeks a decade later to buy the same quality car indicates labor has lost more buying power than the above-calculated 19%. However, this loss has not translated into political action. ―Wall Street economists did not anticipate any great rebellion. Wages have been falling for nearly two decades, they noted, and so far the American people have accepted it with patience and maturity.‖3 The world‘s workers should be aware of what the managers of state have in store for them. William Greider explains: [O]rthodox economists routinely assume that the American wage decline must continue for at least another generation.... Wall Street economists, without exception, predicted further erosion for the next twenty to twenty-five years. Unfortunate but inevitable, they said ... wage patterns are moving toward equilibrium—a ―harmonization‖ of labor costs among nations.4
That ―harmonization of labor costs among nations‖ means a relative drop in wages within the developed world; a disaster for those workers. The story of the Jim Robbins Seat Belt Company illustrates the process. In 1972, it moved from Detroit, Michigan, to Knoxville, Tennessee, and reduced its labor costs from $5.04 an hour to $2.58 an hour. In 1980, the company started moving its operations to Alabama, where wages were about 60% those at Knoxville. Then in 1985 the factory was moved to Mexico, where wages were about 37cents per hour.5 The claims of labor being too small a share of production costs to influence major corporations to rebuild factories in low-wage countries are not valid. If labor costs of a runaway industry are 20% of production costs in the high-wage country, they will be only 5% in a country with one-quarter the wage rate. Add in tax savings, lack of pollution controls, cheap land, and cheap industrial construction labor, and a former 10% profit rate becomes 25 to 40%. Early on, it was only in the markets of parts of Asia, those who had moved under the protection umbrella the United States had placed over Japan and Taiwan, that wages had been consistently rising. William Greider explains: On the streets of Juarez [Mexico] ... [t]heir incomes are not rising, not in terms of purchasing power. They have been falling drastically for years.... In 1981 … the labor cost for a Maquila worker was $1.12 an hour. By the end of 1989, the real cost had fallen to 56-cents an hour.‖6
Before their approval, radio host Jim Hightower had been alerting America to the realities of the General Agreement on Trades and Tariffs (GATT), now melded into the WTO-MAI-NAFTA-GATS-FTAA:
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No need to speculate on the impact of NAFTA. We can already see its future. Dozens of big-name U.S. corporations have already moved 500,000 jobs from our country to Mexico.... In 1985, Zenith employed 4,500 Americans making TV sets in Evansville, Indiana, and another 3,000 in Springfield, Missouri. Workers made about $9.60 an hour—hardly a fortune, but enough to raise a family. Today, all of Zenith‘s jobs are gone from Evansville, and only 400 remain in Springfield. No, Zenith hasn‘t gone out of business—it‘s gone to Mexico, where it pays Mexican workers only 64 to 84-cents an hour.... Consider this: The average manufacturing wage in Mexico is a buck eighty-five. The average wage U.S. companies pay down there is 63-cents—$29 a week. They‘re going to buy a Buick from us on that? Our companies aren‘t creating consumers in Mexico, they‘re creating serfs.... Academics used by the government to promote NAFTA as a job creator confessed that instead of a gain of 175,000 jobs for the United States—as they had claimed in their book ... [it] would cause a job loss.... The real purpose behind NAFTA is not to help Mexican workers, but to use their low wages as a machete to whack down ours. ―Take a paycut, or we‘ll take a hike,‖ the companies say. The Wall Street Journal even found in a survey that one-fourth of the U.S. executives admit that this is what they‘ve got in mind.7 (And they got their wish. Witness the collapse of the American auto companies in 2008-10, it will get much worse, and then it will get worse again when Chinese and others‘ brand names reduce prices by half again, those profits go to Chinese and other traders, and many Western companies disappear.)
This power of workers to increase wages peaked and started declining in Western Europe, the United States, and Japan while, until their 1997-98 financial meltdown, it was in the middle stages of increase in Taiwan and South Korea, and in the beginning stages in China, Malaysia, and Indonesia. Under free trade rules, and at the expense of developed world workers, wages of developed and developing countries will equalize and integrated economies will eventually balance but, unless the rights of labor and communities are reinstated, it will be at a very low level: With the growth of worldwide sourcing, telecommunications, and money transfers, there is no pecuniary reason for U.S. firms to pay Americans to do what Mexicans or Koreans will do at a fraction of the cost. This is why ―elite‖ U.S. working-class jobs are being sent abroad and ―outsourcing‖ is the current rage in manufacturing. As a result, American multinationals remain highly competitive and their profits are booming, while the United States itself is becoming less and less competitive. In the 1980s, U.S. capital goods exports have collapsed while imports of both consumer and producer goods have surged, no doubt in part because U.S. firms are now importing these products from foreign lands. In other words, we once exported the capital goods used to manufacture our consumer imports; now we are also importing the capital goods to run what remains of our domestic industry. Even a growing percentage of output in ―sunrise‖ industries like computers and telecommunications is mov-
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ing offshore. At home, the result is downward pressure on wages and chronic job insecurity for the remaining manufacturing jobholders, who are more docile as a result. Meanwhile, the castoffs from manufacturing and mining plus new labor market participants flock to low-productivity jobs serving coffee, making hamburgers, and running copying machines. Barring protectionism or a decline in U.S. wages to Korean or Mexican levels, this situation will persist and, in fact, will probably get much worse.8
Looking at that earlier collapse, we should make no mistake about it: integrating a high-wage developed economy with a low-wage developing economy, without the protection of equalizing managed trade, will make recovery from the current, 2008-10, collapse difficult. The owners of capital always reach outside the newly balanced economies for even cheaper labor and the downward cycle continues: Broadly speaking, employers can compete either by offering low wages and ignoring the need for effective environmental and other regulations or by achieving higher productivity and producing higher-quality goods. Without a social and environmental charter, a free-trade agreement will encourage competition of the first kind. If, on the other hand, such a charter is adopted, it will not only protect wider social interests but also encourage firms to seek comparative advantage by concentrating on innovative productivity-enhancing approaches. Equally important, a charter is necessary to ensure that workers share in the benefits of rising productivity, thus creating demand for the goods they produce. Simply put, if workers cannot buy the products they make, manufacturers cannot sell them—a point that Henry Ford stressed more than half a century ago.9
For decades, Sweden, Japan, and Germany successfully protected both their labor and capital, and their economies were the envy of the world. But the loss of markets to cheaper producers is forcing those countries to abandon their protection of labor. Their capital is now fleeing and their wages are declining, albeit only slightly. The loss of rights of labor, as those industries flee, is but the other side of the coin of the increased wealth of property. A part of the earnings of first world labor has been transferred to the low-wage country, and a part to increased corporate profits. In the Industrial Revolution, repressed skilled labor fled to the most productive centers of capital that was protected, and firmly rooted within national boundaries. Today it is the reverse: capital is fleeing, both national laws, and well paid labor. The trauma to a country‘s finance structure, to workers within the countries whose economies are declining, and the almost certain restructuring of ideology, and replacement of current leaders, if that decline continues, are, of course, why countries go to war over trade. But corporate imperialism provides a new international economic framework. If the economies of all nations are spiraling downward, as capital parked outside national borders destroys capital within
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those borders, and various elements of this externally parked capital continue cannibalizing each other (capital destroying capital), it will be interesting to see who the managers of state go to war with.
Power Relationships are Shifting Fast China, the former Asian tigers, Russia, and Latin America may be reenergizing while the imperial centers are still collapsing? The old balance of wealthy imperial centers and poor peripheries, meaning successful financial warfare, is not going to be reestablished. Instead, ultra-cheap manufactured products pouring in may continue to hollow out and collapse the former imperial centers, and lead to another great depression? If the emerging world can successfully decouple from the old imperial centers, to avoid war they would have to provide resources to those old centers. This would be the reverse of earlier periphery collapses which provided the imperial centers with lower import prices, and their stock markets with more finance capital as that money fled, collapsing emerging world markets. Over $200-billion was confiscated from the collapsing periphery through currency speculation in 1997-98, and the wealth confiscated as the imperial centers bought up high-quality firms on the bankrupted periphery for pennies on the dollar, was many times that.10 Financial capital was then safely banked in the, at that time, intact imperial centers. Those collapsed economies on the periphery restarted only when finance capital flowed back. As those economies restarted, many of their choice industries had new foreign owners. Finance capital monopolists of the imperial centers, called vulture capitalists, had bought title to those industries and resources for a fraction of true value. The worm has turned. Intact companies in the imperial centers are being purchased by China. If the previous centers of capital collapse further, and assuming the newly awakened periphery holds, other nations such as India, Brazil, Venezuela, and Russia will pick up trade mark companies for pennies on the dollar.a What these former periphery countries will really be buying is technology. These Parts I and II teaches us that the cause of wars and poverty is as much, or more, the monopolization of technology, as it is the monopolization of resources. Chapter 17 addresses the ―Accident of History,‖ the flight of technology to the periphery, which was destined to, at the least, create competing monoFortune magazine agrees with this analysis: Bill Powell, ―Its China‘s World: We Just Live in It,‖ October 26, 2009; pp. 86-96 a
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polists, and if the world‘s new powerbrokers were both alert and moral, and if the world agreed to a restructuring of property rights, could eliminate monopolization altogether. Latin America, Asia, and Africa are speaking of restructuring monetary and political systems, specifically periphery nations having control of regional trading currencies, and a total restructuring of the United Nations, the WTO, the World Bank, the IMF, and other overseeing organizations to where they have a relatively equal voice in world trade policies. There is now adequate industry in Japan, China, India, Brazil, Russia, and oil exporting nations to establish regional currencies, or a digital world trading currency, that cannot be counterfeited because it is to be used strictly for trades between nations or regions. If the more developed nations successfully retain control of monetary policies within their regions, and if they contract with South America and Africa for resources in trade for infrastructure and industrial development, the new secure currency nations, and those trading access to resources for technology, will be able to produce and distribute far more consumer products for their own citizens than under the former world model of wealthy imperial centers and impoverished peripheries. We now return to the current monopoly structure these emerging nations are, hopefully, trying to avoid.
Capitalizing the Values of Corporate Welfare Corporations make unearned profits by ignoring worker safety, failure to properly dispose of waste, and failure to pay their full share of taxes, and by direct subsidies. The American government provides this welfare to corporations to the tune of $448 billion (1997); when all subsidies are counted; much of this went to the wealthiest and most profitable corporations, collectively earning $4.5-trillion in profits. A substantial share of the capitalized value of these corporations is wealth extracted from other stakeholders by these massive subsidies. Meantime, under $14.4-billion in welfare was provided to the truly poor, and a large share of that is consumed in administration.11 Corporate welfare takes the form of tax credits, tax exemptions, tax deferrals and deductions, a tax rate lower than others pay, price supports, funds to train workers, government-insured transactions of all kinds, government grants for research, government services, such as building logging roads for timber companies, outright subsidies, and lavish corporate lifestyles deducted from taxes which is not in these calculations.12 In attempts to attract industry to their communities, states and cities gave corporate welfare in the form of forgiving local taxes; low taxes; government and
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municipal bonds floated to build factories and infrastructure; outright grants of land; low-interest loans; free water, sewer, and garbage services due to those tax exemptions; and discounted utility bills. Thus, Kentucky taxpayers paid $300million, equal to the plant's wage bill for one to three years, for Toyota to build its automobile assembly plant there, Alabama paid Mercedes Benz $253-million for the same purpose, Minneapolis $828-million, Illinois gave Sears $240-million worth of land as an incentive not to move, the Pentagon financed the Martin Marietta-Lockheed merger to the tune of billions of dollars, even as the companies were making record profits, and the list goes on and on.13 "More than a third of annual U.S. government spending, an estimated $448-billion, consists of direct, and indirect subsidies for corporations, and wealthy individuals, in direct violation of free-market principles."14 Cities were bidding against other cities, states were bidding against other states, and nations were bidding against other nations. Cities, states, and nations bidding the lowest taxes, least environmental protection costs, lowest wages, and highest subsidies ended up with the corporate jobs. These ransom payments were competitive bids between societies, not competition by production and distribution efficiency: Externalizing environmental and social costs is one way to boost corporate profits. Paying child laborers slave wages in some countries may increase a U.S. firm‘s bottom line. It is a tragic lure that has its winners and losers determined before it even gets underway. Workers, consumers, and communities in all the countries lose, short-term profits soar, and the corporation ―wins.‖15
These quasi-aristocratic privileges led to the current contraction of commerce, and destruction of their own wealth appears to be coming right behind the collapse of labor‘s buying power. The hundreds of billions of dollars of oil money flowing to the periphery, the massive financial reserves and industries building up outside U.S. and European borders, and the developing world now understanding how they have been kept in poverty, is creating a broad shift in power relationships. Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996), pp. 2, 6; Lester Thurow, ―Falling Wages, Failing Policy,‖ Dollars and Sense, September/October 1996, p. 7; Mortimer B. Zuckerman, ―Where Have the Good Jobs Gone,‖ U.S. News & World Report, July 31, 1995, p. 68; Dean Baker, ―Job Drain,‖ The Nation, July 12, 1993, p. 68, addresses the 2.7% drop in 1992; Kevin Phillips, Boiling Point: Democrats, Republicans, and the Decline of Middle Class Prosperity, (New York: Random House, 1993), p. 24; Lester Thurow, ―The Crusade That is Killing Prosperity,‖ The American Prospect (March/April 1996), pp. 54-59;. The following sources were published before that year. Lester Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe, and America (New York: 1
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William Morrow, 1992), p. 53. The 1980 Economic Report to the President put the loss from 1973 to 1980 at 8% and that decline has continued even more rapidly; an editorial in The Nation, September 19, 1988, p. 187, puts the loss at 16% in weekly income and 11% in hourly earnings. Lester Thurow, ―Investing in America‘s Future,‖ Economic Policy Institute, C-Span Transcript, October 21, 1991, p. 9, puts the loss at 12% in hourly pay and 18% in weekly pay; Peter Drucker, The New Realities (NY: Harper and Row, 1989), p. 123. 2 Lester Thurow, Building Wealth: The New Rules for Individuals, Companies, and Nations in a Knowledge-Based Economy (New York: HarperCollins, 1999), p. 95; Thurow, The Future of Capitalism, pp. 46, 168; Doug Henwood, ―Clinton and the Austerity Cops,‖ The Nation, November 23, 1992, p. 628. Colin Hines and Tim Lang, Jerry Mander and Edward Goldsmith, eds., The Case Against the Global Economy and For A Turn Toward the Local (San Francisco: Sierra Club, 1996), p. 487, cites $24.90 an hour for the Germany, $16.40 for the U.S. 3 William Greider, Who Will Tell the People? (NY: Simon and Schuster, 1992), pp. 395-97, emphasis added; Jerry W. Sanders, ―The Prospects for ‗Democratic Engagement‘,‖ World Policy Journal (Summer,1992): 375; Thurow, Head to Head, p. 163; Thurow, ―The Crusade That is Killing Prosperity.‖ 4 Greider, Who Will Tell the People? p. 396, emphasis added. 5 Thurow, The Future of Capitalism, pp. 2, 227; John Cavanagh, Editor, Trading Freedom (San Francisco: The Institute for Food and Development Policy, 1992), pp. 19-23. Read also Jim Hightower, ―NAFTA—We Don‘t Hafta,‖ Utne Reader, July/August 1993; Donald L. Barlett, James B. Steele, America: What Went Wrong? (Kansas City: Andrews and McMeel, 1992), esp. p. 3. 6 Greider, Who Will Tell the People?, pp. 381-82. 7 Jim Hightower, ―NAFTA—We Don‘t Hafta,‖ pp. 95-100. 8 Michael Moffitt, ―Shocks, Deadlocks, Scorched Earth,‖ World Policy Journal (Fall,1987), pp. 359-60. 9 George E. Brown, Jr., J. William Goold, John Cavanagh, ―Making Trade Fair,‖ World Policy Journal (Spring,1992) pp. 313. 10 Chalmers Johnson, Blowback: The Cost and Consequences of American Empire (New York: Henry Holt & Company, 2000), p. 226-27 11 Laura Karmatz, Alisha Labi, Joan Levinstein, Special Report, ―States at War,‖ Time, November 9, 1998, pp. 40-54; Donald L, Barlett, James B. Steele, ―Fantasy Island and Other Perfectly Legal Ways that Big companies Manage to avoid Billions in Federal Taxes,‖ Time, November 16, 1998, pp. 79-93; Donald L Barlett, James B. Steele, ―Paying a Price for Polluters,‖ Time, November 23, 1998, pp. 72-82; Donald Barlett, James B. Steele, ―The Empire of Pigs,‖ Time, November 30, 1998, pp. 52-64; ―Five Ways Out,‖ Time, November 30, 1998), pp. 75-79; http://www.progress.org/banneker/ cw.html, The Banneker Center’s Corporate Welfare Shame Links. For funds not going to the really poor read J.W. Smith, The World's Wasted Wealth 2 (www.ied.info/: Inst. for Econ. Dem, 1994), chap 6. Ibid Ibid 14 Frances Moore Lappé, World Hunger: Twelve Myths (New York: Grove Press: 1998), p. 98; Ousseynu Gueye, ―Let African Farmers Compete,‖ World Press Review (October 2002), p. 12. 15 Jerry Mander, Edward Goldsmith, The Case Against the Global Economy (San Francisco: Sierra Club Books, 1996), p. 106; Joanna Cagan, Neil DeMause, Field of Schemes (Monroe Maine: Common Courage Press, 1998); Sadruddin Aga Khan, editor. Policing the Global Economy: Why, How and for Whom. Cameron Bay Publishers, 1998.; Susan Strange, The Retreat of the State: The Diffusion of Power in the Global Economy (Cambridge, UK: Cambridge Studies in International Relations, number 49, 1998); Joshua Karlinger, The Corporate Planet: Ecology and Politics in the Age of Globalization (San Francisco: Sierra Club, 1998); John Elkington, Cannibals With Forks (Gabriola Island, B.C., New Society Publishers, 1998); Edward Goldsmith, The Future of Progress: Reflections on Environment and Development (Berkeley: International Society for Ecology and Culture, 1995). 12 13
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13. Unequal Trades in Agriculture
From the perspective of winning trade wars, the United States has an insurmountable advantage in agriculture. However, sales of most U.S. agricultural products are not only unnecessary, but also are morally wrong. While multiplying the exporters GDP, these imports to the emerging world destroy native agriculture by usurping local markets. The lower level of circulating money within the importing economy sabotages the multiplier factor, which is the essence of a healthy economy. Imported food limits the development of, or even destroys industries in, other sectors of an emerging economy. Overseas markets are developed for U.S. farmers because they must sell, not because others must buy. One of the most sacred illusions of America is that its agriculture is above all reproach. There is one thing Americans are sure about, without their food and generosity, much of the rest of the world would starve. Most the world now understands that corporate agriculture is the problem, not the cure. Malawi rejected World Bank/IMF advice and went from famine to exporting food. But permaculture can be two or three times more productive than Malawi‘s gaining food self sufficiency through putting money behind their farmers. Local provisioning of food, fiber, and shelter are the three mainstays of a secure population. A secure economy is only possible when money is circulating within a region, the multiplier factor. Cheap imported food, and other consumer products, send money out of a country and destroys that nation‘s buying power. This weapon has been used mercilessly, not only to prevent the development of other nations, but also to destroy already developed economies. Shiploads of ―free‖ American wheat shattering the economy of the Ukraine, the breadbasket of Europe, is a leading example. Forty percent of the developing world once plagued by severe food shortages successfully increased food production to the 2,300 to 2,400 calories per day required to sustain an adult. China and India were the major successes, but many smaller nations were successful until their economies were sabotaged by the many methods the U.S. and allied nation‘s developed over the centuries.1
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The best-known example of a country continually faced with hunger is Bangladesh, where ―two-thirds of the population suffers from protein and vitamin deficiencies.‖ Yet the country exists on a fertile plain, blessed with plenty of water, and ―grows enough in grain alone to provide everyone in the country with at least 2,600 calories a day.‖2 It is obvious nature has provided this country with the ability to feed more than the present population. The reasons for such anomalies become clearer when one studies Africa and South America, the two continents with the hungriest populations. The United Nations Food and Agriculture Organization estimate that only 60% of the world‘s arable land is farmed. In Africa and South America, the figure averages 20%, and their grain yields are only one-half that of industrialized countries. Brazil, for example, is burdened with a large hunger problem, but even without the destruction of more rainforests, it has 2.3 cultivable acres per person. In that country, as well as most of South and Central America, one-half the acres being farmed, invariably the best, currently grows crops for feeding cattle or for export.3 Brazil has ranches with up to 250,000 head of cattle, that one owned by the Rockefellers, which monopolizes land capable of feeding hundreds of millions of people.4 Latin Americans and Africans consume only a small percentage of their land‘s agricultural potential; a substantial share is exported. If a region gains control of its currency, and a coordinated effort is made, permaculture can be established throughout any nation or region within a period of 20 years. Permaculture is strictly local. At first it may appear more expensive, but one unit of money buying imported food is spent only once, while each unit of money spent purchasing local food, and assuming all other production is local, each unit of money circulates many times. For every person eating locally-produced food, and assuming a balanced economy, 15 people would be fed with those same units of circulating money. That is the enormous power of the multiplier factor when money is spent regionally. Add in the reality that permaculture is two to three times more productive than corporate monoculture, and it is obvious that every nation on earth can be well fed. The impoverished world needs to control their own land, grow their own food, own, and the right to be employed by, their industrial capital. Given those rights, through denying others the right to monopolize, they will not be hungry.
Hunger is Partially Determined by Who Controls the Land The often-heard comments, ―There are too many people in the world,‖ and ―overpopulation is the cause of hunger,‖ is the same myth expounded in 16thCentury England. Actually, the enclosure acts pushed the peasants off the land so the gentry could raise more wool for the new, and highly-productive, power
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looms. Allowing the peasants to retain their historical entitlement to their share of what nature offered to all for free would have meant no unearned fortunes, the centerpiece of capitalism, would be accumulated. Castles and the high living of monopolists, of all shades, were the other side of the coin of starvation. Peasant overpopulation as the cause of poverty and hunger was the accepted reason because social and intellectual elites were doing the rationalizing and they controlled the educational institutions studying the problem. The absurdity of suggesting England was overpopulated is clear when one realizes ―the total population of England at the time, the 16th century, was less than in any one of several present-day English cities.‖5 The European colonizers understood well that ownership of land gives the owners control over what a society produces. The holders of that power wrote those laws to protect their power and wealth. Those colonizers redistributed the valuable land titles to themselves, eradicating millennia-old traditions of common use. If rights in common are ever reestablished through paying rental values of nature‘s wealth and technologies to oneself (society), poverty will quickly disappear. In contrast, impoverishment of the politically weak is assured when the powerful collect the rental values of land (resources) and technologies. Permitting others their rightful share would negate the very reason for conquest and power, ownership of the wealth produced.
The Market Economy Guides the World's Production to Imperial-Centers-of-Capital Currently the purchasing power of the poor keeps falling further and further behind that of the wealthy and powerful. André Gorz, in his book Paths to Paradise, explains why a market economy can only work efficiently when the purchasing power of the poor is increased: This is what we have to understand—growing soya for our [and other wealthy nations‘] cows is more profitable for the big landowners of Brazil than growing black beans for the Brazilian masses. Because our cows‘ purchasing power has risen above that of the Brazilian poor, soya itself has got so expensive in Brazil that a third of the population can no longer afford to buy either its beans or oil. This clearly shows that it is not enough to ensure the developing world gets ‗a fair price‘ for its agricultural exports. The relatively high prices that we would guarantee might merely aggravate hunger in the developing world, by inciting the big landowners to evict their shareholders, buy agricultural machines, and produce for export only. Guaranteed high prices have positive effects only if they can be effectively used to raise the purchasing power of the poor.6
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The defeated, dispossessed, dependent, and impoverished have no money because their labor is far underpaid, and historically there has been no serious intent to let the periphery of empire have agricultural and industrial capital to produce their own wealth, pay themselves well, and spend those earnings locally. The world‘s natural wealth automatically flowed to the money-center countries where those basic commodities, the raw materiel for all wealth, were processed into consumer products by high-paid industrial labor to produce both consumer products, and buying power, year after year. This is the multiplier factor which is the essence of a wealthy society. Great universities within the wealthy world search diligently for ―the answers‖ to poverty and hunger. They invariably find it in ―lack of motivation, inadequate or no education,‖ or some other self-serving belief system. They look at everything except the cause; the powerful have aristocratic exclusive title to the world‘s natural wealth, rather than it being conditional titles requiring rental values to be paid to society. The real causes of poverty, exclusive titles to nature‘s wealth, which she offers to all for free, and plunder by trade, must be ignored. How else can this systematic theft of others‘ wealth be squared with what we are taught about democracy, rights, freedom, and justice? If people have the right to own land, the industrial capital to produce the tools to work it, if production is marketed locally, and if the rental values of nature‘s resources and technologies were paid to themselves (society), every region in the world could feed and care for itself. There would then be no reason to plant the one-quarter of U.S. crops being exported. The multiplier factor, an increase of possibly 15 times in local commerce year after year, would be working its magic in developing countries as they produced, processed, and distributed their own food, as well as other consumer products. The increased buying power would create that market, and the circulation of it, as well as created money up to the level of a balanced economy, would provide the finance capital.
Beef: “A Protein Factory in Reverse” In Diet for A Small Planet, Frances Moore Lappé teaches that: 1 The human body can manufacture all the 22 amino acids which are the building blocks of protein, except 10 which are called the essential amino acids; 2 these nutrients are found in grains, vegetables, and fruits but not all ten exist in any non-meat foods; 3 any essential amino acid missing or deficient in a person‘s diet sets the limit on the human body‘s ability to build protein; when consuming vegetables, grains, and fruits that include all ten essential amino acids in adequate amounts, the body builds its own protein even if no meat has been eaten;7
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4 and chemically there is no difference between an amino acid whether the source is meat, vegetables, grains, or fruits. Ms. Lappé points out that vegetables, grains, and fruits, properly balanced for amino acids, can provide more protein per acre than meat. Each 16 pounds of perfectly edible human food in the form of grain fed to cattle produce only one pound of beef. This is ―a protein factory in reverse.‖8 Lappé‘s calculation is conservative; prime-fed cattle have 63% more fat than standard grade, and much of it is trimmed off, cooked away, or left on the plate. Even the fat eaten is usually not wanted. Subtracting the unwanted fat demonstrates it requires more than 16 pounds of grain to produce one pound of meat. Cattle are ruminants with multiple stomachs that efficiently convert roughage (grass) into muscle. But they are inefficient converters of grain to meat, and in that effort, consume large amounts of this human food. If the grains fed to cattle were consumed directly by the world‘s hungry, the available protein from those foods would increase by 16-times. But when fed to cattle, the overwhelming share of grain is converted into worthless fat, bone, intestines, and manure. While cattle are efficient consumers of roughage, the grain fed to them is subtracting from, not adding to, the supply of protein. With a digestive system designed by nature for that purpose, if cattle were fed only roughage, and the high-quality grains they once consumed were consumed by the human population, hunger would be eliminated while reducing the pressure on the environment. If the developed world returned to the practice of growing cattle on roughage and feeding grain for only a short time before slaughter, the quality of the beef would be higher, measured by leanness, not by marbling, and the quantity available only slightly reduced. Counting the grain required to produce the meat eaten, the consumption by the well to do of 8,000 to 10,000 calories per day is a major cause of world hunger.9 Global production exceeds 3000 calories of food per day for each person, while the daily need is only 2,300 to 2,400 calories, and the potential world calorie production could be raised much more by, in place of planting fields to feed grain to cattle, planting high-protein, high-calorie, crops for human consumption. On the average, the proper combination of leafy vegetables produces 15times more protein per acre than grain-fed beef, peas, beans, and other legumes produce 10-times more. The lowest protein crops, grain, still produce five-times more when eaten directly as opposed to eating meat fattened on grain. Reclaiming one‘s share of the wealth produced by land, through social collection of the rental values of nature‘s resources and technologies, would finance both agriculture and industry. As money is only a symbol for productive labor and resources, and both are within the borders of those regions, the net cost to
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those societies would be almost nothing (their labor will have done it all), and all would be well fed and well cared for. On July 4, 2005, Der Speigal pointed out the audacity of the current monopoly structure: When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -- which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ... Corn that predominantly comes from highly-subsidized European and American farmers ... and at some point, this corn ends up in the harbor of Mombassa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.
Zambia had 40 small industries producing clothes for Zambians. A flood of used clothes from America undersold those producers, those industries closed down, the economic multiplier went into reverse, and the number of impoverished Zambians rose rapidly. The wealthy world feasts on chicken breasts while boatloads of imported chicken wings and drumsticks, supported by the high price the wealthy will pay for chicken breasts, undersell and devastate the meat industries of weak nations. Not only are poor countries unable to compete against subsidized imported food and consumer products, they are also unable to export to the wealthy world due to both their high home-production supports, and tariffs on imports. The wealthy world sells food for roughly half their cost of production. But the money spent producing that item circulates within the exporting economy possibly 15 times (the economic multiplier). Each million dollars worth of exports sold at half the cost of production, in this case $500,000, still generates $7.5 million of economic activity in the wealthy exporting country year after year.
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Meantime, the wealthy world sells $1 million worth of highly-subsidized chicken wings and drumsticks for $500,000. The multiplier factor then goes into reverse destroying roughly $7.5 million worth of local business.
Conceptually Reversing the Process of Free Food If American farmers were undersold by subsidized agricultural surpluses from another society, or that imported food was given to American consumers, U.S. farmers could not sell their crops. They would go bankrupt, the tractor and machinery companies would go bankrupt, the millions of people depending on these jobs would be without work, resources and production of remaining industries would have to be sold to other societies to pay the import food bill, and America would quickly become impoverished; all due to their economic multiplier and capitalization of unearned values going into reverse. In a country not yet industrialized, natural resources must be sold to pay for food, and debt traps (money loaned to them that was properly theirs in the first place) are put in place to maintain that dependency.10 This process created havoc in Mexico as trade barriers fell. Their food imports rose to 60% of their needs, wages fell drastically, industrial production shrunk substantially, and debts increased dramatically. To pay for their ―cheap‖ imported food and consumer products, the natural resources must be sold, and trade rules, and debt traps, have been put in place to maintain that dependency. Once those monopolies are in place, "free trade" siphons the wealth of the periphery to the imperial-centers-of-capital. Witness what happened to the former Soviet federation as free food, cheap food, and other commodities poured into their economy as they followed the instructions of Jeffrey Sachs and other Western advisors. The total Soviet economy simply collapsed. To eliminate hunger: 1 There must be equalizing managed trade to protect both the emerging world, and the developed world, so the dispossessed can reclaim use of their land, and the wealthy retain use of theirs. The process is simple; pay society (themselves) those resource rents (land rents). Under that philosophy only the most productive farmers and industrialists would own that land, absentee ownership would disappear, and the funds collected would build infrastructure and initial crucial industry. 2 Utilizing permaculture, a citizenry can both produce and consume the high-protein, high-calorie, crops containing all ten essential amino acids. 3 Those societies must adapt dietary patterns so vegetables, grains, and fruits are consumed in the proper amino acid combinations, with small amounts of meat or fish for both protein and flavor.
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Global Economies and Local Economies Within the Community Social-Credit Process How can a nation or region attain security so as to avoid starvation and poverty as faced by 100s of millions today due to corporate control of world food supplies? They must first establish local permaculture and avoid foreign control of food supplies. Plants providing thread for cloth, such as flax or six foot high hemp, are among the most prolific in the world. So permaculture can be expanded to produce fiber for clothes and cheap exotic threads made from oil or coal will not be expensive nor will their use threaten the environment. Houses built from rammed earth, brick, or rock with ceramic interiors that will last for many centuries are also local industries. Within those local industries, permaculture and housing, are the essentials of a secure society—food, fiber, and shelter. Where all the resources and labors of the wealthy world go, stands out clearly; they are primarily to maintain the "freedoms to travel," and being entertained, once they arrive. Those within the wealthy world run uptown for hamburger, shop till they drop, have houses full of clothes, shoes that are seldom--or never--worn, their kids have closets stuffed with toys they never play with, there are trips overseas, cruises, annual vacations, and on and on. The list of unnecessary and unused toys a modern society is titillated with is endless. Four passenger diesel cars now getting 65 mpg; five passenger gas electric hybrids getting 150 mpg; the all electric, 7 passenger, 300 miles per 45 minute charge, Tesla sedan; and 300 miles per gallon, gas eclectic, 3 wheel, 300 pound, run-a-bouts springing up all over the place, again tells us that lack of technology was not what was keeping efficient cars off the road. The efficiencies of a market economy within today's property rights law, as applied to nature's resources and technologies, denying others their rightful share of what nature offers to all for free, are fiction. The world was sold BMWs, expensive SUVs, pickups and other big cars because companies earned $8,000 apiece on them and only $1,000 on small cars (these statistics on the evening news discussing the 3-wheel Aptera car) and could not have earned $500 on a little gas-electric run-a-bout. Those high prices are due to the monopolization, wealth extraction, capitalization of unearned wealth, process compounded by promotional, persuasive, titillating, advertising, and further compounded by a society trained to conspicuous consumption (Google Annie Leonard Story of Stuff Mike Adams New Warfare). Not only did our property rights laws, as applied to nature‘s resources and technologies, evolve out of aristocratic law, so did our system of individual identity.
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This exposes the true costs of modern societies, freedom to go anywhere and do anything one wants (which we believe in but not as aristocrats). Most industries—beyond food, fiber, and shelter—are built to sustain those freedoms even though the most important needs for a fulfilling life—food, fiber, shelter, family and friends—are near that home. If all are to share in freedom, as understood within the wealthy world, pleasure travels must be rationally spaced, not aristocratically spaced. Through equal pay for equally productive labor, a sharing of truly productive jobs (two to three days per week once the current waste within the economy is eliminated), and a culture of family, friends, and cheap transportation, automatically eliminates conspicuous consumption and accomplishes that spacing. A thirty mile local commute, in a 3-wheeled run-a-bout, would plug in at night and charge for 50 cents. With about 10% the resources and labor to build and a lifespan of two to three times today‘s cars (there is no drive train, no strain on the constant-speed engine, and fiber glass repairs cheaply), both local and regional travel could have been affordable, relatively non-polluting, and in place the past 40 years. Equal pay for equally productive labor, and a sharing of productive jobs, will have eliminated conspicuous consumption; no one will want to look silly living beyond their means, and each person or family would automatically restrict their expenditures to affordable, pleasurable, trips. Titillating and extravagant life styles are one of the major causes of pollution, resource depletion, and in a final analysis, even wars. This is being carried forward as we speak. Companies consisting of nothing but advertising (they have no factories) are all over the place. Their only purpose is to sell you something at a very high price that has nothing to do with your basic living needs or rational pleasures. If you had never heard of them, you would never have felt a need for what they had to sell. Those products have common features, you do not need them, they titillate your interest, they feed the ego of you and your peers (for a very short time), and they are enormously expensive. A friend's friend bought in-style, wore-out, ragged, western jeans for $100. When told by his friend about he paying $5 for a nice suit at the goodwill store, the friend said "And what do you think of yourself doing that." In short, life styles of the upper middle classes within the wealthy world today are conspicuous consumption, mirror images, of the wealthy class. We are trained to be aristocrats at heart, and all that disappears, even as average quality of life rapidly rises, when each is equally paid for equallyproductive labor. . China is contracting with South America and Africa for resources and ordering factories producing toys for the wealthy world to retool to produce for their citizens. They may successfully decouple from the imperial economies and estab-
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lish an economy with full and equal economic rights for all (Part III) as was the goal of their 1949 revolution. To do so successfully, conspicuous consumption must disappear and this happens automatically with relatively equal pay for equally-productive labor. The above example of $100 for ragged jeans and all other high-priced conspicuous consumptions would disappear once consumption habits were rationalized through equal pay for equally productive labor. Just as automatically, due to the working hours dropping by half and thus the doubling of free time, style would flourish like never before, and all at modest labor input costs and thus modest consumer costs. Every community would have painters, ceramic artists, seamstresses, mechanics, carpenters, and every skill a community would need. Each would be earning a living employed two to three days a week and they would have three days a week to employ their skills within the community at very small cost, while, since their living is already earned, it still amounts to a relatively high net income. Many would forsake employed labor and simply employ their skills locally. The alert will spot that automatic rationalization of consumption habits within Part III, the story of massive waste and savings possible within internal economies. We leave it to sociologists and the citizenry themselves to conceptualize just what form those rationalizations will take. We feel that human energies and need for identity are very high and that free time will be filled by backyard gardens, skilled seamstresses, skilled mechanics, and skilled hobbyists of all kinds trading with each other and styles and respectable, yet modest, identities will blossom. As the world goes peaceful and rational; irrational conspicuous consumption will be only read about in the history books. Frances Moore Lappé, Joseph Collins, Food First: Beyond the Myth of Scarcity, (New York: Ballantine Books, 1979) p. 486; Susan George, Ill Fares the Land (Washington, DC: Institute for Policy Studies, 1984), pp. 8-9; Susan George, How the Other Half Dies (Montclair, NJ: Allen Osmun, 1977), p. 36; David Goodman, ―Political Spy Trial in Pretoria.‖ In These Times, September 19-25, 1984, ―The Buffalo Battalion—South Africa‘s Black Mercenaries.‖ Covert Action Bulletin (July/August 1981): p. 16; ―Hunger as a Weapon.‖ Food First Action Alert (San Francisco: Institute for Food and Development Policy), undated. 2 Lappé and Collins, Food First, p. 20. 3 Ibid, pp. 14-19, 48. 4 Gerald Colby, Charlotte Dennett, Thy Will Be Done: The Conquest of the Amazon: Nelson Rockefeller and Evangelism in the Age of Oil (New York: Harper Collins, 1995). Conversation with the authors. 5 Lappé and Collins, Food First, p. 27. 6 André Gorz, Paths to Paradise: On the Liberation From Work (Boston: South End Press, 1985), pp. 94-95. 7 Frances Moore Lappé, Diet for a Small Planet, (New York: Ballantine Books, 1978), pp. 66-7; Frances Moore Lappé and Anna Lappé, Hope’s Edge: The Next Diet for a Small Planet (New York: Penguin Putman, 2002). For the full story of how ―The Great American Steak Religion‖ developed, read Jeremy Rifkin‘s Beyond Beef (New York: Dutton, 1992). 8 Lappé, Diet For A Small Planet, pp. 7, 17-18. Agricultural studies show that seven to nine pounds of grain produce one pound of meat. But that is for live weight and Lappé‘s is for dressed weight. 9 Barnet, Lean Years, p. 151; George, Ill Fares the Land, p. 48. 10 See Bhagirath Lal Das, WTO: The Doha Agenda: The New Negotiations on World Trade (London: Zed Books, 2003) and his many other books. See also: Vandana Shiva‘s Stolen Harvest: The Hyjacking of the Global Food Supply (Cambridge: South End Press, 2000). 1
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14. Emerging world Loans, Capital Flight, Debt Traps, and Unjust Debt
Under present terms of international lending, a recipient of purchasing power abdicates its authority. The borrower [is] as firmly tied to the apron strings of the lender as he ever was by the chains of colonization. —CEO and author Alan F. Bartlett, Machiavellian Economics
Controlling Puppets of the Imperial Centers Instead of building basic industry for the emerging world which could then produce both more industry and consumer products, petrodollars not consumed by wars were deposited in American and European banks, and then lent to developing world countries for non-productive purposes: Banks everywhere, flush with petrodollars, had to struggle to find big customers to whom they could make big loans. Brazil, Mexico, Argentina, Nigeria, and others were wonderful customers, borrowing hundreds of billions worth of these ―recycled petrodollars,‖ as they were called.... Just moving that money out the door was an achievement because the sums were so vast. Bankers had to struggle to find clients. Never mind that at least $500-billion of those loans turned sour. Never mind that for a decade the biggest borrowers did not make a single payment. Nor, in all likelihood, will they ever.1
The banks ignored their responsibility to make sure their loans were used productively: [E]xternal loans were not used to finance large-scale industrial or other projects designed to improve the productivity of the national economy. The military dictatorships used them instead to open up domestic markets to imports in order to allow the middle classes a brief, and therefore all the more passionate, frenzy of consumption.... [Those debts] are still being paid for today with even greater poverty, unemployment and destitution for the majority of the population. Much of the contem-
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porary wealth of such nations, including Argentina, can be found in numbered Swiss bank accounts rather than between Terra del Fuego and La Plata.2
Economic Warfare and Financial Warfare While bankers were busy converting those hundreds of billions of OPEC dollars into emerging world debt, top financial planners were studying how to reduce the financial claims, the oil nations had, against the industrialized world. Out of those studies, came the financial warfare plans of the imperial-centers-of-capital, debase their currencies: In the early 1970s, the United States and, to varying extents, the other OECD countries, responded to OPEC‘s increases in oil prices by heavily expanding the money supply. The resulting inflation, together with the administered pricing policies in many basic U.S. industries, sharply increased the prices of U.S. exports and thus the cost of many imports to the developing world. Such an inflationary policy enabled the OECD countries, as a group, to keep their current accounts in balance, despite the large oil prices.... In effect, the United States largely insulated itself from the oil price hikes by passing the burden on to the developing world, whose current accounts deficit mounted. The developing world, in turn tried to ease this burden by borrowing heavily rather than by deflating.3
Those petrodollars were transferred to the emerging world, and then returned to the developed world through export purchases, and capital flight; then dollars were printed to lower the value of Arab petrodollar deposits. If the petrodollars lent to the developing world had been used to build industrial capital, and agricultural selfsufficiency, inflating the dollar would have effectively reduced Third World debts, along with the intended reduction of developed-world debts to the oil cartel. However, this money was spent on consumer goods which properly should have been—on the average—produced by themselves. Instead, it is funneled into personal bank accounts in the developed world, and the developing world gained only the debt. The gains of the Arab cartel were largely erased as the value of their money was essentially halved, and the developed nations retained their monopolization of world capital through a massive debt trap for the emerging world, which could only be paid off through sales of valuable resources. Resource prices went up, those debts were being paid, the world economy then crashed (2008-10), and since those commodity prices are holding, the emerging nations, and currently rapidly developing nations, may decouple from the former imperial-centers-of-capital.
The World’s Poor Have Been Subsidizing the Rich Wealth skimmed off by the elite of developing countries, and deposited in foreign banks, is a large factor in the developing world‘s debt burden. Forty-seven
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percent of Argentina‘s, and 50% of Mexico‘s borrowed funds, ended up in other countries via this route. The average loss of borrowed funds for 18 of these developing countries was 44%. By 1985, according to economist Howard M. Wachtel, the total exceeded $200-billion. Susan George calculated that a net of $418-billion, in borrowed funds, flowed right back north between 1982 and 1990.4 As of 1998, about half the debts of the southern nations were private deposits, sitting in the accounts of Northern banks, through deposits in their subsidiaries in tax havens. The net gain to the developed countries, loss to the underdeveloped, of $418billion between 1982 and 1990 is more than what was spent to rebuild Europe after WW II. ―Capital flight from Mexico between 1979 and 1983 alone [was] $90billion; an amount greater than the entire Mexican debt at that time.‖5 The big American banks ... welcomed the money as savings, even though the lending officers in a different department had sent it to those same countries for supposedly productive uses ... 40 percent of Mexico‘s borrowed money leaked away, 60 percent of Argentina‘s, and every penny of Venezuela‘s. Like alchemists, the Latin American elite converted the debt of the public at home into their private assets abroad.... About one dollar out of every three loaned to Latin America by banks between 1979 and 1983 made that round trip.6
Corporate imperialist loans are almost invariably tied to purchases from the creditor nations. Over 80% of America's foreign aid returns immediately through exports tied to that aid.7 Foreign aid of other nations carries the same self-repatriating provisions. In fact, aid money typically never leaves the donor country; it is credited to other institutions in the donor country to which money is owed. Commenting on such generosity, the Prime Minister of Malaysia pointed out, "Although Japan furnishes loans; it takes back with its other hand, as if by magic, almost twice the amount it provides."8 Central American authorities estimated that, by 1986, the wealth drained from Latin America was "more than $70-billion [$200 billion in 2010 dollars] in a single year in the form of money or merchandise for which [Latin America] didn't receive anything in exchange."9 If a loan is to be of lasting value to the country to which it is granted, it must be put to productive, not unnecessary, consumptive, or wasteful, use. Equally important, if those loan funds were spent in the developing region, instead of the loaning country as typically required, that money will be spent several times and create buying power within that region (the multiplier factor).
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Building the Infrastructure to Transfer Natural Wealth to the Imperial Centers A careful analysis will conclude the purpose of many loans is to develop infrastructure—mines, roads, railroads, pipelines—to move the resources of the periphery to the imperial centers. Much of the timber being cut from Brazil‘s rainforest ended up in those imperial centers. Infrastructure must be built to export those resources which are then sold to fund a debt that—due to low prices for those exports, the expense of imported consumer products, and the high cost of infrastructure development—is typically unpayable.
Debt Traps: Loaning Excess Accumulations of Capital Back to the Proper Owners of that Wealth A debtor who repeatedly borrows more than the surplus his labor or business enterprise produces will fall further and further behind in his obligations until, sooner or later, the inexorable pressures of compound interest defeat him ... interest [is] usurious when the borrower‘s rightful share of profit [is] confiscated by the lender.... The creative power of capital [is] reversed and the compounding interest [becomes] destructive.10
Professor Lester Thurow explains: The fundamental mathematics is clear. To run a trade deficit, a country must borrow from the rest of the world and accumulate international debt. Each year interest must be paid on this accumulated debt. Unless a country is running a trade surplus, it must borrow the funds necessary to make interest payments. Thus the annual amount that must be borrowed gets larger and larger, even if the trade deficit itself does not expand. As debts grow, interest payments grow. As interest payments grow, debt grows. As time passes the rate of debt accumulation speeds up, even if the basic trade deficit remains constant.11
We continually point out that the emerging world now understands how the imperial centers have kept them in poverty and, as sovereign nations with most the world‘s natural resources within their borders they can ally together, start developing, and break out of those debt traps. At this time, 2008-10, commodity prices are rising and those unjust debts are being both forgiven and paid off.
Peonage Has Only Changed Its Name World trade is comparable to the loathsome form of slavery known as peonage: In classic peonage, workers, though nominally free and legally free, are held in servitude by the terms of their indenture to their masters. Because their wages are set too low to buy the necessities, the master grants credit but restricts the worker to buying overpriced goods from the master‘s own store. As a result, each month the peon goes
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deeper and deeper into debt. For as long as the arrangement lasts, the peon cannot pay off the mounting debt and leave, and must keep on working for the master. Nigeria [and most other Third World countries] shares three crucial characteristics with a heroin-addicted debt-trap peon. First, both debts are unsecured consumer debts, made up of subsistence and spending-spree expenses, and with future income as the only collateral. Second, both loans are pure peonage loans, that is loans made not because of the potential of the project the loan is to be used for, but simply in order to secure legal control over the economic and political behavior of the debtor. Third, the only way made available for getting out of both debts is by getting into more debt.12
Lending Responsibly, a Well-Recognized Tenet of Law American citizens have won lawsuits against banks that foreclosed on their property for defaulted loans that were irresponsibly made. Developed nations should cancel unjust debts, start over; give serious attention to eliminating waste, both on their end and in the developing world, use the savings to capitalize (industrialize) emerging countries, and develop equality and balance of industry, agriculture, and trade in both developed and developing regions. The reason these sensible policies are not followed is that, under current corporate imperialist free trade policies, emerging world capitalization would be catastrophic for developed world owners of capital. Their development of productive capital with borrowed finance capital would produce profits, pay the debt, eliminate the need to borrow, eliminate dependency, and increase market competition, all to the detriment of the imperial world, who, in this example, would be loaning money previously extracted from those emerging nations.
Canceling Unjustly Incurred Debts There are compelling reasons for paying attention to this potential for catastrophe as, ―every debt crisis in history since Solon of Athens has ended in inflation, bankruptcy or war, and there is no cause to believe we‘ve solved this one, even if it has been postponed.‖13 As much of this unjust debt can never be paid back, most emerging world debt is severely discounted. As of June 1990, Argentina‘s debt traded at a low of 14.75-cents on the dollar while the average price of all developing world debt was 28-cents on the dollar.14 Although it is being traded at a 72% discount, the indebted countries must still pay full price (by 2010 efforts were being made to outlaw such ―vulture fund‖ practices). In the 1800s, the United States defaulted on its development debt, as did Latin America, and others, during the crisis of the Great Depression. American managers of state knew their nation became wealthy due to avoiding the monopolization of their economy, and their European cousins eventual sharing their
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industrial capital and markets. America returned that favor by sharing its wealth, after WW II, to rebuild the ancestral home of their culture. The rational decision, and one Professor Lester Thurow and others consider the developed world‘s only choice, would be to also forgive the emerging world‘s unjustly incurred, and unpayable, debts.15 The precedent has been set by earlier defaults, by the quickness of decisions to protect trading allies, and an honest accounting would find the developed world owing the developing world for the destruction of their social wealth, the earlier enslavement of their labor, and the long term underpayment for their labor and resources which translates to a massive theft of their wealth, to say nothing of a denial of their right to produce their own wealth. In short, most these regions need only technology and training from developed world. With that, they will produce their own wealth, and run their own countries. Joel Kurtzman, The Death of Money (New York: Simon and Schuster, 1993), p. 72. Elmar Altvater, Kurt Hubner, Jochen Lorentzen, Raul Rojas, The Poverty of Nations (New Jersey: Zed Books, 1991) pp. 8-9. 3 Arjun Makhijani, From Global Capitalism to Economic Justice (New York: Apex Press, 1992), p. 159. 4 Susan George, The Debt Boomerang (San Francisco: Westview Press, 1992), p. xiv-xvi; Howard M. Wachtel, ―The Global Funny Money Game,‖ The Nation, December 26, 1987, p. 786; Fidel Castro, Nothing Can Stop the Course of History (New York: Pathfinder Press, 1986), p. 68; Howard M. Wachtel, The Politics of International Money (Amsterdam: Trans National Institute, 1987), p. 42; William Greider, Secrets of the Temple (New York: Simon and Schuster, 1987), p. 517. See also Susan George, Fate Worse than Debt, (New York: Grove Weidenfeld, 1990), especially pp. 16-34, 77-154; Philip Agee, ―Tracking Covert Actions into the Future,‖ Covert Action Information Bulletin (Fall 1992): p. 6. 5 George, Fate Worse than Debt, pp. 20, 236, quoted by Agee, ―Tracking Covert Actions,‖ p. 6. 6 Lawrence Malkin, The National Debt (New York: Henry Holt, 1988), pp. 106-07; see also David Pauly, Rich Thomas, Judith Evans, ―The Dirty Little Debt Secret,‖ Newsweek, April 17, 1989. 7 Dan Nadudere, The Political Economy of Imperialism, (London: Zed Books, 1977), p. 219; Michael Moffitt, . ―Shocks, Deadlocks, and Scorched Earth: Reaganomics and the Decline of U.S. Hegemony,‖ World Policy Journal (Fall 1987). 8 Ibid, p. 220. 9 Castro, Nothing Can Stop the Course of History, p. 69. 10 Greider, Secrets of the Temple, pp. 707, 581-82; Susan George, Fabrizio Sabelli, Faith and Credit (San Francisco: Westview Press, 1994), pp. 80-84, 215. 11 Lester Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe, and America (New York: William Morrow, 1992), p. 232. 12 Chinweiezu, ―Debt Trap Peonage,‖ Monthly Review (November 1985): pp. 21-36. 13 George, Susan Fate Worse Than Debt, p. 196. 14 CNN News (June 28, 1990); David Felix, ―Latin America‘s Debt Crisis,‖ World Policy Journal (Fall 1990): p. 734. 15 Thurow, Head to Head, p. 215. See also, Gowan, The Global Gamble; Gray, False Dawn (New York: The Free Press, 1998), and Longworth, Global Squeeze. 1 2
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15. The Economic Multiplier, Horizontal and Vertical Expansion of Wealth
Although imposed belief systems have always claimed otherwise, people throughout the world can, on the average, be trained to be equally-productive. All it takes is an education, technology, first industries, training, and other supports, rather than the past destabilization policies. If adequate capital (technology) were equally distributed throughout the world, the reality that picking grapes is just as important to society as building automobiles would quickly become apparent. The difference in skills hardly qualifies for the differences in pay. There are many grape pickers, and other low-paid workers, who are just as qualified as many production, construction, and transportation workers. Though not true of all, many high-paid workers learned on the job, the same way those low-paid workers learned their skills, and the work of a large share of well-paid labor is repetitious, just as simple, yet not as hard or dirty as the work of lower-paid labor. Look at the difference in capital accumulation through the discrepancy in pay as outlined in chapter one: A five-times pay differential when trading between equally-productive labor nations results in a wealth accumulation advantage of 25 to one, to be paid twice as much for equally-productive work is to accumulate four-times as much wealth in trades, and being paid 30% greater when trading with equally productive labor will still accumulate almost twice as much wealth. But the defeated, dependent, world‘s loss of wealth is even greater than the above example. Forcing these dependent societies to import a product they do not need, or which they could produce themselves if permitted the requisite technology and capital, is a sale 100% overvalued. Actually, as those societies are also being denied the benefits of the multiple use of this money, the economic multiplier, as it moves through the economy and creates more commerce, this unneeded product is, on balance, several hundred percent overvalued. For example, if a society spends $100 to manufacture a product within its borders, the money paying for materials, labor, and other costs moves through the economy as each recipient spends it. Due to this multiplier effect, $100 worth of primary production can add roughly $1.500 dollars to the Gross Domestic Product (GDP) of that country. If money is spent importing from anoth-
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er country, circulation of that money, and thus the financial wealth generated, is all within the exporting country. If imports and exports are equal in labor input, and produced by equallypaid and equally-productive labor, the trades will be equal. But they are not; they are typically unequal to the extreme. To understand that, we must understand not only multiplication of wealth through the horizontal flow of money, the economic multiplier, but also the vertical expansion of wealth in an industrial economy.
Friedrich List's Fundamental Thesis The fundamental thesis of Friedrich List is: "Commerce emanates from manufactures and agriculture, and no nation which has not brought within its own borders both those main branches of production to a high state of development can attain ... any considerable amount of internal and external commerce.‖1 Further challenging laissez faire, List points out that; governments should support and protect industry and this will utilize unused labor and resources to an ever higher level of value. The new manufacturing industries utilize otherwise wasted agriculture products, and natural resources, producing valuable products to be marketed in trade for other products, preferably cheap natural resource commodities, to also be processed into finished manufactured goods. List also points out how such importation of natural resources, and local manufacturing, as a national policy, would create a wealthy, and powerful, nation. Selling the surplus above the needs of the population, while purchasing commodities and technologies from other nations, can be balanced so that all nations gain.2 Adam Smith‘s analysis is worth quoting a second time: A small quantity of manufactured produce purchases a great quantity of rude produce. A trading and manufacturing country, therefore, naturally purchases with a small part of its manufactured produce a great part of the rude produce of other countries; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity.... Few countries ... produce much more rude produce than what is sufficient for the subsistence of their own inhabitants. To send abroad any great quantity of it, therefore, would be to send abroad a part of the necessary subsistence of the people. It is otherwise with the exportation of manufactures. The maintenance of the people employed in them is
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kept at home, and only the surplus part of their work is exported.... The commodities of Europe were almost all new to, and many of those of America were new to Europe. A new set of exchanges, therefore, began to take place which had never been thought of before, and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several [most] of those unfortunate countries.3
Friedrich List's thesis restructured as an international policy for all nations to have an equal share, which the highly respected President Franklin D. Roosevelt also suggested, and President Kennedy hinted at just before his assassination, would create a peaceful and wealthy world.
Gaining Wealth through the Vertical Building of Industrial Capital and the Horizontal Flow of Money Formerly exported raw material can be processed ever finer, and manufactured into ever more complex products and services, until the costs of the original raw materials are barely detectable in the high-value-added products. Money spent building new industry, to produce new products or services of higher value, are also spent horizontally for products and services, and this continually increases the economic activity of newly industrializing nations. The high price received for that high value added product circulates within the economy, and multiplies the products and services consumed to an ever-higher level. It requires the proper balance of industry, resources, and agriculture to maintain those increased production values which, in turn, maintain land, industry, store, office, and home values. The natural resources necessary to maintain the economic balance of industrial nations are primarily in the developing world. Thus the centuries-long-effort to control the countryside, and maintain the flow of resources to developed world industries, at a fraction of its true value. The scarce resources in the wealthy, highly-industrialized, Japan and abundant resources in the poor nations, cheaply providing Japan‘s factories with their raw materials, dramatically outlines the true cause of wealth in Japan and the poverty of those who provide those resources. The poor nations provide the lowvalue resources, and purchase high-value manufactured products. Japan buys the low-value resources and sells high-value manufactured products. When one adds up both the vertical and horizontal multiplication of wealth in an industrialized country, one has to seriously question the advice given to developing nations by the imperial-centers-of-capital that, ―their success depends on continued mining, harvesting of raw material, and forgoing manufacturing, because that is their ―comparative advantage.‖
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The small savings, on importing any item, must be laid against the entire vertical and horizontal gain to the region when manufacturing their own consumer products. Industrial development multiplies consumer buying power, and profits from consumer spending further multiplies profits, which further multiplies investments, further multiplying profits and consumer spending, and all continually multiplying use-values (in an honest economy, those values do not capitalize).
Capitalizing Unearned Values through Creation of Scarcity Wealth can be accumulated by open destruction of a defeated nation's wealth to make a commodity scarce and the world dependent upon that source. Adam Smith describes just such a destruction of a peaceful and happy society's wealth, and their impoverishment, for the accumulation of capital by monopolists. Spices and silk from the East brought overland comprised the majority of trade between Europe and the East for centuries, and efforts to control that trade resulted in many battles, large and small. Muslims shutting off the overland trade routes to the East forced the search for a new route by sea. Nutmeg and cloves growing wild and plentiful on the Molluca Islands made them, like air, of high desirability but valueless. Natives made an easy living picking the spicy blossoms and leaves. If all traders had access to those spices, the European market—mostly nobles and wealthy traders, no commoners because they had no money—would become quickly flooded, and the price of both the product for sale and the capitalized value of monopolizing corporation would collapse. To create capitalized value for spice traders, it was necessary to monopolize those spice trees and keep spice prices high. So the Dutch burned every spice tree they could not control.4 The other side of the coin of the immense wealth accumulated by a few Dutch traders through monopolization of the spice trade was the impoverishment of the Molluca Islands, and the lowering of the final buyer‘s spendable income, as massive capitalized values were created but few use-values. The Molluca Island spice monopoly gives a quick lesson in how value is transferred from defeated nations, to the powerful, through capitalized value of entitled (monopolized) property. If those islanders had kept common title to their islands and spice trees, and a free market existed, it is they who, eventually, would have, through furnishing spices to the world, become wealthy. If all traders had access to those spices in those early years, there would have been much more, and cheaper, spices in the world, the islanders would have profited immensely, quickly learned the mechanics of gaining wealth through trade, and there would have been many times more final consumers at a much lower price. Creation of scarcity through open destruction of commodity production is a well recognized principle of neoliberal economics. In America, during the Great
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Depression, cattle and pigs were slaughtered and buried; paying farmers to not produce is standard practice yet today. Though many of the world‘s forests were cleared by burning, and more natural gas has been flared off in oil fields than has been consumed, oil, coal, timber, and other natural resources are not openly destroyed to produce scarcity. But wasteful consumption of those resources, when plentiful and cheap, and waste for war, does produce scarcity. The continued flaring of natural gas, and the burning underground coal mines with no attempt to put them out, is a waste our grand children will have to pay for. That waste of plentiful resources can only be corrected through a democratic, cooperative, coordinated, social policy.
Invisible Economic Borders Channeling Wealth to the Imperial Centers A worldwide populist revolution is building fast, and to the extent the emerging world gains control of their destiny and receive full value for their resources, the economics of the world, as we have been describing, can change rapidly. Due to being underpaid for equally-productive labor, resources on the periphery are harvested, and sold to the imperial centers for far less than full value. With that cheap labor, products are manufactured cheaply but are typically not for export to the resource providing region. Those underpaid workers do not have the buying power to purchase production from well-paid nations. High wages in the developed world and low wages in the developing world create invisible borders which channel those products to, and between, imperial centers. This is graphically demonstrated by current wages paid in the emerging world being typically under 2%, never over 5%, a product‘s sales value in the developed world.5 Theoretically, over time, distribution within the developing world, at low prices, could develop. But the large buying power in the imperial center, and the low buying power on the periphery, dictates there will be a limited flow of money within the periphery, and thus a limited development of a balanced regional economy, outside the imperial centers. It is impossible for the ―resource powers” to become wealthy without owning their own resources, owning and running their own factories, being paid equally for equally-productive labor, and selling on established markets. Nor can they develop industrial and social capital without broad-based local buying power, having title to their own productive wealth, and being paid equally for their labor. It is consumer purchasing power—adequate or inadequate wages, adequate or inadequate commodity prices, earned or unearned profits, and, most important, who collects those resource rents (society or monopolists), that determines who, and how many of a nation‘s citizens, have a quality life. If monopolists collect re-
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source rents and bank profits, they will be rich while producers of that wealth will be poor. If society collects the rental values from nature‘s wealth, the profits from banking, and spends those social-credit funds on infrastructure and social needs, if there is equal pay for equally-productive labor, and if labor hours are reduced by roughly half so each has a productive job, all will have a quality life. The common thread of a productive and profitable society, with a high living standard, is sharing work and wealth while using, and sharing, the increased efficiencies of technology. A society with equally-paid labor, and properly-paid capital, and a surplus of resources and energy, can, within the limits of rationality, have whatever level of real wealth (use-value) it wants. A shortage of resources or energy can force a lowering of society‘s standard of living. But, up to the level of resources and energy available, there never ever need be a shortage of finance capital. After all, money is only a tool; if it is not monopolized, and if there are resources and energy to spare; society need only create more money or increase its circulation velocity enough, to take care of any planned increase in production and consumption Properly-paid labor and capital means elimination of monopolies which, since they are nothing more than a multiple of a monopoly system‘s unearned profits, means elimination of capitalized values. Economies will then be measured, and quantified, in use-values. Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977), p.260. 2 List, National System, especially p. 260, chapter XIX, see also chapters XII, XVII, XX -XXV. 3 Adam Smith, Wealth of Nations, Modern Library edition (New York: Random House, 1965), pp. 413, 426, 642. 4 Ibid, pp. 600-02. 5 Jack Epstein, ―Dickens Revisited,‖ The Christian Science Monitor, August 24, 1995, pp. 1, 8; Amy Kaslow, ―The Price of Low-Cost Clothes: U.S. Jobs,‖ The Christian Science Monitor, August 20, 1995, p. 4; Christopher Scheer, ―Illegals Made Slaves to Fashion,‖ The Nation, September 11, 1995, pp. 237-38. 1
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16. Japan's Post-World War II Defensive, Mercantilist, Economic Warfare Plan
In this rapidly changing world, we need to understand that, if monopolization is abandoned, industry can be rapidly built in any society, and markets can be built just as quickly through sharing productive jobs, and paying labor adequately and equally. The desperation-bred cunning of Japan's post-WW II economic warfare is little understood. Stopping fast-expanding socialism required rebuilding, as allies, the countries which lost that war. Besides providing technology and finance capital, America dropped its import barriers while simultaneously permitting Japan, and Germany, to protect their industries and markets, in the same manner America built her industry and wealth (access to technology, resources, and markets).1 An American investment banker in Japan for 15 years, R. Taggart Murphy had a catbird's view and wrote The Weight of the Yen, describing how, in an obvious effort to both survive, and revenge the loss of WW II, Japan‘s postwar economy was structured under pure mercantilist principles to engender ―the greatest transfer of wealth in history,‖ (up to that time) from America to Japan.2 Economist Joe Kurtzman‘s analysis of Japan‘s international trade is worth quoting at length. Japan has developed long-term strategies for entering existing markets and [has] composed detailed plans spanning 20 to 50 years for gaining a share of existing markets, usually by introducing new and highly refined versions of existing products and then slowly upgrading these products.... Beginning with crude copies of advanced German cameras like the Leica and the Rolliflex, the Japanese honed their skills by continually upgrading their entries into these markets until their level of quality and technology began to equal that of the Germans and then surpass it. In the span of less than twenty years, utilizing this long-range managerial approach, the Japanese were able to gain by far the largest share of the worldwide camera and optical goods market, thereby driving the previously dominant Germans to the sidelines. After the Japanese became the primary power in this huge market, they took aim at some of the other existing markets in which they could use their advanced optical skills. Small copying machines, professional video recording devices, and computerized silicon chip etching equipment are markets that the Japanese went after and now
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dominate. But this time the firms bested by the Japanese were not German. They were American firms that failed to keep pace with the slow, steady unrelenting Japanese technological and managerial advance.... Planning twenty-four months ahead is considered long term by most U.S. companies, whereas the Japanese routinely look five, ten, and twenty years into the future when developing their approach to entering a market.... [O]ur companies tend to lose out to those Japanese and other foreign companies that take the long-term view and that have the backing of their governments.3
Under protection of Western imperial-centers-of-capital, and even as they ―chanted the mantra of free trade and laissez-faire,‖ Japan's Ministry of Finance (MOF), and Ministry of International Trade and Industry (MITI), controlled the government‘s budget; set monetary policy; collected taxes; supervised banks, brokers, and insurers; and established parameters for credit, asset values, and profits. Through cross shareholding, designed specifically to prevent outsider takeover of their corporations, and to further their mercantilist goals, Japanese corporations were owned primarily by each other.4 Rapid industrialization was further accomplished through high product prices being protected from imports by arbitrary health, safety and quality standards. This permitted charging Japanese consumers three-times the price for consumer products, as that paid by the rest of the world.5 Those high prices were only a hidden tax that, along with other dictated policies and creative accounting, gave Japanese industry the same free finance capital as it received 100 years earlier. Japan's collapsed land and stock markets, at their lowest points down 75%, are not the total failures they are loudly touted to be.a Government financed industry, and protected home markets, created a comparative advantage which permitted Japanese industry to sell, for a period of time, at what would be a loss for a free enterprise corporation. Now that Japan has built the world's most modern industry, and captured markets around the world, so long as trade surpluses are maintained, losses can be absorbed, up to a point, by those high domestic prices taxing back a part of the economic multiplier gains. ―When the Japanese government cautiously tried to deflate [their land and stock market] bubble by raising interest rates, the Wall Street bankers went on the attack using their new ‗derivative‘ tools to sell the market short and bring it crashBefore that collapse, Japanese businessmen proudly claimed (in error) that ―a square meter of the Ginza, [a part of Tokyo] was worth more than Seattle (Chalmers Johnson, Blowback: The Cost and Consequences of American Empire [New York: Henry Holt & Company, 2000], p. 203). In Super Imperialism: The Origin and Fundamentals of U.S. World Domination, 2003, p. 388, Michael Hudson points out that America forcing the Plaza and Louvre Accords upon Japan created their bubble economy (defending against that destabilization) and effectively bankrupted them. a
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ing down.‖6 Even as its industry ran at only 65% of capacity, and its real estate and stock markets collapsed, Japan‘s trade surpluses have been consistently in excess of $50-billion a year with the United States alone. Many East Asian countries trade surplus, with America, were originally offset by an equal trade deficit with Japan and those captured markets were released only when forced. (China‘s 2008 trade surplus was $290 billion.) Through health, safety, and quality standards (instead of tariffs), which are never met, Japan prevented others from selling on its home market, and with the exception that this accumulated wealth was invested in the world‘s most modern industry, Western financial instruments, and real estate instead of gold, silver and jewels, that is pure mercantilism.7 Even though it has the added features of planned industrial financing, and good pay for Japanese labor, so the economic multiplier will develop a strong economy, mercantilist scholars will easily recognize Japan‘s wealth-siphoning formula: Buy resources for industry cheaply, build and maintain the most efficient industry in the world, educate their citizens, pay Japanese labor well, charge Japanese citizens above that charged for the same exported product, price exports just under the products of other nations, and sell enough on the world markets to pay for it all, with a substantial cushion to spare. Japan‘s Mercantilist policies would appear to be against free trade rules. But Most Favored Nation agreements only required a nation treating all signed participants the same, and all faced the same arbitrary health, quality, and safety standards.8 While these rules will be enforced onto weak nations, they will not all be enforced upon Japan. To do so would force Japan to close out its worldwide investments in real estate and bonds. If done quickly this could collapse the world economy just as it almost did in 1987 when Japan liquidated some of those equities.
The American-Japanese-China-Oil Exporting Nations DebtEquity Embrace Japan, China, and oil exporting nations, invested a large share of their accumulated surplus values, most the industrialized world's savings, in U.S. treasury notes, and other financial and real properties in the United States. This has locked the world into a debt-equity embrace that no one knows how to get out of. The world has only to drop those treasuries, and other properties, on the market, and the U.S. dollar crashes. It was just such a sale of U.S. Bonds by Japan which lowered financial liquidity for all markets and caused America‘s 1987 worst one day stock market collapse. The purchase, and holding, of those treasuries as an unwritten agreement is wearing thin. The United States has the choice of doing what the entire industrialized world did when OPEC raised the price of oil: just print the money to lower the
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value of that debt. America‘s gain would be their creditor nations‘ losses, but there would also be much worldwide distress from such an inflationary binge, even if America won that financial warfare battle. While the Soviet Union was viable, Americans and creditor nations had to protect each other, or allied periphery nations could not have rebuilt, and America‘s ability to finance the Cold War would have been severely weakened. Now that the Soviets have been successfully destabilized, the only need America has for protecting capitalist nations is to protect the reputation of Adam Smith free trade. They will be hard pressed to do that.
Care for Another's Economy is Only Between Allies Care for another nation‘s economy is between allied imperial-centers-of-capital only. There is no sincere concern over economic collapses in either a resourceproviding, or a competing, country. Such collapses mean lower resource prices, and higher profits, for imperial centers, and are the primary policies of powerful developed nations, even if unrealized by second-tier planners. To lower the threat of war, due to rising centers of capital, it is logical for America and China to sign peace and trade agreements. But the United States is not going to be signatory to a trade agreement which would result in China‘s, Japan‘s, and Southeast Asia‘s 1.6-billion people, nor the 1.2-billion in India, becoming equally powerful. Not only will Asia be the world‘s superpower long before per capita equality is reached, there are not enough world resources to support the waste of an American style economy for half that many people (see ―Nuggets‖ on our website, www.ied.info).
Much Japanese Industry has been Forced Offshore The lower costs of production in China and other Asian countries, forced a part of Japan's industry off shore, which reduces its economic multiplier. Because the multiplication of high wages paid labor for export production, multiplying throughout the economy, is the heart of Japan‘s economic planning,9 this may eventually destabilize Japan‘s economy. A simultaneous threat is Costco and other wholesale-retail outlets moving into Japan. Unless historic roadblocks are maintained, which history tells us they will be, efficient supermarkets such as these will quickly replace Japan‘s enormously inefficient distribution system, lower those extremely high internal prices through which Japan has historically financed her industry and exports, and idle a massive number of workers.
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It is far from Free Trade Wherever One Looks All major powers, including the historically allied trading blocs and China, have managed the perceptions of the masses to keep them in line, and to provide a protective negotiating framework when dealing with the rest of the world. The Weight of the Yen is a textbook on how managing perceptions work. The MOF and MITI present protective beliefs to the Japanese people, parrot Adam Smith free trade rhetoric back at the rest of the world, and all the time they are operating under Friedrich List protection principles. Any Japanese industrialist functioning outside MOF-MITI rules, quickly loses access to capital, resources, and markets. Any individual within the ruling structure who would expose to the world that Japan is not following Adam Smith, or that they operate primarily on Friedrich List protection policies, would immediately lose their job and their friends; those ―internal embargoes‖ are so effective, there would be no recovery.10 Though the awakened world‘s changing power relationships may change it all, the major powers, as a group, promote corporate imperialist ―free trade‖ to the ―resource powers” to maintain access to their valuable resources, all while jockeying for advantage among themselves. Currently it is far from free trade or laissezfaire anywhere one looks. Virtually every imperial-center-of-capital has massive subsidies for their industries and agriculture and 70 countries, 66% of the people on earth, are under some form of American embargo or sanction. The world needs others within the other seven nations of the G8 countries and the IMFWorld Bank-GATT- NAFTA -WTO- MAI-GATS- FTAA-Military, worldgoverning system to defect and tell the whole story. This is a rare occurrence because the belief systems are so pervasive defectors do not find an audience, they become instantly isolated, each person instinctively knows this, and that keeps them silent. Mr. Murphy did not defect: he has an audience because Japan's mercantilist protection principles were so successful they were damaging other members of the G8 nations and the intent is to rein Japan in. Though he does not use those terms, Mr. Murphy has the best outline of imposed belief systems we have seen.11 Alfred E. Eckes Jr., Opening America’s Market: U.S. Foreign Trade Policy Since 1776 (no city named: University of North Carolina Press, 1995), pp. xvii, xix. 2 R. Taggart Murphy, The Weight of the Yen (New York: W. W. Norton, 1996), pp. 13, 109-10, 181, 184, 222, 278. See also: Richard C. Longworth, Global Squeeze: The Coming Crisis of First-World Nations (Chicago: Contemporary Books, 1999), chapter 5. 3 Joel Kurtzman, The Decline and Crash of the American Economy (New York: W.W. Norton, 1988), pp. 107-108. 1
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Murphy, Weight of the Yen, pp. 29-30, 72, 77, 108, 185, 197-200, 206, 212-14, 218, 222, 231, 310; Longworth, Global Squeeze, p. 35 and chapter 5. 5 Lester Thurow, The Future of Capitalism: (England: Penguin Books, 1996), p. 201. 6 Ellen Hodgson Brown, Web of Debt (Baton Rouge, LA, 2007), p. 253 7 Murphy, Weight of the Yen,, pp. 43, 48, 75-79, 93-99, 106-07, 126, 133, 184-85, 19293, 195-202, 206, 212, 214, 218-19, 231, 244, 259-69, 279, 286-310, 303, 308; Longworth, Global Squeeze, p. 35 and chapter 5; Chalmers Johnson, Blowback: Cost and Consequences of American Empire (NY: Henry Holt & Company, 2000), p. 203. 8 Longworth, Global Squeeze, pp. 39. 9 See endnote 4. 10 Ibid; especially Murphy, Weight of the Yen, pp. 53-55, 72, 98-99, 118-19, 103, 255, 275, 281 and Longworth, Global Squeeze, p. 35 and chapter 5. 11 Murphy, Weight of the Yen, pp. 118-19, 255, 275, 281. 4
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17. Asian Development, an Accident of History
The current development of China and Southeast Asia due to being given access to technology and markets is accidental: they were only brought within the alliance of wealthy nations to prevent the further spread of socialism. Without a threat there is no basis in capitalism's philosophy to give anything to anybody and that is Adam Smith not just a neo-mercantilist interpretation of him. Instead, the stated tenet is pay the lowest possible price, charge all the market will bear, and give nothing to anybody: a great philosophy for powerbrokers with a monopoly on land (resources), capital, technology, markets, and military might. Membership rights to monopolies were expanded to others only by the need for allies to stop fast expanding socialism and suppress the world's break for economic freedom. China and Southeast Asia‘s industrialization, considering Japan was destroyed in WW II and then tied into Western markets, was the first major accumulation of capital by cultures not tied ethnically and religiously to Europe. If this accident of history continues to succeed, and only war can prevent it, 50% of the world‘s population will be provided with adequate industrial capital, up from the traditional 15%, and 80% of that 50% will be other than descendants of European race and culture. This is a historic moment and Social Darwinists will be viewing their minority role in the industrialized world as a very serious security threat. The post-WW II plan was for German economic power to be submerged in the European common market with its 350-million consumers. The neomercantilist threat of this historically powerful imperial-center-of-capital was to be eliminated through the removal of all trade barriers between Europe, Japan, and the United States, essentially maintaining one imperial-center-of-capital. As it was necessary to prevent fast expanding socialism, Japan was permitted to structure its economy as a sustainable empire within that larger empire. This was a sensible plan for the already developed world but, because their success was not a consideration, unworkable for developing nations. It was unworkable because the historic, and still operational, pattern of siphoning wealth
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from the weak to the strong dictates there must be a countryside to furnish cheap commodities to both the developed and developing imperial-centers-of-capital.
Will Developing Nations Oppose, or Ally With, the Imperial Centers? With the successful destabilization of the Soviet center of capital, claims that the one worldwide imperial-center-of-capital is now threatening to fragment into three imperial centers, are likely misplaced. The record of mercantilist wars over trade— between Britain and Holland, Britain and Spain, and Britain and the Allies against Germany and Japan—has been to avoid subsequent battles between themselves by sharing the monopolization of world trade, and allying against other emerging centers of capital. For example, most the developed world cooperated in the assaults against the emerging Soviet center of capital. Due to losing trade battles and wars in previous centuries, Portugal and Spain were left out of earlier sharing in world trade; however, they have been brought into Europe‘s latest trade alliances. Because a large bloc of industrial capital had been donated by the former Soviet federation, China, federated for centuries, had the basic industries with which to begin industrialization. Still fearing the Soviet Union, imperialists, led by President Nixon, offered access to American markets if china would break from the Soviets. One look at equally productive labor for 30 cents an hour against America‘s $20 to $45 an hour labor and industrialists moved wholesale to China. The profits were so huge for 50 years that few gave a thought to what this might mean two generations later. For those 40 years, the huge profits being made, the dollar as the world‘s trading currencies (later also the euro), and the massive funds extracted from the ―resource powers‖ through plunder by trade, as we have addressed in depth, sheltered the economies of America and Europe from productive capacity building up beyond their borders. In 1997, Western capital withdrew from the Asian Tigers, shattered their economies, and bought up choice industries for pennies on the dollar. Earlier, they had turned their derivatives tools on the inflated Japanese economy and collapsed it, but the alert Japanese never permitted outside finance capital to gain title to their industrial wealth. They kept all bankrupt banks and industries running, kept pulling in their $50 billion a year trade surplus and their economy started to balance just as the current (2008-10) worldwide financial collapse hit. Those assaults on their economies have been thoroughly analyzed by all nations. It is evidence of the historically illiteracy of western opinion that it expects that economic convulsions in east Asia on a scale that Western countries have not known since the thirties should occur without shifts in government and regime comparable to those experienced by Europe during those inter-war years. … Far from signify-
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ing the universal triumph of the free market, the Asian crisis is a prelude to a time of major dislocation for global capitalism. … Asia‘s economies … are not on a phase of decline that terminates with the embracing of free markets. … If history is our guide [most of Europe went Fascist during that crisis], we can be sure that Asian capitalism will emerge from the current crisis altered unpredictably rather than remade on any western model.1
There is no assurance the race to the bottom can be halted. The world is yet locked within the jaws of that centuries-old policy of the countryside providing cheap resources, and markets, for developed imperial centers. Lowering the buying power of labor in the imperial centers and the massive accumulations of capital cannibalizing each other, ongoing as we speak, historically has led to world war. Hopefully, this time, this crisis will lead to replacing the monopoly structure with a cooperative world structure that will avoid war, care for all the world‘s citizens, struggle against global warming, and all other attributes of a sensible, cooperative, world we describe is possible. No matter how sincere managers of state are, to negotiate honestly for world development is not possible under the current rules of neo-mercantilist free trade. Virtually every nation that developed did so while protecting their industries and internal markets. Trade between the developed world, and the latest successfully developing countries, was carefully managed; to develop the remaining countries requires even more careful management. Tying to help the rest of the world, without massive economic restructuring within the developed world, is an extreme contradiction; historically some societies had to provide those cheap resources. The one best hope is for the world to share resources equally through social collection of resource rents and utilizing those social-credits to fully fund infrastructure and all essential social needs. Though the world has a long way to go, this may happen. Africa, South America, and Asia are all speaking of trading with regional currencies, and a reorganization of the United Nations with equal input and decision making by all regions and nations. The leaders of G20, with 80% of world GDP, meeting in mid November 2008 to discuss such things is only the first of many. True freedom, with full and equal economic rights, can be only when each country shares in the enormous productivity of created money, and this requires fiat currencies spendable only within the borders of an economically viable region, and a digital world currency, for trades between countries and regions only, guaranteeing each nation, and each region, equality in international trades (a dual currency system). As these discussions are currently only between those planning on maintaining control, the world will be able to restructure to an honest world trading currency only after the resource powers gain equal negotiating power with the old imperial-centers-of-capital. .
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The dollar, as the world‘s trading currency, means, over the past 60 years, America, as an imperial-center-of-capital, has printed massive sums of money which did far more than finance world trade; it financed the suppression of the world‘s breaks for freedom, and maintained control of resources and the wealth producing process. Once the currencies of emerging regions, and nations, are protected from those imperial assaults by an honest world currency, economically viable regions can ally together and trade access to resources for technology. Created money, having equal purchasing power with earned money, is understood when one thinks in terms of America writing trillions of dollars in checks which, instead of being cashed, were used as the world‘s trading currency. A $100 bill not spent within the country of its creation is simply another name for a $100 check not cashed. Those checks (dollars) originally bought resources, products, services, and paid for overseas military expenses. A share of those dollars then financed other nations‘ trade, as opposed to being spent purchasing from the U.S., and are, as far as America is concerned, essentially uncashed checks. Not only does America end up with the free use of money, those dollars also move between banking systems through debits and credits at the Fed. Any time the U.S. wishes to sanction a bank or a nation, those funds can be, and are being, frozen. The insistence of the developing world on freedom, with full and equal economic rights, and with fully 60% of the world‘s industrial production now in place in formerly impoverished nations, the potential of the rapidly emerging world decoupling from the old imperial-centers-of-capital, and the potential of they cashing the insufficient-fund checks America has written to underwrite its efforts of world control, is a crisis that has yet to hit. This fast-building crisis can be stopped in its tracks through cooperation replacing winner take all competition. A successful aversion of that impending crisis will require sacrifice on all sides, as economically viable regions decouple from the imperial centers, establish permaculture to provide both food and fiber, build quality homes from regional soils that will last for centuries, and develop cheap, non polluting transportation to attain ―reasonable‖ freedom to travel. With most the world anticipated to be relatively developed in 25 years (2035), with China ordering companies currently producing toys for the US and Europe to retool to produce quality consumer products for their own citizens, with they contracting with Africa and South America for resources in trade for development and training, and assuming China can avoid being sucked into the worldwide collapse, this is happening as we speak. 1
John Gray, False Dawn (New York: The Free Press, 1998), pp. 220-21.
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18. Capital Destroying Capital Within World Trade
Due to low wages, factories moving offshore develop inadequate regional buying power in the emerging world, while the loss of those factories in the developed world reduces the buying power of that region‘s previously well-paid labor. As monopolized capital shuts down factories in the developed world, and builds new industrial capacity in low-wage areas to produce products for highpaid workers in the developed world, and assuming the service industries do not expand enough to maintain a distribution balance, the wealth of both the lowwage and high-wage regions is converted to stock values, and there is eventually insufficient market to fully absorb production. By expanding productive capacity, while reducing buying power, capital destroys capital. Those high stock and real estate values collapsed in 2008. Stocks partially recovered in 2009 while real estate is still falling in value. Japan‘s industrial capacity operated at 65.5% for 12 years and today, 2010, the entire industrialized world is producing well below capacity. Central banks and governments have pulled out all stops to avoid dropping into a depression. For the first of a little more history of what led to this crisis and the ongoing destruction of capital, Michael Moffit quotes Stanley J. Mihelick, executive vice president for production at Goodyear: Until we get real wage levels down much closer to those of Brazil‘s and Korea‘s, we cannot pass along productivity gains to wages and still be competitive.‖ With factory wages in Mexico and Korea averaging about $3 an hour, compared with U.S. wages of $14 or so, it looks as if we have a long way to go before U.S. wages will even be in the ball park with the competition. That the decline of U.S. industry is the natural and logical outcome of the evolution of the multinational corporate economy over the past twenty-five years has been a bitter pill to swallow, and it will become increasingly distasteful as time goes on. One consequence will be a nasty decline in the standard of living in the United States.... [W]e have the outlines of a true vicious circle: the world economy is dependent on growth in the U.S. economy but the U.S. domestic economy is [now] skewed more towards consumption than production and investment, and this consumption is in turn sustained by borrowing—at home and abroad.... The deal with
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surplus countries essentially has been as follows: you can run a big trade surplus with us provided that you put the money back into our capital markets.1
The excessive accumulation of capital by stateless corporate imperialists, and the denial of capital to the world‘s powerless, are two sides of the same coin. There is too little buying power among the dispossessed to keep industrial capital fully employed. And finance capital building more industries, without developing adequate consumer buying power, will destroy more capital: So long as global productive capacity exceeds global demand by such extravagant margins, somebody somewhere in the world has to keep closing factories, old and new.... South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh.2
China offered to launch satellites at one-quarter the price charged by the United States. That threat to Western spacecraft industry was temporarily eliminated by negotiation, and until profits from oil money permitted formerly impoverished nations to contract with China to launch satellites, Americans and Europeans dominated the satellite launching industry. If Korea, China, Malaysia, Thailand and other low-wage countries continue their economic development based on industrial cartels, and protected home markets, while selling to the developed Western markets under the fiction of free trade, industries in America, Europe, and Japan will be destroyed. The elimination of more expensive manufacturers, through free trade, appears beneficial and, whenever an inefficient or shoddy producer is eliminated, it is. But the greater share of the factories are closed, not because of their low quality, or inefficiency, but because there are too many factories producing for the established market. When industrial capital is diverted to a developing country to produce for a developed country, the advantage of the former‘s cheap labor destroys both the established industry, and the consumer buying power, of the developed country. William Greider explains: The world‘s existing structure of manufacturing facilities, constantly being expanded on cheap labor and new technologies, can now turn out far more goods than the world‘s consumers can afford to buy.... The auto industry is an uncomplicated example: Auto factories worldwide have the capacity to produce 45-million cars annually for a market that, in the best years, will buy no more than 35-million cars.... Somebody has to close his auto factory and stop producing.3
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Failure to Expand Buying Power to Keep Factories Running is Economic Insanity New industrial capital, destroying both established equally-productive industrial capital, and the social capital built around that industry, is economic insanity. Where industries and jobs disappear as capital destroys capital, both home and business values drop. Through neo-mercantilist free trade, the developed nations are destroying each other‘s industries, while 70% of the world‘s populations are desperately short of industrial capital. There is currently no mechanism within the market system to build consumer buying power and implant this new technology where it is badly needed while keeping the already producing factories servicing the already established market.
Under Monopoly Capitalism, Industries Build Quickly but Markets Develop Only Slowly While industries can be built quickly, under neo-mercantilist free trade policies, markets can be developed only slowly. Instead of building market economies, and developing consumers among the world‘s struggling masses through adequately paid labor, giant producers are busy competing with each other for control of current markets, and destroying perfectly good industrial capital in the process. This cannibalization of each other‘s industries, battling over the current developed markets, is ultimately self-destructive. The destruction of industrial capital destroys the value of social capital (homes and businesses).
Expanding Buying Power in Step with Increased Industrial Capacity Only by creating buying power in step with, and in balance with, productive capacity will there be a market for the production from easily-built industrial capacity. As the productive combining of land (natural resources), labor, and capital (industrial technology) are the three requirements for a wealthy society, buying power is logically created by printing money to combine these economic factors and, so long as the money created and now circulating is in balance with the wealth produced, that new wealth will back that circulating base money (known as the ―money supply). Equal pay for equally-productive work, along with a sharing of productive jobs, will create buying power and capital will no longer destroy capital. This requires an economically viable region‘s money to be spendable only within that nation or region and a world currency handling trades between those regions (see dual currencies in chapter 20 and the Conclusion).
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The Monopoly Hold on Technology and Markets Is Weakening ―It took Britain and the United States 58 and 47 years, respectively, to double their per-capita output, but Japan did it in 33 years, Indonesia in 17, South Korea in 11, and China in 10,‖4 What we are witnessing is the continued weakening hold of the monopolization of technology. Eliminate fully the control of markets through technology monopolies (patents), and the world economy would become so efficient poverty could be eliminated in 10 years and the world industrialized to a sustainable level in 50 years.
Competitive Sharing will Lower Prices, Raise Living Standards, and Eliminate Capitalized Values on Earned Wealth The cost of moving factories, the cost of perfectly good factories destroyed, the loss of value of social infrastructure in abandoned communities, and the massive record profits before the then unbalanced economy collapses (as it is now doing, 2008-10), are all part of the overcharge. So too is military expenditure for protection of this system of theft of other people‘s wealth. We saw the dramatic forerunner of this in the two-decade-long economic collapse in Japan, the collapse of the Soviet bloc, the 1997-98 financial meltdowns in Southeast Asia, and the meltdowns in Latin America before various ballot box revolutions led to the rejection of the unequal rules of trade. Their continued improvement in living standards proves the legitimacy of those decisions. The entire developing world cannot help but notice those successes and will, hopefully, restructure the rules of trade and collect the rental values on their natural wealth, use those funds to build infrastructure and industries, and trade access to resources for technology and training. The 2010 notional value of the derivatives-hedge fund market is expected to increase to between $1 quadrillion and $2 quadrillion, 20 to 30 times total world production. Another run for the exits would destroy a good share of that massive unearned money pretending to be essential capital.a To protect themselves, the periphery of empire will make alliances with fast developing Asia, Japan, India, Russia, Brazil and the oil exporting nations. The On June 9, 2008, a Jim Sinclair blog warned us: ―We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.‖ Those notional values suddenly becoming real values that must be paid is the essence of the 2008-10 worldwide financial crash. The expansion of derivatives trading by huge insider trading banks making split second computerized trades accounts for the massive profits reported even as the rest of the economy struggles. a
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collapsing imperial centers will have to totally restructure, and trade technology and training for access to resources. Restructuring to equal free trade, access to technology and markets, and equal pay for equally-productive labor, would eliminate the cost of moving factories, the loss of destroyed industries, the loss of value of abandoned communities, and the waste of the massive accumulations of unearned finance capital, far above that necessary to run a balanced economy. If it had not been unnecessarily appropriated from its proper owners in the first place, current unearned finance capital could have been earned finance capital producing industries and building infrastructure in the emerging world. Before it is destroyed through a financial collapse, why not return that surplus finance capital back to those from whom it was confiscated in the form of industries, regional infrastructure, and training. At the best, this would only partially repay them for centuries of suppression, slavery, and inequalities of trade? With the tools of production, and training provided by that capital, along with their own natural resources and labor, the developing world could build their regional infrastructures and economies. With those tools, and their own resources, they can build their own social capital—homes, roads, stores, etc—in two generations. In trade for those reparations, the ―resource powers‖ must share their resources with the developed world. Only such an agreement will avoid WW III. Michael Moffitt, ―Shocks, Deadlocks, and Scorched Earth,‖ World Policy Journal (Fall, 1987), pp. 560-61, 572-73. 2 William Greider, Who Will Tell the People? (New York: Simon and Schuster, 1992), pp. 378-79, 399-400. 3 Greider, Who Will Tell the People, p. 399. 4 Samuel P. Huntington, The Clash of Civilizations (New York: Simon and Schuster, 1996), p. 103. 1
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19. China: Possibly A New Hope for the World
The monopoly system established centuries ago, aristocratic exclusive title to nature‘s resources and technologies, denying others their rightful share of what nature offers to all for free, is—hopefully—coming to an end. Professor Michael Hudson‘s Super Imperialism: The Origins and Fundamentals of U.S. World Domination1 has been on the best seller list in China, is going into its 5th printing, all his many books are being translated by the Chinese Government Printing Office, and he lectured at the new Marxist School in Beijing in the fall of 2009. The Chinese already understand ―plunder by trade,‖ and, as shown by the popularity of Hudson‘s books, are studying on how to defend against such financial and economic warfare. China already owns 90% of its banks and will own the rest if the world economy continues to collapse. We don‘t know if they will study on, or realize the economic efficiencies of, a citizenry paying bank profits and resource rents to themselves (to society) to fund governments, infrastructure, education, health care, retirement, etc. If they do restructure under those principles, and still retain a communitarian social structure, they will have the combined efficiencies of honest socialist, honest communitarian, and honest capitalist economies. They will quickly understand they can educate their population, to a high level, over communication superhighways at 5-to-15% the cost of brick and mortar schools (Chapter 24). The efficiency of those same communication superhighways to reduce sales and distribution costs 60-to-70% will be self evident. They will understand the need for permaculture so as to maintain soil fertility, and will quickly realize its importance in the employment of local labor to maintain the economic multiplier year after year. The potential of an efficient economy reducing labor by half, or more, will alert them to the need for lowering the workweek in step with those efficiency gains. Surely they understand the need to economically decouple from America and Europe; provide technology, industry, and training for South America and Africa in trade for access to resources, and the need to produce and distribute their own consumer products. Using Taylorist techniques, known for 70 years, their engineers will easily calculate the resource savings when abandoning monopolized market economies. If all this comes together, China will be the new hope for the world.
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By fully applying the monetary and economic principles we have laid out, especially in Part III, each citizen of this world can have a quality life. Once such a revolution in economic thought has become universal law, the world will have the tools to address global warming, resource depletion, the massive waste of resources and labor, and other problems related to the limitations of our small planet.
Four Powerful Economic Weapons Available for Emerging World Use There are four powerful economic weapons the resource wealthy developing world can use: 1) They can form alliances, better yet full federations, and barter their resources to the developed nations, in trade for technology, finance capital, and access to markets; 2) create regional trading currencies viable only within regional, or national, borders; 3) manufacture their own consumer products for trade within that alliance; 4) and, until the imperial centers negotiate honestly, collectively refuse to mine the ore, cut the timber, drive the trucks, run the trains, or load the ships for export. This is nothing more than a reverse of the embargoes of technologies that have been imposed upon these nations for centuries. Such allying and bartering avoids hard money monopolization and the resultant unequal trades between weak and strong nations. The developed world needs emerging world resources just as badly as the developing world needs technology, training, and finance capital. With America‘s loss of the moral high ground, and the Iraq debacle proving societies can no longer be militarily controlled, the superior bargaining position should pass to the ―resource powers.‖
Emerging World Regional Trading Blocs Attaining Equal Negotiating Power Barter was how Germany broke the financial blockade strangling her, and World Wars I and II settled that threat to gold as the world‘s trading currency. The imperial-centers-of-capital owns most those factories and patents. If barter is again tried, then residual feudal, aristocratic exclusive title to technology, and its monopoly control of others‘ resources, will stand out in bold relief. Any attempt to use the old weapons of financial warfare, diplomatic warfare (embargoes), covert warfare, or open warfare, to prevent those barters, will expose the monopolies even further. If, against all pressure, allied regions refuse to dig ore, cut timber, run trucks and trains, or load ships, for any except nations and regions which recognized their right to equality in trades, the imperial nations would have no choice but acceptance of all nations as equals. Trade agreements between China, India, Japan, and Russia, with the emerging world, which included their industrial development, as is happening as we
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speak, will outflank corporate imperialism. If the ―resource powers‖ ally to create their own trading currencies, spendable only within the borders of an economically viable region or nation (see chapter 20 and the Conclusion), corporate imperialism‘s financial warfare weapons will be rendered harmless. Further protection is gained through social collection of resource rents dropping the monetized value of land and resources to zero, all while providing funds for building infrastructure and industry, education, health care, retirement, etc. If there is no "countryside" to maintain in dependency, there can be no imperial-centers-of-capital The Soviet Union fought so long, and so hard, that, after WW II, the only remaining intact imperial-center-of-capital, America, was forced to share its capital with Western Europe, Japan, Taiwan, and South Korea to retain them as loyal allies to contain that bastion of fast expanding socialism. Before the successful Soviet destabilization, while they were thus still a threat, China and Southeast Asia moved under that sharing protectionist umbrella and, except during the 1997 Southeast Asia financial meltdown, each were rapidly developing. China and India, just as all powerful nations in history, will not accept inequality in world trade. A powerful and fast developing China and India, if they do not incorporate Western monopolization policies and laws, will be the new threat to historic imperial-centers-of-capital. So long as China and India can maintain their independence, industrial technology is now so diffuse that, so long as they are moral and support the industrial development of other nations, which is happening, the monopoly power of the imperial centers will rapidly erode. Up until the economic and financial collapses on the periphery, from 19972003, managers of state were losing control of technology (industrial capital). Though that loss temporarily abated, it picked up speed as high oil prices, due to the Iraq war, gave parts of South America, and other oil rich regions, buying power. China, India, and Japan signing resource contracts with Africa, South America, and Central Asia further extended that loss. Whether the relative price of commodities fall or rise will tell us who is winning. If China can maintain its independence, it will be impossible to embargo technology from her, and a new belief system, portraying a powerful China as the new enemy will not work while they are rapidly continuing to develop, allying with the resource wealthy world, and while the developed world is stagnating. If China, or any other powerful trading bloc, retains the ideology of rights for all the world‘s people, if it is sincere in that belief—the imperial centers preach that philosophy but none follow it—if it is strong enough to not be subverted, too strong to be attacked, and if this blend of power and sincere caring for others results in all regions of the world gaining access to technology and markets with equal pay for equally-productive work, the world will then have the
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opportunity for the 50 years of peace it would take to develop the world to a sustainable level, eliminate poverty, and provide a quality life to each world citizen. As the studies deciding that most of the world will be relatively well developed by 2035, only 26 years away, tell us, this is a realistic possibility. As China and other nations install communications superhighways, the cost of phones, Internet service, TV, Radio, movies, and education will drop to less than 15% the current norm. Through that communication system, the citizenry could be bombarded with rational guidelines for sustainable world development, and outlining the quality life to be had for all, if that was society‘s goal. One child per family would shrink the highly populated nation‘s census by 50% in four generations, while doubling the amenities of life for each citizen, and all with no increase in resource use. A steady increase in technological efficiency, during the same time span, could double the amenities of life again and all that gain would also be without increasing the hours of labor, consumption of resources, or pollution of the environment. We trust per capita consumption will not increase above a rational life style, and those resource savings will go towards alleviating global warming. We use China as an example because it has the necessary social cohesion. If they succeed, and the lowering of their population results in a rapid rise in her per-capita living standards, others will take note, adopt the same policies, and their living standards will also rise rapidly. Such a rapid expansion of rights will be a threat of the first order to corporate imperialism. They know well that, once resources on the periphery are turned towards the care of their own, those resources will not be available for the high lifestyles in the imperial centers. The goal of the allied imperial centers is to co-opt the powerful within China, so as not to be threatened by such expansions of rights, or to prevent such gains by containing China‘s access to technology and finance capital. Thus, reducing its population, increasing its per-capita wealth without expansion of resource use, signing development contracts and technology trades with South America and Africa in trade for resources, is China‘s, and the world‘s, best hope. The imperialist plan was that Chinese elite would recognize the massive unearned sums that would accrue to them under monopoly capitalism‘s exclusive title to nature‘s wealth. If those leaders fall into that trap, and fail to establish full and equal rights for all, then we have to depend upon South America and Africa gaining control of their destiny, establishing the efficient social structure we lay out, and be the beacon for the rest of the world. In Mercantilism as a Rent-Seeking Society, Robert B. Ekelund, R Tollison and about 70 authors on the subject they reference—including Adam Smith and many other classics—address mercantilism, rent-seeking, monopolization, and privatization (both in world trade and internal trade) as being the same things. Those subjects are addressed as beginning with struggles between the bourgeoisie and the
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king to regulate the rules of monopolization by legislatures and courts and ending with the monopoly system structured within the unequal property rights laws of today, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. Just as firmly they point out that, this process has been very inadequately studied, and that there was a consistent connection from the divine right of kings assigning monopoly rights, the bourgeoisie battling to have those rights decided by legislatures and courts, and its connection to the monopoly legal structure of today. Economists did not carry the research of John Stuart Mill, Alfred Marshall, and others, to its logical conclusions. Peer pressure, and the inability to be published by mainstream publishers within a society fiercely attacking any threatening philosophy, almost certainly was the limiting factor. A few, Ralph Borsodi, Stuart Chase, Thorstein Veblen, and others, pushed the essence of this thesis during the Great Depression but WW II submerged all such efforts, and during the Cold War, such free thought simply was not permitted, except on the far margins. All monopolizations are superior rights of some over others. The gains we have made are a few more moving from the underclass to the rent collecting class. Missing in those hundreds of studies, all written within the above parameters, are these four basics: 1) A measurement and study of the waste within each economic sector under the monopolization, wealth extraction, process, 2) A full study and measurement of the economic efficiency gains through elimination of monopolization in all its forms, 3) a study and measurement of the required full and equal economic rights of each citizen emplaced in constitutions, and in laws, which eliminates monopolization, and 4) an outline of how a socially-owned, and operated, banking system replaces the enormous complications and costs of operating a privatized, rent-seeking, mercantile, monopoly system. 2 As crises throughout the world intensifies, the job of all serious social scientists will be to explain how to abandon the monopoly system, currently causing most wars, and give full and equal economic rights to every citizen of earth. Under enlightened philosophies such as we, and others, are describing, wars and poverty will quickly disappear and a quality life for all can be attained within two generations. We now turn to Part III to understand how to restructure property rights, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, into full and equal economic rights for all. 1
Hudson, Michael Super Imperialism::The Origin and Fundamentals of U.S. World Domination (Pluto Press, 2003).
2
Robert B. Eklund, Robert D. Tolison, Mercantilism as a Rent-Seeking Society (Texas A&M U Press, 1981). Too many pages supporting this analysis to cite.
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Part III, Utopian Living Through Restructuring Property Rights Law The Potential for an Economic Collapse The Ease With Which it can be Halted
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Introduction, Part III, Utopian Living Through Restructuring Property Rights Law Environmentalists and all concerned with global warming will be interested in the huge levels of economic waste, 50% per unit of production, which can be eliminated under a philosophy of full and equal economic rights for each citizen of this world.—The author
For two years I had been inserting these words at the end of each chapter on monopolies: ―Once this monopoly is eliminated through restructuring property rights, the huge blocs of capital, buying, and selling, those capitalized appropriated values (misnamed profits) within the ethereal world of high finance, are transposed into roughly equally-shared use-values.‖ But, I still did not see the big picture. Pulling those chapters together to write Money: A Mirror Image of the Economy (which is this Part III you are now reading), I took one look and said, ―Good Lord! Fully 95% of the huge blocs of capital America is worshipped for were not only never necessary; they were reducing economic efficiency at least 50%.‖ The day before I would have said, ―one cannot challenge classical economics,‖ but I now realized those were only justifications for a system of theft, unequal property rights law, as applied to nature’s resources and technologies, denying others their rightful share of what nature offered to all for free, which the powerbrokers spent over 700 years putting in place, and that privatization process is still ongoing. We will be analyzing the aristocratic roots of those property rights laws. No one produced natural resources; it is offered to us all for free by nature; hence all are entitled to their share, and that can be efficiently accomplished through society paying resource (land) rents to themselves, the socialfund. That social collection of land rents converts aristocratic exclusive title to nature‘s wealth to conditional title. That conditional title, socially collected resource rents, providing social-credits for social needs, affirms access to land as a human right and, as you will quickly see, much more. Land titles, being first issued by governments as ―patents,‖ acknowledge patented mechanical and chemical technologies as being a part of nature. They are, like natural resources, waiting to be discovered. With rights of all citizenry to their share—in this case paying inventors well and placing all technology in the
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public domain—the wealth produced by technology is equally shared through a 50% to 80% drop in the price of consumer products (see chapter 22). That savings represents the labor and resources no longer wasted and a quality living can be provided working two to three days per week. Taxi medallions (licenses in New York City) having a capitalized rental value of $200,000 per year, alerts us they are monopolies identical to that of land; land has unearned capitalized rental value, and so do taxi medallions. The connection between them is that their values were not produced by labor, but by exclusive titles, which gives them unearned rental values; the monopolization, wealth extraction, capitalization, process. Like taxi medallions, banking, insurance, law and health care, are all technologies; they are a part of nature which must be discovered and refined over time, licensed within ―the monopoly, wealth extraction process‖; that legal structure gives them non-tangible, unearned, rental values. Land has tangible value, but it is produced by nature and offered to all for free. Banking and insurance are social technologies, and their licenses within a monopoly structure give them non-tangible, unearned, monopoly values; all are beyond the tangible use-values produced by labor. Healthcare and law have tangible labor values (years of study), but their market prices are primarily unearned monopoly values, created by license, which is also beyond the real values created by productive labor. Patents have some tangible labor values, but the much greater non-tangible, unearned, monopoly values more than double costs to consumers. Licenses per se do not have monopoly value; they are a necessity and are proper. It is the ad hoc expansion of ―the monopoly, wealth extraction, process,‖ within which they were issued, that is the problem.a Licenses are issued within other social structures without developing those unearned values. The ad hoc manner in which the superstructures operating these social technologies formed led to unnecessary labor and resource costs which have been factored in as normal. Those technologies are well understood today, and labor is wasted battling for market share for what is recognized as a necessity, and thus should be a social, or human, right. Converting marketing rights to banking, health care, insurance, etc, for a few, to social rights or human rights for all, drops costs by half or more. The resulting full and equal economic rights, eliminating most legal battles, are part of the cost savings.
Best explained throughout Mercantilism as a Rent Seeking Society by Robert B. Ekelaun & R. Tollison (Texas A & M University, 1981). a
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Monopoly Capitalism’s Extractive Property Rights Versus Property Rights Providing Full and Equal Economic Rights Money is a social technology discovered over 5,000 years ago. Banking is a part of money technology learned over the centuries. By restructuring private, monopolized, banking to a socially-owned banking system, one has applied the principle that, as such technologies are a part of nature discovered centuries ago, and have few, or no, tangible values produced by labor; each has a right to their proper share of the wealth nature produced. Over the centuries, to protect and increase their wealth and power, powerbrokers have extended the principle of monopolization of land through exclusive titles to include banking, patents, communications, insurance, health care, the legal system interpreting those rights for us, and other more minor sectors of the economy (run an Internet search for ―rent-seeking‖). To both protect their system of wealth extraction, and lay claim to even more unearned wealth, this system of unequal economic rights—the privatization of every aspect of nature‘s resources and technologies properly belonging to all in roughly equal shares—is being imposed upon the rest of the world (they are now pushing back). Perception management, as to the high efficiency of an economy operating at less than half its potential, is not only hiding inequalities, violence, and lack of democracy; it is also hiding monopoly capitalism’s close connection to aristocratic law. Those aristocratic exclusive titles to nature’s resources and technologies she offers to all for free, designed from their earliest beginnings to lay claim to wealth properly belonging to others, is really aristocratic law. Each person having the possibility of owning those exclusive titles, gives the appearance of equality. But superior rights are contradictions in terms. Some will win (1% own over 90% of America‘s wealth), some will lose, and the aristocratic structure of a wealthy few, and impoverished many, stays firmly in place. This reality is hidden by the immense wealth stolen from the rest of the world through plunder by trade. If the developing world allies together, and demands equality in trade, Europe and America would immediately lose a large share of the wealth annually distributed among their citizenry as earnings. Demographics within those nations would quickly shrink to the aristocratic structure, from which Western capitalism never fully evolved. That aristocratic structure, exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, is still there hiding under beautiful names—democracy, capitalism, freedom, etc. Aristocracy fought for centuries to acquire, extend, and retain their superior rights, and a large share of violence and wars today is financial aristocracy—just as the aristocrats from which this legal structure evolved—battling to acquire,
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extend, and retain the same aristocratic exclusive titles to nature‘s resources and technologies, denying others their rightful share, in only slightly adjusted forms, as under aristocratic law.b Battles against those unequal economic rights are the primary struggles throughout the world today. How is it possible to have ―free thought,‖ ―free thinking universities,‖ and a ―free press‖ and not be aware of this monopolization, wealth extraction, process? Think of the centuries the common people were trained to look up to and worship aristocracy. As aristocrats were the only ones who could read and write, the first books can only have supported them. When education spread to the common people, literature still had to glorify aristocrats. For powerless people to have attacked them in books in any way would have led to very unpleasant consequences. This system of control was retained as the bourgeoisie gained rights and power. The common people were never anticipated to have rights, and their masters had disciplinary power. Thus the classics supporting unequal property rights, with none attacking the system being permitted, amounted to firm control of what was taught. For centuries aristocracies' perception management held firm; serious alternative views challenging the system are not permitted yet today. Aristocratic property rights hiding within current property rights, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free were taught as maximally efficient while all other systems were, except on the margins, taught as dictatorial and inefficient. Marx‘s philosophy is one such belief system which, due to he being a theorist for labor, gained a large following. Powerbrokers spent trillions of dollars, slaughtered tens of millions, and spent billions on perception management (funding think tanks which carried through to the media and the universities) to relegate that philosophy back to the margins. (With capitalism in deep crisis, Marx is resurfacing.) Classics and derivative works supporting the system were taught, and are taught, as the only viable philosophies, and simultaneously it was taught that all were free to think as they wish, and encouraged to do so. But those who did were immediately ostracized to the margins, just as all challenging thought had been for centuries, and that scene is replayed over and over. Those marginalized understand it. Due to continued perception management (propaganda) such people are believed to be a threat to freedoms and rights, that they are radicals not to be listened to, or whatever. Meet any professor today and you will find them totally sincere,
Throughout The Divine Right of Capital: Dethroning the Corporate Aristocracy (BerrettKoehler, San Francisco, 2001/2003) Marjorie Kelly addresses the aristocratic structure of current capitalism. b
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wanting to do good, and totally unaware that their thoughts are as firmly under control as those of scholars 500 years ago. Note the complexity of classical and neoliberal economics. Note the simplicity of eliminating poverty and providing a quality life for all as we will be outlining. Note its solid logic, and note the certainty that it will be rejected by those mentally locked within the ―system.‖ However, when their children are cold and hungry those belief systems (perception management, propaganda) will be thrown aside, and one who parrots the old beliefs will be hard to find. The waste and violence of the current system is so enormous—far more wasted, destroyed, and production forgone, than consumed—; we must hope that day will be soon. Citizens within what are touted as full democracies, but in reality are only representative democracies, are subject to laws imposed by others, primarily corporate lobbyists whose bosses claim far more than their fair share. For each to attain their rightful share of nature‘s wealth, full and equal economic rights for each citizen should be enshrined in a constitution. The justice of those rights will be evident as every citizen both produces and consumes their fair share. The essentials of such a constitution are laced throughout this treatise. Once such a legal foundation is in place, laws covering disputes and changing circumstances can be decided upon by participatory direct democracy as opposed to today‘s representative democracies. Such laws voted on by a citizenry, as referendums will then be approved or disapproved; utilizing eye or thumbprint scans to assure honesty, this would be very viable. With direct citizen approval of important laws and constitutional changes, and though not perfect, Cuba and possibly Libya are the only such democracies today but Venezuela, Bolivia, Ecuador and other South American countries are following in their footsteps. As opposed to a full democracy, the key laws of imperial nations are unequal property rights, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, designed by their predecessors over the past 700-plus years, and generally addressed as ―property rights law.‖ Even though it is an unequal property rights system, individuals can make decisions, and society within the imperial centers can, due to the enormous efficiencies of ever advancing technology, rapidly develop. Those pointing out that current property rights permit stability while the enormous wealth in imperial cultures deny themselves the realization that this unequal legal structure prevents the full development of both internal and periphery economies. All societies, including those imperial-centers-of-capital, could advance much faster and more equally if those laws were designed for full and equal economic rights. Sector by economic sector we will be explaining how applying equal rights to (access to) nature‘s wealth and technologies which she offers to us all for free, will eliminate the inequality of today’s property rights
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law, as applied to nature’s resources and technologies, reduce labor time, eliminate waste of resources, and substantially reduce environmental impact. Through the greater share of the 700-plus years inserting inequality into property rights law, little consideration was given to the rights of the common person, or to their share of wealth produced by nature. Laws were written by the powerful for protection of their wealth and power, and for attaining more wealth and power. Thus the extension of aristocratic exclusive titles to land under the enclosure of the commons process, which started formally in England under the Statute of Merton of 1235, creating massive wealth for the powerful few, and colossal poverty for the many. See chapter one of The Earth Belongs to Everyone, 2008, by Alanna Hartzok. She goes deeply into the early privatization of the commons as a system of theft of wealth properly belonging to all.c Those early enclosures of the commons, and the ongoing privatizations today, are the fundamental unequal property rights laws governing monopolization. Aristocrats created those first monopoly laws, and the very principle of aristocracy was exclusive title to nature‘s wealth, those huge blocs of land they controlled. Those exclusive titles, enclosing the commons, were only aristocratic privileges (monopolization, mercantilism, privatization, rent-seeking, they all mean the same thing) inserted into law to extract wealth from the politically powerless. Whenever the citizenry figured out the fraud, the power structure controlled the slight changes in political structure, gave their rent-seeking legal structure another name, and went right on. Those Property rights laws dealt with rights, but in the sense of superior and inferior rights. As the masses slowly gained more rights, they were given the opportunity to purchase land (resources of nature). Quietly and slowly these unequal property rights, as applied to nature‘s resources and technologies, spread in step with the wealth production of the ever-increasing efficiencies of technology. The elite property owners, with their excessive rights, were the only ones educated, they held all the positions of power, and it was they, at all times, who created those laws. They poured out philosophies of high economic efficiency under property rights as structured, aristocratic exclusive title to nature‘s resources and technologies, denying others their rightful share of what nature offers to all for free, and we hear that claim—―this is the most efficient economic system‖—repeated in almost every classroom today. Those superior rights were continually protected and entrenched in later laws. Alanna Hartzok is Co-Director of Earth Rights Institute. She is currently directing a 34 member International Advisory Group which is developing a program on land value capture for the UN Habitat‘s newly-launched Global Land Tool Network. See www.earthrights.net c
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Superior rights, assured by aristocratic exclusive titles to nature‘s wealth, had a secret: Aristocracy proper was to largely disappear, but the principles of aristocracy, still protecting wealth and power, lived on in those aristocratic exclusive titles to nature’s resources and technologies. At that time, it could not have been anticipated that the common people would ever own a part of the earth upon which they lived and worked. When the bourgeoisie, and later the common people, were brought into the flow of money to purchase land, the fortunate now had, once that purchase was paid for, a share of the superior rights once held by aristocracy. Our research exposes that hidden secret, aristocratic exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, is the very foundation of the monopoly, wealth extraction, process, imposed upon the world. By giving each a chance—in reality a few a good chance, some a small chance, and most no chance of gaining clear title—the system is, like every game of chance, very seductive. If you were accosted and robbed, that is obviously a criminal act, violating the rule of law. If your legislature passed a law giving an advantage to a group, or an individual, which enabled them to extract unearned income from you (it happens all the time, run a search for ―rent-seeking‖), that would be within the rule of law, but would be easily recognized as creating inequality through granting excess rights to a fortunate few. The British Enclosure Acts addressed above, assigning exclusive land titles to lords of the land, and forcing the commoners into the city to survive in breadlines, is easily analyzed as unequal property rights law giving excessive rights to a few and taking away rights and wealth from the many. That injustice was justified by philosophical treatises, again known today as classics, stating those unemployed workers were necessary to work in the factories at the start of the Industrial Revolution. This is a clear example of the need to philosophically justify inequality structured into property rights law, as applied to nature’s resources and technologies which is properly shared by all. Today we know every factory ever built in either a poor country or a rich country is always overwhelmed by applications for employment. The reason is obvious; those employed can purchase more of the amenities of life. As labor has always been available in longestablished, heavily-populated societies, the need to dispossess people from the land to create a labor force was only a justification, not an honest philosophical analysis. With continued philosophical justification, the major classics, the masses‘ rights to the commons were forgotten, and aristocratic exclusive titles to nature’s resources and technologies, denying others their rightful share of
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what nature offers to all for free, were not only accepted as normal, they were taught as imperatives for economic efficiency. We hear those justifications yet today; ―this is the most efficient economic system.‖ Even when its imperfections are recognized, it is still justified: ―this is a really a bad system, except it is better than all others.‖ Through demonstrating the enormous efficiency of a modern commons within all sectors of the economy while still retaining the efficiencies of honest capitalism, we prove such alibis have no relevance to reality. Those rationalizations were hiding the systematic theft of other people‘s wealth through unequal property rights laws as applied to nature‘s resources and technologies. Those evicted from the commons knew they were losing rights, and the landlords were gaining rights. But, until the neocons‘ violent theft of Iraq‘s oil alerted serious thinkers, the only voices heard were those justifying that theft. Over time, current unequal property rights were accepted as normal. The privatization of the commons, unequal property rights law, and plunder by trade laying claim to other societies’ wealth evolved side by side. The earliest law leading to today‘s privatizations under modern law was the Statute of Merton in 1235 in England, almost 800 years ago. In chapter two we quote from classics on the Middle Ages, written by Petr Kropotkin, Henri Pirenne, Immanuel Wallerstein, and Karl Polanyi. Those early battles between the walled cities and the countryside, and those same City States and other City States, parallels the struggles between imperial nations and their countryside; which are today‘s ―resource powers.‖ The theft of wealth throughout the colonial world, and a need for a loyal citizenry to provide the military to enforce that piracy, required a further sharing of wealth with internal labor. With wealthy citizens throughout Western Europe and America, and the acquisition of wealth beyond anyone‘s dreams only three generations ago, this is taught as justification for what is obviously a profoundly unequal and unjust system. This treatise proves monopoly capitalism, misnamed capitalism, is inefficient to the extreme. Massive unearned wealth is being extracted from both society‘s own labor, and from the periphery of empire. Half that wealth is ground up through the offices and labor (the superstructures) managing those monopolies. Added to that waste is the military protecting what is little more than a racket within world trade (Google United States Marine Corp Major General Smedley Butler‘s ―War is a Racket‖). As addressed above, Asia‘s industrialization was an accident of history. Imperial powers were seeking allies in their desperate effort to prevent honest and moral property rights from emerging to challenge their unequal and unethical legal structure. The Conclusion will address how that accident of history, a highly industrialized Asia; an awakened world may yet overthrow the unequal legal structure the West has spent 700-plus years establishing.
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As much of the world now understands the fraud imposed upon them for the past half millennium-plus, those aristocratic exclusive titles to nature’s wealth, the very essence of monopolization extracting wealth, has the possibility of disappearing into history to be replaced by a peaceful, prosperous, sustainable, federated world with full and equal economic rights, providing a quality life for all. Contrary to those 700-plus years of justifications, by what are known today as the classics, there was never a need for exclusive titles to nature‘s bounty to accumulate finance capital. Avoidance of that unequal legal structure, through utilizing the mighty economic and financial engines of sharing technology, as opposed to monopolization, would have doubled economic efficiency, and eliminated poverty as fast as new technologies were invented If our early ancestors had designed a cooperative capitalism instead of monopoly capitalism, technology would have spread across the world as fast as new technologies were invented, and would have done so without poverty or war. Aristocratic exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, is a system of theft; as proven by the 500 years of struggle against it, this was recognized as such when first being imposed. However, philosophical justifications, again those classics and their derivatives, taught in the universities and through the media, have erased that reality from the social mind. To bring up the possibility of such inequality and inefficiency in either polite society, in an academic setting, or in this book, is to create total shock. Such is the totality of the belief systems imposed upon us to hide the reality of a system designed from its origins to extract wealth from the politically weak. Customs and laws of other societies also lay claim to wealth properly belonging to others. The caste system, now outlawed in India, but still having substantial impact, is a system of rights and entitlements, which amounts to property rights law extracting wealth, established centuries ago. Only 160 years ago in America, and in some cultures yet today, both slaves and women were property. The principles are the same, superior rights for the few, and inferior rights for the many, so as to lay claim to unearned wealth. Excessive rights are easy to spot in such a system, and thus easily condemned. The monopoly system of inequality is hidden so deep in custom, in property rights laws, and protected by philosophical justifications, classical and neoliberal, through the educational system and the media, that it is not only considered normal and just, but also is deemed and taught as essential and efficient. Social scientists must look closely. Before this latest surge of populist revolutions, large parts of the world were accepting monopoly property rights as providing equal economic rights and maximum economic efficiency. They now know better. Capitalism‘s mighty economic engine, and the belief system socie-
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ties are encased in, hide the enormous inefficiencies and the violence imposed through unequal property rights laws installed over the past 700-plus years. The first impositions of unequal economic rights were by violence as the commons were privatized. Major classics then justified the imposition of that system of theft. Later impositions of the belief in the justice of such thefts of others‘ wealth were through the university systems teaching those classics. The belief systems were so total that professors were unaware those philosophies were only justifying a system of theft imposed for centuries, and that process is ongoing yet today. Our research tells us that, in their struggle for full and equal economic rights, a large share of the world is breaking out from under those belief systems protecting unequal, monopoly, property rights. Production of wealth is, at every turn, a utilization and transformation of nature‘s wealth. This treatise addresses how restructuring property rights in land (resources), technologies, money, and communications—all technologies of nature—from aristocratic exclusive titles to equal rights conditional titles, with society collecting rent values, and with social rights and human rights legislated into law, would increase economic efficiency equal to the invention of money, the printing press, and electricity. That economic philosophy would give full and equal rights, economic and political, to everyone on earth. We are primarily addressing the internal economy of today‘s hegemon, America. Until checkmated in Iraq, it was their system of exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, creating wealth and power for a few and the impoverishment of many, that was being imposed upon the world. The proof that monopoly property rights are systems of inequality and inefficiency would be the transformation of the massive unearned finance capital within a monopolized economy (roughly 95% of all finance capital) into equally-shared use-values through restructuring aristocratic exclusive titles to resources and technologies to conditional titles (supports on p. 3). This can only be done when a financial crash destroys most those unearned values. Under those conditional titles, society will pay rental values on all natural resources to themselves (socially collected); in the case of technologies, those monopoly values are eliminated through paying inventors well, and placing their discoveries in the public domain; and, in the case of monopolization through licenses, legislate those crucial services as a social right, or a human right. Roughly 5% of today‘s level of private finance capital (in the form of use-values) will then, as now, build/run industry and operate the economy; the 95% of finance capital once wasted remains with those who produced that wealth. That wasted finance capital (fully 95%), now transposed to use value, had only been buying and selling the capitalized values of extracted wealth, and running the shadow economy of that appropriation process (the ethereal world of high finance).
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Appropriations of wealth through aristocratic exclusive titles, no matter where or how they are invested, engender a continual extraction of more wealth. The owners of those unearned funds, searching for a safe place to invest, typically settle for buying treasuries issued to cover the costs of the federal government, and purchasing bonds issued for sewers, water systems, and other crucial infrastructure. Citizens from whom that wealth was extracted in the first place pay taxes to pay off that principal and interest. As those debt instruments are paid off, that money is again loaned back to the same people. The same citizenry, through either taxes or the purchase of products and services at excessively high prices, again pay off those debts. And that impoverishing cycle goes on, in perpetuity, interrupted only by economic collapses, such as is ongoing today, 2008-10, due to too much wealth in the hands of the few, and too little buying power in the hands of the many. It is the potential of doubling economic efficiency through conditional titles to nature’s resources and technologies to achieve that equal sharing of nature’s wealth and eliminating all appropriation of others’ rightful wealth which tags those continual repayments of extracted wealth over and over as ―impoverishing cycles.‖ Those inefficiencies under the founding principles of classical economics alert us they were only justifying a system of excessive rights; they were not laying out principles of an efficient economy. Those justifications, rationalizing unequal property rights within classical and neoliberal principles, are pouring out yet today; however, other voices are starting to be heard. Just as customs of ancient cultures are huge obstacles for their societies to evolve efficiently, exclusive feudal property rights in monopoly cultures severely restrict the efficiency of capitalism. Those inefficiencies are not perceived because modern technologies are so efficient that the huge gains are visible and admired; while the further doubling of consumption possible under inclusive property rights, even as employed labor time is reduced, remains unknown. We are bringing those gains out into the open for all to see. The basic principles of monopolization under feudalism were never abandoned. Citizens living within the belief systems of monopoly capitalism have full rights only in the sense that each has a chance at becoming a wealthy monopolist while only a few gain substantial wealth. Until the current financial collapse, those inequalities were not fully visible to Americans and Europeans because of the large percentage with a high standard of living, and thus the appearance of full rights. But, unrealized by the citizenry, and most in academia, that high standard of living is maintained only through massive additional thefts of wealth from the periphery of empire. The powerful today are fighting to retain, and expand, their aristocratic monopoly property rights; exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. Feudal powers
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fought for centuries to maintain those aristocratic exclusive titles to land which is, of course, the same wealth of nature being fought over today. As the enormous wastes within an economy cannot be eliminated without elimination of monopolies, we will address deeply the four primary monopolies—banking, land, technology, and communications—and, with the principles of exclusion and inclusion within property rights law well established, summarize the secondary monopolies—insurance, law, health care, etc. As this Part III is primarily a treatise on money, we will be addressing that monopoly first. Money is a social technology discovered over 5,000 years ago. That a banking system is properly owned by society is demonstrated by outlining the enormous efficiencies, and full and equal economic rights, under that social structure. To keep everything local, each social unit—a federation of nations, each nation, each region within a nation, each state, each community, each business, and each entrepreneur—should have a constitutional right to their share of socially-created money and savings (investment capital). Except for vast overcharges, credit cards approach this ideal for consumer purposes but such full and equal economic rights have never in the history of private enterprise been applied to investment. High interest charges on those cards disappear when issued by a socially-owned banking system with the citizenry making loans to, and paying the profits to, themselves with those “earnings” funding essential social services. So long as there are available resources and labor, money can be created, up to the level of a balanced money supply, to build social infrastructure as well as financing the early stages of industrial capital. Education systems, roads, railroads, harbors, communication systems, water and sewer systems, etc, any natural monopoly, are properly owned by society and should be built and operated with resource rents and banking profits. History is replete with examples of creating money for wars. The populists of the late 19th century advocated printing money to loan to farmers was a replay of created money funding the economy before the Revolutionary War and within Benjamin Franklin‘s colony in Pennsylvania. Classical money theory is silent on the enormous potential for created money funding infrastructure and, up to the level of monetary balance, other essential social needs. Aware non-classical theorists very correctly advocate creating money for—again up to the level of monetary balance—infrastructure, environmental cleanup, communications, retirement, and universal health care. Primary-created money (base money created up to the level of monetary balance) building infrastructure circulates within communities, regions, nations, and federations to provide the citizenry with food, fiber, shelter, health care, retirement, etc. As industrial capital is justly privately owned, later industries are built by savings; excess circulating money is destroyed by higher mandatory re-
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serves. Once a banking system is socially owned, first industries developed, and resource rents and banking profits are funding all infrastructure and social needs; there is no need for fractional reserve banking. The necessary restructuring can only happen when the current system collapses, and that may be taking place as we speak. When it does we must be ready to provide the philosophical foundation for restructuring unearned values, currently capitalized into massive blocs of unearned finance capital, into roughly equally-shared use-values. Though we describe in depth that it can be done, that the world will abandon its current struggles over who will control resources and the wealth producing process, and peacefully and rapidly eliminate poverty, is not likely. But such revolutionary leaps have happened before and communications superhighways, along with the 2002-10 disastrous foreign policy of America, the hegemon currently blocking such changes, has cost them the moral high ground, greatly increased, and may have assured, the potential of another such leap. Our concluding chapter is a theoretical example of just such a restructuring and the world rapidly developing. As banks have to fund any system—efficient or inefficient, equal or unequal—leaving monopoly property rights in place while creating a theory of either money or economics is an exercise in self delusion. That the world will peacefully eliminate the monopolization, wealth extraction, process—aristocratic law hiding under unequal property rights laws imposed upon the world—is unlikely. Eliminating those monopolies would be revolutionary and the only way to address the many obstacles to peace and prosperity was to tie it to the current financial collapse and the worldwide populist revolution currently under way. So, the improbabilities aside, it is one of the possibilities, and we address it as such. That communications superhighways will revolutionize the world is well understood. That a worldwide populist revolution is in progress is recognized by many. We hope to alert these people that capitalization of unearned values is monopoly capitalism‘s mighty engine wasting or forgoing production of over half a society‘s wealth production potential. In contrast, the much smaller, yet twice as powerful, economic engine of full and equal economic rights would eliminate that waste, eliminate wars, and would provide a quality life for all the world‘s citizens within 50 years.
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The Community Social-Credit Process How did such an inefficient economy as we have today evolve? Visualize a fertile valley 10,000 years ago with fruits, nuts and vegetables growing wild along with lush thatch for building shelters. The new settlers have only to pick their food, build their thatch homes, and once that home is built, relax most the day. A cunning cabal form to lay claim to a part of the land. They make a pact with toughies that they will share the spoils if they protect their unequal and unjust ―property rights.‖ That is our legal structure today, developed in various stages, those unequal laws are still being enacted, and the sheriff and the courts are today‘s toughies. The primary cause of poverty among plenty has just been established. The meek, mild, and law abiding now have to share the food they pick with those ―owners,‖ have to build their houses, and provide other services. Those cunning go on to claim their unearned wealth on through history and those are the property rights laws, as applied to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, that is in place today. Your property rights laws today, as applied to nature‘s resources and technologies, is nothing more than aristocracy‘s property rights law, exclusive title to nature‘s wealth which she offers to all for free. We are not talking about personal property, which was built by labor and properly exclusively owned. We are talking about the wealth of nature, which was not produced by labor and belongs to everybody. The power structure is privatizing everything in sight, and costs rise rapidly (frequently doubling) each time a piece of nature, or a part of the infrastructure of the economy is privatized. This is happening all over the world; efforts are underway to privatize highways and other social services, even Social Security. When Bolivia‘s water system was privatized, costs tripled as services went down. The citizenry revolted, physically took back their water system; the results were that prices dropped, services rose rapidly, and the legal structure had to recognize and legitimize the recovery of society‘s basic right to water. We can each regain our rights to our share of nature‘s wealth by paying land rents, meaning all resource rents, to ourselves (meaning socially collected) and using those social-credits to build roads, railroads, water and sewer systems, and electric grids (all natural monopolies). Those funds will also run governments, and provide education, health care, and retirement. This is not socialism. It is run by the people themselves; Congress need meet only a few days a month to tweak these equal-rights laws. Money and banking are centuries-old technologies—just as much a part of nature‘s wealth as land, water and air—and thus are an integral part of the
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community social-credit process. The only tangible (labor created) values within banks are brick, mortar, and furniture. Operating those banks, and paying for the use of those few tangible values, are covered by ½ of 1% interest on loans. Base Money is created out of thin air by the socially-owned Federal Reserve. Circulation of that base money is our money supply. Thus, money systems are also forms of wealth, produced naturally by all people, and a key part of the community social-credit process. Those earnings of nature are also properly paid to ourselves, and used to augment the funding of governments, infrastructure, education, healthcare and retirement. Currently your earned money becomes monopolist‘s unearned money, which they then loan back to you. That unearned money—the other side of the ledger of everyone‘s unnecessary debts—grows greater and greater. The huge gains from correcting today‘s unequal property rights laws is your share not being appropriated from you in the first place. That is done through paying rental values on nature’s wealth to yourself (to the social-credit fund). The ethereal world of high finance, the 95% of all finance capital, which is unearned wealth amassed through the private collection of rental values to nature‘s wealth and unearned banking profits, simply disappears. We repeat the 170 word full and equal rights, economic and property rights thesis. Utopia: By paying land (resource) rents to ourselves (socially collected), a citizenry is quintuply repaid through those continually circulating social-credits, building roads, railroads, water systems, sewer systems, and electric grids (any natural monopoly), as well as funding governments, providing education, health care, and retirement. Infrastructure and populations, not capitalists, establish the use-value of land, other natural resources, and their rental values provide the social-credits funding essential social services. Restructure to honest capitalism, as described herein, and taxes disappear as employed working hours and consumed resources drop by half, and all enjoy a quality, secure, life. This requires sharing the “productive” remaining jobs and equal pay for equally-productive labor. Each region of the world, each nation, each region of a nation, each state, each county, each community, and each entrepreneur has equal rights to their share of both created and saved finance capital (created money and savings). With those rights, entrepreneurs (private industry) will fill every niche within the production-distribution process. Virtually all capitalized values, those unearned monopoly values, disappear.
Incredulity disappears when one realizes all social infrastructure—roads, water and sewer systems, electric systems, and communication systems—and all social services—education, health care, and retirement—are fully funded even as a high quality life is attained with half the employed working hours.
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This simple thesis would be understandable the first day of an economics class, as opposed to current economics which is falling apart worldwide as we speak (2008-10). If it had ever been broadly taught, and applied, the theft of others wealth, wars, and poverty would have quickly disappeared. Thousands of books can be written expanding from this foundation. But, to avoid waste, monopolization, hunger, poverty, and war—which consumes over half our resources, wealth, and labor—an ―honest social and economic structure‖ must be built upon the principles of this simple, 170-word, economic treatise. All the stated goals of capitalism, Socialism, and Communitarians are attained, living standards can be set within the earth‘s capacity to provide resources and absorb wastes. Instead of that efficiency throughout the past 800 years, powerbrokers, protecting their power and wealth, created the monopolization laws, which we function under yet today. As per the 10,000 year ago story above, and in the first Introduction, this was accomplished by avoiding the distinct difference between wealth created by nature offered to all for free, properly conditionally owned, and wealth created by labor, which is properly owned unconditionally. All wealth is processed from resources, and most those gifts of nature are within the borders of the world‘s poorer nations. Fully 60% of the world‘s industrial capacity is now outside the borders of the historic imperial-centers-ofcapital. Those two realities together are creating huge stresses within the imperial centers. It is anticipated that most of the world will be relatively well developed by 2035, only 25 years away. If we are to avoid poverty and war, we must break free from imperialism’s conspicuous consumption. As discussed on pp. 229-30, that will happen quite naturally when societies pay equally-productive labor equally. As rapidly-developing Asia contracts with the resource powers of South America and Africa, as they decouple from Europe and America, and as they turn their productive capacity towards their citizenry; they will be far wealthier than when trading primarily with imperial-centers-of-capital. That is the trade structure (the dependent world breaking free) that caused both WW I and WW II. However, this time it is the entire world outside those imperial centers, not just parts of Europe or Eurasia, coming out from under the control of the imperial centers, and they are breaking free as we speak. Global warming, shrinking water supplies, and depleting resources motivate good thinkers and moral people to look deeper into the causes of war, and poverty. We will be demonstrating how that violence can be relegated to history, and all while protecting resources and the environment.
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With that knowledge fully dispersed within those imperial nations, only a fascist political structure can control free thinking, highly moral, citizens. Powerbrokers know this, and the current pre-fascist structure (the Patriot Act, recording the communications of all citizens, detention without cause, no habeas corpus, torture, etc.) will, hopefully, be removed by President Barack Obama. Besides the efficiency of paying rental values on nature‘s resources and technologies to oneself, hidden within that theory for the two years it took to put together were three stunning supports that we wish to emphasize: 1) Over 95% of current finance capital is both unearned and unproductive. We came across those statistics only a few months ago. This matched up beautifully with the unnecessary wasted labor and resources exposed. 2) There is no such thing as honest ―capitalized value‖ within an honest economy; there are only use-values. Until that realization sank in, I, like everybody else, thought there were honest capitalized values. Study the 95% of finance capital that is unearned and unproductive, study that capitalized value disappearing as soon as monopolization is eliminated, and study those unearned values automatically becoming earned use-values. All that remains is productive capital, it also being a use-value. If any corporation reached for unearned profits, competitors would use the same, or better, technology and undersell them. 3) And note the steady expansion of this massive unearned and unproductive finance capital that is addressed no where within Western literature. The claim will be made that this capital did rapidly develop the world. But study carefully both the plunder-by-trade story in Parts I and II, and the elimination of patent monopolies in Chapter 22. The world could have developed much faster if inventors had been paid well, and those inventions placed in the public domain for all to use. There would have been few wars; the world would have been relatively equally developed 100 years ago, and—with ten to twenty times the scientists and a far larger increase in entrepreneurs—this world would have developed even faster this last century. Management of the perception of the world has collapsed, and the alert throughout the world are studying the work of the best minds in the world for how to restructure to a society without poverty or war. For more of those answers, we start with the first of the four primary monopolies that must be eliminated before a peaceful and prosperous world can emerge out of this struggle, money and banking.
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20. A Modern Money Commons, Citizens Paying Banking Profits to Themselves
With money creation and central bank accounting powers that other private banks do not have, commongoodbank.com plans to open its first bank this year. Check their webpage for contacts on how this charitable bank can be expanded to your community.
If one has a slave economy or a monopolized economy, the banking system will either buy and sell slaves or buy and sell monopolized values. Thus an honest money system can only be established within an honestly structured economy. Our views of efficient banking diverge sharply from the views of those who advocate the elimination of fractional reserve banking (Google Federal Reserve Chairman Ben Bernanke wants to eliminate reserve requirements completely). Only if banks are socially owned can fractional reserves be safely eliminated; they then automatically have 100% reserves. We will first go through the ritual of the history of money.
From Barter to Commodity Money Before the widespread use of money, trading involved the simplest form of commercial transaction--barter, an exchange of two or more products of roughly equal value. This limits most trading to persons possessing equally valuable items. Eventually cattle, tobacco, salt, tea, blankets, skins, and other items were used as a form of money. Such commodities were the most desirable because they were durable, portable, readily exchangeable, and had the most recognizable common measure of value. Products intended for consumption typically have one to three owners on their way from producer to consumer. Those that are used as money may have dozens or even hundreds of owners. Whether a product is used for exchange or consumption distinguishes it as money or a commodity. The products listed above were imperfect as a medium of exchange. Their limited usefulness limited trade, created problems of storage, transportation, protection, and not everyone could use these commodities.
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From Commodity Money to Coins of Precious Metal Only highly desirable, useful items could become money. No one would accept a piece of paper, brass, or copper in trade for what he or she had worked so hard to produce. Such a trade would effectively rob one of hard-earned wealth. Gold and silver have been highly esteemed and accepted as money in most cultures. The first known coin, the shekel, was minted in ―the temples of Sumer about 5,000 years ago,‖ and coins of measured value have been routinely minted from precious metals ever since.1 Except for scarcity values, the labor required to produce a given amount of gold, silver, or precious stones was roughly equal to the labor required to produce other items this treasure could buy. As accustomed as we are to viewing gold as money, it is still commodity money: desirable, useful, and requiring roughly equal labor to produce. Inequality of money values is inequality of exchanged labor values. When rulers became strapped for cash, usually because of war, they resorted to debasing their currency by lowering the gold or silver content and replacing it with inexpensive metals such as copper. The labor value represented by these debased coins was less than the labor value of the items purchased. Assuming the labor cost of gold was 300 times that of copper, each day‘s production of copper substituted and traded as gold would confiscate the value of 300 days of labor spent producing use-value. It was the universally recognized value of precious metals that became the first readily acceptable money.2 With gold, or any precious metal, divisible into units of measurable value, a trade could be made for any product. As it was only with handy universally accepted money that commerce could flourish, this convenience fueled world trade. However, as these precious metals had to be located, mined, delivered, stored and protected before society could have money, trades were still clumsy.
From Gold, to Gold-Backed Paper Money, to Fiat Paper Money The use of gold as money was handicapped by its weight, bulk, and the need for protection against debasement. These problems were eventually eliminated by printing paper money that could be redeemed for a stated amount of gold or silver. This is known as the gold standard. As this paper money was backed by gold, there still remained the complication of finding, mining, smelting, and storing this valuable commodity. The next step in its evolution was pure fiat paper money (legal tender by government decree). It was universally resorted to in revolutions, although it usually had little value once the banking systems returned to the gold standard. Benjamin Franklin had proposed fiat paper money and, while it was used less
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successfully in the New England colonies, it was used productively in the middle colonies promoting production and commerce while controlling deflation. The powerful of Britain recognized the threat to their control of trade and outlawed the printing of money in the colonies. This effectively dictated control of commerce, determined who would profit, and was a much more a cause of the American Revolution than the vaunted tax on tea.3 World War I and WW II weakened the old imperial nations and eroded the monopoly of the gold standard.4 As most of their gold had been traded for war materiel, these countries had to keep printing money to rebuild their shattered cities and industrial plants. To return to money backed by gold would have left their economies to the mercy of U.S. bankers. Thus the monopoly of the gold standard was partially broken in these countries. The arms race that followed WW II almost totally eliminated gold-backed money as nations continued to print money wastefully for war. Once freed from its bondage to gold, fiat paper money represented rather than possessed value. Printed at little cost, it could be traded for as much wealth as its stated value. Society now required only one product to make a trade. Those who sold their labor received in return the paper symbols of value and needed only save this money form of wealth until they wished to buy products produced by others. Fiat paper money, backed by a nation‘s production and not backed by gold, was true money.
Paper Money, to Checkbook Money, to Electronic Money As simple and light as paper money was, it was still too clumsy for most trades. Most of these units of value called money were deposited in a bank, just as gold had been, and trades were then consummated with checks. These were more efficient than cash because each check was a symbol that the signer had produced, saved, or borrowed that much real wealth and that its money form, safely deposited in the bank, was now being traded for equal value in other products or services. Family, business, corporate, and international trades use these symbols of deposited savings, checks, drafts, notes, bills of exchange, etc. Commodity money—hides, tobacco, etc—had dozens, possibly hundreds, of owners before this trading medium returned to its status as a commodity to be consumed. Gold, still commodity money, retained the status of money much longer and has thousands of owners. Gold-backed paper money traded more conveniently and passed through the hands of many tens of thousands of owners. Reserve deposit money, traded by check, via bank debits and credits, can have an endless number of owners as this representation of value produced keeps moving from owner to owner. Modern electronic money, still reserve deposit money, is but a blip on a computer drive that can be instantly debited from
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one account and credited to another. Though tied closely to the principle of checkbook money, electronic entries are the ultimate in efficient fiat money. Using the symbol of money, the banking system collects all production, completes society‘s trades through debits and credits, and lends the surplus production, savings, to those who, at any particular moment, have capital or consumer needs greater than their savings. The Fed buys debt instruments to expand reserves (base money) and thus increase loan capacity or they create money and loan or spend it into existence. In each case this is done by crediting money to an account without debiting from another account. Except for Congressional oversight and authorization, money is no more complicated than that. What makes money appear mysterious is the powerful having always controlled it. Its secrets are protected by governments, bankers, and in the ethereal world of high finance, finance monopolists of every shade took over that control as they siphoned others‘ wealth to themselves.
Credit or Trust Money People accept money because they trust that the value represented can be replaced by equal value in another commodity or service. Credit, pure trust, is both the oldest and most modern currency. When credit is given, nothing is received for the item of value except a promise. Each month, families and businesses are provided with products or services (produced value) and then billed. This is a procedure based on trust. This illuminates the very meaning of money; it can be redeemed for full value simply by spending it. If money is controlled with equality and honesty, there is trust. Money then exchanges freely and is easily understood. We are describing money and banking in the everyday language that would apply if all were equally paid for equallyproductive labor, if they had full and equal rights to a productive job, and if they had equal rights to finance capital.
The Different Meanings of Money Money is correctly referred to as a unit of accounting, savings, stored value, a measure of value, a standard of value, a receipt for value, a system of accounting, a deferred payment, a transferable claim, a lien against future production, an IOU, an exchange value, and an information medium. At a fundamental level, money represents the value of the final product of combining the elements of production, land, industrial capital, finance capital, and labor. In a properly structured society, money represents the value of labor, profits on stored labor (honest, productive, capital, only 5% of current finance capital) and a share of the costs of running society represented by land rent being paid to society and spent on essential social needs as outlined in the following chapters.
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To the layperson, money is normally explained as a medium of exchange. This is true. However, a medium of exchange implies equality and it is precisely the inequality of exchanges which is the greatest problem. To understand these inequalities, we must have a better explanation of money.
Money is a Contract Against Another Person’s Labor Money is first, and foremost, a contract against another person’s labor. Value is properly a measure of the time and quality of all productive labor spent producing a product or service plus resource rental values embedded in production costs. If the difference between the payment received for productive labor and the price paid by the consumer for a product or service is greater than fair value for expediting that trade, either the producer was underpaid, the final consumer was overcharged, or both. When intermediaries underpay producers or overcharge consumers, they are siphoning away the production of the labors of one or the other, or both. Savings implies something has been produced and not consumed. But even if a commodity is produced for consumption, it is properly understood as capital until sold to the final consumer. It then becomes his or her wealth for consumption and is no longer capital. Some commodities, such as a meal, are consumed in minutes and some, such as homes, are consumed in decades or even centuries. Products are sold, production expenses are paid, any surplus is deposited in a bank, and that credited deposit is a redeposit within the banking system‘s continually circulating reserves (a nation‘s money supply, improperly spoken of by many as a creation of money). Banks lend that in excess of mandated reserves to others for investment or consumption. The parties who labored to create the value represented by that money are only lending their surplus production, in its money form, honest finance capital, with the promise to be repaid, plus interest, for what their stored labor produced. True interest, as opposed to usury, is honest finance capital‘s (stored labor‘s) share of the wealth produced.
Money Productively Contracting Labor Because money is always controlled by those who rule, revolutionaries resort to printing money to finance their insurrections. Successful revolutionary wars, like those of the United States,5 France, Russia, and China, were fought for freedom, were productive expenditures of labor, and were all fought with paper money.6 Every battle for freedom requires large expenditures. Most labor is donated, but much of the weaponry, clothing, food, and medicine must be paid for with money. Money is thus a tool for mobilizing society‘s labor to produce great things; in the above examples it was freedom.
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Other examples of money properly employing labor are seen every day in farming, in the creation of consumer products, and in the building of homes, roads, schools, shopping centers, factories, etc. The rebuilding of Europe after WW II was a productive use of labor employed as was the industrialization of Asia.
Money Unproductively Contracting Labor An efficient economy has been judged as requiring only $3 of speculation for every $1 invested in the real economy yet currency speculation for financing world trade alone is 50 to 100 times the real economy and the notional value of the derivatives-hedge fund market, having little or nothing to do with the real economy, is now, 2010, somewhere between $1 quadrillion and $2 quadrillion, 20 to 30 times total world production. Those notional values becoming unpayable real values when counterparties go broke is the essence of the current, 2008-10, worldwide financial collapse. Borrowing society‘s money capital for speculating on gold, silver, commodities, already issued stock, derivatives, hedge funds, or currency (the ethereal world of high finance) is an interception of others‘ wealth speculating with society‘s savings; there is no intent to produce anything. For example: blogs have alerted us that 1/3 of the price of oil as accounted for within the buying and selling of oil contracts. Other commodities will have similar speculation cost increases. The massive wealth extracted through those speculations, as well as the costs of those offices which produce nothing, show up in higher prices. To quote William Krehm, ―the real economy is rapidly being reduced to the part of a bit player.‖ The uses of society‘s savings for corporate takeovers usually are battles between the powerful for control. Whether the takeover is successful or not, these unproductive uses of social capital continually extract wealth from the economy. All this unnecessary activity diverts money capital from its true purpose, production and distribution. More appropriately, massive speculation beyond that needed for an efficient economy is social insanity. On balance, the entire ethereal world of high finance is composed of massive wealth unnecessarily appropriated through unequal property rights law as per this thesis. An even more nonproductive use of money occurs when labor is contracted to destroy others‘ capital (war). In 1800, Robert Owen, manager of a family textile mill in Scotland, began his famous social experiment of paying workers well, giving them decent housing, educating their children, and doing all this profitably. He calculated this community of 2,500 people was producing as much as a community of 600,000 did less than 50 years before.
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Owen concluded much of that massive gain in wealth was being consumed by the petty wars continually fought by aristocracy.7 The mill workers were being underpaid for their work, the customers were being overcharged for their cloth, and the production of their labor, in its money form, was being siphoned away and used to contract materiel and labor for war. Labor was being paid to fight because this generated the greatest rewards for those who controlled the use of money. This was wasteful to the rest of society, nothing useful was produced when that confiscated wealth was spent on wars, and much of the wealth which already existed was destroyed. In the 15th century, ―about 70% of Spanish revenues and around two-thirds of the earnings of other European countries‖ were employed in these wars.8 The same massive waste of wealth is mirrored in our economies today. The treasure pillaged from the Americas was but a small share of the wealth destroyed in European wars: Until the flow of American silver brought massive additional revenues to the Spanish crown (roughly from the 1560s to the late 1630s), the Habsburg war effort principally rested upon the backs of Castilian peasants and merchants; and even at its height, the royal income from sources in the New World was only about onequarter to one-third of that derived from Castile and its six million inhabitants.9
That is the story of this book. The powerful are wasting massive wealth battling over the world‘s wealth yet today. Once the wastes of the monopoly system are eliminated within both internal economies and in international trade, all money will be backed by real value; both labor and resource use will drop by half or more.
Learning the Secret of Bank-Created Money The secret of creating money was first learned by goldsmiths. Gold deposited in banks for safe keeping were usually left for a substantial period and bankers could safely make loans, in the form of receipts for gold, of many times its value. Loans issued for several times the amount of gold on deposit was money created out of thin air.10 Whenever Rothschild, or other early bankers, loaned 10 certificates of gold at 10% interest, for every unit of gold they owned or held for safekeeping, each year their personal net worth would increase equal to 90% of all gold on deposit (those loans were for as high as 50%). When private banks printed and loaned their own goldbacked currency, their creation of money and their profits, between collapses, were identical to that of goldsmiths. That is history; money creation today is only through central banks. For centuries a prudent bank with $1 million in gold maintaining self-imposed fractional reserves at 10% could print $10 million in personal-signature bank-
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notes, $9 million of that would be bank-created money. All goes well until some banks go beyond reasonable loan to gold reserve ratios leading to runs on banks and they collapse. Section 16 of the 1913 Federal Reserve Act established what was to become a single US currency, the Federal Reserve Note. As fast as banks were brought under that act they could loan only a mandated share of their deposits. In 1980 the Monetary Control Act brought all banks and credit unions within that system of government creation of money and control of bank reserves. Private banks hadn‘t created money for decades but now it was official; only the Federal Reserve could create America‘s money. Incoming loan payments are roughly the same as the total being loaned by banks. Assuming 10% mandated reserves; a private bank can maintain $9 million in loans for every $1 million held in reserves, roughly the same as the prudent banker 100 years ago with self-imposed reserves of 10% in gold or silver backing each bank‘s personal-signature-bills. As opposed to being backed by gold, the money created by a socially-owned banking system—and its circulation productively contracting land, labor, and industrial capital—is backed by the wealth produced. Having the power to create money to cover any crisis, a socially-owned Federal Reserve will be primarily creating base money and maintaining a proper money supply (base money circulating) through increasing or decreasing mandated reserves. Financial powerbrokers eventually stripped most mandated reserves out of the Federal Reserve Act. This was first accomplished, in the 1970s, through selling blocs of loans to money markets. Then, in the 1990s, required reserves were removed from all deposits except checking accounts and the 1933 enacted GlassSteagall Act, which prohibited commercial banks from collaborating with brokerage firms, insurance companies, etc, was repealed. This, along with off the books accounting, circulated base money faster and faster and eventually crashed into the 2008-10, banking crisis. No checkbook money or credit card money ever leaves a banking system. Both are instructions to transfer digital money from one account to another, and on average, a balance is maintained in all banks. Under the Goldsmith theory of banking, personal signature banknotes, promising to pay in gold were circulated. In that process, there was no increase in gold, the base money of those times, when certificates of 10 times those non circulating reserves, gold in safekeeping, were loaned and there is no increase in base money today when 10 times or 33 times (as is possible under 3% reserves) the original primary-created money are loaned and reloaned over and over; the full compliment of digital base money is, at all times, within the banking system. Only the speed of circulation of base money is affected by higher or lower reserves. Gold as base money was stored and only certificates of gold circulated. With fiat money, both currency and digital, base money circulating is the money supply.
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With the experience of colonial script not backed by gold; the 13 American colonies printed money to fight the Revolutionary War. But this power of government to create money out of thin air was not used by the US again in any great measure until President Lincoln printed greenbacks to finance the Civil War. Though the alert will have spotted the efficiency of money created out of thin air and not backed by gold, as soon as that war was over the government started pulling those greenbacks out of circulation. This destruction of money caused bankruptcies to soar for the first 10 postwar years as wealth was again consolidated within the hands of entrenched wealth; those goldsmith theory bankers creating the nation‘s money backed by gold. There was no need for those bankruptcies. If those greenbacks, backed only by the strength of the economy, had been allowed to stand—so long as there were unemployed resources, unemployed labor, and consumer needs—that money would have continued to circulate freely combining labor and industrial capital with America's immense natural resources, creating even more wealth. A healthy, wealthy, economy requires a measured and balanced creation of money to create wealth. Those greenbacks were withdrawn because their creation encroached upon private bankers self-appointed rights to create money backed by ―their‖ gold. As those greenbacks were being withdrawn, conservative bankers required $33.60 of gold in reserve for every $100 of their circulating currency. This was gold-backed money created by conservative private banks. But the next 40 years recorded greedy bankers loaning 20 to 50 times their reserves (called leverage today). Banks pooled their funds to cover runs on banks. But, with their depositors‘ money loaned out operating the economy and thus not immediately collectable (illiquid), perfectly sound banks would go under along with the ―wildcat bankers‖ and bankrupt many farms and businesses with them.
Establishing the Federal Reserve: Base Money Circulating becomes the Money Supply With 13 banking panics over a period of 80 years, one every six years with the last one just ending in 1907, the U.S. decided, in 1913, to eventually eliminate goldsmith banking through the establishment of the Federal Reserve and modern fractional reserve banking. Since that act, member banks could only loan from their deposits of which a mandated percent must remain in reserve. This was a seismic change. Previously a supply of gold, silver, or gold certificates in reserve were necessary to establish a bank. With those ―reserves,‖ a bank then printed currency with the bank‘s name on it (personal signature banknotes) with a total value many times the value of their precious metals reserves. But now member banks, still privately owned, could loan only a percentage of their depo-
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sits of fiat money. Instead of loaning money they created as a percent of gold or silver in reserve, they were now loaning fiat money created by the Federal Reserve which was then redeposited over and over in the banking system, as those reserves circulated. A fraction of that circulating money had to be kept in reserve; America‘s fractional reserve banking system was being put in place. In 1980, the Monetary Control Act brought all U.S. deposit institutions under the Federal Reserve. Creation of money has ever since been by the Federal Reserve and goldsmith banking—private banks creating money through loaning a multiple of their gold or silver reserves in the form of banknotes, though it had not been used much for decades—was officially relegated to history. Though they once did, private banks today do not create money. However, private bankers do control the Federal Reserve where all the money they need to protect their monopoly system is created and that process is on full bore, pouring money at themselves, during the current, 2008-10, financial crisis. Due to the immense wealth that can be guided to their coffers, bankers, with the support of other extractors of wealth, deny society the enormous efficiency potentials we demonstrate are possible within a socially-owned banking system. The huge profits bankers make on high interest rates were theoretically to control inflation or deflation. But they were actually protecting the massive profits pocketed as they moved back and forth between bonds and stocks in sync with the rise and fall of interest rates and bond values. The simplicity, and instant effect, of controlling the money supply through increases or decreases in mandated reserves was ignored. Between 1913 and 1936 each of the federally owned, but privately managed, 12 central banks created money for their regions eventually, and supposedly, backed by government-owned gold. However, from 1926 to 1929, the old guard running the New York Federal Reserve poured created money at their banks which loaned these massive funds to stock speculators. When the NY Fed heard the Federal Reserve‘s Board of Governors had held an all night meeting on their practice, they pulled back. The funding to support the bubble was not there, the stock market crashed, and the Great Depression was on. The problem was traced to the independence of those 12 reserve banks. So, in 1935-36, the Roosevelt administration assigned money creation decisions to the Board of Governors. America finally had its central bank that was not yet fully in place in 1913 and that Board and Congress has made major decisions on creation of America‘s money ever since (still theoretically backed by gold until 8/15/1971 when President Nixon closed the gold window to other countries as President Roosevelt had done to citizens in 1933).11 Modern Money Mechanics (MMM)12 states, in error, that private banks create money. But when analyzed it is clear they—and many money theorists— are calling each change of control of money as it is loaned (each step in its circu-
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lation [velocity]) as a creation of money. Loan repayments closely matching loans made disproves private-banks-create-money-theorists. MMM misnames a loan as created money when they have only moved deposited money (a credit to the bank offset by a debit in favor of the depositor) first to their loanable and spendable funds and from there to a borrower's account (debits to the bank continually offset by incoming deposits). Their statement, ―checks drawn against borrowers' deposits result in credits to accounts of other depositors, with no net change in the total reserves,‖ proves this. MMM recognizes deposits, until they are loaned, as ―excess reserves.‖ In Section three, it states that since ―lending banks expect to lose these deposits, and an equal amount of reserves, as the borrowers' checks are paid, they will not lend more than their excess reserves.‖ The use of federally created base money has been accumulatively accounted for but it was already created (again as base money) and its re-loaning was only a continuation of the circulation of money. Debts being extinguished (repaid) at roughly the same rate they are created keeps the money supply (base money circulating) in balance. An increase in the velocity of money is an increase in the money supply, but not an increase in base money. If more reserves are needed, the Fed must create that base money, now backed only by the faith and credit of the government, not by gold. By crediting those borrowing from—or selling debt instruments to—the Fed without debiting anyone‘s account, new money is created. Private-banks-create-moneytheorists do not address base money, to do so would destroy their thesis. As the creation of base money, and its circulation, is the very essence of money, monetary theory textbooks address it deeply. I have asked private-banks-create-money-theorists what happens to their deposits and am told ―it just sits there.‖ But there being no increase or decrease in total reserves as money is loaned out and redeposited, stated specifically by MMM and proven in their charts, belies that statement. Private bankers tried hard to get past the U.S. Constitution, Article I, Section 8, saying that, "The Congress shall have power….to coin money, regulate the value thereof, and of foreign coin." Once money was no longer backed by precious metals, their lawyers simply could not get around those words in the foundation law of the land that, even allowing for shortcomings in that statement, only the government can create money. So, when technology advanced to money as digits in an accounting system, bankers designed an appearance of ownership of, but not actual title to, the Federal Reserve, all this to maintain their control of fiat money creation which is not permitted under the Constitution. Except for private bankers being in charge, by 1935-36, when President Roosevelt‘s government assigned the authority for money creation to the Board of Governors of the Federal Reserve (in concert with the 12 regional reserve banks), America‘s fractional reserve banking system was brilliantly established.
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Creating money is the prerogative of the Federal Reserve which is—as proven by all profits, almost 98% of the Fed‘s gross income, being paid to the Treasury—federally owned.a See also John Kenneth Galbraith, William Greider, and James Livingston.13 The money supply is only base money‘s measured circulation. If the receiver of what is commonly, and wrongly, referred to as ―private-bank-created money‖ puts it under the mattress instead of into a reserve deposit, money circulation (velocity) stops. But as soon as that person spends the money, where it is soon deposited into a reserve account, again 90% is loaned back out, that money is then committed and there is no surplus to loan until it is again deposited (typically within hours or days if the transaction was by check and instantly if by debit card) and 90% of the money continues to circulate as it is again loaned out. In the act of being accounted for each time it changes hands, the money totals increase and these increasing totals within double-entry bookkeeping make it appear that money has been created. But each trade of money for value has only been counted (and becomes a part of a nation‘s GDP); base money (reserve deposits) has not increased. It has only circulated. (Loan repayments roughly equaling loans made is the missing link in faulty "private-banks-create-money" theory.) Private banks creating both money and debt when they make loans is badly misinterpreted by private-banks-create-money-theorists. A debt within the normal flow of money is just that a loan; a debt to be repaid. It is a normal function within the circulation of money. Once spent, money has no commitments or connection of any kind to any past depositors or borrowers. Depositors look to the bank for protection of their stored labor, and that bank‘s protection is pledged equities or the good credit of borrowers. A bank could have bought a bond, a business, or a vacation for its entire staff instead of making a loan and it would have had exactly the same effect as loaning money. The check written would have returned to the bank as another deposit ready to loan out or to spend. ―The net effects on the banking system [by bank purchases] are identical with those resulting from loan operations,‖ Surely money theorists will not call a bank‘s expenditure of money as a creation of money.
The Bank of England was chartered in 1694 as a privately owned central bank. Government IOUs instead of Gold were used as reserves. Today all central banks create money backed by the faith and credit of the government and they ignore the ritual of gold as a symbol of value backing money. a
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Go to any major coin-currency show and any theorist on money creation will become humble. Counties, railroads, communities, and banks have created so many different issues of money that it requires one or more deeply-researched books for each state. Successful examples of money creation addressed in most such histories have been repeated over and over again throughout most states and the world. That those coins and bills are in collections today testify to most of those money creations as having some measure of success, many very successful. The $850 billion the Federal Reserve had in treasuries going into the current financial crisis set the limit on how much money they could disburse without consulting Congress. Due to the rapidly deepening crisis, the Federal Reserve and Treasury went to Congress for more funds and were authorized to create virtually trillions of dollars (many trillions pledged, no one really knows how much, some borrowed through selling treasuries as nervous capital fled to safety, the rest to be created). Though the Fed is in charge once authorized to create money, when more money is needed it must again be authorized by Congress. Private banks can only increase money‘s circulation (velocity) which is a key aspect of the money supply. If monetary theorists would use the term ―circulating money supply;‖ no one would be saying, ―Private banks create money.‖ They can never create money because they cannot add a credit without accounting for a debit as they did for centuries under the goldsmith theory of banking. If enough people refuse to borrow, spend, or loan, the money supply appears to shrink even though the velocity of base money has only slowed.
Further Testing the Assertions that, Under Modern Fractional Reserve Banking, Private Banks Create Money Alternative money theorist‘s fractional reserve banking assertions are clear, ―Deposited money sits in an account until withdrawn by the depositor and, while on deposit, it serves as reserves for the money the banks create through loaning money into existence.‖ So those theorists are saying, ―Private banks create money by crediting it to the borrowers account and must have 10% that amount on deposit [$1,000 in reserve] to back that $10,000 creation. That $10,000 is spent, and is deposited back into a reserve account which becomes a total of $11,000 in reserve. The $1,000 remaining in the original reserves is still backing that original loan while the $10,000 deposited after that loan was spent is now additional surplus reserves for further loans.‖ Challenge 1 Money theorists cannot have it both ways. If that first $1,000 in reserve deposits backs a $10,000 loan, that secondary reserve deposit of $10,000 becomes reserves for a $100,000 loan which completes cycle two. Cycle three
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creates $1 million. Cycle four $10 million. Cycle five $100 million and four more cycles would reach $1 trillion. No bank claims that ability or that right. Such a money creation process would destroy the very meaning of both M1 and fractional reserve banking. Replace those circulating dollars with diamonds and it would be obvious their circulation would not be a creation of money. 2 Loan payments going into deposits equaling loans spent going out of deposits is as fatal to the theory of private banks creating money as bringing circulating reserves (circulating base money) into the equation. 3 The creator of money owns that representation of value. If banks could create money by making loans they would have tons of money and never go broke. 4 Competition for profits from money created with a few key strokes would competitively shrink interest rates to just that necessary to keep a bank solvent. 5 The same money theorists that claim private banks create money push for 100% reserves (cash in the vault to back all deposits). If deposits are not loaned out, as they claim, that money is still in the bank—available by check, credit card, or debit card—and 100% reserves are already in effect. 6 In the current (2008-10) worldwide liquidity-solvency crisis, banks all over the world are in trouble. Because they cannot, none have created money to solve their problem and, because it is they who create our money, central banks and national treasuries are pouring trillions of dollars at those in-trouble banks. 7 All money currently circulating within the banking system is federal fiat money where money created by private banks have always had that bank‘s name printed on it. As all digital deposit money is convertible to cash money, which is federal fiat money (greenbacks), no one would consider giving a private bank the right to create Federal Reserve notes and no one can point to a law giving them the right to create digital money tradable for reserve notes. 8 Historically interest was normally paid on deposited money. Bank deposits are nothing more than a loan to the bank, typically at interest, that can be rescinded by the depositor at any time. Private banks would not borrow money anywhere if they could simply create free money. 9 It is against the U.S. Constitution, Article I, Section 8, "The Congress shall have power….to coin money, regulate the value thereof, and of foreign coin." There would be no regulation of the value of money if private banks created it each time they made a loan. 10 The fundamental principles of double entry bookkeeping does not permit it. Any who attempted to create money, you or a banker, would go to jail. 11 The seal of the nation, the signature of the Treasurer of the United States and the signature of the Secretary of the Treasury on every bill and it being fiat money ―good for all debts public and private,‖ prove only the federal govern-
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ment—through the Federal Reserve and under the authorization of Congress — creates digital money. 12 James Livingston, in Origins of the Federal Reserve, chapters 7 & 8, John Kenneth Galbraith in Money: Whence it Came, Where it Went, pp 126-83, 188, especially pp 134, 144, 177-90, 195-96, 199-200, William Greider‘s Secrets of the Temple, especially pp 31, 49-50, & 280, and Paul Krugman in The Return of Depression Economics, 2009, p. 176, clearly say (throughout their books) the Federal Reserve is federally owned and that they create our money. They do acknowledge that between 1913 and 1936 regional reserve banks created money independently for their regions. That freedom led to the Great Depression and, as per laws enacted under President Roosevelt in 1935-36, all creation of money decisions were then placed under the authority of the Board of Governors of the Federal Reserve. Through precious metals as reserves and the faith and credit of nations, that right to money creation had been ebbing and flowing between private banks and governments for decades. Any time money was created by private banks and loaned, wealth was extracted when that debt was repaid. As wealth represented by newly created money obviously belongs to all, over time governments created all money and theoretically, but not actually because political control still guided that free money to the powerful, just as is happening now, 2008-10, all citizens gained their share. It is time for citizens to understand that wealth represented by newly created money is theirs collectively; it does not belong to banks, governments, or monopolists extracting wealth from the economy. There is precedent for assigning the full powers of money creation by, and for, society to a socially-owned central bank of a ―National Banking System.‖ President Abraham Lincoln felt money should be created by society and spent into circulation on essential social needs without debt. The monetary needs of increasing numbers of People advancing towards higher standards of living can and should be met by the Government. Such needs can be served by the issue of National Currency and Credit through the operation of a National Banking system. … Government has the power to regulate the currency and credit of the Nation [run an Internet search].
America has a socially-owned, yet private banker controlled, central bank today but does not have a socially-owned National Banking System. Private banker control can be quickly eliminated, socially-owned banks can be just as quickly put in place, and this is happening as we speak, March 2010, as states learn from Ellen Browns writings on how North Dakota with its own state bank is the only state in the nation with a balanced budget. States are realizing that all the profits of a state bank go for state services. This can happen on a large scale, when banks go broke they are, under current law, converted to public ownership.
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As the cost of operating a bank is one half of one percent interest on loans, public owned banks can pay higher interest for deposits, even as they charge lower interest on loans. The Federal Reserve has been pouring money at major banks to keep them afloat. Instead, simply call in those ―permanent rotating loans,‖ a euphemism for imminent nationalization, and take over those bankrupt banks. Backed by the Fed‘s money creation powers, socially-owned banks cannot go broke. Depositors and borrowers will flock to that security. Already in trouble, the rest of the banks will turn in their keys as their customers disappear. With all bank profits going into the social-credit fund, taxes can be reduced by at least half even as the greater share of social needs are fully funded (next chapter eliminates the rest of the taxes). That great opportunity was missed when President Obama‘s economic recovery team poured trillions of dollars of public money at their former employers who had created the crisis in the first place.
The Fed’s Open Market Operations hide the Simplicity of Money Creation To maintain the secret of how simple money creation really is and to avoid the creation of debt-free money for infrastructure and essential services so as to reserve those investment opportunities for monopoly capital, designers (monopolists) conceived the Fed‘s Open Market Operations. Money is created by the Fed buying debt instruments and crediting the selling bank‘s account without debiting another account. The reserve account of the bank where that check is cashed being credited with the amount of the sale with no debiting of another reserve account creates money. That base money circulating (plus currency and coin) is the only ―real‖ money within modern fractional reserve banking. Once the limit of circulation of money is reached, an increase in base money requires the Fed purchasing bonds in the market. No other bank‘s reserves are debited as that banks reserves are credited and money has been created.14 If imminent failure of banks threatens to damage the economy, the Fed may, up to a certain level and under Congressional oversight, create money as a loan to banks or, in an emergency, even loan directly to industries. To do so, the Fed, when authorized by Congress, simply credits their account and debits no other account. Lowering or raising reserve requirements increases or decreases the circulation (velocity) of money (increasing or decreasing the money supply) but does not increase or decrease base money. Base money increases are the responsibility of the Federal Reserve, when authorized by Congress, and only bankruptcies or the Federal Reserve (or a refusal to accept by other societies) can destroy that money.
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It would be transparent and much simpler for the Fed to credit the Treasury‘s account and the government to spend that money into circulation. As those just-purchased treasuries were originally printed by the Treasury, they can be destroyed rather than go through the ritual of the government paying those debts to the Federal Reserve, and, by law, the money is then promptly returned to the Treasury. The interest and principle paid by the U.S. Treasury on Fed-purchased Tbills goes to the Fed, which returns that and a part of other profits—bonds, currency trading, priced services to banks, etc—to the Treasury. In 1994 the Fed received $19.247 billion from the Treasury as interest on bonds and paid to the Treasury $20.470 billion, or $1.223 billion more than it received in interest.15 The dividends investors in the Federal Reserve may receive (6%) can be eliminated by buying back those misleading shares as allowed in Section 7 of the Federal Reserve Act; the same law where all profits are returned to the Treasury. The unpaid principal and interest on those Fed-purchased, and thus government-owned, bonds are simply credits and debits on the Fed's and Treasury‘s books. Both are government agencies and when payments are made to the Fed by the Treasury that interest, principle, and other profits are promptly returned to the Treasury, thus proving there never was a debt. The Treasury-Federal Reserve could have openly created that money. But the simplicity of creating money and spending it into existence would be visible to all and maintaining that secret is the very purpose of the whole charade. Private bankers politically control, but do not own, the Fed. If they really did, the Fed would pay taxes and the owners would retain both interest and principle on Fed-owned debt instruments. Their $212 million in dividends in 1994 at a mandated 6% interest rate tells us the member banks have fewer than $2.4 billion invested. Since the profits turned over to the Federal Reserve would give it a capitalized value of several hundred billion dollars, or more, it is over 99% publicly owned and less than 1% privately owned.16 Operation costs are paid for by charges to banks, the Fed reports to Congress, and the payment of over 99% of its profits (almost 98% of its gross income) to the Treasury is proof that the Fed is an arm of the federal government. With all this and the Fed itself claiming it is a government agency that pays no taxes; the Fed is privately owned theorists have nothing to back their claim. In a society with full and equal economic rights for all, each unit of money represents an equal unit of use-value within the economy. In a steady state economy, value is being destroyed, by consumption and depreciation, as fast as it is created or, if you prefer, created as fast as it is destroyed. Consumption and production are in balance. Still assuming full and equal economic rights, as laid out in this treatise, the circulation of base money does this naturally.
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Pointing that created money towards the ethereal world of high finance and towards war along with the failure to fully utilize the power of mandated reserves (while banks are privately owned), in balance with money creation, seriously lowers economic efficiency. As described earlier, America had the good fortune of sincere bankers, tired of the multiple crisis of wildcat banking (one every six years for 80 years), established in 1913, and finally restructured to a true central bank in 1935-36, a modern fractional reserve banking system overseen by the Federal Reserve‘s Governing Board. Then they had the misfortune of corrupt bankers taking over and dismantling the beautiful system they designed. For the purpose of laying claim to more unearned wealth, they slowly repealed the protective laws of a fully functional central bank, essentially eliminated fractional reserve banking, and eliminated the Glass-Steagall act which forbid combining banks, insurance companies, and brokerage houses. The result was the current financial collapse. Those selfish few had guided the nations wealth to their coffers, loaned those appropriated funds back to the masses, did all this on higher and higher margins (leverage), that is now collapsing (2008-10), and this has the potential of another Great Depression, WW III, or a total restructuring of the world economies such as we are suggesting. The ease of analyzing increasing or decreasing mandated reserves as the most effective method of controlling inflation or deflation means bankers have always known this highly-efficient tool was there but chose to fatten their profits by controlling inflation through higher interest rates. Bonds and stocks rise and fall in reverse order to interest rates and the wealthy do not want to destroy that honey pot by raising or lowering mandated reserves, instead of interest rates, to control the money supply. Very little has to be done for society to reclaim their full and equal rights to finance capital. Buy back those privately owned shares in the Federal Reserve system (roughly $2.4 billion) as allowed for in the Federal Reserve Act, remove those bankers from their undemocratic positions of power, put trained professionals in their place, mandate the creation of money for infrastructure (up to the point the money supply is in balance), and raise or lower required reserves to maintain that balance. Then run the Federal Reserve-Treasury efficiently with all regions, all states, all communities, and all entrepreneurs having full and equal rights to finance capital (created money and savings). This can be done under present law. In a financial crisis, such as the one ongoing, inefficient private banks become socially-owned and operated simply by calling in the Federal loans shoring them up.
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Efficient Social-Credits Require Banking Profits and Created Monies be Paid into the Social-Credit Fund All borrowers, consumers of the moment, are borrowing the deposits of savers of the moment. One may be borrowing from oneself, from a checking account or out of pocket, and expecting to replenish their bank account or pocket change, both are savings. The banking system keeps an account of these trades between people. Many are equal trades—in a month, or a year, most people earn roughly what they spend—but the unequal trades, more produced (earned) than spent, or more consumed (spent) than earned, are balanced by the lending/borrowing of deposited savings in banks‘ reserve accounts. Monopolies per se produce no value. If money contracted only productive labor and full values were paid for that labor, money would represent real value and would become a symbol of actual wealth; its use-value. Money would then be only a tool, a symbol for the trade of productive labor, which is the mechanism that functions when we describe efficiency increases equal to the invention of money, the printing press, and electricity as an efficient and just property rights structure provides the social-credits to fund infrastructures, governments, and all essential social needs. Under conditions of equal economic rights, each person is fairly paid for his or her fully productive labor, each has rights to a productive job, and money lent combines land, labor, and industrial capital to produce full value in needed goods and services. Neither money nor the economy can become truly efficient until all nonproductive extractions of wealth through unequal trades in both internal and world trade are eliminated. Every contracting of labor for nonproductive use must, on final analysis, be paid for by extracting value from other stakeholders. Powerful bankers thousands of miles away have no concept of local needs and no loyalty to local people. Farmers, homeowners, and small businesses are strapped for finance capital as their locally-produced wealth is claimed by stock speculators, merger and takeover artists, currency speculators, hedge funds, and other gamblers in the worldwide market casinos. Do away with the ethereal world of high finance and stock markets and local private capital needs can be easily financed. Simply calculate finance capital needs and assign a surcharge to all loans to go into a socially-owned capital accumulation fund kept in, and loaned from, local, socially-owned, banks. Larger banks will have a department for financing large industries. Worker-owned businesses and cooperatives financed by those larger banks would be the economic ideal of labor employing capital. Everything is then local as opposed to an ethereal world of high finance claiming title to wealth throughout the world. Capital needs of each federated region of the world, each nation, each state, each county, and
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each community can be calculated. So long as there are surplus labor and resources and real value is to be produced, finance capital not available from savings can be obtained through creating money. Once established, an investment fund would replenish itself through loan repayments and interest rates high enough to cover loan losses. Remembering that governments, infrastructure, education, universal health care and retirement should be financed by resource rents and bank profits (social-credit funds funding what amounts to a greatly expanded Bill of rights) it is clear that wealth accumulated in the past through aristocratic exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, has gone for many other things besides society‘s finance capital needs, primarily buying and selling the capitalized values of appropriated wealth (speculation within the ethereal world of high finance), and for extravagant living (conspicuous consumption). Every alert entrepreneur knows the big profits end up with those who call the tune with their money. With social-credit funds (resource rents, banking profits, and created money) replacing those huge blocs of unearned finance capital, destined for obsolescence under full and equal economic rights, citizens with sound ideas, but no capital, would have the opportunity to realize the profits from their abilities and accumulate capital. As talent is broadly diffused, wealth, accumulated by true producers, would quickly diffuse itself relatively equally throughout the population. Just as each individual has rights, federated regions, nations, regions within nations, states, communities, and entrepreneurs should have rights to their share of the world‘s finance capital (primary-created money, resource rents, and bank profits). Denying borrowed social-credit-funds for speculation in the worldwide gambling casinos known as stock markets (see Chapter 22), but permitting it for new speculative enterprises, would guide lending into productive channels; the real economy, as opposed to the ethereal world of high finance laying claim to wealth produced by others. Consumer credit, within limits, should be a right quickly available, just as pioneered by computerized credit cards. Using eye patterns, thumbprints, and signature scanning, procedures now in use, along with a credit check, risks would be almost nonexistent. Each person‘s right to credit would be tempered by being subject to standards much as they are now, and the local credit union, an integrated member of the banking system, would be in a position to know a member‘s creditworthiness. Local bankers should best know the needs of the region and the trustworthiness of those who borrow to build and produce for that society. If not, they should not be bankers. The economies of prosperous nations are dynamic due to the hopes and dreams of their citizens. The economic health of a nation requires that those
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with ideas, talents, and energy have access to finance capital (others‘ savings). With rights to credit, a nation‘s talented can bring together land, labor, capital, and technology at the right time and in the right place to fulfill society‘s needs. If there is a shortage of finance capital for productive use, and the resources are available, and can be used without destroying the environment, a nation‘s Federal Reserve simply creates money and the Treasury spends it into existence (up to the level of a balanced money supply, building infrastructure or providing essential services). Through social collection of resource rental values (next chapter) and the greater profits of efficient socially-owned banks paid to society (both are social earnings, neither are properly private earnings), all citizens pay their share of normal social costs through the products and services purchased with their relatively equal pay for equally-productive work. Credit is currently rationed by the simple method of checking track records and lending up to a certain percentage of a borrower‘s equity, a great rule for monopolists. ―Loans are made in a very impersonal way—everything depends on ‗track record,‘ and if you don‘t have a ‗track record‘ [or equity], as most young people do not—you can forget it.‖17 Access to investment capital should be a right based on productive merit as well as collateralized equity. Thus credit for productive people in their first ventures and those with a vision for productive expansion would be easier to obtain. With employees of a banking authority trained to be alert to productive investment requests, these loans would be quite simple. When a loan request was received, an evaluation would be made of its potential productive and financial success. If it looked reasonable, the loan would be approved. This is precisely how loans in America were made for the first 15 to 20 years after WW II. After the boom years were over, banks reverted primarily to loans against equity.b With the disappearance of monopoly values, the much smaller loans needed would be backed by an equally smaller, secure, true value, and those values would be matched by the savings of fully-productive labor and entrepreneurs within a fully efficient economy. A loan would, of course, require financial accountability by the borrower just as it does now. Through regional capital accumulation funds charging enough interest to cover risk, loan institutions can fund new projects. It is not necessary to lend strictly to owners who would then hire workers. Those with insight need only prepare a prospectus describing the product or service, market potential, profit expected, financial requirement, and labor needs. The loan institution would study the proposal and, assuming the ideas were sound and beneficial, would With the elimination of appropriated values in the various monopolies, there will not be those monopoly values against which to lend. But neither will money capital be needed to purchase those fictitious values. b
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approve the loan. Workers would study the prospectus, and agree to 10-20% of their wages being deducted as payments until their 60-80% of the stock is paid for. Those who planned the productive endeavor would own, and be responsible for paying for, 20-40% of that industry‘s value. Fully worker owned and operated industries and cooperatives should receive equal consideration. Their financing would be the economic ideal of labor employing capital. A Google search for ―Mondragon Cooperative‖ alerts us that this is the world‘s fastest growing production model. With workers owning a substantial share of industry and a share of their wages being used to pay off the loan, those owners of capital would be true producers. Society would receive useful products or services and the nation‘s savers and central banks, providing primary-created money (base money) when necessary, would be fully paid for their finance capital. With these triple benefits to society, bankers should be taught to pay close attention to requests for investment credits; they are the sinews of capitalism. Most workers would stay on the job, but, once a new business was secure and their new stock had maximum value, the talented would search out another prospectus, help develop another business, train more workers, build that industry to its maximum use-value, and move on again. Labor would be both mobile and highly productive just as capital is now and the most productive of those workers would be the accumulators of capital. This would be mobilization of labor without the dispossessions that had been the norm of past capitalization processes. Labor would have the same rights to gains in efficiencies of technology as investors now have. The talented would be in high demand by the developers of industry. Periodically, employed working hours must be lowered in step with technology‘s efficiency gains. Besides collateral protection, there are three flows of money that make those loans secure, resource rents, profits, and a share of wages. Every success increases the use-value, and thus the rental value, of land. As they are sharing in those profits, society‘s collection of resource rents (see next chapter)—either directly or through lower product and service costs—could, and should, permit it to accept its share of the risks of new entrepreneurs. With these restructured borrowing rights, many more people would qualify for investment capital than under equity loans. If successful, they and their workers would own that capital honestly, as opposed to the current custom of capitalizing values through exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. Those searching for a higher return, and confident they have found good investments, could directly employ their capital. Those with the opportunity to lend their savings at a higher rate would be free to do so. But they could no
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longer obtain high profits by bidding on exclusive titles to nature‘s resources and technologies and, through that monopoly structure, laying claim to wealth properly belonging to others. The huge blocs of accumulated capital confiscated from productive labor, roughly 95% of all investment capital, would be transformed into equally-shared use-values under these proposed conditional titles to nature’s resources and technologies. Once restructured, a society must reduce labor time and share productive jobs. If this is not done, new mini-monopolizers, in the form of excessive job rights, will emerge. A socially-owned capital accumulation fund within a modern financial commons (finance capital comprised of created money, resource rents, bank profits, and savings) would eliminate the ethereal world of high finance composed of capitalized, unearned, rental values and the many games played within the ethereal world of high finance with this unearned, and surplus, finance capital, laying claim to ever-more wealth produced by others. Japan operated just such a capital accumulation fund and utilized it with a vengeance to reach its current position in world trade. We do not suggest a nation‘s international trade capital accumulation fund be that aggressive but it would be great protection against others‘ predatory trade practices. The 95% of finance capital that is both unearned and unproductive is a loss to society, while the 5% honestly earned, saved, and operating the real economy is efficient. That which was not honestly earned is inefficient to the extreme. Not only is creation of money, socially-collected resource rents and profits of socially-owned banks funding infrastructure, governments, and other essential services more efficient than when funded with unearned finance capital extracted from its proper owners, those massive funds are also floating around searching for something to own is the ethereal world of high finance laying claim to ever more of the wealth properly belonging to others. The key to understanding an honest banking structure is that money and banking are only tools with which to produce and distribute wealth. Beyond a little brick and mortar there is nothing tangible (labor created) there to own. With automatic 100% reserves, a socially-owned and operated bank cannot go broke. Their cost of operation is only ½ of 1% on loans leaving massive profits available to assist in funding health care and retirement. An efficient privately owned bank is an oxymoron. That exorbitant interest rates are unnecessary was demonstrated by early Scottish bankers whose thrift is so well known that even today a person careful with his or her money is called ―Scotch.‖ In the 19th century, the universal practice of Scottish banks budgeted 1% of all loans to cover banking costs. Their innovative practices are still considered a model of banking stability.18 With the costs well established at 1% for small-volume banking using expensive hand ac-
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counting, ½ of 1% would be a proper service charge for large-volume banking using inexpensive computerized accounting. During the stable years following WW II, the real rate of interest in the United States, allowing for inflation, hovered around ½ of 1%. Although the real rate of interest during what were considered the best years the world economy has ever known was under 2%, we believe stored labor should be well paid and will allow the highest long-term average real rate of interest for investors, 3%, as a fair rate. With interest on savings at the high end of historical norms, both industrial and honest finance capital (both are stored labor) and current labor would be well paid. People would save and those savings would be available for productive investments. Unearned, unproductive, finance capital deserves no interest. Though the interest rate on loans could be made 1% over that paid savings, totaling 4%, an efficient economy would charge possibly 6-to-8%. In league with social collection of resource rents, those surpluses would become social-credits for essential social and human rights (funding governments, infrastructure, education, universal health care, retirement, etc). Those funding needs and the sums collected from resource rents and interest charges can be adjusted to provide all necessary funding. In a banking system, with the exception of money created, total debits and credits will balance, withdrawals will equal deposits. With a fully integrated banking system, any deviation from that balance could be quickly corrected. The visible flow of funds would be the economic pulse of a community, a region, a nation, a federated world region, and the entire world. Any unexplained deficit in a bank, community, or region could be immediately looked into while normal deficits are balanced by others‘ normal surpluses. To provide an adequate living standard for all people and still protect the world‘s resources and environment, a balance between a respectable living standard and the capacity of the earth‘s resources and ecosystems will have to be reached. Assuming centers of capital could no longer siphon the world‘s wealth to themselves, and then waste it battling over that wealth, as addressed in Parts I and II, societies throughout the world could then progress calmly and rapidly. Every trade financed by money capital moving between two countries creates a change in those overseas banks‘ reserve accounts at the central bank for that currency. If that central bank does not honor a transaction in its currency through suspending targeted banks‘ access to their reserves, those banks funds are frozen. The power to discount currencies and freeze funds of developing countries gives powerful nations effective control over currency values and thus control over others‘ ability to create money and control its value. Nothing is more important for a nation‘s or a region‘s economy than productive use of created money and savings, its finance capital. This requires their currency being under
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their control, spendable only within their borders, and an honest World Central Bank currency; a dual currency system, handling trades between nations with a mandate to protect the value of all currencies. If economically viable regions restructure to a regional currency spendable only within that region, and a sustainable, efficient economy is established as per page 3 and throughout this book, there will be no need for bank rescues; all problems are resolvable through production readjustments.
The Theory of Interest as Usury Working on a bill to submit to the Eighth Session of the Provisional World Parliament, Professor Glen Martin of Radford University expanded upon the Biblical and Koranic principles that it is wrong to charge interest. As money and banking are social technologies understood for thousands of years, ownership is only proper for items built by one‘s labor or purchased with funds earned by one‘s labor, and banking systems are neither, they are properly socially owned. What caught Professor Martin‘s attention was that, if properly structured, the elimination of the waste of monopolies and the attaining of full and equal economic rights through sharing the remaining productive jobs, with paid employment only two to three days per week, and being equally-paid for equallyproductive labor, equalizes the earnings of all relative to their productivity. It also does away with the huge blocks of wealth formerly extracted from its proper owners through aristocratic exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free. Beyond application, approval, accounting, and brick and mortar costs, recoverable at a ½ of 1% interest rate on loans, there is no one within a banking system applying anything other than normal mental or physical labor. Therefore, though all are entitled to be well paid, no one is entitled to the unearned profits earned through 6-24% interest charges or the many other methods of bankers to extract wealth properly belonging to others. The ethereal world of high finance will have disappeared. By raising required reserves in step with the creation of money, it is possible to create money for a developing region‘s first industries and infrastructure. As the economy develops, industries can be financed from savings and infrastructure from resource rents paid to society. By raising mandated reserves every two months for a year, and by creating money (increasing base money) at an annual 18% rate during that timespan, China has proved its viability. Though China may still run into trouble because her money being spendable outside her borders leaves her vulnerable to financial warfare, other developing regions will be studying that model. It will work beautifully so long as you use a currency spendable only within the borders of a region and handle trade be-
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tween regions through a world trading currency as China, Russia, Brazil, India, and others are petitioning for as we speak. Honestly-earned depositor savings are entitled to interest on their stored labor. They should be rewarded and we do so through, as outlined above, the payment of interest on savings at the high end of long term averages, 3%. Operating costs are ½ of 1%. The key is what is done with the profits of 2-to-6% earned by socially-owned banks charging modest interest rates. No one‘s labor is involved beyond that of well-paid managers, accountants, and clerks within the banking system and we have deemed monopolies structured through aristocratic exclusive titles to technology (their licenses) are the heart of the current monopolized banking system. So, beyond brick and mortar, there are few tangible, labor-created, values to own. Thus the proper recipient of bank interest, above operational costs, is society itself.c With society paying banking profits to themselves, those social-credits fund universal health care, retirement and other essential services. As all funds are returned to society collectively, effectively there is, just as preached in the Bible and Koran, effectively no interest. Society has simply taxed the loan structure in the form of an annual percentage on outstanding loans. The differential between the 3% paid savers and that charged borrowers and the charges for resource rents would be balanced to cover government costs, building and maintenance of infrastructure, universal health care, retirement and other essential social costs. Once the world is developed to a sustainable level, as we demonstrate in the Conclusion can be done within two generations, the wealthy world will have repaid the struggling world for 500 years of slavery and plunder through which the massive wealth of the imperial nations was accumulated. At that point, interest and resource rents society pays to itself should, except for those protecting against resource depletion and environmental degradation, be reduced to the level required to operate a peaceful federated world. To not federate means continual war. To federate under full and equal economic rights for all would mean peace for all time.19 The elimination of banking monopolies through socially-owned banking, with the profits paid to society, and spent on infrastructure, universal health care, retirements, and other essential social needs, engenders an economic efficiency gain equal to the invention of the printing press. This increased efficiency would require democratic and communitarian oversight to conserve the earth‘s resources and protect the environment (see Conclusion). Interest can be analyzed from another direction. Industrial capital is composed of factories (a series of tools efficiently producing) and businesses which We have already demonstrated that 95% of current finance capital is unearned and unproductive so it should never have been extracted from the citizenry in the first place. Though billions in interest is paid to them every day, in an honest, moral, economy none of that interest or principal would be owed. c
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produce and distribute consumer products. Honest finance capital is only a symbol for industrial capital. Without industrial capital (tools) all a person can do is pick fruit and nuts off of trees, catch a few small animals, etc. With tools (industrial capital that can be as small as an ax, a shovel, a bow and arrow, or a wrench) one can do a lot of work and thus produce substantial wealth. Without those tools, industrial capital, nothing can be produced. The claim is made by some monetary theorists that private banks create money by making loans but do not create the money to pay interest on those loans. We have shown that capital (both industrial and honestly earned financial capital) is just as productive as labor, actually far more so. It is stored labor, it produces wealth efficiently, and thus should be well paid. Interest on this honest capital, as opposed to unearned wealth, is a necessary cost and it earns its own way, just as does labor. The statement that no money is created to pay interest is not valid. Honest finance capital, a representation of productive industrial capital, is even more productive than labor (try producing anything without tools which is stored labor [industrial capital]), and should be well paid. On OpEdNews.com, Ellen Brown just published ―The Mysterious CAFRs: How Stagnant Pools of Government Money Could Help Save the Economy.‖ Many states are looking into her recent work pointing out that other states should copy North Dakota, establish a state bank, and, by law, keep state and community monies in that bank. Ms. Brown points out that most of the states are receiving almost nothing for their banked money just as you receive almost nothing for the funds sitting in your bank accounts. If the states set up their own bank, and all government agencies banked there by law, they could receive respectable interest on their average bank balances, while charging more modest interest to government entities which need to borrow money. What she has proposed in a modest way is what we have proposed, sociallyowned and operated banks. And we have said exactly what she says is possible; depositors can be paid higher interest, and borrowers can be charged lower interest. In both our theories, both Ms. Browns and ours, is that the unearned interest going to the ethereal world of high finance is transposed into honest earnings, going into the social fund where it is available to fund essential social services. The only difference is that Ms. Brown is proposing a modest move towards socially-owned banks as an example of how we can soften the current collapse of state, county, and community monies, while we have assumed the banisters will retain control, keep pouring the bailout funds at themselves, and only after a total collapse will they be pushed aside, and a honest restructuring of the banks, and then economy, be possible.
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If Ellen Brown‘s proposals are followed, the financial pressures on the state will be alleviated. When the public learns they would get respectable interest on all deposits, they will move their money to those state banks. If that reached its logical conclusion, state banks would either replace private banks, or private banks would pay honest interest. In either case, the unearned profits would no longer go to the banksters; it would go to the depositors as their ―earned‖ money. In Ms. Brown‘s case there would be an increase in funds for essential social services. In our proposals, going all the way, virtually every social need, infrastructure, governments, education, health care, retirement, and all other social services, all currently—and intentionally—starved for money, would be fully funded. Both Professors Michael Hudson and William K. Black have pointed out that the financial industries share of all profits was 2% 40 years ago, and today it is 40%. Finance capital is only the money symbol of industrial capital and operating funds. Ever-more efficient technology steadily lowers industrial capital costs. Thus finance capital costs, and profits, should be lower, not higher. I thank them for quantifying the unearned, unproductive, share; it is 95% of all finance capital. We now turn to how full and equal economic rights requires society collecting resource (land) rents to provide social-credits for funding governments, building and maintaining infrastructure; providing for education, health care and retirements, and for any other essential social services. 1 Joel Kurtzman, The Death of Money (New York: Simon and Schuster, 1993), p. 11.
2 William Greider, Secrets of the Temple (New York: Simon and Schuster, 1987), p. 335. 3 John Kenneth Galbraith, Money (Boston: Houghton Mifflin, 1976), pp. 62-70. 4 Ibid, pp. 167-78; Greider, Secrets of the Temple, pp. 228, 282.
5 John Kenneth Galbraith, Money (Boston: Houghton Mifflin, 1976), pp. 62-70. 6 S. P. Breckinridge, Legal Tender (NY: Greenwood Press, 1969), cha 7; Galbraith, Money, pp. 72-75.
7 Carl Cohen, Editor, Communism, Fascism, Democracy (New York: Random House, 1962), pp. 13-14; Paul Kennedy, The Rise and
Fall of Great Powers (NY: Random House, 1987), p. 53. 8 Galbraith, Money, pp. 18-19. 9 Paul Kennedy, The Rise and Fall of the Great Powers. New York: Random House, 1987, p. 53. 10 E.K. Hunt, Howard J. Sherman, Economics (NY: Harper & Row, 1990), pp. 491-93, 505-508. 11 William Greider, Secrets of the Temple: How the Federal Reserve Runs the country (NY: Simon & Schuster, 1987) throughout but especially pp. 49-50, 380; James Livingston‘s Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890 to 1913 (Cornell University Press, 1986), chapters 7 & 8; and John Kenneth Galbraith, Money: Whence it Came, Where it Went, (Boston: Houghton Mifflin, 1995), pp. 176-83, 188, especially pp. 134, 144, 177-90, 195-96, 199-200 12 MMM, http://landru.i-link-2.net/monques/ mmm2.html or run a Google search. 13 William Greider, Secrets of the Temple: How the Federal Reserve Runs the country (NY: Simon & Schuster, 1987) throughout but especially pp. 31, 49-50, 280; James Livingston‘s Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890 to 1913 (Cornell University Press, 1986), chapters 7 & 8; and John Kenneth Galbraith, Money: Whence it Came, Where it Went, (Boston: Houghton Mifflin, 1995), pp. 176-83, 188, especially pp. 134, 144, 177-90, 195-96, 199-200 14 Hixon, Triumph, chapter 5. 15 Ibid. 16 Ibid 17 Robert Swann, Need for Local Currencies (Great Barrington, MA, E.F. Schumacher Society, 1990), p. 6. 18 George Tucker, Theory of Money and Banks Investigated (NY: Greenwood Press, 1968), pp. 219, 255. 19 Errol E Harris, Earth Federation Now: Tomorrow is too Late (www.ied.info: the Institute for Economic Democracy, 2005; Glen Martin, Basic Documents of the Emerging Earth Federation (www.ied.info: the Institute for Economic Democracy, 2006).
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21. A Modern Land Commons, Citizens Paying Resource Rents to themselves
Land, minerals and other aspects of nature‘s wealth are subtly monopolized by private collection of rental values on what nature offers free to all. This monopolization of social wealth started centuries ago as the powerful structured superior rights into ownership of land. These first privatizations laid the base for the theft of your and my wealth today. As British Prime Minister Winston Churchill said, land is ―by far the greatest of monopolies—it is a perpetual monopoly, and it is the mother of all other forms of monopoly.‖1 This chapter is essentially Henry George‘s thesis.2 Monopolizations of industrial and social technologies, banking etc, were patterned off land monopolies but go well beyond his writings. When resource rents are privately collected, it is ―an extraction of uncompensated value‖ (run a Google search for rent-seeking) properly belonging to all in roughly equal shares. As society collects its full due in resource rents (meaning the citizens are paying those rental values to themselves) all private-property use rights are retained. As the initial cost of land drops to zero, ownership of land for homes, businesses, and production will be a human and community right. With resource rents and banking profits replacing all taxes and fully funding all essential social services, land for homes and businesses would, on balance, cost nothing. Those rental values coming back to all citizens as social-credits financing infrastructure, health care, retirement, running governments, and other essential services, means society is quintuply repaid for restructuring to paying resource rents to themselves (to the social fund). Eliminating monopolization would not only increase your right to land and the profits from its productive use, it would ensure that human right.
Reclaiming Your Share of Wealth Produced by Nature If a person were born with fully developed intelligence, physical ability, and judgment, but without social conditioning, one of the first confusing realities he or she would face is that all land belongs to someone else. Before one could legally stand, sit, lie down, or sleep, he or she would have to pay, or have the implicit permission of, whoever owned that piece of land. This is absurd. Air, water, and land nurture all life and each living thing requires, and is surely entitled to, living space on this earth. No person produced any part of it, it was here when each was born, and their share of its bounty is everybody‘s common right:
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The first man who, having enclosed a piece of ground, bethought himself as saying ―this is mine,‖ and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: ―Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.‖3
Jean Jacques Rousseau, in A Discourse on the Origins of Inequality, was outlining the injustice of one person having exclusive title to another‘s living space. This practice is only social conditioning (spin, perception management) locking society within belief systems. Being thoroughly conditioned, and having never experienced or imagined anything else, few realize that, under exclusive ownership of land and other aspects of nature‘s wealth—including mechanical, electrical, chemical, and social technologies—they do not have all their rights. Instead, the possibility of eventually owning one‘s piece of land, or a license to practice within a monopolized structure—banking, insurance, law or other social technologies—are viewed as full rights. Being conscious of the not-so-distant past when common people did not have even those rights; citizens view and celebrate these limited rights as full rights. Mark Twain recognized that same alienation of nature‘s gifts in unrestricted private title by one person and loss of rights for others: ―If he owned the entire world, all the wealth of the world would be his and all the world‘s citizens would be his slaves.‖ While one‘s lack of full and equal economic rights is difficult to visualize when a person is accustomed to exclusive ownership to what nature provided free for all; it is easy to see if one uses a gift of nature, such as air, that has not yet been alienated from the commons. Air is one of nature‘s gifts and if a group could claim title to it (when windmills were invented such efforts were made), each person would have to pay for the right to breathe just as now they have to pay for the right for a place to live. Water was still free long after land was fully claimed. As population density increased and water became scarce, it has become profitable to claim exclusive title to water. With those exclusive titles to water recorded at the courthouse, water sources develop high capitalized values, society becomes accustomed to paying dearly for its drinking water, and more unearned wealth is banked. Instead of society wasting that wealth paying non-producing monopolists, each one‘s proper share of nature‘s bounty should be paid by, and distributed right back to, all citizens through socially-collected resource rents providing the social-credits to fund infrastructures, education, universal health care, retirement, running governments, etc. The secondary monopolies—again insurance, health care, law, etc—are social technologies with only modest amounts of tangible,
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labor-created, values, but high monopoly values. Each one‘s proper share of values to which they have a natural right is assured by replacing marketing rights (licenses within a monopolized structure) with social rights or human rights to those services.
Pride in Ownership Must be Maintained Land is, unquestionably, social wealth. However, the right to one‘s space on this earth, the pride it returns to its owner, and the care normally given to one‘s personal property, are compelling reasons to keep land under a conditional form of private ownership. If equal rights for all to a share of the production of land are acknowledged through society collecting resource rents, private ownership is socially efficient and fully justifiable. What is unjust is the unrestricted monopolization of the natural resources that nature freely provides on, above, and under, land. It is necessary to keep private ownership of land and resources while eliminating monopolization and its unavoidable inequities.
The Feudal Origins of Land Titles Societies have battled for title to land for millennia. One society‘s violent claim to land is another society‘s violent loss. Today‘s landowners are the descendants of the winners of the latest clashes of cultures. After the collapse of the Roman Empire at the hands of the Germanic tribes, the common people regained their rights to the land, and the use of nature‘s wealth in common again developed a powerful following.4 Their belief in freedom and natural rights resembles our belief (but not our practice) in these principles today. However, this reversion to social wealth in public ownership came under attack by powerful clans. Petr Kropotkin, a unique historian, describes the repression of these rights as the origin of the modern state: ―Only wholesale massacres by the thousand could put a stop to this widely spread popular movement, and it was by the sword, the fire, and the rack that the young states secured their first and decisive victory over the masses of the people.‖ Those people were struggling against imposition of a legal structure (privatization) which protected aristocratic exclusive titles to land, and all the resources on and under the land, previously owned and used by all in common.a In The Earth Belongs to Everyone, chapter 1, published by this institute, Alanna Hartzok addresses the formalization of the privatization process into modern law as starting with the Statute of Merton in England in 1235. Many other authors address important aspects of that system of theft of wealth produced by others. The privatizations ongoing today are extensions of that same process, read Shock Doctors, by Naomi Klein. The rule of thumb is that privatizing the commons more than doubles costs and creates a mega wealthy class as it impoverishes the masses. The 50% overcharges today (those doubled costs) are the a
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As described by Kropotkin, the medieval roots of our culture grimly parallel the massive slaughter in many countries of the emerging world today. People in these countries are fighting to retain, or reclaim, their right to a fair share of the earth‘s wealth, those resources now owned by the cultural descendants of earlier violent thefts of land. The resemblance here is not a coincidence; current struggles are a continuation of that medieval battle over who shall have rights to nature‘s wealth and, as we have stated and will be demonstrating further, today‘s land titles are feudal exclusive property rights. However unjust, if legal title to land or any other gift of nature can be established (the privatization process) those with unrestricted title can, through the collection of rental values or various overcharges, lay claim to wealth produced by others. In the 14th century, the sharing of social wealth in common was still practiced by local communities. But, tragically, that century saw the beginning of a 300-year-effort by the aristocracy of Europe to erase all trace of communal rights. Kropotkin explains: The village communities were bereft of their folkmotes [community meetings], their courts and independent administration; their lands were confiscated. The guilds were spoilated of their possessions and liberties, and placed under the control, the fancy, and the bribery of the State‘s official. The cities were divested of their sovereignty, and the very springs of their inner life—the folkmote, the elected justices and administration, the sovereign parish and the sovereign guild—were annihilated; the State‘s functionary took possession of every link of what formerly was an organic whole. Under that fatal policy and the wars it engendered, whole regions, once populous and wealthy, were laid bare; rich cities became insignificant boroughs; the very roads which connected them with other cities became impracticable. Industry, art, and knowledge fell into decay.5
Though privatization of the commons started with the Statute of Merton in 1235, the continued efforts to alienate the individual from common use of the land are documented in Britain by the nearly 4,000 enclosure acts passed between 1760 and 1844 that effectively gave legal sanction to this theft.6 Those enclosure acts were the continued privatizations which, in turn, are the continuations of rent-seeking legal structures (monopolizations) appropriating wealth properly belonging to others.
same 50% of a serf‘s production paid to aristocracy 300 to 800 years ago. Modern imperial law is only aristocratic law hiding under the beautiful words of capitalism and democracy. Lawmakers today are continually expanding those aristocratic rights and deferring to the rights of the masses only when the threat of ballot box revolutions are high. As Co-Director of Earth Rights Institute, Alanna developed an online class on the social collection of rental values of land and resources (see www.earthrights.net).
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For the powerful to protect their aristocratic exclusive titles further, it was necessary to erase from social memory all traces of the earlier custom of social ownership of social wealth. Kropotkin points out, ―It was taught in the universities and from the pulpit that the institutions in which men formerly used to embody their needs of mutual support could not be tolerated in a properly organized State.‖7 Classics for the past 400 years justified that injustice and we hear those justifications yet today: ―This is the most efficient and proper social structure.‖ The classic descriptions of the evolution of capitalism explain how trade and industrial capital usurped the preeminent position of nobility with their historical title to all land. Yet in parts of Europe an elite social class still owns large tracts of land. As late as 1961, the Duke of Bedford, the Duke of Westminster, and the British Crown owned the most valuable sections of London, and large estates still abound throughout the countryside. In fact, at the turn of the 20th century, the English upper class consisted ... of around ten thousand people drawn almost entirely from a core of 1,500 families.... The aristocracy owned great estates and houses and works of art—but, above all, they owned land. Well over ninety percent of the acreage of Britain was theirs.8
Today‘s neoliberal philosophies are the ongoing efforts to prevent a rekindling of mutual support beliefs and social wealth held in common. Today we are taught, by those who parrot the original disinformation, that an efficient economy requires all property being privately owned with each individual a ―free‖ bargaining agent. Our disagreement with current property rights law is that title to land, or any other gift of nature, including mechanical, chemical, electrical, and social technologies, should—since no person built this natural wealth and all are entitled to their share—be conditional. Exclusive title as opposed to conditional title is that remnant of feudal law which is the primary cause of today‘s inefficient economies creating a wealthy few, an impoverished many, and the many wars protecting power and wealth.
Private Ownership of Social Wealth Moves to America Parts of America‘s land ownership were originally structured under the same aristocratic property rights as in Europe. The ―manorial lords of the Hudson Valley‖ owned huge estates ―where the barons controlled completely the lives of their tenants.‖ One such estate in Virginia covered over five million acres and embraced 21 counties.9 Such excessive greed contributed to the widespread dissatisfactions that fueled the American Revolution. Under Governor Benjamin Fletcher, three-quarters of the land in New York was granted to about thirty people. He gave a friend a half million acres for a token an-
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nual payment of 30 shillings. Under Lord Cornbury in the early 1700s one grant to a group of speculators was for two million acres.... In 1689, many of the grievances of the poor were mixed up in the farmers‘ revolt of Jacob Leisler and his group. Leisler was hanged, and the parceling out of huge estates continued.10 [B]y 1698, New York had given thousands of acres to the Philipses, Van Cortlands, Van Rensselaers, Schuylers, Livingstons and Bayards; by 1754, Virginia had given almost three million acres to the Carters, Beverleys, and Pages—an early example of government ―aid‖ to business men.11 [Spanish land grants were even more extensive]
Despite the egalitarian rhetoric of the American Revolution and an attempt to place a proclamation in the Declaration of Independence for a ―common right of the whole nation to the whole of the land,‖ the powerful looked out for their own interests by changing the wording of Locke‘s insightful phrase: ―All men are entitled to life, liberty and property.‖ This powerful statement that all could understand, especially if they replaced the word property with ―land,‖ coming from a highly respected philosopher was a threat to those who monopolized that natural wealth. So they restructured those words to ―life, liberty and [the meaningless phrase] pursuit of happiness.‖ The substitution in America‘s Declaration of Independence of phrases which would protect every person‘s rights to nature‘s wealth for words that protect only the monopoly rights of a few should alert one to check the meaning, and purpose, of all laws of all societies carefully. Only portions of the huge estates described below were confiscated, and ―speculations in western lands were one of the leading activities of capitalists in those days‖:12 Companies were formed in Europe and America to deal in Virginia lands, which were bought up in large tracts at the trifling cost of two cents per acre. This wholesale engrossment soon consumed practically all the most desirable lands and forced the home seeker to purchase from speculators or to settle as a squatter. ―[Moreover, observes Beard], as the settler sought to escape the speculator by moving westward, the frontier line of speculation advanced.‖13
Some of America‘s famous leaders were deeply involved: In the Ohio Valley a number of rich Virginia planter families, amongst whom were counted both the Lees and the Washingtons, had formed a land company and this, the Ohio Company, founded in 1748, was given a crown grant of half a million acres.14 [And with] every member of the Georgia legislature but one [having] acquired a personal interest in the speculation schemes, [they sold thirty-five] ―million acres to three ... land speculating companies for a total payment of less than $210,000.15 [That is six-tenths of a cent per acre. Thus,] as the frontier was pushed back during the first half of the nineteenth century, land speculators working with banks [and corrupt legislators] stayed just ahead of new immigrants, buying up land cheap and then reselling it at high profits.16
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Those who participated in these later land grabs knew the route to wealth lay in claiming exclusive title to land so those who followed would have to buy or rent it from them. Whether rented, or sold at high capitalized values, a share of the wealth produced each year would be siphoned to those owners without expenditure of their labor. Individuals, such as the butcher‘s son John Jacob Astor who had title to much of Manhattan Island, became immensely wealthy. Matthew Josephson, in Robber Barons, and Peter Lyon, in To Hell in a Day Coach, document the greatest land grab in history when the railroads, through control of state and federal governments, obtained unrestricted title to 183 million acres of land, 9.3% of the land in the United States. By the turn of the century this included ―more than one-third of Florida, one-fourth of North Dakota, Minnesota, and Washington and substantial chunks of 25 other states.‖17 The state of Texas was the most generous of all: at one point they had actually given away about eight million more acres than they had in their power to bestow; as it finally turned out, they forked over to twelve railroad companies more than thirtytwo million acres, which is more real estate than can be fitted inside the boundaries of the state of New York.18
Those to whom this land was parceled out had taken care to buy Congress and codify their aristocratic exclusive titles in legal statutes, inequality structured into unequal property rights law. The arrival of the railroads provided easy access to these lands and made them valuable. Instead of immigrants being allowed to choose land on a first-come first-served basis and using its rental value to develop social infrastructure, the land-hungry poor were forced to buy from these profiteers. Land sales by speculators were contracts siphoning to the speculator a part of the future labor of those who bought the land. America‘s celebrated Homestead Act of 1862 came after most of the choice land had already been claimed by speculators. Some 600,000 pioneers received 80 million acres under this act, but this was less than half that allotted to the railroad barons, who were only the latest in a long line of profiteers. These new lords of the land thoroughly understood the legal mechanics of siphoning wealth properly belonging to others to themselves. They knew all the surplus land had to be owned before their land could have significant value, thus the Homestead Act was vital to their plans of attaining great wealth.
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Saleable Land Titles Permitted the Mobilization of Capital Once land had been confiscated from the masses in the Middle Ages, it belonged permanently to the lord of that land, and could only be lost through war. When English law changed to permit the sale of land, this created the foundation for modern monopoly capitalism. When an entrepreneur wished to speculate by building a factory or ship, land could be mortgaged for that venture. Monetizing (capitalizing) the value of land provided a broader base of wealth for loans than loaning against potential profits from monopoly trade rights issued to favored friends by royalty. The privatization of land and resultant mobilization of capital was a key stage in the development of capitalism that expanded rights to more people. However, those exclusive titles to nature‘s wealth still maintained the aristocratic legal structure which permitted nonproducers to claim wealth that should have been social-credits (those rental values) funding essential social needs. An efficient economy will have neither those capitalized appropriated values (misnamed profits) nor the huge blocs of unearned capital currently buying and selling capitalized unearned values. When those exclusive titles are restructured to conditional titles, societies paying those rental values to themselves, the monopoly values (the 95% of finance capital that is unearned) are transposed into equally-shared use-values. There are no longer any unearned values for it to represent but money, once created, stays in existence until destroyed. The remaining 5% runs the economy efficiently. Thus, before a society can restructure, that massive, unneeded, finance capital must be destroyed by financial collapses. Slave labor was also a method to accumulate capital and pockets of slavery remain today. Export platforms in the emerging world that avoid taxes and pollution laws and pay dimes per hour for workers to produce items for sale in the developed world, where workers with the same qualifications are paid $9 to $35 an hour, is a simple capital accumulation scheme akin to slavery. The forced acceptance of opium sales to China a century ago, and the turna-round sales of drugs to the developed world today, each accumulates capital. Charging Japan‘s well-paid citizens triple the price for Japanese manufactures or food as the same item would cost in Europe or America is also a capital accumulation scheme. The ―Robber Barons‖ of the late 19th and early 20th centuries accumulated capital at great cost to all others in America. That cost is not acknowledged because, even with massive destruction of natural wealth, timber, topsoil, etc, the remaining vast resources could still provide a good living for the relatively small population. The timber burned to clear the land could have provided a fine set of hardwood furniture for every family on earth, and topsoil could have been preserved to feed people for millenniums.
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Through hard work, frugality or good fortune, a family owns a valuable piece of land. When the breadwinner‘s buying power decreases or ceases due to death, tracts of land are sold off piecemeal to maintain the accustomed standard of living. All money from land sales deposited within the banking system as savings become part of a nation‘s privately owned finance capital. Eventually all the tracts of land are sold, some of the money becomes accumulated capital, and the part spent to maintain the family, that also could have been accumulated capital if that person had worked for his or her living, becomes consumed capital. John Jacob Astor‘s aristocratic exclusive titles to a large share of—and piecemeal sale of—Manhattan Island, is probably America‘s leading example of wealth accumulation through land monopolization. As tracts of land became smaller and smaller, and their capitalized (monopoly) values, rose higher and higher. The values unrealized (potential capital), the capital wasted through high living of heirs, and the enormous monopolized values encroaching others‘ rights, tells us transposing privately collected rental values into social-credits is far more efficient. A simple adjustment in the law, paying resource rents to themselves (resource rents paid into a social fund), and those funds building infrastructure and providing other social needs attains those rights. The ―mother of all monopolies,‖ the private taxation of land, will have been eliminated; each will have rights to their share of the wealth produced by nature.
Profound Thinkers Who Believed in Society Collecting Resource Rent The French Physiocrats were the originators of laissez faire, the philosophy of little government interference. They held as a cornerstone of their beliefs— extended from the work of Jean Jacques Rousseau, John Locke, William Penn, and Richard Cantillon 50 to 100 years earlier—that society should pay resource rents to themselves (to their government). One of their most respected members, Mirabeau the Elder, held that this would increase social efficiency equal to the inventions of writing or money. Note: These theorists were royalists who would point those rental values towards the king and their thesis is only of value if those rental values are returned to the citizenry in the form of economic infrastructure and social services. David Ricardo formulated the law of rent which supports the logic of Mirabeau‘s statement. Put in simple terms, Ricardo‘s law of rent means all income above that necessary to sustain labor will be claimed by the owners of the land without the expenditure of ―their‖ labor. A land monopolist retains ownership of land until some innovative entrepreneur sees its potential for more productive use. The high price demanded effectively siphons a part of the wealth produced by that entrepreneur to the previous owner, now the holder of that mortgage
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and sales contract. Ricardo, not theorizing the proper recipient of resource rents being society itself, testifies to his being a ―justifying‖ philosophy. Adam Smith‘s statement ―every improvement in the circumstances of society raises rent‖ tells us he knew titles to land claim much of the wealth produced by the increased efficiencies of society.19 The respected economist John Kenneth Galbraith, although questioning changing tax policy at this late date, accepted the justice of society collecting resource rents. In 1978, the conservative economist Milton Friedman stated, ―In my opinion the least bad tax is the property tax on the unimproved value of land.‖20 Earlier philosophers who believed in the free enterprise philosophy of the Physiocrats—―society collecting the land rent‖—include Thomas Paine, who is credited with proposing much of the Bill of Rights; William Penn, Herbert Spencer, the noted philosopher in his classic Social Statics; Thomas Sperry of the Newcastle Philosophical Society; and philosopher John Stuart Mill. These early economists were not radicals. They all ―believed in the sacredness of private property, particularly land.‖21 Besides Henry George, the leading theorists on the subject, the Robert Schalkenbach Foundation lists over 100 more famous thinkers —including Confucius, Moses, Thomas Jefferson, Mark Twain, Henry Ford, John Maynard Keynes, Albert Einstein, President Eisenhower, and several popes—who recognized the principle that the natural product of the land belongs to all citizens. Also listed are various places in the modern world where these policies have been, at least in part, implemented.22
Commercial Land As David Ricardo and Henry George taught us, the closer one approaches to the center of commerce, the higher the price of land. Every transit line from the suburbs to a commercial district raises commercial land values a calculable amount. This high value represents the cheapness and the quantity of trades within any population center and that savings, efficiency of trades, is recognized by the price business is willing to pay for that land. Because rent lays claim to a large share of the wealth produced by commerce, land values are very high in large population centers. Land values gradually lower as the distance from the center of population becomes greater and the trades become less frequent and more expensive. In a matter of minutes on an acre in the middle of a city there would be millions of dollars‘ worth of trades in grain, diamonds, stocks, land, finance capital, or consumer products. A share of each trade is remitted to the landowner as rent, thus the high value of land within population centers.
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It is not unusual for commercial land to be valued at three, four, or even 10 times the value of the buildings placed upon it. Probably the highest priced acre in the world was in the center of Tokyo, valued, before prices dropped over 75%, at $1.5 billion. The space of one footprint in Tokyo was valued at $8,000. The land area of the 23 wards of Tokyo was equal in monetary value to the entire land area of the United States. The land upon which the emperor‘s palace sat was valued at the price of all the land in California. All the land in tiny Japan was worth four times as much as all the land in America. ―In fact, the real estate value of Tokyo [in 1989] at $7.7 trillion [was] so high that, once collateralized and borrowed against (at 80% of [the then] current value), it could buy all the land in the United States for $3.7 trillion, and all the companies on the New York Stock Exchange, NASDAQ and several other exchanges for $2.6 trillion.‖
Farm Land The quality of farmland depends on rainfall, growing season, fertility, and accessibility to markets. Once the quality has lowered to where one can earn only the wages expended in production or distribution at the margins, meaning the economic edge of profits, the land‘s value reaches zero. By exporting food to countries that—if their lands, resources, and trade were not monopolized—could just as well feed themselves, and by farming the public Treasury, agriculture in the United States has made handsome profits and evaded Ricardo‘s law of rent. Resource rents from the monopoly created by those laws, are capitalized into, and maintain the unearned capitalized value of, farm land. Under Ricardo‘s law, but without subsidized sales to countries able to feed themselves if this cheap food was barred from their shores, the price of the current high priced farm land of America would be almost zero.
Home Sites In smaller cities of America, a typical $240,000 house will be on a $120,000 lot. In major population centers, it is not uncommon for the same house to cost double, triple, or even 10 times that price. In Honolulu and parts of California a comparable home would be over $1 million and in Washington, DC it would be $1.6 million. As labor and material costs are relatively equal, the price differentials are the costs of land functioning under Ricardo‘s law of rent. The price of land accurately measures the resource rents collected by landowners without the expenditure of their labor. The powerbrokers took from Locke, the Physiocrats, and others, only that which protected and further extended their wealth and power. As historically most members of legislative bodies were large landholders, naturally they did not accept that society should collect resource rents. If that were to happen, every-
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one would have a right to their share of nature‘s wealth. The ―divine rights‖ of private ownership of social wealth, siphoning large amounts of wealth to those who did no productive labor (those who owned those monopoly values bought and sold on the markets), would be converted to ―conditional rights‖ where only those who produce are paid. Take homes for example: real estate taxes are currently levied mostly on the improvements and only a small part on the land. That tax structure is the key to land monopolization. Removing all taxes on the house and society charging full rental value on all lots, used and empty, drops home-site land prices to zero. As the monetized (monopolized) value of the land disappears, its use-values increase. The purchase price would be only the value of labor and material that built the house. The initial capital required to purchase a home would drop to the cost of building the house, or the depreciated value of an older home. The social collection of resource rents eliminates all other taxes, and lowers the purchase price of homes and businesses 50 to 90%. Those socially-collected rents—along with banking profitsb—transpose into social-credits building and maintaining a nation‘s infrastructure, running governments, providing education, universal health care, and funding retirements. That is at least a quintuple gain over monopolists collecting those rental values and loaning that unearned money back to those from which it was extracted. Though the purchase price of home and business sites are zero, each paying annual land rents to the social-credit fund, lowers the monthly purchase cost of homes and businesses to slightly less than current costs. However, those former unearned profits are now social-credit funds, taxes have disappeared, and all social needs (not personal needs) are fully funded; thus the quintuple gains through society paying resource rental values to themselves. Occasionally a city council person will become aware of the social efficiency of taxing unused land within their jurisdiction. If that idle land is properly taxed it will quickly be put to use. But these alert officials quickly find that powerbrokers have inserted restrictions into state constitutions and passed state laws on local communities‘ ability to tax land. Land held in unrestricted private ownership entitles the owners to large rental values which create high capitalized (monopoly) values. True free enterprise, economic efficiency, and fully funded social needs, requires society collecting those natural resource rental values. Distribution of land by price (capitalized value) would then be replaced by distribution of land by rental value paid to soThe private collection of land rent is ―The extraction of uncompensated value from others.‖ Because there are few tangible (labor produced) values within banking proper, so is the private collection of banking profits. b
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ciety and that money returned to the citizenry through paying for the social services described above, all taxes eliminated, etc. The initial cost to the homeowner would be slightly lower, much lower if Mason Gaffney and Fred Harrison‘s estimation of 35% of national income being resource rent is correct, and there would be no interception of others‘ labor through private collection of rent on what nature provided to all for free; thus the gains have quintupled. Oil, copper, iron and other ores are land and can very properly be privately owned so long as the resource rents are returned right back to society in the form of social-credits funding social needs. The world has adequate reserves of most of these minerals. It is only richer deposits and cheaper labor in the emerging world that make their minerals more available. Under Adam Smith‘s unequal free market philosophy, the developed world's more expensive deposits are not mined until the ―resource powers‖ cheap deposits are exhausted. Developing land—clearing, drainage projects, shaping the land, irrigation dams, canals, and so forth— require special consideration. Those who invest in such improvements should be well paid. However, unconditional title to land development becomes exclusive title to the land. Currently the government pays a substantial share of development costs. Investor-developers can be fully reimbursed by liberal deductions of the remaining costs from resource rents. The market measures the rent value of land. The resource rents paid by society would be slightly less than that now collected both publicly (taxes) and privately (interest). The price spread of resource rents between the choice sites and lower-valued sites must be maintained. The current private resource taxes, both interest and rents, are converted to socially-collected land rent that would be slightly lower than the former combination of taxes and land payments.
Society Paying Resource Rents to Themselves and Taxes Disappearing is Key to the Community Social-credit Process According to Gore Vidal: In 1986 the gross revenue of the government was $794 billion. Of that amount, $294 billion was Social Security contributions, which should be subtracted from the National Security State. This leaves $500 billion. Of the $500 billion $286 billion went to defense; $12 billion to foreign arms to our client states; $8 billion to $9 billion to energy, which means, largely, nuclear weapons; $27 billion to veterans‘ benefits, the sad and constant reminder of the ongoing empire‘s recklessness; and finally, $142 billion to loans that were spent, over the past forty years, to keep the National Security State at war, hot or cold. So, of 1986‘s $500 billion in revenue, $475 billion was spent on National Security business.... Other Federal spending, incidentally, came to $177 billion ... which is about the size of the deficit, since only $358 billion was collected in taxes.23
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In 1929, federal government expenditures were 1% of GNP and at the peak of the Cold War they were approximately 24%.24 David Stockman calculated that after deducting bureaucratic waste and payments to law firms and lobbyists and trade associations in rows of shining office buildings along K Street in Washington; the consulting firms and contractors; the constituencies of special interests, from schoolteachers to construction workers, to failing businesses and multinational giants, all of whom came to Washington for money and legal protection against the perils of free competition ... that leaves seventeen cents for everything else that Washington does. The FBI and national parks, the county agents and the Foreign Service and the Weather Bureau—all the traditional operations of government—consumed only nine cents of each dollar. The remaining eight cents provided all the grants to state and local governments, for aiding handicapped children or building highways.25
As those valuations are no longer kept, extrapolating from 1990 land values of $3.7 trillion,26 we can safely say 2010 values of land were well over $10 trillion. Resource rents at 4% of value would be over $400 billion per year. That is over three times the percentage of GDP that ran the peaceful American government in 1929c and to that must be added the resource rents from oil, minerals, timber, etc. To those rental values we must add profits collected once banks are sociallyowned. Obviously, society will have adequate funds for all essential services. When necessary to regulate commerce, other taxes are proper, but those funds should also be returned to society through social services. For example, ecological taxes can support pollution-free energy development and resource conservation. The proper level of sin taxes, alcohol, tobacco, etc, would lower disease through lowering consumption and the funds collected would offset health care costs incurred from such habits. Machinery and inventory are relatively easy to obtain; it is the price of land that restricts ownership of farms, businesses and homes. While land prices would drop close to zero, use-values and productive ownership rights would increase. Commerce would flourish as business people, farmers, and other entrepreneurs, all true producers, would be able to start businesses with only the capital necessary to buy buildings, machinery, and inventory. They do not have to purchase monopoly values that, now in the form of much lower use-values, belong to everyone. The 2007 budget was $2.4 trillion. But Social Security is a paid-for insurance, not rightly part of that budget, and that also applies to health care. With costs hidden in other parts of the budget, the actual cost of the military is far above the $439.3 billion listed. Assuming Stockman‘s estimate that only 17 cents of each budget dollar will operate ―all the traditional operations of government,‖ those needs in that year‘s budget were $470 billion. c
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Resource rent being paid to society out of cash flow means only hard working and talented people would own farms and businesses. Labor costs to industries and businesses would be reduced by whatever taxes labor previously paid. The elimination of all taxes, and a lowering of finance capital costs makes replacing all taxes with socially collected resource rents and banking profits a bargain for any business. Although society would be enormously richer, land will not have monetized (capitalized [monopolized]) value against which money can be loaned. The sale value would be calculated as the rental value one pays to society monthly or, as in the case of farmers, annually. Society, not the landowners, puts that value there by increased population, education, roads, water systems, sewers, electricity, communication systems, etc. Resource rents, profits of socially-owned banks, and all other rental values from nature‘s resources and technologies would be returned to the people through the cost of social services—measured in employed labor time to provide it—dropping at least 50%. Opportunities to extract wealth from its proper owners will be almost nonexistent, and all would be well cared for, even as all the functions and services of government (universal health care, retirement, infrastructures, etc.) are well funded. When society collects the rental values of the land and natural resources, which nature offers to us all for free, the huge blocs of capital, previously buying and selling those capitalized appropriated values must be destroyed. The high values they represented, have been transposed into much lower, equally-shared, use-values. Each now has a human right to their share of land and resources for homes, businesses, or industries. If the remaining productive jobs are shared, and labor paid equally for equally-productive work, those quintuple gains from abandoning the private collection of rental values (rights to land at no initial costs as a human right, those socially-collected social-credits building economic infrastructure, and no taxes to pay) will become even greater gains by employment outside the home lowering to two to three days per week. Each citizen of that society, or the world if so applied, will have the opportunity for a quality life. Michael Hudson and Baruch A. Levine, in Privatization in the Ancient Near East and Classical World, trace the 5,000 year history of privatization of nature‘s wealth. Restructuring those aristocratic exclusive titles to conditional titles, as applied in this thesis, has, in one stroke, retained the claimed efficiencies of privatization—private property, individualism, competition—even as it restores, in modern form, the commons that was the original economic structure for every people on earth. A study of the five books on property rights law in this footnote will alert one that this subject is in continual discussion in America‘s cour-
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trooms and collective rights trump private rights if it can be shown as imperative and just.d 1 M Gaffney & F Harrison, Corruption of Economics, (London: Shepheard-Walwyn, 1994), pp. 13, 193. 2
All works of Henry George and many authors writing on him are available from the Robert Schalkenbach Foundation, 41 E 72 St, NY, NY 10021 (212.988.1680)
3 Michael Parenti, Power and the Powerless (New York: St. Martin‘s Press 1978), pp. 184-85, quoting Jean Jacques Rousseau, ―A
Discourse on the Origins of Inequality,‖ in The Social Contract and Discourses (New York: Dutton, 1950), pp. 234-85. 4 Kropotkin, Petr, Mutual Aid, (Boston: Porter Sargent Publishing Co., no date) p. 225. 5 Ibid., p. 226 6 Ibid., pp. 234-35 7 Ibid., p. 226. Read also George Renard‘s Guilds in the Middle Ages (New York: Augustus M. Kelley, 1968), chapters 7-8. 8 Lewis Mumford, The City in History (New York: Harcourt Brace Jovanovich, 1961), p. 264; Angela Lambert, Unquiet Souls (New York: Harper and Row, 1984), p. 6. 9 Charles A. Beard, Economic Interpretation of the Constitution (New York: Macmillan, 1941), p. 28; Howard Zinn, A People’s History of the United States (New York: Harper Colophon Books, 1980), p. 48. 10 Zinn, People’s History, p. 48. See also Howard Zinn, The Politics of History (Chicago: University of Chicago Press, 1990), pp. 61-68. 11 Herbert Aptheker, The Colonial Era (New York: International Publishers, 1966), pp. 37-38. 12 Zinn, People‘s History, p. 83; Herbert Aptheker, The American Revolution (New York: International Publishers, 1985), p. 264, quoted in Beard, Economic Interpretation, p. 23; Petr Kropotkin, The Great French Revolution (New York: Black Rose Books, 1989), p. 143. 13 Beard, Economic Interpretation, pp. 23, 27-28, quoting C.H. Ambler. 14 Olwen Hufton, Europe: Privilege and Protest (Ithaca, NY: Cornell University Press, 1980), p. 113. 15 Herbert Aptheker, Early Years of the Republic (New York: International Publishers, 1976), p. 125; Abraham Bishop, Georgia Speculation Unveiled (Readex Microprint Corporation, 1966), in forward. 16 James Wessel, Mort Hartman, Trading the Future (San Francisco: Institute for Food and Development Policy, 1983), p. 14. 17 Quoted by Peter Lyon, To Hell in a Day Coach (New York: J.B. Lippincott, 1968), p. 6. See also Edward Winslow Martin, History of the Grange Movement (New York: Burt Franklin, 1967); Joe E. Feagin, Urban Real Estate Game (Engelwood Cliffs, NJ: Prentice-Hall, Inc., 1983), pp. 57-58; speech by U.S. Representative Byron Dorgan, North Dakota, the statistics researched by his staff and quoted in The North Dakota REC (May 1984). 18 Lyon, To Hell in a Day Coach, p. 6. 19 Adam Smith, The Wealth of Nations (NY: Modern Library Ed, Random House, 1965), pp. 247, 647, 773-98.
101 Famous Thinkers on Owning Earth (New York: Robert Schalkenbach Foundation); Durand Echeverria, The Maupeou Revolution (Baton Rouge: Louisiana University Press, 1985), p. 182; Guy Routh, The Origin of Economic Ideas (Dobbs Ferry, NY: Sheridan House, 1989), p. 62; John Kenneth Galbraith, Economics in Perspective (New York: Houghton Mifflin, 1987), chapter 5, especially pp. 55, 168; Mark Blaug, Great American Economists Before Keynes (Atlantic Highlands, NJ: Humanities Press International, 1986), p. 86. 21 Herbert Spencer, Social Statics (New York: Robert Schalkenbach Foundation, 1995 unabridged edition); Dan Nadudere, The Political Economy of Imperialism (London: Zed Books, 1977), p. 186; Phil Grant, The Wonderful Wealth Machine (New York: Devon-Adair, 1953), pp. 416, 434-38; Hufton, Privilege and Protest, p. 113. 22 101 Famous Thinkers. 23 Gore Vidal, ―The National Security State: How To Take Back Our Country,‖ The Nation, June 4, 1988, p. 782. 24 E.K. Hunt, Howard J. Sherman, Economics (New York: Harper and Row, 1990), p. 511. 25 Wm Greider, The Education of David Stockman and Other Americans (NY New American Library, 1986), pp. 6, 17. 26 Samuelson, ― Great Global Debtor,‖ p. 40. 20
Laura Underkufler, The Idea of Property: Its Meaning and Power; Janet Dine, Andres Fagan, editors, Human Rights and Capitalism; Marjorie Kelly, The Divine Right of Capital: Dethroning Corporate Aristocracy; Stephen R. Munzer, A Theory of Property; Jeremy Waldron, The Right to Property d
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22. A Modern Technology Commons Lowers Consumer Prices Fifty Percent or More
The original meaning of a patent was, ―A grant made by a government that confers on an individual fee-simple title to public lands.‖ This affirms our analysis that patent monopolies were patterned after aristocratic exclusive titles to land. Copying the legal design of land and patent monopolization, later monopolies were established through licenses. Before the advent of industrial and finance capital, all sustenance for life and all wealth were processed directly from land. Finance capital is the money symbol for industrial and distribution operating capital, and these factories and distribution systems are only extremely efficient tools to process and distribute products from the land. So the monopolization of finance capital and industrial capital are only extensions of the monopolization of land. When wealth began to be produced by industrial capital as well as land, powerful people undertook to lay claim to (monopolize) those tools for the production of wealth just as historically they had monopolized land to lay claim to the wealth it produced. If you claim technology is produced by labor and is not a part of nature, put yourself in the position of the rest of the world when denied its use even if independently invented. Or consider technology thousands of years old, patented within monopoly capitalism‘s unequal property rights laws, and denied its free use even to those who have used it for those millenniums. We addressed a money system as a social structure known for centuries so, unless it is monopolized to lay claim to unearned wealth, and thus create a capitalized value, there is little there to own. All technologies are a part of nature waiting to be discovered and thus honest ownership can only be under conditions protecting the rights of all to their share of the wealth produced by efficient production and distribution technology. Communication systems are a natural monopoly in the same sense as are sewers, water systems, electric systems, natural gas, roads, railroads, and garbage
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collections. It is well understood that duplicating such services through competing private ownerships is highly wasteful economic nonsense. Social technologies are also a part of nature and such key knowledge has been monopolized whenever possible, money and banking for example. Systems of government are also social technologies and any thought of monopolizing governments would be ridiculed. Yet most governments are monopolized through power, witness the firm control of imperial governments throughout history by the very monopolies we are exposing. For centuries, as modern economies developed, the hidden hands of the alert and powerful were busy structuring property rights to gain, or retain, title to wealth-producing sectors of the economy. Patent laws were being structured to monopolize technology; stock markets were being structured to both harvest those profits and further monopolize industries. That stock markets are crucial to raising investment capital in a modern economy is a myth. Most stock traders have no contact with new issues of stock and those who do are primarily taking an already established private company public. Most corporate investment needs are financed from profits, liberal depreciation schedules, and borrowing. A stock is taken public primarily to put those values in play to join in the game of making money betting on whether stocks will go up or down, which is really gambling, not producing. Expanding markets means increased profits capitalized into the value of a company‘s stock and, with the potential for profits thoroughly analyzed by the market; those capitalized values are claimed before those profits are banked. ―Behind the abstraction known as ‗the markets‘ lurks a set of institutions designed to maximize the wealth and power of the most privileged group of people in the world, the creditor-rentier class of the first world and their junior partners in the third.‖1 Restructuring exclusive patent laws to pay inventors well, and place those patents in the public domain, would erase those centuries of carefully crafted monopoly laws. The purpose is to create unearned values above and beyond intrinsic values created by labor; in short, to monopolize values created by nature. Under that simple legal change to conditional patent titles, the inventors are well paid and their patents placed in the pubic domain. The monopoly structure—85% of the offices and labor within stock markets where those profits are collected—disappear, and the price of consumer products drop by at least half (we are confident it is closer to 75%). Current capitalized, non-tangible, values of corporations have been transposed into much lower use-values. Combining those social savings with free trade between equally developed regions, with managed trade between unequally developed regions, and dropping protections in step with the harmonization of previously unequal economies, would protect both labor and capital worldwide. The masochistic destruction of jobs and capital under current internal economic and world trade structures
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based on monopolization of technology and control of resources would be eliminated.
Capital Destroying Capital Within Internal Economies Moving factories offshore for low-paid labor sharply reduces buying power. The profits from lower cost production sold on the high-priced markets of the imperial centers go into corporate coffers become capitalized profits distributed to owners of stock, corporate managers, and stock traders. Those increased profits, higher capitalized values, which—so long as there is broad ownership of stocks and an increase in taking in each other‘s wash, cooking each other hamburgers, or giving each other heart transplants (service industries) to maintain the circulation of money— temporarily replaces buying power once earned by labor.a By expanding productive capacity without expanding equal buying power, capital destroys capital. It is unrealistic to assume this will be the first time in history those rising stock and real estate values, that have been providing a substantial share of consumer buying power, will not go down and collapse the imperial center‘s buying power. It is happening as we speak (2008-10). Japan‘s industrial capacity operated at 65.5% of capacity for 15 years and by 2010 much of the industrialized world was producing at two-thirds capacity. Michael Moffit quotes Stanley J. Mihelick, executive vice-president for production at Goodyear: Until we get real wage levels down much closer to those of Brazil‘s and Korea‘s, we cannot pass along productivity gains to wages and still be competitive.‖ With factory wages in Mexico and Korea averaging about $3 an hour, compared with U.S. wages of $14 or so, it looks as if we have a long way to go before U.S. wages will even be in the ball park with the competition. That the decline of U.S. industry is the natural and logical outcome of the evolution of the multinational corporate economy over the past twenty-five years has been a bitter pill to swallow, and it will become increasingly distasteful as time goes on. One consequence will be a nasty decline in the standard of living in the United States.... [W]e have the outlines of a true vicious circle: the world economy is dependent on growth in the U.S. economy but the U.S. domestic economy is [now] skewed more towards consumption than production and investment, and this consumption is in turn sustained by borrowing—at home and abroad.... The deal with surplus countries essentially has been as follows: you can run a big trade surplus with us provided that you put the money back into our capital markets.2
The excessive accumulations of capital by stateless corporate imperialists, and the denial of capital to the world‘s powerless, are two sides of the same coin. Forty years ago the United States economy was 30% services and 70% industrial. In 2008, it was 15% industrial and 85% services. a
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There is too little buying power among the dispossessed to purchase all the production of industrial capital. When there is already an excess, capital building more industry without developing more consumer buying power, capital will destroy other capital: So long as global productive capacity exceeds global demand by such extravagant margins, somebody somewhere in the world has to keep closing factories, old and new.... South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh.3
Several auto companies appear headed for bankruptcy as we speak (2010). When China (which is considering buying in-trouble auto companies) and other developing nations develop brand names, and sells cars, and other consumer products, on the world market 40% below current prices, both overseas and home profits of auto makers, and the producers of other consumer products, will disappear. So will American and European jobs.
Labor Should Employ Capital That capital is properly owned and employed by labor is recognized by Adam Smith. His bible of capitalism, Wealth of Nations, states: ―Produce is the natural wages of labor. Originally the whole belonged to the labourer. If this had continued all things would have become cheaper, though in appearance many things might have become dearer.‖4 The ―appearance of becoming dearer‖ is because each worker would have been fully paid. Things would have been cheaper because the purchasing power of those fully-paid workers would have advanced in step with productive capacity. If that philosophy had been followed, those who currently make their living through extracting wealth from labor would have to move into the ranks of productive labor. Those well-paid workers will purchase more from other fully-paid workers; with that increased buying power, others would produce more to take advantage of that market. In short, purchasing power, which is so hard to generate under monopoly rules, would have developed in step with the productive power of easily-built industrial technology. If monopolization had been avoided, labor would have been fully paid and the world would have developed rapidly, without destructive wars, without poverty, and without financial and economic crashes such as the world currently faces.b
This cannot happen until democracy is established. If a crisis transposes American society into a full democracy, a restructuring to full and equal, inclusive, property rights will eliminate those monopolies. b
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If labor owned the capital it produced, then labor would employ, rather than be employed by, capital. When monopolized, capital‘s use can be denied to labor at any time, and it will be denied if no profit, earned or unearned, is made. The natural order of labor employing tools (capital) is reversed. If land and capital (both industrial and financial) were not monopolized, land, labor, and capital could freely combine to produce social wealth, workers would receive their full wages from what they produced, and the owners of industry would receive full value for use of their capital. Elimination of the monopolization of technology under current stock market and patent structures would increase social efficiency equal to the invention of money. As all people are stakeholders in their nation‘s—and the world‘s—economy, no economic sector should have excessive rights (monopolization, structured within property rights law, denying others their rightful share of what nature offers to all for free). Just as with land, we are accustomed to wealthy people claiming ownership of the nation‘s industrial capital. We are taught this is the proper and most efficient social arrangement. Therefore we do not recognize the obvious; capital is social wealth, composed of all tools of production which were produced by labor. Thus honest capital, both industrial and financial, is but stored labor. Those technologies, industrial capital, are only a part of nature that has been discovered, and all should be entitled to the opportunity of employing that capital, or being employed by it, and receiving a fair share of what is produced.c Capital, however, is often more productive under private ownership and, when this is so, private ownership is justified. In such cases, entrepreneurs, whose special talents lead to increased production, properly buy industrial capital, at a fair price, from those who produced it. A substantial share of society‘s capital has been justly claimed in this manner. Capital that is obtained by means other than trading useful labor—physical, intellectual, innovative, or special talent—is an unjust interception of wealth produced by others. Those natural values are properly distributed to all through patents placed in the public domain sharply lowering consumer prices. This thesis is easily tested. Factories are only a series of tools. Without tools you must pay a shop to repair anything. Most homes have simple tools and carry out simple repairs in a few minutes at no cost. Monopolize those tools in the same manner as industrial technology is monopolized, and you have to pay someone else to do those repairs. Likewise, eliminate the monopolization of technology through the patent process, and other communities and societies can produce their own consumer products. Two massive wastes have been eliminated, preventing others‘ use of technologies, and the superstructure—the unneeded share of stock markets— managing that monopoly. This first is proven by the rest of the world quickly industrializing under those just rules and the second by the roughly 50% (very possibly 75%) drop in price of consumer products and services that would occur. c
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Capital which is more efficient under social ownership belongs to all society, with all citizens receiving the profits. For example, no profits are directly distributed from the increased wealth produced by highways, airports, harbors, or post offices. But the wealth society is able to produce and distribute, through the common use of these natural monopolies, is many times more than construction and maintenance costs. Just as each ones‘ share of the usevalue of land, in a modern commons, is realized by all through socially collected resource rents, the efficiency gains of socially-owned natural monopolies are distributed to all, silently and efficiently. Through far cheaper production-distribution costs, and elimination of massive amounts of labor and resources being wasted; none of the wealth properly belonging to all in roughly equal shares will be claimed by monopolization. Much of what is properly social capital,d ―honest‖ private capital, and ―fictitious‖ capital are all currently lumped together and collectively treated as private capital. Ownership of capital is considered proof it was justly earned, and that the owner deserves compensation for its use. Below we distinguish between social, private, and fictitious capital. Once identified, the proper owners can claim their capital and the profits it produces. Fictitious capital, like that in banking and land monopolization, can be replaced by socially collected, and thus socially owned, finance capital.
Efficient Socially-Owned Capital The difference between what is properly social capital and private capital is that everybody uses social capital. It forms a natural monopoly, while proper private capital is used only to produce products or services for specific needs of specific people. Capital required for society‘s basic infrastructure, is properly part of a modern commons through a modern legal-social structure. This includes not only highways, airports, harbors, and post offices, but also railroads, electric power systems, community water systems, banking and communication superhighways. Most recognize these natural monopoly infrastructures should be socially owned. Although such facilities and services are publicly held in most societies, U.S. citizens are unaccustomed to railroads, electric power systems, banking, and communications being socially owned. These are natural monopolies and all claims of efficiency under private ownership are rhetorical covers to hide the siphoning of the fruits of others‘ labor to those who hold title to those economic crossroads.5 Social capital is also used by some to refer to the unquantified—but real—value of social interconnections that aid the functioning of society, typically meaning a higher education level. d
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Almost 24% of America is served by consumer-owned electric utilities, 13.4% are publicly owned and 10.2% are rural cooperatives. Privately-owned companies charge 42.5% more for electricity than those publicly owned. Yet, since they serve population centers with the highest density of customers per mile, privately-owned electricity costs should be far lower. The difference in electricity costs between privately-owned and publicly-owned electric companies is even greater than these statistics show. Not only do they sell cheap electricity to private companies, the publicly-owned utilities also provide enough profits for some of those communities to build swimming pools, stadiums, and parks.6 Matthew Josephson‘s classic Robber Barons, Peter Lyon‘s even more profound To Hell in a Day Coach, and Edward Winslow Martin‘s History of the Grange Movement cover how the American railroads were built at public expense. As much as half the funds collected for building them were pocketed and over 9% of the land in the United States was deeded to these railroads. The pocketing of those funds, claiming title to these natural monopolies, and being deeded that land, were little more than thefts of public wealth. Martin describes the building of the Union Pacific Railroad as perhaps the most flagrant example but the pattern was typical: Who then was Crédit Mobilier? It was but another name for the Pacific Railroad ring. The members were in Congress; they were trustees for the bondholders; they were directors, they were stockholders, they were contractors; in Washington they voted subsidies, in New York they received them, upon the plains they expended them, and in the Crédit Mobilier they divided them. Ever-shifting characters, they were ubiquitous—now engineering a bill, and now a bridge—they received money into one hand as a corporation, and paid into the other as a contractor. As stockholders they owned the road, as mortgagees they had a lien upon it, as directors they contracted for its construction, and as members of Crédit Mobilier they built it.... Reduced to plain English, the story of the Crédit Mobilier is simply this: The men entrusted with the management of the Pacific road made a bargain with themselves to build the road for a sum equal to about twice its actual cost, and pocketed the profits, which have been estimated at about thirty millions of dollars—this immense sum coming out of the taxpayers of the United States.7
―By 1870 the states alone had given $228,500,000 in cash, while another $300,000,000 had been paid over by counties and municipalities.‖ Of course, those millions of 19th century dollars would be hundreds of billions in inflated 21st century dollars. In the process of building those railroads, promoters skimmed off possibly one-half of this public investment and stockholders‘ capital, while simultaneously claiming 9.3% of the nation‘s land through land grants.8 With enforced privatizations through imposition of Reaganism-Thatcherism, the first heavy promoters of this philosophy, on the successfully destabilized former Soviet Union, social wealth was being placed under exclusive private
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ownership in the 1990s at a rate that makes America‘s robber barons of the late 19th and early 20th centuries look like country bumpkins. Those defeated nations were paid pennies on the dollar to give up title to their natural wealth, their banks, and their industrial capital. The citizenry, of course, had little to say. In many cases, if not most, one member of these less-than-honest groups, to put it mildly, would be signing as government agent and another was the buyer. Obviously there is no savings to society from the private ownership of a natural monopoly such as education, railroads, electricity, post offices, power systems, sewers, water systems, communication systems, etc. And, as shown in chapter 24, the true cost of a communications superhighway, when properly structured under a public authority and used in common, would be only pennies per dollar of current costs. The basic infrastructures addressed above are integral to a nation. Society is a machine; even though these basic facilities do not directly produce anything, society cannot function without them. They are an integral part of production, and are just as important to social efficiency as modern factories. To demonstrate this, compare the labor costs of a society with an undeveloped infrastructure to those of a developed society. Vacation to any wilderness park, hike for a day, and calculate how efficient virtually any economic activity, such as sending and receiving mail, would be from there. In the 18th century, a letter traveling by U.S. mail from New York to Virginia, 400 miles, took four to eight weeks and cost 60 cents a page.9 Today it is 44 cents, possibly equal to less then a penny 200 years ago, for several pages anywhere in the nation and that letter normally arrives within one to three days. When China built a road into the almost inaccessible Tibet, the price of a box of matches dropped from one sheep to two pounds of wool.10
Efficient Privately-Owned Capital Commercial activities producing for variable individual needs, rather than everybody's needs, are properly privately owned. Thousands of personal preferences—clothes, furniture, jewelry, hobbies, recreational activities, etc—cannot be provided efficiently by a public authority. Such personal needs can only be assessed by perceptive and talented individuals close enough to recognize and fulfill those needs. The capital to provide such services is more productive under private ownership. Most of the construction and production for basic social infrastructure operated under public authority is quite properly provided by tens of thousands of privately-owned industries. This free-enterprise, privately-owned, capital can, under contract, accommodate the needs of public institutions. We see this every day in contracts to build infrastructure.
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Fictitious Capital Few economists agree on exactly what constitutes capital. Most include all wealth that produces a profit—titles, stocks, bonds, etc. But, although this paper has a firm claim on what is rightfully part of society‘s income, much of it was skimmed off and resurfaced in another investment. The earnings of the skimmed off share of those first certificates is properly defined as ―wealth extracted through fictitious capital.‖ Bonds used to construct harbors, deepen riverbeds, and build railroads represent true capital. But, if 50% were pocketed and reinvested elsewhere, that leaves two dollars in claims against each dollar of value of the original infrastructure contract. In the previous example of building the Union Pacific Railroad, half the money was used to build; the other half was pocketed and reinvested elsewhere. That share of those certificates claiming a part of social production and yet had produced nothing was fraudulent. This fictitious capital may represent wealth to the owners, but it is not, on balance, increased wealth to society. There are three physical foundations to production—land, labor, and capital. Land commands rent, labor is paid wages, and honest interest can only be for the productive use of honestly earned capital (stored labor). Patent monopolies capitalize stock values far above tangible values (use values), and those fictitious values demand profit equality with real values. Through excess profits on unearned wealth, the production of others‘ labor is siphoned from those who produce to those who do not. The share of finance capital demanding payment, and yet produces nothing (the 95% of current finance capital which is the primary subject of this Part III), is properly labeled ―fictitious capital.‖ Restructure to a modern commons throughout the economy and those huge blocs of capital currently buying and selling capitalized unearned values disappear, and all that remains are equally-shared use-values. The doubling in economic efficiency (employed hours and resource use drop by half, and the reasons for war disappear) proves those huge blocs of wealth should never have been extracted from their proper owners in the first place. Yes a large share of appropriated capital built industries and infrastructure. But that infrastructure, plus essential social services—education, health care, and retirement—should have been paid for by the unearned money—resource rents and banking profits—those monopolists were banking. That it is necessary to appropriate huge blocs of capital to finance infrastructure, industry, or any other aspect of an economy, is a cover story to justify unearned wealth. If technology had been shared the past 500 years instead of monopolized, it would have spread rapidly across the world and there would have been little poverty and few wars.
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Banking is a social technology which would have spread to the rest of the world right along with mechanical, chemical, electrical, and other technologies. Being far more efficient, thus producing far more wealth, each technological leap can be financed by savings or created money. The increased wealth, both the industry and its production, backs that investment.
Invention, a Social Process There is no isolated, self-sufficing individual. All production is, in fact, a production in and by the help of the community, and all wealth is such only in society. Within the human period of the race development, it is safe to say, no individual has fallen into industrial isolation, so as to produce any one useful article by his own independent effort alone. Even where there is no mechanical cooperation, men are always guided by the experience of others. —Thorstein Veblen
These words from an eminent philosopher of massive waste within our economy are well spoken. The long march of technology leading up to the present sophisticated level is based upon thousands of earlier discoveries—fire, smelting, the wheel, lathe, and screw—and untold millions of improvements on those basic innovations.11 Many primitive, but revolutionary, technologies were discovered by Asian and Arab societies. Greek, Roman, and other cultures, improved upon these methods, which were, in turn, used by later cultures. As social processes build upon the insights of others, Stuart Chase‘s list of inventions of 5000 years ago barely touches the subject: The generic Egyptian of 3,000 B.C., though unacquainted with iron, was an expert metallurgist in the less refractory metals. He could smelt them, draw them into wire, beat them into sheets, cast them into molds, emboss, chase, engrave, inlay, and enamel them. He had invented the lathe and the potter‘s wheel and could glaze and enamel earthenware. He was an expert woodworker, joiner and carver. He was an admirable sculptor, draftsman and painter. He was, and is, the world‘s mightiest architect in stone. He made sea-going ships. He had devised the loom, and knew how to weave cotton to such fineness that we can only distinguish it from silk by the microscope. His language was rich, and he engrossed it in the handsomest system of written characters ever produced. He made excellent paper, and upon it beautiful literature was written.... He had invented most of the hand tools now in existence.... He had worked out the rudiments of astronomy and mathematics.12
There were also wedges, drills, wheels, pulleys, and gears; all were necessary before modern machines were possible. There had to be countless earlier inventions, back to the control of fire, before the Egyptians could have reached even that level of technology. Not only does every modern invention rest on millions of insights going back to antiquity, its development also requires thousands of people with special
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talents. For example, a British scientist‘s accidental discovery of penicillin has benefited almost every person in modern civilization. More people worked to develop and produce this antibiotic for the wounded in WW II than worked on the atomic bomb, and they were all funded with public money. Yet the drug was patented by an American who recognized by obtaining a patent he would have a monopoly with a capitalized value that would lay claim to vast wealth, although he had neither created, nor produced, anything.13 Every innovation is a part of nature. Just like land, oil, coal, iron ore, or any of nature‘s wealth, if something is to be discovered it had to have been there all the time. As technology is a part of nature that has been discovered, everybody should share its fruits. Inventions not only use the insights of millions of people throughout history and prehistory, they also require the support and skills of millions of present workers as well. Stuart Chase estimated at least 5,000 people were involved in contributing data to the writing of his book and they depended on others for their knowledge. These people provided tools, materials, and services: pencils, paper, graphite, rubber, lead, typewriters, telephones, cars, electricity, typing, printing presses, book distribution, banking, and so forth. The people directly involved in Chase‘s knowledge required educators, authors of textbooks, and their educators, ad infinitum. Every one of these consumer items required the labor and skills of thousands of people, some in distant parts of the world such as producers of rubber or tin. Though the labor charge of some is infinitesimal, each is real and definite. Collectively they accumulate a substantial, though incalculable, value.14 While the contribution of any one person to the pool of social knowledge is truly small, the unearned wealth diverted to those who own the patents to social knowledge can be substantial. It has been estimated that, if the emerging world were industrialized to the level of the developed world, the royalty claims would be $1 trillion a year. These royalties would normally be going to people who ―own‖ these efficient technologies but neither invented anything nor labored productively for this wealth. They are designed commercial chokepoints structured into unequal property rights law, denying others their proper share. This is the monopolization of these tools of production, technology, permitting huge overcharges that siphon wealth, properly belonging to all in roughly equal shares, to owners of patents. Consider how expensive consumer products would be if the use of wheels, levers, gears, fire, and thousands of other early inventions could not be used without the payment of royalties. The current huge overcharges create excessive stock market values which become the blocs of capitalized unearned wealth owned by monopolists that—through restructuring aristocratic exclusive titles to nature‘s wealth, patents in this case, to conditional titles—disappear as they are transformed into efficient, relatively equally-shared, use-values. Fully 85% of
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the stock market, where those unearned sums are collected, will disappear if patents were placed in the public domain. Inventors rarely receive much reward for their discoveries and innovations. The few who are compensated receive but a small share of the tribute charged by those who own this social wealth. That a small number of powerful people monopolize inventions, and ever afterwards siphon to themselves unearned wealth properly providing quality living to all, defies both decency and justice. This was well known to prominent inventors and industrialists such as Thomas A. Edison and Henry Ford. Both ―agreed all patent laws should be repealed since they benefit the manufacturer and not the inventor.‖15 Patent laws should be redesigned to be a part of a modern commons, inclusive and equal property rights, in which any person can use that technology by society paying those inventors well and placing those patents in the public domain.
Capitalizing Actual and Fictitious Values Inventions are a ―more or less costless store of knowledge [that] is captured by monopoly capital and protected in order to make it secret and a ‗rare and scarce commodity,‘ for sale at monopoly price[s]. So far as inventions are concerned a price is put on them not because they are scarce but in order to make them scarce to those who want to use them.‖16
The current patent structure capitalizes value far above tangible values (labor values/use-values), through those unearned profits, and without expenditure of productive labor, intercepts wealth that should be funding living standards of productive labor. Where inventions once went unchanged for decades or even centuries, many, if not most, patents are now obsolete before their 20 year life expires. Due to the efficiency gains of the new patents, the owners control both the latest technologies, and the expired patents, of support technologies. Honda‘s exclusive ownership of patents on the stratified charge engine, even though the basic principles for this crucial technology were invented 100 years ago, makes all this quite evident. Corporations are in such powerful bargaining positions that only occasionally will a new invention pose a threat to them. As corporate control of other critical patents limits the inventor‘s options, these patents are bought for a fraction of their true value, or they are patented around, and the inventor receives nothing. Controlling patents is integral to controlling markets: Any move by the neo-colonial state to revoke the patent law as a defensive measure would have very limited results since the market belongs to the monopolies. This becomes quite clear when it is realized that the other markets to which such products would be exported would still have such legislation protecting the same pa-
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tents, and the transnational corporation would be in a position to require compliance. The mere ownership without the actual know-how which is guarded by the monopoly at headquarters would be useless. This is the whole point about monopoly. The world imperialist monopoly market would not exist if such a system of market control were not in operation.17
We view the inventions of 400 to 1100 years ago as primitive, yet in their time these simple inventions could produce, with less labor, both more and better products. Someone powerful enough to control these new techniques could trade one day‘s work for two, three, five, ten or as many days‘ production of other people‘s labor as the efficiency of his invention and political power allowed. If the invention of the windmill could have been monopolized, its owners could siphon to themselves the production of large amounts of others‘ labor. This potential created a dispute between the nobles, priests, and emperor ―as to which one the wind belonged.‖18 A 17th century French patent granted just such a right to selected owners of windmills.‖19 However hard they tried, claiming ownership of the wind was quite difficult. But it was not so with other technologies. The water mill, first used in Europe during the 10th century, permitted one worker to replace as many as 10 others. A stone planer eliminated seven workers out of eight. One worker with an Owens bottle machine could do the work of 18 hand blowers.20 Modern technology has created even greater efficiency gains. Many credit the steam engine with the greatest single increase in productive efficiency. Stuart Chase cites a study by C.M. Ripley of work, costing $230 done by hand labor, which would cost only $5 using electric power.21 Modern electric furnaces and continuous casting have brought the direct labor expended in the steel industry down to only 1.8 hours per ton of steel produced.22 The owner of that first water mill was able to trade his single day‘s work, grinding grain, for seven days‘ labor of a woodworker or blacksmith. In effect he was paid for seven days while working one. The owner of a patented stone planer would likely gain five days‘ value for only one of his own. Owning a patented Owens bottle machine would probably have claimed 12 days‘ pay for each day‘s labor. If the manufacturer in Ripley‘s study had been able to patent that efficiency, he could have charged 20 to 30-times the labor value in his product. However, just like claiming ownership of the wind, it would be difficult to claim exclusive title to electricity and accounts for the drop in costs in Ripley‘s study. Whether a market is in land, or corporate stock, what is being bought and sold under current property rights are primarily values produced by nature, or an aspect of nature, properly belonging to all in relatively equal shares. That value has been confiscated by the cunning and powerful through exclusive titles to the various aspects of nature‘s wealth, and those unearned values are then capitalized in the
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markets by a factor of 10 to 30 times. Modest use-values, properly shared by all, have been converted to massive, unearned, capitalized, values owned by a few.
Royalty Conferring Monopoly Trading Rights is the Origin of Patent Royalties That the owners of patents are entitled to royalties exposes the feudal origin of the term. Patent rights to land and inventions were conferred upon favorites by kings and queens, with the understanding that the person so favored would share the earnings (royalties). In short, the origin of patents is indistinguishable from paying bribes for the privilege of doing business. Such bribes were the precursors of today‘s patent royalties.23 Aristocratic exclusive title to patents, as opposed to conditional title, is the remnant of feudal patent law which must be restructured to attain full rights for all, a human right to the full benefits of evermore efficient technology.
The Ever-Increasing Efficiencies of Technology In final analysis, the foundation of most law is power expressed through military strength. Long before governments protected patents, they were protected by violence. ―The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years.... All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms or fulling vats were broken or carried away.‖24 Those early claims to technology, enforced by violence, were the forerunners of today‘s industrial patents. Those who would control technology have just become more sophisticated. They encode these exclusive rights in legal titles. Today, being accustomed to it, and unaware of society‘s large losses, we accept this as normal. The growing efficiency of textile machinery started the Industrial Revolution. Primitive looms were improved upon by inventions such as Kay‘s flying shuttle, Hargreave‘s spinning jenny, Crompton‘s ―mule,‖ and the power loom. Between 1773 and 1795, the labor time to process 100 pounds of cotton went from 50,000 hours to 300 hours, an efficiency gain of 16,666%.25 That efficiency gain, within a time span of only 22 years, exposes how the owners of these technologies quickly dominated world trade. Quite simply, technology was not shared; it was monopolized through restricting the rights of production to the owners of patents. The widespread use of machine weaving came about only because the technology was copied and the patents ignored. That 16,666% gain in 22 years is dwarfed by 150 power looms, in Formosa, weaving 24 hours a day under the watchful eyes of only one agile female operator on roller skates.26 This is a gain of hundreds of thousands, if not millions, of times in efficiency. The labor com-
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ponent in the price of a yard of cloth produced by modern industry is small. This includes the labor to smelt the ore, and to fabricate the machines which is stored in that industrial capital. The economically powerful will say, ―They are not claiming the production of anyone else‘s labor as there is hardly any labor involved.‖ But this is exactly how wealth is siphoned to those who monopolize the tools of production. The price charged for those products, by the holders of exclusive titles to nature‘s wealth, is far above the cost of production, and others are forced to trade large amounts of their labor for what was produced with a small amount of labor. All society is denied the full benefit of cheap industrial goods when labor is charged more than they are paid to produce and distribute that product. If a product requires one hour‘s labor to produce and distribute, and then sells for three hours‘ of labor value, it effectively siphons away the value produced by two hours of labor value. If production is traded at the same value to a country where equally-productive labor is paid one-third as much, it siphons away nine hours of labor value, see chapter one. Standard economics and accounting do not measure this overcharge because it shows up in stock prices far beyond intrinsic (labor created) value. If that cloth were priced relative to the price paid labor within the region sold, including fair interest and depreciation for the stored labor value represented by that machinery, then it would be priced within reach of the world‘s low-paid labor. A bushel of wheat required three hours to produce in 1830 but only 10 minutes in 1900.27 A call to Montana State University in Bozeman revealed that in 1986 it took only 3.2 minutes of labor to produce one bushel of dryland Montana wheat. Other crops have similar efficiency gains. Railroad labor costs per ton-mile in 2010 were roughly 2% that required 95 years earlier, and that efficiency gain is dwarfed by the five million percent gain in transportation efficiency over the horse and wagon only 180 ago. The public did receive a large share of the labor savings in textiles, agriculture, transportation, and other technologies. With the common people's newly won rights, the U.S. Constitution and Bill of Rights, and with the enormously wealthy and sparsely inhabited lands of the Americas, the gains were just too great for the powerful to claim them all. However, due to the failure to increase the buying power of all labor in step with the productivity of capital, there is more production forgone and wasted than that which society so gratefully receives. Ownership of a key technology, the telephone, was Bell Telephone‘s advantage when that monopoly was established. Inventions not controlled by Bell, such as the dial phone, were suppressed for many years. The telegraph and telephone reduced communication costs by an amount comparable to the savings created by new technology in textiles and transportation. These efficiency gains
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of technology, protected by patents, produced the monopoly profits that established Bell Telephone, a corporation larger than any in textiles or transportation. At 10 times the capacity for 10% the cost (1% the cost per unit of capacity), and assuming powerful low frequency spectrums able to pass through mountains are reserved for social use, a communication superhighway has the potential of reducing communication costs to 1% that of today. Under those efficiencies, still advancing rapidly, the whole world has the potential of gaining their freedom. Henry Ford‘s assembly line was a milestone in industrial technology that rapidly picked up the pace of the Industrial Revolution: The factory is not a new tool but an organization of production that eliminates the periods of idleness in the use of tools, machines, and human beings that are characteristic of agrarian and artisan production. In the artisan‘s shop the saw, chisel, file, and so forth are idle while the hammer is being used. In the factory all the tools are simultaneously in use in the hands of specialized workers; production is ―in line‖ rather than ―in series.‖ But production in line requires a large scale of total output before it becomes feasible. The division of labor is limited by the extent of the market, as Adam Smith told us. But transportation, urbanization, and international trade provided a market of sufficient scale.28
During 1913 alone, the time required to assemble an automobile dropped from 728 minutes to 93. Until that year, the wage rate averaged $2.50 for a 10-hour day. Ford doubled the daily wages of his workers and reduced their hours from ten to eight, all while lowering the price of his cars.29 This was unheard of in those times and drew much criticism from business and the press. What Ford knew, and others did not, was the profits were so large that, with that 800% efficiency gain, the wages could have been increased to almost $20 per day. Ford was strongly opposed by his managers and other investors. But Emerson had reached Ford on the morality of not maximizing the profit potential of his monopoly. However, there were attempts to monopolize the emerging auto industry. George Baldwin Seldon, a patent lawyer, understood that, as the law was structured, patents laid claim to wealth properly distributed to others. In 1899, he set his mind to working out the precise legal definition and wording of a patent that would give him the sole right to license and charge royalties on future automobile development in America.... Seldon had gone into partnership with a group of Wall Street investors who saw their chance to cut themselves in on the profits of the growing American car industry.30
The near success of Seldon, and his partners, in patenting the automobile, illustrates the basic injustice of the current patent structure. Neither Seldon, nor these investors, had anything to do with the invention of automobiles. The first
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ones had been built in Europe 14 years earlier, and virtually hundreds of auto companies were already in existence. Yet, if anyone had succeeded in patenting the process of building automobiles, every purchaser of an automobile would have had a part of the production of his or her labor siphoned to the owners of that patent who had invented nothing, and had done no productive work. Seldon‘s attempt at patenting the principle of the automobile is being successfully accomplished today in the patenting of processes. Corporations are being formed to patent embryo transfers, gene splicing, other advanced medical procedures, even title to human genes and genes of plants domesticated by primitive societies thousands of years ago. Any doctor who wishes to use these new procedures, and any farmer who grows a patented plant, has to obtain a license and pay a royalty.31 Totally new, manmade, identifiable, synthetic cells are being patented as we write. The current race to patent human genes clearly outlines the monopoly cost of patent laws. There are thousands of human genes directly affecting human health. As patent laws now stand, some corporation is going to have a patent on, and thus own, each gene. Let us say that there are 300 genes to be studied in a standard gene test and the royalty to be paid to each patent holder only $1 per gene. If a couple wishes to test themselves for defective genes before conception, or their unborn child shortly after conception, the cost would be $300. Sixty minutes, July 29, 2001, suggested the possibility of $1,000 royalties. This added tax, though common to medical equipment and drugs, has not previously been added to the cost of an operation or food crops. If ownership of procedures and food plants had been established years ago, every bill for an operation, and the cost for every plate of food, will have royalties added, and thus reduce the rights of everyone else, some to the extent of death or hunger. Only those licensed by the patent holder could perform operations or raise crops. Every improvement in patented surgical procedures, or improved crop strains, would also be patented and, as technological improvement is ongoing, the patent‘s monopoly would never run out. Thus Microsoft‘s tens of billions of dollars of software overcharges, all built from purchasing the DOS computer operating system for $3,000 and patenting it, led to later patents eventually valuing Microsoft at hundreds of billions of dollars. The cost to society can be imagined if each producer or service provider had to pay a patent holder for the use of fire, wheels, wedges, levers, and gears. Inversely, the savings are evident in their free use when in the public domain. About 7,000 patents worldwide are based upon indigenous knowledge of India. After spending millions to get one plagiarized patent invalidated, India is creating a tens-of-thousands-page Traditional Knowledge Data Library (TKDL) to be available to every patent office in the world.32
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There is one recent and remarkable exception to this rule. In parts of Africa, ―as many as sixty percent of the people over age fifty-five were partly or completely blind‖ from becoming infected with a parasitic worm. Possibly 18 million people were affected. The pharmaceutical corporation Merck and Company owned the patent on a drug, Ivermectin, used to kill worms in animals. In October 1987, Merck announced they would provide this drug free of charge for Africans afflicted with this parasite. The company chairman, Dr. P. Roy Vagelos, noted, ―It became apparent that people in need were unable to purchase it.‖33 Here the loss to society from aristocratic exclusive title was so obvious, and devastating, these corporate executives made a moral decision to save the sight of millions of people. The cost to them was negligible; the gain to society was beyond measure. Cuba restoring vision to 4.5 million treatable blind Latin Americans by 2015 without charge, 40% of Cuba‘s 70,000 doctors at work in many impoverished areas of the world, Cuban education equaling the best in the world, and Venezuela and Bolivia in the early stages of copying Cuban successes, are further examples of how cooperation can quickly alleviate poverty while monopolizations only entrench it deeper. An intense battle was fought over life saving drugs for AIDS victims. These drugs can be produced for a tiny fraction of the monopoly prices currently asked. Even at that fractional price few in the impoverished world can afford those essential drugs and, at the monopolized price, almost no one can afford them. Drug companies have reneged on agreements to lower prices for Aids victims in Africa, and that struggle for what is obviously a human right is still on-going (2008-10). There is a loss to society from exclusive control of any technology, but it is usually not as obvious as in these dramatic examples, where the patent rules of exclusive use were abandoned. These examples demonstrate the original morality of the medical community when ―to patent an essential medicine was considered morally indefensible.‖34 It is also morally indefensible for other inventions crucial to society. The Gaviotas community, regenerating the primeval Amazon forest of Colombia‘s barren Los Llanos plains, while building a model community using modern production methods to live off the land, does not believe in patenting technology. Its inventions, such as a cheap, 100-pound, wind-mill driven water pump, and a cost-free, maintenance free, air conditioning technology, are spreading throughout Latin America.35 Innovation and technology thus create large reductions in labor costs in all segments of the economy. Most are more modest than the previous examples, but reductions of 90% are common. Average increases in efficiency of 30% per decade36 while labor‘s pay remains static, or even shrinking, exposes capital as banking all efficiency gains (plus a part of what once went to labor) as capitalized profits. This alerts us that, if technology had been shared instead of monopolized, the entire world could have industrialized in step with the increased efficiencies
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of technology. Throughout those centuries, assuming equal rights to the fruits of nature had been taught, as opposed to the teachings of Adam Smith‘s winner take all philosophy; there would have been little poverty, and few wars. With each enjoying full and equal use rights, the world would have been, at all points in time, many times richer in use-values than under monopoly capitalized values. Most wars and poverty throughout the world today have their origins in millions of unequal property rights laws the past 700-plus years, through which the powerful monopolized technology. Two of the most obvious were: 1) Kaiser Wilhelm buying technology wholesale from his grandmother, England‘s Queen Victoria and cousin, King George V.37 That breach of monopolist‘s absolute rule to never transfer technology to any other nation was the direct cause of WW I. 2) The massive suppression of the world‘s breaks for freedom the past 65 years. That this is conscious policy is again proven by providing technology to the defeated nations, Germany and Japan, and to Southeast Asia, so as to halt fast expanding socialism with their more equal property rights laws. Corporations fleeing high-paid labor led to an abandonment of the rule to not share technology with other cultures. That accident of history, technology developing outside the imperial-centers-of-capital, again proves the waste and inefficiency of the monopoly system. Overcharges cannot exist if labor is fully paid for their work. It only appears proper because people are accustomed to a subsistence wage for most labor, equally accustomed to all increased profits going to owners and management, and unaware of how rapidly that technology would spread around the world if capital were accumulated along the guidelines in this treatise—conditional patent titles, labor fully and equally paid, and productive jobs shared by all. Under those restructured rights, workers would have buying power, and technology would be regionally available to produce desired products. Capital will have been accumulated to finance it all simply through the emerging world, federated into viable economic regions, safely creating their own money, and they being fully paid for their resources and labor.
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Wealth is Extracted by Titleholders Through Capitalizing Unearned Values Shares in corporations are sold with the price based on how profitable they are expected to be, their capitalized value. This idea proved to be a real bonanza. Where conservative business people typically estimated the capitalized value of the company at 10 times yearly profits, the stock markets, anticipating future increases in profits, capitalized these values far higher, frequently 20 to 30 times annual profits and occasionally even more. It is not uncommon for the price of stock going public, called IPOs (initial price offerings) to jump 500% the first week. This capital accumulation bonanza claims a share of a nation‘s loans and the money supply must be expanded, either more base money created or money circulating at a higher velocity, to sustain those values. All in one stroke, an individual or group can lay claim to the efficiency of a technology through capitalizing its value and selling shares to investors. This claiming of wealth properly distributed to other, through the mechanism of unearned capitalized values, concentrated rightful wealth of the many into the hands of a few, was christened accumulated capital, and gave capitalism its name. Through carefully structured laws, the hidden hand of the wealthy and powerful kept claiming an ever-larger share of the wealth produced. Labor, just as naturally, tried to retain, or reclaim, what they produced. The rights gained in the American Revolution, enshrined in its Constitution, and the natural justice of those rights, eventually increased the power and income of labor. This, and the expansion of unnecessary labor in the service industries, as summarized in the next chapter, led to more people retaining a greater share of society‘s wealth.e By eliminating monopolization, sharing the resultant fully-productive jobs, and paying labor fully for what it produces, measured values (now tangible, labor-created, use-values instead of monopoly values) would equal the rental value of nature‘s resources used, the value of productive labor, and the earnings and depreciation of industrial capital (stored labor) producing that wealth.
The Stock Markets are Primarily Extracting Wealth As that is where the unearned profits from aristocratic exclusive titles to patents are collected, the battle for corporate ownership is centered in the stock market. Millions of hours are spent by speculators, they call themselves investors, trying to figure out which company is going to increase its capitalized value. The game is calculating profits that will translate into increased capitalized value. It is viewed as a simple method of keeping score. But claiming wealth, properly beA large share of the massive wealth distributed had been appropriated from the periphery of empire by imposed inequalities in trade and outright theft. e
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longing to others as technology continually replaces labor, is the underlying theme. Values, properly shared by all through lower prices, are claimed by the shareowners of industrial technology. Unearned values claimed by monopolists are capitalized, sold or borrowed against, the Federal Reserve creates more base money (reserve deposits) which will circulate buying and selling those unearned values, and a capitalized multiple of that annual wealth extraction (capitalized value) becomes finance capital. Through restructuring exclusive titles to patents to conditional titles, eliminating intangible values, and creating a modern technology commons in the process, those monopolized values and huge blocs of finance capital are, in the form of consumer prices dropping by 50% to 80% (measured in productive employed labor time to purchase), transposed into relatively equally-shared use-values. Lester Thurow explains that the impoverishment of many while wealth is accumulated by a lucky few is due to ―the process of capitalizing disequilibrium,‖ distortions of trade, either internal or external, and thus distortions of values, and that ―patient savings and reinvestment has little or nothing‖ to do with generating large fortunes.38 at any moment in time, the highly skewed distribution of wealth is the product of two approximately equal factors—instant fortunes and inherited wealth. Inherited fortunes, however, were themselves created in a process of instant wealth in an earlier generation. These instant fortunes occur because new long-term disequilibriums (sic) in the real capital market are capitalized in the financial markets.... Those who are lucky and end up owning the stocks that are capitalized at high multiples win large fortunes in the random walk. Once fortunes are created, they are husbanded, augmented, and passed on, not because of ―homo economicus‖ [economic man] desires to store up future consumption but because of desires for power within the family, economy, or society.39
Of course, the small fortunes accumulated by the upper middle class are from these same disequilibria in the value of land and capital. Except by violence or trickery, those aristocratic exclusive titles to the resources and technologies, denying others their rightful share of what nature offers to all for free, how else can wealth beyond what one produces be accumulated? The income demanded by those unearned appropriated values, derived from nontangible values (capitalized monopoly values), is a private tax upon the rest of society, and quite accurately labeled air. ―By reducing air to vendability, scarcity could be capitalized. Business would be richer—and every man, woman and child in the country would be poorer.‖40 A study of the market, over a full boom and bust cycle, will find these fictitious values developing in most stocks. The reasons given may be many, but the underlying cause is clear: the steady rise in the nation‘s efficiency is captured by,
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and mirrored in, stock and land values created through extracting wealth which should have been, and under a modern commons would have been, relatively equally shared by all. Every speculator dreams of becoming wealthy by owning some of these stocks or land. The powerful and cunning, with better than even odds, buy and sell in rhythm with the inflation, and deflation, of stock and land prices to lay claim to much of this unearned wealth. Those who win the gamble on who will own the world‘s land and industrial and distributive technology are freed from the necessity of laboring for their living. This is not a contradiction, their speculative efforts are certainly labor; however, when unnecessary, that labor is fictitious, and such earnings are appropriations of wealth. Through the stock markets, those unearned values are automatically capitalized to 10 to 30 times annual earnings. Capitalizing values is necessary to decide the sale price of a business. However, not only should everyone involved receive proper compensation for his or her labor, innovations, and risk; society should receive its share and there should be no waste of labor or resources. Society not only provided tens of thousands of necessary preceding innovations; it also provided the schools, skills, tools, labor, markets, and infrastructure. Nature provided the resources, including the inventions waiting to be discovered, and each citizen is properly entitled to their share of the rental value of all nature‘s wealth. There is a necessity for a stock market. However, that the stock market‘s primary purpose is financing the nation‘s business is pure fiction; trades in the stock market have little to do with capital investment: Buying a stock from a broker does not add one red cent to the corporate treasury and provides no investment capital except if the stock is newly issued. But new issues by major corporations are fairly rare because issuing new stock dilutes equity and depresses stock prices. As a result, the bulk of shares now traded on the stock markets were issued twenty or fifty years ago. Since then the shares have passed through many hands, and their prices have fluctuated over a wide range. Yet all these transactions have been strictly between the buyers and sellers of stocks, aided and abetted by stockbrokers trying to eke out a modest living.... [S]peculators are not really interested in the company whose stock they temporarily own. They want to take their profits and get out. They are not investing in the proper sense of the word; they are simply gambling. Ownership of corporations has become largely a game of chance in which the individual players try to guess what the other players will do.41
Market Bubbles and Crashes Speculators are unaware their gains are unearned. If the market wipes them out, they feel they have lost earnings when actually it was just the odds of the gamble
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and their turn to lose. Like the casinos they are, the stock markets are primarily a mechanism for the redistribution of wealth upwards towards the already wealthy and powerful, not its production. It is a gambling game in which the rest of society‘s members are spectators who continually have their share of the nation‘s increased wealth thrown on the table of a game of chance they are not playing. The danger of gambling with the nation‘s wealth was addressed by Business Week’s cover story, ―Playing with Fire‖: By stoking a persuasive desire to beat the game, innovation and deregulation have tilted the axis of the financial system away from investment toward speculation. The U.S. has evolved into what Lord Keynes might have called a ―casino society‖—a nation obsessively devoted to high-stakes financial maneuvering as a shortcut to wealth.... ―Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a byproduct of the activities of a casino, the job is likely to be ill-done.‖42
What is normally spoken of as a market ―bubble‖ is only the claiming of wealth, properly belonging to others, which has gotten out of hand. History is replete with examples. Charles Mackay, in Extraordinary Popular Delusions and the Madness of Crowds, describes the tulip craze that broke out in Europe in the 17th century. Before that insanity dissipated, one particular tulip bulb cost ―two lasts of wheat, four lasts of rye, four fat oxen, eight fat swine, twelve fat sheep, two hogsheads of wine, four tuns of butter, one thousand lbs. of cheese, a complete bed, a suit of clothes and a silver drinking cup.‖43 One wonders at the variety of commodities traded for one flower bulb, but their total value of 2,500 florins serves as a guideline to the money value paid for other bulbs. During this period, prices ranged from 2,000 florins for an inferior bulb to 5,500 florins for the choicest varieties. ―Many persons were known to invest a fortune of 100,000 florins in the purchase of 40 roots.‖44 Although tulips are not stocks, the principle is the same. At the turn of the 18th century, John Law implemented a plan to sell stock in gold mining in the Mississippi wilderness to pay off the huge debt of the French government. Though this scheme was seriously flawed, the French economy prospered. The plan went awry when the money rolled in. Those selling paper were so busy getting rich they neglected to invest in production anywhere; they merely reinvested in more paper. In a speculative frenzy, fortunes changed hands as people sold, and then bought back, nothing but paper. The stock had no value because there was no investment in production and thus no wealth produced. Law‘s scheme was borrowed from cunning financiers in England who had sold stock in a South Seas venture, known today as the ―South Sea Bubble.‖ Although Spain controlled most of South America, and the
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English had limited trade rights within it, stock companies were set up to trade within this territory. Visions of wealth stirred up a speculative fever, companies were formed for very unlikely endeavors, and the money rolled in as speculators dreamed of getting rich. Soon, so many joined the game that it got out of hand, and the government had to call a halt to new issues. The intention of most of these promoters can be summed up by one audacious proposal; this promoter touted ―a company for carrying on an undertaking of great advantage, but nobody to know what it is.‖45 Since the organizers of these companies had no intention of producing anything, their capital was 100% fictitious. Proof this capital was not real was when the speculative bubble collapsed. There were no tangible assets, production, or services to back the value of the stock; there was only the transferring of wealth from the naive to the cunning, or lucky. When wild speculation breaks loose, there is no relationship between value and price. Even when the stock market behaves normally, there are always stocks whose prices defy logic. This activity can only be attributed to crowd psychology, as described by Mackay, although sly promoters pull strings at every opportunity.f
Options, Futures, Derivatives, and Hedge Funds are Extractors of Wealth The markets for stocks, bonds, commodities, futures, options, currencies, mortgages, money markets, virtually every exchange market anywhere in the world, are now one huge market. Options, futures, swaps, forwards, other derivatives, all tools of hedge funds, are only the buyers, and sellers, betting something will go up or down; neither has a stake beyond the gamble. They appear to have a legitimate purpose in takeover schemes, but in that role, until a bubble tops out, they are not even gambles. The psychology of the market almost guarantees the stock price will rise when word gets out a takeover is in progress. This increase in valuation backs the money required for the takeover. All aspects of the markets ―have become chips in a casino game, played for high stakes by people who produce nothing, invent nothing, grow nothing and
Major banks lost trillions, markets were seizing up around the world, and several trillion dollars worldwide were, up to this point in time, distributed to the gamblers. Possibly $30 trillion of value has disappeared worldwide and this could yet be a Nikolai Kondratieff 50 year depression. Those bankrupt banks, hedge funds, and derivative traders, already having made massive sums as the bubble inflated, had their bets down for making even more, and lost that wager; then, in 2009, they earned record profits off the several trillion dollars of public funds poured at them. f
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service nothing.‖ As these gamblers go broke in the current 2008-10, financial crash, they may be bringing the world down with them. ―One-third, [or more], of the cost of oil is due to speculative buying of oil contracts.‖ That, and the same practices in other markets, is another form of harvesting unearned profits. Sharp traders have leveraged world markets with stock and currency options, futures on options, meaning options on options, futures on interest rates, warrants, a form of option, credit default swaps, and other bets (derivatives) designed to lay claim to wealth without doing any productive labor. Hedge funds are, at this time, 2010, betting $2 trillion (backing $1 quadrillion to $2 quadrillion in notional values, 20 to 30 times world GDP) in the derivatives market. As this is five times the size of the derivatives market which triggered the 2008-09 collapse, the world should be holding its breath. The collapse of the housing bubble in America with its valueless collateralized debt obligations (CDOs), structured investment vehicles (SIVs), etc, sold to the world triggered the crisis. While the legal debt equity (leverage) ratio was 12:1 or less, much of the world‘s economy was leveraged 20, 40, 70, and even 280:1 (Citibank). As most banks‘ derivatives bets were off book, all this was kept secret as the Federal Reserve bought up those CDOs close to their book value so as to recapitalize the banks. Those ―permanent rotating loans,‖ bankers‘ language for imminent nationalization, were like sand against incoming waves. Trillions were thrown at those waves, and they are still coming at us as we go to press. As values fell, and just as all financial crisis for centuries, the value of normally sound banks, companies, and industries fell below the value of debts owed. In the early 1990s, Wall Street bankers used derivative tools to crash the Japanese land and market bubbles, but Japan‘s control of investment and management did not permit others to gain title to Japanese companies. Later, Vulture funds bought up Southeast Asian properties after those etherealworld-banker engineered crashes. By printing ¥35 trillion in 2003-04, equaling $50 for each person on earth, which was converted to dollars to buy US treasuries, Japan partially evened the score.46 We have yet to see if a fascist financial and military fix will protect the current monopolizers of capital, or whether the oppressed world will break free as the ongoing worldwide populist revolutions build strength. President Barack Obama‘s sincere dedication to change should reduce the chance of a drift towards fascism, but that hope has not yet materialized (May 2010).
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Bringing the World’s Markets under Control Buying and selling investments is the legitimate purpose of stock markets; any activity beyond that is gambling. Eliminating monopolization through restructuring primary monopolies—money, land, technology, and communications—into a modern commons and eliminating secondary monopolies, next chapter, through full and equal economic rights for all will eliminate those massive appropriated funds which are reducing economic efficiency fully sixty percent. The ethereal world of high finance disappears, economic efficiency doubles; if that were to happen, poverty would soon be history.
Equal and Efficient Patent Laws Within the Community SocialCredit Process At least two millennia ago, the Chinese were producing massive amounts of iron, including stainless steel. They had the compass, rudders for large ships, paper, movable type, the printing press, suspension bridges, matches, wheelbarrows, wheeled metal plows, mechanical seeders, horse collars, rotary threshing machines, and a drill to tap into natural gas. They knew the decimal system, negative numbers, and the concept of zero. And they once knew how to produce primary tools of world conquest, gunpowder and large ships.47 But that technological knowledge was forgotten because of disuse, and the lack of a recording system, such as today‘s patents. Inventions and innovations are the cornerstones of prosperity. To establish them in social memory, those technologies must be recorded and used.48 It is necessary to reward those who had the original innovative ideas, and those who first put them to work. The present policy of restricting access to technology should be changed to one of easy access—with proper compensation for inventors, developers, and producers—while returning the maximum savings to society. The patent system could do all that, be far simpler, and administration costs lowered to almost nothing, by evaluating the value of a patent, paying inventors and developers a reasonable ―earned‖ value, and placing their innovations in the public domain. This creates a modern technology commons, conditional titles to nature‘s wealth; all may use these technologies without charge. The inventors and developers would be well paid, and there would be no cost for accounting or for disbursing royalties. Those royalties have been paid, in advance, to the inventors. Most inventors would want their inventions to have maximum use and opt for instant cash, recognition, and free use by all. Inventions not originally recognized as valuable, a frequent occurrence, would be proved by developers who would then file development patents, they too would each be paid an ―earned‖
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value, all patents would be in the public domain, and inventors, developers, and consumers would all be well paid. Businesses and communities would no longer have to shut down because their markets were overwhelmed by a competitor with a patent monopoly, capital destroying capital. Communities, and its citizens, would be secure as all gained maximum benefits from the newest technologies. Those huge blocs of finance capital owned by monopolists, currently buying and selling appropriated monopoly values, will disappear, and be replaced by, much smaller, relatively equally-shared, use-values. Those unearned patent monopoly profits are collected through the stock market, the superstructure of patent monopolies extracting wealth produced by technology. With each having full and equal rights to these fruits of nature, the need for 85% of the offices and staff overseeing, and the businesses and labor servicing, the patent-stock market industry disappear; the productive remainder becomes as stable as bond markets in a non-monopolized, efficient, economy. Economic efficiency gains from these relatively small changes, but huge effects, in property rights, establishing a modern technology commons, would, assuming buying power is protected through sharing the remaining productive jobs, be equal to the invention of electricity.49 Such massive economic efficiency gains require democratic, communitarian oversight to prevent stripping the earth‘s resources, to protect the environment, and to rebalance the human psyche to the massive free time available under those full and equal rights. Again it must be pointed out that, wealth extracted from truly productive labor, through exclusive title to nature‘s technologies, is loaned back to its proper owners, to, as society is currently structured, finance their living. Through taxes, overpriced products, services, and those debt payments, including interest, those unnecessary debts are paid for again and again on into perpetuity. That impoverishing cycle is broken only by economic collapses, such as the one currently ongoing, 2008-10, due to the wealth having been concentrated into too few hands, and leaving the majority without adequate buying power, The elimination of those huge blocs of extracted wealth and the resultant large increase in economic efficiency and elimination of poverty is the essence of inclusive property rights laws. Patent marketing rights (monopolization) are replaced by a social right, the right of all to use any technology. Privately imposed monopoly costs are transposed into equally-shared use-values priced 50% to 80% less than current monopolized values; all these gains are due to greater freedoms, fiercer competition, and full and equal economic rights. A study of the four books on property rights law in this footnote will alert one that property rights are in continual discussion in America‘s courtrooms and
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collective rights trump private rights if it can be shown as imperative and just.g Though those court cases do not go, and cannot go, to the depth that this thesis does, the principles are all there. A legislature can go to this depth, and we can only hope they will if this current crisis deepens into a full fledged depression. It should be understood that, once monopolies and the extraction of unearned wealth has been eliminated through honest property rights laws, there should never be a shortage of finance capital. After all, honest finance capital is only represents industrial and operating capital and, in that efficient economy, each unit of industrial capital will produce ten times the value in production value each year than the cost of building the production facilities.h Any Industry producing annually ten times the value of its construction cost can surely make payments on loans to build it. We must remember that every dollar spent on construction and production circulates within an efficient economy possibly 15 times. That tells us that if a society does not build their own industrial capacity they will be poor while a society building and operating its own industrial base will be wealthy. Before we analyze the 4th primary monopoly, which is the technology of communication superhighways through which our rights can be reclaimed, we will address secondary monopolies. Doug Henwood, Wall Street (New York: Verso, 1997), p. 7. Michael Moffitt, ―Shocks, Deadlocks, and Scorched Earth,‖ World Policy Journal (Fall, 1987), pp. 560-61, 572-73. 3 William Greider, Who Will Tell the People? (New York: Simon and Schuster, 1992), pp. 378-79, 399-400. 4 Adam Smith, Wealth of Nations (New York: Random House, 1965), p. 64. 5 John D. Donahue, The Privatization Decision: (New York: Basic Books, 1989). 6 Public Power Directory and Statistics for 1983 (Washington, DC: American Public Power Association, 1983); Jeanie Kilmer, “Public Power Costs Less.” Public Power Magazine, May/June 1985, pp. 28-31; the late Montana Senator Lee Metcalf and Vic Reinemer, Overcharge (New York: David McKay, 1967). 7 Edward Winslow Martin, History of the Grange Movement (New York: Burt Franklin, 1967), pp. 62, 70. 1 2
Laura UnderKufler, The Idea of Property: Its Meaning and Power (NY, Oxford U Press, 2003); see also Janet Dine and Andrew Fagan, Editors, Human Rights and Capitalism. (NorthHampton, MA, 2006); Marjorie Kelly, The Divine Right of Capital: Dethroning Corporate Aristocracy (San Francisco, Berrett-Koehler, 2007; Stephen R. Munzer, A Theory of Property (); Jeremy Waldron, The Right to Private Property (NY, Oxford U Press, 1988). g
Google Energy Efficiency and the Pulp and Paper Industry by Lars J. Nilsson, Eric D. Larson, Kenneth Gilbreath, and Ashok Gupta. New capital expenditures in the last decade have averaged 10.4% of revenues. h
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Matthew Josephson, Robber Barons (New York: Harcourt Brace Jovanovich, 1962), p. 92; Joe E. Feagin, The Urban RealEstate Game (Englewood Cliffs, NJ: Prentice-Hall, 1983), pp. 57-8; Peter Lyon, To Hell in a Day Coach (New York: J.B. Lippincott, 1968), p. 6; see also Martin, Grange Movement. 9 Wilfred Owen, Strategy for Mobility (Westport, CT: Greenwood Press, 1978), p. 23. 10 John Prados, The Presidents’ Secret Wars (New York: William Morrow, 1986), p. 152. 11 Lewis Mumford, Pentagon of Power (New York: Harcourt Brace Jovanovich, 1964), pp. 134, 139; Stuart Chase, Men and Machines (New York: Macmillan, 1929), chapters 34. 12 Chase, Men and Machines, pp. 42-43. 13 PBS, Nova (September 2, 1986). 14 Stuart Chase, The Economy of Abundance (New York: Macmillan, 1934), chapter 8. 15 Phil Grant, The Wonderful Wealth Machine (New York: Devon-Adair Co., 1953), pp. 301-06. 16 Dan Nadudere, The Political Economy of Imperialism (London: Zed Books, 1977), p. 251, quoting in part from E. Penrose, The International Patent System, 1951, p. 29. 17 Ibid, pp. 186, 255. 18 Karl Marx, Capital (New York: International Publishers, 1967), volume 1, p. 375, footnote 2. 19 Nadudere, Political Economy of Imperialism, p. 38, quoting Leo Huberman, Man‘s Worldly Goods, pp. 128-29. 20 Lewis Mumford, Technics and Civilization (New York: Harcourt Brace Jovanovich, 1963), pp. 227-28, 438. Read also Nadudere, Political Economy of Imperialism, pp. 51-55. 21 Chase, Economy of Abundance, p. 166. 22 Lester Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe, and America (New York: William Morrow, 1992), p. 187. 23 Grant, Wonderful Wealth Machine, pp. 301-306. 24 Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), p. 277, quoting from Pirenne, Medieval Cities, p. 211. 25 Marx, Capital, volume 1, pp. 372-74, 428, 435, 562; Eric R. Wolf, Europe and the People Without History (Berkeley: University of California Press, 1982), pp. 273-74, 279. 26 Richard Barnet, The Lean Years (New York: Simon and Schuster, 1980), p. 260. 27 Howard Zinn, A People’s History of the United States (New York: Harper Colophon Books, 1980), p. 277. 28 Herman E. Daly, John B. Cobb, Jr., For the Common Good (Boston: Beacon Press, 1989), p. 11. 29 Robert Lacey, Ford (New York: Ballantine Books, 1986), pp. 118-40; also Juliet Schor, The Overworked American (New York: Basic Books, 1991), p. 61. 30 Lacey, Ford, pp. 105-06; Brian Tokar, Redesigning Life? The Worldwide Challenge to Genetic Engineering (London: Zed Books, 2001). 31 Tokar, Redesigning Life?; Stanley Wohl, Medical-Industrial Complex (New York: Harmony Books, 1984), pp. 69-71; Ivan Illich, Medical Nemesis (New York: Bantam Books, 1979), p. 245. 8
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―India Protects its Heritage Against Privatization Theft,‖ COMER (February 2006), p. 8. Taken from Globe and Mail (December 12, 2005) 33 Stephen Budiansky, ―An Act of Vision for the Developing World,‖ U.S. News and World Report (November 2, 1987), p. 14. 34 Jean-Pierre Berlan, ―The Commodification of Life,‖ Monthly Review (Dec. 1989), p. 24. 35 Alan Weisman, ―Columbia‘s Modern City,‖ In Context, No. 42, 1995, pp. 6-8; Los Angeles Times Sunday Magazine, September 25, 1994. 36 E.K. Hunt, Howard Sherman, Economics (New York: Harper and Row, 1990), p. 166. 37 Kurt Rudolph Mirow, Harry Maurer, Webs of Power (Boston: Houghton Mifflin Co., 1982), p. 16. 38 Thurow, Generating Inequality, p. 149. 39 Ibid, p. 154, (emphasis added). 40 Chase, Economy of Abundance, p. 165. 41 Rolf H. Wild, Management by Compulsion (Boston: Houghton Mifflin, 1978), pp. 92, 94-95. 42 Anthony Banco, ―Playing With Fire,‖ Business Week (September 16, 1987), p. 78. 43 Charles Mackay, Extraordinary Delusions and Madness of Crowds (New York: Farrar, Straus and Giroux, 1932), pp. 90-97. 44 Ibid, pp. 1-45; Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996), p. 221; John Train, Famous Financial Fiascoes (New York: Clarkson N. Potter, 1985), pp. 33-41, 108-89. 45 Mackay, Delusions, pp. 46-88; see also Train, Fiascoes, pp. 88-95; Charles P. Kindleberger, Manias, Panics, and Crashes (New York: Basic Books, 1978), pp. 220-21. 46 Ellen Hodgson Brown, Web of Debt (Baton Rouge, Third Millennium Press, 2007) pp. 253-54, 387-89, primarily on the crash in Japan and Southeast Asia. 47 Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996, p. 15; Lester Thurow, Building Wealth: The New Rules for Individuals, Companies, and Nations in a knowledge-Based Economy (New York: HarperCollins, 2000), pp. 85, 102. 48 Michael Goldhaber, Reinventing Technology (New York: Routledge & Kegan Paul, 1986), p. 185. 49 For another study see Vandana Shiva‘s Protect or Plunder: Understanding Intellectual Property Rights. 32
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23. The Productive Roles, and Extractive Roles, of Secondary Monopolies The American health care, insurance, legal, and welfare systems, taxi medallions, etc, are exclusive marketing-rights-monopolies which built up ad hoc due to a lack of those services as a social or human right. Prisons, law enforcement, and other protective industries are not monopolies per se but they grew to the huge proportion of the economy they are due to the inequalities and lack of rights within the monopolized sectors of the economy (3.7% of adult white Americans, 15% of adult Latinos, and 35% of adult African Americans, have been in jail). All social structures—governments, banking systems, retirement, other insurances, a legal system, health care, etc—are all social technologies (wealth producing, distribution, and governing tools) discovered and put in place over the centuries. That they are ineffectively overseeing ―rights‖ within an unequal system is instinctively understood. The threat of ballot box revolutions due to periodic economic collapses led to Social Security, unemployment insurance, and in almost 50 countries, universal health care becoming social tools to fulfill human rights and social rights. That these rights were given only during economic crises, and are typically partially withdrawn during good times, proves the power structure is protecting their wealth and power. Even the novice can‘t help noticing it would be much easier to fund those economic changes during prosperous times than during an economic crisis. Yet reforms are put in place primarily during a periodic crisis, and are partially, and steadily, withdrawn by power and wealth in good times. Hard right think tanks are gearing up to cut back, or even eliminate, Social Security as we speak. In the early to middle stages of designing democratic societies, as imperial (dominating, aristocratic) societies slowly evolved from Feudalism, the wealthy were so few, and those producing their daily subsistence needs within their family unit—primarily from the land—were so many, that not even the most alert could conceive of rights for all to retirement income, universal health care, home insurance, unemployment insurance, support for the incidentally, or accidentally, impoverished, etc. They were all social technologies (social tools) of the future made possible by the enormous efficiencies of advancing industrial, chemical, electrical, and medical technologies.
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As imperial industrialized societies formed, ad hoc, labor-intensive, capitalintensive, monopolized, and expensive, social structures arose to fill the needs of the citizenry as they were slowly brought into the flow of money within a monopoly capitalist system. This is the process addressed two paragraphs above which prevented expansion of rights during good times.a Ever-increasing efficiencies of technology increased rights rapidly, but those same rights (living standards) would have been put in place many times faster if technology and wealth had been shared instead of monopolized. Power and greed caused the past centuries of poverty and war, and neither social rights, nor human rights, are yet fully in place. The masses within a subsistence economy could have been quickly brought within a money economy, except it was seldom their rights under consideration. A society with full and equal economic rights for all could have, and likely would have, established a banking, land, and technology commons under inclusive and equal property rights principles. But the powerful, the ones creating those laws, would quickly calculate this would limit each to accumulating only earned wealth. Thus, power structures world wide protected their power and wealth through continually refining exclusive-titles to nature’s resources and technologies, which rightfully belong to all in roughly equal shares. Not only were aristocratic property rights designed to maintain wealth and power within national economies, they were also designed to claim the wealth of the peripheries of empires. This is the reason for the covert destabilizations of emerging countries as they attempted to break out of the strait jacket imposed by empires. If they were permitted their freedom, and full and equal economic rights, others would notice their rapid rise in living standards, and quickly restructure to full and equal property rights, social rights, and human rights, laws. Excessive rights for a few and lack of rights for the many, structured into unequal property rights being the very heart of the monopoly system, stands exposed as we lay out the simplicity of transposing monopoly rights into use rights relatively equally shared, and utilized, by all.
The insurance industry extracting wealth within the monopolization process: Security is a necessity and, in most developed nations, some form of Social Security (retirement insurance) is now a human right. As it is recognized as a human right, the powerful, though they continually try and those efforts are intensifying, find it difficult to reduce life-sustaining guarantees for those final years.1
Expansion of excessive rights is a regular occurrence within legislatures through specialfavor laws. Starting out as a service, secondary monopolies expanded into rent seeking. Most secondary monopolies can be eliminated through the services they provide becoming a social or human right. a
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Health insurance, car insurance, and home insurance are necessities for most people. Yet none are a social right anywhere, and the insurances we do have are, roughly, only 50% productive. With the masses not having all their social rights, ad hoc insurance industries sprang up. Instead of a social right to insurance, similar to Social Security, being established by society, a ―market‖ for insurance evolved, and stock markets simultaneously expanded to buy and sell the capitalized values created by those massive appropriations of wealth; half the extracted wealth was ground up within the superstructures of those monopolies in the process. The annual profits of insurance industries are capitalized 10 to 30 times in the stock markets. As Social Security has proven there are no needs for insurance companies, thus no need for their costs or their profits, insurance industries are strictly a social structure for ―creating money out of thin air.‖ A society with full and equal economic rights creates money to create wealth while current capitalist economies monopolize nature‘s wealth and technologies to create money. Fully 95% of America‘s huge blocs of finance capital, created and accumulated through that process, is unearned wealth (supports on p. 3). The capitalization process made those unearned values transportable and transferable (saleable). Wealth rightfully belonging to each and all is appropriated, capitalized, sold, and banked; as if by magic, this is the simple process where the lack of rights for the masses are transposed into the massive unearned wealth of our unnecessary insurance industries. In the banking, land (resources) and technology chapters we theoretically eliminated wasteful monopolization by apportioning the rental values on wealth produced by nature and all wealth produced by labor directly to the citizenry. These secondary monopolies are unique in that the maximum efficiency is gained by totally replacing their marketing structure with a social right (insurance) or a human right (universal health care and retirement). Having rights or lacking rights is the crucial difference between a highly efficient sector of an economy and a labor-intensive, monopolized, wasteful sector, extracting wealth from others, capitalizing the profits on those non-tangible values, and buying and selling those unearned values on the markets. Rights can be given any time a power structure decides. But, not understanding the enormous power of a modern economy to take care of everyone‘s needs, and with heavily-funded think tanks pouring out perception management belief systems (spin) protecting the powerful‘s excess rights, rights for all are actually preached as a loss of rights (which it is for those with excessive rights). Thus retirement funds, accepted as a human right today, were typically given only when the market economy broke down, people were starving, a revolution was imminent, and the leaders, those who had been continually blocking such key expansions of rights, stood to lose both wealth and power. True to our thesis, with 60
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years of good times, those powerful have been working furiously to roll back Social Security and other social and human rights within today‘s unequal property rights, all under the rhetoric of protecting your rights.2 As this crisis deepens (2008-10), and especially after the year-long-battle over expanding health care, more rights for the people are spoken of even on main stream news. Under the threat of a ballot box revolution, American citizens were given Social Security as a human right in the Great Depression. Annual management costs are less than 1% of premiums collected through payroll deductions. In contrast sales, management, and profits of insurances in the market economy typically cost 50% of premiums paid. Insurances negotiated by unions, and given as a social right to those select few, typically cost only 6% of premiums. Social Security is insurance and it is much larger than any several insurance companies put together. Yet few people have ever seen their efficient regional Social Security office. Restructure health, auto, and home insurances to a social right and those insurance offices—along with the office furnishings and those wastefully employed—are replaced by a fully productive regional office that, like Social Security, you seldom see; those insurance companies simply disappear. Your home insurance premiums paid when you pay your mortgage payment should be almost half their current costs. No fault auto insurance, paid as one purchased gas, would greatly lower costs as each person pays equally, relative to the gas used. Universal health care, such as at least 12 states are discussing becoming law, all developed nations—except the US—already have, and over 5000 physicians were petitioning for, can be handled under payroll deductions at 40% today‘s cost, or it could be covered by socially collected resource rents and socially owned bank profits at no visible, our of pocket, cost. If one‘s insurance needs fall outside those parameters, simply sign up, pay the premium, and pocket the savings. That is, if the powerful will ever permit such social rights to be allotted to the citizenry. The wasted labor and capital (offices all over town) once operating the highly inefficient insurance sectors of the economy are now available for truly productive uses. The legal structure also extracts wealth: In a society with full and equal economic rights, both crime and the need for legal resolutions would drop to a very small fraction of today‘s epidemics of lawlessness and battles over divisions of wealth. In 2006, a radio show host in Boston, incensed at the murders each week by drug dealers, blurted out, ―Give me a call. I will find you a job.‖ Within a week 10 of those battling for turf on the drug scene were enrolled in a cooking school. That violent life was not what they wanted; they simply did not have rights to a job of any kind let alone one with equal pay. With each having full and equal rights to their share of nature‘s wealth, rights to a productive job through a radical reduction in working days, being paid
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equally for equally-productive labor, and considering a total restructuring of society (see Conclusion), the daily struggle for survival would be replaced by an efficient, calm, inclusive economy with each having security and a quality life. Assuming inclusive full and equal rights were sincerely put in place, which means each having the opportunity for a respectable identity and a secure life; the 2.1 million American prisoners now increasing 47,000 per year would shrink to infinitesimal levels. Those building and guarding prisons, the police, private guards, the personnel operating the justice system, and its brick and mortar infrastructure would shrink accordingly. But the savings go far beyond the criminal justice system into the civil courts. We quote from Fred Rodell‘s classic, Woe Unto You Lawyers: It is the lawyers who run our civilization for us—our governments, our business, our private lives....We cannot buy a home or rent an apartment, we cannot get married or try to get divorced, we cannot die and leave our property to our children without calling on the lawyers to guide us. To guide us, incidentally, through a maze of confusing gestures and formalities that lawyers have created....The legal trade, in short, is nothing but a high-class racket.3 The lawyers—or at least 99 44/100 per cent of them—are not even aware that they are indulging in a racket, and would be shocked at the very mention of the idea. Once bitten by the legal bug, they lose all sense of perspective about what they are doing and how they are doing it. Like the medicine men of tribal times and the priests of the Middle Ages they actually believe in their own nonsense.4
Fred Rodell knew that expensive divorces were replaceable by each party agreeing to how property is to be divided, each fill out and file a prescribed form, the judge questions each party to ascertain each were fully aware, that the settlement was fair, and grant the divorce. Some states have enacted such laws, and the savings, in both emotional distress and money, were everything Rodell predicted. Special care is taken when children are involved but typically they too are rescued from the trauma of a messy, expensive, divorce. Most trauma and expense before those legal changes were because citizens were denied a right, in this case the right to a simple, agreed-upon, divorce. Probating wills were, and many still are, subject to lawyers milking estates of the deceased. In contrast, living trusts and beneficiary deeds take effect with almost no cost upon his or her death when changes are no longer possible. As soon as papers of the trustee‘s death are filed, the heirs have full control of his or her share of the estate. Legal forms are really a checklist of items that have to be addressed by all who wish to enter into a contract with each other, or with themselves. Most legal transactions are procedures requiring only the filling out of these ready-made
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forms. How else could it be? If most dealings between people were not based on custom, there would be chaos. This simplicity is blocked by the present legal system, which makes simple transactions complicated and tedious, thus expanding labor and time to justify large compensations. That is all wasted time, money, and resources. Rosemary Furman, legal secretary and court reporter, estimated, if the public were given access to standardized forms, about 70% of the legal work could be eliminated. With this access, and guidance from the clerks of court, literate adults could easily handle uncontested divorces, name changes, debt collections, tax matters, bankruptcies, real estate transactions, adoptions, patents, wills, trusts, and many other legal matters. Furman charged twenty-five to fifty dollars for these services while lawyers received three hundred to five hundred dollars. But whenever citizens use a prepared form, and handle their own transactions; there are no costs beyond filing fees. ―Everything I do,‖ said Furman, ―is the responsibility of the clerk of court.‖5 Over half the compensations for accidents, product liability, and malpractice are claimed by lawyers. In New Zealand, the ―Accident Compensation Corporation oversees the claims process. Injured people file claims whether their injury happened at home, at work or at play, and compensation is provided fully and fairly.‖6 This process is equally applicable to product liability and malpractice suits. Divorce, accidents, and liability constitute at least 80% of all civil suits and in each it is possible to almost totally eliminate lawyers. Early lawyers were paid by the word. This led to the current unnecessary legalese that few can understand: It has been the custom in modern Europe to regulate, on most occasions, the payment of the attorneys and clerks of court, according to the number of pages which they had occasion to write; the court, however, requiring that each page should contain so many lines, and each line so many words. To increase their payment, the attorneys and clerks have contrived to multiply words beyond all necessity, to the corruption of law language of, I believe, every court of justice in Europe. A like temptation might perhaps occasion a like corruption in the form of law proceedings.7
Lawyers extract more than their share by keeping secret the simplicity of everyday common agreements. Once language is simplified and the public has access to legal forms, the practice of law via, obscurantism and hocus-pocus, disappears. And we can go on and on: Conflict Resolution Law, corporate mini-trials, etc, are all examples of how to eliminate the current unnecessary expense of the legal system.
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Most within the criminal class only lack rights. Though most the wealth consumed in the legal industry is wasted labor, wasted office space, wasted protective forces, wasted courtroom space, etc, huge profits are still made and those appropriated values—claimed by private prisons, law firms listed on stock markets, incorporated but unlisted law firms, etc—create unearned, high capitalized, values which are bought and sold. Extracting wealth through health care: April 18, 2006, the American Medical Association released their study that, by U.S. Department of Justice guidelines, health insurers were effectively monopolies. Among the 50 most developed nations, only the United States and South Africa do not have universal health care. U.S. citizens pay out of pocket 38% more than the Canadians, 39% more than the French, 42% more than the Swedish, 53% more than Germans, 62% more than Italians, 78% more than Australians, 90% more than the Japanese, 100% more [actually 130% more] than the British, and 466% more than the Cubans.8 Universal health care for many of these countries equal or, when one considers that all their citizens receive medical care, exceeds that in the United States. Markets for health care are far from efficient. The more products sold, whether needed or not, or even if they may be harmful, the more profits that can be made. Such wasted labor and resources of secondary monopolies are not the result of intent. As a distribution mechanism, these unnecessary marketing territories expand relentlessly in all the service segments of the economy. Businesses must operate at their maximum to maximize profits and people must maximize their labor time to earn a good living. Thus, without full and equal economic rights, the service sectors of the economy continually expand. In their book, Frogs into Princes, psychiatrists Richard Bandler and John Grinder explained the process. One of their fellow psychiatrists treated patients in a state clinic and averaged six visits per client. ―In his private practice he is apt to see a client twelve or fifteen times...and it never dawned on him what caused that....The more effective you are the less money you make because your clients get what they want and leave and don‘t pay you anymore.‖9 All sectors of the United States economy mirrors this psychiatrist‘s practice of, in part producing wealth, but in the greater part only extracting of wealth. An episode of the Sally Jesse Raphael Show featured young women who, at fourteen years of age, were unjustly institutionalized.10 With remarkable insight, these young women figured out the fraud, and outwitted the system. A patient advocate, a member of the Minnesota Mental Health Association instrumental in freeing these young ladies, pointed out that, when hospital occupancy declined they expanded into child care, and both ―hospitals and psychiatrists were preying upon parents and children.‖ The ―cures and discharges came miraculously when the insurance ran out.‖
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The Children‘s Defense Fund suggests at least 40% of these juvenile admissions were inappropriate, while a Family Therapy Network youth expert put the figure at 75%.11 Few experiences could be more damaging to the self image of a youth than institutionalization during those crucial formative years. On balance, in the search for profits, the psychiatric industry can only have been doing far more harm than good. A study by Rand Corporation found 40% of hospital admissions as being inappropriate because they involved simple procedures that could have been handled just as well in a doctor‘s office. Thirty percent of operations have been deemed unnecessary. Localities with fewer doctors had lower mortality rates and during hospital strikes in the United States, Canada, Great Britain, and Israel, the death rates went down. In the Israeli and New York strikes, the hospitalization rate dropped 85%. ―It was as if the population was in better health when medical care was limited to emergencies.‖12 Canada is listed among those countries with lowered mortality rates when doctors were on strike. Yet ―Canadians get bypass surgery half as often as Americans.‖13 When exposed, the installation of pacemakers under promotions reminiscent of staying in style was a disgrace.14 This author listened on the evening news to Dr. David Graham, who blew the whistle on Vioxx, pointing out that, ―The patients that Vioxx was killing [44,000] equaled the death rate of two to four airliner crashes a week and there were five more drugs he knew that were highly suspect.‖ Running an Internet search for ―drugs, whistleblower‖ or ―trans-fats, Denmark‖ will alert one the problem goes far beyond drugs. In each case addressed above, gaining markets, whether there was a real need or not, occasionally even if the process or product was lethal, was the game. Unneeded sales through market creation are springing up all the time. The recent lowering of the recommended cholesterol levels was surely for millions more patients to take prescribed statin drugs. TV ads on ―restless leg syndrome‖ are to create a whole new syndrome requiring treatment with high-priced and dangerous drugs. We could go much further but that is enough. This message, emailed to me, was sincerely appreciated: ―I am a doctor and everything you said is true.‖ David Himmelstein and Steffie Woolhandler are doctors at Harvard Medical School. In 2001, along with Dr. Ida Hellander, they wrote Bleeding the Patient: The Consequences of Corporate Health Care.15 Here one will read 238 pages of unsettling facts on the American Health care system paralleling that just described. Universal health care as a human right, paid from socially-collected resource rents and socially operated banking profits, with private doctors paid well yet all incentive for unnecessary treatment eliminated (like Britain, pay doctors bonuses for keeping patients healthy), would quickly drop health care costs by 60% even as all citizens receive quality care. A serious food and nutrition study and citizen
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education, if not dominated by food and drug corporations, would drop those costs another 50%, up to the last three years of life, while increasing life spans substantially. Example: Three years after the alert on the dangers of transfats, the evening news said, ―There has been a dramatic rise in life expectancy and the experts do not understand why.‖ Corn syrup and other cheap, high glycemic, sweeteners that the body cannot metabolize will prove to be just as dangerous.b
Welfare disappears when the wealth extractive processes are eliminated: In an inclusive society with full and equal economic rights, the only welfare necessary would be for those mentally or physically incapacitated. By right, the first jobs for which they are qualified should go to the functionally impaired—answering services for the blind, accounting and secretarial work for those in wheelchairs, janitorial and assembly work for the learning disabled, etc. Surely there are jobs for most of these 14 million disadvantaged people, whose self-esteem would soar if only they could achieve self-sufficiency.c The Americans with Disabilities Act (ADA) makes it illegal to discriminate against the physically or mentally disadvantaged in jobs they can handle. The severely impaired should have the opportunity, but—since any evaluation would be arbitrary—not the obligation, to work. It is those who have been faced with dependency who can best appreciate the need for the pride, equality, independence, and self respect, achievable through productive labor. When handicaps result in a lack of productivity, employers being compensated by society as they maintain their employment, a right already in law, would eliminate most of the welfare bureaucracy. Those once working in the welfare industry can now move to productive jobs. Others would have the right to a job, much as they do now—through talent, education, tests, interviews, contacts, seniority, etc. The major change would be a dramatic cut in the workweek, by law, which would—considering a total restructuring of society, open up space for realization of that human right. Who would object to over a 50% reduction in employed hours with no loss of living standards? Rights to equal pay for equally-productive labor, a productive job, land, one‘s share of the fruits of technology, universal health care, retirement as a human right, honest insurance, the elimination of legal hocus-pocus, a public taught responsibility for its own health, and social safety nets for disastrous events that deny a person the ability to care for their family as a social right is the Run a Google search for Bountiful Baskets.org. There one can buy healthy fresh fruits and vegetables for half the cost as in supermarkets. This simple distribution of quality food, as opposed to processed foods, would add years to one‘s life span. c Mary Lord, (―Away With Barriers,‖ U.S. News & World Report [July 20, 1992]: p. 60) says 43 million. Fourteen million is the lowest figure I have heard. b
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foundation of a truly democratic, all-inclusive, peaceful, productive, society with need for welfare only in cases of mental or physical incapacitation. Where the foundations for primary monopolies are various forms of titles to nature‘s wealth, secondary monopolies evolved filling a need that citizens should be entitled to, a right which powerbrokers neglected (refused) to establish in law. Doing so would eliminate their market monopolies which currently waste over half our labor and resources. Waste within those monopoly structures, as addressed above, expanded through the sale of unnecessary services. Eliminating monopolization through legislating those necessary services into a right typically reduces service costs over half even as citizens are better served. Unnecessary infrastructure—monopoly insurance structures, excess prisons, excess law offices, excess courtrooms, etc, and all currently wasted labors and resources—can be turned to productive use.
Agriculture within the community social-credit process: On July 4, 2005, Der Speigal pointed out: When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ... Corn that predominantly comes from highly-subsidized European and American farmers ... and at some point, this corn ends up in the harbor of Mombassa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.
Zambia had 40 small industries producing clothes for Zambians. A flood of used clothes from America undersold those producers, those industries closed down, the economic multiplier went into reverse, and the number of impoverished Zambians rose rapidly. The wealthy world feasts on chicken breasts while boatloads of imported chicken wings and drumsticks, supported by the high price the wealthy will pay for those breasts, undersell and devastate the economies of weak nations. Not
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only are poor countries unable to compete against subsidized imported food and consumer products, they are also unable to export to the wealthy world due to both high supports and tariffs. At times, the imperial centers sell items for roughly half the cost of production. But the money spent producing that item circulates within an exporting economy, roughly 15 times. This is the economic multiplier. Each million dollars worth of exports sold at half the cost of production, in this case $500,000, still generates $7.5 million of economic activity in the wealthy country year after year even as the same multiplier, now in reverse, eliminates the same value, $7.5 million, of economic activity annually in the importing country. The entire $1 million chicken business in the importing country disappears plus another $6.5 million dollars worth of business through which that money once circulated. Let‘s reverse this process: If American farmers were undersold by subsidized agricultural surpluses from another society or that imported food was given to American consumers, U.S. farmers could not sell their crops. They would go broke, the tractor and machinery companies would be bankrupt, the millions of people depending on these jobs would be without work, resources and production of remaining industries would have to be sold to other societies to pay the import bill, and America would quickly become impoverished. In a country not yet industrialized, their natural resources must be sold to pay for subsidized food, and other consumer products, from the industrialized world, and debt traps are put in place to maintain that dependency.16 This process created a disaster in Mexico. As their food imports rose to 60% of their needs, wages fell drastically, industrial production shrunk, and debt and hunger increased dramatically. And it will get worse. Businesses that moved to Mexico for $3.50 an hour labor under that trade agreement are now moving to Asia for even cheaper labor and, along with those traders banking those massive profits instead of sharing, caused, in part, the current 2008-10 economic crisis. Subsidiary monopolies follow this pattern: Through licenses to provide services within a monopoly structure, the citizenry are denied full and equal economic rights, doubling their costs, even as services are reduced. Give citizens full and equal economic rights—including insurance, health care, a just legal structure, etc—as social and human rights and those monopolies disappear, even as the quality of services rise rapidly. Elimination of monopolization extends both social and human rights substantially further than the Universal Declaration of Human Rights. Values, equal to the massive blocs of capital that once bought and sold by those monopolized service industries, have been transposed into relatively equally-shared use-values. Again we point out that unearned wealth extracted through unequal property rights, is capitalized by a multiple of 10 to 30 times, sold, and becomes a bloc
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of capital which is loaned, in one way or another, back to those from whom it was extracted. Through taxes or consumer purchases, the citizenry repay that principal, plus interest, over and over on into perpetuity, and that impoverishing cycle continues, interrupted only by economic collapses (which appears to be happening as we speak) caused by too much unearned wealth in the hands of the few, and too little buying power in the hands of the many. As soon as the services of these secondary monopolies are declared a right, the social structures can be put in place to care for those newly declared social and human rights at half the cost, or less, even as the quality of care rapidly rises. The efficiencies of monopoly capitalism are fiction. We now turn to a modern information commons through which these rights can be realized. Greider, Secrets of the Temple, p. 630; Christian Miller, ―Wall Street‘s Fondest Dream: The Insanity of Privatizing Social Security,‖ Dollars and Sense, November/December 1998, pp. 30-35; Edward S. Herman, ―The Assault on Social Security,‖ Z Magazine, November 1995, pp. 30-35; Bernstein, Merton C., Joan Brodshaug Bernstein, Social Security: The System that Works (New York: Basic Books, 1988). 2 Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Metropolitan Books, 2007). 3 Fred Rodell, Woe Unto You Lawyers (Littleton, CO: Fred B. Rothman & Co., 1987). 4 Rodell, Woe Unto You Lawyers, pp. 16-17. 5 Katherine J. Lee, ―Justice Has Broken Down,‖ Americans For Legal Reform 4/2 (1985), p. 5; and other issues of ALR. 6 George Milko, ―It‘s Hassle-Free Down Under,‖ Americans for Legal Reform 6/3 (1986): p. 3. 7 Adam Smith, The Wealth of Nations, Modern Library ed. (New York: Random House), p. 680. 8 Thomas K Grose, ―Free Health Care for All,‖ U.S. News (March 24-April 2, 20070), p. 65; Rasell, ―A Bad Bargain,‖ p. 6; Robert Weil, ―Somalia in Perspective: When the Saints Go Marching In,‖ Monthly Review (Mar. 1993): p. 10. Others have somewhat different statistics: Tom Shealy, ―The United States vs. the World: How We Score in Health,‖ Prevention (May 1986): pp. 69-71; Ernest Conine, ―U.S. Should Take a Tip from Canada,‖ Missoulian (Apr. 2, 1990): p. A4; John K. Iglehart, ―Health Policy Report: Germany‘s Health Care System,‖ The New England Journal of Medicine (Feb. 14, 1991): pp. 503-08 and The New England Journal of Medicine (June 13, 1991): pp. 1750-56; Victor R. Fuchs, PhD., and James S. Hahn, A.B., ―How Does Canada Do It?‖ The New England Journal of Medicine (Sept. 27, 1990): pp. 884-90. 9 Richard Bandler and John Grinder, Frogs Into Princes (Moab, UT: Real People Press, 1979), p. 102. 10 Sally Jesse Raphael Show (May 30, 1988). Patient advocates Bill Johnson and Tom Wilson. 11 ―Kids in the Cuckoo‘s Nest,‖ Utne Reader (Mar./Apr. 1992): p. 38. 12 Sale, Human Scale, pp. 267-68; André Gorz, Ecology as Politics (Boston: South End Press, 1980), p. 161. 13 Hurwit, ―A Canadian-Style Cure,‖ p. 12. 14 Donald Robinson, ―The Great Pacemaker Scandal,‖ Reader’s Digest (Oct. 1983): p. 107. 15 Himmelstein, David, Steffie Woolhandler, Ida Hellander, Bleeding the Patient: The Consequences of corporate Health Care (Common Courage Press, 2001) 16 See Bhagirath Lal Das, WTO: The Doha Agenda: The New Negotiations on World Trade (London: Zed Books, 2003) and his many other books. See also: Vandana Shiva‘s Stolen Harvest: The Hijacking of the Global Food Supply (Cambridge: South End Press, 2000). 1
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24. A Modern Information Commons, Education at 5-to-15% the Costs of Brick and Mortar Schools
Restructuring the developed world is prevented because information is monopolized by the financial power of four primary monopolies—land, Finance Capital, technology, communications—and the secondary monopolies, insurance, law, health care, etc. Control of information, primarily the economic classics and the corporate media, protects monopolies. This ensures that wealth will remain in the same channels going to the same class of people. Use-values are produced by combining labor, capital, and resources. Through exclusive titles to (monopolization of) nature’s resources and technologies, others are denied their rightful share of what nature offers to all for free. The unearned share, of those values are claimed by capital which capitalize (monetize) those profits, both earned and unearned, by 10 to 30 times. These values, again both earned and unearned, circulate among monopolists as they each jockey for position within the ethereal world of high finance, maximizing their extraction of wealth, as opposed to the production of wealth. Unequal property rights, as applied to nature‘s resources and technologies, locks each into the system. Through monopolization of the communications industry, perception management keeps belief systems firmly in place and it requires no conspiracy. Each one does just what we would do; fiercely protect the source of our livelihood. The citizenry know little about past battles through which the limited rights they have today were wrenched from those laying claim to the major share of the wealth produced by nature and technology. Professor Herbert Schiller explains how America‘s view of the world has been distorted through labor having been ―sealed off‖ from much of their history: How many movies did [corporate America] make about the labor movement? After all, America is made up of people who work. Where is the history of these people? Where‘s the day-in day-out history of the African American population? Where‘s the day-in and day-out history of women? Not just one program. Where‘s the whole history of the people? Where‘s the history of protest movements in America? Can you imagine the kind of material that could come from American protest
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movements? The entertainment people are always saying that they don‘t have enough dramatic material. Who are they kidding?1
Just like the windmill, steam engine, and electricity becoming so cheap that the powerful lost monopoly control, a communications superhighway has the potential of being so inexpensive that—within both the wealthy nations and developing nations—minorities, environmentalists, the peace movement, lower-paid labor, and all politically weak segments of society will be able to reach the citizenry with the histories of dispossessions, impoverishments, waste, and violence. With that knowledge, their equal share of the wealth produced by nature‘s resources and technologies, rightfully belonging to us all in roughly equal shares, can be reclaimed, and the waste and violence eliminated. Powerbrokers will use all the deceits and power at their disposal to prevent or delay the loss of their niche within the economy for extraction of unearned wealth. Those powerbrokers have been buying up exclusive titles to the efficient low frequency communication spectrums with the intent of forever forcing the citizenry to pay monopoly prices: Imagine … that you‘re relaxing on the white sand, with a slight breeze in the air, just steps from clear blue water. The beach is open to the public, but it‘s never too crowded. It‘s a great place to surf. But then one day you show up and there‘s a huge brick wall blocking your path to the shore. Without telling anyone, the government sold off this seaside spot to a private developer. … If you still want to dip your toes in the water, the new management expects you to pay through the nose. You‘d be pretty angry. Right? Well that‘s exactly what is happening right now in Congress. Only the valuable public resource being auctioned off isn‘t the beach—it‘s a prime slice of the public airwaves. … The airwaves being taken over by the broadcasters are the Malibu of the radio spectrum—fine beachfront property. Signals at these lower frequencies travel farther at lower powers and can go through obstacles like walls, trees and mountains. That means lower infrastructure costs for broadband providers, encouraging the development of local wireless networks and lowering prices. With more unlicensed spectrum, the ―Community Internet‖ networks being setup across the country would be faster and even more reliable. Super-high-speed broadband connections for just $10 a month could be a reality. … We‘re headed for a world in which all communications—television, telephone, radio and the Web will be delivered over the Internet. … We can sell off our public resources … or we can invest in the future, bringing the benefits of broadband to all Americans. But first our lawmakers need to pull their heads out of the sand.2
This example of establishing exclusive title to nature‘s resources and technologies, and forever claiming wealth produced by others without providing equal value in return, is a beautiful example of how exclusive-title-monopolies have
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been structured, through unequal property rights laws, for centuries. Each of those exclusive titles, or licenses, permits massive overcharges to the public for use of what are properly social rights and human rights, their share of those social services and nature‘s wealth at the lowest possible price. White space (unused spectrums within current spectrums) use, approved in 2009, expanding spectrum capacity several times may lead to those lower costs. Even as we are far overcharged, the gains we do receive are so huge, and the even greater gains possible normally totally unknown, that everybody believes what they have always been told, this is the best of all possible property rights systems. But the communications superhighway being partially operational in America, and fully operational in some countries, the possibility of the entire monopoly system collapsing, and society hopefully eliminating that waste, is what this book is based on. We will confine ourselves to how a communications superhighway could be established, if planned as a maximally efficient part of the community process. Through E-learning (distance learning) many professors already have their lectures and curriculum online for their students to do their studies at home.a The student saves lodging and travel time, but other college/university costs are still, unnecessarily, the same. Internet1 is a hodgepodge of servers and routers reminiscent of the buggy roads of 200 years ago while Internet2—utilizing Abilene, Backbone Network Service (vBNS), and Wiki software, designed specifically as a communications superhighway connecting one to sources as they write (research Google Chrome‘s operating system)—and it has downloadable and uploadable speeds 10,000 times greater. Internet 2 has already proven that all we will be describing is possible. It was designed to handle the data output of the Hadron Collider in Switzerland and other research, all of which requires massive computing power. Utilizing this latest technology, the emerging world can install communication superhighways that, relative to brick and mortar education costs, are almost free. Those satellite digital superhighways, accessed through universal wireless broadband receivers on board all new computers, can reach even the remotest rural areas at very modest costs per user. Cell phones and broadband, already operational from any place on earth, will soon relegate landlines to history. When more satellites are needed, they will be launched. That modest investment, creating modern communication superhighways, will permit countries to educate their citizens as far as they want to go at 5-to15% the cost of brick and mortar schools. That savings alone would, each year, more than repay the costs of establishing those information superhighways. A Google search alerts us that grade school and high school classes are also available online. a
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Communications Superhighways Eliminating Monopolization Assuming the world breaks out from under the many forms of monopolization within unequal property rights law, specifically meaning avoiding the privatization of those efficient low frequency spectrums, a 99% reduction in consumer cost per unit of communication capacity is possible. When those information superhighways reach each home, a population can be educated for the 5-to-15% of today‘s costs we keep pointing to. The emerging world has the opportunity to make an end run around those nations whose valuable communication spectrums are monopolized and their brick and mortar schools fully operational. Massachusetts Institute of Technology, NASA, and Google, combining their expertise and money to provide an indestructible, WiFi and cell phone equipped, $200, laptop computer, for developing-world governments to provide free to children might be replaced by Google‘s new Chrome operating system operating entirely on the web using open source software. With operating systems and software on the web for free use, the current expensive software will be discarded to the dustbin of history. With operational costs for individual Internet service now cheaper than accounting, costs of phone calls and broadband connections can be borne by society. Already VoIP (Voice over Internet Protocol) users speak to each other for free and the reception on the other side of the world is as clear as local landlines Skype, only one of many providers, has 405 million subscribers and adding 380,000 every day. Through the community social-credit process funding worldwide communication systems—as opposed to taxes—these efficiencies can be attained. TV and radio stations streaming their programs onto those information superhighways will eliminate the need for down-stream booster stations.b Consumer choices will thus expand exponentially. The shakeout within the developed world will be at the same pace as those information superhighways are installed. The brick and mortar school infrastructures of the developing world will not have to be built because they already have full access to education. To compete, the now-out-of-work, former down-stream, booster stations must provide more interesting programming. The market for programming without advertising will trump the advertising stations those TV and radio stations, will have to produce programming for a narrow, single-interest, audience.
Several broadband URL connections, viewable on your TV, each with thousands of TV station choices, and adding more every day, are already available online. b
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News networks will face the full brunt of competition as alternative news from around the world becomes available to all. Democracy Now, Link TV, Mosaic, BBC, AlJazeera, INN Report, Indymedia, documentaries, and news from all countries in all languages would present their views. Major news networks will have to address those various views or become irrelevant. Perception management will be severely constrained and control of perception to protect the wealthy and powerful will quickly become impossible. As few people can handle such an overload of viewing choices, sports will gravitate to one bloc of stations, music and sitcoms will each gravitate to their blocs, and the viewers will further subdivide into various categories, such as a bloc of channels with pay-to-play movies. Stations forced to close will be picked up by NGOs, and political groups, for pennies on the dollar. Formerly forced to the margins, dedicated progressives, environmentalists, sustainable-living researchers, permaculturists, Greens, the peace movement, minority rights, labor rights, women‘s rights, children‘s rights, antipoverty, and a thousand more causes will be able to reach the citizenry with their views of the world over those same information superhighways. Politicians must address questions brought up that were previously kept off the table. Alert viewers will have hard questions; those answers will be available, will be voiced, and will be understood. Propagandists will no longer be able to create justifications for war, and full and equal economic rights, with peace and prosperity for all, will be possible.
Communication Superhighways Eliminates Intermediaries and Reduces Trading Costs The difference between manufacturing cost and the consumer price, measures the major cost of most products, distribution. Typically, manufacturing costs are under 20% of the final selling price. With mail-order shipping charges from 2-to4% of retail price, no one would pay intermediaries three to five-times the production cost when it is feasible, in this communication superhighway age, to study the products on an Internet database, contact the producer, buy the item, and have it shipped directly at 30-50% today‘s cost or even less. A large share of the world‘s consumer products are imported. But, if full and equal economic rights were attained worldwide, including equally-productive labor relatively equally paid, production will be primarily regional. Shipping half way around the world what could be produced next door is economic insanity. Once the common-sense principle of equal pay for equal work worldwide is accepted, and put in place, it will be much cheaper to produce and distribute regionally; those shiploads of identical consumer products meeting and passing
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each other on oceans and highways —consuming enormous finance capital, industrial capital, labor, resources, and energy—will be history. Besides doing office work at home, one can search for, and order, consumer durables. Middlemen are primarily in the information business. Over the Internet, it will be possible for producers and consumers to trade directly and cheaply again, just as face-to-face trades were finalized for thousands of years. The current army of intermediaries would disappear. As those marketing channels become operational, prices for middle-priced to expensive items will drop sharply. The savings in distribution alone will sometimes reach those savings. In short, measured in labor time producing and distributing, and counting the savings from elimination of patent monopolies we discussed above, consumer costs of small to medium size consumer durables should drop 50-to-80%. Currently America has 10 square feet of retail floor space for each shopper while Britain has only two square feet. That surplus retail space will disappear as Internet shopping rapidly lowers costs to a fraction of current levels. A great shakeout of the retail industry is inevitable. The buildings and support infrastructure for 60%, and it could be 80%, of what the developed world today considers necessary for distribution will be available for productive uses. An efficient, productive, and sustainable economy is possible. Bill Gates, who accumulated $60 billion because he understood communications technology better than most, said, ―The information highway isn‘t quite right. A metaphor that comes closer to describing a lot of the activities that will take place is the ultimate market.‖3 We are describing that ―ultimate market.‖
Big-ticket, Infrequently-Purchased Items Autos, appliances, furniture, farm equipment, industrial equipment, and major tools are all big-ticket, infrequently-purchased items whose buying requires accurate information but not the promotional-persuasive advertising hammering at us incessantly. We trust and get information from experience and we make the most important decisions by observing products in daily use. In a communications commons, customers would make purchase decisions by dialing a database containing all manufacturers and models of a product. That database would have information required to make an informed decision—energy efficiency, noise level, hours of useful life, price, and other features—as well as videos of the product in use. With tests by independent researchers, such as Consumer Reports, note the pressure this would put on manufacturers to produce the most efficient products and stand out in this allimportant master index. Buyers would, at their leisure, study engineering specifications, styling, and actual use of the product on their television or computer. Once a decision was made, they would only need to punch in the code for the
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desired order—model, color, and accessories—and a databank computer would note the closest distribution point where that item was available. Or buyers could choose delivery from the factory. The bank account number, thumbprint, eye-scan, thermogram and/or signature of an Internet shopper would be verified by a master computer and that account instantly debited. If a credit line had been established at the local credit union or bank and recorded in an integrated computer, credit would be handled simultaneously. The process, not involving advertising, sales, or banking labor, would greatly reduce transportation, storage, and sales costs. Pressures on resources and the environment are correspondingly reduced as the price of these major consumer products, again measured in employed labor hours to earn the money, fall by 50%. Product guarantees, maintenance, and repairs would be taken care of by local private enterprise under standardized guarantees. Direct trades between manufacturer and consumer, and elimination of distribution intermediaries, will be guaranteeing high-quality products at the lowest possible price. Both seller and buyer would save time and labor as verbal explanations and mailing of information are eliminated. The current time-consuming exchange of information would be replaced by consumers studying databases at their leisure. This would conserve millions of acres of trees and the environmental impact caused by manufacturing paper, producing brochures and distributing that information, including a large percent of the retail establishments themselves disappearing, should be of high interest to the sustainable development movement. Every qualified producer would enjoy the right to place his or her product or service in the databank and pay a very small percent of gross sales out of cash flow. In place of millions of dollars up front to advertise through the present openly-monopolized media, there would be only a small charge for entering the product information in a database. To eliminate clogging the databanks with useless information of producers no longer in business, regular minimum payments would be required to retain the privilege of selling through this integrated communications network. Starting up a truly productive industry would be quite simple. A new company‘s advertising would have full billing alongside major producers. With consumers having easy access to all choices, a few wealthy corporations would no longer decide, through promotional-persuasive advertising, what the public wants. In the United States, once direct contact is established between producer and consumer via product databases, it would only require roughly 100,000 railroaders, possibly three million truckers, and a system of organized freight terminals to distribute the nation‘s production. It would be a freight postal system just as with Christmas packages today. The item would be delivered, or consum-
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ers would receive notice of the arrival of their purchases, and pick them up at the local freight terminal. There are normally several trucking companies in any moderate-size city, each complete with loading docks, storage capacity, dispatching equipment, and staff. The following shipping pattern is already operational: 1) Shippers punch into a common-use database loads to be shipped; 2) truckers with computers punch in their location, freight preferences, and where he or she would like to deliver the next load; 3) the computer shows where the loads are, the type of freight, the required pickup and delivery times, the rate per mile, etc; 4) the trucker chooses a load, informs the computer, and records his or her identification number; 5) and the computer records the acceptance, removes that load from the databank, provides a contract number to the trucker, and informs the shipper. There will be no need for duplicated dispatching services, loading docks, storage facilities, equipment, and personnel. Competitive monopolies, created by the minimum capital requirements for trucking companies, are eliminated, placing independent truckers on an equal footing with corporate truckers. The nation‘s freight will quickly settle into flow patterns, and be moved as regularly as mail by the cheapest combination of rail, truck, ship, and plane. It might take three days to receive small items, and up to 10 days for large items but, at one-half the price or less while taking pressure off of resources, society is well paid. Transit time between producer and consumer will be a fraction of that currently through jobbers, wholesalers and retailers. A barcode scanner listing the cheapest price in the area, and on the Internet, will lead shoppers to distribution points with prices marked down 60-to-70%. Manufacturers‘ on-time delivery of parts to the factory, that greatly reduces storage and finance capital costs, will have been expanded to on-time shipping to consumers. Those within the retail system who, formerly bought, stored, and sold these products, are available to share the remaining productive jobs. Society will eventually attain an undreamed-of efficiency. Well over 50% of these intermediaries between producer and consumer will eventually be eliminated, and assuming society was alert and restructured labor's working hours and other crucial adjustments, all would be free to share the remaining productive work with employment outside the home of only two to three days per week. Once those productive jobs are shared, the average workweek reduced, and labor fully paid, the small amount of time necessary to labor for one‘s share of the nation‘s wealth, plus resource rental costs paid into the social-credit fund, would be the proper measure of the price of products and services. That potential reduction in costs, through elimination of unnecessary labor and productive
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labor being fully paid, is the meaning of Adam Smith‘s little-noticed insightful statement, ―If produce had remained the natural wages of labor, all things would have become cheaper, though in appearance many things might have become dearer.‖
Inexpensive, Small, Frequently-Traded Items The markup on perishable groceries is about 100% while the markup on small consumer durables is several hundred percent. There is a competitive sales monopoly at work in the latter. Taking full advantage of modern communications would remove all purchases above an intermediate price range out of the wasteful, duplicated retail outlets. Simultaneously, the consumers‘ choices would multiply through access to these products in databanks. Household supplies, cosmetics, knickknacks, and most small, inexpensive consumer items would be most efficiently distributed through the present retail outlets. The breakeven point would be in the lower range of the intermediatepriced, occasionally-purchased, items. BountifulBaskets.org is distributing within several states fresh fruits and vegetables to local pickup points at the price normally charged to the markets those truckers formerly supplied. Wholesalers would keep the quality and price of all products posted in a databank. Once trust had been established, retailers would check those bulletin boards for the best buys. This would eliminate the need for many jobbers and other salespeople.
Shopping as a Social Event Entails a Cost Shopping is recreation for many people and a status symbol for others. Those status shoppers would have no trouble finding merchants to accommodate the high prices associated with status shopping (Tupperware, Avon, Tiffanys, etc.). The majority would choose the most direct, least labor-intensive, cheapest, method of completing a trade. This would not impinge on coffeehouse-type trades where socializing is the primary activity.
Reserving TV Time for New Products Innovations on a familiar product would be readily presented to the public through a databank while totally new products would require special access to the public. Complementing TV channels reserved to feature new inventions, these creations accessible in a database, would be quite popular. Once a production-distribution infrastructure is in place, promotionalpersuasive advertising becomes wasteful. Rather than titillate the consumer with thousands of toys to be played with and discarded, it would be much more so-
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cially efficient to abandon persuasive advertising and permit people to advance to a higher intellectual, social, and cultural level. The maximum average living standard within the capabilities of the earth‘s resources and ecosystem can be calculated. Society could, and should, use those proven promotional-persuasive methods to educate people about the waste of the current production-distribution systems. Many in the developed world have already abandoned the ―conspicuous consumption‖ lifestyle for rational living (see pp. 229-30, also the Anastasia book series by Vladimir Megre). If people are so dull that a society with a respectable living standard cannot function without promotional-persuasive advertising, which we do not believe, society could analyze advertising for essential and nonessential products for the desired standard of living. Many items—cigarettes, alcohol, and chemical-laden processed foods—lower the quality of life at a serious pace, their promotion, or promotion of food with transfats or corn syrup in them is economic insanity. The public, captivated by the enormous wealth they are unaware of as having been extracted from them, pays dearly for the debasement of their lives. Driving a $60,000 luxury automobile while others are driving fuel-efficient $20,000 cars may draw admiration today, but that will turn to ridicule as soon as each are paid roughly equally for equally-productive labor. The resources saved and pollution prevented by that refocused social mindset would be essential to the survival of thousands of species, to humankind‘s quality of life, and most probably to our survival.
Music, Sports, Movies, and Game Shows A block of channels should be reserved for sports, movies, and game shows, pay per view is already well established; however, they will be cheaper. Along with more time to enjoy TV, viewer choices would rise, and the truly talented artists would be well paid for their efforts. All would have a reasonable opportunity to prove their abilities. A formula of gradually reduced pay per million viewing hours as a show increased in popularity would compensate performers relative to their popularity, little different than now. With new performers having access to the public, monopoly control disappears.
Investment and Job Opportunities Along with databases, a few channels should be reserved for direct communication between those offering investment opportunities and investors looking for them. As everyone with savings would have access to investment information stored in those databanks, money monopolists would be bypassed. Individual investors would put their risk capital in innovations that went unrecognized by
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regular loan institutions. If the investments were truly productive, investors would receive much higher than average returns. However, if their claims to insight were not valid, they would not be able to hide behind the protective shield of monopolization. An entrepreneur who had obtained community approval, and initial investment capital from the bank, they need both now, would deposit a prospectus in a databank. Investors would study the various investment plans, buy shares in the most promising, and have their accounts automatically debited, all without intermediaries. Talented workers would look over prospectuses, which would include labor needs and incentives, and if they saw where their talents would be used productively and profitably, and assuming they had fulfilled their contract to train a replacement, they could transfer to that new job. Labor would be mobile and free, not dispossessed as in a reserve labor force. Their right to their share of the efficiency gains of technology translates to average employed working hours of only two to three days per week.c For their risk, the original innovators, investors, and worker owners would receive the initial higher profits plus the increased values of a successful company. Through sharing in the profits, workers and management who bought stock through deductions of 10-20% of their wages would be well compensated. The profit potential would increase their desire to maximize efficiency and provide incentive to look for new industries to develop.4 Others would quickly analyze and duplicate the innovative production or distribution process, and prices would fall to just that required to compensate the innovators, labor, and capital. Through low priced products, equal pay for equally-productive labor, and rights to a productive job, each member of society would be receiving their proper share of wealth provided by nature and the efficiency gains of technologies; which are gifts of nature nurtured by inventors‘ labors and talents. If a replacement were not immediately available, other workers at the factory could double their pay by working five days a week. Strict rules of later time off to compensate would have to be followed. Permitting doubling up on employed working hours would appropriate the labor-rights of others and subvert the economy through again creating a class with superior rights (though in a much subdued form). See the work of Charles Fourier 180 years ago, and Thorstein Veblen, Bertrand Russell, Lewis Mumford, Stuart Chase, Upton Sinclair, and Ralph Borsodi in the first half of the 20th century. Late 20th century writers describing the same phenomenon are Juliet Schor, Seymour Melman, Samuel Bowles, David Gordon, and Thomas Weiskopf, Jeremy Rifkin, Andre Gorz, HansPeter Martin and Harold Schumann, and numerous European authors. c
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With a communications reducing production and distribution costs 60%, adequate compensation to the innovators being 10%, and prices measured in hours of labor required to purchase a product, the public would benefit by a 50% reduction in the price of consumer products. Through the reduced income of a shorter workweek matching the reduction in living costs, there would be no loss in average living standards. Societies which decided to forego a throwaway society and opt for a fuel cell, hybrid car, bicycle economy, and other efficient transportation systems, would provide a quality lifestyle with even less labor. Global warming is the world‘s most serious problem. A sensible world society, designed to reduce pollution, reduce greenhouse gases, and still provide a quality life for all, can be designed with each employed outside the home two to thee days per week. The human animal has tremendous energies which must then be channeled into pleasurable pursuits that do not consume precious resources or pollute the environment.
Education Children want the approval of their parents and other members of society. They love to excel, and desire equality with their peers. They are curious and, if not discouraged, love to learn. Today‘s educational system creates too many barriers; ―half of all gifted children float through school with average or worse grades, never realizing their potential ... almost 20 percent will drop out.‖5 There are many reasons: a child may be timid and terrified of school, an inferiority complex may prevent a student from functioning, or excessive pressure to do well may be daunting. The school district may have obsolete books and teaching aids, and students may not get the individual attention they need. Local peer groups, gangs, etc., may replace parents and teachers as role models. Parents may not be involved enough in their child‘s learning. Or the curriculum may be so slow it is boring. With elimination of these, and other, barriers, many with low grades will blossom right along with their peers. Schools are a commons but they need to be modernized. With K1 through K20 downloadable or viewable from Internet2, or an Internet3, every home would have every class at their fingertips, free of charge. Each subject would have several lecturers, each the best in their field. The competition would be intense for those lecture positions, and those best educators in the world would be well paid. Each recorded course would be edited for maximum clarity, simplicity, and comprehension. Everything in a book, or dozens of books, can be summarized in those recorded lectures.d Current access restrictions to Internet2 will disappear as other nations establish their accessible communication superhighways. d
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Reasoning is quite natural, and nothing can beat a good educator whose recorded lectures anticipate, and are carefully structured to answer, most questions. With all society having access, the fictions and omissions of history, especially omissions, would be challenged, researched, and corrected. With their lessons recorded, these high-quality educators would be spending less time teaching than any one of the tens of thousands they replaced. They would concentrate on studying all lectures for ways to improve theirs. Role modeling is the most potent teacher of all, and these skilled teachers would be great role models. The equipment required for each student would be a $200 computer, with the operating system and all software on the Internet, given free to every student on earth while in kindergarten, courtesy of their governments. These lessons would be in a databank, fully accessible on the communications superhighways. Classes requiring hands-on learning would be held in a classroom setting, along with supporting recorded programs. So long as students maintain an adequate grade average, a share of the money society saved on maintaining the present school system should be paid to their family, or directly to the student. Allowing for each child‘s ability, it would be logical to pay this incentive for each subject, and on an average of all subjects. With spending money earned for each subject, motivated students would zip through those subjects. Developing nations do not have to deconstruct an entrenched, expensive educational system, and their citizens‘ motivation for education is high, so incentive pay would not be a necessity, but paying them modest sums would establish that necessary model for when their economy is developed. A small share of current classrooms would become administrative testing stations, as the citizenry educate themselves cheaply, and efficiently, at home. With the two to three day workweek possible in a developed economy, there would be adequate time for parents to monitor their children‘s learning. With rapport between parent and child, the brightest would cover a current year‘s education in as little as four months, some in two months. The most intelligent, and motivated, would have the knowledge of PhDs at an age when they would normally be entering universities, which, incidentally, would eliminate another monopoly. Actually those students would have a much broader education than most PhDs. Current doctoral studies are very narrow in focus. Without breadth of education, the answers to the world‘s problems will not be found there. Conversely, if universities emphasized graduate degrees covering a broad spectrum of disciplines instead of narrow fields, answers would be found relatively quickly. Through free studies provided on communication superhighways, students would have that broad education. This is proven by over one million American
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children already being successfully home schooled, doing well in universities, and their numbers are growing 15% a year, all without government support.6 Students would not be pressured to follow the teaching of any one professor. Others might have a different view, and students could listen to all views. Judgments would be made while still young and idealistic. All this would be gained while enjoying the irreplaceable quality time between parent and child. Talented students, lacking parental support, would find a surrogate family by immersing themselves in education. Private or public education centers would be operated for the few who could not function under home self-education. Upon doing satisfactory work, they would still receive incentive funds. The compensations and identity received by siblings and friends for successful home schooling would be noticed by younger children, and provide motivation to avoid the formal school setting. Most children would be proud to go shopping with their own earnings, and it is hard to visualize many children being irresponsible toward their education if it meant losing both their freedom of choice, and their spending money. They would quickly learn responsibility when it meant both financial and emotional rewards. Society would quickly become accustomed to such a system and the need for brick and mortar schools would be very minimal. It would be logical to eliminate the senseless violence in today‘s children‘s programs. At the least, quality programming could be assigned a bloc of channels so conscientious parents could maximize their children‘s intellectual and moral growth. Incentive funds, as a social right, would in no way impinge on others‘ rights. Those rights could only be exercised by obtaining a set grade average, and those funds go right back to the people from whom they came. Over time, such incentives would be looked upon as normal as wages. Older students would soon learn to structure their flexible education time around a job. There need not be a sharp cutoff between school years and entering the workforce. The options for pursuing education for a career, and earning one‘s living, would be increased. Instead of a division between students and workers, the two would overlap until the young adults opted for a career. Motivated children, young adults, and adults would obtain most of their education at home and at their own pace. Children with a desire to learn, which is most, would find the field wide open. Left to their own devices, they would quickly learn it was their time and labor being conserved by dedication and attention to the subjects being taught. The alert would be developing university level leaning skills while in grade school Many talented children‘s potential, now lost through boredom and diversion to socially undesirable activities, would be salvaged. The brightest would attain a
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12 grade education in less than eight years, the middle level in 10, and even the slower group, which currently sets the pace of a classroom, would learn more quickly. There would be adequate resources, and time, to give special support to the few who are unable to cope for various reasons. This would not only conserve society‘s labor, it would also economize students‘ energy and time. This potential was shown by an experiment with interactive videos reducing learning time while increasing comprehension by 30%. Having watched great videos on Free Speech TV, Link TV, The Learning Channel, The History Channel, The Discovery Channel, public broadcasting channels, etc, we conclude the statement, ―A picture is worth a thousand words,‖ should be updated to; ―One documentary is worth a million words.‖ The best of those documentaries combines the wisdom of many researchers, which comprise many lifetimes of study. All viewers will absorb that knowledge at some level. Avid reading will seldom bring one close to the understanding gained from a wellresearched documentary. The gain for the slower, and less avid, readers would still be substantial. As opposed to being bored and discouraged, students will enjoy their education. A central testing facility would issue scholastic level certificates to adults. This would quickly equip all nations to be competitive. Since credentials are crucial for obtaining good jobs, all would have access to their scores, the right to analyze their answers, and the right to retake tests. Millions who dreamed of additional education would find it freely available in what was previously their idle time. As no one‘s knowledge is complete, every curriculum would be subject to review and correction. The Great Saint-Mihiel battle of WW I that never happened, and other examples of fraudulent history addressed throughout this author‘s books, are not exceptions.7 Severely distorted history is the norm, and such failures to tell the full truth seriously retards democratic development while correct, and full, knowledge is critical to understanding the world, and planning one‘s future. Every day we learn something new or reinforce what we already know. To waste huge amounts of resources while continually affirming nice-sounding slogans about efficiency, justice, and compassion, while operating an inefficient economy, and violent foreign policy, seriously limits true knowledge. It is not possible to get every student to enjoy learning for its own sake. If given a choice, most people would choose to do things that best support their need for identity and security; for many that is obtained in work, sports, and hobbies, rather than intellectual pursuits. There will be those who, though unable to compete across the board scholastically, will take great interest and do well in a field of their choice. Some, early on, will perform at a genius level, and hold that lead throughout their life.
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Schools, as now structured, do perform a babysitting function. But, if that is the criterion, society should be aware that the potentials of many children are lost, and that child care is what they are paying for, not education. One must also be aware that early industrialists hoped ―the elementary school could be used to break the labouring classes into those habits of work discipline now necessary for factory production....Putting little children to work at school for very long hours at very dull subjects was seen as a positive virtue, for it made them ‗habituated, not to say naturalized, to labour and fatigue.‖8
Inspired Teachers for Every Student People feel insecure at any suggestion of fundamental change in their social structure, and most are closely attached to their current institutions of education. But, in the current school structure, where is that all-important role model if the student has a poor, mediocre, or burned-out teacher? Under the system proposed here there would be all great teachers, each teaching his or her deepest beliefs, and their recorded lectures would be freely available for all. In the soft sciences, economics, political science, finance, some social studies, and yes, history, what passes for education is, unwittingly, really perception management encasing society within beliefs protecting the monopoly system, those exclusive titles to nature‘s wealth we all grew up with, unaware this was the property rights structure which denied others their rightful share. Certainly, good hands-on teachers are wonderful, but how can they hold enthusiasm with 25 or 30 children to teach? Would not the best possible teacher, backed by professional graphics, be able to put on an enthusiastic performance, and that enthusiasm be there forever in an education database, available to the world? Would not slow or timid students have a better chance of not developing an inferiority complex, and thus do better?
Parents Interacting Closely with Their Children’s Education With their increased free time, motivated parents would enjoy watching their children learn, and answering their questions. Children would ask an interested parent many more questions than they would a teacher. A motivated parent will go into deeper detail than the teacher, who has so little time to spare for individual attention. Students too timid to function freely in class would function confidently in a home setting. In the upper grades, motivated parents would share the experience, and learn with their children.
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Better Institutions for Socialization Socialization is of high importance. But the elimination of this function within education would free students for concentration on their studies, or it could remain a part of the education process if properly organized. Youth social clubs, or learning clubs, would spring up, and children would sign up voluntarily, as opposed to the requirement to attend school. When children join a social or learning club by choice, they would be bound by the rules of social courtesy, not classroom discipline, and would mix, relate, and learn social graces, at a faster pace than in a school setting. Parents would automatically seek such groups to replace the baby-sitting function of schools. With increased free time, the arts— music, dance, sculptors, singing, painting, and other skills—would expand rapidly.
Maintaining Curiosity, Creativity, and Love of Learning Education freely available to all in their free time would bypass that greatest of all destroyers of curiosity and creativity, the straitjacketing of children into conformity. We cannot count on a great teacher in every classroom. Witness Massachusetts, a state with much higher quality schools than the average, in 1998 over half the teachers failed state qualification tests. There are over 15,000 educational experiments yearly. Some show dramatic improvements in education scores. Yet the overall average of scores does not improve. Either these better teaching methods are not spreading to other schools, or those schools do not have motivated teachers. Why not combine modern technology with the students‘ abilities and desires, and trade the constraints of current classroom and university systems for the opportunity of an inexpensive, high quality, and enjoyable, education? One can point to great teachers and the gains for their lucky students. But there would be no loss to those children in this proposed educational structure. The number of children educated, to their maximum potential, would increase by a factor of two, three, or more. With easy access to classes in their spare time, many adults would broaden their education. Those who have a burning desire for another profession can gain credentials for their desired career even if finances are limited. Potentially great artists would have the opportunity to discover their talents, painters, poets, writers, singers, sculptors, ad infinitum? There are undoubtedly many latent Einsteins, currently spending their lives in drudgery, who would educate themselves, and have their genius suddenly blossom for all the world to see, and enjoy, in the form of a book, a song, a new theory, an invention. A large percentage of society educating itself to a much higher level would develop an even more efficient and productive society, while protecting the environment and natural resources.
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Once Borderline Teachable Graduating at the Top of Their Class Inspirational teachers and programs have proven they can parent impoverished children with damaged psyches into becoming successful citizens. One such teacher is Ms. Marva Collins in Chicago. She worked among her students, rather than from her desk. Each time one did well she would put her hand under his, or her, chin, lift the child‘s eyes to hers, and say, ―You are brilliant,‖ or give some other sincere compliment. Minority children in her class, once deemed borderline teachable, graduated from the university at the top of their class, and went on to become professors, lawyers, and other successful professionals. Failures were nonexistent. Charles Murray, in his infamous book, The Bell Curve, cited Ms. Collins, pointing out that such programs could not possibly improve academic achievement, or cognitive functioning. Having documented this teacher‘s successes 20 years earlier, Sixty Minutes went back after Murray‘s book came out, and checked on those 33 children.9 Those students were the roaring successes described above, and thoroughly proved Murray‘s thesis was racist nonsense supported by corporate hard-right think-tank money as outlined in chapter six. While restructuring to a just society, such programs would be used to salvage such at-risk children. With equal access to a society‘s benefits, and opportunities, most will be good parents, and most children will be well educated.
Culture and Recreational Learning Fine arts and recreational learning programs, such as are produced by public broadcasting documentaries, are enjoyable, and add to one‘s knowledge. Several channels should be reserved for these high-quality shows, and these too can be stored in databases. The social benefits of learning while relaxing are self-evident, and popular talk shows, and good recreational-educational TV commands a loyal audience. One live commercial show can easily exceed one PBS station, or alternative view station‘s, yearly cost for all recorded shows. With their fair share of funds through restructured funding, as described below, the present financial struggles of those who broadcast quality programs would be eliminated, which would lead to the production of many more great documentaries. Among the cultural and educational programs would be one, or more, channels reserved for introducing innovations, including governing, banking concepts, and inventions. Alert, imaginative minds would relate their special expertise to other machines, production processes, distribution methods, and social
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policies. Besides alerting consumers to new products, society would be devising simpler, cheaper, and environmentally protective methods of manufacturing, distributing, and governing.
Minority Cultures Several channels would be reserved for ethnic minorities. Within the American culture they are inadequately represented, and their participation in national culture is, at best, restricted. With these new rights, they would quickly develop outstanding media, and political, personalities to articulate essential issues and challenge the belief systems that protect power structures, and keep others in bondage. With their own communication channels, equal access to land and jobs, and the right to retain what their labors produce; minorities would share the nation's work, its wealth, and participate in national decision making. Every citizen might, at last, attain the full rights of equal citizenship.
Foreign Cultures When the vulnerable are not present to defend themselves, managers of state— seeking followers for aggressive intent—portray them as enemies. Programs created by cultures of other nations, correcting those views, are already streaming over communications superhighways. With the world in all living rooms, it would be difficult for managers of state to hide their aggressive intentions, as they create enemies to justify their wars. By mutual agreement, there should be reciprocal presentations of cultural programs between countries to provide cross-cultural information. Redrawn broadcast standards would limit propaganda. Beamed to every home, programs would show people throughout the world, at work, and at play. People would begin to appreciate, and respect, both what we have in common, and what is distinctly different.
Local Television With all TV stations able to stream over the communications superhighways, the meaning of a local station would change. Those with superior production teams could gain a national or even an international audience. As a source of community information, and culture, citizens will share ideas and experiences. Local sports, concerts, plays, and community information forums, on a broad range of issues, will be hosted. Meetings of governing bodies, normally open to the public by law, would be beamed over local TV.
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Elections With politicians having access to the public, through communications superhighways, there would be no need to spend private funds for elections. Politicians want to be just as honest as anyone else. With each of them having equal access to the voters, campaign funds could, and should, as all understand they are bribes, be made illegal. With free access to the citizenry for politicians assured by law, campaign contributions will be a liability, and disappear into history. Those reserved TV channels would be for serious leaders to present their views. Minorities, the poor, conservationists, peace groups, and all others, will have equal standing with the, currently overrepresented, corporations and business. With knowledgeable people invited to these forums, it would be difficult for politicians to duck the issues. Only when all have the opportunity to present their views, making perception management by a power structure counterproductive, can there be true democracy. Those who presented a consistent, and accurate, view of reality, and who promote a policy for the maximum good, would gather a loyal following. People would make value judgments on the history leading to the present problems, study the different solutions presented, and analyze the intelligence, and integrity, of the leaders. These opinion makers would watch the information forums to inform themselves and, in turn, inform the public. To do less would leave one uninformed, and lose one‘s followers. With elections structured for candidates to prove their mettle, like the famous Lincoln-Douglas debates, the now-informed citizens would be enabled to make responsible voting decisions. Monopolists will use every power at their command to prevent cheap communications between all people, and all elements, of society. However it will happen, hopefully quickly, and when it does today‘s monopolies will, just like aristocracy, be history.
A Socially-Owned Banking System within the Community Process Paying for Communication Superhighways As the cost of education will drop 85%, possibly 95%, and many other aspects of communication will have even greater gains, there would be no shortage of funds for operating a communications superhighway. Access to that commons would be as cheap as highways, sidewalks, and parks. The current monopoly system stands exposed as the system of theft it was designed to be throughout the past 700-plus years, as power brokers wrote unequal property rights laws to protect, and further expand, their wealth and power. The privatizations ongoing
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worldwide in recent history were those same protections and expansions of wealth and power. The above outline of efficiently educating both children and adults, only puts a framework on Nicholas Negroponte‘s vision of a free computer for every child in the world, so they can educate themselves. He learned this watching Cambodian school children teaching themselves on computers faster than other children were learning from books. Expanding upon that concept, Google had the insight, and the money, to restructure computers, software, and the Internet, far beyond Nicolas‘s vision. Together, these two visionaries are making an end-run around the major hardware and software companies trying to undermine that threat to their monopolies. Nigeria, South Africa, Uganda, Kenya, Tanzania, Rwanda, Burundi, Libya, and other nations are negotiating with Negroponte‘s group. The intention is for their governments to buy his $200 laptops and distribute them free to school children. It will take a few years to get internet access installed and those computers purchased and distributed. Within possibly one generation, an almost costless (per person) education, and communication system will be a reality across the world. Herbert Schiller (Interview), ―The Information Highway: Paving Over the Public,‖ Z Magazine, March, 1994, pp. 46-50. 2 Craig Aaron, ―Sun, Sand and Spectrum Policy,‖ In These Times, September 19, 2005, p. 13. 3 Steven Levy, ―Bills New Vision,‖ Newsweek, November 27, 1995, p. 68. 4 Ibid 5 Anne Windishar, ―Expert: 20% of Gifted Kids Drop Out,‖ Spokane Chronicle, January 7, 1988, p. B7. 6 Rebecca Winters, ―From Home to Harvard,‖ Time, September 11, 2000, p. 55. 7 George Seldes, Even The Gods Can’t Change History (Secaucus, NJ: Lyle Stuart, 1976), p. 16. 8 Juliet Schor, The Overworked American (New York: Basic Books, 1991), p. 61. 9 60 Minutes, September 24, 1995; Herrnstein, Richard J., and Charles Murray. The Bell Curve: Intelligence and Class Structure in American Life (New York: Free Press, 1994), p. 399. 1
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25. The Mighty Economic Engine of Full and Equal Economic Rights
All wealth is produced from resources provided by nature. There are no natural resources in cities, even though they are the heart of every society, and every economy. Throughout the Middle Ages the city states of Europe, also known as the walled cities of Europe, fought to control the resources of the countryside. Processing those resources into consumer products was the source of both their living and their wealth. Those city states became nations. The resources required for wealth and power still lay outside their borders. This produced more wars. Reaching for more wealth and power; seven nations of Europe rushed across the world to, with minor exceptions, claim every square mile. Those early battles between city states and the countryside, and those between individual city states, were then replayed between countries, and later by struggles between empires. The fundamental rule, never transfer technical knowledge to other nations, was broken when Kaiser Wilhelm of Germany bought technology wholesale from his grandmother, England‘s Queen Victoria, and cousin, King George V.1 The result was German technology taking over the markets of British industries leading to WW I. China, and other low-paid developing nations, taking over world markets in this century, is recognized by many as a replay of that early 20th century crisis. But 50% of the world industrialized, armed with nuclear weapons, and battling over access to resources and markets in the 21st century, is different than 15% of the world industrialized, armed with conventional weapons, and battling over access to resources and markets in the early 20th century. There are too many nuclear weapons pointed at too many huge cities. Any nation which chooses nuclear war over sharing technology and resources will likely also be destroyed. Short of destruction by imperial nations, they committing national suicide in the process, China, India, East Asia, South Africa, Turkey, large parts of South America, Africa, and many other countries, will successfully industrialize. The monopolization of technology, the basic structure of both domestic and world economies, and a primary cause of both wars and poverty, will be history, if war can be avoided this time around. Developing their economies and eliminating poverty were the goals of supposedly-free nations on the periphery of empires after WW II. Africa was plan-
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ning on becoming a United States of Africa.2 Think of the threat that continent, as a unified nation, would have been to the countries depending upon those resources to rebuild from that war. Knowing that is understanding the financial, economic, diplomatic, covert, and overt wars suppressing the colonial world‘s post WW II breaks for freedom, preventing the emergence of that super federation and—with the exception of Cuba and Asia, which were both accidents of history—preventing any nation from gaining their economic freedom. As all these wars were waged under the flags of peace, freedom, justice, rights, and majority rule, not even the countries being destabilized realized what was happening. They knew America had become wealthy after breaking free, believed those slogans, and looked up to them as saviors, and supporters, of their freedom. But now they understand, America had joined forces with their European cousins, to deny emerging nations their rights and freedom. The surges for equality and freedom today are identical to the hopes and dreams of the emerging world 40 to 60 years ago, and they now understand the tricks of the trade. As there are at least six centers of capital, with three being in Asia (China, India, and Japan), again each an accident of history, and more centers forming, competition for resources will be fierce. This is the resource powers’ moment to demand freedom and equality, and they know it. After all, industries are relatively cheap to build, and the resources to build them are primarily within their borders. One of the primary purposes of this book is to document that, once a regional labor force is trained, and their own workers are used to process their resources and build and operate their industry; the finance capital cost of developing a federated region is primarily the cost of printing money; all else is a region‘s utilization of their labor for internal processing of resources into infrastructure, industries, and consumer products. The entire region surrounding the three Asian centers of capital, with over half the world‘s population, is rapidly industrializing. It is understood that an alliance of the developed world in a war against the fast-developing world is likely to destroy both. The quagmire in Iraq proves both covert and overt destabilizations to install puppet governments are no longer options. Those acts of empire have cost America the moral high ground, and provided both the motivation, and the opening, for the world‘s poorest regions to start allying together. The European Union is a possible model for unification within Africa and South America or, like Europe, of each continent. Alliances between resource-wealthy developing regions, and rising centers of capital, increase the economic and political power of both. The massive resources inside the borders of those forming alliances, combined with the world‘s rising centers of capital, should give federating regions equal negotiating power.
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Chapters 20 through 24 exposed various monopolies by, theoretically, applying inclusive, and equal, property rights laws. Currently each are laying claim to massive amounts of wealth; those unearned extracted values (mixed with honest profits) are capitalized by 10 to 30 times; and those ―earnings‖ (thefts) are invested in treasury, water, sewer, other bonds, etc. Those from whom that wealth was extracted pay both the ongoing monopoly overcharges and payments on those bonds; and this goes on and on, into perpetuity, until it gets so out of balance the economy collapses. Considering fully 95% of America‘s huge blocs of accumulated capital is capitalized extracted wealth, that half its production potential is then wasted extracting more wealth, and that an equal amount is wasted destabilizing other societies to protect those amassing this massive wealth, the monopoly capitalist system is a value harvesting----labor and resource wasting— machine, not an efficient producer and distributor of wealth. The finance monopolists understand how to prevent a financial crash, just create money, pour it at those markets, and ratchet up some part of the economy, the 2002-07 housing bubble pumping up both the housing and stock market for example. The economy then rises to a higher imbalance and this one, in 2010, may unfold into a worldwide financial collapse. This value-harvesting, resource-wasting, labor-wasting, machine has been sucking up, and wasting, the world‘s wealth. In contrast, the super-efficient, much-smaller, economic engine of full and equal economic rights—money created, and circulating within, a socially-owned banking system (in tandem with socially-collected resource rents) funding the real economy—eliminates the ethereal world of high finance, maximizes the utilization of increasingly-efficient technologies, shares full and equal economic rights world wide, eliminates war, expands across the earth with productive capacity and buying power in balance, has the power to eliminate world poverty in 10 years, and can provide a quality life for all world citizens in under 50 years. That potential is not realized because the large increases in technological efficiencies are eulogized, while the even greater potentials remain unknown. To restructure to such an efficient economy within any country would be revolutionary. There is no middle ground, so we have chosen to address it as a velvet revolution. These final pages establish the framework for those peaceful revolutionary changes. Even though many spotted the potential gains as applied to land, mainstream historians and economists did not carry their research to its logical conclusions. Peer pressure and the inability to be published by mainstream publishers within a society fiercely attacking any threatening philosophy was likely the limiting factor.
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All monopolizations give superior rights to one over another. The only gains made under modern monopolies is a greater number moving from the rent paying underclass to the rent collecting upper class. Missing in those thousands of studies, all written within the above parameters, are these four basics: 1) A measurement and study of the waste within each stage of the monopoly system, 2) A full study and measurement of the economic efficiency gains through elimination of monopolization in all its forms, 3) a study and measurement of the required full and equal economic rights of each citizen emplaced in constitutions and laws, so as to eliminate monopolization, and 4) an outline of how a socially-owned and operated banking system, along with socially collected resource rents, replaces the enormous complications, and costs, of operating a privatized, rent-seeking, mercantile, monopoly system.3 Our research attempts to stand outside those permitted parameters of debate, measure those wastes, and provide an outline of an efficient, honest, economy. Kurt Rudolph Mirow, Harry Maurer, Webs of Power (Boston: Houghton Mifflin Co., 1982), p. 16. Crucial documentary on a U.S. of Africa: Wind of Change, order at Films for Humanity & Sciences 800.257.5126, item # BVL30750; Organizations formed to further African unity are: AU (African Union); NEPAD (New Partnership for Africa‘s Development) OAU (Organization of African Unity); OAAU (Organization for African American Unity (founded by Frantz Fanon); OCAM (Organization Commune Africaine et Malagache); OERS (Organization of States Bordering the Senegal River); UDEAC (Customs Union of Central African States); OERM (Economic Organization of North Africa); EACM (East African Community and Common Market); CEAO (West African Economic Community); CEDEAO (The Economic Community of West African States). Follow Democracy Now, Free Speech TV, Link TV, .informationclearinghouse.info, commondreams.org, globalnet news, globalresearch.ca/, and europac.net/ to stay up with world developments. 3 Robert B. Eklund, Robert D. Tollison, Mercantilism as a Rent-Seeking Society (Texas A&M U Press, 1981). Too many pages supporting this analysis to cite. 1
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26. Summary
Power brokers have spread the unequal property rights system, aristocratic exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free, far and wide. Recognizing the power and wealth this system accrues to them, regional puppets worldwide, owning the greater share of their nation‘s wealth, will be hard to displace, and the imperial centers‘ mighty militaries have been, until recently, in place to protect it all. The imperial world will still try to control the world‘s resources rather than choose the path of peace and prosperity. But this short reality list demonstrates that, this time, the ongoing populist revolution may be successful: 1 Full fledged ballot-box revolutions, after both WW I and WW II, threatening to eliminate unequal Western property rights, put in place the past 700plus years, were far closer than our history books acknowledge. After each war, all of Europe was almost lost.1 With the loss of its core, the Western monopoly system (there are other methods of monopolization), the primary causes of both poverty and wars worldwide, would have been weakened. 2 Above and beyond the supporting rationales, the primary purpose of those two world wars were, as addressed above, to prevent Germany from taking over England‘s markets. If that were to happen, Britain‘s empire would have quickly collapsed and that would have either collapsed the monopoly system, or placed Germany at the helm. 3 A further hidden reason, and the real purpose of WW II, was to take out the Soviet Union whose economic successes, starting from one of the poorest and most inhospitable regions on earth, also spelled doom for the Western monopoly system. Forget the massive perception management, imposed belief systems, propaganda, keeping their successes from the consciousness of the world. The world could not be kept under control so long as that ongoing successful example was there for the world to see. A secret agreement had been reached with Germany to take out that threat. Knowing France and England would enter the fray, and dictate the peace, as they were busy defeating the Soviet Union, Germany, through conquering all nations between her and the Atlantic Ocean, took care of her back door first. Then, after attacking the Soviet Union, Germany flew their second in command,
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Rudolf Hess, to Britain, in what turned out to be a one-way mission, to get the original agreement back on track, only this time it would be on their terms.a Britain could not shift the beliefs of her people from Germany as an enemy, to an ally, in so short a time, and the historic three-way struggle for control of Europe by competing capital (German, British, and the emerging Soviet federation [which represented labor worldwide]) became intense. The struggles between centers of capital are well understood, while the struggles of labor for freedom, and full and equal economic rights, are buried history. Specifically, labor had the vote and they could not be controlled anywhere in the world, once the Soviet system provided a better living standard to workers. America‘s embargo of Japan‘s oil and steel, planned to shut that economy down in 60 days, led to Pearl Harbor. America joined the battle on both fronts and the rest is history. Parts of that scenario are not what are recorded in history but, realistically, that is what happened. Hess finished his life out in Spandau prison permitted only to see his family and, under guard; only family matters could be discussed. 4 Though few realize it, the 45 years of the Cold War were specifically to suppress both post WW II ballot box revolutions within Europe, and full fledged revolutions for freedom around the world. The struggles to prevent labor from taking over governments of Europe (totally unreported in the corporate media), were only continuations of the, almost successful, post WW I ballot box revolutions throughout Europe addressed above; which were a part of the struggles of labor worldwide, in which the real reasons are conveniently left out of history books.2 5 Oil producing nations knew America‘s 2003 invasion of Iraq was only the first step in controlling oil throughout the Middle East and Central Asia; so as to control the rest of the world through control of their oil supplies. Other oilsupplying nations are contracting (lightly allying) with Russia, China, and India to offset that threat. As discussed, the U.S. planned to establish AFRICOM to offset China‘s 50 cooperation agreements with Africa, and their 800 firms doing business there. The cover story was to help with education, health, economic growth, and democracy but, understanding their real purpose; no African country has yet accepted those covert forces on their soil. The emerging world also understands that the slogans of peace, freedom, justice, rights, and majority rule, have also been covers for suppressing their freedom and rights. So the option of developing a few nations under the above slogans as Undoubtedly the terms would have been that England, France, other nations in Europe, and Germany would all be free. But Germany‘s control of the enormous resources of the former Soviet Union would mean that Germany would be far the stronger nation and may even have equaled America in productive capacity. a
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allies against the remaining periphery nations is no longer viable. The cover story, bringing democracy to the world, is believed by no one. That true democracies have been subverted, and overthrown, for the past 60 years, and violent, dictatorial, puppet governments installed, is well understood. Imperialists are trapped as certified-free elections replace those puppet governments with more honest ones. Imperialist control is so well understood that, even countries where external control of elections were once blatant—Brazil, Venezuela, Bolivia, Nicaragua, Ecuador, and Chile for example—have thrown aside those puppets by the ballot. As the War on Terror worldwide is against them, and they are fully aware of the above deceptions,b the Muslim world interprets the ―war on terror‖ as being against their religion. Thus, for each Muslim killed in this war, several more take their place. As all this unfolded, more of the citizenry, both within the imperial nations and the periphery nations, understood that America and their allies were an allied empire. 6 Fully 60% of the industrial capacity of the world is now outside the borders of Europe and America. This is the same trade and political structure which led to WWs I and II, and this current crisis for the imperial centers is many times greater. All rapidly developing nations are busy developing brand names for consumer products. With hollowed out industrial economies, the profit structure within wealthy nations will collapse as those brands, one by one, hit Western markets, and the wealth is retained by their traders, not those of America, Europe, and Japan. The current, 2008-10, crisis in world markets, the bankruptcies of leading brand name cars, and China‘s gain in technology if she purchases brand names intact, quickens the arrival of that crisis moment. Through brand names, China, and other lower-paid nations, will be banking the profits of capital, the wages of labor, and those huge trader profits. The current account deficits of the historic imperial nations, will increase in step with foreign traders replacing domestic traders. 7 Fast developing Asia may settle for equality but, whether America and Europe like it or not, and even though they do not want a confrontation with the developed world, nor do they want the imperial economies to collapse (such social crises cause wars), they will not settle for second place.
The alert throughout the world will be aware of General Wesley Clark‘s interview on Democracy Now. There he explained that, while America was attacking Afghanistan immediately after the 9/11/2001 terrorist attack on the World Trade Center, the order came down through the Pentagon that they were going to take out the governments of Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. Taking out governments, of course, means replacing them with puppets. Read Naomi Klein‘s The Shock Doctrine: The Rise of Disaster Capitalism to understand those plans. b
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8 As their enormous wealth, and military might, is based upon theft of the wealth of weak nations, and assuming America does not use its nuclear weapons to maintain its current control of resources throughout the world, long before Asia and other emerging nations reach 50% equality, the economies of America and Europe, dependent upon inequalities in trade, will collapse. 9 All the world‘s major banking systems know that day of reckoning will come. Various countries will be getting out of the dollar, and into other currencies. Girding to fight that battle, America‘s Federal Reserve quietly noted they would no longer release statistics on how much money they are printing.3 The citizenry are not to be made aware of the massive sums of money being created to buy their own treasuries, and that the battle of the titans has begun. Seeing the writing on the wall, half the presidents of America‘s Federal Reserve banks resigned. Markets are in chaos as we speak. A Google search for ―Eric deCarbonne 15-Fold Increase in US Monetary Base‖ will alert us to the massive sums expected to be created to buy America‘s own treasuries. That expected 15-fold increase would be roughly $12 trillion newly created dollars. 10 The imperial rulers are totally out of sync with their peripheries, who are demanding their reasonable share of the world‘s wealth. The populist uprising is picking up momentum, the communication superhighways to sustain that revolt are being put in place, and sooner or later, if the world‘s leaders do not wake up and run this world responsibly, the imperial nations will not be able to contain this worldwide populist revolution. Under the tutelage of President Hugo Chavez of Venezuela, South America is tying their nations, and economies, closer together, and moving towards a regional currency; the sucre. There is a difference between aristocracy denying the common people rights for centuries leading to the French Revolution (taken back by aristocracy only 26 years later), and financial aristocracy today denying the citizenry worldwide their reasonable share of the world‘s wealth. Modern communications, outside the control of the imperial centers, will permit a large share of the world to revolt simultaneously. 11 And, as there is enough on this earth for all if it were shared equally, instead of fought over, wasting over 50% of the resources and labor in the process; these battles over control of the wealth producing process are unnecessary. So, although the struggle may go on for many years, there are only two choices: 1 Powerful nations giving up their selfish ways, governing responsibly, and sharing the wealth of the world relatively equally. 2 Or this world is shattered, and made largely uninhabitable, by a 3rd World War using nuclear weapons.
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Another two possibilities may avoid a world war, but both they, and option 2, are so morally repugnant, we will not even consider them: 3 The current fast developing nations will come to an agreement, with the old imperial nations, that together they will militarily control the world, and share the wealth. Africa, South America, parts of Asia, and the Muslim world— targeted to be outside that circle of wealthy nations—will never accept that. Laying down their tools, sabotaging resource extraction, roadside bombs, and suicide bombers, will grind the world economy to a halt. Already there are signs China, and others, are starting to decouple from the American and European imperial economies, and, in trade for access to resources, couple with Africa and South America. 4 Fascist-control of periphery nations, and their resources, by imperial nations, through puppet governments, is how periphery nations have been controlled ever since WW II. That colonial system, hiding under false cover, is falling apart as we speak, and though habituated powerbrokers will surely try to perpetuate it; we do not believe these last three possibilities are worth considering. If the current alliance of America, Europe and Israel use nuclear weapons on recalcitrant nations, that could be a preview of WW III. Other nations are being asked to agree to a far lower share of the wealth than that consumed by Europe and America. That would also mean Africa, South America, and the Muslim world, will have to accept their resources providing a large share of that wealth as they receive the smaller share. We do not believe any of those nations will accept that. The world‘s corrupt and selfish rulers must be replaced by others with vision and responsibility. As the crisis in Iraq winds down, and that in Afghanistan rises (2010); President Barack Obama will be studying his choices closely.c His meeting with Muslim leaders and President Hamid Karzai meeting with the Taliban is highly encouraging. The list and comments above are optimistic. In Nemesis: The Last Days of the American Republic Chalmers Johnson says Americans are so dependent upon the military as a Keynesian infusion into the economy that they can never reduce it, let alone get rid of it. For all the reasons laid out above, and more, he sees no way America can survive. There we disagree. Once the collapse occurs, and since Many governments stay in power only at the behest of those imperial leaders. Under threat of not having access to American banks or markets (sales or purchase), banks all over the world cannot do business with any nation America decides to embargo. Those who turn to the Euro will discover those nations have not given up the prerogatives of empire. Corporations of any nation who break that embargo can do no business in the United States. If all that fails covert specialists are called out. c
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half the world‘s potential is currently wasted, America, and all other nations, can restructure to full and equal economic rights for all, and survive superbly well, with a quality life for all world citizens. If we are in error; we feel it will only be one of timing. There is the possibility fascist control of resource wealthy nations, and the wealthy imperial centers, could go on for another generation. There is the possibility that battles over the world‘s resources will go on forever. We think both those scenarios are unlikely. It will be either peace with sharing of the world‘s resources or it will be nuclear WW III and we choose to assume the first of those possibilities, the world restructuring to permanent peace with a quality life for all. If peace does come to this world, it will be because historic powerbrokers are faced by equal power, the current leaders are pushed aside by democratic forces, and new leaders agree to equitably share the wealth. Ever since WW II, only the alliance of developed nations, the ones imposing those unequal trades, has had choices. If the ―resource powers‖ are ever to rise out of poverty, they must ally together, and force the imperial nations, and fast developing nations, to include them equally in the wealth-producing, wealth-sharing, process. Once allied, their power—most the world‘s resources being within their borders—will equal that of the imperial world. No combination of military power can offset half the world laying down their tools, and fighting back with industrial sabotage, suicide bombs, car bombs, and roadside bombs. Having been extracting the wealth of periphery nations, under various cover stories, for centuries—they are not really people, they have no souls, they are not capable, and new rationales keep being created—the West refuses to bite the bullet, and restructure to honest, truly productive, societies. But there are signs that the resource powers are allying for their protection. All the ASEAN countries, Indonesia, Thailand, Malaysia, Singapore, Philippines, Brunei, Vietnam, Laos, Myanmar and Cambodia, plus Japan, China, India, South Korea, Australia, and New Zealand, representing half (three billion) of the world‘s people, met in Malaysia, December 2005, for the inaugural of the East Asian Summit (EAS). That America was not invited is significant. Interest quickened at the April 10, 2006 meeting of the South Asian Association for Regional Cooperation (SAARC), and Russia, China, and the Central Asian nations, forming the Shanghai Cooperation Organization (SCO), whose primary purpose is to offset USNATO moves to control the oil of Central Asia, further weakened imperial nations. Look for these groupings to decouple to a safe distance from the imperial economies. Eighty percent of South America has governments fully aware that American foreign policies are designed to maintain access to their resources below fair value, and that this, and a refusal to share technology and markets, is the cause
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of their poverty. Rumors are flying that America is backing the one country still in their camp, Columbia, to overthrow those populist revolutions. Honduras is, so far, the only Latin American country reclaimed by the empire. Venezuela is now fully literate, and forming alliances promise to free more countries, in a shorter span of time, than Simon Bolivar almost freed in his lifetime. President Chavez has nationalized Venezuela‘s banks, is working on a single currency for South America, and is suggesting a new world reserve currency. All are prerequisites for the former colonial world to attain their freedom. Venezuela‘s offer of cheaper oil to South America‘s Mercosur alliance—Brazil, Argentina, Uruguay, Paraguay and Associate Members Chile, Ecuador, Columbia, and Peru—their funding of satellite TV, radio, phone, and broadband coverage for Latin America—plus the elections of more populist governments, is turning that long-standing free trade alliance into an affiliation for economic freedom, comparable to the East Asian Summit. Those alliances have the tools to thwart imperialist ambitions. South America‘s Telesur satellite is operational. Named after Simon Bolivar, and engineered by China, it has brought the Arabic station, Al Jazeera, and others, on board to expand to the entire world in various languages. That breathtaking advance towards full freedom is as catching as a cold. Communications will be beamed out of these countries, as well as into them. The three billion people represented in that East Asian Summit, those in Central and Western Asia, and others in Africa, will broadcast their views of current and past history to the world. Russia will also be heard. With the views of the world‘s dispossessed broadly disseminated, corporate media, within the West, must address the world more broadly, and accurately, or be irrelevant. That relevancy is already highly visible on CNN, and occasionally on NBC, CBS, and ABC. What can greater relevance to reality accomplish? President Chavez is so popular that the opposition, backed by America, dropped so low in the polls they withdrew from the 2005 elections, and all South America and beyond is poised for, or has already had, a Bolivarian Revolution overthrowing unequal trade agreements. Africa will notice, and this gives insight into how fast a movement for freedom and rights can spread, when unique world events, and communication superhighways, provide that opening. The international havoc of America‘s disastrous foreign policies, an extension of European colonialism, totally discrediting the U.S. in the eyes of the world, and costing them the moral high ground, is just such an opening; the emerging world now has the communication facilities to inform their citizenry of the wealthy world‘s many methods of denying emerging nations their share of the world‘s wealth. All people want to be free. Understanding how their impoverishment has been imposed by imperial nations is a crucial step towards gaining their full freedom.
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Only by coming together in firm alliances, and federations, and educating their citizenry on the importance of coalition and cooperation, can freedom, with full and equal economic rights, be attained. Japan, China, and India are already signing mutually-protective, trade deals with forming alliances across the developing world. That, and Russia, China, and several other nations requesting a totally new world trading currency, just as we have suggested for years, has imperial managers of state in a panic. Still trying to maintain control, the imperial powers are thinking in terms of three world currencies, the dollar, the Euro, and china‘s Yuan each, being the trading currency for their 1/3 of the world. Establishing that, if it happens, may only be temporary. Hugo Chavez says ―China is not intent on establishing an empire.‖ Hopefully their goal is equality of development and full and equal rights, and that they intend to do this by offering development to the resource powers in trade for resources. Imperialists are undoubtedly concerned: President Chavez has moved Venezuela‘s reserves to Europe, and is establishing a ―Bank of the South.‖ A new currency, called the ―sucre‖ (Unitary System of Regional Compensation [also the name for Ecuador‘s currency]), is being planned. Iran and Syria have shifted their reserves to safer havens, and all Muslim countries are considering that move. China announced it is diversifying its reserves of $2 trillion. Iran‘s oil bourse (bypassing traders whose pure-gambles, derivative trading, currently accounts for 1/3 the cost of oil) by selling directly to the final buyers, was delayed in becoming operational by the cutting of five undersea cables.d With the Chinese signing trade agreements with the East African Community (Kenya, Tanzania, and Uganda, [CEDEAO]), the Economic Community of West African States, and the African Union, that continent is stirring. Europe, North America, Australia, Japan, China, India, Russia, Taiwan, South Korea, Indonesia, Malaysia, Brazil, Argentina, Venezuela, Turkey, etc, over half the population on earth, will soon be modernized and the remaining developing world, those with the resources necessary to keep the world‘s industries running, will be catching up fast. Let‘s face that reality: Under what strategy will a technologically developed China, India, Japan, Russia, or any other rapidly developing country, be the most prosIn the price rise of oil from $44 a barrel to $70 a barrel in early 2009, each barrel of oil changed hands 25 times. That oil bourse trading directly between oil producing nations and the final processors of that oil would have increased the net returns of oil exporting nations, or saved the final consumers of the importing nations, roughly 50%. The disappearance of the 33% now claimed by oil traders would wipe trillions of dollars in value off the world‘s stock markets, and collapse imperial economies. Watch for Iranian banks to be embargoed, and Iran fighting back by coalitions trading in other currencies. With their weak dollar, America could lose that war. This is really what the embargoes and potential war with Iraq is all about. d
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perous—with America and Europe as their primary trading partners, or by sharing technology with Africa, South America, and Central Eurasia in trade for resources? Obviously, measured in consumer products and services provided their citizenry, they would be much wealthier under the second option than the first. Massive accumulations of dollar reserves would become valueless in an inflationary spiral, an economic crash, or war. America would cite security needs to prevent those reserves from buying up their properties, or they would create massive sums of new dollars. Using the same creation of currency option— China, India, Brazil, and Russia, plus Malaysia, Indonesia, and the substantial industry already in Brazil, Argentina, etc.— have enough technology to rapidly develop the remaining poor nations, even as they increase the products and services provided their citizens. We must remember that the world being relatively developed by 2050 has been updated to 2035, only 25 years away. Later developing nations can industrialize quickly with the support of earlier developing regions. Japan‘s success in the late 19th and early 20th centuries, based on empire, ended with their defeat by more powerful empires. The struggle between the British and German empires over control of world trade led to WW I, and the fear of the Soviet Union, and ballot box revolutions in Europe, was the direct cause of WW II. Those holocausts taught Western empires that they had nothing to gain by fighting each other; NATO and the European Union evolved out of that realization. Occasional surface disagreements notwithstanding, the historic empires of Europe and America have been an allied empire ever since. One hundred and twelve years ago, we had an example for what may happen. Propaganda notwithstanding, the Soviet Union was not an empire. Those fifteen individual nations quickly, and peacefully, federated after WW I. Openly declaring they would live off their own resources, they released title to all natural wealth outside their federation, and took title to all within their borders. Another legal structure prohibiting the extraction of the wealth of either internal labor, or that of other nations, was a serious threat to empires whose unequal property rights were designed to appropriate the wealth of both internal labor, and the periphery of empire. The expenditure of 85% of Germany‘s firepower against the Soviets, and they still winning, was the primary reason for post WW II Cold War alliances such as NATO and the European Union. Not only was it crucial to contain Soviet cooperative and sharing, philosophies, the colonial world‘s breaks for freedom also had to be suppressed. Though the cost in lives and treasure—both within the imperial centers and on that periphery— were enormous, those suppressions were, until these latest worldwide populist revolutions, successful. The periphery‘s breaks for freedom again threaten imperial unequal property rights. As already addressed, financial, economic, covert, and overt warfare will
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have continual diminishing returns. Though the full transformation may take many years, our analysis will proceed on the assumption that the world will break free, and the imperial-centers-of-capital will negotiate a sharing of technology in trade for resources. Those unequal agreements imposed upon periphery nations by financial, economic, diplomatic, covert, and overt warfare can be quickly set aside; various countries around the world are renegotiating their resource extraction contracts as we speak. That stirring will turn into a biblical flood once the resource powers start reclaiming control of their resources through collecting the rental values on nature‘s resources, and using that huge flow of money to build infrastructure and industry. International law prevents reclaiming title to resources without compensation. But applying the foundation principle of collecting the rental values on nature‘s resources and technologies, reclaims that stolen wealth without the need to compensate owners who are unaware it is unearned. Corporations can retain title to that natural wealth, but all they can earn is fair compensation for their labor and capital. The rental income from nature‘s resources and technologies goes to the proper owners of the land; the citizenry of those resource wealthy nations. The latest WTO Doha round has totally collapsed. Recognizing that the 30 OECD (Organization for Economic Cooperation & Development) nations‘ $350 billion per year agriculture subsidies permitted imports to undersell India‘s farmers, Trade Minister Kamal Nath—before leaving for the December 2005 WTO negotiations—said, ―importing food is as good as importing unemployment,‖ and he could sign a trade agreement on the terms offered, only if the U.S. is ―willing to provide a visa to every farmer displaced as a consequence of the import of cheaper and highly subsidized food.‖ Minister Nath kept that promise. When first developing, periphery nations need both money and industry. Assuming those alliances included any two, or all of the three Asian centers of capital, Brazil and Russia, they would have adequate technology and capital to eventually develop the 50% of the world that has little industry. Normally it would take many years for a fully allied, federated, South America and a federation of Africa to form. But these are not normal times. Industrialized nations need the resources of the ―resource powers‖ just as badly as those emerging nations need technology and an efficient economic infrastructure. The only way those developing nations will be fully paid for their resources, and gain access to technology, is by allying together and demanding that price. The flow of money is a super efficient accounting system and that flow is a mirror image of an economy. We just looked into that mirror and saw that over
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50% of the current flows of money were wasted efforts, both within internal economies and in world trade. Proof that this is monopoly capitalism rather than honest capitalism is provided by economic efficiency doubling when those exclusive titles are restructured to conditional titles, as we do theoretically in the above chapters and the conclusion. All are morally entitled to their share of nature‘s wealth, and that can be attained only through eliminating those monopolies we are taught do not exist. Once eliminated, the costs of government (national, state, and local) are paid from resource rents, and profits from a socially-owned banking system. Any necessary increase in the money supply is covered by building infrastructure with sociallycreated money (up to the point of monetary balance). Once that monetary balance is reached, additional essential services—education, water systems, sewers, roads, railroads, communications superhighways, health care, and retirement, will all be covered by socially-collected resource rents and banking profits. Monopolies claim a large share of the wealth produced—waste enormous amounts of resources, capital, and labor, and restrict the efficiencies of an economy. All this more than doubles the cost of production. The social efficiency gains reclaimed (over 50%) are so enormous that we will be challenged. But the truth is, if technology had been shared—both internally and in world trade— rather than monopolized, the entire world would have developed in step with those efficiency gains, and there would have been little poverty and few wars. With all societies utilizing the latest technologies, the pace of inventions would have quickened. War and poverty would have been the exception, rather than the rule, over the past 300 years. Exclusive titles to nature‘s resources and technologies are little more than aristocratic property rights. Aristocracy fought for centuries to protect those exclusive rights and today‘s battles, both worldwide and within internal economies, are a continuation of those struggles. Full and equal economic rights for any great numbers have never been attained, and we outline herein how—through utilizing the mighty economic and financial engines of inclusive property rights applied across the full economic spectrum—they can be attained for all. Add up the waste within America‘s internal economy as herein addressed, add in that wasted and destroyed worldwide by both covert and overt war the past 60 years, add in the GDP for a respected living standard for roughly five billion impoverished people who could be enjoying a quality life today except for monopoly capitalism‘s last fifty years of warfare—a struggle led by America for the purpose of controlling resources and the wealth producing process, and the imposition of their system of property rights (aristocratic exclusive title to nature‘s resources and technologies) on the world (preventing their economies
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from developing)—and you arrive at how much more wealth has been effectively destroyed or production forgone, as opposed to how much wealth America produces. That honest look highlights America as a negative producer, consuming, wasting, and destroying far more wealth than she produces. Full and equal economic rights, through restructuring exclusive titles to nature‘s resources and technologies to conditional titles, are applicable across the full economic spectrum. That simple change in property rights eliminates both the unacknowledged primary monopolies—land, technology, money, and communication—and the secondary monopolies that are so proliferate in the American economy. Through conditional titles, as outlined within chapters on each sector of the economy, monopoly values are transposed into relatively equallyshared use-values. All trained in classical and neoliberal economics will say, ―Those appropriated blocs of capital owned by individuals were, and are, necessary to finance an economy.‖ They will claim that ―governments are inefficient allocators of financial and industrial capital.‖ Both claims are unequivocally untrue. Financing is not needed to build land, nature built it. A large amount of financing is not needed to start up a bank. The only labor-created value there, beyond a small amount of brick, mortar, and computers is its license. Yes a private bank requires a minimum level of startup funds but a socially-owned banking system simply creates that money. Private banks essentially own nothing but ideas that are thousands of years old, and use their exclusive titles to extract more wealth from others. This has to be the greatest fraud ever imposed upon mankind. Inventions are produced by labor. But currently the greatest shares of technologies values are pieces of paper—monopoly patents and stock market values based on the capitalized value of those unearned ―profits.‖ Communications need financing, but that finance capital need is primarily buying and selling the enormous capitalized values of monopolized spectrums and patents; both are a part of nature offered to us all for free. Financing is needed for roads, railroads, water systems, sewer systems, post offices, electric systems, and communication superhighways. But, in the early stages of federated regional development, those can be built with socially-created money. Up to the balance point of an adequate money supply, even first industries can be built with created money. In a crisis, as demonstrated in the Conclusion, such money can be pointed directly to any distressed sector of the economy, natural or manmade. Socially-created money can be pointed towards alleviating any natural disaster. Nothing could be fairer then created money quickly replacing values destroyed in natural disasters such as Hurricane Katrina which destroyed New Orleans. Instead, current capitalism monopolizes all resources and technologies, denies others their rightful share of what nature offers to all for free, and
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loans those extracted values back to those from whom it was unjustly taken, over and over, on into perpetuity. Those annual, privately-collected rents, improperly called earnings, are extracted values which are then capitalized 10 to 30 times by the markets. The reason finance capital is so hard to obtain under the errors of monopoly capitalism is that those monopoly values, and the 95% of America‘s finance capital that funds those unearned values, reverses the proper order of money and wealth creation. Inclusive and equal property rights correct that. During early development, stage one: Money is socially created to fund infrastructure (debt free) and first industries, the savings within that circulation of money builds more private businesses. Stage two: As development progresses, money is socially-created to fund (debt free) only that infrastructure not fundable by incoming resource rents. Savings within the circulation of money funds all private industrial development; as well as housing and other consumer needs. The developed stage: 3) Infrastructure is now funded through socially-collected rental values of nature‘s resources and by banking profits. Money is now created only when it is needed to expand the economy or rebuild from a natural disaster. This eliminates the need for disaster insurance for hurricanes, earthquakes, floods, and large fires. In an efficient economy, with full and equal economic rights for all, there are no unearned values. Instead of financing unearned, monopoly-created, values, touchable and useable use-values are financed, created, and bought and sold. Both planning and financing are regional and local. Private industries and serving consumer needs are properly financed out of savings. We are proposing a constitutional right to finance capital for federated regions of the world, countries, regions within countries, states, local communities, and entrepreneurs. Individual financing is much simpler under full and equal economic rights than under loans backed by monopoly capitalism‘s unearned values. Needs can be calculated and allotted relatively easily and loans would be more on merit and less on equity.e The infrastructure operating monopoly systems, and collecting those rental values, are today‘s pyramids. They waste resources, capital, and labor, lowering economic efficiency by over 50%. The efficiency gains of technology are so enormous that, even though massive wealth is produced, much more is wasted while an even greater amount of wealth that would have been produced under an efficient economic structure is not even realized. This waste is unknown due to the centuries of justifications by the economic classics claiming these systems of theft were efficient economies. e
As we addressed in Chapter 24 ―Investment and Job Opportunities.‖
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Walk into the heart of any city, look up at those huge skyscrapers, walk in, look at the plaques on the doors, and—when one understands monopolies intercepting, as opposed to producing, wealth—one realizes this is the superstructure of a wealth extraction system. The entire building, and the next ones, are unnecessary, as are a share of the companies which built them, those that built the furnishings, and those who service and clean them. (Google Annie Leonard The Story of Stuff. Also see http://www .naturalnews.com/021872.html and http://www.ied.info/articles/nuggets to realize this statement is conservative.) The unnecessary offices and staff (the superstructures) extracting wealth through banking, technology, and other monopolies (except land, wasted labor within that monopoly structure is minimal), waste enormous amounts of wealth. Those labors and resources are no longer wasted under the full and equal economic rights of a modern commons guaranteeing all their share of what nature offers to all for free. Necessities of life such as universal health care and retirement are addressed in law as a human right; other necessities, such as insurance, are addressed in law as a social right. The quality of life rises rapidly even as the hours of employed labor are reduced over half. The precipitous drop in GDP measures the previously wasted labor, capital, and resources of a monopolized economy. Quality of life rises as people utilize their new free time to develop their many artistic talents, and socialize with friends and family. By analyzing the forthcoming struggle of those employed in the educational system to retain their current highly respected—but now obsolete—positions and identities, one can understand why, and how, as the efficiencies of technology advanced, full and equal economic rights were historically withheld from the masses. The efficiencies of technology continually eliminate jobs through which identity, respect, power, wealth, and the needs for every day living, are distributed. Those in positions of respect and power destined for elimination quite naturally used, and still use, their power and wealth to protect their power and wealth. With their living tied to those wasteful arteries of commerce, the citizenry unwittingly defend a system which is denying many their right to a quality life. When discussing this thesis of the enormous wasted labor, capital, and resources with others, they easily understood the waste in all segments of the economy except theirs: ―Oh no! Not my job! My work is necessary;‖ and a litany of reasons why would pour forth. What takes place is the instinctive protection of territory within the economy from which one obtains respect, identity, and their living. I have watched teachers and professors bristle at the thought of their replacement by video lectures and documentaries presented by the world‘s best teachers. Unless, and until, the
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current system totally collapses, which it will, monopolies always do—and just as those whose identities and livings are tied to the arteries of commerce in other sectors of the economy destined for shrinkage to a fraction of current capital, labor, and resource needs—neither politicians nor the educational industry will make any serious effort to fully modernize their economic sector. If you have a slave society, banks must finance buying and selling the capitalized value of slaves, but they would never finance a slave for any personally conceived endeavor. If you have a monopolized economy, banks will finance the buying and selling of the capitalized values of monopoly profits. In both cases they are financing the theft of wealth produced by others. When primary and secondary monopolies are eliminated, use-value (a total of labor costs, resource rent costs, and finance capital costs) will determine market value. Under full and equal economic rights, all are reasonably well paid, none receive compensation beyond the value of their mental and physical labors, capitalized values disappear as use-values match market values, there would be no inflations or deflations, there is no space for an ethereal world of high finance, and thus, there would be no economic collapses. The price of gold will remain forever stable as a commodity for manufacturing jewelry. An individualized society with 80% of their waking hours free and each searching for identity would become chaos. A cooperative, communitarian society utilizing the efficiencies of honest precepts of capitalism—providing camaraderie, a sense of belonging, and an active life interacting with family and friends as home production and education expanded, yet retaining the efficiencies of money and competition (honest capitalism)—would thrive. Those who study gangs filling those primal emotional needs in an individualized society, and those experienced in communitarian societies, understand this well; we will leave that to be sorted out by the alert within these newly-free societies. As different societies sort this out within the dynamics of their own culture, there are four basics to full and equal economic rights: 1) Society must collect the rental values of nature‘s resources and technologies, and use those social-credits to build and maintain economic infrastructure and essential social services. 2) The banking system must be socially-owned and operated, and those funds also used to fund essential social services. 3) Productive jobs must be shared, reducing employed labor time to two to three days per week, leaving four to five days per week for family care, socializing, and pursuing personal goals. 4) And each must be paid equally for equally-productive labor with possibly no greater than a two times wage differential (key management a somewhat greater spread). There will always be talented people who earn far above that wage differential. But it will be earned compensation (Oprah Winfrey, artists, presidents, etc.), not monopoly extractions of what is properly others‘ wealth. Highly talented people
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would have several days a week to produce with their talents. There would be so many of them that the price of their art or talents would be only modestly above normal labor costs. Talented carpenters, repairpersons of all kinds, etc, free lancing would earn money to purchase other‘s free lancing talents and art, which further reduces what is thought of as ―one‘s job.‖ The many customs that identify cultures beyond those four basics would flourish, and retain cultural identity. However, domination of one by another will quickly be identified and abandoned. With full and equal economic rights, those once dominated would quickly see to that. With efficient and moral centers of capital supporting them, a federated region, even entire continents, can develop and provide a quality life to all its citizens within two generations. Compare that with the monopolized economies of America and Europe, which have been industrialized for 150 years, and they still have large impoverished populations. If the principles of full and equal economic rights had been in use the past few hundred years, instead of the current monopoly system, production would have immediately doubled, doubled again in a few years, doubled again the next few years, etc, on up to the level of a fully sustainably developed world, and all without poverty or war. Instead of the simplicity of a cooperative system, the original designers of unequal property rights (the monopoly system) did not even consider the possibility that a large share of their citizenry could one day be well off, let alone should be, or would be. The substantial development of wealth in Asia was an accident of history, a need for allies to stop fast expanding socialism. Not only did monopolists need allies to maintain control of the world, they also needed the allegiance of their own citizenry. That, and the enormous efficiency gains of technology, provided a quality life to many more people than ever anticipated. Those enormous gains were under exclusive, and unequal, property rights designed for the elite to have the greater share of that wealth. Shared technology cannot be taken back, and the rapid industrialization of the world is destroying the world monopoly structure. Those who keep track calculate the larger share of the world will be relatively well developed by 2035, and that is only 25 years away.f With care in planning and elimination of the over 50% of today‘s economic and military activity that is wasted, the ecosystem can be well protected. Tiny Tikopia Island, addressed above, has successfully practiced three-dimensional orchard farming for 3,000 years. That permaculture mixing of annual and perennial tubers, berries, vegetables, fruits and nuts is enormously productive and, due to that closely-planted mixture building its own defenses, essentially free of disease and destructive insects. If the world replaced monoculture farming and shipping from hundreds or f
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That plunder by trade is the cause of poverty in the emerging world is now understood, and alliances within the developing world are forming to take control of their destiny. Venezuela and Bolivia are leading the way through taking control of their carbon fuels. Russia renegotiated their contracts and oil companies now retain only six cents of every dollar above $27 a barrel.4 Through a modern communications superhighway being put in place—the many national and international news programs on Free Speech TV, Link TV, Al Jazeera and other emerging TV networks, controlled by the world‘s previously dispossessed, are spanning the world—the emerging world will be watching these dramas unfold, and strengthening their alliances to attain more negotiating power. We assume the imperial centers‘ mighty military and financial power will eventually be checkmated, and a substantial reduction in their extraction of wealth from the periphery of empire will be reflected in a further collapse of their stock and financial markets. Since the alternative news and new world-wide communications systems will be telling that story, corporate owned media within those imperial centers will have to address the reality that past imperial foreign policies have created a disaster. Once allied, and hopefully federated, each unified economic region should, and we assume will, establish a regional central bank, create a regional currency, and sign contracts with developed centers of capital to trade resources for access to technology and training for industrial development. The developing world‘s need for trade with Europe and America will continually shrink. As the waste within Europe and America shrinks, only increasingly efficient economies will keep their citizenry cared for. That explains why America embarked on regime change in Iraq. A success there would assure worldwide control of other resources far into the future. If that colonial adventure had successfully installed a puppet government, or if Iraq had been split into two or three isolated political units, with the oil regions controlled by historic imperial-centers-of-capital. If that control had expanded to the oil wealth of Central Asia, and if control was retained in Saudi Arabia, the old empires could offset the power of those forming alliances, and retain access to resources worldwide on the same unequal terms. Other nations, and alliances, will have to abide by trade rules laid down by the imperial nations, or they would get no oil. But the Iraq occupation became a quagmire. The world understands America‘s plan; every abuse of power engenders a countervailing power, and the opposing alliances described above are forming. thousands of miles away with three dimensional orchard permacultures in back yards and surrounding communities, society could be living in a Garden of Eden continually improving soils as opposed to its rapid depletion under monoculture farming.
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The developing world understands well that the United Nations is not democratic. Planned and established by the winners of WW II, with other nations essentially voiceless, that body, as an extension of colonialism, is a fait-accompli. That intended ―irreversible accomplishment‖ is centered in the Security Council. Each member has one vote and decisions are made by an affirmative vote of at least nine of the 15 members, five permanent and the other 10 slots rotating every two years among the remaining 182 UN members. A ‗yes vote‘ of all five permanent members—the United States, Britain, France, Russia, and China—is required before any action can be taken. A ‗no vote‘ by any one of the five is a veto. Thus nothing of importance happens without the unanimous approval of those five permanent members. While other departments of the UN can make recommendations, and many good things are proposed and accomplished, the Security Council alone has the power to make decisions on all matters of major importance, and the UN charter obligates all member nations to carry out those decisions. In short, on important issues, there is no United Nations; there is only a Security Council comprised of five of the seven most powerful nations in the world. The two other major powers, Germany and Japan, lost WW II, and were never given a voice in the UN commensurate with their economic power. As the UN, fronting as a quasi world government, has been used as cover for control of nations worldwide, most the 10 rotating members of the Security Council, and likely two of those permanent members, Russia and China, want a truly democratic institution. The other three permanent UNSC members—the U.S., Britain and France—are allies.g Russia knows well how the former Soviet Union was destabilized by that alliance, and China knows just as well that there are powerful financial interests behind political factions within both American political parties, and throughout Europe, who want to do the same to her. Those same movers and shakers in the former administration, that of President George W. Bush, openly stated they are not going to tolerate any nation, or group of nations, to militarily challenge America. Translated that means maintaining worldwide control of resources and the wealth producing process through military force. As addressed above, a major move towards assured control of resources by the historic imperial centers was the occupation of Iraq, which turned into a disaster. Not only does America have most Iraqis against them, the entire Muslim
With centuries of colonial experience, France would not agree with U.S. President George W Bush on attacking Iraq. The 2003-10 quagmire in Iraq proved them right. g
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world is aware that, with possibly 70% of the world‘s known reserves of easilyaccessible oil within their borders, they are the primary target. The world is aghast at the destruction, torture, and oppression of American foreign policy.5 Once the moral high ground is lost, a nation‘s power is greatly diminished, and this has America‘s mighty military essentially immobilized. Cover stories will be ignored, attempts at regime change anywhere in the world would be recognized for the imperialism it is, and at some level, sanctions against aggressor nations, posing as moral societies, would be invoked worldwide. The Iraqi suppression alerted the former provinces of the old Soviet Union, oil and mineral rich Central Asia, to further protect themselves by trade and development agreements with Russia, China, and India. The immobilization of America‘s mighty military, due to loss of the moral high ground creates an opening for the formerly voiceless within the UN to insist that their votes will count. The key factors are the immense resources, and the roughly 60% of the world‘s industrial capacity, within the emerging world, the many trillions of dollars in reserves also outside the imperial nation‘s borders, and the current immobilization of imperialism‘s mighty military due to America‘s loss of the moral high ground. Understanding those realities provides the opportunity for ―resource powers‖ to take control of their destiny, through insisting on an equal voice in the UN, and they will be attempting to gain that voice. Attempting to retain control, former U.S. Ambassador to the UN, John Bolton, threatened to defund the United Nations if they do not accept U.S. dictates on world trade. Instead of capitulating, the Doha round of world trade talks collapsed; with China, India, and other countries, refusing to open their borders to cheap imports, because it would destroy their economies. The once powerless are getting stronger and they recognize that the imperial centers are getting weaker. Alliances and federations of the resource powers will be difficult to challenge. Once they are strong enough, they can serve notice to the historic imperial nations that the UN be restructured into a democratic and moral forum, or they will form their own world governing body, which effectively would be a federation of 70% of the world. That ultimatum would be rejected by imperial powers. On the chance that the previous creators of history—those s major imperial powers—will change their minds, the new world governing body, should retain ambassadors and skeleton staff at the UN, and reconvene under a new name in a major city within those alliances. The world will have moved closer to being, openly and officially, what it has been ever since the end of WW II, a wealthy and heavily armed imperial world, in open struggle with the emerging, previously unarmed, world over
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control of resources, and the wealth producing process. All nations should be invited to that new world-governing body. World federalist organizations have been working to have a constitution ready for that momentous day. The World Constitution and Parliament Association (WCPA), as does others, have one ready for revision and acceptance by just such an alliance of nations. This forming federation can choose the best features of each constitution, add what they feel is necessary, and accept it as their foundation law. The inequalities, and injustices, within the United Nations Charter, compared against the equality and justice within the new world-governing body, will highlight the efforts of the old power structure to dictate, and the new power structure to rule cooperatively and democratically. With a name picked and a constitution for that governing body in place, the first order of business should be how best to move forward on world development, alleviation of poverty, and global warming. Even though they would retain their staff at the UN, the relatively well developed China and India, will surely join. Japan and Russia will just as surely see the advantage in developing the poorer parts of the world in trade for access to resources. The presence of those four in that new governing body would be counter-weights to the well-armed nations that had historically denied freedom to the periphery of their empires. Russia‘s and China‘s veto power in the UN Security Council eliminates the option of a military assault under cover of the United Nations. The loss of the moral high ground, and the insanity of attacking the, now-allied, 70% of the world‘s population seeking the same freedoms America attained in their revolution, should keep the imperial nations‘ mighty militaries immobilized. The first discussions between the fast-developing nations, and the ―resource powers,‖ should be on access to resources for these rising centers of capital, in trade for industrial technology, and training, for the emerging world. As they are busy signing such agreements as we write, we believe China, India, and Japan, would see the greater security to each of a fully developed world and agree. With their technology, arms, and resources, Russia would join. The ironclad rule to never share technology, except when allies were needed, will then be replaced by equal access to (a sharing of) technology, and equal access to (again a sharing of) resources. An economy requires modern industrial capital, resources, skilled labor, finance capital, markets, and—up to this point in history—a military to protect it all. Though nothing can protect against madmen, those powerful fastdeveloping nations—China, Russia, India, Brazil, Turkey, etc.—give these forming alliances substantial security. Both developed, and fast developing, nations know they must join or their access to resources and markets will be at risk. At that point, financial and military monopolization would be checkmated.
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Once the Iranian oil bourse has been activated, and contracts are directly between oil exporting nations and refiners, either profits of oil exporting nations will increase 50% or the costs to buyers will drop 30%. Those oil trader profits (33% of the price of oil [derivative trading by traders who never use oil]) will disappear, and stock markets will shrink in step with that wealth extraction collapse.h Economic alliances of a large share of the world‘s population, with the greater share of the world‘s resources within their borders, would spread shock through the markets of the imperial-centers-of-capital. As every democratic government must do, every nation or region must maximize their capital, labor, and resources for their own people. That principle, applied to all nations, requires equality of access to resources, technology and trade. That is the trap the imperial nations find themselves in after centuries of appropriating the wealth of others, and becoming enormously wealthy, with no concern of others‘ rights, or that it may all have to end some day. As they want to avoid war, current rapidly developing nations will want to help those crumbling empires restructure; but they will not want to do so at the expense of their own development. Such a seismic shift in relationships between societies takes more time than allotted in this theoretical analysis, which condensed the time frame to make the process understandable. In a reasonable time frame, the unequal aspects of property rights monopolists have created over the past 700-plus years, must be replaced by a fully federated world with honest property rights, providing each citizen of the world their share of nature’s wealth that she offers to all for free. We will be using a theoretical restructuring of the American economy as an example. Such restructuring, needs to be applied to monopoly laws throughout the world. The emerging world understands this and—as addressed in Parts I and II—they also understand that the imperial-centers-of-capital‘s financial, economic, and military power, have suppressed every such attempt the past 65 years. We assume the certainty of the aggressor, and aggressed, both being destroyed, will eliminate nuclear war as an option. The power of monopolized capital, and their mighty military, will be checkmated. At this historic moment, an equal share of the levers of power will be in the hands of the ―resource powers,‖ and their allied centers of capital decoupling from the collapsing imperial centers. This new balance of power will permit the now-allied ―resource powers‖ to bargain with the former imperial powers for continued access to their Which is why five undersea cables were cut just days before that bourse was to open. Not even a telephone call could get through to the island on which that bourse was located. h
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resources. We also assume America‘s loss of the moral high ground will advance that natural flow of events, towards a fully federated earth, by many years. Capital fleeing to cheap labor has de-industrialized the United States. Just as early America ignored Britain‘s patent laws and copied British industry, China, and other countries, are ignoring monopoly patent laws and producing copies of every manufactured product in world trade. Those knock-offs, and the graduation of over 100,000 PhDs per year in the hard sciences, and that number increasing 30% a year, will soon bring Chinese technology abreast that of the wealthy world. The de-industrialized American economy will be in grave danger. The monopoly system will be collapsing due to the allied ―resource powers‖ ignoring patent monopolization laws, just as America and other nations did when they were developing. To replace the complexity of theft through plunder by trade, with the simplicity of sharing and cooperating, will require deep soul searching. As the only other choice is nuclear war, we will assume leveler heads—backed by a nowconscious population—will be humbled, and negotiate as equals, not as the powerful centers of empire they once were. Key to those agreements between the federating, fast developing, world, will be placing patents into the public domain. The first such steps have been taken. In the contract to launch satellites for emerging nations‘ communications superhighways, China has agreed ―there are to be no technological secrets kept from those South American nations.‖ Establishing industries to build machinery for construction of both communications and transportation superhighways, throughout the forming alliances, with no royalties charged, would be a big move towards breaking patent monopolies. President Chavez understands this, and has vowed to ―shake up the rules governing intellectual property rights on medicines and other products.‖ Communication highways keeping all citizens abreast of plans to provide a quality life for all citizens of the world, is becoming a reality. With many times the population of the wealthy world, with an equal per capita percent—but a far greater total—of geniuses, educating many times the engineers and scientists, with those four centers of capital sharing their technological knowledge with the emerging world, and if WW III is avoided through the world allying under the new world governing body; within two generations the citizenry of current fast developing resource powers could be living a quality life. As opposed to ad-hoc development, the alert and moral will recognize that security for all requires poorer nations reaching a planned, sustainable, development level. The developed portions of this federated world, and the collapsing highly developed imperial world, should provide technology, training, and first industries, in trade for access to their reasonable share of resources. If that sharing is honest, the labor, capital, and resources of the emerging world will be pro-
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ducing most the necessities for their citizenry within one generation, and they should attain engineering, infrastructure, and production equality within two generations. Towards that goal, all resources should be mapped and banks, roads, railroads, alternative energy power systems, industries, water and sewer systems, and all other infrastructure for an efficient, sustainable, regional economy should be planned. This takes care. Large industrial capacities for tractors, construction equipment, etc, are required to industrialize a developing region, but once developed, only small production capacities are adequate to produce parts for that machinery. Japan has far more industry than necessary to produce for her 120 million citizens. Under monopoly rules, those exports are necessary to pay for imports, but they are not necessary within a properly-planned, sustainably-developed, economically balanced, region. In that peaceful world, Japan‘s defense needs disappear, three dimensional orchard farming (permaculture) on its own land can provide their food,i and they can provide technology, development, and manufactured products to Africa and South America in trade for resources. Cultures within these emerging federations are not locked into the aristocratic system of exclusive titles to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free (the monopolization, wealth extraction, process). They were forced into that system of unequal property rights, and when the opportunity arises, they will replace it with an efficient economic structure. The choices are only three: 1) retain the Western system of exclusive title to nature‘s resources and technologies, denying others their share; 2) revert to some form of command economy, communal socialist, or 3) turn to an honest economic and financial engine of full and equal economic rights for all through conditional title to nature‘s bounty, tempered by communitarian principles.j Those who chose options one or two would soon change their mind as the higher productivity, and lower labor and resource costs of those who chose the inclusive, efficient, intensely competitive, principles of full and equal property rights were proven.k See Tikopia Island in Jared Diamond‘s Collapse: How Societies Choose to Fail or Succeed, 2005. This is a synthesis of capitalist, socialist, and communitarian property rights.. The dynamism of capitalism and the justice and equality within other philosophies are each retained. k Many see a fully developed world as destructive to the environment. Tiny Tikopia Island, addressed above, has successfully practiced three-dimensional orchard farming for 3,000 years. That permaculture mixing of annual and perennial tubers, berries, vegetables, fruits and nuts is enormously productive and, due to that closely-planted mixture building its own defenses, essentially free of disease and destructive insects. Under such advanced permaculture, one‘s yard could produce a large share of a family‘s food needs and sharing between neighbors will provide variety. If the i j
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Edmond Taylor, The Fall of the Dynasties: The Collapse of the Old Order, 1905-1922 (New York: Dorset Press, 1989), chapters 17-19. This author’s Economic Democracy: A Grand Strategy for World Peace and Prosperity, 2nd edition (235 Dabney Lane, Pamplin VA, The Institute for Economic Democracy), pp 62-63, 102-03. 2 Ibid 3 Robert McHugh, ―Money Supply versus Interest Rate Policy,‖ Comer, January 2006, pp 18-19. 1
4 5
Ian Bremmer, ―Who‘s in Charge in the Kremlin‖ World Policy Journal (Winter 2005/06), p.3. Alfred W. McCoy, A Question of Torture: CIA Interrogation from the Cold War to the War on Terror (NY: Henry Holt and Company, 2006). Steven Hiatt, Editor, A Game As Old Empire: The Secret World of Economic Hit Men and the Web of Global Corruption As (San Francisco, BarrettKoehler, 2007), Chalmers Johnson, Nemesis The Last Days of the American Republic (Metropolitan Books, New York, 2006), run keyword searches.
world replaced monoculture farming and shipping from hundreds or thousands of miles away with three dimensional orchard permacultures in back yards and farming communities, society could be living in a Garden of Eden continually improving soils as opposed to its rapid depletion under monoculture farming.
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27. President Barack Obama‘s Economic Transition Team‘s Stabilization Policies
It was not unexpected that President George W. Bush‘s Emergency Economic Stabilization Act of 2008 was designed to bail out the major banks and financial institutions which caused the current financial and economic crisis. Those financial institutions receiving trillions of dollars in bailout money had copied Enron‘s off the books accounting, leveraged their investments 30:1 or higher, produced nothing, pocketed massive sums of money, and it was those policies of investment banks which brought on the current financial crash. As values collapsed, those 30:1 leverages (debt to equity ratios) doubled, tripled, and kept on climbing. Citibank‘s leverage rose to 280:1 and required massive infusions of government money to prevent the nation‘s collapse. Others, Goldman Sachs, JP Morgan, Wells Fargo, Bank of America, HSBC, and banks across the world are caught in the same sand trap. The rescue of those major banks, the American International Group (AIG) and other financial institutions, required trillions of dollars in bailout funds. The trillions spent, and the trillions more pledged, as the U.S. and world economy worsens, measures the huge vacuum building beneath the massive sums of unearned wealth which is currently accepted as ―our finance capital.‖ Fully 95% of that finance capital is doing nothing more than extracting ever-more unearned wealth out of the economy. Key members of those non-productive bankers became President Obama‘s advisors, and they have convinced him that the best way to protect the nation is by continued protection of their massive sums of unearned wealth. President Obama spotted the error of pouring money at Chrysler and General Motors. He fired the CEO of GM, and told them, and Chrysler, to produce viable plans for profitable companies before they received any more bailout funds. He needs to realize that the many trillions of dollars in finance capital he is currently
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protecting is even less productive, and point those trillions of dollars of your and my money at the real economy, you and me. Most of the nation was upset over those many trillions of dollars going to the very people who had dropped the value of their 401K pensions by 45%, and destroyed millions of jobs. The economy may yet calm down. Massive funds are parked in treasuries, other safe havens, and they will pour into the markets if the economy stabilizes. However, a deeper look tells us it may not. Much of the rest of the world‘s economies are dropping faster than the U.S., not all their central banks have the strength to bail them out, and some parts of the world have no way to protect themselves. Added to that ongoing worldwide collapse are the resource power’s breaks for freedom picking up speed. If they succeed in decoupling from the imperial world, that will deny the empires massive sums of extracted wealth. As they will be retaining the wealth once extracted from them, the resource powers, and the emerging centers of capital, can actually develop more rapidly as the empires collapse. Others will, formally or informally, quickly join those successful federations. If those bailouts fail and/or if the world starts decoupling from the American and European economies, the president‘s only choice is call in the loans to those banks, nationalize them, and turn the money creation powers of those now nonbankruptable banks towards restructuring the real economy. We now turn to the Conclusion where we demonstrate the simplicity of stopping this financial and economic collapse in its tracks, supporting the world‘s struggle for freedom, restructuring to full and equal economic rights for every citizen of this earth, reducing employed hours of the industrialized world by half even as poverty disappears, all citizens enjoying a quality secure life, and all this while taking pressure off resources and alleviating global warming. President Barack Obama‘s ultimatum to the automobile industry, his start towards normalizing relations with Cuba, his sincere move for massive reduction in nuclear weapons, his not pushing for NAFTA and other unequal trade agreements at the Organization of American States Summit, and his alert to Israel that America will be backing a viable Palestinian state, hints he may have the intention to living up to his pledge for honest change. The world may yet go peaceful, with full and equal economic rights, and a quality life for every citizen of this earth. If it does, this president will be recorded in history as the greatest leader of all time.
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28. Conclusion: An Open Message to President Barack Obama‘s Economic Recovery Team
In every extreme crisis, such as the aftermaths of WW I and WW II, or the Great Depression of the 1930s with its 89% collapse in values, the imperialaristocratic system of property rights came close to being overthrown by ballot box revolutions.1 It is not reasonable to think that the citizenry of America and Europe will patiently watch the developing centers of capital—China, India, and Russia, along with Japan, successfully ally with the emerging world while the West‘s economies, historically dependent upon those cheap resources and labor, become moribund and their children cold and hungry. As war against 70% of the world will be unacceptable to the developed world‘s own citizenry, we trust that President Barack Obama will live up to his announced dedication to change. Only a powerful president with exceptional vision and integrity, such as Franklin Roosevelt in the Great Depression of the 1930s enacting revolutionary legislation within 100 days, can guide this nation and the world to its salvation through applying these simple principles for efficient economies. In this crisis, like all others in history, families will be cold and hungry as values collapse all around them. All know that monopolists (those with the unearned money to loan) firmly enforce the rule that the final mortgage holder will own all property backing defaulted loans. This president and his advisors will know those collapsed values are pledged to loan institutions. Those privatelyowned loan institutions going broke right along with their customers will be, by the same custom and law, owned by the Federal Reserve, the socially-owned lender of last resort that has been loaning, possibly giving, trillions of dollars to the very people who caused the current financial crash. Three times—after WW I, in the depth of the Great Depression of the 1930s, and after WW II—the monopoly system avoided its overthrow by ballot box revolutions only by the major share of those countries turning to fascism. This time, with half the world industrialized, but divided into various centers of capital, and the yet-unindustrialized fully aware, there should be no way to save the centuries-old property rights system designed to protect wealth and power, at the expense of the powerless. This president will realize that America‘s socially-owned Federal Reserve, with its money creation powers, taking over management of those bankrupt banks is the only option.
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The president‘s advisors understand the process very well. They were using these principles to prevent financial collapses and protecting the ethereal world of high finance for 30 years. The 1982 Savings and Loan scandal, the one-day stock market collapse of 22.6% in 1987, the 1990 Citibank bailout, the 1994 Mexico financial crisis, the Asian currency crisis in 1997-98, Long-Term Capital Management‘s bankruptcy crisis in 1998, and the dotcom crash of 2000-01 were only different in that the U.S. economy was not collapsing, and the money necessary to turn the economy back up was modest. If the citizenry remain passive, an economy can balance anywhere for periods of time, and there is the possibility that the American economy can be stabilized at its current poverty level. However, massive productive capacity throughout the world going idle, and that which is humming is building the emerging world, tells us Western economies may not rebalance. Their economies have yet to face the hurricane of the emerging world retaining the ―earnings of their natural wealth,‖ and the imperial centers losing those massive sums which previously went to their side of the accounting ledger. If it does not stabilize, President Obama should organize a new recovery team with no ties to the ethereal world of high finance, call in those ―loans‖ to distressed banks, nationalize them just as the law requires, start pouring created money at the real economy, rather than to those financial monopolists who created this crisis, and guide this world to a quality life for every citizen of this earth. If the goal is equality and honesty, bankrupt private banks converted to socially-owned banks can stop any financial crash in its tracks, and quickly rebuild an economy. With higher interest to depositors and lower interest to borrowers, due to lower operating costs, and backed by the Fed‘s money creation powers, both depositors and borrowers will flock to those secure, socially-owned banks. Already in trouble, the rest of the private banks will turn in their keys as fast as their customers start transferring to those secure banks. The entire banking system will quickly be, as it should be, socially-owned, socially-operated, and more powerful than an army. The goals must be the greatest good for the greatest numbers—food, fiber and shelter for everybody, and protecting the savings, equities, and livelihood, of the maximum number of people. This requires financing both consumers and the real economy as opposed to the current financing of the ethereal world of high finance, the ones who created this crisis.a A banking system can be balanced anywhere from highly efficient to its current, extremely corrupt, monopolized inefficiency. The world economy is just as unbalanced as national economies. Debts between, and within, all nations will have to be renegotiated along the lines of renegotiating debts within America as we are addressing. This will be a huge effort but, as demonstrated by this a
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The president and his new advisors already understand this socially-owned banking system‘s creation of money powers for stopping the financial collapse in its tracks, quickly restructure the economy, and reestablish prosperity. A decree is issued for every head of household—husbands, wives, or singles—without a job and without other income or resources, to apply to their bank/credit union for a monthly subsistence based on single households receiving 75% that of married couples and an allowance for each dependent. The loan institutions will put the applicant‘s electronic transfer number on that application. That form will include testimony, under oath, that they have no income or resources. Upon signing, and on the 1st of each month thereafter until receiving their first full paycheck, subsistence funds will be computer-deposited into those accounts. Heads of families will walk out with funds in that secure bank to cover food, fiber, and shelter for that month, and each month thereafter until employed. Those who would be against a non-bankruptable bank and subsistence funds for those with no equity and no income would be so out of sync with events they will be few and irrelevant. Though only modest amounts of cash can be withdrawn, all trades will be quickly consummated through checks, credit cards, or debit cards, which is the real money in a modern economy. With this latest break from unequal property rights, as applied to nature‘s resources and technologies, all Americans are now fed, clothed, and housed, and the worst aspect of the crisis, a cold and hungry citizenry, is under control. Spending of those subsistence funds will increase demand and, since every citizen has a livable income, quickly stabilize the economy. With money flows across national borders controlled through countries and regions issuing new currencies spendable only within their borders, any shortage of circulating money for subsistence payments, and construction and repairing of economic infrastructure can, up to the level of a balanced money supply, be created. These are the dual currency systems handling world trade within a cooperative, federated, world system we addressed periodically. World currency systems are under discussion, but they do not have the simplicity and power of a currency for all nations, and useable only in trades between nations and regions. Inflation threats due to too much circulating money are easily handled when a currency is spendable only within a nation‘s borders. Mandated reserves may at first be necessary but a socially owned bank automatically has 100% reserves, and fractional reserve banking is not necessary once an economy of full and equal economic rights is established and in balance. Once the currencies of resimplified example, it can be done. Each nation or region will have to operate their economies with a new currency as they renegotiate contracts and debts with all other nations and regions denominated in a world currency (a dual currency structure). Sacrifices will be required by all.
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source-rich developing world regions and nations are protected, trading access to resources for technology will boost the circulation of those ―values‖ (money). An efficient economy with full and equal economic rights, balances through resource rents and banking charges maintained at levels that cover the costs of infrastructure construction and maintenance, operations of government, education, universal health care, retirements, etc. Keeping intermediately developed, and developing, regions of the world going requires currencies that cannot be spent outside economically viable borders, and a world currency handling trades between those viable regions, or nations, as they rebalance their trades with the imperial economies. Under a dual currency system, each viable region can create base money to build infrastructure or, early on, even loaned to build industries. With the understanding that a slowing of the velocity of circulating money permits base money creation at an appropriate level, it is possible to operate an economy at very high levels of created money spent on essential needs in a crisis, or for initial development of emerging economies. Once a nation is developed, money creation will be only when natural disasters, such as hurricanes, tornadoes, floods, and earthquakes, destroy value, or when an economy is expanding. Note the savings when major natural disasters are insured through created money replacing destroyed wealth, instead of through insurance policies. Owners having to shoulder some loss will protect against fraud. Blocks of homes burning would be, of course, a natural disaster. Forced to start decoupling from the American economy before that full federation, other nations, and the emerging world, will be restructuring their banking systems with their own regional currencies spendable only within their borders. With banking systems protected against cross-border flows of money, and with development planning carried on through regional alliances, each region can develop sensibly, and steadily, at the maximum pace allowed by construction equipment, trained labor, and resources available. With the dollar the world‘s current reserve currency, the U.S. has had the power to create money (value) that properly belongs to other nations. While costing nothing to create, that money has a firm claim against real wealth. Though they do not put it in these words, China, Russia, and other countries are demanding a world currency that protects their right to their share of created money, and that protects their money‘s value. America and Europe responded by offering IMF Special Drawing rights, backed by a basket of four currencies, as that world currency. The struggle for equal rights to the protective power, and efficiency, of an inter-country trading currency has just begun. This president initiating negotiations for dual currency systems protecting each currency from rapid money flows across borders (full and equal currency rights placed on the table for the first time in history) could lead to a true inter-
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national currency for a peaceful federated earth. A world currency is, of course, what we have always had, except America was in charge the past 60 years, there were no cross border controls, and leaving an imperial power in control of the world‘s trading currency, is an open invitation for financial destabilizations, within the alliances we are addressing as crucial for the world‘s final break for freedom. America‘s counter offer, IMF Special Drawing Rights backed by four currencies (the dollar, pound, Euro, and Yen), can only be that world currency if all other currencies have equality and protection. The structure should be a democratic ―Bank for International Settlements;‖ an honest World Central Bank (the one in Basel Switzerland only if totally reformed) overseeing that dual currency system. That honest world currency would handle trades between economically viable nations and regions. As the money of a properlystructured world bank will be only numeric values stored within computers, there will be no world paper currency. This will eliminate counterfeiting, money laundering, most black market exchanges, etc. The ―flickering beginnings‖ of a world federation with a world central bank will have become a steady glow. Having addressed control of the flow of money across borders so economically viable federated regions can create money and rapidly develop, we return to the collapsing American economy which has just been theoretically stabilized by creating money for subsistence payments to the unemployed, for restarting the economy, and for economic restructuring we have yet to address. Once monopolization is eliminated, only 5% the former level of finance capital will operate the American economy efficiently. Ownership of that capital will be very broadly diffused, and it will be democratically, and equally, shared with all transactions visible, touchable, and understandable. The ethereal world of high finance, which is nothing more than massive sums extracted through unequal property rights, will be history. With the old powerbrokers keeping a low profile and an appreciative citizenry paying close attention, this alert president realizes lobbyists can no longer block universal health care being legislated as a human right. Faced with the logic of single-payer health care at half the price, with over 500 physicians petitioning President Barack Obama to put it into law, with almost 50 nations having already established it, and with Britain a stark example of 100% coverage at 43% America‘s per capita cost,2 with 90% approval of their system by the British and 70% disapproval of their system by Americans, and with British doctors better paid than America‘s, universal health care will quickly be legislated into law.b The This will take a full restudy of nutrition and drugs without input or interference by food or drug companies, and providing the citizenry with the knowledge to take control of their own health. Remember deaths go down when doctors go on strike. Both deaths and food b
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once cold and hungry citizenry are now warm, well fed, and their health care costs are covered by the social-credits (profits and society‘s savings) of the socially-owned banking system. With food, fiber, shelter, health care, and retirement for each citizen secure, addressed just below, crime will drop rapidly and the prison population and legal system will eventually shrink to a shadow of its current self. The genie will be out of the bottle and it cannot be put back. The advantages and efficiencies of a socially-owned banking system, universal health care, and retirement as social and human right, would be so obvious that the citizenry will be looking forward to a continued restructuring to full and equal economic rights. A dialog on abandoning the monopoly system, structured within property rights laws for the past 700-plus years, will be on-going world-wide, as the world awakens to the efficiencies of a federated world with full and equal rights economies. Once the insurance industry is analyzed and that segment of the economy restructured along the lines of Social Security, the now empty insurance offices would be turned to productive use, even as all citizens are fully insured at half the cost. The subsistence-pay-protected displaced insurance workers will be assured of a respectable job when this economic restructuring is finalized. By this time monopolists will know their secret was out, and they will not be investing in monopolies they know will soon no longer exist. Citizenry worldwide will be watching closely the on-going drama, and by now will understand the key concepts for an efficient economy: Human labor did not produce land (resources), nature offers it to all for free, and a rightful share for each can be had through socially-collected resource rents funding essential services. The citizenry will watch taxes disappear as those funds (bank profits, created money, and resource rents) are returned to them as social-credits running governments, building and maintaining economic infrastructure (water and sewer systems, roads, railroads, electricity, communications superhighways, and all other natural monopolies), universal health care, retirement, and in an emergency, any social need. In short, all money once paid to monopolists (that unearned 95% of current finance capital) now provides a community with social-credits, eliminates taxes, and that double savings is realized by employed working hours dropping by half or more and still providing a quality life for all. With that explained, the citizenry will understand those quintuple plus gains when society collects all resource rents, and expends it as social-credits funding infrastructure and social services; that law will pass by legislation or referendum. costs will drop rapidly when the processed food craze is understood as a primary cause of diabetes (processed carbohydrates) and heart disease (transfats), and avoided.
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The mother of all monopolies (land [resources]) will have been eliminated,c all would be receiving their share of the wealth produced by nature, and for the first time in history, an honest capitalist society will have been established. This funding of the real economy, stopping the financial collapse in its tracks, is many times cheaper than the current pouring of tens of trillions of dollars at the ethereal world of high finance which caused this crisis in the first place. In fact this social-credit plan will cost nothing when it is fully in place. A restructured, federated, world economy, that provides a quality life for all its citizens, provides far more use-value with far less resources and labor than a monopolized economy. As opposed to the excluding social structures designed by monopolists the past 700-plus years, under the principles of full and equal economic rights, taxes will be quaint history. The equal sharing of jobs, a reasonable pay ratio between higher skilled and lower skilled labor, and an ongoing analysis of an economy requires an accounting system. Each person is responsible for most the amenities of their lives and these are paid for from wages and profits. Universal health care and other social and human rights are efficiently funded through socially-collected profits from society‘s banking system and resource rents. As proven by the savings possible under an economy of full and equal economic rights, investment funds from sociallycollected resource rents and bank profits replacing extracted values capitalized into huge blocs of privately owned capital, are so enormous that money to fund this peaceful society will be in plentiful supply. That there are shortages of investment capital is fiction. Currently only 5% of finance capital, at best, is operating the real economy in America. The rest is only extracting wealth. While all the above is taking place, accountants experienced in real estate will be assessing the value of all property both before and after the financial collapse. The price mechanisms of capitalism had measured those values, but those monopoly-created values, and the 95% of the current blocs of capital created to buy and sell them, were not legitimate then, and are not legitimate now. Protection of honestly-earned savings mixed with those monopoly values, requires reduction in debts, at the same ratio as the rationalization of property values. Capitalized (monopoly) values will have disappeared, and only labor-created values (usevalues) remain. With reassessment ongoing, this alert president proceeds to clear up titles to all property and, with the greatest good for the greatest number in mind, restore Land as the mother of all monopolies is obsolete. This treatise proves that monopolization of both banking and technologies are equally as powerful and damaging to an economy. We have addressed above the elimination of the monopolization of technology as the key to developing the impoverished world. Thus patent monopolies have adverse effects equal to either land or banking monopolies. c
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the financial health of the citizenry, and the nation. The land under all homes, all farms, all mines, and all industries, will remain under the name of the current owners (previous owners if property has been foreclosed upon) but they now must pay monthly resource rents to society (themselves). Considering all taxes disappear, and those funds come right back as social-credits operating governments, building infrastructure, education, universal health care, retirement, etc, paying resource rents to the social-fund is the most profitable investment a society can make. The property owners have all rights to that land as before, except the right to collect a private tax, the land rent. Wages should be recalculated to be adequate and low-paid retirements must be recalculated upward, to that necessary for a quality life. As land now has no capitalized value, loans against it must be erased from the records, and that against structures built upon it reappraised to current, labor-created, use-values. If 50% of loan values were backed by the land before the crisis, that 50% loan value is erased. The remaining 50% will be discounted to 50% those structures‘ current value. Autos, boats, and other loans would be similarly restructured. Paid-for real-estate would not be affected, except there will be no taxes on structures, and land rents will be paid into the social fund. Those with more than one home, or if they have other resources, will not be receiving subsistence payments until those residuals of massive unearned wealth have been consumed. That rule would not apply to an owned, productive, business in which that person is directly employed, and which is temporarily idle due to the crisis. Such productive resources would be entitled to protection, and support, from the socially-owned banking system in the same manner as these suggestions for protection of titles to homes. Under the financial crisis, most second homes or investment properties carrying debt will have been repossessed. Those renting would be first in line to purchase; financing would be available. The socially-owned banking system, being not-for-profit and not bankruptable, will have replaced trillions of dollars in uncollectable debts on homes with collectable debts, at the same debt-equity level as before the collapse. A private bank can write off only a modest amount of loans before they are bankrupt; a socially-owned bank can erase all debt that is necessary. The process is simple, and the rights of all are protected while stabilization of a severe crisis is not viable under private banking; restructuring an economy is impossible without the cornerstone of a community social-credit process, the banking system, under public ownership. Such protection for borrowers would be in direct conflict with current unequal property rights, and private banks‘ maximization of profits.
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With the citizenry now understanding the monopoly, wealth extraction, process they previously were unaware existed, and with property rights of all secure; this is the time to eliminate the doubling of consumer costs due to patent monopolies. Explanations to the now alert citizenry on how consumer product prices are at least twice that necessary will make those legal changes imperative. By Congressional action, or by referendum, those patent laws will change to paying inventors well, and placing patents in the public domain. When that law is fully in place, 85% of the activity of casinos known as stock markets, where those unearned profits are collected, will disappear. The resources, and talented labor previously battling within equity markets over who shall claim the enormous wealth produced by technology, will be available for truly productive use. Current patents will be in force for up to 20 years. Transferring technology to ―resource powers‖ in trade for access to resources while letting those monopoly rights run out within the developed world, will give corporations those 20 years to unwind from their monopoly positions. When unwound, their productiondistribution capacities will be intact. But they will no longer be extracting wealth through monopolization. As the gains and protections of society as a whole are obvious, developing countries will adopt that patent structure as fast as they can negotiate use of the latest technologies in trade for access to resources. The wealthiest nations have greater dependence upon emerging world resources. Rising centers of capital are transferring technology and building infrastructure in trade for access to resources as we speak. This federating world will recognize those imperial unequal property rights (monopolization patterned after aristocratic property rights) had effectively collapsed, and they will adjust their laws accordingly. Monopoly values of corporations are primarily capitalized values of wealth extracted through exclusive title to nature’s resources and technologies, denying others their rightful share of what nature offers to all for free (the monopolization, wealth extraction, process). These are all big boys fully believing in the system they had created, and which has now crashed. As most those values had been extracted from productive labor over the years, and those unequal property rights— now proven as a system of theft—have been abandoned, nothing is owed there.d The economic collapse, plus the loss of monopoly values, will drop the value
The simplicity of inflation and deflation control proves that inflations are conscious decisions. An example is the 2002-06, housing bubble. Money had to be created to buy and sell those doubled values. So that housing bubble was a planned event, utilizing created money to rescue the stock market, which only creates another imbalance that has to be weathered. All such maneuvers, protecting power and wealth, disappear when an honest banking system fully funds the real economy, and d
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of most corporations below their debt values (values collapsed 89% in the Great Depression). As the original private banks will have been holders of 1st mortgages, the now socially-owned banks will own most of those corporations, and the looming elimination of patent monopolization, along with the economic crisis, will, as in all great crashes, collapse stock values to that of wallpaper. As private property, and free enterprise, should be maintained, shares should be distributed to labor and management within those corporations as loans at market-value. Those loans repaid along the principles of the subchapter ―Investment and Job Opportunities‖ (p. 378, a percent of wages deducted each month) would resolve that equitably. With its own workers the new owners, those industries would be operated efficiently. By the same debt revaluation formulas; the modest market values acknowledged in those payments would be distributed to the few creditors still standing. As in all economic collapses, those values will be low to nonexistent. It will be the responsibility of the new manager-owners to operate a productive-profitable company, and rebuild values. For that purpose and for new entrepreneurs, a department within the socially-owned banking system would fund major industries and businesses. That financing of worker-owned businesses and cooperatives would be the economic ideal of labor employing capital. Since this banking system has the power to direct both primary created money (base money) and savings to areas in need while simultaneously holding required reserves high enough to destroy surplus buying power, and maintain a steady money supply, funding would not be a problem. Loans to cover expansions and new enterprises would be available at interest rates high enough to cover risk. And we reaffirm that, once this efficient economy is in balance and the banks socially-owned, there will be little need, likely no need, for mandated reserves. The many subdivisions of financial empires within the ethereal world above the real economy will have collapsed when the economy crashed. The sociallyowned banking system will keep the real economy operating; those many methods of intercepting wealth within the vapory ethereal world of high finance, that are reducing economic efficiency by fully 50%, can wither on the vine. As most are financial empires built capitalizing extracted values, 95% of America‘s current huge blocs of finance capital are both unearned and unneeded. That ethereal world of high finance is only laying claim to wealth produced by others. Except for bonds not revalued through bankruptcy, most those intangible ethereal values will have disappeared in the economic collapse. With their total disappearance, GDP will measure only economic activity in the real economy.
the many games in the ethereal world of high finance, extracting massive wealth, are history.
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A great hue and cry will go up that these blocks of capital are necessary to operate an efficient economy. That warning will be muffled as the mighty economic and financial engine of full and equal economic rights doubles the efficiency of the economy. Once established, a slim, trim, ―real‖ economy will replace the inefficient ethereal economy which had evolved into a crazy quilt of methods to extract wealth produced by productive labor. Each of those best and brightest, who once owned and operated those niches within a monopolized economy, will be guaranteed a ―productive‖ job. There will be no need to carve out an inefficient financial empire. Those who see new opportunities will have access to investment capital through loan officers trained, and experienced, in financing promising new endeavors. Socially-owned risk capital, charging higher than normal interest, would be paid from cash flow and those entrepreneurs, no longer monopolists, would retain the honestly earned values of their successes. Due to a socially-owned banking system being more powerful than armies, what we have addressed philosophically can be done. That power is denied a private banking system because their unequal property rights are designed for maximum rights to monopolists and minimum rights for all others. In each financial crisis, the relative wealth of deeply entrenched monopolists increase as the entire nation goes broke. If your property is half paid for, the creditor owns half and you own half. But, when a financial crisis hits, values drop, the creditor owns it all, and you own nothing. Instead of monopolists claiming what is properly your equity, a socially-owned banking system can rebalance debts to match value collapses, and protect everyone‘s honestly-earned equity. However, it has no responsibility for protecting unearned wealth extracted under unequal property rights laws. A large share of the unearned wealth will have disappeared in the above collapse and revaluations. Once all monopolies are eliminated through the restructured economy we lay out, there will be no deflations. Inflations from shortages caused by the weather will be regional and temporary. The goal is to restructure the unequal property rights laws established by imperial power brokers over the past 700-plus years—which caused this, and all past, economic crises—to inclusive property rights with a quality life for all while employed only two to three days a week, and all with no risk of poverty or economic collapses. This philosophy eliminates monopolies while retaining an honest capitalist economy which accomplishes both socialist and communitarian goals.e Recognizing the security of titles to land with an initial purchase price of zero due to paying all resource rents to society; noting the efficiencies and equality of a socially-owned banking system providing equality in social-credits; with the In either case it is possible to create money for both infrastructure and industry, and control the money supply through higher mandated reserves. e
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properties, and equities, of the maximum number protected; with insurance priced at half the old norm; with universal health care and retirement as social and human rights, and all this now part of the social dialog; a mandated reduction of the workweek to create a highly-efficient economy with a quality life for all will not only be an imperative, it will be an easy sell. Among the large numbers of unemployed will be people well qualified to calculate the number of productive jobs in a fully rationalized, efficient, economy. We will assume their calculations match ours, two to three days work per week outside the home for each employable citizen. From that calculation, Congress would pass, and the President would sign, or a voter referendum would mandate, a reduction of the work week to that level. A productive, well-paid, job for each citizen is now guaranteed. Subsistence payments, continuing as wages during the first one to two months, or more, of an employment-learning period, will readjust the workforce smoothly. Highly skilled jobs, pilots, railroad engineers, etc, will take substantially longer. A few skills, such as scientists, are unique. They are on intense searches that leave little free time; their pay is primarily emotional. Society, and those scientists, both gain by a doubling in manpower with little reduction in each one‘s search for those secrets of nature. All that, and a stable money supply, can be seamlessly accomplished. As the workweek is lowered, and respectable, well-paid jobs become available, subsistence payments will be withdrawn. All this can be done much faster, much cheaper, and create a far more efficient economy than pouring those massive sums of created money at the same ethereal world of high finance that extracted their wealth from others, and created this crisis (2008-10). Some people are much more productive than others but not so productive as to justify the current wide disparity in pay. There will be exceptions—an Einstein, an Oprah Winfrey, a president, and a few others—but serious researchers have concluded that most should be paid equally with a differential in pay no greater than two to one is reasonable, and that great a differential only in exceptional cases. As these adjustments are made, the wages of the underpaid must be increased. Once those adjustments are made, both poverty and subsistence payments are history. Cost of products and services, measured in hours employed to purchase them, will drop 50%, or more. The crisis will quickly subside as all checks, credit and debit card charges against adequate bank balances, within the socially-owned banking system, are honored. With debts restructured, property titles secure, and all adequate bank balances honored, proving a socially-owned banking system automatically has 100% reserves, and with money in consumer‘s pockets, an economy, America‘s
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or any region of the world that puts this together, has nowhere to go but forward. There will be other problems to resolve but, once the banking system is under social ownership, monopolies are eliminated, and the goal of planners is full and equal rights for all, those are all solvable. Most will have lost everything as the economy collapsed and everyone comes out of the economic crisis with secure title to homes and businesses, secure jobs, and equal and adequate pay. Those full and equal economic rights create an economy that, so long as monopolies and ethereal worlds of high finance are avoided, will maintain stable and secure values for millenniums. After historic past economic collapses, citizenry distrusted banks and were afraid to go into debt. In contrast, this, potentially the worst of all collapses in history, would be so short, and security restored worldwide so quick, the citizenry will soon spend and save normally. Communication superhighways are so efficient that they have the potential, possibly the certainty, of destabilizing the entire world monopoly system. It was studying that possibility that led to this analysis of the least traumatic way to restructure to a peaceful and prosperous world. So we allow the communications industry as quickly restructuring to those superhighways along the lines of chapter 24 (communications). Monopolization of phone, cable, TV, and radio, as well as 85% of the brick, mortar, and labor of the developed world‘s education system and possibly 60%, or more, of the infrastructure of retail industry, are replaced by those communication superhighways. With the old power structure totally discredited and thus without a political voice, alert and moral managers of state, and an equally moral, but more likely frightened, American Congress,f or voter referendums, would pass the necessary restructure laws as described above. With a citizenry enjoying the security and higher quality of life of these restructurings, constitutional and other legal challenges can be quickly set aside by national referendums.g Only under a socially-owned banking system can you quickly provide subsistence payments to a cold and hungry citizenry and simultaneously restructure debts and an entire economy. It is that quick alleviation of the crisis, and rapid restructuring, which alerts a citizenry to the full, and equal economic rights In the crisis of the 1930s, the legislators were just that frightened, which is what permitted the passage of many laws giving Americans rights taken for granted today (Social Security, Unemployment Insurance). g The powerful have established many blocks to changes, constitutional and legal, into their property rights laws. But with an alert leader quickly providing security to a cold, hungry, and panicky citizenry, and with promises of total security for the foreseeable future, few legislators or judges would dare stand against it; national referendums would override those hold outs. f
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possible by abandoning the monopoly system, so carefully structured the past 700-plus years; which economic classics have told us is the best of all possible systems in which monopolization does not exist. Until an example of an efficient economy, with full and equal rights for all, has been put in place, most will be unaware they had been living under a monopoly structure. Besides the classics, that misguided belief system is due to monopolists funding justifying philosophers, primarily through the spin of philosophically hard-right think tanks, in step with establishing, and as a part of maintaining, the monopoly system. That also explains suppression of the developing world‘s breaks for freedom the past 65 years. If any example of full and equal economic rights for all ever successfully established itself, the now-exposed monopoly system would have collapsed. An efficient, federated, world economy requires each region producing most of their consumer needs. Part of restructuring the American economy to keep everything local will be rebuilding regional industries that were sent overseas in the race for the unearned profits that created this crisis. A nation or economic region can only be secure when they are producing the essentials of a quality life for their citizens. Bananas, coconuts, minerals, and many other commodities have to be paid for either by surplus commodities or manufactures. Such resource and production balances require planning and cooperation, not winner take all laissez-faire. Developing nations require a regional currency acceptable only within the borders of an economically viable region. With that regional currency, money to build both industry, and infrastructure, can be created, and that, plus resources and skilled labor, are the fundamentals of wealth production. That foundation of an industrial economy, plus the wealth produced, backs the socially-created money. Each time a unit of money (base money) circulates, it equals the usevalue being bought or sold, and its circulation now operates only the ―real economy.‖ An ethereal, unproductive, wasteful, economy no longer exists. Necessary adjustments will be made after an analysis of how these monopoly laws evolved over the centuries. The conclusion can only be that they were unequal property rights put in place undemocratically to lay claim to wealth properly owned by others, and those huge blocs of capital invested in bonds are, beyond that which is part of the roughly 5% which were honest earnings and savings. Those representations of value are invalid because their owners were paid those massive sums while producing nothing.h
Bonds and treasuries held by financial institutions of other countries will require negotiation. A just settlement will require sacrifices from all parties. h
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Government and infrastructure bonds are the final sanctuary for that appropriated wealth. While all other values are collapsing, interest rates fall and the values of earlier-issued bonds with higher interest rates rise. A doubling of bond values as real property values crash can be a quadrupling in relative values. By moving into bonds as interest rates peak, and into stocks as interest rates bottom, a managed rhythm, massive more wealth is extracted from its proper owners. Just as aristocracy‘s titles to land was for centuries the proverbial elephant in the living room denying all others the right to enjoy their full and equal economic rights, that elephant‘s children, the share of those huge blocs of capital (the 95%) once buying and selling capitalized appropriated values (misnamed profits) within the ethereal world of high finance, that have moved to other investments, primarily government and infrastructure bonds, would still be preventing full realization of rights. For centuries the money realized from selling capitalized appropriated values have been moving into other investments, some into productive industries— addressed above in which those extracted values had now disappeared through bankruptcy—and some were invested in government and infrastructure bonds in which those values, both honestly earned and extracted, have, assuming bankruptcy had not lowered their value, possibly doubled or tripled in value as industry values collapsed. Both the profits and the interest on that unearned wealth have to be paid for by the very people from whom that original unearned finance capital was first extracted. And, until the economy is fully restructured, it will be paid for again and again, on into perpetuity. Current titles to nature‘s resources, and technologies, derived directly from aristocratic property rights law, and fine-tuned for the past 700-plus years as monopoly property rights law, are unequal, inefficient, and unethical. That marks a substantial share of properly-invested funds as unearned wealth including all ―earnings‖ such as those who rode up the value of land or bonds as addressed above. So we have moral investors with unearned savings functioning within an unethical system. Those unethically earned, yet morally invested in bonds, are both perpetuating the cycle of unearned wealth, and blocking honest investment of honest savings, and socially-created money. We addressed above how the need for safe investments for these blocs of extracted wealth led bankers to ignore the efficiencies of resource rents and bank profits providing social-credits for education, highways, railroads, water systems, sewers, communication superhighways, libraries, parks, universal health care, retirement, running governments, etc. Such simple financial efficiency was ignored to provide a safe place (government and infrastructure bonds) to invest the massive sums extracted through unequal property rights.
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Unearned money invested in government and infrastructure bonds would both deny society the right to create debt free money to build infrastructure, and penalize honestly earned savings. After all, resource rents and bank profits now funding all social needs, exposes where these massive sums came from, resource rents and bank profits (Most other profits are winnings [derivatives] gambling with those unearned profits). If one traces those blocs of savings back to where they were supposedly ―earned,‖ one will find most originated as unearned wealth. It is impossible to restructure to an efficient economy without directly addressing those huge blocs of wealth which were unethically earned but ethically invested. Like the proverbial elephant in the living room, others cannot exercise their rights so long as that beast, extracted wealth invested in government and infrastructure bonds or which weathered the crisis in another safe niche, is still there. The conundrum of honest investing of unearned wealth, within the rules of a corrupt system, can be resolved through negotiation. Either those bondholders accept rational payments for their bonds that acknowledge those original unearned values or they will be revalued through bankruptcy of the pledged properties. After all one cannot rob a bank, invest it honestly, and claim the earnings are honest when they are finally caught. There will be derivatives and hedge funds that will, after the shakeout and like bonds, place title to much of the nation‘s wealth into the hands of very few people. Along the same lines as changing the rules when the Hunt brothers had the silver market cornered, which saved the market and came close to bankrupting the Hunts, these unearned wealth accumulations can be, and must be, set aside. Once the principles of full and equal property rights—as related to nature‘s resources and technologies—are in place, operation of an economy will be simplicity itself. There need be no taxes unless society decided to fund retirements through payroll deductions so as to have an accounting system measuring the economy, and those would be insurance premiums, not taxes. Keeping the value of one‘s currency in line with the currency of other nations of these forming federations requires an honest World Bank for International Settlements that is mandated to protect honestly earned values of all nations, and regions (the one in Basel Switzerland needs restructured). Blips on computers, at this honest World Bank, will replace current international trading currencies. While exports and imports are sold and purchased in this international currency, each nation or federated, economically viable, region will have full control of money within their economies. With their currencies having no value outside their borders, their banking systems can create money to build infrastructure and industries, rapidly develop their economies and those are the values that the new World Bank must protect.
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We have structured our theoretical economies, with full and equal economic rights, which will stay in balance forever. Once regional economies are developed and efficient, currency values between regions will balance. Until that time, trade between regions must be managed; that is what trading resources for technology and establishing regional and international currencies were, in this example, all about. Once each region of this fully formed federation is sustainably developed, its labor equally as productive, and equally paid, those relatively equal currencies could be made interchangeable. But controlling cross-border flows of drugs, illegal harvesting of resources, criminal activities, keeping a finger on the pulse of the world, resolving problems before they get out of hand, elimination of currency speculations distorting and sabotaging an economy, and the right to experiment with a potentially more efficient social structures require dual currency world trading systems. As economies develop, infrastructure costs will be covered by resource rents, and banking profits, transposed into social-credits. To stay within the earth‘s capacity, a fully developed world economy, with a quality life for all, as opposed to an ever-expanding economy, will create only the money destroyed through natural disasters; effectively it is insurance, paid to those who took the loss. Base money that has been destroyed is replaced by paying directly to those who had those catastrophic losses. For the world to become peaceful, for poverty to be eliminated, and for protection of resources and the environment, something similar to what we lay out has to happen in a relatively seamless web worldwide. With modern communications informing the world, as it breaks out from under its centuries of monopolization, that can happen. As the resource rich, but financially poorer, world is developing, surplus labor within the wealthy world will have been released by the rationalization of their former inefficient monopolized economies. A part of those surplus labors should be turned to installing communication superhighways throughout the emerging world, and providing those first industries and training. There are simple and cheap ways to train human capital. Labor for intermediate technologies can be trained, work as apprentices, and when fully trained, join the expanding labor force. They, in turn, will train more apprentices. Under such policies, practiced by guilds for centuries, but that too was under a monopoly structure to avoid training oneself out of a job. By avoiding those monopoly structures, which form naturally as each protects their access to a share of society‘s wealth production, a skilled labor force can rapidly expand. If the world community is serious, communications superhighway, recordings in databases on all subjects for all classes, and local scholastic testing stations, will be operational within a developing region within five years of a decision to install
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an efficient education system. Education would be available as fast as communication superhighways are installed, and free laptop computers distributed. As motivated students breeze through these classes at two to three times the speed of brick and mortar schools, first beneficiaries will be ready for college courses before communications superhighways are fully in place across a federated region. Within 15 years all will be literate, within 20 years a population will be fully educated, and within 40 years their education level will be relatively equal to the rest of the world. With tests showing the world‘s highest scholastic levels, Cuba has already proven this even with brick and mortar schools. Venezuela and Bolivia will prove it shortly, and other nations will follow. Simultaneous with establishing a modern educational system, resources will be mapped and power systems, industries, railroads, ports, airports, roads, etc, planned. As energy is the resource in shortest supply, special attention must be given to solar and other non-polluting renewable energies. Permaculture and three dimensional orchard farming will create a secure food base while protecting, actually rebuilding, the soil and the environment. A federated world will have no wars and such wasted monies can be turned to fulfilling the agreement to trade technology, and training, for equal access to resources. Appendix II outlines how master home builders and permaculturists can be quickly trained; quality homes cheaply built from local soils, rock, timber, etc; production of a region‘s own food; and industries built to provide windows, trim, furnishings, etc. Those factories, homes, and industries that emerge to provide services, consumer products, and wages will be the productive wealth that backs the newlycreated money. Care must be exercised to create high use-values. Comfortable rammed earth homes with ceramic interiors that will last for centuries can be built for little more than, and in some regions cheaper than, the cost of mobile homes that have a lifespan of 30 years. Three wheeled, 300 miles per gallon, gas-electric runabouts, about 20% the weight of today‘s automobiles, will be for sale by the time this book is in print. A Google search for ―Bloomberg electricity‖ alerts one that the cost of producing electricity will eventually drop by half or more. Commuting without environmental damage can be at a reasonable price. The entire process will require management and oversight by a fully democratized United Nations or its replacement. That world legislative body will eventually replace negotiations overseeing the equal sharing of the world‘s resources. As opposed to the federation of the United States, the European Union, and China centuries ago, all of which became powerful but internally unequal, a federation of the earth, with full and equal economic rights, will maintain
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peace, tranquility, equality, and a quality life for all the world‘s citizens for millenniums.i This is not a prediction of what will happen or even of what can be easily established. We even acknowledge the high possibility that President Barack Obama‘s massive throwing of money at the ethereal world of high finance, the people who caused this crash, may rebalance this highly unequal and unjust economy. If he does, it will still be inefficient, unequal, and it will eventually crash again. The cheapest and quickest route to full and equal economic rights, elimination of poverty, and restructuring to a quality life for all is the current, ongoing, collapse being total. Only then will the monopoly structure be rejected, and hopefully replaced by an efficient, easily understood, fully federated, community social-credit process. Computer modeling will prove this utopian living is possible; let‘s do it.j 1
Taylor, Fall of the Dynasties, chapters 17—19.
2
Thomas K Grose, ―Free Health Care for All,‖ U.S. News (March 24-April 2, 2007), p. 65.
The elimination of monopolization of technology permits the rapid and low-cost development of poor regions of the world even as the environment and resources are protected. It is time to eliminate all forms of monopolization and share this world in peace. j Professor Michael Hudson‘s Super Imperialism: The Origins and Fundamentals of U.S. World Dominationj has been on the best seller list in China, is going into its 5th printing, all his many books are being translated by the Chinese Government Printing Office, and he lectured at the new Marxist School in Beijing in the fall of 2009. As shown by the popularity of Hudson‘s books, the Chinese are studying on how to defend against financial and economic warfare. That nation has the social cohesion to put this efficient economy into practice. Starting from further back, and with their massive resources, South America and Africa could put this philosophy to work quickly and lead the world within two generations i
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Appendix I: Myths in Monetary Theory
The error of paying off debts destroys money: Logic proves that paying off debts does not destroy money as stated by both MMM and some monetary theorists. If you take in cash to pay off a $10,000 loan, the bank is not going to burn that money. They are going to put it in their vault right alongside their other cash. If you pay by check, those digital funds are debited from one reserve account and credited to that bank‘s reserves. Digital money is destroyed when debts are unpayable and then only to the extent not recoverable through bankruptcy sales of pledged assets. What is currently called a destruction of money is only a slowing of the circulation of base money. By keeping her banks running, even when they were technically bankrupt, Japan demonstrated how to avoid the destruction of base money as just described. Simply do not enforce bankruptcy laws. Their economy slowed, the circulation of money slowed to the same pace, which did effectively reduce the money available and thus reduced the money supply, but base money was only destroyed by bankruptcies. The misunderstandings of 100% reserves: Early 100% reserve theorists suggested that the government print currency and use it to buy up treasuries and other debt instruments of banks. That money was to be stored in their vaults and each dollar on deposit was then guaranteed by a matching dollar in those vaults. Later variations had the banks borrowing enough currency from the Treasury to match all deposits. These are severe contradictions. 1st variation) A government earning interest on those debt instruments instead of the banks would be a massive loss to banks which would have to be replaced by higher interest rates, effectively a tax paid by every citizen. 2nd variation) Paying interest on sterile money, no matter at how low a rate, would be economic nonsense. The myth of debt money: Note the massive wealth extracted via unequal property rights law, as applied to resources and technologies, denying others their rightful share of what nature offers to all for free. Because that wealth was essentially taken from us, it has to be loaned back to us so we can live and that form of debt money is what these theorists are really looking at. Those appropriated blocks of capital are so massive they are beyond the capacity of
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monopolists (who are unaware that most their wealth is unearned) to consume or invest it all. Those blocks of unearned wealth, mixed in with earned wealth, keep getting larger and larger, the ethereal world of high finances must expand to provide a place to invest (actually to gamble with) it, the percent claimed by the top few percent rose from 2% of corporate earnings to 40% and it all came crashing down in 2008-10. Though we have outlined an efficient economy that would operate on roughly 95% less borrowed money; debt at a much lower level is a feature of an efficient economy. Mandated reserves, managed by a Federal Reserve to maintain the right monetary balance between honest savings and the necessary borrowing we all incur, known as the money supply, is pure gold to a monopolized economy and unnecessary in a full and equal rights economy. Unless it is a gift or inheritance, nobody starts life with adequate finance capital; it must either be earned or borrowed. Earning takes a long time whereas borrowing takes minutes. With borrowed finance capital, gifted people can put their talents to work producing with the efficiency addressed throughout this book. This is why rights to finance capital—for federated regions of the world, for countries, for regions within countries, for states, for communities, and for individual entrepreneurs—are so important. Yes, an efficient economy requires debts to keep products and services flowing but those debts are not money per se (meaning it is not debt money). They are just what we think they are, loaned money. That loaned honest money can be either created money or savings (stored labor) but none will have been appropriated. Let‘s assume private banks-create-money monetary reformists carry the day. The Federal Reserve calls in those rotating loans, takes over the banking system, and Congress legislates that created money will be spent into existence through building infrastructure (a fundamental of our thesis) and through paying for health care, retirement, and other social necessities—all of which are advocated by these monetary theorists who are (theoretically) now in charge. Also, by their theory, exclusive titles to nature‘s resources and technologies, all monopolies, remain. But what will that hybrid banking system, creating money for all essential services and a still monopolized economy, be in practice? The economy will be rolling once again, those unearned huge blocs of capital will stay in place or rebuild, but they will have nowhere to invest 95% of their appropriated wealth. As this is many times more money than can possibly be spent on high living and all avenues of safe investment are blocked, those appropriated funds can only be turned to buying up property in the rest of the world. If it ever got off the ground, which it couldn‘t; the finest plunder machine imaginable will have been established (which is what existed until the periphery of empire understood it).
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This very structure is, in part, being put in place in Eastern Europe. With their living standards well below that before their socialist governments were voted out and, in part, East Europeans realize their error. But Western capital has bought up all their valuable productive property, there is no way to get it back, and they do not have the money to build new industry or the markets in which to sell what they would produce. Eastern Europe has become a cash cow for Western Europe but their leadership will not admit this because doing so would be in direct conflict with their loyalty to Western Christianity. Western capital pays East Europeans $2 an hour to work in modern factories. The managed economies they are returning to can provide enough food, fiber, and shelter for basic necessities but no luxuries. Capitalist blood is flowing through socialist arteries, sucking all surpluses out of East Europe, and banking those profits in the West. We said above this couldn‘t get off the ground. It has for a while but those massive sums extracted from East European economies will be destroyed when their debts prove unpayable. This again measures the enormous waste of the monopoly system the past centuries as we have been exposing. It is that waste we spoke of when we kept repeating that ―If sharing property rights had been established instead of unequal property rights, economic efficiency would have doubled. Assuming technologies were continually shared with others, production would have doubled again in a few years, and again, and again, up to the level of a sustainably developed world; all without war or poverty‖ That is the efficient and peaceful world we have philosophically laid out. It cannot happen until the current corrupt economies collapses. When it does, let‘s be ready.
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Appendix II: A Practical Approach for Developing Nations & Regions Trying to provide an answer to capitalism, socialism, and communism the past 50 years, the Progressive Utilization Theory (Prout, www.prout.org) integrating economic democracy and spiritual values, is, speaking to full and equal economic rights for each and every person, very similar to our approach. Those reading both philosophies may want to add a spiritual approach to our strictly economic approach and perhaps add a full understanding of conditional titles to nature‘s resources and technologies applied across the full economic spectrum and a socially-owned and operated banking system to Prout‘s cooperative philosophy. While waiting for the world to throw off the current beliefs which maintain their poverty, let‘s design an emerging-nation development plan utilizing cheap, broadly-available resources that can be accomplished within the current monopoly structure. Many countries have traditional, fireproof, rammed earth homes hundreds of years old. Most developing nations have large numbers of unemployed labor who can build high-quality earthen homes cheaply. Firing the inside of earth homes creating ceramic walls and floors opens an unlimited potential of beautiful, clean, easily maintained, yet cheap, housing. Some regions traditionally use other building materials such as stone, straw-bale, timber, bamboo, etc. Local master-craftsmen can train the apprentice home builders, and these newly-trained practitioners can teach others on the job. The teachers would be paid but the workers‘ pay would be their training as master home builders. Assuming five workers to a crew on an adobe or rammed earth home, every three or four houses built will result in five more master builders who can return to their home regions, sign up apprentice home builders, and rapidly expand the home building project. Different building materials will require differing periods of training to produce master craftsmen, but the principle is the same. (See Hassan Fathy's book, Architecture for the Poor, for an inspiring account of the method that was used to create a totalprocess system of adobe construction in Egypt.) Having designed and built sustainable housing and major architectural projects in many countries, Phil Hawes (
[email protected]) is an internationally known expert as is Richard Register, ecocitybuilders.org. Additional industries are necessary to produce doors, windows, plumbing and electrical systems, flooring, roofs, and furniture. These industries will expand in step with the expansion of home building. Though these homes will be built cheaply, they have full, actually superior, use-value. As some projects mature, labor will be paid, while in others the master-builder will train volunteer workers to build more homes for themselves, family, and friends, and are thus paid indirectly, but paid well.
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Since real value is being produced utilizing local and regional resources, base money can be created by any nation, or region, up to the value of those homes, businesses and inventory. That created money is the proper financial source to utilize a nation‘s own resources to build infrastructure, industries, businesses, and inventory necessary to service a developing community. The circulation of that base money will build and operate distribution systems and repair systems and provide wages which becomes the buying power to purchase the production of those industries. As most this will be volunteer labor and high value is created, creating money to pay the master builder and other costs will not be inflationary. Simultaneous with building homes, a country or region must develop a prosperous agriculture. Permaculture fruits, nuts, berries, tubers, and vegetables work well with eco-village housing. Master permaculturists can be trained and returned to their regions to train more just as described above with master builders. Farms, equipment, and the food produced have value and, as it is locally produced, money can be created for that development as well. All resources should be processed locally into high value-added products both for regional consumption and export. As economic activity and production increases, buying power increases to purchase the new production, and community values rise. So long as countries or regions are utilizing local resources and labor, money can be created to build those industries and infrastructures. This includes hightech industries wind generators, small hydro generation units, and photovoltaic cells. These can convert the naturally occurring, non-fossil fuel forces of wind, waterpower, and sunlight into electrical energy. It is possible to train ambitious local inhabitants to assemble electronic equipment, such as TVs and computers, which can provide a free education via information superhighways. At all times wealth (use-value) is being produced. The circulation of that created money purchases the produce of other workers, and further develops an economy. However, a developing country or region will soon need technology and industries that, unless the revolution we addressed throughout this book has taken place, is firmly under the control of the imperial centers. It is at this point, the local production of wealth, that regions must federate (ally together) to negotiate with the imperial centers to trade access to resources for access to technology. To not ally together would result in the locally created wealth being eventually transferred to those imperial centers via unequal pay for equally-productive labor. Local resources will be purchased far below their full value, resulting in the familiar inevitable debt traps for the developing regions sucking up any money that has been created and taking title to that locally produced wealth in the process. The key is cheap, quality, local production of social infrastructure. But the money created must be protected against claims by international creditors. Col-
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lecting the rental values of nature‘s wealth as per the inclusive property rights laws, chapters 20 through 25, eliminates capitalized monopoly values of what nature offers to all for free, provides development funds, and protects the entire nation from having those values attached to repay debts. The principle of society collecting socially-created rental values is essential both for economic efficiency and protection against creditor nations laying claim to a weak nation‘s wealth. The use-value is still there but society collecting resource rents and profits of banking prevents those nature-produced values from being capitalized, and keeps them out of the hands of creditors; thus the earnings of nature‘s wealth can be utilized to fund essential infrastructure and social programs. By classes being available via information superhighways and studied on home computers, it is possible for the emerging world to educate their citizens for 515% the cost of conventional brick and mortar schools. Not only would the youth become well educated, so also would many older citizens. Apprentice labor working side by side with skilled labor will soon build a highly skilled labor force. Currency values can only remain stable if a country‘s productive capacity is efficient and stable. So a country needs to develop infrastructure cheaply and efficiently; the above building of quality homes and support industries cheaply is an example but only a start. With technology and markets monopolized, high technology industrializing is more problematic. The key is maximum production of high-value-added products rather than selling raw resources. Example: an oil producing nation has the option of refining its oil, producing plastics, etc. The monopolies of wealthy nations are so powerful that such industries will require trading alliances or full federations between weak nations, a step toward the full federation of all nations. Stevia is 30 times sweeter than sugar, is cheap to produce, cheap to process, and it does not have the health damaging effects of sugar. William Hayward,
[email protected], has containers filled with Stevia plants, processing equipment, and instructions ready to ship anywhere in the world. Africa also has a couple indigenous sweet plants that may replace sugar. The gains to a society both financially and in health care substituting any one of these sweeteners for sugar is huge. As this simple development plan is put together, other areas of utilization of local labor and resources will become visible.
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Index
461
Index
Accident Compensation Corporation, 362 Accumulation of capital, 12-15, 24, 27, 76, 107-12, 129-30, 200-01, 209-11, 222, 234, 237, 240, 245, 249-51, 254, 257, 272, 301-305, 308, 318-19, 330, 337, 345-47, 358-59, 374, 436 Acheson, Dean, 64, 97, 99, 104, 204 Afghanistan, 6, 58, 62, 127, 132-37, 153, 399 Africa, 2, 42-43, 49, 53, 57, 79, 86-87, 102, 109, 140, 162-65, 170, 186, 203-05, 218, 222, 226, 229, 251-52, 259-62, 280, 344, 357, 363, 366, 369, 391-92, 396-404, 417, 445; African Union, 402; National Congress, 67 AFRICOM, 53, 165, 205, 396 Albania, 115-21, 126, 135 Albright, Madeleine, 167 Al Jazeera, 373, 401, 411 Allende, 65, 159-60 Al Qaeda, 58, 137 Alsop, Joe and Stewart, 58 Amerca; agent provocateurs, 74; American airmen died in Soviet prisons, 141, 170; Aryan Nations, 61, 188; big brother, 74,
Bill of Rights, 320, 341; Boston Tea Party, 31; Boxer Rebellions, 45; Chiang Kai-shek, 46. 96, 100; Cold War, 38-39, 55-68, 70-76, 83-86, 89, 95-99, 102-04, 110, 113, 120-24, 138, 141, 146-47, 153, 159, 170-72, 179, 186, 204, 246, 263, 323, 396, 403; covert warfare, 5-7, 9, 19. 25. 28, 39, 45, 53, 53-68, 76-77, 80-85, 89-91, 97-100, 103-05, 115-25, 133-34, 14048, 152-54, 162-72, 199-100, 205 260, 358, 391, 396, 402-05; crop warfare, 164; Great Depression, 50, 71, 77, 85-86, 106, 186, 217, 235, 240, 262, 292, 297, 299, 360, 421, 430; Homestead Act, 317; Kennedy assassination, 76-80, 98, 239; Operation Tailwind, 88; Operations CHAOS, Cable Splicer, Garden Plot,
74; reason for Korean War, 65, 68, 99-104; same decision as the Free Cities of Europe, 97;
Angola, 56, 162, 169
Aptera, 302 mpg car, 228
Argentina, 14, 36, 42, 160, 165, 169, 231-33, 235, 402 Aristocratic law, 5-9, 16, 19-20, 83, 108, 156, 179-84, 205, 219, 224, 228-29, 252, 265-71, 275, 278, 289, 314-15, 327, 388, 395, 398, 405, 417, 421, 429, 435 ASEAN countries, 400 Asian currency crisis, 422, Monetary Fund (AMF), 36, tigers, 35, 128, 213, 217, 250 Astor, John Jacob, 317-19, 435-36 Australia, 32, 42, 96, 363, 400, 402 Backbone Network Service (vBNS), 371
Bandler, Richard, 363 Bangladesh, 13, 46-45, 221, 254, 330 Bank of the South, 402 Baruch, A. Levine, 325 Belarus, 58, 66, 107, 124 belief system, 5, 9, 25, 55-75, 81-85, 90, 96, 100-108, 119, 141-146, 153, 168-69, 17987, 224, 237, 247, 261, 268, 272-275, 312, 359, 369, 387, 395, 434 Belgium, 41, 67, 162 Bismarck, Otto von, 35, 47 Black Death, 23 Bolivar, Simon, 6, 161-65, 400-01 Bolivia, 6, 97, 157-58, 163-66, 279, 344, 397, 411, 438 Bolshevik Revolution, 105, 147, 185-186, Bonner, Ray, 88 Borsodi, Ralph, 16, 262, 379 Bosnia-Herzegovina, 115-16 Dayton Accords, 114 Bowles, Samuel, Gordon, and Weiskopf, 16, 379 Boxer Rebellions, 45 Brazil, 13, 37, 165-66, 203, 217-18, 222-23, 231, 234, 253, 256, 307, 329, 397-402 Britain, 21-24, 29-37, 41-53, 64, 68, 95-96, 103-106, 110-11, 140, 154, 157, 160, 163, 187, 196, 203, 213, 250, 256, 285, 314-115,
462 Economic Democracy: A Grand Strategy for World Peace and Prosperity 364, 374, 395-96, 412-15, 425, Enclosure Acts, 23, 222, 270, 314-17, Statute of Merton, 23, 270-272, 313-15; Methuen treaty of 1706, 23-24, 40; Navigation Acts, 23-25, 29; Protectionist Act of 1562, 40 Staple Act, 24, 29 Brunei, 400 Brzezinski, Zbigniew, 134
Brown, Ellen, 196, 297, 309
Bush, President GW, 37, 53, 82, 91, 136, 156, 412, 419; HW, 141, 169 Butler, General Smedley, 153-54, 77 Byelorussia, Belarus, 87, 106, 142 Cambodia, 158, 166, 389, 400 Canada, 32, 42, 200, 125, 193, 364 Cantillon, Richard, 319 Carter, President Jimmy, 133-34 Caspian basin, 120-22 Castro, Fidel, 77, 98, 100, 129, 163-66 Central American Free Trade Agreement (CAFTA), 13-14, 97 Central Asia, 87, 136-37, 155-56, 261, 396, 400, 411-13 Central Europe, 123, 196
Central Intelligence Agency (CIA), 46, 55-68, 72-88, 98-99, 108-09, 116, 13036, 144, 153-71, 184; academicsjournalists, 57-61, 66, 68-69, 73, 82, 167, 215, assassination of President Kennedy, 76-80, 98, 239; blowing up Cuban airliner, 170; COINTELPRO, 74, 78; death squads, 62-63, 78-79, 126, 150, 153, 159-61, 166-70 Mighty Wurlitzer, 55, 60-63, 67, 75, 81-95, 98, 100, 108-09, 119, 136, 144, 154-155, 159, 164; National Security Administration (NSA), 18, 25, 82, 88, 173; Operations Gladio/Statewatch/ Chaos/ Cable Splicer/Garden Plot, 6667; poisoning East Germany‘s dairy cattle, 143, 164; propaganda (perception mangement), 3-7, 34, 5560, 70-91, 96-105, 116-19, 124, 133, 137, 144-46, 158-59, 164, 169-70, 18385, 268-69, 313, 359, 369, 373, 384-88, 395, 403; starting the Korean War, 64-68, 98-104, 108;
strategies of tension, 56-58,76, 82, 98109, 153, 157, 164, 169, 180-85; ballot box revolutions, 66, 145, 161, 256, 35760, 396, 403; worked with Osama Bin Laden, 136 Chamberlain, Neville, 43 Chase, Stuart, 16, 263, 336-39, 341, 379-81 Chavez, Hugo, 6, 124, 161-62, 398-402, 416; Bolivarian Revolution, 6, 161-64, 401 Chiang Kai-shek, 46, 95, 100 Chile, 56, 60-65, 159-61, 165, 168, 171, 397, 401 China, 6-7, 22-23, 38, 45-46, 53, 63-65, 8687, 95-96, 100-102, 110-12, 124, 129, 137, 154-57, 165-66, 209, 216-17, 221, 229, 245-62, 280, 287, 307, 318, 330, 334, 391-92, 396-402, 412-17, 21, 424, 439; China Lobby, 100; opium, 44-45, 318; Christianity,Western,70,105,115-17,119-21;Albigensian Crusade,179;Cathars,179-182 ,188;Eastern Orthodox,105,116--21,128; Inquisitions, 17983, 188; Knights Templar, 181; Waldensians, 179-82, 188 Church and Pike Congressional Committees, 57-59, 72 Churchill, Winston, 104-04, 107, 110, 310 Citibank bailout, 351, 419, 422 City States, 5, 19, 22, 96, 172, 272, 391 Clark, General Wesley, 119, 136 Classical economics, 7-9, 13, 16-18, 27-29, 29-34, 70, 75, 81, 83-84, 115, 139, 196, 262, 265, 268-77, 315, 320 Clay, Henry, 32 COINTELPRO, 72, 78; black ops, 57, 65, 67, 72 Colbert, Jean Baptiste, 30-42 Cold War, 38-39, 55-76, 83-89, 95-99, 10204, 110, 113, 120-24, 138, 140, 142-47, 153, 159, 170-72, 204, 246, 263, 323, 396, 403 Coleman, Peter, 56-57 Collins, Marva, 386 Columbia, 182, 400-01 Commongoodbank, 283, 308 Communication Superhighways, 4, 259, 332, 342, 354, 370-73, 382, 388, 398, 400, 406, 416, 433-38, 444-45
Index Communitarian, 261, 282, 309, 355, 409, 411, 417, 431 Community Process, 352, 371, 387; social-credit, 3, 197, 228, 265, 278-78, 298, 300-312, 325, 366, 372, 376, 409, 426-39
Conflict Resolution Law, 362 Confucius, 320 Congo, 56, 66, 119, 143, 162, 168 Congress for Cultural Freedom, 56, 60, 6506 Constantine, Emperor, 179, 189 Constitutions, 4, 115, 145, 157, 165, 193, 263, 269, 276, 292, 296, 322, 341, 346, 395, 407, 414, 433 Crédit Mobilier, 333 Croatia, 114-18, 121-22, 126 Cuba, 6, 60, 64, 77-78, 86, 98-100, 111-12, 122, 144-45, 153-54, 162-66, 170-71, 195, 269, 344, 363, 392, 420, 438; Bay of Pigs, 78; direct democracy, 145, 165, 170, 269; education and health care, 16164, 170, 200, 345, 365, 438; embargoed, 161; germ warfare against, 161-62; training doctors and curing 4.5 million blind, 6, 344; Czechoslovakia, 95, 126 Death squads, 62-63, 78-79, 125, 153, 15961, 166-71; Ustase, 117, 126 Debt traps, 15, 148, 197, 227, 230-34, 367, 44 Deflation, 37, 277, 285, 292, 300, 348, 409, 431 Democracy, representative-participatorydirect, 4, 60, 105, 124, 144-46, 155, 16365, 170, 186, 269, Democracy Now, 8, 158, 374, 400 derivatives, 244, 247, 256, 268, 273, 288, 350-51, 415, 436 destabilization foundations, 58, 124-25, 130, 200 Diamond, Jared, 188, 417 Doha round, 404, 413 Duke of Bedford, Westminister, 315 Earth Rights Instittute, 270, 314 East African Community, 394, 400 East Asian Summit (EAS), 6, 400-01 East Timor, 121, 154 Eastern Europe, 21, 50, 58, 88, 95-96, 103, 107-08, 110-13, 120-23, 128-29, 142, 148, 196-97, 442
463 ECHELON, CARNIVORE, EINSTEIN, TEMPEST, 87-88, 136, 172 black ops, 57, 65-67, 72 Economic Hit Man (EHM), 25, 167 Econmic multiplier, 5, 30, 112, 123, 131, 139, 210, 219-27, 233, 237-38, 244-46, 259, 366-67 Ecuador, 160, 165-167, 171, 269, 397, 401402 Edict of Nantes, 23, 41 Edison, Thomas A., 338 Egypt, 48, 336-37, 443 Einstein, Albert, 320, 385, 432 Eisenhower, President Dwight D.109, 112, 320 Ekelund, Robert B & R Tollison. 5, 262 Eritrea, 121 Enclusure Acts, 23, 222, 270-71, 314-15 Ethiopia, 121 Europe; Ccty States, 5, 19, 22, 96, 172, 272, 391; Holy Alliance, 42, 183 European Union (EU), 115, 193,196, 206, 392, 398, 402, 438 Fascism, 50, 90, 109, 142, 173, 187-88, 204, 421 Fathy, Hassan, 443 Federal Reserve act of 1913, 49, 203, 290, 299-300, Federal Reserve Governing Board, 300
First Estate, 179 Fletcher, Governor Benjamin, 315 Ford, Henry, 216, 320, 338, 342 France, 13, 22-24, 30-33, 41-42, 47-48, 5658, 96, 102, 102, 116, 129, 141, 179-181, 183, 187, 203, 225, 287, 395, 412; Revolution, 33, 42, 184, 398 Waterloo, 32, 40, 184 Franklin, Benjamin, 16, 277, 284 Free Cities of Europe, 20, 25, 97 Free Congress Foundation, 69 Free Speech TV, 7, 70, 383, 411 Free Trade Area of the Americas (FTAA), 13-15, 97, 193-206, 214, 247 Freemasons, 180 Friedman, Milton, 139, 168, 189, 320 Furman, Rosemary, 362 Gaffney, Mason, 322 Galbraith, John Kenneth, 295, 297, 319 Gandhi, 45, 63, 95, 115, 167, 171
464 Economic Democracy: A Grand Strategy for World Peace and Prosperity Gates, Bill, 374, 427 GATS, 12-14, 193-206, 214, 247 Gaviotas community, 344 General Agreement on Trades and Tariffs (GATT) 13-14, 97, 193-206, 214, 247 George, Henry, 9, 310, 320, 469-70 Germany, 15, 22, 30, 35, 41, 47-53, 57, 67, 85-86, 89, 96, 99, 104-107, 115-23, 14042, 164, 183-88, 194-96, 204, 213-216, 243, 250, 260, 345, 391, 395-96, 403, 412; cause of WW I & II, 35, 47-50; colonialism, 41; centrally planned cartels, 49-51, Operation Barbarossa, 106
Glass-Steagall, 290, 300
gold standard, 284-85 goldsmiths, 289-95 Gorz Andre, 16, 223 Graham, Dr. David, 364 Grand Strategy, 31-34, 59, 64, 70, 103-04, 122, 131, 155 Great Depression, 50, 71, 85-86, 106, 186, 217, 235, 240, 263, 292, 297, 360, 421, 430 greenbacks, 291, 296 Greenspan, Alan, 36 Greider, William, 214, 254, 294, 297 Guatemala, 60-62, 158-61, 171 Gulf Wars, 64, 121, 155 Habsburg, 289 Hadron Collider, 371
Hamilton, Alexander, 34, 42 Hampton, Fred, 74 Hanseatic League, 22 Harrison, Fred, 322 Hartzok, Alanna, 270, 313 Harvard Institute for Int. Development, 130, 138 Hawes Phil, 443 Hayward, William, 445 Health care, universal, single payer, 2-4, 69, 114, 127, 140, 144, 163, 170, 196-100, 261, 265-67, 276-80, 302-12, 322-25, 357-69, 405, 408, 424-28, 432, 435, 441, 445 Heckscher, Eli F., 18 hedge funds, 256, 288, 301, 350-51, 437 Hess, Rudolf,105, 395 Himmelstein David & Steffie Dr. Ida Hellander, 364
Hitler, 35, 55, 64, 67, 85, 89, 95, 98, 101, 106, 115-17, 126, 146, 188-88, Enabling Act, 82, 89; Reichstag fire, 67, 89, 183 Third Reich, 35 Holland, 14, 22-24, 41, 47, 250; Molluca Islands, 240 Holy Alliance, 42, 183 Hong Kong, 15 Hudson, Michael, 58, 148, 156, 196, 244, 259, 325 Hull, Cordell, 51 Hungary, 48, 95, 113, 122 Hussein, Saddam; 127, 138, 156 Huxley, T.H., 47 Illuminati, 183-85 IMF, 13-15, 35-39, 97, 113-15, 126-28, 193-201, 221, 247, 424-25 India, 23-24, 43-45, 95, 99, 115, 129, 137, 156, 203, 215, 217-18, 221, 246, 256, 260-61, 273, 307, 344, 391-92, 396, 400404, 413-14, 421; caste system, 273; Central Asia, 86, 136-37, 155-56, 261, 396, 400, 411, 413; protect indigenous knowledge, 344 Indonesia, 56, 62-64, 121, 156-57, 171, 215, 256, 400-402 Industrial Revolution, 16, 23, 189, 216, 270, 340-42 Indymedia, 373 inflation, 114, 133, 233, 235, 246, 277, 292, 300, 306, 348, 402, 409, 423, 431 initial price offerings (IPO), 346 INN Report, 373 International Workers of the World, IWW, 71 Internet2, Internet1, 371, 380
Iran, 6, 62-64, 88, 136, 154-58, 163, 169-71, 402, 415 Iraq, 4, 59-67, 78, 82-87, 90, 98, 121, 13639, 143, 155-56, 163, 172, 189, 260-61, 274, 392, 396, 399, 411-13 Israel, 66, 86, 120, 155, 185, 364, 399, 420 Italy, 22, 41, 48-50, 66-67, 76, 96, 104-05, 185-87; Black Shirts, 67, 187 Japan, 12-14, 35-38, 45-47, 50-53, 67, 79, 85, 94-99, 102-105, 128-31, 193-94, 204, 214-18, 233, 239, 243-56, 261, 277, 305, 318-20, 329, 345, 361, 363, 392, 396-97, 400-403, 412-15; embargoed, 396;
Index MITI,-MOF, 244; markets forced open, 249; Jefferson, Thomas, 63, 171, 320 Johnson, Chalmers, 244, 399 Johnson, President Lyndon, 778, 98, 109, 143 Josephson, Matthew, 317, 333 Kaiser Wilhelm, 47, 345, 391 Kazakhstan, 6 Kennedy, John F, 14, 98-99, 109 assassination, 76-78, 239 Kenya, 226, 232, 362, 402 Keynes, John Maynard, 320, 349, 399 King George V, 345, 391 King Philip II and IV, 24, 181-82 Kistiakowsky, Professor George, 109 Klein, Naomi, 132, 139, 156, 159, 172, 189, 312, 397 Koran, 307-08 Korean War, 65-67; a strategy of tension, 99104, 108 Korten, David C., 17, 207 Kosovo,115-21,126-27,135; Liberation Army (KLA), 115-18; nomassgraves,118; Trepcamining complex,120 Krehm, William, 288 Kondratieff, Nikolai, 9, 350
Kropotkin, Petr, 17, 272, 313-14 Krugman, Paul. p. 297 Kyrgystan, 6 Laos, 158, 166, 400 Lappé, Frances Moore, 224-25 Law, John, 349 Leisler, Jacob, 315 Link TV, 9, 70, 168, 373, 383, 411 List, Friedrich, 5, 22, 26-36, 38-41, 45, 49, 51, 107, 191, 196, 238-39, 247; theory of values, 31, 43 Livingston, James, 294, 297 Local Currencies, 14, 35 Lord Brougham, 32 Lord Cornbury, 315 Lyon, Peter, 317, 333 MacArthur, General Douglas, 100-101 Macedonia, 115, 135 Mackay, Charles, 349-50 Makhijani, Arjun, 12-13 Malaysia, 6, 36, 64, 215, 233, 254, 400-02 Manhattan Project, 108
465 Marshall Plan, 35-39, 58, 96, 107 Martin Luther King, 63, 78, 167, 170 Martin, Edward Winslow, 333 Martin, Professor Glen T, 307 Marx, Karl, 28, 148, 268 McCarthyism, 60, 65, 69-73, 100-02, 188; House Un-American Activities Committee, 60, 70-73 Melman, Seymour, 16, 379 mercantilism, 7, 11, 17-20, 24-34, 46, 50-53, 70-72, 79-80, 96, 113, 131, 151, 168, 197203, 209, 243-51, 255, 262-63, 270, 394 Mercosur alliance, 400 Mexico, 13-14, 62, 129, 153, 160, 182, 214, 225, 227, 231,233, 253, 329, 367; crisis, 422 Middle Ages, 9, 17-21, 121, 179, 182, 201, 272, 317, 361 Middle East, 50, 55, 119-20, 134, 152-53, 170, 396 Mighty Wurlitzer, 55, 60-63, 67, 75, 81-93, 98, 100, 108-09, 119, 136, 144, 154-55, 158, 164 Military Professional Resources (MPRI), 116, 135 Mill, John Stuart, 16, 263, 320 Milosevic, Slobadon, 116-17, 125-27, 167 Mirabeau the Elder, 320 Modern Money Mechanics (MMM), 29291, 440 Moffit, Michael, 253, 329 Monroe Doctrine, 50 Montenegro, 119, 122-24 Mozambique, 56, 162 Mujahideen, 133 Multilateral Agreement on Investments (MAI), 13-14, 35-39, 97, 113-15, 126-28, 193-101, 221, 247, 424-25 multiplier factor, 5, 30, 112, 123, 131, 139, 210, 221-27, 233, 237-38, 244-46, 258, 366-67 Mumford, Lewis, 16, 44, 379 Murray, Charles, 386 Muslim, 22, 58, 70, 115, 118-120, 133-37, 155, 180-82, 240, 397-402, 412 Napoleon, 29-34, 41-42, 183; Codes, 183; Continental Decrees, 41; Continental System, 29-33, 42, 183
466 Economic Democracy: A Grand Strategy for World Peace and Prosperity National Endowment for Democracy (NED), 125, 130 National Security Council, 18, 59, 63-65, 97-104, 109, 113-14, 133-34, 157-58; Directive 166, 132-34; directive 54, 113; NSC-68, 63-65, 97-104, 159; NSC-4, NSC-4A, NSC-10/2, 63, 104 National Union for Total Independence of Angola (UNITA), 162 NATO, 115-27, 156, 167, 400-403 Negroponte, Nicholas, 389
Nehru, Prime Minister Jawaharlal, 45 New Zealand, 30, 362, 400 Newcastle Philosophical Society; 320 Nicaragua, 56, 60, 62, 153, 160-62, 171, 397 Normandy, 107 North American Free Trade Agreement (NAFTA), 13-14, 193-206, 214-15, 247, 420 North Korea, 96, 100-103 Obama, President Barack, 72, 74, 144, 155, 163, 173, 298, 351, 399, 419-25, 439 Office of Strategic Influence, 70 Office of Strategic Services (OSS), 46, 60, 64, Open Market Operations, 298 Operations Gladio, 66-67 Northwoods, 100; Statewatch, 67, 172 Organization for Economic Cooperation & Development (OECD), 206, 232, 404 Orwell, George, 57, 137 Osama Bin Laden, 136-37 Owen, Robert, 288 Paine, Thomas, 320 Palast, Greg, 78, 124, 195 Palmer Raids, 186 Paraguay, 401 Patriot Act, 74, 82, 90-91 Patterson, Thomas C., 27 Pearl Harbor, 52, 396; a strategy of tension, 82, 137 Penn, William, 319-20 Perelman, Michael, 27 Perkins, John, 25, 81, 167 permaculture, 4, 220-22, 227-28, 252, 259, 417, 438, 444 Peru, 14, 42, 160, 165, 182, 400 Petty, Sir William, 27 Philippines, 67, 153, 400
Physiocrats,9, 319-21 Pitt, William, 29-30, 168 Plantation system, 32, 198 Poland, 22, 98, 100, 105, 113, 185 Pope Gregory IX, 180 Pope Innocent III, 174-76; IV, 176 Popes Alexander IX, 178; Urban IV, 180; Clement IV, 180; and Boniface VIII, 180 populists, 9, 14, 39, 75, 193, 241, 273-78, 351, 395, 398, 400, 403 Portugal, 22-23, 40, 47, 196-97, 250 Pratt, Geronimo, 74 Privatize, 7, 156, 172, 189, 200-01, 263, 274, 279, 394 Protocols of Zion, 84 Provisional World Parliament, 307 purchasing power parity, 14 Quadrilateral Group of Trade Minister (QUAD), 193 Queen Victoria, 345, 401 Rambouillet Accords, 117 Rand Corporation, 364 Reagan, President Ronald, 195, 334 Reaganism-Thatcherism, 334 Reichstag fire, 67, 90, 187; Enabling Act, 82, 90 Register, Richard, 443 rent seeking, 7, 46, 262-63, 267, 270-71, 311, 314, 394 Ricardo, David, Law of Rent, 319-20 Rifkin, Jeremy, 16, 379 Ripley, CM, 339 Rodell, Fred, 361 Roman Empire, 119, 180, 313 Roosevelt, President Franklin D., 51, 239, 292-93, 297, 421 Rothschild, 289 Rousseau, Jean Jacques, 27, 312, 319 Russell, Bertrand, 16, 57 Russia, 6, 36-37, 40-42, 48, 58, 87, 104-07, 120-23, 126, 129-34, 138-42, 146-48, 156, 158, 184-85, 213, 217-18, 256, 260, 307, 396, 400-402, 411-14, 421, 424; golden children, 138; Revolution, 146 Sachs, Jeffrey, 130-32 Sally Jesse Raphael Show, 363 Saudi Arabia, 411 Schalkenbach Foundation, 320 Schor. Juliet, 16, 379
Index Second Estate, 96, 179, 182-85 Serbia, 115-26, 168 Shaftesbury, First Earl of, 24, 29, 41 Shanghai Cooper Org (SCO), 6, 400 Sinclair, Upton, 16, 379 Singapore, 13, 400
Sixty Minutes, 162, 343
Slovakia, 128; VSZ steel complex, 128 Smith, Adam, 5, 11, 20-31, 33, 38, 42-44, 53, 68, 76, 131, 148, 160, 168, 172, 200, 210, 238-40, 246-49, 262, 319, 323, 330, 342, 377, 470, law of wages, 210 natural wages of labor, 11, 330, 377; theory of value, 31, 43 Social Security, 279, 323, 357-60, 426, 447;. socialism,6,35,39,45,52,85-86,112,121,129,138, 243, 249,260,279-80,345,410,417,431,4432 Socialist WorkersParty (SWP),73; Young SocialistAlliance (YSA),72 Somoza, 161 Soros, George and his destabilization foundations, 58, 124-25, 200 South Africa,42, 49, 67, 140, 162, 170, 363, 401 South America, 6, 87, 109, 161-62, 208, 218, 222, 229, 261-62, 269, 281, 349, 391-92, 398-404, 416-17 South Korea,16, 35, 38, 45-46, 53, 85, 9596, 100-103, 215, 256, 330, 400-402 South Sea Bubble, 349 Southeast Asia, 38, 45, 129, 246-49, 256, 260, 345, 351 Soviet Union, 42, 46, 50, 53, 58, 66-67, 8589, 95-96, 99, 102-47, 157, 162-65, 171, 245, 26, 261, 334, 395-96, 403, 412-13 American airmen lost over the SU, 87, 141, 170; building industrial capacity, 105; destabilization foundations printing textbooks, 58, 124-25, 130; invaded, 106, 109; losses WW II, 106-09; participatory democracy, 105; plundered by Germany, 106-08; Stalingrad, 106-07 Spain, 22, 24, 32, 42-43, 47, 87, 129, 159-60, 181-82, 186-87, 196-97, 250, 349 Special Operations Command (SOCOM), 135 Spencer, Herbert, 27, 51, 320 Sperry, Thomas, 320 Statute of Merton, 23, 270-72, 313-14
467 Steuart, Sir James, 27 Stockman, David, 323 Stone, I.F., 100-01 104 strategies of tension, 56-59, 65-67, 76, 82, 98-104, 109, 157, 164, 169, 180 structural adjustments, 35-36, 114, 128, 200, 196-98, 200, 204, 207 Sucre, 402 Summers, Larry, 36 Syngman Rhee, 95, 100-01 Taiwan, 16, 35, 38, 45-46, 53, 85, 95, 10203, 214-15, 261, 402 Tajikistan, 6 Tanzania, 199, 402 Thailand, 200, 254, 330, 400 Theodosius I, Emperor, 179 think tanks; American Enterprise Institute, 69; American Legislative Exchange Council ALEC), 69; Heartland Institute, 69; Hoover Institute, 69; Manhatten Institute, 69; National Empowerment Television, 69; Reason Foundation, 67; State Policy Network, 69 Third Estate, 183, 185 Thule Society, 188 Thurow, Lester, 234-36, 347 Tikopia Island, 410, 417 Truman, President Harry S., 63, 99-101 Tuchman, Barbara, 31 Twain, Mark, 312, 320 Uganda, 402 Ukraine, 58, 66, 87, 105, 120, 124-26, 221 unemployment insurance, 357-58, 427 Union Pacific Railroad, 333-35 United Nations, 142, 147, 161, 218, 222, 251, 412-14, 439, charter, 412-14; Security Council, 412-14; World Food Program, 226, 366 Uruguay, 165, 401 Ustase; death squads, 117, 126 US Treasury, 34, 243, 294-96, 299, 303, 321, 348, 393, 440 Uzbekistan, 6, 120 Veblen, Thorstein, 16, 263, 336 Venezuela, 124, 156, 217, 233, 269, 344, 397-402, 411, 438; fully literate, 6, 165; Simon Bolivar satellite, 6, 124 Vidal, Gore, 323 Vietnam, War, 73, 153
468 Economic Democracy: A Grand Strategy for World Peace and Prosperity Voice over Internet Protocol (VoIP), 372 Wall Street, 37, 153, 214-15, 243, 350, Wallerstein, Immanuel, 18-19, 272 war crimes, 87, 118, 127, 167, 172 War on Terrorism, 98, 104, 110, 136-37 Warren Commission, 77 Weishaupt, Professor Adam, 183 Western Europe, 14, 22, 37, 43, 85, 99, 103,107-08, 110, 120-22, 148, 171, 196, 215, 261, 272 WiFi, 372 White space, 371 Winfrey, Oprah, 374, 409, 432 Winstanley, Gerard, 27 World Bank, 13-15, 35-39, 97, 113-15, 12628, 193-201, 221, 247, 425, 436
World Trade Center, 119, 134, 397 World Trade Organization (WTO), 13-14, 35-39, 97, 113-15, 126-28, 193-201, 221, 247 WW I, II, 34-39, 46-53, 62,-73, 85-90, 95105, 110-17, 137-47, 152, 157, 158, 162, 171, 184-87, 198, 203, 213, 233, 235, 243, 249, 257, 261, 263, 281, 285, 288, 300, 303, 306, 337, 345, 383, 391-403, 41216, 421
Yugoslavia, 6, 60, 62, 64, 105, 113; economic, financial, covert warfare against-as NATO moved East, 14-129 Zambia, 162, 226, 366
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About the Author
With a PhD. in political economics from Union Institute and University, J.W. Smith has presented these concepts in nine countries. This is his 7th book on the causes and cures of world poverty and elimination of wars. The Indonesian University System appears to have named their ―Centre for Economic Democracy Studies‖ after his Economic Democracy: The Political Struggle of the TwentyFirst Century. That book has been translated and is in use in Indonesian classrooms. A contact on official business has been passing out copies of Economic Democracy: A Grand Strategy for Global Peace and Prosperity to officials in various countries of Africa. One thought enough of it we have a picture of him presenting a copy to an official of the Nigerian government. Three of this author‘s books are in print in India: WHY? A deeper History of the September 11th Terrorist Attack on America was accepted by a Book of the Month Club there. University research libraries have been a primary market for this author‘s work and all have seen use in the university classroom. Until he wrote this book, Smith felt his moving Henry George‘s philosophy across the full economic spectrum was almost certainly his most important contribution to economic theory. He now thinks his melding of Henry George philosophy with the exposure of Western economic classics as justifications for unjust and unequal property rights laws as applied to nature’s resources and technologies, denying others their rightful share, of, what nature offers to all for free, rather than philosophies for economic efficiencies is even more important. We think many will agree: The restructuring of aristocratic exclusive title to nature‘s wealth to conditional title eliminating those huge blocs of monopolized capital, the reforming of those capitalized appropriated values into relatively equally-shared use-values, and the doubling of economic efficiency is quite persuasive. Smith not only takes a different view from most economists on how economies are currently structured and how they should be structured, his views on money also firmly challenges some theories on monetary theory.
Smith's 24 years of deep study of economic history builds a new school of thought. Where else do you read the history of plunder by trade or that the foundation of the current monopoly economic structure is capitalism‘s exclusive titles to nature‘s wealth evolving from aristocratic exclusive titles? Or western societies evolving from plunder-by-raids to plunder by trade becoming the very signature of "civilized" nations? Or that Adam Smith free trade was specifically designed to entrench this system of laying claim to others wealth? Or that no nation ever
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developed under that philosophy? The exposures of these realities provide a new foundation upon which to understand the world. That understanding of economic history leads us to Smith's explanation of how Western "democracies" evolved from feudalism and today‘s exclusive titles to nature‘s wealth retain the essentials of those feudal exclusive rights to nature's bounty. Those monopolies, excluding the weak from their rightful share, follows naturally. To his surprise, this latest research exposes classical economics as only justifications for a system of theft, called property rights law, that Western powerbrokers spent 00 plus years putting in place. In short, except as a system of theft, they are not philosophies at all. Smith looked deeply within belief systems protecting the power structure and its stolen wealth and concluded the debris of centuries of custom and law are the barriers preventing Western societies from evolving into peaceful and far more productive societies. This is his 7th book on the causes and cures for poverty and wars. Smith‘s explains how the elimination of those monopolies through expanding individual rights and competition under a modern commons would increase economic efficiency equal to the invention of money, writing, and electricity. Those enormous efficiency gains would provide all the world‘s citizens with a quality life while working only 2 to 3 days per week outside the home, and all this while protecting the earth‘s resources and ecosphere. This work shines a bright light on what we must do to restructure to a peaceful and prosperous world. Many have, or sense, these fundamentals of poverty already; they just have not learned how to articulate them. A quick read of Smith‘s research will provide the articulation tools to go head to head with those imposing the very philosophy which is creating their poverty. Once the masses and their negotiators are armed with the simple tools of truth, that is a debate the powerbrokers and their negotiators cannot win. And, as documented in the Conclusion, they are not winning. Being fully free is having full and equal economic rights. If the world‘s poor share this knowledge among themselves, and especially if emerging world universities accept the job of informing the masses, no amount of propaganda and bluster can stop the world from gaining their full rights and rising out of poverty. There is no left in the Western political system, only a right and an extreme right and that society is moving further right all the time. This thesis is not to the left, it is in the middle. We are not proposing government ownership of industry as socialism once did. We are proposing restructuring private property rights to the philosophies of Henry George so as to provide full and equal economic rights to all and maximize the efficiencies of the wealth producing process.
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If this knowledge sweeps across the world through the media of the emerging world not even the powerful nations‘ Mighty Wurlitzers can stop it. The truth is too simple and too sensible. People are good. Prove to philosophers and negotiators in the wealthy world that poverty can be relatively quickly eliminated and many will recognize they have been badly misinformed and support you. Form study groups to look deeply into every aspect of why there is poverty and how to eliminate it. Professors, organize your peers and students to study this in depth. Paying through will automatically register you as a member. Those in the developing world are automatically registered by simply emailing us they wish to be a member. Go to www.ied.info/ for further updates. Please join us: The Institute for Economic Democracy
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