Category Archives: financial derivatives

roll up the red carpet!

The following article is Chapter Five of a book entitled Finishing The Rat Race which I am posting chapter by chapter throughout this year and beyond. Since blog posts are stacked in a reverse time sequence (always with the latest at the top), I have decided that the best approach is to post the chapters in reverse order.

All previously uploaded chapters are available (in sequence) by following the link above or from category link in the main menu, where you will also find a brief introductory article about the book itself and why I started writing it.

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“All animals are equal
but some animals are more equal than others

— George Orwell 1

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I discovered recently and by happy accident that the author, Michael Young, who invented the term ‘meritocracy’, detested his own creation. Here’s how Young outlined his position in a Guardian article “Down with meritocracy”, published in 2001:

I have been sadly disappointed by my 1958 book, The Rise of the Meritocracy. I coined a word which has gone into general circulation, especially in the United States, and most recently found a prominent place in the speeches of Mr Blair.

The book was a satire meant to be a warning (which needless to say has not been heeded) against what might happen to Britain between 1958 and the imagined final revolt against the meritocracy in 2033.2

But I shall save further thoughts of Michael Young until later, and begin here by considering what lies in the shadows of a meritocracy. After all, and at first glance, what on earth can be wrong with the purposeful restructuring of society in ways that prioritise ‘merit’ above all else? Isn’t this the epitome of a fair system?

As with examining most ideas, it is helpful first to step back a little to gain perspective. In this case, it is important to get a fuller grasp of what ‘merit’ means when buried within the heart of ‘meritocracy’. What does ‘merit’, in this narrow political sense, finally equate to?

Throughout the last two hundred and more years, including under progressive administrations such as Clement Attlee’s reforming government in Britain and FDR’s earlier New Deal for America, the political systems in the West have remained very solidly rooted in capitalism, and being so, they have remained inherently utilitarian in design. It follows that ‘merit’ (in our narrow definitional sense) must be gauged on the scales of those extant utilitarian-capitalist conventions: that ‘merit’ therefore becomes an adjunct of ‘utility’ or, in other words, ‘usefulness’.

Advocates of capitalism like to evoke the invisible hand of the market, which they say enhances productivity and safeguards against wanton overproduction, thereby ensuring society’s needs are met. Thanks to the market that which is wasteful falls away, and in consequence profits and earnings will flow to the most efficient producers. So it follows that within a meritocracy governed strictly by market forces, with the invisible hand steering our efforts unerringly toward ‘usefulness’, estimations of ‘merit’ ought to be fairly directly measureable in terms of salaries and wealth. Maximum profits and earnings tending to go to those who serve the most useful function and are, by dint of this, the most ‘merited’. The losers are those who merit little since they provide little to nothing of use, and, conversely, the winners contribute most gainfully in every sense…

There is already a suffocating tightness in this loop; a circularity that brings me to consider the first serious objection against meritocracy, if only the most trivial and conspicuous. For judged solely by its own terms just how meritocratic is our celebrated meritocracy? Hmmm – need I go on? Very well then, I shall offer this brisk reductio ad absurdum:

Let’s start where the debate ordinarily ends, with the topic of professional footballers… To most people, the excessive salaries paid to footballers stands out as an egregious example of unfairness. I share the same view, but wonder why we stop at footballers. They are not alone; not by a long chalk.

Indeed, given that our utilitarian-capitalist meritocracy does in fact function as it is presumed to function, then it follows that most top sportsmen (to a lesser extent, sportswomen too), including footballers, but also tennis players, golfers, F1 drivers, cyclists, athletes, etc – sports of low popularity by comparison – as well as pop idols, TV celebrities and film stars (not forgetting agents and the retinue of hangers-on) are, by virtue of their fabulous incomes, not merely most deserving of such high rewards, but also, by direct extension, some of the most ‘productive’ amongst us. Would any deign to defend this high visibility flaw in our socio-economic system? Truth is that many on this ever-expanding list are rewarded for just one thing: fame – thanks to another self-perpetuating cycle in which fame makes you wealthy, and then wealth makes you more famous again.

Nor does such rightful utilitarian calculus reliably account for the gargantuan salaries and bonuses (and who else gets bonuses in excess of their salaries!) of so many bankers, hedge fund managers and other financiers who callously wrecked our western economies. With annual remuneration that outstrips most ordinary worker’s lifetime earnings, the staggering rewards heaped upon those working in The City and Wall Street have little relationship to levels of productivity and usefulness, but worse, remuneration is evidently disconnected from levels of basic competence. Instead we find that greedy ineptitude is routinely and richly rewarded, if only for the ‘made men’ already at the top and lucky enough to be “too big to fail”. In light of the crash of 2008, any further talk of “the classless society” ought to have us all running for the exits!

Then we come to the other end of our meritocratic muck-heap. And here amongst the human debris we find contradictions of an arguably more absurd kind. I am referring to those disgustingly unworthy winners of our many lotteries – you know the types: petty criminals, knuckle-draggers and wastrels (the tone here is strictly in keeping with tabloid outrage on which it is based) who blow all their winnings on a binge of brash consumerism and a garage full of intoxicants. Conspicuous consumption of the most vulgar kinds! How dare they squander such hard, unearned dosh on having fun! But wait a minute… surely the whole point of running a lottery is that anyone can win. Have we forgotten the advertisement already? So if we are really serious about our meritocracy then perhaps we should to be stricter: no lotteries at all! Yet a cursory consideration of this point presents us with far bigger hurdles by far. For if we are truly committed to the project of constructing a meritocracy (and we must decide precisely what this means), it is vital to acknowledge the fact that life is inherently beset with lotteries. Indeed when roundly considered, this represents an existential dilemma that potentially undermines the entire project.

For life begins with what might best be described as our lottery of inheritance. Where you are born and to whom, the postal code you reside in, the schools you attended, your religious (or not) upbringing, whether you happen to carry one or two x-chromosomes, and the colour of your skin… the whole nine yards. Your entire existence happened by extraordinary chance and each and every aspect of it owes an unfathomable debt to further blind chance.

Therefore, in our most puritanical understanding of meritocracy, lotteries relating to the guessing of random numbers will be abolished altogether, in order to set a precedent, although still these other lotteries, life’s lotteries, remain inescapable. Which is devastating blow to the very concept of fully-fledged meritocracy, since whatever meritocracy we might choose to build will always remain a compromise of one kind or another.

In point of fact, however, we have been moving instead in the completely opposite direction. There has been a tremendous and rapid growth in lotteries of all shapes and sizes: from the casino economy working to the advantage of financial speculators at the top; to the rise of online casinos and the latest betting apps, mathematically honed to suck money from the pockets of the desperate and sometimes destitute pipedreamers at the bottom. Further indications of how far our society truly diverges from even the most rudimentary notions of meritocracy.

So there is plenty of scope for devising a better version of meritocracy; one that isn’t so riddled with blatant inconsistencies and arbitrary rewards. A more refined meritocracy operating according to common sense fairness and consistency, with built-in checks and balances to ensure the winners are more consistently worthy than the losers. A more level playing field bringing us closer to the ideal – for surely a better devised version of meritocracy is the fairest system we can ever hope to live under. In fact, I beg to differ, but before entering further objections to the sham ideal of meritocracy, I wish first to celebrate the different areas in which greater equality has indeed been achieved and ones where it is still dangerously lacking.

During the Q&A session following a lecture entitled “Capitalist Democracy and its Prospect’s” that he delivered in Boston on September 30th, 2014, Noam Chomsky speaks to why the notion of a capitalist democracy is oxymoronic. He also discusses the widespread misinterpretation of Adam Smith’s economic thinking, especially amongst libertarians, and specifically regarding the misuse of his terms ‘invisible hand’ and ‘division of labour’.

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There is no denying that at the start of the twenty-first century our own society has, and in a number of related ways, been made fairer and more equal than it was just thirty years ago when I was a school-leaver. Most apparent is the sweeping change in attitudes towards race and gender. Casual racism wasn’t merely permissible in seventies and early eighties Britain, but an everyday part of the mainstream culture. The sporadic Black or Asian characters on TV were neatly allotted into their long-established stereotypes, and comedians like bilious standup Bernard Manning had free rein to defile the airwaves with their popular brands of inflammatory bigotry. Huge strides have been taken since then, and social attitudes are unalterably changed for the better. Today the issue of diversity is central to political debate, and social exclusion on the grounds of race and gender is outlawed.

In the prophetic words of abolitionist preacher Theodore Parker, “the arc of the moral universe is long but it bends toward justice”; words famously borrowed by Martin Luther King in a celebrated sermon he delivered in the year of 1965.3 It was a momentous year: one that marked the official end to racial segregation in the Southern United States with the repeal of the horrendous Jim Crow laws, and the same year when Harold Wilson’s Labour government passed the Race Relations Act prohibiting discrimination in Britain on “grounds of colour, race, or ethnic and national origins”.

On August 28th (last Tuesday) ‘Democracy Now’ interviewed co-founder and chair of the Black Panther Party, Bobby Seale, who was arrested and indicted after speaking outside the 1968 Democratic National Convention in Chicago. He describes how during his trial Judge Julius Hoffman ordered him to be gagged and bound to his chair [from 9:15 mins]:

Did Bobby Seale’s treatment provide inspiration for Woody Allen’s madcap courtroom scene in ‘Bananas’? [from 5:00 mins]:

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As Parker and King understood well, of course, the arc of the moral universe does not bend of its own accord but requires tremendous pressure from below. And so it was, again in 1965, after shockwaves sent by Wilson’s government through former colony Rhodesia, that in efforts to avoid the end of its apartheid system, the white minority government under then-Prime Minister Ian Smith, declared independence, and an armed struggle for black liberation ensued. It was a bloody struggle that would grind on throughout the 70s, but one that ended in triumph. Meanwhile, apartheid in neighbouring South Africa outlasted Rhodesia for a further decade and a half before it too was dismantled in 1994 and the rainbow flag could be hoisted.

In solidarity with Nelson Mandela and leading the armed struggle had been Joe Slovo, a commander of the ANC’s military wing Umkhonto we Sizwe (MK) who fought alongside deputy Ronnie Kasrils; both the sons of émigré Jews. Also prominent within the anti-apartheid resistance were other Jewish figures including Denis Goldberg, Albie Sachs, and Ruth First – an activist, scholar and wife of Joe Slovo, she was murdered by a parcel bomb sent to her in Mozambique. Ironically, today Israel stands alone as the last remaining state that legally enforces racial segregation, but even the concrete walls and barbed wire dividing the West Bank and Gaza cannot hold forever.

This video footage was uploaded as recently as Wednesday 29th. It shows a young Palestinian girl living under Israeli control in Hebron having to climb a closed security gate just to get home:

The fence had been extended in 2012 and fitted with a single gate to provide entrance to the Gheith and a-Salaimeh neighborhoods in Hebron. The footage below was recorded by B’Tselem in May 2018 and shows other students unable to return from school and their mothers beseeching the Border Police officers to open it. The officers say in response that the gate is closed as “punishment” for stone throwing; a collective punishment that is prohibited under international law:

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Likewise, homosexuality, which until astonishingly recent times remained a virtually unspoken taboo, was decriminalised as comparatively recently as 1967 – the year of my birth and coincidentally the same year aboriginal Australians received full citizenship and the right to vote.

Before the Sexual Offences Act came into force, gay men faced prosecution and a prison sentence (lesbians slipped through the legal loophole due to technicalities surrounding the delicate issue of penetration), whereas today they enjoy the equal right to marriage, which cynics will doubtless say entitles them to an alternative form of imprisonment, but hurrah for that… since irrespective of one’s views on the institution of marriage, equality under law is indicative of genuine social progress. The same goes for the transformation of attitudes and legal framework in countering discrimination on grounds of gender, disability and age. Discrimination based on all these prejudices is plain wrong, and liberation on all fronts, an unimpeachable good.

In these ways, our own society – like others across the globe – has become more inclusive, and, if we choose to describe it as such, more meritocratic. Yet many are still left out in the cold. Which people? Sadly, but in truth, all of the old prejudices linger on – maybe they always will – but prime amongst them is the malignant spectre of racism.

For overall, as we have become more conscious and less consenting of racism than in the past, the racists, in consequence, have adapted to fit back in. More furtive than old-style racism, which wore its spiteful intolerance so brashly on its sleeve, many in the fresh crop of bigots have learned to feign better manners. The foaming rhetoric of racial supremacy is greatly moderated, and there is more care taken to legitimise the targeting of the chosen pariahs. Where it used to be said how “the Coloureds” and “the Pakis” (and other labels very much more obscene again) were innately ‘stupid’, ‘lazy’, ‘doped-up’ and ‘dirty’ (the traditional rationalisations for racial hatred), the stated concern today is in difference per se. As former BNP leader Nick Griffin once put it:

[I]nstead of talking about racial purity, you talk about identity, and about the needs and the rights and the duty to preserve and enhance the identity of our own people.4

And note how identity politics here plays to the right wing just as does to the left, better in fact, because it is a form of essentialism. In effect, Griffin is saying ‘white lives matter’, when of course what he really means is ‘white lives are superior’. But talk of race is mostly old hat to the new racists in any case, who prefer to attack ‘culture’ over ‘colour’.

In multicultural Britain, it is the Muslim minority, and especially Muslim women, who receive the brunt of the racial taunts, the physical abuse, and who have become the most preyed upon as victims of hate crimes, while the current hypocrisy lays blame at their door for failing to adopt western values and mix in; a scapegoating that alarmingly recalls the Nazi denigration and demonisation of the Jews. It follows, of course, that it is not the racists who are intolerant but the oppressed minority who are or who look like Muslims. By this sleight of hand, Islamophobia (a very clumsy word for a vile creed) festers as the last manifestation of semi-respectable racism.

When it was released in 1974, “Blazing Saddles” shocked audiences. It is no less shocking today, but the difference today is that no-one could make it. No contemporary film in which every third word is a vile racist expletive would pass the censors. Yet as it plunges us headlong into a frenetic whirlwind of bigotry, and as all commonsense rationality is suspended, nothing remains besides the hilarious absurdity of racial prejudice. Dumb, crude, and daring: it is comedy of rare and under-appreciated genius. As Gene Wilder puts it “They’ve smashed racism in the face and the nose is bleeding, but they’re doing it while you laugh” [6:15 mins]. Embedded below is a BTS documentary tribute entitled “Back in the Saddle” [Viewer discretion advised]:

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“It is only shallow people who do not judge by appearances,” quipped Oscar Wilde.5 And though the accusation at the heart of his bon mot may be contested, that most people certainly do judge by appearances really cannot be. Briefly then, I wish to consider a few of the most overlooked but widespread social prejudices, which though seldom so vicious and of less clear historical significance than other such virulent strains as sexism and racism, are long-standing and ingrained prejudices nonetheless. These tend to be prejudices against certain types of individual, rather than against interconnected “communities”. Prejudices so commonplace that some readers will doubtless see my digression as trivial, or even laughable, and yet there is good reason to delve into the matter as it opens up a bigger question, and, once expanded upon, more fundamentally challenges our whole notion of meritocracy. So here goes… (I am braced for the many titters and guffaws and encourage you to laugh along!)

Firstly, there is a permitted prejudice on the one hand against short blokes (trust me, I am one), and on the other against fat ladies. Short men and fat women being considered fair game for ridicule literally on the grounds that we don’t shape up. Which would be fine – believe me, I can take a joke – except that in playing down the deep-seated nature of such prejudice, as society generally does, there are all sorts of insidious consequences. For it means, to offer a hopefully persuasive example, that whenever satirists (and I use the term loosely, since genuine satire is rather thin on the ground) lampoon Nicolas Sarkozy, rather than holding him to account for his reactionary politics and unsavoury character, they go for the cheaper shot of quite literally belittling him (and yes, prejudice in favour of tallness saturates our language too). Worse still, Sarkozy had the gall to marry a taller and rather glamorous woman, which apparently makes him a still better target for wisecracks about being a short-arse (it’s okay, I’m reclaiming the word). As a result, Sarkozy is most consistently disparaged only for what he couldn’t and needn’t have altered, instead of what he could and should have. No doubt he takes it all on the chin… presuming anyone can actually reach down that far! Yes, it’s perfectly fine to laugh, just so long as we don’t all continue pretending that there is no actual prejudice operating.

Moreover, it is healthy for us to at least admit that there is a broader prejudice operating against all people regarded in one way or another as physically less attractive. Being fat, short, bald or just plain ugly are – in the strictest sense – all handicaps, which, and though far from insurmountable, represent a hindrance to achieving success. Even the ginger-haired enjoy a less than even break, as Neil Kinnock (who was unfortunate enough to be a Welshman too) discovered shortly after he was elected leader of the Labour Party.

Indeed, most of us will have been pigeon-holed one way or another, and though we may sincerely believe that we don’t qualify to be categorised too negatively, our enemies will assuredly degrade us for reasons beyond our ken. But then, could we ever conceive of, for instance, the rise of something akin to let’s say an “ugly pride” movement? Obviously it would be comprised solely of those self-aware and unblinkingly honest enough to see themselves as others actually see them. This envisaged pressure group would comprise an exceptionally brave and uncommon lot.

Then what of the arguably more delicate issues surrounding social class? Indeed, we might reasonably ask ourselves why is there such an animal as social class in the first place? And the quick answer is that people are inherently hierarchical. That “I look up to him because he is upper class, but I look down on him because he is lower class”, to quote again the famous skit from The Frost Report. But now pay proper attention to the vocabulary and its direct correspondence with the physical stature of the three comedians.6

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Class and stature side-by-side, just as they are in the dictionary – and as they have been throughout recent history thanks to dietary deficiencies. Here is a visual gag with etymological parallels: the word ‘stature’ itself a double entendre. But, and unlike physical stature, class is already inextricably tied into levels of wealth and success, and virtually impossible to escape in any society – the Soviet system and Mao’s China were arguably more deeply class-riven than our own purportedly “classless” societies.

Incidentally, I in no way advocate the drafting of future legislation to close the gap on these alternative forms of everyday discrimination: demanding social justice for all those with unpopular body shapes, or who speak with the wrong accent, or stutter, or who have chosen to grow patches of hair in the wrong places, or whatever it is (beards became fashionable after I wrote this!). That would instantly make our lives intolerable in another way: it would be (as the Daily Mail loves to point out) “political correctness gone mad!” After all, prejudice and discrimination come in infinite guises, so where could we finally draw the line?

All of which brings me to our last great tolerated prejudice, and one that is seldom if ever acknowledged as a prejudice in the first place. It is our own society’s – and every other society’s for that matter – very freely held discrimination on the grounds of stupidity. And no, this is not meant as a joke. But that it sounds like a joke makes any serious discussion about it inherently tricky.

Because the dim (and I have decided to moderate my language to avoid sounding unduly provocative, which is not easy – I’ll come to other tags I might have chosen in a moment) cannot very easily stand up for themselves, even if they decide to try. Those willing to concede that their lives are held back by a deficit in braininess (sorry, but the lack of more appropriate words is unusually hampering) will very probably fail to grasp much, if anything at all, of the bigger picture, or be able to articulate any of the frustrations they may feel as daily they confront a prejudice so deeply entrenched that it passes mostly unseen. Well, it’s fun to pick on the idiots, blockheads, boneheads, thickos, cretins, dimwits, dunderheads, dunces, knuckleheads, dumbbells, imbeciles, morons, jerks, and simpletons of the world isn’t it? It is the cheaper half of every comedy sketch, and in all likelihood will remain so; with much of the rest that brings us merriment being the schadenfreude of witnessing the self-same idiots cocking up over and over again. And finally, is there really a nicer word that usefully replaces all the pejoratives above? Our casual prejudice against the dim has been indelibly written into our dictionaries.

On May 13th, 1999, comedian George Carlin was invited to deliver a speech to the National Press Club at Washington D.C. He used the occasion to poke fun at the tortuous abuse of language by politicians as well as the growing tyranny of an invented “soft language”, which includes what he describes as ‘the tedious liberal labeling’ of minorities. His speech is followed by an entertaining Q&A session:

Here’s a little more from Carlin dishing the dirt on political correctness:

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Now if I’d been writing say a hundred years ago (or even more recently) the available vocabulary would have been a little different. For it was permissible during the first half of the last century to speak and write about the problem of ‘feeble-mindedness’ – a term that implies an innate (and thus inherited) ‘disability’. Moreover, as part of a quasi-scientific conversation, social reformers including intellectuals and political thinkers got into the habit of discussing how this affliction (as it was then regarded) might best be eradicated.

Those on the political left were no less shameful in this regard than those on the right, with radical thinkers like H.G. Wells 7 and George Bernard Shaw, chipping in alongside the youthful Winston Churchill8; all scratching their high brows to think up ways of preventing the spread of such evidently bad stock from ruining good society – ‘the feeble-minded’, for reasons never dwelt on by the pioneering eugenicists, not the least bit incapable of passing on their enfeebled genes.

Thanks again to genuine social progress it is unacceptable to speak (openly) about the elimination of the underclasses in our societies today, or to openly speculate on means of halting their uncontrolled and unwanted proliferation (though I write very much in terms that Wells, Shaw and Churchill would have understood). But eugenics, we should constantly remind ourselves, was a great deal more fashionable not so very long ago – even after the concentration camps and worryingly under alternative names it finds advocates still today (for instance, the Silicon Valley techies gather nowadays for conferences on transhumanism, the artificial ‘enhancement’ of humanity, which is one way in which eugenics has reemerged9).

Today’s progressives (and keep in mind that Wells and Shaw both regarded themselves as progressives of their own times) prefer to adopt a more humanitarian position. Rather than eliminating ‘feeble-mindedness’, the concern is to assist ‘the disadvantaged’. A shift in social attitude that is commendable, but it brings new hazards in its stead. For implicit in the new phraseology is the hope that since disparities stem from disadvantage, all differences between healthy individuals might one day be overcome. That aside from those suffering from disability, everyone has an approximately equivalent capacity when it comes to absorbing knowledge and learning skills of one form or another, and that society alone, to the advantage of some and detriment of others, makes us smart or dim. But this is also false, and cruelly so – though not yet barbarously.

For differences in social class, family life, access to education, and so forth (those things we might choose to distinguish as environment or nurture) are indeed significant indicators of later intellectual prowess (especially when our benchmark is academic performance). So it makes for comfortable presupposition that regarding intelligence (an insanely complex matter to begin with) the inherent difference between individuals is slight, and upbringing is the key determinant, but where’s the proof? And if this isn’t the whole picture – as it very certainly isn’t – then what if, heaven forfend, some people really are (pro)created less cognitively proficient than others? Given that they did indeed receive equivalent support through life, it follows that failure is “their own fault”, is it not?

In any case, intelligence, like attractiveness, must be to some degree a relative trait. During any historical period, particular forms of mental gymnastics are celebrated when others are overlooked, and so instruments to measure intelligence will automatically be culturally biased (there is a norm and there are fashions) to tally with the socially accepted idea of intelligence which varies from place to place and from one era to the next. There can never be an acid test of intelligence in any pure and absolute sense.10

Furthermore, whatever mental abilities happen to confer the mark of intelligence at any given time or place, obviously cannot be equally shared by everyone. As with other human attributes and abilities, there is likely to be a bell curve. It follows, therefore, that whatever braininess is or isn’t (and doubtless it takes many forms), during every age and across all nations, some people will be treated as dimmer, or brighter, than their fellows. And notwithstanding that whatever constitutes intelligence is socially determined to some extent, and that estimates of intelligence involve us in a monumentally complex matter, it remains the case that an individual’s capacity for acquiring skills and knowledge must be in part innate. This admission is both exceedingly facile and exceedingly important, and it is one that brings us right to the crux of meritocracy’s most essential flaw.

For how can those who are thought dim be left in charge of important things? They can’t. Which means that it would be madness to give the dimmest people anything other than the least intellectually demanding jobs. The meritocratic logic then follows, of course, that being less capable (and thus relegated to performing only the most menial tasks) makes you less worthy of an equal share, and yet this cuts tangentially across the very principle of ‘fairness’ which meritocracy is supposed to enshrine. For wherein lies the fairness in the economic exclusion of the dim? To reiterate what I wrote above, our prejudice is so deeply ingrained that to many such exclusion will still appear justified. As if being dim is your own lookout.

For whether or not an individual’s perceived failure to match up to society’s current gauge of intelligence is primarily down to educational ‘disadvantage’ (in the completest sense) or for reasons of an altogether more congenital kind, we may justifiably pass over the comfortable view that equal opportunity (laudable as this is) can entirely save the day. Degrees of intellectual competence – whether this turns out to be more socially or biologically determined – will always be with us, unless that is, like Wells, Shaw and Churchill (together with a many other twentieth century social reformers including Theodore Roosevelt, Woodrow Wilson, Alexander Graham Bell, and the founder of Planned Parenthood, Margaret Sanger) we opt instead for the eugenic solution – and I trust we do not. But bear in mind that programmes of forced sterilisation kept running in regions of the western world long after WWII right up to the 1970s.11 Earlier calls to weed out the “feeble-minded” that never fully went away, but instead went underground.

On March 17th 2016, ‘Democracy Now!’ interviewed Adam Cohen, co-editor of TheNationalBookReview.com and author of “Imbeciles: The Supreme Court, American Eugenics, and the Sterilization of Carrie Buck”, who explained how:

After World War II, we put the leading Nazis on trial for some of the worst things that the Nazis did. One of those very bad things was they set up a eugenics program where they sterilized as many as 375,000 people. So we put them on trial for that. And lo and behold, as the movie [“Judgment at Nuremberg”] shows, their defense was: “How can you put us on trial for that? Your own U.S. Supreme Court said that sterilization was constitutional, was good. And it was your own Oliver Wendell Holmes, one of your most revered figures, who said that. So, why are we the bad guys in this story?” They had a point.

Click here to watch on the Democracy Now! website.

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Now for those further thoughts from the man we might describe as “the father of meritocracy” – even though he would certainly hate it! This is Michael Young speaking out against about his accidental bastard child and the decisive role it is has played in reshaping our societies:

I expected that the poor and the disadvantaged would be done down, and in fact they have been. If branded at school they are more vulnerable for later unemployment.

They can easily become demoralised by being looked down on so woundingly by people who have done well for themselves.

It is hard indeed in a society that makes so much of merit to be judged as having none. No underclass has ever been left as morally naked as that.12

This meritocracy we live in today, as Michael Young points out, is not just a distant remove from the fairest society imaginable, but in other ways – psychological ones especially – arguably crueller than any older, and less enlightened, -ocracies.

Embedded below is one of a series of lectures “Biology as Ideology” given by distinguished geneticist and evolutionary biologist Richard Lewontin in 1990. Lewontin here explaining how erroneous theories of biological determinism have been used to validate and support the dominant sociopolitical theories and vice versa. He also offers his subversive thoughts on meritocracy:

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Inevitably, ‘merit’ is equated with, and thus mistaken for, ‘success’, and this is true not only for our self-declared meritocracy, but universally. Think about it: if millions of people love to read your books, or to listen to your songs, or just to watch your delightful face on their TV screens, then who would not leap to the conclusion that what they do is of the highest ‘merit’? How else did they rise to stand above the billions of ordinary anonymous human drones?

The converse is also true. That those who remain anonymous are often in the habit of regarding themselves as less significant – in fact psychologically less real – than others in the limelight they see and admire: the celebrities and the VIPs. Which brings me to a lesson my father taught me; an observation which reveals in aphoristic form the inbuilt fault with all conceptions of meritocracy: VIP being a term that makes him curse. Why? For the clinching fact that every one of us is a “very important person”. If this sounds corny or trite then ask yourself sincerely, as my father once asked me: “Are you a very important person…?”

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Famously, Van Gogh sold just a single painting in his lifetime13, but then we all know that millions of terrible painters have also sold one (or less than one!) Not so widely known is that a great deal of Schubert’s music was lost when, in the immediate aftermath of his death, it was recycled as waste paper; but then again, thousands of dreadful composers have also had their music posthumously binned. So the odds are that if you can’t sell your music or publish your book, then you’re just another of the billions, rather than an as yet unappreciated master and another Van Gogh or Schubert. For aside from posterity, and no matter how much we might like to conjure one up, there is no established formula for separating ‘merit’ from ‘success’, and no good reason for supposing we will ever discover such a razor.

In reality therefore, any form of meritocracy will only ever be a form of success-ocracy, and in our own system, money is the reification of success. A system in which success and thus money invariably breeds more success and more money because unavoidably it contains positive and negative feedback loops. For this reason the well-established ruling oligarchies will never be unseated by means of any notional meritocracy – evidence of their enduring preeminence being, somewhat ironically, more apparent in the American republic, where dynasties, and especially political ones, are less frowned upon, and in consequence have remained more visible than in the class-ridden island kingdom it abandoned and then defeated. But even if our extant aristocracies were one day uprooted wholesale, then meritocracy simply opens the way for that alternative uber-class founded by the “self-made man”.

Indeed, ‘aristocracy’, deriving from the Greek ἀριστοκρατία (aristokratia) and literally meaning “rule of the best”, sounds a lot like ‘meritocracy’ to me. Whereas governance by those selected as most competent (the other way ‘meritocracy’ is sometimes defined) is better known by an alternative name too – ‘technocracy’ in this case – with the select order of technocrats working to whose betterment we might reasonably ask. Meritocracy of both kinds – and every meritocratic system must combine these twin strands – has fascistic overtones.

The promise of meritocracy has been seductive largely because of its close compatibility with neoliberalism, today’s predominant, in fact unrivalled, politico-economic ideology. Predicated on the realism that humans do indeed have an ingrained predisposition to social hierarchy (something that traditional concepts of egalitarianism sought to abolish), it offers a reconfigured market solution to foster a sort of laissez-faire egalitarianism: the equalisation of wealth and status along lines that are strictly “as nature intended”. Furthermore, it appeals to some on the left by making a persuasive case for “equality of opportunity”, if always to the detriment of the more ambitious goal of “equality of outcome”. A sidelining of “equality of outcome” that has led to a dramatic lowering of the bar with regards to what even qualifies as social justice.

Moreover, the rightward drift to meritocracy involves the downplaying of class politics in favour of today’s more factional and brittle politics of identity. This follows because under meritocracy the rigid class barriers of yesteryear are ostensibly made permeable and in the long run must slowly crumble away altogether. In reality, of course, social mobility is heavily restricted for reasons already discussed at length. But this abandonment of class politics in favour of the divisiveness of identity politics is greatly to the benefit of the ruling establishment of course. Divide and conquer has been their oldest maxim.

Interestingly, of the many advocates of meritocracy – from Thatcher to Reagan; Brown to Blair; Cameron to Obama; Merkel to May – none have bothered to very precisely define their terms. What do they mean to imply by ‘merit’ and its innately slippery counterpart ‘fairness’? And whilst they talk of ‘fairness’ over and over again – ‘fairness’ purportedly underlying every policy decision they have ever taken – the actual direction all this ‘fairness’ was leading caused a few to wonder whether ‘fairness’ might be wrong in principle! Like other grossly misappropriated abstract nouns – ‘freedom’ and ‘democracy’ spring instantly to mind – the difficulty here is that ‘fairness’ is a handy fig-leaf.

Instead, and if we genuinely wish to live in a society striving for greater equality, then the political emphasis ought not to be placed too heavily on wooly notions like ‘merit’ or ‘fairness’ but upon enabling democracy in the fullest sense. The voice of the people may not be the voice of God, but it is, to paraphrase Churchill (who mostly hated it), the least worst system.14 One person, one vote, if not quite the bare essence of egalitarianism, serves both as a fail-safe and a necessary foundation.

Of course, we must always guard against the “tyranny of the majority” by means of a constitutional framework that ensures basic rights and freedoms for all. For democracy offers an imperfect solution, but cleverly conceived and justly organised neither is it, as so many right-wing libertarians are quick to tell you: “two wolves and a sheep deciding what to have for dinner”. This sideswipe is not just glib, but a better description by far of the extreme right-wing anarchy they advocate. In reality, it is their beloved ‘invisible hand’ that better ensures rampant inequality and social division, and for so long as its influence remains unseen and unfettered, will continue to do so, by rigging elections and tipping the scales of justice.

Democracy – from its own etymology: rule by the people – is equality in its most settled form. Yet if such real democracy is ever to arise and flourish then we must have a free-thinking people. So the prerequisite for real democracy is real education – sadly we are a long way short of this goal too and once again heading off in the wrong direction. But that’s for a later chapter.

Next chapter…

*

Addendum: our stakeholder society and the tyranny of choice

Prior to the rise of Jeremy Corbyn and to a lesser extent Bernie Sanders (for further thoughts on Sanders read my earlier posts), mainstream politics in Britain and America, as more widely, were converged to such a high degree that opposition parties were broadly in conjunction. Left and right had collapsed to form a single “centrist” amalgam in agreement across a wide range of diverse issues spanning race relations, gender equality, immigration, environmentalism, to foreign policy, and most remarkably, economics. In Britain, as in America, the two major parties ceased even to disagree over the defining issue of nationalisation versus privatisation because both sides now approved of the incorporation of private sector involvement into every area of our lives. “Big government”, our politicians echoed in unison, is neither desirable nor any longer possible. Instead, we shall step aside for big business, and limit ourselves to resolving “the real issues”.

The real issues? Why yes, with the business sector running all the fiddly stuff, governments pivoted to address the expansion of individual opportunity and choice. Especially choice. Choice now became the paramount concern.

Even the delivery of essential public services, once the duty of every government (Tory and Labour alike), began to be outsourced. No holy cows. It became the common doctrine that waste and inefficiency in our public services would be abolished by competition including the introduction of internal markets and public-private partnerships, which aside from helping to foster efficiency, would, importantly, diversify customer choice once again.

Under the new social arrangement, we, the people, became “stakeholders” in an altogether more meritocratic venture. Here is Tony Blair outlining his case for our progressive common cause:

“We need a country in which we acknowledge an obligation collectively to ensure each citizen gets a stake in it. One Nation politics is not some expression of sentiment, or even of justifiable concern for the less well off. It is an active politics, the bringing of a country together, a sharing of the possibility of power, wealth and opportunity…. If people feel they have no stake in society, they feel little responsibility towards it, and little inclination to work for its success. ….”15

Fine aspirations, you may think. But wait, and let’s remember that Blair was trained as a lawyer, so every word here counts. “Sharing in the possibility of power…” Does this actually mean anything at all? Or his first sentence which ends: “…to ensure each citizen gets a stake in it” – “it” in this context presumably meaning “the country” (his subject at the beginning). But every citizen already has a stake in the country, doesn’t s/he? Isn’t that what being a citizen means: to be a member of a nation state with an interest, or ‘stake’ (if we insist) in what goes on. However, according to Blair’s “One Nation” vision, members of the public (as we were formerly known) are seemingly required to become fully paid-up “stakeholders”. But how…?

Do we have to do something extra, or are our “stakeholder” voices to be heard simply by virtue of the choices we make? Is this the big idea? The hows and wheres of earning a salary, and then of spending or else investing it; is this to be the main measure of our “stakeholder” participation? In fact, is “stakeholder” anything different than “stockholder” in UK plc? Or is it less than this? Is “stakeholder” substantially different from “consumer”? According to the Financial Times lexicon’s definition, a stakeholder society is:

“A society in which companies and their employees share economic successes.”16

Well, I certainly don’t recall voting for that.

*

We are increasingly boggled by choice. Once there was a single electricity supply and a single gas supply – one price fitting all. Now we have literally dozens of companies offering different deals – yet all these deals finally deliver an entirely identical supply of electricity and gas. The single difference is the price, but still you have to choose. So precious moments of our once around the sun existence are devoted to worrying about which power company is charging the least amount. And the companies know all this, of course, so they make their deals as complicated as possible. Perhaps you’ll give up and choose the worst of options – for the companies concerned, this is a winning strategy – thinking about it, this is their only winning strategy! Or, if you are of a mind to waste a few more of your precious never to be returned moments of existence, you may decide to check one of the many comparison websites – but again, which one? Just one inane and frustrating choice after another. And more of those tiresome tickboxes to navigate.

But choice is everything. So we also need to worry more about the latest school and hospital league tables. It is vital to exercise our right to choose in case an actual ambulance arrives with its siren already blaring. In these circumstances we need to be sure that the ambulance outside is bound for a hospital near to the top of the league, because it is in the nature of leagues that there is always bottom – league tables giving a relative assessment, and ensuring both winners and losers.

And provided, an entirely free choice – and not one based on catchment areas – what parent in their right mind elects to send their offspring to a worse school over a better one? So are we just to hope our nearest school and/or hospital is not ranked bottom? Thankfully, house prices save much of the time in helping to make these determinations.

Meantime I struggle to understand what our politicians and civil servants get up to in Whitehall these days. Precisely what do those who walk the corridors of power find to do each day? Reduced to the role of managers, what is finally left for them manage?

And where is all of this choice finally leading? In the future, perhaps, in place of elections, we will be able to voice our approval/dissatisfaction by way of customer surveys. With this in mind, please take a moment to select the response that best reflects your own feelings:

Given the choice, would you say you prefer to live in a society that is:

 More fair

Less fair

Not sure

*

Please note that for the purposes of ‘publishing’ here I have taken advantage of the option to incorporate hypertext links and embed videos – in order to distinguish additional commentary from the original text all newly incorporated text has been italised.

*

1 Quote taken from Chapter 10 of George Orwell’s satirical fairytale Animal Farm published in 1945. After the animals have ceased power at the farm they formulate “a complete system of thought” which is designed to unite the animals as well as preventing them from returning to the evil ways of the humans. The seventh and last of these original commandments of ‘Animalism’ is straightforwardly that “All animals are equal”, however, after the pigs have risen to dominance again, the sign is revised and so this last commandment reads “All animals are equal, but some animals are more equal than others”.

2 From an article entitled “Down with meritocracy: The man who coined the term four decades ago wishes Tony Blair would stop using it” written by Michael Young, published in the Guardian on June 29, 2001. http://www.guardian.co.uk/politics/2001/jun/29/comment

3 Quote taken from a sermon by Martin Luther King Jr. delivered at Temple Israel of Hollywood delivered on February 25, 1965. In fuller context, he said:

“And I believe it because somehow the arc of the moral universe is long but it bends toward justice. We shall overcome because Carlyle is right: “No lie can live forever.” We shall overcome because William Cullen Bryant is right: “Truth crushed to earth will rise again.” We shall overcome because James Russell Lowell is right: “Truth forever on the scaffold, wrong forever on the throne. Yet, that scaffold sways the future and behind the dim unknown standeth God within the shadow, keeping watch above his own.”

An audio recording of King’s speech and a full transcript is available here: http://www.americanrhetoric.com/speeches/mlktempleisraelhollywood.htm

4 Quote taken from a meeting on April 22nd, 2000 with American white supremacist and former Grand Wizard of the Ku Klux Klan, David Duke, that was recorded as “American Friends of the British National Party” video.

In fuller context Griffin says:

“Perhaps one day, once by being rather more subtle we got ourselves in a position where we control the British Broadcasting media and then we tell ’em really how serious the immigration problem was, and we tell them the truth about a lot of the crime that’s been going on, if we tell ’em really what multiracialism has meant and means for the future, then perhaps one day the British people might change their mind and say yes every last one must go.  Perhaps they will one day.  But if you hold that out as your sole aim to start with, you’re going to get absolutely nowhere. So instead of talking about racial purity, you talk about identity, and about the needs and the rights and the duty to preserve and enhance the identity of our own people.  My primary identity quite simply is there (points to veins in wrist). That’s the thing that counts.”

The clip was shown in BBC1’s Panorama: Under the Skin first broadcast on November 25, 2001.

The transcript is available here: http://news.bbc.co.uk/hi/english/static/audio_video/programmes/panorama/transcripts/transcript_25_11_01.txt

5 Although these words are frequently attributed to Wilde himself, they actually belong to one of his characters. To Lord Henry Wotton who says “To me, beauty is the wonder of wonders. It is only shallow people who do not judge by appearances. The true mystery of the world is the visible, not the invisible.” Taken from Chapter 2 of Wilde’s once scandalous novel The Picture of Dorian Gray.

6 The “Class Sketch” was first broadcast on April 7, 1966 in an episode of David Frost’s satirical BBC show The Frost Report. It was written by Marty Feldman and John Law, and performed by John Cleese, Ronnie Barker and Ronnie Corbett in descending order of height!

7 Anticipations of the Reaction of Mechanical and Scientific Progress upon Human Life and Thought (1901), is one of H.G.Wells’ earliest blueprints for the future. Set in 2000, a youthful Wells (aged 34) suggested an altogether more matter of fact solution to the problem of what he then called “the People of the Abyss” than a promise of education, education, education (the commentary is my own of course):

“It has become apparent that whole masses of human population are, as a whole, inferior in their claim upon the future, to other masses, that they cannot be given opportunities or trusted with power as superior peoples are trusted, that their characteristic weaknesses are contagious and detrimental in the civilizing fabric, and that their range of incapacity tempts and demoralises the strong. To give them equality is to sink to their level, to protect and cherish them is to be swamped in their fecundity…”

Which is putting it most politely! Oh dear, oh dear! What has happened to the clarion call for freedom and equality (and here I mean equality of opportunity, since to be fair Wells was ever the egalitarian, consistently keener on meritocracy than any of the more radical ideals of wealth redistribution). Might it be that the young Mr Wells was showing off his truer colours? Let us go on a little:

“The new ethics will hold life to be a privilege and a responsibility, not a sort of night refuge for base spirits out of the void; and the alternative in right conduct between living fully, beautifully, and efficiently will be to die.”

Just who are the hideous hoards who Wells so pities and despises (in roughly equal measures)? Let us read on:

“…the small minority, for example, afflicted with indisputably transmissible diseases, with transmissible mental disorders, with such hideous incurable habits of the mind as the craving for intoxication…”

But he’s jesting… isn’t he?

“And I imagine also the plea and proof that a grave criminal is also insane will be regarded by them [the men of the New Republic] not as a reason for mercy, but as an added reason for death…”

Death? Why not prison and rehabilitation…?

“The men of the New Republic will not be squeamish either, in facing or inflicting death, because they will have a fuller sense of the possibilities of life than we possess…”

Ah, I see, yes since put like that… yes, yes, death and more death, splendid!

“All such killing will be done with an opiate, for death is too grave a thing to be made painful or dreadful, and used as a deterrent for crime. If deterrent punishments are to be used at all in the code of the future, the deterrent will neither be death, nor mutilation of the body, nor mutilation of the life by imprisonment, nor any horrible things like that, but good scientifically caused pain, that will leave nothing but memory…”

An avoidance of nasty old pain… that’s good I suppose.

“…The conscious infliction of pain for the sake of pain is against the better nature of man, and it is unsafe and demoralising for anyone to undertake this duty. To kill under the seemly conditions of science will afford is a far less offensive thing.”

Death, yes, a more final solution, of course, of course…

This is horrifying, of couse, especially in light of what followed historically.

Deep down Wells was an unabashed snob, though hardly exceptional for his time. Less forgivably, Wells was a foaming misanthropist (especially so when sneering down on the hoi polloi). But mostly he longed to perfect the human species, and as a young man had unflinchingly advocated interventions no less surgical than those needed to cure any other cancerous organ. But then of course, it was once fashionable for intellectual types to seek scientific answers to social problems: programmes of mass-sterilisation and selective reproduction.

His Fabian rival George Bernard Shaw had likewise talked of selective breeding in his own quest to develop a race of supermen, whilst Julian Huxley, Aldous’s big brother, was perhaps the foremost and pioneering advocate of eugenics, later coining the less soiled term ‘transhumanism’ to lessen the post-Nazi stigma. Judged in the broader historical context therefore, Wells was simply another such dreaming ideologue.

That Wells was also one of the first to use the term “new world order” maybe of little lasting significance, however totalitarian his visions for World Socialism, but importantly Wells was never in the position to realise his grander visions, in spite of being sufficiently well-connected to arrange private meetings with President Franklin D. Roosevelt, who entertained him over dinner, and with Joseph Stalin at the Kremlin. Finally, he was unable to inspire enough significant others to engage in his “open conspiracy”.

All extracts below are taken from Anticipation of the Reaction of Mechanical and Scientific Progress upon Human Life and Thought, Chapman & Hall, 1901

8

Like most of his contemporaries, family and friends, he regarded races as different, racial characteristics as signs of the maturity of a society, and racial purity as endangered not only by other races but by mental weaknesses within a race. As a young politician in Britain entering Parliament in 1901, Churchill saw what were then known as the “feeble-minded” and the “insane” as a threat to the prosperity, vigour and virility of British society.

The phrase “feeble-minded” was to be defined as part of the Mental Deficiency Act 1913, of which Churchill had been one of the early drafters. The Act defined four grades of “Mental Defective” who could be confined for life, whose symptoms had to be present “from birth or from an early age.” “Idiots” were defined as people “so deeply defective in mind as to be unable to guard against common physical dangers.” “Imbeciles” were not idiots, but were “incapable of managing themselves or their affairs, or, in the case of children, of being taught to do so.” The “feeble-minded” were neither idiots nor imbeciles, but, if adults, their condition was “so pronounced that they require care, supervision, and control for their own protection or the protection of others.”

Extract taken from a short essay called “Churchill and Eugenics” written by Sir Martin Gilbert, published on May 31, 2009 on the Churchill Centre website. http://www.winstonchurchill.org/support/the-churchill-centre/publications/finest-hour-online/594-churchill-and-eugenics

9 “Population reduction” is another leftover residue of the old eugenics programme but freshly justified on purportedly scientific and seemingly less terrible neo-Malthusian grounds – when previous “population reduction” was unashamedly justified and executed on the basis of the pseudoscience of eugenics, the pruning was always done from the bottom up, of course.

10 Aside from being the invention of pioneering eugenicist Francis Galton, the IQ test was an pseudo-scientific approach that first appeared to be validated thanks to the research of Cyril Burt who had devised ‘twin studies’ to prove the heritability of IQ. However, those studies turned out to be fraudulent:

“After Burt’s death, striking anomalies in some of his test data led some scientists to reexamine his statistical methods. They concluded that Burt manipulated and probably falsified those IQ test results that most convincingly supported his theories on transmitted intelligence and social class. The debate over his conduct continued, but all sides agreed that his later research was at least highly flawed, and many accepted that he fabricated some data.”

From the current entry in Encyclopaedia Britannica. http://www.britannica.com/EBchecked/topic/85886/Sir-Cyril-Burt

11

Eugenics is now rightly abjured, and if only for its abominable record for cruelty. But the cruelty of the many twentieth century programmes of eugenics was hardly incidental. Any attempt to alter human populations to make them fit an imposed social structure by means of the calculated elimination and deliberate manipulation of genetic stock automatically reduces people to the same level as farm animals.

It should be remembered too that what the Nazis had tried to achieve by mass murder across Europe was only novel in terms of its extremely barbarous method. Eugenics programmes to get rid of “inferior” populations by forced sterilisation having been introduced earlier in America and surreptitiously continuing into the 1970s. For instance, there was a secret programme for the involuntary sterilisation of Native American women long after the World War II.

http://muse.jhu.edu/login?auth=0&type=summary&url=/journals/american_indian_quarterly/v024/24.3lawrence.html

12 From the same Guardian article entitled “Down with meritocracy” written by Michael Young, published in June, 2001.

13 Van Gogh famously sold one painting during his lifetime, Red Vineyard at Arles. A painting that now resides at the Pushkin Museum in Moscow. The rest of Van Gogh’s more than 900 paintings were not sold nor came to public attention until after his death.

14

“Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.”

— Winston Churchill in a speech to the House of Commons, November 11, 1947.

15 Tony Blair speaking in Singapore on January 7, 1996.

16 The source for this definition is given as the Longman Business English Dictionary (although the link is lost). http://lexicon.ft.com/Term?term=stakeholder-society

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Filed under analysis & opinion, « finishing the rat race », financial derivatives, neo-liberalism, Noam Chomsky

all work and no play

The following article is Chapter Six of a book entitled Finishing The Rat Race which I am posting chapter by chapter throughout this year (and beyond). Since blog posts are stacked in a reverse time sequence (always with the latest at the top), I have decided that the best approach is to post the chapters in reverse order.

All previously uploaded chapters are available (in sequence) by following the link above or from category link in the main menu, where you will also find a brief introductory article about the book itself and why I started writing it.

*

BOSWELL, “But, sir, the mind must be employed, and we grow weary when idle.”
JOHNSON, “That is, sir, because others being busy, we want company; but if we were all idle, there would be no growing weary; we should all entertain one another… But no man loves labour for itself.”
1

*

Leaving aside the various species of bats and whales, very nearly all mammals are land-dwelling creatures. In fact, nearly all animals – meaning quadrupeds – spend their lives earthbound. For millennia humans too occupied the same earthbound sphere alongside fellow ground-dwelling organisms. So consider then the following: at this precise moment upwards of six thousand scheduled airliners are aloft in our skies, and at peak times as many as ten thousand are flying high above the clouds. Each of these airborne vessels is packed with many hundred perfectly ordinary human beings sat in rows, hurtling above our heads at altitudes exceeding thirty thousand feet and speeds above 500 miles per hour. This sum equates to literally millions of people airborne at each and every moment of each and every day – a significant proportion of the entire human population!

Now consider this: prior to December 17th 1903, only a handful of our species had ever lifted off the surface of the planet by any means at all and not a single human being had ever experienced powered flight. But then, on that fateful day, Orville and Wilbur Wright made three successful flights between them. On his first take-off, Orville covered 120 feet, remaining airborne for just 12 seconds. On the final flight, he valiantly managed 200 feet, all at an altitude of only ten feet. A century on, we have Airbus – take note the humdrum name of the company! – and the launch of its A380, the world’s largest passenger jet, which accommodates between 525 and 850 individuals, and is capable of flying approximately 10,000 miles nonstop. Thus, thanks to technology we have grown wings and been transformed into a semi-airborne species; entirely forgetting to be astonished by this remarkable fact is perhaps the final measure of our magnificent achievement.

*

“The world is undergoing immense changes. Never before have the conditions of life changed so swiftly and enormously as they have changed for mankind in the last fifty years. We have been carried along – with no means of measuring the increasing swiftness in the succession of events. We are only now beginning to realize the force and strength of the storm of change that has come upon us.

These changes have not come upon our world from without. No meteorite from outer space has struck our planet; there have been no overwhelming outbreaks of volcanic violence or strange epidemic diseases; the sun has not flared up to excessive heat or suddenly shrunken to plunge us into Arctic winter. The changes have come through men themselves. Quite a small number of people, heedless of the ultimate consequence of what they did, one man here and a group there, have made discoveries and produced and adopted inventions that have changed all the condition, of social life.”

These are the opening paragraphs from a lesser-known work by H.G. Wells. The Open Conspiracy, an extended essay written in 1928, was the first of Wells’ most earnest attempts to set the world to rights. Stumbling across it one day, it struck me that this voice from ninety years ago still chimes. I couldn’t help wondering indeed if we aren’t still in the midst of those same “immense changes”, being swept along by an, as yet, undiminished “storm of change”.

Wells, who uses the word ‘change’, in various formulations, no less than seven times (in a mere eight sentences), goes on to compare our modern wonders to the seven wonders of the ancient world, intending to emphasise their novel potency:

“Few realized how much more they were than any “Wonders.” The “Seven Wonders of the World” left men free to go on living, toiling, marrying, and dying as they had been accustomed to for immemorial ages. If the “Seven Wonders” had vanished or been multiplied three score it would not have changed the lives of any large proportion of human beings. But these new powers and substances were modifying and transforming – unobtrusively, surely, and relentlessly – very particular of the normal life of mankind.”

Wells had been trained as a scientist, and more than this, a scientist at a time when science was reaching its apogee. At the Royal College of Science2, he had studied biology under the tutelage of T. H. Huxley, the man who most publicly defended Darwin’s theory. In the debates against the Bishop of Oxford, Samuel Wilberforce, it was Huxley who challenged and defeated the permitted orthodoxy of divine creation by showing how Science makes a better account of our origins than religious authority; so in an important sense, Huxley must be seen as one of the pioneers of this scientific revolution. With religion rather abruptly and rudely dismissed, it was open to the scientists and technologists to lead us all to salvation.

Wells was keen to get involved, if only as one of science and technology’s most passionate and outspoken advocates.  Growing up in late Victorian Britain, he was well acquainted with how systems of mass production had mostly superseded manual methods to become the predominant form of industrial process. Likewise, he had witnessed the spread of agricultural machines for planting seeds and harvesting crops, and of automotive machines transporting loads and providing ever more reliable and comfortable means for human transit. These innovations had led to a dramatic increase both in production and, more importantly, in productivity, and machine processes were set to become ever more versatile and reliable.

Wells was amongst the first to seriously consider how these new modes of manufacture with their greater efficiencies and capacities for heavier constructions, not to mention for longer range transportation and communication, would bring rapid and sweeping changes to ordinary life. Most importantly, he understood that since technology potentially allowed the generation of almost limitless power, its rise would unstoppably alter human affairs forever, and by extension, impact upon the natural world too.

Quite correctly, Wells went on to forecast an age to come (our age), in which ordinary lives are transformed to an extent so far beyond the technological transformations of past ages that life is unutterably and irreversibly altered. Yet the widespread access to these “wonders”, as he insistently calls them, causes us to regard them as so ordinary that we seldom, if ever, stop to wonder about them.

For machines are nowadays embedded quite literally everywhere – one is in fact translating the movement of my fingertips into printed words, whilst another happens to be reproducing the soulful precision of Alfred Brendel’s rendition of one of Franz Schubert’s late sonatas on a machine of still older conception (the piano) via yet another machine that preserves sound in the form of electrical impulses. Thanks to machines of these kinds, not only the sheet-music – those handwritten frequency-time graphs so painstakingly drafted, perhaps by candlelight, and very certainly using only a feather quill and inkpot – but thousands upon thousands of musical (and other) performances can be conjured up with literally “a click”. The snapping fingers of an emperor could never have summoned such variety. But then the internet is a wonder far exceeding even H.G. Wells’ far-seeing imagination.

*

More than a century ago, the poet, satirist and social commentator Oscar Wilde was another who looked forward to a time of such “wonders”. For Wilde, as for Wells, they presented reasons to be cheerful:

“All unintelligent labour, all monotonous, dull labour, all labour that deals in dreadful things, and involves unpleasant conditions, must be done by machinery. Machinery must work for us in coal mines, and do all sanitary services, and be the stoker of steamers, and clean the streets, and run messages on wet days, and do anything that is tedious and distressing… There is no doubt at all that this is the future of machinery; and just as trees grow while the country gentleman is asleep, so while Humanity will be amusing itself, or enjoying cultivated leisure – which, and not labour, is the aim of man – or making beautiful things, or reading beautiful things, or simply contemplating the world with admiration and delight, machinery will be doing all the necessary and unpleasant work. The fact is that civilization needs slaves… [But] Human slavery is wrong, insecure and demoralizing. On mechanical slavery, on the slavery of the machine, the future of the world depends.”3

Wilde and Wells were optimists, but cautious ones, and each foretold new dangers that potentially lay in wait for us. Wells wrote:

“They [the new “wonders”] increased the amount of production and the methods of production. They made possible “Big-Business,” to drive the small producer and the small distributor out of the market. They swept away factories and evoked new ones. They changed the face of the fields. They brought into the normal life, thing by thing and day by day, electric light and heating, bright cities at night, better aeration, new types of clothing, a fresh cleanliness. They changed a world where there had never been enough into a world of potential plenty, into a world of excessive plenty.”4

Wells believed that the very successes which brought about large-scale manufacturing and distribution, as well as commensurate developments in fields such as agriculture, sanitation and medicine, ones that were already extending the average life-expectancy, might still feasibly bring heavier burdens to bear on the planet. Left unchecked, he argued, our species would finish using up everything, whilst, exponentially crowding ourselves out of existence. So these new “wonders” were a double-edged sword. And then what of “excessive plenty” – of too much of a good thing – how do we avoid replacing one set of miseries with another? Such were Wells’ concerns, but then Wells owed a great deal to the eternal pessimist Thomas Malthus.

By contrast, at the dusk of the Victorian era, Wilde is not much bothered as Wells is, by the prospect of society overrun by a burgeoning and profligate mass of humanity, but by how we can ensure the new prosperity, so long awaited and desperately overdue, could be fairly distributed. After all, progress had until then been primarily technological in form and not social, and it appeared to Wilde that the costs of industrialisation were still hugely outweighing its benefits.

The centuries of Industrial Revolution had claimed so many victims. Not only those trapped inside the mills and the mines, the wage-slaves working all the hours God sends for subsistence pay, but those still more benighted souls incarcerated in the workhouses, alongside their malnourished children, who from ages six upwards might be forced underground to sweat in the mines or else to clamber about in the more choking darkness of chimneystacks.5 Industrial development meant that for the majority of adults and children (boys and girls) life was sunk into a routine of unremitting hardship and ceaseless backbreaking labour, as the poor were ruthlessly sacrificed to profit their masters – one big difference today, of course, is that our own sweatshops are more distant.

To abolish this class-ridden barbarism, Wilde therefore proposed an unapologetically radical solution:

“Up to the present, man has been, to a certain extent, the slave of machinery, and there is something tragic in the fact that as soon as man had invented a machine to do his work he began to starve. This, however, is, of course, the result of our property system and our system of competition. One man owns a machine which does the work of five hundred men. Five hundred men are, in consequence, thrown out of employment, and having no work to do, become hungry and take to thieving. The one man secures the produce of the machine and keeps it, and has five hundred times as much as he should have, and probably, which is of more importance, a great deal more than he really wants. Were that machine the property of all, everyone would benefit by it.”6

*

In case Wilde’s enthusiasm for collective ownership encourages you think it, then please be assured that he was not exactly a Leninist (as you will see), nor, in any traditional sense, was he a fully-fledged Marxist. In fact, if anything Wilde was an anarchist, heaping special praise on Peter Kropotkin, whom he once described as: “a man with a soul of that beautiful white Christ which seems coming out of Russia.”7

Now it is interesting and worthwhile, I think, to compare Wilde’s views, writing just a few decades earlier, with those of H.G. Wells, for both held notionally left-leaning sympathies and both were broadly hopeful; each underscoring the special importance of science and technology when it came to achieving such desirable goals as ending poverty and rebuilding a fairer society. For in some regards, Wilde’s perspective is orthogonally different to Wells – and it is Wells who made the better communist (though he remained deeply antagonistic towards Marx for other reasons).

For Wells was an unflinching collectivist, and thus forever seeking solutions in terms of strict autocratic control. For instance, in one of the concluding chapters of The Open Conspiracy, Wells outlines “seven broad principles” that will ensure human progress of which the sixth reads as follows:

“The supreme duty of subordinating the personal career to the creation of a world directorate capable of these tasks [ones that will ensure the betterment of mankind] and to the general advancement of human knowledge, capacity, and power”8.

Wilde, on the contrary, unswervingly insisted that above all else the sovereign rights of the individual must be protected. That personal freedom must never be horse-traded, since “the true personality of man”, as he puts it, is infinitely more precious than any amount of prospective gains in comfort and security. This is precisely where Wilde is at his most prescient, foreseeing the dangers of socialist authoritarianism a full two decades before the Russian revolution, and instinctively advising a simple cure:

“What is needed is Individualism. If the Socialism is Authoritarian; if there are governments armed with economic power as they are now with political power; if, in a word, we are to have Industrial Tyrannies, then the last state of man will be worse than the first.”9

So compare Wilde’s earlier views to those of Wells fifty years on, by which time the Soviet model was up and running, and yet he is still advocating the need for a more widespread and overarching central authority: ultimately, a world government to coerce and co-ordinate the masses into the new age of socialism; even to the point of eradicating misfits for the sake of the greater good.

For Wells, every answer for resolving humanity’s problems involved the implementation of top-down governance, with the patterns of individual behaviour controlled by means of an applied political force-field, whereas Wilde was equally insistent that individuals are not uniformly alike like atoms, and must be permitted, so far as is humanly possible, to organise ourselves. It is a fundamental difference in outlook that is reflected in their attitudes towards work.

*

The inherent value of work is rarely questioned by Wells. In his earlier fictional work A Utopian World he answers his own inquiry “will a Utopian be free to be idle?” as follows:

“Work has to be done, every day humanity is sustained by its collective effort, and without a constant recurrence of effort in the single man as in the race as a whole, there is neither health nor happiness. The permanent idleness of a human being is not only burthensome to the world, but his own secure misery.”10

Wells is expressing a concern that once the labouring masses are relieved of their back-breaking obligation to work, they may “develop a recalcitrance where once there was little but fatalistic acquiescence”:

“It is just because labour is becoming more intelligent, responsible, and individually efficient that it is becoming more audible and impatient in social affairs. It is just because it is no longer mere gang labour, and is becoming more and more intelligent co-operation in detail, that it now resents being treated as a serf, housed like a serf, fed like a serf, and herded like a serf, and its pride and thoughts and feelings disregarded. Labour is in revolt because as a matter of fact it is, in the ancient and exact sense of the word, ceasing to be labour at all.”11

For these reasons, Wells senses trouble ahead, whereas for Wilde, these same changes in modes of employment serve as further reasons to be cheerful:

“[And] as I have mentioned the word labour, I cannot help saying that a great deal of nonsense is being written and talked nowadays about the dignity of labour. There is nothing necessarily dignified about manual labour at all, and most of it is absolutely degrading. It is mentally and morally injurious to man to do anything in which he does not find pleasure, and many forms of labour are quite pleasureless activities, and should be regarded as such. To sweep a slushy crossing for eight hours on a day when the east wind is blowing is a disgusting occupation. To sweep it with joy would be appalling. Man is made for something better than disturbing dirt. All work of that kind should be done by machine.”12

In his essay, Wilde, unlike Wells, is unabashed in confessing to his own Utopianism, writing:

“Is this Utopian? A map of the world that does not include Utopia is not worth even glancing at, for it leaves out one country at which Humanity is always landing. And when humanity lands there, it looks out, and, seeing a better country, sets sail. Progress is the realization of Utopias.”13

But then, both Wilde and Wells were dreaming up Utopias during an age when dreaming about Utopia remained a permissible intellectual pursuit. So it is just that Wilde’s dream is so much grander than any visions of Wells. Wells was certainly an astute forecaster and could see with exceptional acuity what immediately awaited humanity around the next few corners, but Wilde, on the other hand, sought to navigate across a wider ocean. He did not wish to be constrained by the tedious encumbrances of his own time, and regarded the complete abolition of hard labour as an absolutely essential component of a better future. Even then, he was far from alone.

*

Writing in the thirties, Bertrand Russell was another outspoken advocate of cultured laziness. Russell, who is now venerated by some almost as a secular saint was nothing of the sort. Many of his views on politics and society were highly disagreeable and he was arguably one of the dreariest philosophers ever published, but this aside he was a supreme mathematician. It is noteworthy therefore that in order to support his own expressed desire for reducing the average workload, he did a few very simple sums. These led him to what he regarded as the most important, yet completely overlooked, lesson to be learned from the Great War.

At a time when the majority of the able-bodied population were busily fighting or else engaged in other means of facilitating the destructive apparatus of war, new modes of production had maintained sufficiency, and yet, as Russell pointed out, the true significance of this outstanding triumph of the new technologies was altogether masked by the vagaries of economics. He writes:

“Modern technique has made it possible to diminish enormously the amount of labour required to secure the necessaries of life for everyone. This was made obvious during the war. At that time all the men in the armed forces, and all the men and women engaged in the production of munitions, all the men and women engaged in spying, war propaganda, or Government offices connected with the war, were withdrawn from productive occupations. In spite of this, the general level of well-being among unskilled wage-earners on the side of the Allies was higher than before or since. The significance of this fact was concealed by finance: borrowing made it appear as if the future was nourishing the present. But that, of course, would have been impossible; a man cannot eat a loaf of bread that does not yet exist. The war showed conclusively that, by the scientific organization of production, it is possible to keep modern populations in fair comfort on a small part of the working capacity of the modern world. If, at the end of the war, the scientific organization, which had been created in order to liberate men for fighting and munition work, had been preserved, and the hours of the week had been cut down to four, all would have been well. Instead of that the old chaos was restored, those whose work was demanded were made to work long hours, and the rest were left to starve as unemployed.”

And so to the sums – easy stuff for a man who had previously tried to fathom a complete axiomatic system for all mathematics:

“This is the morality of the Slave State, applied in circumstances totally unlike those in which it arose. No wonder the result has been disastrous. Let us take an illustration. Suppose that, at a given moment, a certain number of people are engaged in the manufacture of pins. They make as many pins as the world needs, working (say) eight hours a day. Someone makes an invention by which the same number of men can make twice as many pins: pins are already so cheap that hardly any more will be bought at a lower price. In a sensible world, everybody concerned in the manufacturing of pins would take to working four hours instead of eight, and everything else would go on as before. But in the actual world this would be thought demoralizing. The men still work eight hours, there are too many pins, some employers go bankrupt, and half the men previously concerned in making pins are thrown out of work. There is, in the end, just as much leisure as on the other plan, but half the men are totally idle while half are still overworked. In this way, it is insured that the unavoidable leisure shall cause misery all round instead of being a universal source of happiness. Can anything more insane be imagined?”

His conclusion is that everyone could and would work a lot less hours, if only the system permitted us to:

“If the ordinary wage-earner worked four hours a day, there would be enough for everybody and no unemployment – assuming a certain very moderate amount of sensible organization. This idea shocks the well-to-do, because they are convinced that the poor would not know how to use so much leisure.”14

It was still only 1932 remember – technology’s “wonders” have moved on a lot since Russell’s day…

*

Apis mellifera, the honey-bearing bee, is the paragon of industriousness. It’s a pleasure just to watch them humming their way from flower to flower. Working all the hours the apian god sends, without a care in the world. We ascribe tremendous social virtue to our arthropodous familiars, the busy, busy bees. However, if we are to judge bees fairly then we ought properly to consider more critically what it is that our conscientious little friends actually get up to day in, day out…

For though we say that the bees are “at work” – the infertile females who carry out the majority of tasks technically denominated as “workers” – their most celebrated activity, the foraging for nectar from flowers, can hardly be considered a “real job” at all. Unless by “real job” we allow that gorging oneself on the sweetest food available automatically qualifies as work. For, after supping up an abdomenful of nectar (I exaggerate a little for effect), these “workers” then return home to empty the contents of their bellies, as any professional drinker might. Back at the hive, their sister bees also collaborate in the transformation of the incoming nectar, collectively “manufacturing” honey by means of repeated consumption, partial digestion and regurgitation – and apologies to anyone who has suddenly lost their appetite for honey, but bear in mind that milk and eggs are no less strange when you stop to think about them.

By chance, it happens that humans (and other creatures) are partial to the sticky end product of a bee’s binge drinking session. I personally love it. And so we steal away their almost intoxicating amber syrup and attach an attractive price tag to it. The bees receive compensation in the form of sugar, and being apparently unaware of our cheap deception, are extolled as paragons of virtue.

In fact, whenever we take to judging or appraising human conduct of any kind, there is a stubborn tendency to take direction either from Religion, or, if Religion is dismissed, to look for comparisons from Nature. If doing something “isn’t natural”, a lazy kind of reasoning goes, then evidently – evidentially, in fact – there must be something wrong with it. For it cannot be right and proper to sin against Religion or to transgress against Nature. Thus, behaviour that is unorthodox and deviant in relationship to a received normal is denounced, in accordance with strict definition indeed, as perversion.

This fallacious “appeal to nature” argument also operates in reverse: that whenever a particular behaviour is thought virtuous or worthwhile, then – and generally without the slightest recourse to further identifiable evidence – ipso facto, it becomes “natural”. Although of the tremendous variety of human activities, work seems outstanding in this regard. For throughout historic times, societies have consistently upheld that work is self-evidently “natural”; the Protestant “work ethic” is perhaps the most familiar and unmistakeably religious variant of a broader sanctification of labour. Although it is surely worth noting that God’s punishment for Adam’s original sin was that he should be expelled from Paradise “to till the ground from whence he was taken.”15 (Most probably booming “the world doesn’t owe you a living, my son!” before slamming the gates to paradise shut.) Protestant mill-owners, of course, found it convenient to overlook how hard labour was God’s original punishment.

But then, atheistic societies have been inclined to extol work more highly still, and not simply because it is “natural” (the commonest surrogate for Religion), but because atheism is inherently materialist, and since materials depend upon production, productivity is likewise deemed more virtuous and worthwhile. Thus, under systems both Capitalist and Communist, work reigns supreme.

Stalin awarded medals to his miners and his manufacturers – and why not? Medals for production make more sense than medals for destruction. Yet this adoration of work involves a doublethink, with Stalin, for example, on the one hand glorifying the hard labour of labour heroes like, most famously, Alexey Stakhanov, and meanwhile dispatching his worst enemies to the punishment of hard labour in distant work camps, as did Mao and as did Hitler. “Arbeit macht frei” is an horrific lie, yet in some important sense the Nazi leaders evidently believed their own lie, for aside from war and genocide, the Nazi ideology once again extolled work above all else. In the case of Communism, the exaltation of the means of production was to serve the collective ends; in Fascism, itself the twisted apotheosis of Nature, work being natural ensures it is inherently a still greater good.

Yet oddly, whenever you stop to think about it, very little modern humans do is remotely natural, whether or not it is decent, proper and righteous. Cooking food isn’t natural. Eating our meals out of crockery by means of metal cutlery isn’t remotely natural either. Sleeping in a bed isn’t natural. Wearing socks, or hats, or anything else for that matter, isn’t natural… just ask the naturists! And structuring our lives so that our activities coincide with a predetermined time schedule isn’t the least bit natural. Alarm clocks aren’t natural folks! Wake up!

But work is indeed widely regarded as an especially (one might say uniquely) exemplary activity, as well as a wholesomely natural one. Consider the bees, the ants, or whatever other creature fits the bill, and see how tremendously and ungrudgingly productive they all are. See how marvellously proactive and business-like – such marvellous efficiency and purpose! In reality, however, the bees, ants and all the other creatures are never working at all – not even “the workers”. Not in any meaningful sense that corresponds to our narrow concept of “working”. The bees, the ants and the rest of the critters are all simply being… being bees, being ants. Being and “playing”, if you prefer: “playing” certainly no less valid as a description than “working”, and arguably closer to reality once understood from any bee or ant’s perspective (presuming they have one).

No species besides our own (an especially odd species) willingly engages in drudgery and toil; the rest altogether more straightforwardly simply eat, sleep, hunt, drink, breathe, run, swim and fly. The birds don’t do it! The bees don’t do it either! (Let’s leave the educated fleas!) Nature natures and this is all. It is we who anthropomorphise such natural activities and by attaching inappropriate labels transform ordinary pleasures into such burdensome pursuits that they sap nature of vitality. So when Samuel Johnson says, “No man loves labour for itself!” he is actually reminding us all of our true nature.

*

Whether or not we welcome it, “manpower” (humanpower that is), like horsepower before, is soon to be superseded by machine-power. Indeed, a big reason this profound change hasn’t made a greater impact already is that manpower (thanks to contemporary forms of wage slavery and the more distant indentured servitude of sweatshop labour) has remained comparatively cheap. For now the human worker is also more subtle and adaptable than any automated alternative. All of this, however, is about to be challenged, and the changeover will come with unfaltering haste.

To a considerable extent our switch to automation has already happened. On the domestic front, the transfer of labour is rather obvious, with the steady introduction and accumulation of so many labour-saving devices. For instance, the introduction of electric washing machines, which eliminate the need to use a washboard, to hand rinse or squeeze clothes through a mangle, spares us a full day of labour per week. When these became automatic washer dryers, the only required task was to load and unload the machine. In my own lifetime the spread of these, at first, luxury appliances, is now complete throughout the Western world. Meantime, the rise and rise of factory food and clothing production means ready meals and socks are so inexpensive that fewer of us actually bother to cook and scarcely anyone younger than me even remembers what darning is. The bored housewife was very much a late twentieth century affliction – freed from cooking and cleaning there was suddenly ample time for stuffing mushrooms.

Outside our homes, however, the rise of the machine has had a more equivocal impact. Indeed, it has been counterproductive in many ways, with new technologies sometimes adding to the workload instead of subtracting from it. The rise of information technologies is an illustrative example: the fax machine, emails, the internet and even mobile phones have enabled businesses to extend working hours beyond our traditional and regular shifts, and in other ways, work has been multiplied as the same technologies unnecessarily interfere to the detriment of real productive capacity.

Today’s worker is faced with more assessments to complete, more paperwork (albeit usually of a digital form), more evaluation, and an ever-expanding stack of office emails to handle – enough demands for swift replies to circulars and a multitude of other paper-chasing obligations that we spend half our days stuck in front of a monitor or bent over the office photocopier. Every member of “the team” now recruited to this singular task of administrative procedures.

But these mountains of paper (and/or terabytes of zeroes and ones) needing to be reprocessed into different forms of paper and/or digital records are only rising in response to the rise of the office. In fact, it is this increase in bureaucracy which provides the significant make-weight to mask the more general underlying decline in gainful (meaning productive) employment. Yet still, this growth in administration is a growth that only carries us so far, and a growth that can and ultimately will be eliminated, if not for perfectly sound reasons of practicability, then by automation. Ultimately, office workers are no more immune to this process of technological redundancy than the rest of us.

First broadcast by Channel 4 in 1993, the final episode of Tim Hunkin’s wonderful “Secret Life of the Office” served up a humorous take on the social engineering that led to the Twentieth Century’s rise of the office:

*

That the robots are coming is no longer science fiction, any more than the killer robots circling high over Pakistan and Yemen armed with their terrifyingly accurate automated AGM-114 Hellfire missiles, are science fiction. In fact, all our future wars will be fought by means of killer robots, and, unless such super-weapons are banned outright or, at the very least, controlled by international treaties, subsequent generations of these ‘drones’ will become increasingly autonomous – the already stated objective is to produce fully autonomous drones; an horrific prospect. It is also a prospect that perhaps most graphically illustrates how sophisticated today’s robotic systems have become, even if, as with all cutting-edge technology, the military enjoys the most advanced systems. In short, the grim robots fleets are with us, and set to become swarms unless nations act to outlaw their deployment, whereas more beneficial robotic descendants still wait more placidly in the wings. The arrival of both fleets heralds a new age – one for the better and one decidedly for the worse.

Of course, the forthcoming workforce of robots might also be for the worse. Yet the choice is ultimately ours, even if we cannot hold off that choice indefinitely, or even for very much longer. For all our robotic rivals (once perfected) hold so many advantages over a human workforce. Never grumbling or complaining, never demanding a pay rise or a holiday, and, in contrast to human drones, never needing any sleep at all, let alone scheming against their bosses or dreaming up ways to escape.

And the new robots will not stick to manufacturing, or cleaning, or farming the land, or moving goods around in auto-piloted trucks (just as they already fly planes), but soon, by means of the internet, they will be supplying a host of entirely door-to-door services – indeed, a shift in modes of distribution is already beginning to happen. In the slightly longer term, robots will be able to provide all life’s rudimentary essentials – the bare necessities, as the song goes. Quietly, efficiently and ungrudgingly constructing and servicing the essential infrastructure of a fully functioning civilisation. Then, in the slightly longer term, robots will be able to take care of the design, installation and upgrading of everything, including their own replacement robots. In no time, our drudgery (as well as the mundane jobs performed by those trapped inside those Third World sweatshops) will have been completely superseded.

This however leads us to a serious snag and a grave danger. For under present conditions, widespread automation ensures mass redundancy and long-term ruin for nearly everyone. And though there are few historical precedents, surely we can read between the historical lines, to see how societies, yielding to the dictates of their ruling elites (in our times, the bureaucrats and technocrats working at the behest of unseen plutocrats), will likely deal with those superfluous populations. It is unwise to expect much leniency, especially in view of the current dismantlement of existing social safety nets and welfare systems. The real clampdown on the “useless eaters” is only just beginning.

It is advisable, therefore, to approach this arising situation with eyes wide open, recognising such inexorable labour-saving developments for what they are: not merely a looming threat but potentially, at least, an extraordinary and unprecedented opportunity. However, this demands a fresh ethos: one that truly values all human life for its own sake and not merely for its productive capacity. More specifically, it requires a steady shift towards reduced working hours and greatly extended holidays: a sharing out of the ever-diminishing workload and a redistribution of resources (our true wealth), which will of course remain ample in any case (the robots will make sure of that).

This introduction of a new social paradigm is now of paramount concern, because if we hesitate too long in making our transition to a low work economy, then hard-line social and political changes will instead be imposed from above. Moves to counter what will be perceived as a crisis of under-employment will mean the implementation of social change but only to benefit the ruling establishment, who for abundantly obvious reasons will welcome the rise in wealth and income disparity along with the further subjugation of the lower classes – the middle class very much included.

As physicist Stephen Hawking said in response to the question “[D]o you foresee a world where people work less because so much work is automated?” and “Do you think people will always either find work or manufacture more work to be done?”

“If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.”16

It is an answer that closely echoes Wilde’s foresight of more than a century ago; the difference being one of placing stress. Hawking emphasises the threat of what he calls the “second option”, whereas Wilde encourages us to press ahead in order to realise Hawking’s “a life of luxurious leisure” for everyone.

Of course, there will always be a little useful work that needs doing. Robots will ultimately be able perform all menial, most manual and the vast majority of mental tasks far more efficiently than a human brain and hand, but there will still be the need and the place for the human touch. In education, in medicine and nursing, care for the elderly and sick, and a host of other, sometimes mundane tasks and chores: emotionally intricate, kindly and compassionate roles that are indispensible to keeping all our lives ticking pleasantly along. The big question for our times, however, is really this: given the cheapness and abundance of modern labour-saving equipment, how is it that, even in the western world, instead of contracting, working hours are continuing to rise? The question for tomorrow – one that the first question contains and conceals – is this: given complete freedom and unrestricted choice, what would we actually prefer to be doing in our daily lives? As Bertrand Russell wrote:

“The wise use of leisure, it must be conceded, is a product of civilization and education. A man who has worked long hours all his life will become bored if he becomes suddenly idle. But without a considerable amount of leisure a man is cut off from many of the best things. There is no longer any reason why the bulk of the population should suffer this deprivation; only a foolish asceticism, usually vicarious, makes us continue to insist on work in excessive quantities now that the need no longer exists…”

“Modern methods of production have given us the possibility of ease and security for all; we have chosen, instead, to have overwork for some and starvation for others. Hitherto we have continued to be as energetic as we were before there were machines; in this we have been foolish, but there is no reason to go on being foolish forever.”17

*

I was about twelve when I took my first flight. It was onboard a Douglas DC9 and I was travelling to Vienna on an exchange trip. I was so excited and not afraid at all – or at least not afraid of the flight. Indeed, I recall how this was the main question older relatives kept asking and I found their obsession puzzling more than anything. But as I have grown older I have sadly developed a fear of flying. This is annoying in the extreme. Why now… when I’m middle-aged and have so much less to lose? But fear is only seldom a purely rational impulse.

Not that it is half so irrational as we are told to have a severe anxiety about being catapulted inside a thin metal capsule six miles up and at close to the speed of sound. Statistics are one thing but being in the presence of sheer physical danger is another. That said, fear of flying is surely as much about loss of control as anything. For why else did my own fear of flying worsen as I got older? Children are more accustomed than adults to feeling powerless, and so better able to relish the excitement of situations totally outside of their control.

Whole societies – or at least majority sections of societies – also suffer with phobias. Like our private fears, these collective fears held by social groups are frequently rooted in some sense of an impending loss of control. Fear of foreigners, fear of financial collapse, and fear of “terror”. But seldom considered is another societal phobia: our collective ‘fear of flying’. Flying in the poetic sense, that is: of fully letting go of the mundane. Instead, it seems our common longing is to be grounded: an understandable desire.

Why else, scarcely a century since the Wright Brothers’ miraculous first flights, do today’s air passengers find flying (that ancient dream) so tiresome that our commercial airlines serve up non-stop distractions to divert attention away from the direct experience? Indeed, listening to those familiar onboard announcements bidding us a pleasant flight, we are inclined (and very likely reclined) to hear the incidental underlying message: “we are sorry to put you through the dreary inconvenience of this journey”.

We fly and yet we don’t fly – or not as those who first dreamt of flight imagined. Flight has instead been transformed from visionary accomplishment into a nuisance and taken entirely for granted by the clock watchers impatiently kicking our heels beneath the slow-turning departure boards.

And just why are today’s airports such sterile and soul-destroying anti-human spaces? Presumably because this is again what modern humans have come to expect! The same can be said for so many facets of modern live. If we can transform the miracle of flight into a chore, then it follows that we can turn just about any activity into one.

Next chapter…

*

In 1958 Mike Wallace interviewed psychoanalyst and social critic, Erich Fromm. What Fromm says about society, materialism, relationships, religion, and happiness is remarkably prescient, as is his analysis of a growing alienation as we become diminished to the role of products in an age of consumerism:

*

Addendum: the future of work and Universal Basic Income

Due to its historical roots in workers’ movements18, the political left has tended to hold a somewhat inimical position when it comes to appraising the value of work. The understandable and perfectly legitimate elevation of the worker has had a countervailing effect in terms of accentuating the virtuousness of work per se, thereby adding to the weight of received wisdom that to endure toil and hardship is somehow intrinsically valuable. This is why the left has fallen into the habit of making a virtue out of the central object of the oppression it faces.

So what is the goal of the political left (of socialism, if you prefer)? What is its aim, if not, so far as it is possible, to fully emancipate the individual? For whatever dignifies and ennobles labour, and however understandable it may be as a strategy, to celebrate work for its own sake, disguises the base truth that only seldom is it edifying, and more often just a millstone, frequently a terrible one, which, if we are ever to become truly “free at last”, ought to be joyfully laid aside.

In 2013 Anthropologist David Graeber, professor of anthropology at LSE, wrote an excoriating essay on modern work for Strike! magazine. “On the Phenomenon of Bullshit Jobs” was read over a million times and the essay translated in seventeen different languages within weeks. Embedded below is a lecture Graeber gave to the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) to expand on this phenomenon, and explore how the proliferation of meaningless jobs – more associated with the 20th-century Soviet Union than latter-day capitalism – has impacted modern society:

Since writing most of the above chapter the Zeitgeist has shifted remarkably. Suddenly technological unemployment is treated as a serious prospect and debated as a part of a wider political discourse on future trends. Introduced into this new debate, especially on the left, is the proposal for a ‘universal basic income’ i.e., money provided to everyone by the state to cover basic living expenses. Importantly this payment would be provided irrespective of how many hours a person works and has no other (discernable) strings attached.

UBI is certainly a very bold initiative as well as a plausible solution to the diminishing need for human workers in the coming hi-tech era. Unsurprisingly, I very much welcome it, at least in principle, but wish also to offer a small note of caution. Before large numbers of us are to able to live solely by means of a state provided UBI it will be essential to adjust societal norms relating to work. There can be no stigma in idleness. For if UBI is seen as merely a state handout and its recipients as welfare dependents, then we put them all into severe danger.

After all, work historically equates to status and money and until this ingrained relationship is eroded away, anyone subsisting on UBI alone would rather quickly sink to the level of a second-class citizen. Which is why I propose the better approach to UBI must aim to advance by taking baby steps: reducing days and hours, increasing holidays, lowering pensionable age, as well as expanding education – we must in fact think of eventually offering the luxury of lifelong education for all. Given where we start from today, to attempt to leap to it with one giant stride is surely too much of a risk. If UBI is truly our goal then we might reach it best by trimming work back until it barely exists at all.

*

Please note that for the purposes of ‘publishing’ here I have taken advantage of the option to incorporate hypertext links and embed videos – in order to distinguish additional commentary from the original text all newly incorporated text has been italised.

*

1 Quotes taken from The Life of Samuel Johnson, LL.D by James Boswell (1791). In the original version, the section substituted by ellipsis reads as follows: “There is, indeed, this in trade:– it gives men an opportunity of improving their situation. If there were no trade, many who are poor would always remain poor.”

2 Now part of Imperial College (my own alma mater).

3 Extract taken from The soul of man under socialism by Oscar Wilde (first published 1891).

4 The Open Conspiracy was published in 1928, subtitled “Blue Prints for a World Revolution”. These extracts are taken from Chapter 1 entitled “The present crisis in human affairs”. Interestingly, in a letter to Wells, albeit a begging letter, Bertrand Russell said of the work: “… I do not know of anything with which I agree more entirely”. The Open Conspiracy was later revised and republished as “What Are We to Do with Our Lives?” in 1931. http://www.voltairenet.org/IMG/pdf/Wells_The_Open_Conspiracy.pdf

5 Many boys and girls suffocated and others fell to their deaths. This was not helped by the practice of master sweeps to light a fire beneath them in order to force them to climb faster.

6 Quote taken from The Open Conspiracy.

7

“Two of the most perfect lives I have come across in my own experience are the lives of [the French Symbolist poet, Paul] Verlaine and of Prince Kropotkin: both of them men who have passed years in prison: the first, the one Christian poet since Dante; the other, a man with a soul of that beautiful white Christ which seems coming out of Russia.”

Taken from “De Profundis”, meaning literally “from the depths”; Wilde’s celebrated cri de coeur was intended, in part at least, as an extended letter and impassioned rebuke to his lover Lord Alfred Douglas. It was written during his imprisonment in Reading Gaol between January and March 1897, and has since been publicly released in various expurgated versions, the first of which was published in 1905. A complete version was finally released in 1962.

8

From The Open Conspiracy by H.G. Wells. The full set of seven “broad principles” reads as follows:

(1) The complete assertion, practical as well as theoretical, of the provisional nature of existing governments and of our acquiescence in them;

(2) The resolve to minimize by all available means the conflicts of these governments, their militant use of individuals and property, and their interferences with the establishment of a world economic system;

(3) The determination to replace private, local or national ownership of at least credit, transport, and staple production by a responsible world directorate serving the common ends of the race;

(4) The practical recognition of the necessity for world biological controls, for example, of population and disease;

(5) The support of a minimum standard of individual freedom and welfare in the world; and

(6) The supreme duty of subordinating the personal career to the creation of a world directorate capable of these tasks and to the general advancement of human knowledge, capacity, and power;

(7) The admission therewith that our immortality is conditional and lies in the race and not in our individual selves.

In light of what was about to come, this last item of the seven is perhaps the most perturbing. Wells introduces it as follows:

“And it is possible even of these, one, the seventh, may be, if not too restrictive, at least unnecessary. To the writer it seems unavoidable because it is so intimately associated with that continual dying out of tradition upon which our hopes for an unencumbered and expanding human future rest.”

9 Extract from The soul of man under socialism by Oscar Wilde (first published 1891).

10 From A Modern Utopia by H. G. Wells (published 1905). The same passage continues:

“But unprofitable occupation is also intended by idleness, and it may be considered whether that freedom also will be open to the Utopian. Conceivably it will, like privacy, locomotion, and almost all the freedoms of life, and on the same terms – if he possess the money to pay for it.”

11 Extract from The Open Conspiracy by H.G. Wells (first published 1928).

12 Extract from The soul of man under socialism by Oscar Wilde (first published 1891).

13 Ibid.

14 Extract taken from In Praise of Idleness by Bertrand Russell (1932). Note that Russell’s reference to pin manufacture is a deliberate allusion to Adam Smith’s famous hypothetical pin factory in which he illustrated the benefits of ‘division of labour’ in The Wealth of Nations.

15 From Genesis 3:23 (KJV)

16 In answer to a question posed during a Reddit Ask Me Anything session on October 8, 2015. https://www.reddit.com/r/science/comments/3nyn5i/science_ama_series_stephen_hawking_ama_answers/cvsdmkv

17 Extract taken from In Praise of Idleness by Bertrand Russell (1932).

18 Without an upwelling of righteous indignation amongst the oppressed rank and file of working people, no leftist movement would ever have arisen and gained traction. Yet, the political left also owes its origins to the early co-operative movements, a spontaneous awakening of enlightenment humanists, to the Romantics, and most importantly, to fringe religious groups. Tony Benn famously said that the formation of the Labour Party in Britain owed “more to Methodism than Marx”.

In 1832 six agricultural labourers formed a friendly society to protest against their meagre wages. George Loveless, a Methodist local preacher, was the leader of this small union – the other members included his brother James (also a Methodist preacher), James Hammett, James Brine, Thomas Standfield (Methodist and co-founder of the union) and Thomas’s son John. These men were subsequently arrested, convicted and sentenced to transportation. Three years later, and following a huge public outcry which involved a march on London and petitions to parliament, they were issued pardons and allowed to return to England as heroes. This small band of men is now collectively remembered as the Tolpuddle Martyrs.

But the origins of socialism in Britain can be really traced as far back as the English Civil War and indeed earlier again to Wat Tyler’s Peasants’ Revolt of 1381, when the workers of the Middle Ages, inspired by the teachings of the radical priest John Ball, took their demands directly to the King Richard II who reneged on his concessions and had them hunted down.

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Filed under analysis & opinion, « finishing the rat race », financial derivatives, neo-liberalism

the price of everything

The following article is Chapter Nine of a book entitled Finishing The Rat Race which I am posting chapter by chapter throughout this year. Since blog posts are stacked in a reverse time sequence (always with the latest at the top), I have decided that the best approach is to post the chapters in reverse order.

All previously uploaded chapters are available (in sequence) by following the link above or from category link in the main menu, where you will also find a brief introductory article about the book itself and why I started writing it.

*

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease…”

John Maynard Keynes 1

*

Have you ever wondered what it’s like to be rich? Here I don’t just mean well-off, with a paltry few tens of millions in the bank, I mean proper rich – megabucks! So much money that, as I heard one comedian put it (aiming his joke squarely at the world’s richest entrepreneur), if Bill Gates were to stuff all his cash under the mattress, then due to interest alone, if he fell out of bed he’d never hit the ground!

I suppose what I’m wondering is this – and perhaps you’ve found yourself thinking along similar lines – why are these super-rich guys always so intent on accruing ever greater wealth when they already possess more than enough funds to guarantee the needs of a small country. Think about it this way: Gates and the others are, barring a few very necessary legal constraints, completely at liberty to do whatever they choose at every moment of every day. They can eat the best food, drink the most delicious vintage wines, smoke the finest cigars, play golf morning, noon, and evening, and then after the sun goes down, and if it is their wont, have liaison with the most voluptuous women (or men) available. Quite literally, they have means to go anywhere and do everything to their heart’s content and all at a moment’s notice. Just imagine that. So why be bothering about sales at all? I mean wouldn’t you eventually get bored of simply accumulating more and more money when you’ve already got so much – and let’s face it, money itself is pretty boring stuff. So just what is it that keeps them all going after it? After all, there are only so many swimming pools, grand pianos, swimming pools in the shape of grand pianos, Aston Martins, Lear Jets, and acreages of real estate that one man (or woman) can profitably use (in the non-profit-making sense obviously). Economists would call this the law of diminishing marginal utility, although in this instance it is basic common sense.2

Presented with evidence of this kind, some will say that here is further proof of the essential greediness of human beings. That, as a species, we are simply never satisfied until we have the lot. Fine then, let us take on this modern variant of original sin, since it certainly holds more than a grain of truth. For the sake of argument, we might presume that all men and women are greedy to an almost limitless extent. That this is truly the natural order, from our conception having been evolutionarily programmed to grab as much as we can for ourselves – our most primeval reflex being to snatch.

So I shall not waste too much time here. Only to say that I do not find such unrestrained cupidity within the circles of people with whom I have chosen to associate, most being happy enough to share out the peanuts and fork out for the next round of beers, quite oblivious to outcomes in terms of commensurate returns. What comes around goes around… There is, of course, no doubting that most folks will, very naturally, if opportunity arises, take good advantage to feather their own nests. Making life a little more comfortable for themselves, and reserving the ample share of their fortune for their immediate family and closest friends. But then, why not…? Charity begins at home, right?

What most don’t do (at least in the circles I know best) is devote their whole lives to the narrow utilitarian project outlined above. And why? Because, though quite understandably, money and property are greatly prized assets, they offer lesser rewards than companionship and love. And, in any case, pure generosity is its own reward – and I do mean “is”, and not “has” or “brings” – the reward being an inseparable part of the act itself: a something received as it was given, like a hug, like a kiss. That said, if you still prefer to believe that we are all to a man, woman and child, innately and incurably selfish and greedy, then next time you take a look into the mirror, do consider those all-too beady eyes staring back. It’s very easy to generalise about mankind when you forget to count yourself in.

But if not intractably a part of human nature, then we must find other reasons to account for how our world is nevertheless so horribly disfigured by rampant and greedy exploitation. For if greed is not an inherently human trait, and here I mean greed with a capital Grrr, then this monomaniacal obsession is all too frequently acquired, especially in those who approach the top of the greasy pole. There is an obvious circularity in this, of course. That those whose progress has depended upon making a buck, very often become addicted. As money-junkies, they, like other addicts, then prioritise their own fix above all else. Whether or not these types are congenitally predisposed to becoming excessively greedy, we have no way of knowing. What we can be certain of is this: that by virtue of having acquired such great wealth, they disproportionately shape the environment they and we live in. So they are not merely money-junkies, but also money-pushers. If you’re not a money-junkie then you don’t know what you’re missing. There’s nothing new in this. This is the way the world has been for many centuries, and perhaps ever since money was first invented.

So here’s Oscar Wilde addressing the same questions about money and our unhealthy relationship to it; his thoughts leaping more than a century, during which time very little has apparently changed:

“In a community like ours, where property confers immense distinction, social position, honour, respect, titles, and other pleasant things of this kind, man, being naturally ambitious, makes it his aim to accumulate this property, and goes on wearily and tediously accumulating it long after he has got far more than he wants, or can use, or enjoy, or perhaps even know of. Man will kill himself by overwork in order to secure property, and really, considering the enormous advantages that property brings, one is hardly surprised. One’s regret is that society should be constructed on such a basis that man has been forced into a groove in which he cannot freely develop what is wonderful, and fascinating, and delightful in him – in which, in fact, he misses the true pleasure of joy and living.”3

Embedded below is a recent interview [from December 2013] Pulitzer Prize-winning journalist Chris Hedges gave on “The Real News” in which he talked about – based to a large extent on his own personal experience – how the super rich are isolated and disconnected from the rest of society. He explains how this creates a deluded sense of entitlement and a pathological callousness:

*

Isn’t money funny stuff! Funny peculiar, I mean. We just take it so much for granted, almost as though it were a natural substance (disappointingly, of course, it doesn’t actually grow on trees). But when we do think about it, money has far stranger properties than anything in the natural world. And our relationship to it is more peculiar than our relationship to almost anything else.

Money, that’s what I want… sang the Beatles on one of their less celebrated tracks. But the truth will out. So just why did the Beatles want money, and, for that matter, why do I, and why do you? It doesn’t work, you can’t eat it, and it’s not, of a rule, a thing of special beauty. Money is absolutely useless in fact, right until you decide to swap it for what you actually want.

Money can’t buy me love, true again, but it might buy me a chocolate bar. Because money is really just a tool, a technology: a highly specialised kind of lubricant, that enables people to exchange their goods and services with greater ease and flexibility. The adoption of a money system enabling levels of parity for otherwise complex exchanges to be quickly agreed and settled. The great thing about money being, to provide a concrete illustration, that although £1 of tinned herring is probably equivalent to about thirty seconds of emergency plumbing (if you’re lucky), you won’t require crates of herring to pay for the call-out. So far so simple.

Except wait. We all know how the price of herring can go up as well as down, and likewise for the price of emergency plumbers. So why such a dynamic relationship? Well, there’s “the market”, a price-fixing system that arises spontaneously, regulating the rates of exchange between goods and services on the basis of supply adjusting to match demand. Thus by a stroke of good fortune, we find that money is not merely a lubricant for exchange, but also regulatory of useful production and services. This, at least, is the (widely accepted) theory.

Prices rise and fall in accordance with demand. Things that are in short supply become expensive, things that are abundant are cheaper. This is basic economic theory and it means, amongst other things, that in every transaction the “real value” of your money is actually relative, for the simple reason that the amount required depends not only on what you’re after, but also upon whether or not other people are after the same kind of thing. Money then, in terms of its “real value” to any individual or group, is something that is constantly varying. We might call this “the relativity of money”.

One consequence of the relative nature of money, is that the useful value of money overall can also rise and fall. It is possible that wholesale, retail and labour costs can all more or less rise or fall together, although the general tendency, as we all know from experience, is for overall rising costs. Indeed such “inflation” is regarded as normal and expected, and, as a consequence, it comes to seem just as natural as money itself. Yet since you always need more and more money to buy the same things then the value of your money must, in some important way, be constantly falling. But just why does money as a whole lose its value in this way? What makes yesterday’s money worth less than today’s? Well it turns out that this is a huge question and one that economists have argued long and hard about.

One partial account of inflation goes as follows: businesses and people in business are constantly looking for a little bit more. For how else can they maximise profits? In direct consequence, we, as customers, necessarily require more dosh to pay for the same goods or services. But to enlarge our budget, this automatically requires a commensurate increase in income, which means successfully negotiating for a larger salary. In the bigger picture then, the businesses supplying our wants and needs, are now needing to cover their larger wage-bills, which means higher prices to compensate. So prices and incomes rise together, with money becoming worth less and less precisely because everyone is trying to accumulate more and more of it. This endless tail-chasing escalation, which is given the fancy title of “the price/wage spiral”, serves as an excellent example of why money is really very odd stuff indeed.

And what is money in any case? The first traders most likely exchanged shells, precious stones, or other baubles to aid in bartering, but then naturally enough, over time these exchanges would have been formalised, agreements arising with regards to which objects and materials were most acceptable as currency. The material that became most widely accepted was eventually, of course, gold. But why gold? Well, no one actually knows but we can make some educated guesses.

Firstly, gold is scarce, and it is also rare in other ways – for instance, having a unique and unusual colour, which just happens to correspond to the colour of the Sun. The fact that it is almost chemically inert and so doesn’t tarnish, means that it also shines eternally, and so again is like the Sun. Indeed, Aldous Huxley, in Heaven and Hell (his sequel to The Doors of Perception) points out that almost every substance that humans have ever regarded as valuable shares this property of shininess. To Huxley this is evidence that even money owes it origins, in part at least, to a common spiritual longing. Our wish to own a precious piece of paradise.

But back to more mundane matters, if gold (or any other substance) is chosen as your currency, then there arises another problem. How to guarantee the quantity and quality of the gold in circulation? For if gold is worth faking or adulterating then it’s certain that somebody will try cheating.

Well, one answer could be the adoption of some kind of official seal, a hallmark, and this solution leads, naturally enough, to the earliest forms of coinage. But then, if the coins are difficult to counterfeit, why bother to make them out of gold in the first place? Just the official seal would be enough to ensure authenticity. And why bother with metal, which is bulky and heavy. So again it’s an obvious and logical leap to begin producing paper banknotes. The value of these coins and banknotes, although far less intrinsically valuable in material terms than the gold they represent, is still backed by the promise that they are redeemable into gold. But hang on, what’s so special about the gold anyway (aside from its shininess). And doesn’t the gold, which is now locked up in bullion reserves, in fact have real uses of its own? And doesn’t this mean that the gold also has a monetary value? So why not cut loose from the circularity and admit that the value of money can exist entirely independent from the gold or from any other common standard. Indeed, why couldn’t the issuing authority, which might be a government but is more often a central bank, simply make up a “legal tender”4 with no intrinsic or directly correlated value whatsoever and issue that? Not that the money issued need even correspond to the amount of real coins or paper banknotes in circulation – most of the world’s money being bits and bytes, ones and zeroes, orbiting out in cyber-space. Which brings us to just how funny money has now become.

The Pound Sterling, the various dollars, the Euro and every major currency on Earth are, to apply the correct terminology, “fiat currencies”5 With fiat currencies there is no parity to the value of any other commodities and so they are, if you like, new forms of gold. As such, and given their shifting relative values, these new fiat currencies can also be traded as another kind of commodity. Money, in the form of currency, becoming an investment in itself. Money is strange stuff indeed.

Yet money also remains as an instrument. And we use this instrument to measure just about everything. To establish the value of raw materials and manufactured items. The value of land and, by extension, the value of the space it occupies. The value of labour, and thus a value on the time used. And, since works of art are also bought and sold, money is even applied as a measure of such absolutely intangible qualities as beauty.

So money is basically a universally adaptable gauge, and this is its great strength. It is perhaps the big reason why its invention gradually caught on in such a fundamental way. From humble trading token, money has risen to become a primary measure of all things. But remember, remember… Money, whether fiat currency or gold standard, can never be real in the same way as tins of herring and plumbers are real, and neither is “monetary value” an absolute and intrinsic property, but only ever relative and acquired. Money, we ought to constantly remind ourselves (since we clearly need reminding) is nothing without us or without our highly structured civilisation – intrinsically, it is worthless. It is very strange stuff.

Perhaps the future benchmark for money will no longer be gold but ‘virtual gold’ in the form of cryptocurrencies – bitcoin being currently the most well-known of these. One advocate of these alternatives to traditional forms of money is financial expert Max Keiser. On February 3rd 2014, he spoke with coder, hacker and cryptocurrency specialist Andreas Antonopoulos about the regulation of bitcoin transactions; the advent of bitcoin derivatives, which he believes these are less of a threat than ordinary derivatives (a subject I’m coming to next); the fact that unlike gold, cryptocurrencies can be ‘teleported’; and a future in which bitcoin is used widely by businesses as much as by individuals. He says that a time is coming when the prevalent misgivings and doubts about bitcoin and other cryptos have long since been forgotten. Is he right? I don’t know and remain highly skeptical, but I find the debate an interesting one:

Incidentally, there are less radical and more tangible alternatives to the currencies we now have in circulation. “Treasury notes” are one such alternative and these have historical precedence in the form of both the American “greenback” and the UK’s Bradbury Pound. To read more about this and also for links to campaigns to reintroduce them please read the addendum at the end of the chapter.

*

Little more than a century ago, and even in the richest corners of the world, there were no dependable mechanisms to safeguard against the vicissitudes of fortune. If you weren’t already poor and hungry (as most were), then you could rest assured that potential poverty and hunger were waiting just around the corner. Anyone with aspirations to scale the ladder to secure prosperity faced the almost insurmountable barriers of class and (a generally corresponding) lack of education. A lower class person of such ambitions would be very well aware that if they could step onto the ladder at all, there was very little in the way of protection to save them in the event of falling; errors of judgement or sheer misfortune resulting in almost certain and unmitigated personal disaster. This was the sorry situation for people at all levels of society aside from the highest echelons.

One tremendous advantage then, of living in a modern society, is that, aside from having slightly less restricted social mobility (not that we now live in the classless society we are told to believe in), there are basic safety nets in place, with additional protection that is optionally available. For those languishing at the bottom of the heap, there are the reliable though meagre alms provided through a welfare system, whilst for the ever-expanding middle classes there is plenty of extra cover in the form of saving schemes, pension schemes, and, in the event of the most capricious and/or calamitous of misfortunes, the ever-expanding option of insurance policies. If the Merchant of Venice had been set in today’s world then the audience would feel little sympathy for his predicament. Why had he ventured on such a risk in the first place, casting his fortune adrift on dangerous waters? Why hadn’t he protected his assets by seeking independent financial advice and taking out some preferential cover? It’s a duller story altogether.

Systems for insurance are essential in any progressive civilisation. Protection against theft, against damage caused by floods, fires and other agents of destruction, and against loss of life and earnings. Having insurance means that we can all relax a bit, quite a lot, in fact. But it also means that, alongside the usual commodities, there’s another less tangible factor to be costed and valued. That risk itself needs to be given a price, and that necessarily means speculating about the future.

Indeed, speculations about the future have become very much to the forefront of financial trading. As a consequence of this, at least in part, today’s financial traders have become accustomed to dealing in “commodities” that have no intrinsic use or value whatsoever. They might, for example, exchange government bonds for promises of debt repayment. Or, feeling a little more adventurous, they might speculate on the basis of future rates of foreign exchange, or in interest rates, or share prices, or rates of inflation, or in a multitude of other kinds of “underlying assets” (including that most changeable of underlying variables: the weather) by exchange of promissory notes known most commonly as “derivatives”, since they derive their value entirely on the basis of the future value of something else. And derivatives can be “structured” in any myriad of ways. Here are a just few you may have heard of :–

  • futures (or forwards) are contracts to buy or sell the “underlying asset” up until a future date on the basis of today’s price.
  • options allow the holder the right, without obligation (hence “option”), to buy (a “call option”) or to sell (a “put option”) the “underlying asset.”
  • swaps are contracts agreeing to exchange money up until a specified future date, based on the underlying value of exchange rates, interest rates, commodity prices, stocks, bonds, etc.

You name it: there are now paper promises for paper promises of every conceivable kind. Now the thing is that because you don’t need to own the “underlying asset” itself, there is no limit to the amounts of these paper promises that can be traded. Not that this is as novel as it may first appear.

Anyone who’s ever bought a lottery ticket has in effect speculated on a derivative, its value in this case being entirely dependent upon the random motion of coloured balls in a large transparent tumbler at an allocated future time. All betting works this way, and so all bets are familiar forms of derivatives. And then there are, if you like, negative bets. Bets you’d rather lose. For instance, £200 says my house will burn down this year, is presumably a bet you’d rather lose, but it is still a bet that many of us annually make with an insurance company. And general insurance policies are indeed another form of familiar derivative – they are in effect “put options”.

However there is one extremely important difference here between an ordinary insurance policy and a “put option” – in the case of the “put option”, you don’t actually need to own the “underlying asset”, which means, to draw an obvious comparison, you might take out house insurance on your neighbour’s property rather than your own. And if their house burns down, ah hum accidentally, of course, then good for you. Cash in your paper promise and buy a few more – who knows, perhaps your neighbour is also a terrible driver. There are almost numberless opportunities for insuring other people’s assets and with only the law preventing you, then why not change the law. Which is exactly what has happened, with some kinds of derivatives circumventing the law in precisely this way, and permitting profitable speculation on the basis of third party failures. When it comes to derivatives then, someone can always be making a profit come rain or shine, come boom or total financial meltdown.

But, why stop there? Especially when the next step is so obvious that it almost seems inevitable. Yes, why not trade in speculations on the future value of the derivatives themselves? After all, treating the derivative itself as an “underlying asset” opens the way for multiple higher order derivatives, creating with it, the opportunity for still more financial “products” to be traded. Sure, these “exotic financial instruments” quickly become so complex and convoluted that you literally need a degree in mathematics in order to begin to decipher them. Indeed those on the inside make use of what are called “the Greeks”, and “the Higher Order Greeks”, since valuation requires the application of complex mathematical formulas comprised of strings of Greek letters, the traders here fully aware, of course, that it’s all Greek to the rest of us. Never mind – ever more financial “products” means ever more trade, and that’s to the benefit of all, right…?

Deregulation of the markets – kicked off in Britain by the Thatcher government’s so-called “Big Bang” and simultaneously across the Atlantic through the laissez-faire of “Reagonomics”6 – both enabled and encouraged this giddying maelstrom, allowing in the process the banking and insurance firms, the stockbrokerage and hedge funds that make up today’s “finance industry” to become the single most important “wealth creator” in the Anglo-American world. Meanwhile, declines in manufacturing output in Britain and America meant both nations were becoming increasingly dependent on a sustained growth in the financial sector – with “derivatives” satisfying that requirement for growth by virtue of their seemingly unbound potential. Indeed, having risen to become by far the largest business sector simply in terms of profit-making, many of the largest banks and insurance groups had become “too big to fail”7. Failure leading potentially to national, if not international, economic ruin. Which is how the very systems that were supposedly designed to protect us, systems of insurance, have, whether by accident or design, left us more vulnerable than ever.

And then came the bombshell, as we learnt that the banks themselves were becoming bankrupt, having gambled their investments in the frenzy of deregulated speculation. Turns out that some of the money-men didn’t fully understand the complexity of their own systems; a few admitting with hindsight that they’d little more knowledge of what they were buying into than the rest of us. They’d “invested” because their competitors “invested”, and, given the ever-growing buoyancy of the markets at the time, not following suit would have left them at a competitive disadvantage. A desperate but strangely appropriate response to the demands of free market capitalism gone wild.

*

It is currently estimated that somewhere in the order of a quadrillion US dollars (yes, that’s with a qu-) has been staked on derivations of various kinds. Believe it or not, the precise figure is actually uncertain because many deals are brokered in private. In the jargon of the trade these are called “over the counter” derivatives, which is an odd choice of jargon when the only thing the average customer buys over the counter are drugs. Could it be that they’re unconsciously trying to tell us something again?

So just how big is one quadrillion dollars? Well, let’s begin with quadrillion. Quadrillion means a thousand trillion. Written at length it is one with a string of fifteen zeros. A number so humungous that it’s humanly impossible to properly comprehend: all comparisons fail. I read somewhere that if you took a quadrillion pound coins and put them side by side then they would stretch further than the edge of the solar system. The Voyager space programme was, of course, a much cheaper alternative. Or how about this: counting a number every second, it would take 32 million years to count up to a quadrillion… Now obviously that’s simply impossible – I mean just try saying “nine hundred and ninety-nine trillion, nine hundred and ninety-nine billion, nine hundred and ninety-nine million, nine hundred and ninety-nine thousand, nine hundred and ninety-nine” in the space of one second! You see it really doesn’t help to try to imagine any number as big as a quadrillion.

However, there are still useful ways to compare a quadrillion dollars. For instance, we can compare it against the entire world GDP which turns out to be a mere 60 trillion US dollars8. One quadrillion being nearly twenty times larger. Or we might compare it against the estimated monetary wealth of the whole world: about $75 trillion in real estate, and a further $100 trillion in world stock and bonds. So one quadrillion is a number far exceeding even the total monetary value of the entire world – material and immaterial! A little freaky to say the least! Especially when we discover that many of these derivatives are now considered to be “toxic assets”, which is a characteristically misleading way of saying they are worth nothing – yes, worthless assets! – whatever the hell that means!

So just like the Sorcerer’s Apprentice, it seems that the spell has gone out of control, and instead of these mysterious engines making new money out of old money, the system has created instead an enormous black hole of debt. A debt that we, the people, are now in the process of bailing out, with extremely painful consequences. Efforts to save us from a greater catastrophe having already forced the British and US governments to pump multiple hundreds of billions of public money into the coffers of the private banks. Yet the banks and the economy remain broken of course, because how is any debt larger than the monetary value of the entire world ever to be repaid?

Another tactic to halt descent into a full-blown economic meltdown has involved the issuance of additional fiat currency in both Britain and America; a “quantitative easing” designed to increase the supply of money by simply conjuring it up (a trick that fiat currency happily permits). Money may not grow on trees but it can most certainly be produced out of thin air. But here’s the rub. For in accordance with the most basic tenets of economic theory, whenever extra banknotes are introduced into circulation, the currency is correspondingly devalued. So you may be able to conjure money from thin air, but all economists will readily agree that you cannot conjure “real value”, meaning real purchasing power. Indeed this common mistake of confusing “nominal value” (i.e., the number of pounds written on the banknote) with “real value”, is actually given a name by economists. They call it: “the money illusion”. And it’s useful to remind ourselves again that money has only relative value.

To understand this, we might again consider money to be a commodity (which in part it is, traded on the currency markets). As such, and as with all other commodities, relative scarcity or abundance will alter its market value, and, in obedience to the law of supply and demand, more will automatically mean less. This is just as true for the value of money as it is for tins of herring, plumbers, scotch eggs and diamonds. So it seems that if too much of our quantitative is eased, then we’d better be prepared for a drastic rise in inflation, or much worse again, for hyperinflation. Printing too much money is how hyperinflation has always been caused.

Our future is bleak, they tell us. Our future is in the red. So much for security, so much for insurance. We’d apparently forgotten to beware of “the Greeks” and of the “higher order Greeks” when they’d first proffered gifts.

*

I said earlier, just in passing, that money is actually pretty boring stuff, and it is… Truly, madly and deeply boring! So when I hear on the news how “the markets” are hoping that the latest round of “quantitative easing” will enable governments to provide the necessary “fiscal stimulus”, I am barely even titillated. Whilst explanations, both in the popular press and supposedly more serious media, that like to describe such injections of new money as in some way analogous to filling up my car with imaginary petrol provide me only with a far, far more entertaining distraction: to wit, a magical car that runs on air.

But then, of course, money isn’t really stuff at all! More properly considered, money is perhaps a sort of proto-derivative, since its worth is evidently dependent upon something other than the paper it’s (increasingly not) written on. So what is it that money’s worth depends upon? What underlies money? Well, the accepted answer to this question is apparently that money is a “store of value”. Although this leads immediately to the obvious follow-up question: in this context, what precisely is the meaning of “value”? But, here again there is a problem, since “value”, although a keystone to economic thinking, has remained something of an enigma. Economists unable to agree upon any single definitive meaning.

Is “value” a determinant of usefulness? Or is it generated by the amount of effort required in the production of things? Or perhaps there is some other kind of innate economic worth? For instance in a thing’s scarcity. And can this worth be attributed at the individual level or only socially imputed?

There are a wide variety of definitions and explanations of “value”, that, being so foundational, have then encouraged the various branches of economic theory to diverge. And here is another important reason why economics is in no way equivalent to the physical sciences. Ask any physicist what energy is, and they will provide both an unambiguous definition and, no less importantly, offer established methods for measurement. Because of this, if ever one physicist talks to another physicist about energy (or any other physical quantity) they can be absolutely certain that they are talking about the same thing. Which is very certainly not the case when economists talk about “value”.

“A cynic is a man who knows the price of everything and the value of nothing,” said Oscar Wilde, distinguishing with playful wisdom the difference in human terms between “price” and “value”. The great pity is that the overwhelming majority of today’s economists have become so cynical – but then perhaps they always were.

*

As part of his on-going assault against religion, Richard Dawkins recently published a book called The God Delusion. It’s the old hobby-horse again; one that he shares with a great many millions of other broadly liberal, literate and intelligent people. That religion is an evil of which humanity must rid ourselves totally. And yes, much of religion has been dumb and dangerous, this I will very readily concede (and already have conceded in earlier chapters). But really and truly, is it “the God delusion” that we should be most concerned about in these torrid times? For regardless of Dawkins claims, it is quite evident that religion is a wounded animal, and for good or ill, the secular world is most certainly in the ascendant. Right throughout the world, aside from a few retreating pockets of resistance, faith in the old gods has been gravely shaken. It is not that human faith, by which I mean merely a belief and/or worship of something greater, is extinguished, for it never can be, but that it has been reattached to new idol-ologies. And in those parts of the world where the old religions have been most effectively disarmed or expelled, namely the West, one idol-ology above all others has gathered strength from Religion’s demise.

Richard Dawkins has said many times that instructing young children in religious obedience is a form of psychological child abuse and on this point I wholeheartedly support him. Children’s minds are naturally pliable for very sound developmental reasons. But is it less pernicious to fill their precious minds with boundless affection for let’s say Ronald McDonald? For this is merely one stark but obvious illustration of how a new fundamentalism has been inculcated in the young. Devotion to the brand. Love of corporations. Worship of the dollar and the pound.

This new kind of fundamentalism has long since swept across the world, but it is unusual, although not unique, in that it denies its own inherent religiosity whilst claiming to have no idols. This is the fundamentalism of free market neoliberal economics. The Father, Son and Holy Ghost having been forsaken, only to have been usurped by the IMF, the World Bank and the WTO. If you think I’m joking, or that this is mere hyperbole, then think again. When things are tough we no longer turn to the heavens, but instead ask what sacrifices can be made to “reassure the markets”. Sacrifices to make it rain money again.

By far and above, here is the most pernicious delusion of our age. And it has next to nothing to do with God, or Yahweh, or Allah, or even the Buddha. The prophets of our times talk of nothing besides profits or losses. They turn their eyes to the Dow Jones Index, trusting not in God, but only in money. So I call for Dawkins to leave aside his God delusion, for a moment, and pay a little attention to the rise and rise of “the money delusion”. If future historians reflect on our times, this is what they will see, and given the mess this “money delusion” is creating they will scratch their heads in disbelief and disgust.

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I have already discussed the so-called “money illusion” – of mistaking nominal banknote value for real purchasing value – but this is merely one of many nested and interrelated illusions that make up “the money delusion”. Illusions that have become so ingrained within our permitted economic thinking that they are completely taken for granted.

Foundational is the belief that individuals always make rational choices. According to the definition of making rational choices, this requires that we all choose with consistency and always with the aim of choosing more over less. That a huge advertising industry now exists to tempt us into irrationality is never factored in. Nor are the other corrosive influences that so obviously deflect our rational intentions: the coercion of peer pressure, our widespread obsession with celebrities and celebrity endorsement, and that never-ending pseudo-scientific babble that fills up many of the remaining column inches and broadcast hours of our commercial media. We are always eager for the latest fashionable fads, and perhaps we always were. Yet this glaring fact, that people make wholly irrational choices time and again, whether due to innate human irrationality or by deliberate design, is of little concern to most economists. It is overlooked and omitted.

Likewise, a shared opinion has arisen under the name of neoliberalism that economics can itself be neutral, usefully shaping the world without the nuisance of having to rely on value judgements or needing any broader social agenda. If only individuals were left to make rational choices, as of course they do by definition, or so the idea goes, and the market could also be unshackled, then at last the people will be free to choose. Thus, goes the claim, individual freedom can only be guaranteed by having freedom within the marketplace. Freedom trickling down with the money it brings. “Wealth creation” alone must solve our problems by virtue of it being an unmitigated good.

Of course, back in the real world, one man’s timber very often involves the destruction of another man’s forest. Making profits from the sale of drugs, tobacco and alcohol has social consequences. Factories pollute. Wealth creation has its costs, which are very often hidden. There is, in other words, and more often than not, some direct negative impact on a third party, known to economists as “spillover” or “externalities”, that is difficult to quantify. Or we might say that “wealth creation” for some is rather likely therefore to lead to “illth creation” for others.

Illth creation? This was the term coined by romantic artist, critic and social reformer, John Ruskin, and first used in his influential critique of nineteenth century capitalism entitled Unto This Last. Ruskin had presumably never heard of “the trickle-down effect”:

“The whole question, therefore, respecting not only the advantage, but even the quantity, of national wealth, resolves itself finally into one of abstract justice. It is impossible to conclude, of any given mass of acquired wealth, merely by the fact of its existence, whether it signifies good or evil to the nation in the midst of which it exists. Its real value depends on the moral sign attached to it, just as sternly as that of a mathematical quantity depends on the algebraical sign attached to it. Any given accumulation of commercial wealth may be indicative, on the one hand, of faithful industries, progressive energies, and productive ingenuities: or, on the other, it may be indicative of mortal luxury, merciless tyranny, ruinous chicane.”9

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We are in the habit of regarding all money as equal. Presuming that the pounds and pence which make up my own meagre savings are equivalent in some directly proportional manner to the billions owned by let’s say George Soros. A cursory consideration shows how this is laughable.

For instance, we might recall that on “Black Wednesday” in 1992, Soros single-handedly shook the British economy (although, the then-Chancellor of the Exchequer Norman Lamont was left to shoulder the blame)10. But to illustrate this point a little further, let me tell you about my own small venture into the property market.

Lucky enough to have been bequeathed a tidy though not considerable fortune, I recently decided to purchase a house to live in. The amount, although not inconsiderable by everyday standards (if compared say with the income and savings of Mr and Mrs Average), and very gratefully received, was barely sufficient to cover local house prices, except that I had one enormous advantage: I had cash, and cash is king.

For reasons of convenience, cash is worth significantly more than nominally equivalent amounts of borrowed money. In this instance I can estimate that it was probably worth a further 20–30%. Enough to buy a far nicer house than if I’d needed to see my bank manager. A bird in the hand…

Having more money also has other advantages. One very obvious example being that it enables bulk purchases, which being cheaper, again inflates its relative value. The rule in fact is perfectly straightforward: when it comes to money, more is always more, and in sufficient quantities, it is much, much more than that.

But then, of course, we have the market itself. The market that is supposedly free and thus equal. The reality being, however, that since money accumulates by virtue of attracting its own likeness, the leading players in the market, whether wealthy individuals or giant corporations, by wielding larger capital resources, can operate with an unassailable competitive advantage. These financial giants can and do stack the odds even higher in their favour by more indirect means, such as buying political influence with donations to campaign funds and by other insidious means such as lobbying – all of which is simply legally permitted bribery. The flaunted notion of a free market is therefore the biggest nonsense of all. There is no such thing as a free market: never has been and never will be.

The most ardent supporters of free market neoliberalism say that it is a non-normative system, which permits us finally to rid ourselves of disagreements over pesky value judgements. The truth, however, is very much simpler. By ignoring values, it becomes a system devoid of all moral underpinning. Being morally bankrupt, it is unscrupulous in the truest sense of the word.

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If I had enough money and a whim, I might choose to buy all the plumbers and tins of herrings in Britain. Then, since money is (in part) a measure of scarcity, I could sell them back later with a sizeable mark-up. Too far-fetched? Well, perhaps, but only in my choice of commodity. The market in other commodities has without any question been cornered many times in the past. For instance, by the end of the 1970s, two brothers, Nelson Bunker and William Herbert Hunt, had accumulated and held what was then estimated to be one third of all the world’s silver. This led to serious problems both for high-street jewellers11 and for the economy more generally12, and as it happened, when the bubble burst on what became know as “Silver Thursday”, it also spelt trouble for the brothers’ own fortune. Fortunately for them, however, the situation was considered so serious that a consortium of banks came forward to help to bail them out13. They had lost, their fortune diminished, although by no means wiped out. As relatively small players they’d played too rough; meanwhile much larger players ensure that the markets are routinely rigged through such manufacture of scarcity. Going back as early as 1860, John Ruskin had already pointed out a different but closely-related deficiency in any market-driven capitalist system of trade:

“Take another example, more consistent with the ordinary course of affairs of trade. Suppose that three men, instead of two, formed the little isolated republic, and found themselves obliged to separate, in order to farm different pieces of land at some distance from each other along the coast: each estate furnishing a distinct kind of produce, and each more or less in need of the material raised on the other. Suppose that the third man, in order to save the time of all three, undertakes simply to superintend the transference of commodities from one farm to the other; on condition of receiving some sufficiently remunerative share of every parcel of goods conveyed, or of some other parcel received in exchange for it.

“If this carrier or messenger always brings to each estate, from the other, what is chiefly wanted, at the right time, the operations of the two farmers will go on prosperously, and the largest possible result in produce, or wealth, will be attained by the little community. But suppose no intercourse between the landowners is possible, except through the travelling agent; and that, after a time, this agent, watching the course of each man’s agriculture, keeps back the articles with which he has been entrusted until there comes a period of extreme necessity for them, on one side or other, and then exacts in exchange for them all that the distressed farmer can spare of other kinds of produce: it is easy to see that by ingeniously watching his opportunities, he might possess himself regularly of the greater part of the superfluous produce of the two estates, and at last, in some year of severest trial or scarcity, purchase both for himself and maintain the former proprietors thenceforward as his labourers or servants.”14

By restricting the choices of others, one’s power over them is increased, and it this that brings us to the real reason why money becomes such addiction, especially for those who already have more than they know what to do with. For truly the absolute bottom line is this: that money and power become almost inseparable unless somehow a separation can be enforced. And whilst wealth, especially when excessive, accumulates, as it almost invariably does, then along with it goes the accumulation of power. This is underlying and centralising mechanism has perhaps always operated at the heart of all civilisation. But even the power of money has its limits, as Ruskin points out:

“It has been shown that the chief value and virtue of money consists in its having power over human beings; that, without this power, large material possessions are useless, and to any person possessing such power, comparatively unnecessary. But power over human beings is attainable by other means than by money. As I said a few pages back, the money power is always imperfect and doubtful; there are many things which cannot be reached with it, others which cannot be retained by it. Many joys may be given to men which cannot be bought for gold, and many fidelities found in them which cannot be rewarded with it.

“Trite enough, – the reader thinks. Yes: but it is not so trite, – I wish it were, – that in this moral power, quite inscrutable and immeasurable though it be, there is a monetary value just as real as that represented by more ponderous currencies. A man’s hand may be full of invisible gold, and the wave of it, or the grasp, shall do more than another’s with a shower of bullion. This invisible gold, also, does not necessarily diminish in spending. Political economists will do well some day to take heed of it, though they cannot take measure.”15

Until such a time, every action and probable outcome must continue to be evaluated on the basis of strict cost and benefit estimates. Our “ponderous currencies” literally enabling a figure to be set against each human life – an application fraught with the most serious moral dilemmas and objections – and beyond even this, we have price tags for protecting (or else ruining) the natural environment all our lives depend upon. For only the market can secure our futures, optimally delivering us from evil, though inevitably it moves in mysterious ways. Which is how the whole world – land, water, air and every living organism – came to be priced and costed. Everything set against a notional scale that judges exclusively in terms of usefulness and availability, such is the madness of our money delusion.

We are reaching a crisis point. A thoroughgoing reappraisal of our financial systems, our economic orthodoxes, and our attitudes to money per se is desperately required. Our survival as a species may depend on it. Money ought to be our useful servant, but instead remains, at least for the vast majority, a terrible master. As a consequence, our real wealth has been too long overlooked. Time then for this genii called money to be forced back tight inside its bottle. Ceaselessly chasing its golden behind, and mistaking its tight fist for the judicious hand of God, is leading us ever further down the garden path. Further and further away from the land it promises.

Next chapter…

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 Addendum: Q & A

Back in April 2012, I forwarded a draft of this chapter to friends in Spain (a nation already suffering under imposed “austerity measures”). They sent an extended reply which raised two interesting and important questions. Both questions along with my replies are offered below:

Q1: You seem to be saying that printing money (as the US and UK, who are in control of their own currency, are doing ) is as bad as dealing with the debt problem by means of austerity (the “Merkozy” approach). But the latter is surely definitely worse.

A. I think these are simply two sides of the same scam. The bankers create an enormous unpayable debt and then get governments to create new money to bail them out. This is sold to us as a way of bailing out a few chosen victims (Greece, Spain, Portugal, Ireland) although it simply means a huge transfer of wealth from public into private hands. To make that money useful to the bankers (and the rest of the ruling elite) ‘austerity measures’ are put in place which not only steal money off the average person but also permit the fire sale of national assets. Meanwhile, in Britain and America, the governments are helping to pay for these bailouts by creating money out of thin air, which means the real value of our money is reduced through inflation (effectively a hidden tax). If the money were invested in infrastructure or education or whatever, then this could potentially be a good thing (even though it still creates inflation), so certainly QE could have been beneficial but not when you use the money only to keep afloat a huge Ponzi scheme. But then you ask later…

Q2: ‘but how come the pound is high now and the euro low’

A. That’s a very good question and I won’t pretend that I understand this completely, but I gather there are plenty of ways for keeping currencies higher than they ought to be by manipulating the markets [incidentally, the Forex Scandal to manipulate and rig the daily foreign exchange rates did not come to light until Summer 2013]. The market is rigged in any case by virtue of the fact that the dollar remains the world’s reserve currency and that oil is traded entirely in dollars. But essentially what’s going on here is a huge currency war, and the euro is constantly under attack from speculators. I am fairly certain that the chickens will come home to roost sooner or later in America and Britain (and in Germany too), but meanwhile the governments simply go about cooking the books and telling us how inflation is only 4% or whatever when fuel prices, for instance, have rocketed during the past few years. In any case, we get ‘austerity’ too, not as hardline yet as the ‘austerity’ being imposed elsewhere, but it will come – of this I have no doubt. Either it will happen slowly, or worse, there will be a huge war and the ‘austerity’ will be brought into place to justify the expense of that. This is a deliberate attack by the bankers against the people of the world, and until the people of the world say that’s enough, and most of the debts are cancelled outright, I don’t see any way this can be reversed.

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Another topic I briefly touched upon in the chapter above is the matter of inflation. What is it and what causes it? My answers were sketchy, in part, because I wished to avoid getting too bogged down in technicalities beyond my training. But this question about the causes of inflation is, in any case, an extremely thorny one. Different schools of economists provide different explanations.

One less orthodox account that I have frequently come across is that our fractional reserve banking system when combined with a central bank’s issuance of a fiat currency is inherently inflationary. That in the long term, and solely because of these extant monetary mechanisms, inflation is baked into the cake. So I wrote to a friend who holds with the above opinion and asked if he would explain “in the briefest terms that are sufficient” why he and others believe that central bank issuance of currency and fractional reserve banking are the primary underlying cause of inflation. Here is his succinct but detailed reply:

In a central bank system, money is created in the first instance by governments issuing bonds to banks and banks “printing” money and handing it over to the government in return. The government then owe the banks the money plus interest. If they ever pay back any of the principal, then a corresponding amount of bonds are handed back, i.e. cancelled. In that case, the money repaid goes out of existence!

Before elaborating any further, let’s take a step back. Fractional reserve lending doesn’t require central banks, nor does it require governments to create money by issuing bonds in exchange for it. Fractional reserve lending is simply the act of taking someone’s money to “look after it”, then turning around and lending a fraction of it to someone else. If the lender has enough depositors, then sum of all the unlent fractions of each deposit should cover him if one of them suddenly comes through the door asking for all their money back in one go. As I’m sure you know, if too many turn up at once looking for their money, a run ensues. Fractional reserve banking doesn’t even require a government sanctioned paper currency to exist. Depositors can simply deposit something like gold and the lenders can issue receipts which become the paper currency.

In olden times, when depositors of gold first found out that the goldsmiths they were paying to store their gold safely were lending it out for a percentage fee, they were outraged. The goldsmiths appeased them by offering them a cut of the fee for their interest in the scam. Accordingly, this money became known as ‘interest’.

So where do central banks fit in? Countries like the Unites States prior to 1913 have operated without central banks. There were thousands of banks of all sizes. To compete with one another, they had to endeavour to offer higher interest to depositors, lower interest rates to borrowers or to cut the fraction of deposits that they kept in reserve. This latter aspect was what caused banks occasionally to go to the wall, to the detriment of their depositors.

Central banking avoids this risk because the same fractional reserve ratio applies to all the banks under a central bank’s jurisdiction. However, it is really a way to avoid competition and if the system ever does get into trouble, the government feel obliged to bail it out or risk collapse of the whole system.

Now to answer your question about inflation.

In a fractional reserve central bank system, money is created as I’ve described by the government issuing bonds to the bank, receiving money created out of thin air and having to pay interest on it. When they spend it by paying salaries of government employees, contractors, arms manufacturers and so on, that money goes straight into bank accounts and the bankers can’t wait to lend out as much of it as possible, up to the limit of whatever fractional reserve ratio applies. So now there is a double claim on the money. The government employee thinks their salary is sitting in the bank but 90 percent of it is in the pocket of a borrower who thinks it’s theirs as long as they keep up with interest. That borrower, will inevitably either put the borrowed sum in their own bank account or spend it. Either way it will end up in another bank account somewhere. Then the same thing happens again; up to 90 percent of it gets lent out (81 percent of the original government-created money) and so on…

We end up in a situation where all of the money in circulation has arisen from someone somewhere, signing the dotted line to put themselves in debt. The money isn’t backed by a commodity such as gold. Instead it is backed by the ability of the borrower to repay. All these borrowers, including the government are paying interest. If interest is to be paid on every penny in circulation, then it doesn’t take a genius to figure out that new money must be continuously ‘created’ to keep paying this. That occurs by governments constantly borrowing so that their debts keep on increasing and borrowers constantly borrowing more and more. This seems to work as long as prices, wages and asset values keep increasing. Generation after generation, workers can afford to pay more and more for the houses that they live in because the price of the house keeps going up so it looks like good collateral to the lender and also their wages keep going up, so the borrower can meet payments in the eyes of the lender.

Working out what the rate of inflation is at any given time is practically impossible. Government figures such as RPI and CPI are just another tool for the propagandists to use as they see fit at any given time. However for the banks to gain anything from the game, the rate of inflation must be:

  • less than the rate of interest paid by borrowers and;
  • greater than the rate of interest paid to savers.

This is why savers money is ‘eroded’ if they just leave it sitting in a bank account.
Now imagine a different system where:

  • governments issue paper money by printing it themselves;
  • the amount in circulation is absolutely fixed;
  • there is no central bank but there are plenty of independent banks.

In such a country, there is no need for the government to have any debt and there is ample historical evidence of nations that have existed without government debt for very long stretches of time. What borrowers there are have to find the interest by earning it from the fixed pool of currency that is in circulation. There is little need for anyone to borrow but that’s something that most people you speak to have difficulty accepting. That’s because they’ve only ever lived in a system where they spend their lives in the service of debt and cannot conceive of it being any different.

The bankers right at the top of the system aren’t out to grab hold of all the money in the world. They’re not after all the tangible in the world either. Their only goal is to ensure that as much human labour as possible is in the service of debt.

Now for something different. How can this whole thing go horribly wrong for the bankers? I don’t just mean a run on banks or a recession. That happens periodically and is known as the business cycle. People lose confidence and are reluctant to borrow for a number of years, then they regain confidence and start to borrow again and the whole thing picks up and the cycle repeats.

What can go horribly wrong is if, after generations and generations and generations of increasing prices and debts, everyone gets more spooked by debt than ever before and totally fixated on repaying it. They sell assets but there are so many folk doing that that asset prices start to decline. That spooks people further. A spiral is under way. Banks try to ‘stimulate’ the economy by lowering interest rates but there is very little confidence around, especially if asset prices are declining compared with debts and wages aren’t rising either (or may be in decline), so that the ability to repay debt is impaired. This decline can be long and protracted. Also there can be many ups and downs along the way, although the long term trend is down. Ups can be deceptive as they are perceived as “coming out of the recession” by those used to the normal business cycles we’ve experienced throughout the whole of the twentieth century. In this way, asset prices can bleed away until eventually they reach something like a tenth of of their peak value. This process can reach a very late stage before a lot of people recognise what’s really going on. This is just a scenario but one worth considering seriously. We could be in for long term deflation but it will be well under way and too late for many people in debt by the time it gets mainstream acknowledgement.

A closely-related question and one that automatically follows is why do countries bother having central banks at all? Instead of a government issuing bonds, why not directly issue the currency instead, thereby cutting out the middle men? It is an approach that actually has a number of historical precedents as pointed out in this open letter to Obama urging him to reissue ‘greenbacks’ and the campaign in Britain to print ‘treasury notes’ like the Bradbury Pound. So in a further reply to my friend I asked him, “do you think that the re-issuance of ‘greenbacks’ in America or the Bradbury Pound in the UK might offer a realistic solution to the current crisis?” His response:

The issue of greenbacks or whatever you call them (essentially government-issued money) would probably make no immediate difference. Already, the money created by quantitative easing is not working its way into the system, so why would money issued by any other means?

In the longer term, such a fundamental upheaval would make a huge difference as the government wouldn’t need to be in debt the whole time and people wouldn’t have to keep paying increasing prices for houses and cars on top of interest. Pensioners wouldn’t be on a treadmill, having to ‘invest’ their savings just in vain an effort to keep up with inflation.

There’s a risk that the government might be tempted to print more and more money, which is often cited as a point in favour of the present system. It is claimed that having to pay interest and ultimately repay the whole principal is a disincentive in this respect. However, the current system ensures constant “printing” all the time as there’s no way that everyone involved can pay interest otherwise.

There’s talk at the moment about banks charging people a few percent for holding their money on deposit, i.e “negative interest”. People think they’ll lose money as their account balances will go down over time. However, it’s no different to being paid say six percent interest at a time when inflation is at 9 percent and the cheapest loan you can get is 12 percent.

I’m amazed at how people in the alternative media can inform us that banks are going to charge us ‘negative interest’ for our deposits, express outrage and then in the next breath claim that we’re in a hyperinflationary environment. Low/negative interest is a sure sign of massive deflationary pressure. I don’t know what’s going to happen but I’m convinced that deflation’s the one to watch. It has the potential to catch people out.

Getting back to your original question, the direct issuing of money by the government would represent a seismic shift of power from bankers to governments; a shift in the right direction, no doubt. It’s only possible if everyone knows what’s exactly going on. We’re a very long way off yet. Peoples’ understanding of the banking scam is very very poor.

I would add that very much front and centre in that scam is the role of the central banks. These extraordinarily powerful commercial bodies that adopt the outward appearance of public institutions when in fact they work for commercial interests. The US Federal Reserve, for instance, is a de facto private corporation and all of its shareholders are private banks. The status of the Bank of England is more complicated. This is what the main wikipedia entry intriguingly has to tell us:

Established in 1694, it is the second oldest central bank in the world, after the Sveriges Riksbank, and the world’s 8th oldest bank. It was established to act as the English Government’s banker, and is still the banker for HM Government. The Bank was privately owned [clarification needed (Privately owned by whom? See talk page.)] from its foundation in 1694 until nationalised in 1946.[3][4] 

Original references retained.

Clarification needed indeed! Anyway, nowadays it is officially (since 1998) an ‘independent public organisation’. However, the BoE is not really as independent as it might first appear, since along with eighteen other central banks from around the world (including the US Federal Reserve) it is a member of the executive of “the central bank for central banks” – the little known Bank for International Settlements (BIS) based in Basel, Switzerland. To hear more about the history, ownership and function of this highly profitable (tax free and extraterritorial) organisation, I recommend listening to this interview with Adam LeBor, author of the recently released book The Tower of Basel:

For my own more detailed thoughts on effective remedies to the on-going financial crisis please read this earlier post.

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Please note that for the purposes of ‘publishing’ here I have taken advantage of the option to incorporate hypertext links and embed videos – in order to distinguish additional commentary from the original text all newly incorporated text has been italised.

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1 From “The Future”, Essays in Persuasion (1931) Ch. 5, John Maynard Keynes, CW, IX, pp.329 — 331, Economic Possibilities for our Grandchildren (1930).

2 Adam Smith applied “the law of diminishing utility” to solve “the paradox of water and diamonds”. Water is a vital resource and most precious to life and yet it is far less expensive to purchase than diamonds, comparatively useless shiny crystals, which in his own times would have been used solely for ornamentation or engraving. The reason, Smith decides, is that water is readily abundant, such that any loss or gain is of little concern to most people in most places. By contrast, the rarity of diamonds means that, although less useful overall, any loss or gain of use is more significant, or to put it more formally the “marginal utility” is greater.

3 Extract taken from The soul of man under socialism by Oscar Wilde (first published 1891).

4 Legal tender is a technical legal term that basically means an offer of payment that cannot be refused in settlement of a debt.

5 Fiat (Latin), “let it be done” meaning that these currencies are guaranteed by government decree only.

6 Milton Friedman pays homage to Ronald Reagan’s record on deregulation in an essay entitled “Freedom’s friend” published in the Wall Street Journal on June 11, 2004. Drawing evidence from The Federal Register, “records the thousands of detailed rules and regulations that federal agencies churn out in the course of a year”, Friedman contrasts Reagan’s record with that of Presidential incumbents before and since: “They [the rules and regulations] are not laws and yet they have the effect of laws and like laws impose costs and restrain activities. Here too, the period before President Reagan was one of galloping socialism. The Reagan years were ones of retreating socialism, and the post-Reagan years, of creeping socialism.” For socialism read regulation. http://online.wsj.com/news/articles/SB108691016978034663

7 Definition of “too big to fail” taken from Businessdictionary.com: “Idea that certain businesses are so important to the nation, that it would be disastrous if they were allowed to fail. This term is often applied to some of the nation’s largest banks, because if these banks were to fail, it could cause serious problems for the economy. By declaring a company too big to fail, however, it means that the government might be tempted to step in if this company gets into a bad situation, either due to problems within the company or problems from outside the company. While government bailouts or intervention might help the company survive, some opponents think that this is counterproductive, and simply helping a company that maybe should be allowed to fail. This concept was integral to the financial crisis of the late 2000s.”

8 According to IMF economic database for October 2010, World GDP is $61,963.429 billion (US dollars).

9 Unto This Last is based on a collection of four essays first published in the monthly Cornhill Magazine, 1860, and then reprinted as Unto This Last in 1862. This extract is drawn from his second essay: “The Veins of Wealth”

10 George Soros proudly explains the events of “Black Wednesday” on his official website: “In 1992, with the economy of the United Kingdom in recession, Quantum Fund’s managers anticipated that British authorities would be forced to break from the European Exchange Rate Mechanism (ERM) then in force and allow the British pound to devalue in relation to other currencies, in particular the German mark. Quantum Fund sold short (betting on a decline in value) more than $10 billion worth of pounds sterling. On September 16, 1992—later dubbed “Black Wednesday”—the British government abandoned the ERM and the pound was devalued by twenty percent.” http://www.georgesoros.com/faqs/archive/category/finance/

11Last year [1979] Bunker and his syndicate began buying silver again, this time on a truly gargantuan scale. They were soon imitated by other speculators shaken by international crises and distrustful of paper money. It was this that sent the price of silver from $6 per oz. in early 1979 to $50 per oz. in January of this year. Chairman Walter Hoving of Tiffany & Co., the famous jewelry store, was incensed. Tiffany ran an ad in the New York Times last week asserting: ‘We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver from baby spoons to tea sets, as well as photographic film and other products.’” Extract taken from “He Has a Passion for Silver”, article published in Time Magazine, Monday 7April, 1980. http://content.time.com/time/magazine/article/0,9171,921964-2,00.html

12Many Government officials feared that if the Hunts were unable to meet all their debts, some Wall Street brokerage firms and some large banks might collapse.” Extract taken from “Bunker’s busted silver bubble”, article published in Time Magazine, Monday 12 May, 1980. http://content.time.com/time/magazine/article/0,9171,920875,00.html

13What may deal the Hunt fortune a fatal blow is the fallout from the brothers’ role in the great silver-price boom and bust of 1980. Thousands of investors who lost money in the debacle are suing the Hunts. On Saturday the brothers lost a civil case that could set an ominous precedent. A six-member federal jury in New York City found that the Hunts conspired to corner the silver market, and held them liable to pay $63 million in damages to Minpeco, a Peruvian mineral-marketing company that suffered heavy losses in the silver crash. Under federal antitrust law, the penalty is automatically tripled to $189 million, but after subtractions for previous settlements with Minpeco, the total value of the judgment against the Hunts is $134 million.” Extract taken from “Big bill for a bullion binge”, article published in Time Magazine, Monday 29 August, 1988. http://content.time.com/time/magazine/article/0,9171,968272-1,00.html

14 Extract also taken from the second essay, entitled: “The Veins of Wealth” of Unto This Last by John Ruskin.

15 Ibid.

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Greg Palast on the other “Summers memo” and the decriminalisation of rogue banking

‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]?

wrote Larry Summers when he was Chief Economist at the World Bank. The words are contained in a memo to Brazil’s then-Secretary of the Environment Jose Lutzenberger on December 12th 1991 that became known as the “Summers memo”.

This memo (which was apparently ghost-written by Lant Pritchett who worked under Summers, and signed by Summers himself) then went on to suggest three reasons why dumping toxic waste in the poorest regions of the world is a great idea; reasons that are summarised below:

1) “…a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages… I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

2) “I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City.”

3) “The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity… Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.”

Summers adding that:

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

You can read more about the “Summers memo” here.

Lutzenberger later wrote a response to Summers as follows (although I believe that his reply came after the memo itself had been leaked):

“Your reasoning is perfectly logical but totally insane… Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in… If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said… the best thing that could happen would be for the Bank to disappear.”

You can read this alongside the Summers memo at the satirical website whirledbank.org

If this first leaked memo was, well let’s just say more than a little embarrassing for the World Bank and Larry Summers, then what turned up recently looks altogether more incriminating again. This second memo – a document that fell into the hands of investigative reporter Greg Palast and who says he expended great efforts to affirm its authenticity – “confirmed”, as Palast put it in his recent article for Vice Magazine, “every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.”

When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it. […]

The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.

Since Palast wrote his piece, it transpires that Summers will not be replacing Ben Bernanke as Fed Chairman, but instead the job looks likely to go to Timothy Geithner1 – Geithner being the author of this latest memo, which (to quote Palast again) “begins with Summers’ flunky, Timothy Geithner, reminding his boss to call the then most powerful CEOs on the planet and get them to order their lobbyist armies to march”:

“As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs….”

So just what was this “end-game” that Tim Geithner is referring to in his memo sent in late November 1997? Well, it’s complicated but here’s Palast again picking up the story:

It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling. The horror is in the purpose of the “end game” itself.

Let me explain:

The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets.”

Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet in one single move. It was as brilliant as it was insanely dangerous.

How could they pull off this mad caper? The bankers’ and Summers’ game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.

Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.

Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.

The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.

After further background surrounding the nature of the “WTO financial services negotiations” Geithner is alluding to in his memo to Summers, Palast then adds:

Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate. 2

Click here to read Greg Palast’s full article entitled “Larry Summers and the secret ‘End-Game’ Memo”, which was published on August 22nd 2013.

You can also watch an interview with Palast on Tuesday’s [Sept 17th] Keiser Report in which he talks more about the “End-Game” memo:

Going back to the original “Summers memo” and we discover that in their defence both Lant Pritchett (the self-confessed author) and Summers himself said later that their suggestion for dumping toxic waste in third world countries was just meant sarcastically – so in other words just a great big insider joke, ha, ha, ha… stop me because my sides are splitting!

Presumably then, this more recently discovered “End-Game” memo will turn out to be just another example of the boys at the US Treasury, the WTO and the heads of the major banks larking around. Playing at being mobsters with a wink and a nudge – you know, like Bugsy Malone or something. Destroying the global economy with toxic derivative “products”, ha, ha, ha… like that could ever happen!

1 From an article entitled “Federal Reserve:Who will replace Ben Bernanke?” published by BBC news on September 16, 2013:

“There are three candidates being discussed as possible replacements to Ben Bernanke, chairman of the Federal Reserve, the US central bank. They are vice-chair of the Federal Reserve Janet Yellen, previous vice-chair Donald Kohn and former Treasury Secretary Timothy Geithner.” […]

The 52-year-old was heralded by watchers of the Fed as the man to replace Ben Bernanke. He is a confidante of Mr Obama, and a White House favourite. But he has ruled himself out of the race.

Chris Orndorrf, senior portfolio manager at Western Asset Management, told the BBC he thought Mr Obama would try to persuade Mr Geithner to take the job.

“He [Mr Geithner] said he doesn’t want it but stranger things have happened in Washington. I would say maybe a 25% chance,” Mr Orndorrf said.

There is no doubt that Mr Summers had been Mr Obama’s preferred choice to lead the post. ”

http://www.bbc.co.uk/news/business-24105985

2 From an article entitled “Larry Summers and the Secret ‘End-Game’ Memo” written by Greg Palast, published by Vice Magazine on August 22, 2013. http://www.vice.com/en_uk/read/larry-summers-and-the-secret-end-game-memo

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independence for Catalonia?

An introductory note:

The following is the translation of an article written by journalist and political activist Esther Vivas after the recent September 11th demonstrations for Catalan independence.

The Catalan independence issue is a complex one, and so I also sent the original article to a Catalan friend who has helpfully explained some of the more technical terms. I have since re-edited the original version and added my friend’s remarks in the form of footnotes (with links) to provide a little guidance for those of us less familiar with politics of the region.

What is perhaps especially interesting to outsiders is the birth of a new political movement. The movement, which is known as Procés Constituent – approximately translates to mean “constitutional process” – was started by a nun by the name of Sister Teresa Forcades and a fellow activist called Arcadi Oliveres.

*

Catalonia: independence from Spain, independence from capitalism

Esther Vivas

Hundreds of thousands turned out last September 11 to demand independence for Catalonia. Some decided to surround the Caixa, form a human chain around the largest bank in Catalonia and third largest in Spain, to demand not only independence from Spain, but from capitalism.

Some in that crowd will say that independence comes first, and then we’ll see. That independence itself will end unemployment, poverty, and hunger. As if independence were a divine manna. This, however, is falsehood. Just ask people in Greece, Portugal, Ireland, Cyprus and all of us now living in Spain. Instead, gaining real independence must mean that we escape from, well, the grip of the Troika*, since it is the European financial powers which now stand in the way of real freedom for the people. After all, there can be no real independence under the burden of debt, the blackmail of the risk premium and the “markets” .

Others in the crowd will claim “Madrid robs us ”, and so if we say “Farewell to Spain”, then our problems are solved. But nothing is further from reality… Where are we going with a country in the hands of just 400 families1 forever? Moving towards real independence, involves asking: independence for what and for whom.

The open debate in Catalonia today is an opportunity to rethink the foundations for a new model of society. It may be independent, yes, but it must be open to a ‘constitutional process’2 that allows us to decide together what kind of country we want… Always remembering that it has been the banks which are most responsible for this crisis, with La Caixa being the largest bank in Catalonia. And that to save these financial institutions we have been sunk into absolute misery. So we will never be free nor independent, if we are still subject to policies that only serve to prop up the banks.

It is also common knowledge that La Caixa does not want a referendum on independence. “Social peace” [or “let’s not rock the boat”]3 being the final guarantor of its sustained profits, and with the Spanish State always its biggest source of business…. Its true loyalties evident from the scandal involving the royal family… La Caixa ensuring a golden retirement for the Infanta Cristina in Switzerland4, as head of the International Department of the La Caixa Fundación, her salary increasing to 320,000 euros per year…

So which country will we have after independence if our largest bank still evicts families and rips us off through ‘preferred shares’5? What will our independence amount to if we are still in the hands of thieves…?

* This is an extract from an article published by Esther Vivas in Spanish in Publico.es, 12/11/2013.

Originally translated by http://revolting-europe.com.

+info: http://esthervivas.com/

*

Footnotes:

* The following is a previous article published by Esther Vivas at Publico.es, June 1, 2013:

United against the Troika
Esther Vivas

Who is the Troika? A year ago few knew the answer to this question. We knew it by reference, to its stay in Greece, and it wasn’t good. The Troika was synonymous with austerity, adjustment and cuts, hardship, hunger and unemployment.

But it was not until the arrival in Spain of the much denied rescue, in June 2012, that the “men in black” and “Troika” became a household name. Today, a year later, people, sick and tired, are coming out into the streets to say loud and clear: “Troika, go home”.

History repeats itself. And just as many countries of the South in the 1990s and 2000s saw mass demonstrations against the International Monetary Fund and the World Bank, whom the people accused of reducing them to misery, now people here speak out against the Troika: the International Monetary Fund, the European Commission and the European Central Bank. The bank is different. But the logic is more of the same.

Centre-periphery relations at a global level are now repeated in the European Union. And the countries of the periphery of the Continent, we have become the new colonies, markets or sources of financial capital. Where once, in the South, structural adjustment plans were applied, in order, it was said, to make debt more sustainable, as if the misery and poverty to which they could be subjected was sustainable. Now they speak to us of “aid” and “bailouts “… and they reduce us all to misery.

Debt remains the yoke imposed on the poor. A mechanism of control and subjugation of peoples. An infallible instrument to transfer resources, or to be more precise, of plunder, from South to North, either global or at a European scale. And an argument for reducing the rights of the majority and generate more profits to capital, cutting and privatizing public services covertly. The debt imposed on us, which, incidentally, is not ours, is the perfect excuse to implement what is a long plan. Thus, the scam is called the crisis, the theft is the debt.

We have quickly learned the meaning of the Troika, but also that of other concepts such as anger, rebellion and disobedience. And today we rise in more than 100 cities across Europe as the “peoples united against Troika”. Because we can.

* Article published at Publico.es, June 1st, 2013.
** Translated by http://revolting-europe.com.

1400 families”: I don’t know exactly when this phrase was coined, but it has been current in the media in recent years to refer to the Catalan ruling elite, whose members are often descended from the industrial bourgeoisie of the past. The phrase became popular in 2009 when Fèlix Millet, a well-connected businessman from this particular class, confessed to embezzling large amounts of money from the Palau de la Música foundation. He has also been accused of conniving in the illegal funding of Convergència Democràtica de Catalunya, the political party in power in the autonomous government, many of whose leaders happen to belong to the “400 families”. But despite his confession and the public outrage that followed, the court case keeps being delayed and Millet has only spent a few days in prison so far.

According to La Vanguardia, in an interview he referred to himself as belonging to a group of 400 influential Catalans, some related to each other and others not, “who meet everywhere and are always the same” (sorry, I haven’t found a link in English:

http://www.lavanguardia.com/politica/noticias/20090924/53791233174/uno-de-los-nuestros-felix-millet-orfeo-catala-omnium-cultural-montserrat-estado-liceu-joan-anton-mar.html).

2constitutional process”: this refers to the writing of a socially progressive Catalan constitution in the future, which is advocated by a group called “Procés Constituent” started by Teresa Forcades (the nun who became famous on Youtube exposing the pharmaceutical industry in connection with the swine flu vaccine) and a fellow Christian activist called Arcadi Oliveres.

This group is not a political party and both founders have said from the start that they are not going to stand in elections. Their aim is allegedly to set up a movement that will eventually lead to a “constituent assembly” for the new Catalan state. The group organized the alternative human chain around la Caixa that is mentioned in the article, to signal their differences with the independentist “Via Catalana” chain.

They are pro-independence but believe that a Catalan republic will be pointless unless it’s built on radically different principles, so for example in their manifesto they advocate, among other things, nationalising banks, refusing to pay “odious debt” and extending the welfare state (which is the reason Vivas supports them; I also signed my support when they first published their manifesto, which felt pretty odd given my feelings about Catholics –Forcades and Oliveres seem well-meaning, though). So when Vivas refers to the “constituent process”, I think she’s referring to the idea that social rights should be written into the future Catalan constitution.

To read more about Sister Teresa Forcades and her movement, “Procés Constituent”, I recommend a BBC news article entitled “ Sister Teresa Forcades: Europe’s most radical nun”, written by Matt Wells, published on September 14, 2013. The article outlines her 10-point programme, drawn up with economist Arcadi Oliveres, as follows:

• A government takeover of all banks and measures to curb financial speculation

• An end to job cuts, fairer wages and pensions, shorter working hours and payments to parents who stay at home

• Genuine “participatory democracy” and steps to curb political corruption

• Decent housing for all, and an end to all foreclosures

• A reversal of public spending cuts, and renationalisation of all public services• An individual’s right to control their own body, including a woman’s right to decide over abortion

• “Green” economic policies and the nationalisation of energy companies

• An end to xenophobia and repeal of immigration laws

• Placing public media under democratic control, including the internet

• International “solidarity”, leaving Nato, and the abolition of armed forces in a future free Catalonia

http://www.bbc.co.uk/news/magazine-24079227

3Social peace”: this is a direct translation of a euphemism that is often used here by politicians, bankers and businessmen alike, so when there’s a demonstration or a strike or any kind of protest by the people, those in power will say that this is undesirable because it disrupts “social peace”, by which they mean that the protests threaten to disrupt the status quo.

4ensuring a golden retirement for the Infanta…”: this refers to a financial scandal involving the Infanta, her husband, the king and various Partido Popular politicians and regional governments. It’s a long soap opera so I’ll spare you the details. The latest thing is that after being let off the hook by the corrupt justice system, the Infanta has been given a cosy and highly lucrative job in Switzerland by La Caixa, the bank mentioned in the article.

5preferred shares”: this is a complex, high-risk ‘financial product’ that a few years ago was fraudulently sold by Spanish banks to thousands of unwitting citizens, mostly elderly and uneducated, who didn’t have a clue what they were buying. When the crisis set in, the buyers lost everything (in fact I know someone whose elderly mother lost her savings this way). The victims are still fighting to get their money back. If you want to read more about this, you can have a look here: http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleID/194380/reftab/96/Default.aspx

I would like to thank Esther Vivas for allowing me to reproduce these articles.

Not all of the views expressed are necessarily views shared by ‘wall of controversy’.

*

Update:

The following is a subsequent article on progress of the ‘Constituent Process’ published on October 27th 2013:

Catalonia: a Constituent Process to decide everything
Esther Vivas

Nobody said that it would be easy, but it is necessary to try. And this is precisely what is being done through the Constituent Process in Catalonia, led by the Benedictine nun Teresa Forcades and the economist Arcadi Oliveres, along with many other people. To create social consciousness, to mobilize, to promote civil disobedience and to raise a political alternative that defies those who monopolize power.

Its objective is to construct a new politico-social instrument, based on popular self-organization, loyal to those of at the bottom and able to contribute, in diversity, to the social and political left as a whole. On the horizon, if things work out, it expresses the will to compete in the next elections to the Catalan Parliament, with a broad candidacy, the result of the necessary confluence of many people, some currently inside and others outside the Process, that aspires to transform social discontent into a political majority and to establish the bases to promote a constituent process, that allows us to collectively equip ourselves with a new political framework in the service of the majority.

Some will say that this is utopian, but it is more utopian, from my point of view, to think that those who have led to us to the present situation of crisis, from which, by the way, they obtain substantial benefits, will get us out of it. Breaking with scepticism, apathy and fear is the challenge that we have ahead. Knowledge that “we can” is the first step to obtaining concrete victories.

Ever since the Constituent Process went public last April, the support received has been wide The Process has connected with broad sectors of society who perceive, in the present context of crisis, the urgent necessity of changing things. Many people without too much political or organizational experience have identified with a discourse that appeals to something as essential as can be: justice.

Other social activists have seen in the Process an instrument to go beyond social mobilization per se and to consider a political-organizational perspective of change. Two years after the emergency of 15M, many perceive that no matter how much we occupy banks, empty houses, supermarkets, hospitals… those in power continue applying a series of measures that sink us into absolute misery. Resting on the essential struggle on the street, without which there is no possible change, the Constituent Process raises, at the same time, a challenge to the political-economic regime, as well as in the institutions. And to change the system by “occupying” these instances and giving them back to the social majority via a constituent process.

For sure there are no magical formulas but experiences like the constituent processes in Latin America (Ecuador, Bolivia, or Venezuela) or, closer to home, Iceland, in spite of their debatable evolutions, are experiences to consider deeply, not to imitate but to learn from their successes and errors. In Catalonia, the debate on the national question and independence opens an opportunity, as we could never have imagined, to be able to decide… and to decide on everything.

High participation

The high participation in public presentations of the Constituent Process, some led by Teresa Forcades and others by Arcadi Oliveres, with an average of between 400 to 700 people in municipalities like Vic, Sabadell, Santa Coloma de Gramenet, Lleida, Girona, Vilanova i la Geltrú, Balaguer, Figueres, Blanes, Granollers, Terrassa, or even small municipalities like Santa Fe del Penedès or Fals, shows the capacity of attraction of this initiative, which has, in a few months, made more than one hundred presentations across the Catalan territory.

And more importantly, the interest of those who approach the Process does not reside only in listening to its two main promoters but in participating actively in the construction of this politico-social instrument. In this way, more than 80 local assemblies have already been set up across Catalonia. Also specific assemblies around such issues as education, health, feminism and immigration have started up. All of them are coordinated in a general assembly known as the Promotional Group, which meets monthly.

The forms of action of the Constituent Process also reflect this “other politics”. At most public events makeshift money boxes are passed around to collect what it costs to rent the PA apparatus, photocopies and so on. The presentations serve also to attract those present to attending local meetings and assemblies. The groups in the territory are organized according to their own priorities and are coordinated nationally. The Constituent Process still has some way to go, but it shows the potential of a political initiative able to connect with major social unrest. Although obviously there is still much to be done, perhaps the most difficult part: to consolidate the process and improve the coordination of the assemblies. This is a work in progress.

From bottom to top

The confidence generated by its principal promoters, Teresa Forcades and Arcadi Oliveres, is key to its success. But we know that this is an initiative that will only succeed if it is built from the bottom up. I was told the day both presented the proposal: “We two alone cannot do much”. Correct. Today, the Constituent Process has more than 44,000 people attached and multiple local and sector meetings. Teresa Forcades and Arcadi Oliveres, as has been said many times, do not want to be leaders of anything, but agree to put their credibility at the service of a just cause.

Criticisms of the Christian profile of both have been made, despite the secular nature of the Process. Which in part is not surprising. The social mobilization of the left, both in Catalonia and in the Spanish state, would not be understood, in part, without the contribution of ordinary Christians. Without going any further, one of the founders of the Field Workers Union was none other than the priest of the poor, Diamantino Garcia. Denying this reality means ignoring this part of our collective history. And both Teresa Forcades and Arcadi Oliveres have spoken repeatedly and at length before the Constituent Process, against the ecclesiastical hierarchy, for the separation of church and state and in defence of the right of women to decide on their bodies. Which, incidentally, has earned them widespread criticism by reactionary sectors of the church and its hierarchy.

Last October 13, the main event of the Constituent Process was being held in Barcelona, just six months after its introduction. I still remember how before the proposal someone commented: “Why go ahead with such a project. This is going to fail”. A colleague said: “Failure would be not to try.” How right she was.

*Translated by International View Point.

+info: http://esthervivas.com/english

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look who’s coming into the cross-hairs next…

I’ve now been writing this blog for just about two years, and this will be my 200th post. Being something of an anniversary then, I’ve been wondering how to mark the occasion. How about some kind of a retrospective, for instance… reviewing my earlier reports on the decline of the world’s economy as an inevitable consequence of systemic fraud and failure; or the rise of the surveillance state with the introduction of fingerprinting of kids in Britain and of drones over America; or the serious environmental threat from nuclear power and fracking (this ultra-destructive ‘technology’ coming to Britain almost immediately after I first heard and wrote about it!); mixed in perhaps with another reminder of how the neo-imperialist wars of the twenty-first century are being expanded into Africa and why the civil war in Syria is really just a proxy war with the al-Qaeda-led rebel forces being covertly supported by their own sworn enemy, America. (To read posts on any of the above just follow the relevant links from the main menu or use the search tool.)

However, to do justice to such a monumental post would possibly have taken a month or more. All the troubles I have written about, and sadly with very few exceptions, worsening during the past two years; our descent into chaos and tyranny happening quicker now than before I began.

More wars; more environmental devastation in the name of environmental protection; greater infringement of our civil liberties and human rights; and an economy that is teetering on the very edge of total collapse. Indeed, the economic situation is now so bad that on BBC2’s Newsnight a few nights ago [Tuesday 19th], Jeremy Paxman was reduced to interrogating an MP from Cyprus. And just think about that for a moment, and bear in mind that Cyprus (and I mean no offence to Cypriots when I say this) is an economic gnat. Yet we are seriously contemplating how the effects of a debt problem in Cyprus might undo the entire Eurozone. All of which is actually a measure of how broken the banking system has become.

Yes, the financial system of much of the world (and especially our region of it) is bankrupt, and has been for some time. The reason is the multiple hundreds of trillions of dollars of so-called ‘toxic’ derivatives that have still yet to be deleted. But instead of cancelling the odious debts and prosecuting a corrupt banking establishment, the proposed solution is instead to openly steal money from personal bank accounts in order to keep the Ponzi scheme up and running just a little longer. This brazen theft being described in places like the BBC as “a haircut” or “a tax on savings”. You just can’t make it up any more! And sooner or later, we must expect that all of this will be coming to a bank nearby…

Those who have listened carefully to people really in the know, like former regulator William K Black, are aware not only of the real cause of this crisis (and the resulting depression which the mainstream media have also helped to play down) but also precisely who is really to blame – and let’s name names here: hands up Moody’s, Standard & Poor’s, and Fitch! The three credit rating agencies who gave triple-A’s to toxic trash on the basis of mere opinion and yet continue to downgrade the credit worthiness of nation states in a deepening crisis which they were instrumental in starting… you really can’t make this up! And hands up Goldman Sachs, J.P Morgan, Citibank, Barclays, HSBC, and all the cronies in government, at the ECB, the Bank of England, the Federal Reserve, the IMF, and not forgetting the FSA and other supposed “regulatory agencies”. Agencies working for whom and to what ends, we may all reasonably demand.

It is the greed, incompetence and malfeasance across the whole of the financial sector that has brought us to this brink. It was never the fault of “the lazy Greeks” and it’s not the fault of pesky Cypriots either, but the mainstream media still hesitates at telling the people the truth – and why? Just how deep does the cronyism run…?

I hate to say this but quite frankly our world, by which I mean our civilisation, is going to hell in a handbasket. Because just as our economies collapse, and the social structures we rely upon follow, at very same time the controls on us are being tightened one notch at a time, and at an accelerating rate. This is another big theme I have returned to time and again. How in America there was Obama’s introduction of the NDAA “indefinite detention act”, and how in Britain we look set to get our own secret trials too. How in America (and most probably in Britain, although here the available evidence is less certain) there is already universal surveillance of internet activity and soon (certainly if Obama gets his way) of bank accounts too.1

These are the considered thoughts of veteran investigative journalist John Pilger, writing almost a year ago an article on his own website entitled “You are all suspects now. What are you going to do about it?”:

You are all potential terrorists. It matters not that you live in Britain, the United States, Australia or the Middle East. Citizenship is effectively abolished. Turn on your computer and the US Department of Homeland Security’s National Operations Center may monitor whether you are typing not merely “al-Qaeda”, but “exercise”, “drill”, “wave”, “initiative” and “organisation”: all proscribed words. The British government’s announcement that it intends to spy on every email and phone call is old hat. The satellite vacuum cleaner known as Echelon has been doing this for years. What has changed is that a state of permanent war has been launched by the United States and a police state is consuming western democracy.

What are you going to do about it?

In Britain, on instructions from the CIA, secret courts are to deal with “terror suspects”. Habeas Corpus is dying. The European Court of Human Rights has ruled that five men, including three British citizens, can be extradited to the US even though none except one has been charged with a crime. All have been imprisoned for years under the 2003 US/UK Extradition Treaty which was signed one month after the criminal invasion of Iraq. The European Court had condemned the treaty as likely to lead to “cruel and unusual punishment”. One of the men, Babar Ahmad, was awarded 63,000 pounds compensation for 73 recorded injuries he sustained in the custody of the Metropolitan Police. Sexual abuse, the signature of fascism, was high on the list. Another man is a schizophrenic who has suffered a complete mental collapse and is in Broadmoor secure hospital; another is a suicide risk. To the Land of the Free, they go – along with young Richard O’Dwyer, who faces 10 years in shackles and an orange jump suit because he allegedly infringed US copyright on the internet. 2

Click here to read John Pilger’s full article.

Meanwhile, of course, the neo-imperialist adventuring remains not only unchecked, but is actually gathering momentum. The war racket pressing full-steam ahead and flattening all before it. It doesn’t matter that we don’t have money to fix our broken hospitals, or to build houses and renew infrastructure, or that in America there are fifty million people already on food stamps – and if you picture those people in sepia forming a queue then you’ll see how this depression has already reached 1930s levels. But in spite of these hardships at home, no amount of money is ever spared when it comes the next country on our checklist for “humanitarian intervention” – and more thoughts on this in my next post.

So these days I am finding every post I write is harder than the last. How many ways are there to say that nuclear power and fracking are a menace not only to human beings but to most other life on the planet (cockroaches aside perhaps)? How many times do you need to say that “austerity measures” are not merely ideological in design but that they serve no useful purpose other than to wreck economies (as the IMF and World Bank have done in so many other countries across the globe) whilst redistributing wealth from the relatively poor to the mega-rich? How many times does it need pointing out that America is backing al-Qaeda when it suits their ends? – when, after all, al-Qaeda owes its origins to Zbigniew Brzezinski and the CIA and their dirty campaign to overthrow the Soviets in Afghanistan. So it is genuinely painful to have to repeat these things, and totally depressing to be shown to be right – that our collective future really is becoming so absolutely bleak, and unremittingly brutalised. Sooner rather than later, I want to be proved wrong – this hope is the only thing that actually keeps me writing this damned blog.

Now if any of the above sounds to you like craziness, then let me confirm that on one level it really is, though the craziness is not mine. For, in a sense, this is simply the way things have always worked: policies of expedience, of realpolitik. It is how ruling elites prefer to govern the masses, and all that stuff and nonsense about “freedom and democracy” and “saving the planet” is for the proles and “the gentlemen” (as neo-con political philosopher Leo Strauss called them) – those in the higher-up echelons who truly believe in the goodness of the system, but whose real job is to protect the interests of the powers that be. But the difference now is that the ruling elites are ready to assume a more complete dominion over all of their underlings. And it will be achieved by a scientifically-driven programme of social engineering that is already well underway: bringing us into the scientific dictatorship that globalist bigwig Zbigniew Brzezinski famously called “the Technetronic Era”:

“In the Technetronic society the trend seems to be toward aggregating the individual support of millions of unorganized citizens, who are easily within the reach of magnetic and attractive personalities, and effectively exploiting the latest communication techniques to manipulate emotion and control reason.” [..]

“Another threat, less overt but no less basic, confronts liberal democracy. More directly linked to the impact of technology, it involves the gradual appearance of a more controlled and directed society. Such a society would be dominated by an elite whose claim to political power would rest on allegedly superior scientific knowhow. Unhindered by the restraints of traditional liberal values, this elite would not hesitate to achieve its political ends by using the latest modern techniques for influencing public behavior and keeping society under close surveillance and control.” 3

Do Brzezinski’s words represent a warning or a blueprint… this ambiguity remains only because Brzezinski quite deliberately never makes his position clear:

The Technetronic age is that which is created by the (theoretical) Technetronic Revolution. It is always fairly ambiguously presented as to whether Brzezinski is actually predicting this revolution based on observation/trends, or whether he is abstractly philosophizing. It certainly is not a work of political science. With this in mind, his concluding line in the book, ‘In the technetronic era, philosophy and politics will be crucial’ serve to confuse the reader further rather than give some closure. 4

The quote above is taken from a rather favourable review of Brzezinski’s book written by Stephen McGlinchey in 2011. The book itself has been out of print for three decades.

There is plenty of speculation about Brzezinski’s real intent when he wrote the book, but does this even matter – especially as we have good reasons to be suspicious given his record in other more tangible ways – the more important point is that the direction he outlines is evidently the direction our world has taken. And I would like to think that my own ant-sized efforts to halt the progress of this imposed revolution, alongside the efforts of countless other out-spoken ants, all trying so hard to speak up with truth to power is having some effect. That we may be small and struggling to be heard above the largely controlled, mainstream din, with tiny readerships and such small spheres of influence, but that our combining ripples are building in amplitude and spreading wider…. And then I read an article and I think that yes indeed, tiny as we are, we really must be having some effect, because it seems that the government is suddenly intent on shutting voices like mine down altogether.

Never letting any good crisis go to waste, the government it seems has twisted the whole Leveson Inquiry around to its own advantage – in a fashion reminiscent of what happened with the Hutton Inquiry (from which, of course, the BBC has never properly recovered). The Leveson Inquiry, we should remember, was set up to deal with crimes, and specifically the crime of phone hacking, perpetrated by media giants (most prominently Rupert Murdoch’s News International), and to also look into the role played by the London Metropolitan Police, yet in consequence, the results of that inquiry look likely to close down parts of the alternative media instead. Here’s an extract from Tuesday’s Guardian:

Bloggers could face high fines for libel under the new Leveson deal with exemplary damages imposed if they don’t sign up to the new regulator, it was claimed on Tuesday.

Under clause 29 introduced to the crime and courts bill in the Commons on Monday night, the definition of “relevant” bloggers or websites includes any that generate news material where there is an editorial structure giving someone control over publication. […]

Kirsty Hughes, the chief executive of Index on Censorship, which campaigns for press freedom around the world, said it was a “sad day” for British democracy. “This will undoubtedly have a chilling effect on everyday people’s web use,” she said.

She said she feared thousands of websites could fall under the definition of a “relevant publisher” in clause 29.

Hughes said: “Bloggers could find themselves subject to exemplary damages, due to the fact that they were not part of a regulator that was not intended for them in the first place.” 5

Click here to read the full article.

My belief has always been (and remains) that the best way to lose your freedom of speech is by refusing to use it, and so this ludicrous regulatory overreach is more reason to keep offering some small alternative to the mainstream behemoths. And rest assured that I certainly won’t be signing up to any regulatory body.

Finally then, and if the authorities ever do decide to go after me for daring to disagree with mainstream authority, then I ask in advance for your support – why? Because I’m the little guy, the ant, the gnat, the gadfly. The main difference between you and I, in this respect, is merely that I have perhaps put my head a little higher above the parapet. So once I’m firmly in the cross-hairs, assuming this should happen, then you can be absolutely certain it’ll be your turn next, and rather sooner than you might suppose…

1“The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.

“The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.”

From an article entitled “Obama Administration Proposing To Let U.S. Spy Agencies Have Access To Massive Financial Database”, written by Emily Flitter, Stella Dawson and Mark Hosenball, (from Reuters) published by Huffingtonpost. http://www.huffingtonpost.com/2013/03/13/obama-spy-agencies_n_2868389.html

2 From an article entitled “You are all suspects now. What are you going to do about it?” written by John Pilger and posted on his own website on April 26, 2012. http://johnpilger.com/articles/you-are-all-suspects-now-what-are-you-going-to-do-about-it

3 Both quotes taken from Between Two Ages: America’s Role in the Technetronic Era, written by Zbigniew Brzezinski, published in 1970 (although out of print since 1982).

4 Taken from a review of Between Two Ages: America’s Role in the Technetronic Era, written by Stephen McGlinchey and published July 22, 2011. The full review can be found here: http://www.e-ir.info/2011/07/22/review-between-two-ages-america%E2%80%99s-role-in-the-technetronic-era/

5 From an article entitled “Press regulation deal sparks fears of high libel fines for bloggers: Websites could have to pay exemplary damages if they don’t sign up to new regulator, claim opponents of Leveson deal”, written by Lisa O’Carroll, published by the Guardian on March 19, 2013. http://www.guardian.co.uk/media/2013/mar/19/bloggers-libel-fines-press-regulation

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Filed under al-Qaeda & DAESH / ISIS / ISIL, austerity measures, Britain, Cyprus, financial derivatives, internet freedom, John Pilger, mass surveillance, Syria, USA

the Chicago School is dangerously wrong: I’m with Michael Hudson

On Thursday’s episode of the Keiser Report [March 8th], Max Keiser spoke with Dr. Michael Hudson from the University of Missouri, Kansas City. Hudson explained how neo-liberal economic theories have become dominant simply by virtue of the fact that they fail to accommodate any antithetical viewpoint:

We’re the unspeakable ones. We’re the people that liberals like [Paul] Krugman won’t talk about. We’re the people that the University of Chicago – in the magazines that it’s put its editors in – will not permit discussion. So basically the free-marketers are censors; they don’t believe in a free market of ideas. They believe in what they did in Chile. Remember, the first thing the Chicago Boys did in Chile was close down every economics department in the country except the one they controlled…

Hudson also explained to Keiser, how these ideas, which are most associated with Milton Friedman and the University of Chicago (more thoughts on Friedman are provided in an appended article at the bottom of this post), have quite literally inverted the original free market thinking of its founders Adam Smith and J.S. Mill:

The idea of ‘free market’ to classical economics was to bring prices in line with the actual technologically necessary costs of production… Monopolies were either to be regulated to keep their prices in line with the actual costs – like America regulates the bills that electrical utilities can charge – or, that most monopolies would be, as in Europe, kept in the public domain and operated as public utilities. And if there was something basic like education, or roads, these should be provided freely in order to minimise the economy’s cost of production, and make it more competitive. This was the whole philosophy of the industrial revolution, and it was the ‘free market’ idea that the Classical economists had. […]

But [the modern] idea of a ‘free market’ was free for predators. Free for monopolists. Free for landlords to gouge whatever rents they could get, and to free themselves from taxation, so that the government had to tax labour and to tax industry. And the result is that the American economy today under the so-called ‘free market’ has such a high cost of living, and a high cost of production, that labour can’t compete internationally. That’s why America’s balance of trade has moved so far into deficit.

So ‘free market’ is what is killing the American economy and it’s not free at all… not the kind of ‘free market’ that Adam Smith talked about.

You can read more about Michael Hudson’s economic thinking along with the views of his fellows at the University of Missouri-Kansas City (including an insider perspective from former financial regulator William Black) at the ‘new economic perspectives’ blog http://www.neweconomicperspectives.org/.

*

Milton Friedman was professor at the University of Chicago. There he helped to found the acclaimed Chicago School of Economics – a group that produced a number of Nobel Prize winners. Friedman himself received the Nobel Prize for Economics in 1976, whilst The Economist once described him as “the most influential economist of the second-half of the twentieth century.”1

It was the economic ideology formulated and promulgated by Friedman and his Chicago School, with its emphasis on market deregulation and free trade, that exercised such great influence during the eighties with the ‘hands off’ economic policies of Reagan and Thatcher. Indeed the legacy of those years has persisted throughout the administrations led by Major, then Blair and Brown, and now Cameron and Clegg (Quelle différence?), and today’s political consensus offers little alternative but the full acceptance of Friedman’s old deal, with economic differences between New Labour and Conservative being merely a matter of degrees. Friedman seems to have won, for the time being at least. So what exactly is the rationale behind his winning formula?

Broadly he came to his theories from two angles. Firstly, he distanced himself from the sorts of social reformers who saw state control as a necessary element of modern civilisation. Regarding welfare legislation, such as minimum wage laws as self-defeating (because they would supposedly prevent those without skills from finding gainful employment), he was equally dismissive of the meddling trade unions, and sought ultimately to banish all social security programmes.

Whereas previously, economists like Keynes, and also Adam Smith, had got themselves all tangled up on what sorts of policies were better or worse for the general welfare, Friedman carefully side-stepped such messy complications. As far as Friedman was concerned, government is mostly a stifling and wasteful inconvenience (which, in fairness, is all too often the case). But here Friedman goes to extremes: left to its own devices, he says, all government must undoubtedly veer toward some form of tyranny. The best thing then is to clip its wings completely. Instead of government making decisions, the people should be left to choose for themselves. But how? Well, by forcing government to give way to the market.

Secondly, and in common with many cool-headed intellectuals, Friedman regarded human beings with a deeply felt suspicion. “Mankind is selfish and greedy,” he said in a television interview. But when asked by the interviewer whether in admitting this, he’s not inadvertently making a good case for more control rather than less, he quickly dismissed such Hobbesian objections, replying: “Therefore, we have to put power into the hands of other selfish and greedy men.”2 It’s an odd and revealing answer for one who purported to be a liberal rather than a conservative, and who always wrapped himself in the flag of Freedom.

So here is Milton Friedman, the high evangelist of a radical lassez-faire “limited government”, fast talking and slick, and preaching ever less intervention, less regulation, and less central control. Less is more. Less interference makes more profits, and more profits equates with more goods, and goods are of course, by definition, good.

Work hard, make money: this was the heart of his doctrine – and leave it to the individual to make all the right choices. Trying to do good with “other people’s money” is simply fallacy – Friedman liked the term “other people’s money” (though nowadays he’d almost undoubtedly say “taxpayer’s money”; same difference):

“If I want to do good with other people’s money I’d first have to take it away from them. That means that the welfare state philosophy of doing good with other people’s money, at its very bottom, is a philosophy of violence and coercion. It’s against freedom, because I have to use force to get the money.” [about 11:30 min into part 1]

Phew, it certainly sounds bad when you put it like that. All that collecting of taxes and then divvying the money out for housing, schools, hospitals and caring for the old folk, sure is some serious violation of our inalienable human rights. Friedman, characteristically, takes such reasoning to its logical and ultimate extremes. Indeed, he is actually prepared to estimate just how many people might reasonably be done-away-with to ensure that we remain free from the sorts of deplorable ‘violence and coersion’ that are all too familiar when it comes to tax collection:

“But let’s look at that a little farther,” he says,”Suppose that five percent of the elderly would not be able to provide for themselves. Does it make sense to impose a programme on a hundred percent of the people in order to do something about five percent? Does that really make sense? You see, that’s the great defect in this line of thinking – ” [about 1:30 min into part 2]

Although why stop at five percent, when it makes economic sense to sacrifice a few more of the useless-eaters…

As for the new role of economists themselves, and with the tricky problem of people dismissed, their attention can be properly focused on complex theories of monetary policy: intricate models of how money and the markets function in and by themselves. Here is enough to be getting on with, says Friedman, and the new economists agree. Why? No doubt in part, because it grants them a legitimacy that previously only attached to the expertise of the scientist. It offers an intellectual purity.

But how can anyone objectively divorce economics from society (even if they would choose to), and draw such clear divisions between money and its effects on people? Economics, if it is a science (and there are extremely good grounds for saying that it isn’t), might conceivably be a science like psychology, but it can never be anything like, say, physics. The reason being that money is inherently a people thing; a human construct, bearing only a superficial resemblance to other kinds of natural phenomenon, which it most definitely isn’t. Nor are markets freely-floating entities immune to all human frailty, but composed of analysts and traders: people who are driven at least as much by fear as by good reason. Constantly jittery; every now and then ‘the markets’ totally crap their pants. Yet Friedman desperately wants to cut all this out of his equation, whilst insisting that all other economists eventually join him in his perfect economic bubble.

And following Friedman’s prescription has led us to a perfect economic bubble. A debt bubble that has swollen to such an extent that it currently exceeds the value of everything else on earth.3 We should not be surprised. This is what’s likely to happen when you entirely decouple economics from social needs. When money becomes the main ‘product’ in the world. When high frequency trading involving the use of computer algorithms forces commodity and share prices to rise and fall in fractions of second, whilst outside in the real world nothing about those commodities or businesses has altered in anyway – the values being driven instead by feedback loops of speculation. When markets are also rigged by insider knowledge – an anathema to the ‘free market’ and yet, thanks to deregulation, easier than ever. And when ‘the markets’ in themselves are bloated by the never-ending creation of ‘financial products’, quite apart from any judgment of how all these new paper contracts might blight the real economy. No value judgments are allowed. No distinction between profits earned from the supply of real goods and services as opposed to profits made by profiteers and financial predation. Money making more and more money being an inherent good.

In truth, Friedman was never really a liberal, but a libertarian of sorts (and saying this does a disservice to the better half of libertarianism). The neo-con intellectual apologist Francis Fukuyama is another libertarian of a similar sort, and Fukuyama undoubtedly derives a great deal from Friedman. Liberty, in the eyes of both men, is inextricably tied to the freedom to buy and sell. Indeed, Friedman once claimed that: “underlying most arguments against the free market is a lack of belief in freedom itself.”4

In defence of this extremist position, Friedman has often pointed to history. History, he tells us, has long been constructed along collectivist principles, which is indeed the normal state of humankind. The trouble is that collectivism doesn’t work, and so, although the system of minimal collective intervention may appear, at least on the surface, to be crueller and more selfish, the results it yields are for the betterment of most, if not all. We should judge much better by the consequences rather than from the objectives, he always insisted, looking at the ends rather than the means. Okay then let’s do just that. And let’s be fair here, and judge Friedman on the basis of his most acclaimed success.

On September 11th of 1973 the democratically elected government of Salvador Allende was overthrown by a CIA backed military coup and replaced by a junta government led by Augusto Pinochet. What immediately followed is common knowledge. Imprisonment of political opponents, torture, and the “disappearance” of thousands of innocent victims. The record of atrocities committed by the Pinochet regime is well documented. But perhaps what is less well remembered is the parallel economic measures imposed by the so-called Chicago Boys during Pinochet’s reign of terror.

Sweeping deregulatory reforms that involved the abolition of the minimum wage, the removal of food subsidies, the suppression of trade union activity, and the privatisation of just about everything in sight. The pension system, the banks and assets of state-ownership, all greedily seized and sold off. This kind of “shock treatment”, as Friedman unflinchingly referred to it, resulted in a real wage drop of more than forty percent, a doubling in levels of poverty, and a staggering one in five of the working population (a five-fold increase within a decade) forced into desperate unemployment and left to fend for themselves .5 Yet Friedman regarded all of this as merely the price of success, and described the transformation from Allende’s democratic socialism to Pinochet’s hard-line, totalitarian capitalism as “the miracle of Chile”. Individual suffering was simply a small price for Friedman’s greater ‘liberty’, and back in 1975, in the discussion with Heffner, he staked out that position too, albeit a little clumsily:

“I want people to take thought about their condition and to recognize that the maintenance of a free society is a very difficult and complicated thing. And it requires a self-denying ordinance of the most extreme kind. It requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to try to do them [do what? the temporary evils?], you not only may make them – [hesitation as he corrects himself] – to do something about them – you not only may make them worse, but you will spread your tentacles and get bad results elsewhere.” [about 6:00 min into part 2]

Milton Friedman spread his own tentacles pretty much everywhere, and the world has long been poisoned by his ‘free market’ phoney liberalism. Friedman’s Chicago School branch of economics having not merely served as justification for the continued exploitation of workers, but also, and by virtue of its mantra for deregulation, encouraged the rampant, cancerous growth of a crony capitalist elite. Fundamentalist ‘free market’ thinking isn’t just cruel, it has been calamitous. Milton Friedman, its high priest, was so very dangerously wrong.

1 From an article entitled “Milton Friedman, a giant among economists” published November 23rd, 2006, The Economist.

2 All otherwise uncredited quotes in this section have been drawn from an interview with Richard D. Heffner, broadcast on Sunday December 7th, 1975 as part of the TV series “Open Mind” , produced by WPIX, Channel 11, New York, in cooperation with Saturday Review (based on a transcription found at http://www.theopenmind.tv/tom/searcharchive_episode_transcript.asp?id=494).

Friedman’s full answer to Heffner’s question is this: “Therefore, we have to put power into the hands of other selfish and greedy men. Now I want to apologize for what I said. The great bulk of mankind. There are always conspicuous exceptions, not everybody. And also for each person there is an exception. People are selfish and greedy in one aspect of their activity. They are unselfish and generous in another.” [about 8:00 min into part 2]

3 The underlying cause of the current crisis is the worldwide trade in “derivatives”. It is currently estimated that in the order of a quadrillion US dollars (yes, that’s with a qu-) has been staked on derivations of various kinds. We can compare this with the entire world GDP which turns out to be a mere 60 trillion US dollars [According to IMF economic database for October 2010, World GDP is $61,963.429 billion (US dollars)]. One quadrillion being more than twenty times larger. Or we might compare it against the estimated monetary wealth of the whole world: about $75 trillion in real estate, and a further $100 trillion in world stock and bonds. So one quadrillion is a number exceeding even the absolute monetary value of the entire world! Warren Buffett once described derivatives as “financial weapons of mass destruction”, and he should know because he trades in them.

4 “A major source of objection to a free economy is precisely that it … gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.” Taken from chapter 1 of “The Relation Between Economic Freedom and Political Freedom“, 2002 edition, page 15.

5 From 1973-83 unemployment rose from 4.3% to a staggering 22%, whilst by all measures, the average worker was worse off in 1989 than in 1970, labor’s share of national income having fallen from 52.3 to 30.7 percent. Statistics courtesy of James Petras and Fernando Ignacio Leiva with Henry Veltmeyer, from “Democracy and Poverty in Chile: The Limits to Electoral Politics“, Boulder: Westview Press, 1994.

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Filed under analysis & opinion, Britain, Chile, financial derivatives, Max Keiser, neo-liberalism, USA

“austerity” is too good for the bankers: their punishment should fit their crimes

Ever since I began writing this blog and long before that, one thing has been at the forefront of the political agenda:– “Austerity measures”. The quotation marks are ugly but essential. Those annoying little curly tadpoles hopefully raising the question: what does this phrase actually mean and what is it hiding? Perhaps a dictionary might help us:

Austere: grave, sober, or serious; self-disciplined, abstemious, or ascetic; severely simple or plain. Austerity is then, more often than not, considered ennobling; the word even carries implicitly wholesome religious connotations. The life of a monk is austere. The saints too practiced austerity. And Christ himself is said to have led an austere life. The religious justification is that obsessing about material comforts misses the bigger spiritual picture, but I am not intending to argue either for or against that opinion. My contention here being simply that the meaning of “austerity measures” relies heavily although unconsciously on these traditional ideals. In more purely secular terms, tightening the belt being very often regarded as a good thing.

There is, of course, a constantly expanding menagerie of euphemisms and doublespeak. Civilian casualties in war are now simply “collateral damage”; war itself becoming “kinetic action”; “enemy combatant” meaning a prisoner of war denied their rights; “theater” the war zone; whilst kidnap and torture have been reduced to “extraordinary rendition”. All of these are designed to hide the indefensible truth. But “austerity measures” achieves more again. It doesn’t merely hide the truth, but almost reverses it.

First, let me translate “austerity measures” into useful Standard English: “austerity measures” means enforced poverty. There are no ugly tadpoles required here, because this is quite literally the meaning of the phrase. With the proper words in place, the spell is undone and the truth becomes unavoidable and as clear as day. “Austerity” means being pushed down. Being forced to submit. In short, there is nothing edifying nor ennobling about stripping ordinary people of their very basic and essential public services and economic rights.

“Austerity measures” — what are they good for? Absolutely nothing! You cannot rescue any economy during a depression by impoverishing the people of that country. We can understand this through applying basic economics, or we can find the empirical proof in so many cases where the IMF and the World Bank have applied such “measures” in the past. By making people poorer, personal debt increases as does government debt. As people stop spending, others are forced out of work. The economy shrinks and tax revenues are driven down. Eventually the debt repayments become impossible to maintain. It is a downward death spiral, as the latest report from Greece on Democracy Now! shows all too clearly:

Click here to watch the video or read a full transcript of the same report [from Feb 14th] on the Democracy Now! website.

Greece has now been brought to its knees by imposed “austerity”, and so long as its main political parties continue taking the same course, the situation will quickly worsen. Society is already breaking down and sooner or later the whole political system will surely follow. A revolution in Greece of one kind or another is coming. We can only pray that it’s a good one.

Wherever severe “austerity” moves to next, whether it is Portugal, Ireland, Spain, Italy or here in Britain, the same results must be expected. Oh, and if you think that Greece has a more serious debt problem than anywhere else, then it’s time to think again. Japan has a far higher level of public debt than Greece (see here), and if you also include business and bank debts, then the picture looks very different again. This graphic, published on zerohedge.com [from November 2011] shows very clearly which nation is currently leading in the global debt race to the bottom (and it’s not Greece – not by a long chalk):

Owe your banker £1000 and you are at his mercy; owe him £1 million and the position is reversed. The economist John Maynard Keynes called this ‘the old saying’. So old that it seems to have been long since forgotten. These days, as Keynes would no doubt be surprised to learn, there are some banks deemed simply ‘too big to fail’. Which is, of course, precisely how we got into this mess in the first place, as well as the reason we remain stuck in it.

The ‘megabanks’ have failed, trading poorly, making bad investments and decisions, whilst influencing economic policies in ways that are now proven to be destructive and against the interests of most on the planet, and all the time conducting their operations way beyond their actual means. They are all bankrupt, having “invested” in a load of completely worthless paper which they prefer to call “toxic assets”. And here it is important to understand that in the topsy-turvy world of finance, all debts held are considered to be ‘assets’, even if those debts cannot be repaid, in which case they are regarded as ‘toxic’, whilst remaining as ‘assets’ nonetheless!

The question now being asked is will the latest 130 billion euro bailout save the Greek economy, and the answer to that question is a resounding no. It will no more save the Greek economy than the 110 billion euro bailout did less than two years ago, back in May 2010. Greece will default eventually. Meanwhile the Greek people will have received no benefit from any of these huge bailouts, since the money is only ever used to pay off the bankers’ losses. And yet, when we trace back those losses, what we discover is that they were a product of unquestionably criminal practices. William Black, a highly respected former financial regulator, has explained more than once how the whole financial system became a Ponzi Scheme — and Black is far from a lone voice. Click here to read an earlier post on William Black.

Yet the bankers have so far remained immune from any prosecution. Instead of prison they are receiving continued bailouts, whilst also picking up private perks in the form of bonuses. So how do they get away with it? Simple – they run the show. And evidence of this banker occupation is all around. Goldman Sacks, for instance, are everywhere.

They have not only ‘conquered Europe’, as an extraordinary article in the Independent put it, but long since embedded themselves in other positions of power and influence including, perhaps most significantly, the White House. More recently, they have openly installed unelected puppets to run Greece and Italy. Which is how the Ponzi Scheme that Black and others have uncovered remains officially unchallenged, unhampered and unabated. The bailouts keeping the crooked casino afloat a little longer, whilst the debt contagion spreads far and wide, generating renewed opportunity for asset-stripping along the way. The Greeks are the scapegoats, and also the first victims.

Two years ago, speaking on Al Jazeera, Max Keiser pointed out [7:30 minutes in] that Goldman Sacks had illegally colluded with the Greek government in order to hide debts in their bid for entry into the Eurozone:

The same collusion was more recently picked over in this detailed BBC report from Nick Dunbar, author of “The Devil’s Derivatives”. According to Dunbar’s version of events, however, the secret deal that had been fraudulently cooked up to conceal the true level of Greek government debt was “perfectly legal”:

In his latest book Vultures’ Picnic, investigative journalist, Greg Palast, also delves into Goldman Sacks chicanery. Hidden within documents that he took great pains to authenticate, he discovers evidence that the dodgy deal was a deliberate plan to force the Greek nation into bankruptcy and a fire-sale:

Greece’s economy blew apart because a bunch of olive-spitting, ouzo-guzzling, lazy-ass Greeks refuse to put in a full day’s work, retire while they’re still teenagers, pocket pensions fit for a pasha; and they’ve gone on a social-services spending spree using borrowed money. Now that the bill has come due and the Greeks have to pay with higher taxes and cuts in their big fat welfare state, they run riot, screaming in the streets, busting windows and burning banks.

I don’t buy it. I don’t buy it because of the document in my hand marked, “RESTRICTED DISTRIBUTION.”

I’ll cut to the indictment: Greece is a crime scene. The people are victims of a fraud, a scam, a hustle and a flim-flam. And––cover the children’s ears when I say this––a bank named Goldman Sachs is holding the smoking gun.

You can read a little more about Palast’s investigation, and what it reveals about the Greek crisis here and also on page 27 of chapter one.

There has been a loud call (one that I have also joined in) for the bankers to pay their way in the form of Toban Taxes and so forth, but frankly this is not enough. “Austerity” is too good for bankers. Nothing short of a full criminal investigation is actually needed, with a debt moratorium imposed for as long as that investigation takes. A cancellation of all odious debts should then follow.

Until that time, and as the people of Greece and elsewhere continue to suffer, we would be wise to stand shoulder to shoulder with them. They are the unfortunate recent victims in an ever-expanding and increasingly merciless financial war. For “bailouts” read “more debt”, whilst “austerity measures” means nothing other than economic “shock and awe”.

On the positive side, even parts of the mainstream media are finally beginning to awaken to the crisis now taking hold in Greece and elsewhere. Here, for instance, is Paul Mason, the economics editor for BBC‘s Newsnight, taking a break from his usual duties to speak on Democracy Now! (and to plug his book, obviously) last Wednesday [Feb 22nd]:

Paul Mason appears to be under the unfortunate delusion that only he and Glenn Beck (of all people) are making the connection between the deepening financial crisis and the rise of popular movements across Europe, North Africa and America. If only Mason had figured out how to navigate the internet, he’d be so much better informed.

Click here to watch the video or read a full transcript on the Democracy Now! website.

Additional:

As for the truth about just how lazy the Greek’s really are, here’s a BBC news article from Feb 26th:

But the statistics suggest the country has not lost its way due to laziness. If you look at the average annual hours worked by each worker, the Greeks seem very hard-working.

Figures from the Organisation for Economic Co-operation and Development (OECD) show that the average Greek worker toils away for 2,017 hours per year which is more than any other European country.

Out of the 34 members of the OECD, that is just two places behind the board leaders, South Korea.

On the other hand, the average German worker – normally thought of as the very epitome of industriousness – only manages 1,408 hours a year. Germany is 33rd out of 34 on the OECD list (or 24th out of 25 looking at the European countries alone).

Europe’s top 10 and bottom 10

Most hours worked Most productive Least hours worked Least productive
1 Greece Luxembourg Netherlands Poland
2 Hungary Norway Germany Hungary
3 Poland Ireland Norway Turkey
4 Estonia Belgium France Estonia
5 Turkey Netherlands Denmark Czech Rep
6 Czech Rep France Ireland Portugal
7 Italy Germany Belgium Slovakia
8 Slovakia Denmark Austria Greece
9 Portugal Sweden Luxembourg Slovenia
10 Iceland Austria Sweden Iceland

Looking though the table above, you might notice a negative correlation between long working hours and increased productivity. This exposes another pernicious myth, as we can clearly see that it’s far better to work clever than to work hard.

Click here to read the full article which is entitled “Are Greeks the hardest workers in Europe”, written by Charlotte McDonald.

*

Click here to add your signature to the statement of solidarity with the people of Greece backed by trade union leaders, members of Parliament and campaigners published in the Guardian.

The people of Greece face an unprecedented economic and political crisis. They are being driven to poverty and mass unemployment by the demands of the so-called Troika – the European Union, the European Central Bank, and the International Monetary Fund which has imposed Lucas Papademos, formerly of Vice-President of the ECB, as Prime Minister.

Hospitals in Greece are running out of basic medicines, nearly half of all young people are unemployed, workers in some sectors have not been paid for months, and many are forced to resort to soup kitchens or scavenge from rubbish dumps.

Now the Troika demands a cut of 23% to the minimum wage, the sacking of tens of thousands of public sector workers and the decimation of pensions which have already lost nearly 50% of their value. International capital is asset stripping an entire country and ripping apart its social fabric.

Greece is at the cutting edge of the austerity measures that are being introduced across Europe. All the evidence shows that while these measures may protect the interests of the rich, they just make matters worse for the majority of the population. What happens in Greece today we will see in Portugal tomorrow and in Ireland the day after. In Britain, the Coalition government is pursuing similar measures which will see workers earnings cut, working longer for a smaller pension, and the dismantling of the NHS along with other public services.

Mikis Theodorakis, famous Greek composer of Zorba’s Dance, and Manolis Glezos, veteran resistance fighter against the Nazi occupation who took down the swastika from the Acropolis during the 2nd World War and replaced it with the Greek flag, have issued a statement calling for a European Front to defend the people of Greece and all those facing austerity.

The Coalition of Resistance and the People’s Charter have decided to support this call and agreed to work with trades unions, campaigns and parties across Europe to establish a European Solidarity Campaign to defend the people of Greece. The campaign aims to organise solidarity and raise practical support for the people of Greece; they cannot be made to pay for a crisis for which they are not responsible.

 

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William Black on how our financial system became a Ponzi scheme

William Black, Associate Professor of Economics and Law at the University of Missouri-Kansas City, is a former financial regulator and a white-collar criminologist, who helped to expose Congressional corruption during the Savings and Loan Crisis in the late 1980s, by accusing then-house speaker Jim Wright and five US Senators, subsequently known as the Keating Five (who included John Glenn and John McCain), of doing favors for the S&L’s in exchange for contributions and other kickbacks. Although the senators only received a slap on the wrist, Charles Keating — after whom the so-called “Keating Five” were named — had sent a memo that read, in part, “get Black — kill him dead.”

Based on his experiences, Black wrote a book entitled: “The Best Way to Rob a Bank is to Own One.

In April 2009, William Black was interviewed by Bill Moyers on PBS. He explained how the banks and the credit ratings agencies were together committing fraud, with the result that the financial system “became a Ponzi scheme”:

BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars’ loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.

BILL MOYERS: You’re describing what Bernie Madoff did to a limited number of people. But you’re saying it’s systemic, a systemic Ponzi scheme.

WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn’t even get into the front ranks of a Ponzi scheme…

BILL MOYERS: But you’re saying our system became a Ponzi scheme.

WILLIAM K. BLACK: Our system…

BILL MOYERS: Our financial system…

WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, “Triple-A.”

He also pointed out that the policies of Obama administration remained in violation of the law:

BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?

WILLIAM K. BLACK: Absolutely.

BILL MOYERS: You are.

WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They’re scared to death of a collapse. They’re afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we’ll run screaming to the exits. And we won’t rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it’s foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, “We just can’t let the big banks fail.” That’s wrong.

Click here to read a complete transcript of the interview.

Two and a half years on, William Black says on Democracy Now! that nothing has changed:

AMY GOODMAN: What do you think has to happen now? And what does this have to do with the Occupy Wall Street protests that have expanded here in Kansas City and across the globe? There are more than a thousand demonstrations that have been held in the last weeks.

WILLIAM BLACK: Well, we have companion problems. We’ve got to stop this dynamic that’s producing recurrent, intensifying crises. I mean, this one has devastated the nation. The next one would probably be equivalent to the Great Depression. And part of that answer—but only part of it—is to hold the folks accountable, especially the most elite, who caused this crisis. And they did it through fraud, and they did it through fraud in what we call the “C-suites” —the CEOs, the COOs — so, the absolute top.

AMY GOODMAN: And how would these powerful financial entities be held accountable? What exactly should happen?

WILLIAM BLACK: It all starts with the regulators, which is why it’s all not started here, because we have, of course, the wrecking crew, Bush’s wrecking crew, what Tom Frank called them, in charge, and they stopped making criminal referrals. So our agency, in the savings and loan crisis, made over 10,000 criminal referrals to the FBI. That same agency, in this crisis, made zero criminal referrals. If you don’t get people pointing the way and pointing to the top of the organization, you don’t get effective prosecutions. So, in the peak of the savings and loan crisis, we had a thousand FBI agents. This crisis has losses 70 times larger than the savings and loan crisis. And the savings and loan crisis, when it happened, was considered the largest financial scandal in U.S. history. So we’re now 70 times worse. And as recently as 2007, we had 120 FBI agents—one-eighth as many FBI agents for a crisis 70 times larger. And they looked not at the big folks, but almost exclusively at the little folks.

AMY GOODMAN: William Black, you mentioned Bush’s wrecking crew, but we live in the time of President Obama.

WILLIAM BLACK: And we’ve been living for some years in the time of President Obama, and he has done absolutely nothing to reestablish the criminal referral process. And as a result, there are virtually no prosecutions of any elites.

He was also asked about what the message from Occupy Wall Street should be:

Well, first, of course, I don’t speak for that movement, and indeed they don’t have official spokespersons with clear plans. So that part is true. They think of that as one of the great strengths of democracy now, right? That things bubble up, and they have different ideas. However, if you look, not just nationwide, but worldwide, you will see some pretty consistent themes developing.

And those themes include: we have to deal with the systemically dangerous institutions, the 20 biggest banks that the administration is saying are ticking time bombs, that as soon as one of them fails, we go back into a global crisis. Well, we should fix that. Right? There’s no reason to have institutions that large. That’s a theme.

That accountability is a theme, that we should keep—put these felons in prison, and there’s no action on that.

That we should get jobs now, and that we should deal with the foreclosure crisis. So those are four very common themes that you can see in virtually any of these protest sites. And they have asked me, for example, to come to New York to talk about some of these things. So, I think, over time, you won’t necessarily have some grand written agenda, but you’ll have, as I say, increasing consensus. And it’s a very broad consensus. It’s not left, it’s not right; it’s not Republican, it’s not Democrat.

Click here to read the full transcript.

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Filed under analysis & opinion, financial derivatives, Uncategorized, USA

how the markets make famine

The Food Crisis Strikes Again

Esther Vivas

The threat of a new food crisis is already a reality. The price of food began to rise to record levels again, according to the FAO Food Price Index of February, 2011, which does a monthly analysis of global prices of a basic food basket made up of grains, seed oils, dairy products, meat and sugar. The Index came to a new historic maximum, the highest since the FAO began to study food prices in 1990. In the past months, prices have leveled off but analysts predict more hikes in the coming months.

This increase in the cost of food, especially basic grains, has serious consequences for southern countries with low incomes and dependency on food imports, and for the millions of families in these countries that devote between 50 and 60 percent of their income to food—a figure that rises to 80 percent in the poorest countries. In these countries, the rise in the price of food products makes them inaccessible.

We are approaching a billion people—one out of every six on the planet—that today do not have access to adequate food. World Bank president, Robert Zoellick, affirmed that the current food crisis has increased the number of persons who suffer chronic hunger by 44 million. In 2009, this number was surpassed, reaching 1.023 billion people undernourished on the planet, a figure that went down slightly in 2010, but without returning to the levels before the food and economic crisis of 2008 and 2009.

The present crisis takes place in the context of an abundance of food. Food production has multiplied over the three decades since the sixties, while the world population has merely doubled since then. There’s plenty of food. Contrary to what international institutions like the FAO, World Bank and World Trade Organization say, it’s not a problem of production, but rather a problem of access to food. These organizations urge an increase in production through a new Green Revolution, which would only make the food, social and ecological crises worse.

Popular Rebellions

The popular rebellions in northern Africa and the Middle East had among the many catalysts the rise in food prices. In December of 2010, in Tunis, the poorest of the population occupied the frontline of the conflict, demanding, among other things, access to food.

In January of 2011, youth demonstrated in Algeria blocking highways, burning stores and attacking police stations to protest for the rise of prices in basic foods. Similar cases were seen in Jordan, Sudan and Yemen. Egypt is the largest importer of wheat in the world, and depends on food imports.

Evidently other factors came into play in the uprisings: high unemployment, lack of democratic freedoms, corruption, lack of housing and basic services, etc. In any case, the rise in food prices was one of the initial catalysts.

A Central Cause

What are the causes of the new spike in the cost of our meals? Although international institutions and experts have pointed to several elements such as meteorological phenomena that affect harvests in produce countries, the increase in the demand in emerging countries, financial speculation, the growing production of agrofuels, among others—various indices point to speculation with raw food materials as one of the main reasons for food price increases.

In 2007-2008 the world experienced a profound food crisis. Basic foods prices such as wheat, soy and rice rose by 130%, 87% and 74% respectively. Then, as now, several causes converged, but the most important were production of agrofuels and the growing speculative investment in the food futures markets. But this increase in the price of food leveled off in 2009, in part probably due to the economic crisis and a reduction in financial speculation.

By mid 2010, with international financial markets calmed down and huge sums of public money injected into the private banks, food speculating struck again and the price of foods began to rise. To “save the banks”, after the financial crisis of 2008-2009, it is estimated that the governments of rich countries gave a total of $20 trillion dollars to stabilize the banking system and lower interest rates.

With the influx of money, speculators saw incentives to acquire new loans and buy merchandise that predictably would rise rapidly in value. The same banks, high-risk funds, etc. that caused the subprime mortgage crisis are currently responsible for speculation in raw materials and the rise in the price of food, taking advantage of unregulated global commodity markets.

The food crisis is intimately linked to the economic crisis and the logic of a system that promotes, for example, plans to bail out Greece and Ireland while sacrificing their sovereignty to international institutions, just as it sacrifices food sovereignty of the peoples to the interests of the market.

A Grower’s Guarantee or a Speculator’s Bonanza?

There has always been some speculation in the price of foods and this is the logic behind futures markets. In their current form, futures markets date back to the mid-1900s when they began in the United States. These are legal standardized agreements to buy and sell physical merchandise in a previously established time period in the future and have been a mechanism to guarantee a minimum price to the producer faced with the oscillations of the market.

It works like this: Farmers sell their production to traders before harvest to protect themselves from uncertainties in the weather, for example, and to guarantee a future price. The trader also benefits. When the harvest is bad, the farmer still gets a good income and when the harvest is optimal, the trader benefits even more.

This same mechanism is used by speculators to make money off the deregulation of the raw materials markets that was spurred in the mid-nineties in the United States and Great Britain by banks, free-market politicians and high-risk funds in the context of the process of deregulation of the world economy. The contracts to buy and sell food became “derivatives” that could be traded independently of the real agricultural transactions. A new business was born—food speculation.

Speculators today have more weight in the futures markets, even though these transactions have nothing to do with real supply and demand. Mike Masters, manager of Masters Capital Management, points out that in 1998 speculative financial investment in the agricultural sectors was around 25% and today it is close to 75%. These transactions are carried out in the markets, the most important of which on the world level is the commodities market in Chicago, while in Europe food and raw materials are traded in the futures markets of London, Paris, Amsterdam and Frankfurt.

A “100% Natural Deposit”

In 2006/2007, following the fall in the high-risk mortgage loan market in the United States, institutional investors like banks, insurance companies and investment funds sought safer and higher yield places to invest their money. Food and raw materials became a popular alternative. As the price of food soared, investments in the food futures markets rose, pushing the price of grains up and worsening inflation in food prices.

In Germany, the Deutsche Bank announced easy earnings if invested in rising agricultural products. And similar business deals were promoted by the major European bank BNP Paribas. Catalunya Caixa urged its clients in January 2011 to invest in raw materials under the slogan a “100% natural deposit”.

What did they offer? A guarantee of 100% of capital with the possibility of obtaining profits of up to 7% annually. How? According to the ads, based on “the evolution of yields in three food products: sugar, coffee and corn”. To assure such high yields, the ads pointed out that prices of these three products had increased at 61%, 34% and 38% respectively over the past months due to “growing demand that is increasing above the rate of production”, because of the increase in world population, and agrofuels production.

Catalunya Caixa left out important information, however: food speculation that provided such handsome profits increases the price of food, makes it inaccessible to large parts of the population in the global South and condemns thousands of people to hunger, poverty and death in these countries.

Oil Dependency

Another element that exacerbated the food crisis is the heavy dependency on oil of the current model of food production and distribution. The rise in the price of oil had a direct impact on the similar rise in the cost of basic foods. In 2007 and 2008 the price of oil and the price of foods reached record levels. Between July of 2007 and June of 2008, crude oil went from 75 dollars a barrel to 140 dollars, while the price of basic foods went from 160 dollars to 225, according to the FAO Food Index.

Food and agriculture have become heavily dependent on oil. Following the Second World War and with the Green Revolution in the sixties and seventies, and with the supposed increase in production, an intensive and industrial model of agriculture was adopted. In the current system, our food travels thousands of kilometers before it arrives on our tables; production requires the intensive use of farm machinery, chemicals pesticides, herbicides and fertilizers. This model could not exist without oil.

The rise in the price of oil and the strategy of governments to combat climate change has led to a growing investment in the production of alternative fuels, agrofuels, such as biodiesel and bioethanol, made from sugar, corn and other crops. But this production has entered into direct competition with food production for consumption and is now another cause of the rise in food prices.

The World Bank recognizes that when the price of oil goes over fifty dollars a barrel, a 1% increase causes a 0.9% increase in the price of corn, since “for every dollar that the price of oil rises the profitability of ethanol rises and consequently the demand for corn grows.”

Since 2004, two-thirds of the rise in world production of corn was destined to satisfy the North American demand for agrofuels. In 2010, 35% of the corn harvest in the United States, which is 14% of world production, was used to produce ethanol. And the tendency is on the rise.

But beyond the causes such as food speculation and the rise in oil prices that has an impact on the growing investment in agrofuels, leading to competition among grain production for consumption and for transportation, the food and agriculture system is profoundly vulnerable and in the hands of the market. The growing liberalization of the sector in the last decades, the privatization of natural resources (water, land, seed), the imposition of a international model of trade at the service of private interests, etc., has led to the current crisis.

As long as agriculture and food continue to be considered merchandise in the hands of the highest bidder, and business interests prevail over food needs and the limits of the planet, our food security and the welfare of the earth are far from assured.

*Esther Vivas is a member of the Center for the Study of Social movements (Centro de Estudios sobre Movimientos Sociales) in the Universidad Pompeu Fabra (Barcelona). She is the author of “En pie contra la deuda externa” (El Viejo Topo, 2008) among other publictions, and a contributor to the CIP Americas Program www.cipamericas.org.

I would like to thank Esther Vivas for allowing me to reproduce this article.

+info: http://esthervivas.wordpress.com/english

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Filed under Egypt, Esther Vivas, financial derivatives, Middle East, neo-liberalism, Sub-Saharan Africa, Tunisia, Uncategorized