Tag Archives: Aldous Huxley

the united colours of Bilderberg — a late review of Montreux 2019: #1 status quo warriors

This is the first of a sequence of articles based around the ‘key topics’ to this year’s Bilderberg conference discussed in relation to the prevailing political agenda and placed within the immediate historical context.

*

Smoke on the water

We all came out to Montreux, on the Lake Geneva shoreline
To make records with a mobile, we didn’t have much time

— Deep Purple 1

Is it any exaggeration to say that western civilization is in the midst of an existential crisis? No longer tethered by the old sturdy belief in post-Enlightenment progress, at best we seem to be drifting aimlessly, and at worst, lost at sea and beginning to take on water.

Amongst the young especially, a common view has developed that we are living through a uniquely historical moment. The quickening sense that unless the current socioeconomic course can be abruptly diverted, not just the human species, but the biosphere as a whole, will be dashed to pieces as together we plunge into a vortex of our own making. Some prospect of an environmental catastrophe on a truly planetary scale is now top of many people’s concerns, and understandably therefore, a commensurately international environmental resistance movement has been actuated. A few are even asking whether we need a global dictatorship to solve the environmental problems of the twenty-first century. Of course, we should always careful what we wish for!

The gross flaws inherent in our prevailing neoliberal orthodoxy present us with a still more immediate and thus more daunting threat. Vast disparities of wealth and income have been rupturing our societies as the impact of perpetual “austerity” impoverishes millions and spreads untold misery. Inequalities that have lain partially dormant during the decade since the last crash are now beginning to feed an upcoming breed of far-right demagogues and more overt fascists. But the political centre cannot hold for a reason: by adopting right-wing economic policies, it too became virulently extreme. In fact, the measures that brought us to a crisis point remain wholly endorsed by today’s extreme “centrists” perhaps best exemplified by French President Emmanuel Macron.

Finally, a less spoken-of, if occasionally numbing dread, is felt somewhere in the back of all our minds, as Nato powers drag the world unsteadily into the era of a new Cold War and we once again glimpse the unfathomable absurdity of nuclear obliteration. Oddly, this time around, the unspeakable apparitions of apocalyptic doom seen glinting occasionally across Mike Pompeo’s sociopathic gaze, or else blurted spasmodically in the nocturnal delirium of Trump’s presidency-by-Twitter, seldom shock us because we have all but forgotten how to be more seriously afraid. Our conscious minds are so thoroughly distracted whether by the material consumerism of our nonstop Black Friday (in societies that know nothing about thanksgiving) or the more ethereal dopamine rewards of social media, whilst abandoned and denied, yet still lurking unconscious, is a kind of clammy white vertigo of impossible horrors.

On September 28th, Chris Hedges spoke on his RT show “On Contact” with fellow journalist Stephen Kinzer about efforts by Riyadh and Washington to cripple Iran’s economy, inevitably putting Saudi Arabia, its Gulf allies and Washington on a collision course with the Islamic republic that could end in war:

When Bush and Blair were about to deliver their “shock and awe” bloodbath to capture the non-existent weapons of mass destruction operated by Saddam, in London alone two million gathered on the streets to shout truth to power. The antiwar message was loud and clear. How many will gather with placards if Trump and Johnson now decide to send our forces to bring down Iran? The marginalisation of the antiwar movement very much in the midst of the 21st Century’s war without end, with its frontline stretching through the Middle East, Central Asia and more insidiously spreading across Africa, is another disturbing trend.

For these and other reasons, the call for sweeping changes is on the rise in many quarters, and who can deny that western civilisation is in need of swift and sweeping transformation? The old capitalist system is dying, and the elites, the establishment, the globalists (alternative labels for the class of oligarchs who carelessly own and exploit more than half the planet and its “resources”) understand this better than anyone. After all, potentially at least, they stand to lose most in its demise. As the Guardian’s token Bilderberg correspondent Charlie Skelton observed sardonically reporting from this year’s conference in Montreux:

A crisis is looming for Bilderberg, and not merely because of the rise in anti-globalization movements and a creeping loss of faith in the EU project. It’s a crisis of leadership. With the Brexit, Frexit, Grexit and even Polexit dominoes threatening to fall, Bilderberg needs to gird its loins for the long haul if it wants the transatlantic alliance to thrive and its beloved EU to survive. But who’s going to be doing the girding?

The problem Bilderberg faces is a loss of quality, of intellectual backbone. With David Rockefeller tucked away since 2017 in his cryogenic pod, and Henry Kissinger knocking on hell’s door, you realize that Bilderberg is facing a generational crisis. You might not like or admire Henry Kissinger, you might want him strung up for war crimes, but you have to admit he’s a heavyweight statesman and historian. He’s a psychopath with vision. Where will Bilderberg find the serious ideologues to lead them into the 2020s? 2

Click here to read Skelton’s full article published by Newsweek.

*

Non-violent totalitari­anism

“By means of ever more effective methods of mind-manip­ulation, the democracies will change their nature; the quaint old forms— elections, parliaments, Supreme Courts and all the rest—will remain. The underlying substance will be a new kind of non-violent totalitari­anism. All the traditional names, all the hallowed slo­gans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorial—but democracy and free­dom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of sol­diers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.” — Aldous Huxley 3

*

Born in Boston in 1910, Carroll Quigley read history at Harvard University, afterwards going on to teach history, first at Princeton, before returning to Harvard to lecture in Government, History and Politics. Later again, he moved to Georgetown University, where he became one of its most eminent professors. 4 But there were also other strings to Quigley’s prodigious bow.

Quigley had worked for the House Select Committee on Astronautics and Space Exploration. He became a consultant for the Navy, advising on the development of weapons systems. He had even advised the Smithsonian Institution on the layout of their Museum of Science and Technology.

An exceptional polymath, Quigley was respected and influential. Bill Clinton famously singled him out for special mention during his acceptance speech to the 1992 Democratic National Convention, saying:

“As a teenager, I heard John Kennedy’s summons to citizenship. And then, as a student at Georgetown, I heard that call clarified by a professor named Carroll Quigley, who said to us that America was the greatest Nation in history because our people had always believed in two things – that tomorrow can be better than today and that every one of us has a personal moral responsibility to make it so.” 5

In 1966, Quigley wrote a remarkable if little known book. Entitled Tragedy and Hope: A History of the World in our Time, it recounts the central role played by Cecil Rhodes, English imperialist and founder of the De Beers diamond company (which had at the time a virtual monopoly in the diamond mining industry) and the societies and associations established by Rhodes – the so-called Round Table Groups – extending influence and bringing to fruition his and others’ ambitions for expanding the British Empire. 6

“The Round Table Groups”, Quigley explains, “were semi-secret discussion and lobbying groups whose original purpose was to federate the English-speaking world along lines laid down by Cecil Rhodes.” 7 To what political ends? Quigley is quite clear: irrespective of what the John Birch Society afterwards claimed, this was very far from a communist plot:

“…there is no evidence of which I am aware of any explicit plot or conspiracy to direct American policy in a direction favorable either to the Soviet Union or to international Communism.” 8 In fact, Quigley unequivocally dismisses all theories of a communist conspiracy as a “Radical Right fairytale”; before he goes on to make his more important and eye-opening assertion:

“There does exist, and has existed for a generation, an international Anglophile network which operates, to some extent, in the way the radical Right believes the Communists act. In fact, this network, which we may identify as the Round Table Groups, has no aversion to cooperating with the Communists, or any other groups, and frequently does so. I know of the operations of this network because I have studied it for twenty years and was permitted for two years, in the early 1960’s, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments. I have objected, both in the past and recently, to a few of its policies (notably to its belief that England was an Atlantic rather than a European Power and must be allied, or even federated, with the United States and must remain isolated from Europe), but in general my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known.” 9

The part of this network which Quigley says he had the greatest access to was the Council on Foreign Relations (CFR). Founded in 1921, as “a nonpartisan and independent membership organization”, Quigley tells us that it was actually set up as “a front for J.P. Morgan and Company in association with then very small American Round Table Group”, and that by 1928, “the Council on Foreign Relations was dominated by the associates of the Morgan bank.” 10 Indeed, Quigley later informs us that funds for all these Round Table activities came primarily from Cecil Rhodes himself, alongside J.P. Morgan, the Rockefeller and Whitney families and associates of bankers Lazard Brothers and Morgan, Grenfell and Company. Apparently their design was to be a grand one:

“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland 11, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” 12

A world controlled by international banking interests – who would have thought so? A world of “cooperative politicians” coerced to do their bidding by offers of “subsequent economic rewards in the business world” – oh, come on now… is there even a shred of evidence?

*

Bilderberg is a key part of an extensive network of loosely affiliated private groups, institutes, ‘think tanks’ and other organisations that include, in descending order of secrecy, the Trilateral Commission, the US Council on Foreign Relations, its UK cousin the Royal Institute of International Affairs (better known as Chatham House), and not forgetting the World Economic Forum in Davos.

Bilderberg is arguably the most prestigious and is certainly the most “private” of all these.

It is the place (so far as we know) where our own class of oligarchs, those we might usefully distinguish as Atlanticists (plutocrats in the Anglo-American sphere and those who serve them), meet annually to discuss business and to make arrangements with their political go-betweens. This is all done in strict adherence to Chatham House Rules which means we can never know for sure who said what to whom, and thus importantly, who was receiving instructions and who was giving them. We do however know that Bilderberg isn’t managed according to egalitarian principles, and no great leap of imagination is needed to recognise the entrenched internal hierarchy with its top-down steering committee to decide the agenda, topped again – we learn this year – by a managerial board: in effect this is Bilderberg Inc. Quelle surprise.

There are many reasons why Bilderberg operates in darkness, but the semi-official one is that the delegates hide out to avoid the prying gaze of public attention, i.e., they don’t want to have the likes of us looking over their shoulders when they are in the process of trying to run things. In fact this repeated assertion is hardly worthy of doubting.  That ‘the great and the good’ of Bilderberg are the best and most worthy leaders is perfectly self-evident – how else did they rise to such prominence if not because of their exceptional calibre? It follows as a matter of course that they eschew, as they see it, the incompetent meddling of the public.

Its (reliably incomplete) list of participants also provides insight into Bilderberg’s political leanings and this year was interesting not just for inviting representatives from both sides of the mainstream political aisle (the usual practice in fact), but with the more surprising appearance of a representative for the Greens: the attendance of Dutch MP Kathalijne Buitenweg was indeed a novelty.

I have highlighted this bringing into the fold of a Green MP because it is revealing. Not only should it challenge a widely held opinion that the greens are inherently anti-establishment, but it also shines light on the peculiar nature of Bilderberg, which aims always to cover all available political bases, and thus perennially invites a mix of individuals feigning to be conservatives and progressives when Bilderberg is by its peculiar nature neither conservative nor progressive, but a phoney amalgam – so we need another word: I tentatively propose “congressive”.

I need to expand on this point a little. Bilderberg is not strictly conservative due to its efforts to keep ahead of the curve, proactively (a horrible word too, but an equally appropriate one) guiding and railroading future advancements under its broad remit to concentrate and centralise existing power. It is this forward-looking, and in some respects pioneering outlook – which is seldom if ever progressive in any recognisably leftist sense – that helps to preserve the status quo; a feature of Bilderberg that is readily apparent once we consider their annual agenda, and especially this year’s list of ‘key topics’. Here’s my own schematically enhanced version:

Notice first how many of the listed items completely transcend the everyday concerns of the industrialists, defence contractors, financiers and bankers, heads of intelligence, and military top brass who make up its main contingent.

Why are they even discussing “the ethics of artificial intelligence” or “the importance of space”? In fact, in both cases another cursory glance down the list of participants elucidates one of the likely reasons…

That’s Matthew Daniels, Technical Director for Machine Learning and AI Office of the Under Secretary of Defense for Research & Engineering at US Department of Defense having a good old natter with Patrice Caine, Chairman and CEO of Thales Group, the French multinational that designs and builds electrical systems and provides services for aerospace, defence and security.

And here’s Admiral (Ret) James Ellis, former Commander of US Strategic Command and current Director of Lockheed Martin leading the way for Jānis Sārts, the Director of NATO Strategic Communications Centre of Excellence. Can you feel the breeze from those revolving doors?

And there is a second reason to welcome the Greens into the Bilderberg fold. It is arguably the most brilliant ruse of the ruling class: the ability to maintain the illusion of electoral free choice. A ploy I first understood during a spell I spent in retailing: that expanding product lines reliably boosts overall sales and turnover. The same is true when it comes to political choice: by giving the impression of a greater variety of political alternatives, public interest is maintained and electoral turnout is bolstered, all of which serves to maintain the semblance of democracy.

But it is a difficult process, of course, to manufacture political alternatives out of whole cloth. Successful newcomers such as Macron’s neoliberal relaunch under the Vichyesque banner of En Marche! tend to be the exceptions – incidentally, Macron attended Bilderberg in 2014 and became President of France in 2017 (one of many Bilderberg success stories!).

Other comparative newcomers include the quick-to-sell-out Syriza coalition in Greece; Spain’s more honourable leftist alternative Podemos; and its Machiavellian centre-right adversary Ciudadanos (Citizens), whose leader Inés Arrimadas joined President of mainstream conservatives Partido Popular, Pablo Casado, at this year’s Bilderberg conference.

Italy’s noxious, if more enigmatic, Movimento 5 Stelle (Five Star Movement); and Nigel Farage’s opportunistic Brexit Party are also notable exceptions to the rule. And of all these new political players, Ciudadanos and En Marche! are unusual in that they receive annual invitations to Bilderberg. 13

Contrast these few successes with the more typical death spiral perhaps best epitomised by already defunct wannabe centrists Change UK and it becomes clear how prefabricated parties only seldom succeed. Instead, the promotion of special interests is more reliably achieved through the capture of established political parties, as well as the infiltration of grassroots movements.

In Britain for instance, takeover of the Labour Party was negotiated by Peter Mandelson (a Bilderberg grandee), its rebranding achieved under Neil Kinnock’s leadership, and the hijacking thereafter concluded under Blair (another Bilderberg attendee). Corbyn’s attempt to undo this process is hampered at every step by the same Blairites who having seized control of the party machinery, remain ensconced at all levels beyond the rank and file of ordinary membership. Here is Labour peer, Lord Adonis, the consummate Blairite, speaking live on an LBC radio phone-in last September, encouraging the British public not to vote Labour:

And here is Lord Adonis enjoying his minibreak in Montreux:

Outstanding amongst this year’s crop of nominally leftist progressives is Stacey Abrams, a former member of the Council on Foreign Relations, who as then (at the time of Bilderberg) was being touted to run as a Democrat presidential candidate in 2020. 14 Mary Kay Henry, the International President of Service Employees International Union, was another other of this year’s cohort who must account for her glaring conflict of interests, about which she instead prefers to remain tight-lipped [from 15:15 mins]:

So where is this leading? Democracy is always a moveable term. On the one hand it has become more or less synonymous with mere electoral procedure, and on the other, it is held up as a shining western standard, especially so when it comes to imposing American-led versions of it throughout the world. American democracy – well, that’s one word in case you didn’t know!

Trojan Liberty by Anthony Freda

Thus democracy as we authorise it, can also be gauged negatively. Any government acting against the interests of western – specifically US foreign policy – will be singled out and rebranded “a regime” irrespective of the transparency and rigour of its electoral procedures. These days the West alone is sanctioned to decide on who is and isn’t “a dictator”. Yet even when we judge in accordance with its own definition of the word, the United States provides military assistance to more than 70% of the world’s dictatorships – what better measure of double standards and flagrant hypocrisy?

Empire of Chaos – Liberty Bomb by Anthony Freda

In short, whether the determination of democracy is applied to foreign or domestic governments there is never recourse to the neat definition proffered in the Gettysburg Address: “government of the people, by the people, for the people.” Why? Because set against this measureable benchmark of popular sovereignty, there never has been true democracy, whether in America or elsewhere. No government has ever served the common interests of the people. As French democratic socialist Jean-Luc Mélenchon reminded us in a recent interview:

“[T]he French Socialist Jean Jaurès once said, the only question posed in politics is that of the people’s sovereignty. All the rest depends of that, including the question of the distribution of wealth, for this is a matter of reasserting democracy.” 15

Indeed, if we are to take Lincoln’s words seriously and judge historically, there have only ever been better or worse regimes that asymptotically approach or recede from his laudable ideal of true democracy.

Bilderberg is a thoroughly anti-democratic entity, of course, whose operation seeks to gnaw away at structures and institutions that serve true democratic interests. It ought to go entirely without saying that Bilderberg doesn’t gather in tight secrecy to serve the public good, so why am I saying it again? Because the media owners, newspaper editors and other senior staff, whose crucial role ought to hold corporations, institutions and politicians to democratic account, have been instead lodged inside Bilderberg for decades and have chosen to function as its willing agents.

Perhaps the most lurid example of the cronyism at this year’s meeting was the surprise appearance (to some) of Trump’s son-in-law Jared Kushner. Kushner’s appointment to Trump’s cabinet is an instant measure of how undemocratic US politics has become:

Today the tide of democracy is receding again and as it recedes so too do our individual freedoms. Restrictions on free speech and free assembly were first tightened by the terrorism bills introduced after 9/11, but the chilling effect of total surveillance is more insidious, as is the clampdown on alternative voices by virtue of deplatforming, shadow bans, and algorithmic discrimination, all of which is carried out by the tech giants who dominate proceedings at Bilderberg.

James Corbett on how tech giants like Google envision the search engine of the future:

The steady militarisation of policing provides a further means for quelling popular resistance, as evidenced by the brutal suppression of the French Gilets Jaunes movement (read more here).

Free Speech Zone by Anthony Freda

At another level, all democracies are highly vulnerable to infiltration within existing parties and through the hollowing out of extant political institutions; a process nearing its completion in America and ongoing throughout Western Europe. In all instances, of course, our political systems have managed to retain the outward appearance of democracies. In other ways too, they satisfy the democratic duck test: first and foremost, they still quack like democracies, and are belligerent in quacking that this is the only way to be a democracy. Meanwhile, the power to take decisions that is ostensibly placed in the hands of our elected representatives, shifts incrementally to the technocrats – the appointed experts. This is the preferred end game for the bigwigs at Bilderberg.

In the interim, and faced with a genuine crisis at least in terms of western confidence, Bilderberg, which exists and operates solely to promote the interests of established structures of privilege and power, is now hunkered down to such a degree that it has very nearly disappeared from sight again. For their part, the media, which is reliably obedient to the same insider interests, have purposefully let it disappear.

Image based on a work by Anthony Freda called Presstitute

This year’s location was announced at the eleventh hour thanks to the charade of their annual “press release”: a nod to transparency since they already know the press has no interest whatsoever in reading and reporting on it. And top of this year’s ‘key topics’ (attached to the same press release) was how a system that serves their own plutocratic agenda can survive, or, put in the language of Bilderberg, how to maintain “a stable strategic order”. When it comes to confessing their priorities, could they be any more frank with us?

*

1 Opening lyrics to the famous track “Smoke on the water”. The inspiration for the song was a fire inside a casino that the band had witnessed across the water of Lake Geneva. Here ‘mobile’ actually refers to a type of recording studio although given today’s context seems to fittingly allude to more contemporary methods of audiovisual recording.

2 From an article entitled “Silicon Valley in Switzerland: Bilderberg 2019 and the High-Tech Future of Transatlantic Power” written by Charlie Skelton published in Newsweek on June 1, 2019. https://www.newsweek.com/silicon-valley-switzerland-bilderberg-2019-and-high-tech-future-transatlantic-1441259

3 Quote taken from Brave New World Revisited (1958), Chapter 3, by Aldous Huxley.

4 Georgetown University awarded Quigley its Vicennial Medal in 1961 and also the 175th Anniversary Medal of Merit in 1964.

5 http://www.4president.org/speeches/billclinton1992acceptance.htm

6

“In 1891, Rhodes organized a secret society with members in a “Circle of Initiates” and an outer circle known as the “Association of Helpers” later organized as the Round Table organization… In 1909-1913, they organized semi-secret groups know as Round Table Groups in the chief British dependencies and the United States. In 1919, they founded the Royal Institute of International Affairs. Similar Institutes of International Affairs were established in the chief British dominions and the United States where it is known as the Council on Foreign Relations. After 1925, the Institute of Pacific Relations was set up in twelve Pacific area countries.”

Extract taken from Tragedy and Hope: A History of the World in our Time written by Carroll Quigley, The Macmillan Company, 1966, pp131-2.

7 ibid. p. 950

8 ibid. p. 946

9 ibid. p..950

10 ibid. p. 952

11 “The Bank for International Settlements was established in 1930. It is the world’s oldest international financial institution and remains the principal centre for international central bank cooperation.” taken from current BIS website.

12 ibid. p. 324

13 In 2018 (Turin) then-President of Ciudadanos, Albert Rivera Díaz, (ESP) joined Spanish Deputy Prime Minister Sáenz de Santamaría, Soraya of Partido Popular. Rivera Díaz also attended in 2017 (Chantilly) this time alongside then-Minister of Economy, Industry and Competitiveness, Luis de Guindos (Partido Popular), soon after appointed Vice President of the European Central Bank. In 2016 (Dresden), Bilderberg welcomed Luis Garicano, Professor of Economics, LSE and Senior Advisor to Ciudadanos.

14

Stacey Abrams announced on Tuesday that she would not run for Senate in 2020, denying Democrats their favored recruit for the race in Georgia. She did not say if she planned to run for president, which she has also been considering doing.

From an article entitled “Stacy Abrams Will Not Run for Senate in 2020, written by Alexander Burns, published in The New York Times on April 30, 2019. https://www.nytimes.com/2019/04/30/us/politics/stacey-abrams-2020.html

15 From an interview with Jean-Luc Mélenchon conducted by David Broder for The Tribune, published under the title: “Everyone should know – I am very dangerous”. [I am currently unable to find an upload of this piece]

Leave a comment

Filed under analysis & opinion, Charlie Skelton, Switzerland

the unreal thing

The following article is Chapter Eight 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.

*

Advertising is the rattling stick inside a swill bucket”

George Orwell

*

“Take a card, any card, it’s your choice… but don’t let me see what it is.” The magician fans the cards flamboyantly. We know it’s a trick of course. “Three of Clubs,” he tells us. We shake our heads dismissively – after all, we’re part of the act. The magician seems momentarily perplexed. “Do you have anything in your jacket pocket?” he asks as if desperately trying to turn our attention away from his apparent failure. We feel inside and find a sealed envelope. It’s the one we’d signed earlier in the performance. “Is the seal broken?” he asks, knowingly. “Open it – what’s inside?” We scratch our heads and quietly applaud. Somehow the magician has diverted our attention just long enough to construct the illusion of an altered reality. In truth his method was to “force” the card, and so his illusion relied on the simple fact that we really hadn’t a free choice at any stage. But we applaud because we admire his harmless deception. It amuses us to be deceived once in a while.

*

I saw an advert the other day. It read “Say No to No” which is the kind of quasi-Zen mumbo-jumbo that advertising executives get paid a small fortune to write. What was the effect of that advertisement? Well, it had suddenly interrupted my original train of thought. I’d probably been looking for the cigarette lighter or wondering how the living room table was so heaped up in junk again, but now I was reading on about how negativity gets in the way of progress. And which company, I kept wondering as I’d read down, would attach themselves to such a manifestly new age positive-thinking banner? I read on and came to examples of human achievements that left to the nay-sayers could never have happened:

“Yes, continents have been found…”, it read.

Found? By Columbus in 1492, presumably, and then Australia by James Cook. And no human had set eyes on them before? Obviously this is a rhetorical question. I read on…

“Yes, men have played golf on the moon…”

American men to be more precise. And it was indeed an incredible and truly awesome achievement – not the golf, but the travelling to the moon. When it comes to golf, there are obviously far superior facilities a lot closer to home. I read on…

“Yes, straw is being turned into biofuel to power cars…”

Well, hardly in the same league as exploration to such distant lands, but finally some inkling to where they were leading me…

I studied the picture more carefully. The words “Say no to no” are in thick capitals near the top of a blackboard already filled with images of progress and science – molecular structures, conical sections, a diagram showing a spherical co-ordinate system, graphs, line drawings of electron orbits and DNA, of animals and a ship and of course the ubiquitous pie-chart. A girl, her long straw-blond hair tied back into a pony-tail, and wearing a bright red tank top, has her back turned toward to us. She is reaching high, almost on tip-toe, into the black and white and adding the upward flourish of a spiral. Perhaps I was looking at one of those recruitment adverts for teaching, yet something told me otherwise…

And there it was – I’d found it at last – deliberately placed outside the main frame of the picture; a small, emblematic containment for all that progress: a remote, red and yellow scollop shell. The message was far from loud, but that was the point. And once spotted it was very clear, yet it had been intentionally delivered at a subliminal level – out of picture, unobtrusive, easily missed. Its instruction surreptitious and beyond the margins. Why? Because they wanted me to attach the ideas of positivity and progress to the symbol of a multinational oil corporation just as surely as Pavlov’s dogs associated lunch with the ringing of their owner’s bell. They wanted me to feel good things the next time I saw the scollop and to never even think about why.1

*

Advertising is simply another act of illusion and as with the performing stage magician, the audience is well aware that they are being tricked. But in advertising the illusion runs deeper, so that aside from the obvious aim of persuading us to buy Coke instead of Pepsi or whatever, it very often constructs a host of other frauds. Take again the advert mentioned above as an example, with the girl reaching up on tip-toe. Here nothing is accidental, with all parts and relationships operating together to reinforce our idea of progress as a constant striving toward a better world, whilst in the background, it only quietly dismisses any “nay-sayers” who disagree. Like many predators, advertisers work by stealth, often, as here, offering glimpses of Utopia, or of wonderful and perpetual advancement, to draw us on and in. The carrot on a stick swinging endlessly before the eyes of the befuddled donkey.

But then, on other occasions, they will take a different tack, and get out a proper stick. They’ll make us uneasy about our looks, or our lack of social status, before offering a quick fix for these problems so frequently of their own devising. There are many ways to ring our bells: both carrots and sticks are equally effective.

And then everyone says this: “Adverts don’t work on me.” So these companies spend literally billions of pounds and dollars on refining their illusions, posting them up all across our cities and towns, filling our airwaves with their jingles and sound-bites, not to mention the ever-widening device of corporate sponsorship, and yet still this remains as our self-deluding armour against such unending and ever more sophisticated assaults. I’ll bet you could find more people who’d say David Copperfield can really fly than would actually admit to being significantly influenced by advertising.

*

There probably never was a time when advertising was just that: a way to make products and services more widely or publicly known about. In such a time, adverts would have just showed pictures of the product and a simple description of its uses and/or advantages. “This is the night mail crossing the border…” – that sort of thing.

Though, of course, here immediately is a bad example, because the famous post office film is not only reminding us of what a jolly useful and efficient service our mail delivery is, but how wonderfully hard the GPO work whilst the rest of us are asleep. So on this different level Auden’s famous homage is a feel good thing, encouraging us to connect our good feelings to the postal service; it is an early example of public relations although still harmless enough in its quiet way.

But audiences get wise, or so we like to imagine, and so today’s advertisers have had to up the ante too. Gone are the days of telling you how to have “whiter whites” or advising everyone (with only a hint of surrealism) to “go to work on an egg”. Nowadays you’re far more likely to choose to eat a certain chewy stick because “it’s a bit of an animal” (without even noticing the entirely subliminal reference to your feelings about being carnivorous) or drink a can of soft drink because “image is nothing” (which presumes a ridiculous double-think on the part of the targeted purchaser). And where once a famous Irish beverage was just “good for you”, now it’s better because it comes “to those who wait”. Here you’re asked to make an investment in the form of time; an investment that is intended to add personal value to the brand.

Adverts are loaded with these and other sorts of psychological devices – cunningly latent messages or else entertaining ways of forging brand loyalty. They prey on the fact that we are emotional beings. They use tricks to bypass our rational centres, intending to hard-wire the image of their products to our feelings of well-being, happiness, contentment, success, or more simply, the image we have of ourselves. They use special words. LOVE for instance. Just see how many adverts say “you’ll love it”, “kids love it”, “dogs love it”, “we love it”, and so on and so on…. one I saw recently for condoms said simply “love sex” – talk about a double whammy!

Advertisers also like to scare us. When they are not showing us washing lines drying over the Fields of Elysium, or happy pals sharing time with packets of corn snacks, or elegant cars effortlessly gliding down open highways; they are constructing worlds of sinister dangers. Germs on every surface, and even in “those hard to reach places”. Threats from every direction, from falling trees to falling interest rates. I once saw an TV advert that showed a man desperately running from a massive and menacing fracture. It was a crack that seemed to be ripping through the very fabric of space and time, an existential terror relentlessly chasing after him through some post-apocalyptic nightmare. After a minute or so the threat abated and a solution was offered. Get your windscreen checked, it calmly advised.

And the government get in on this too. Watch out, watch out, there a thief about! Just say no to drugs! Sex is fun, but take precautions and don’t die of ignorance! In these ways, they ramp up fears of the real dangers we face, whilst also inculcating a sense of trust in the powers that be. The world is a perilous and unjust place, they say (which is true); fortunately, we are here to help you. Trust us to guide you. Obey our instructions. To protect you and your loved ones. To help you to realise your dreams. Together, we will make the world a fairer place. The constant PR refrains: “Believe”, “Belong”, “Trust”, and more recently, “Hope and Change”. O, ring out those bells!

*

Right now, there’s something refreshingly honest about smoking. Those of us who refuse or are unable to quit are left under absolutely no illusions about our little cancer sticks. We know perfectly well that each drag is bringing the grave that little bit closer. And it’s certainly not cool to smoke. Our clothes stink, our breath stinks, and stinking, we huddle outdoors, rain or shine, cluttering up the office doorways with our toxic fumes and heaps of fag-ends. But it wasn’t always so. Smoking had its golden age. A time when cigarettes were an accoutrement to style and when sharing a fag with a dame was nearly as great as sex.2 During this period, the tobacco industry invested a small fortune in maintaining their myth. They paid to lobby politicians, they made funds available for favourable medical research, and perhaps most significantly of all, they hired the best PR man in the business.

It can be fun to speculate on who were the most influential figures in history. Who would we wish to include? Great statesmen, formidable warriors, innovators, engineers, scientists and artists, when lists are polled for, the public generally take their pick from these, chucking in the odd saint or celebrity just for good measure. They choose between Churchill, Washington, Alexander the Great, Thomas Edison, and Albert Einstein, and if the criteria are widened to include villains as well as heroes, plump for Adolf Hitler, Mao Tse Tong, and Joseph Stalin. A selection, if you like, of the stars of the show. But what about people whose work involves them behind the scenes? What of those whose greater skill was to remain invisible or simply unnoticed? Edward Bernays was just such a man.

*

To say that Bernays was a great PR man is to do him a considerable disservice, for Bernays, who happened to also be a nephew of no lesser light than Sigmund Freud, is nowadays regarded as the father of modern PR. He wrote the book. Rather candidly he entitled it simply Propaganda – the word deriving from the Latin for “propagation” was less sullied back in 1928. In the opening chapter Bernays lays out the situation as he sees it:

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.”

But Bernays is not warning us here, far from it. This is merely the way the world works, spinning along in a fashion that Bernays regards are both inevitable and to a great extent desirable. Better an orderly world of unseen manipulation than a world of ungovernable chaos. And it’s this point which he makes perfectly explicit in the very next paragraph:

“We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society.”3

We should perhaps not be surprised to learn then that Bernays’ book was one that didn’t make it onto the bonfires of the Third Reich. Instead, Joseph Goebbels publicly praised Bernays’ work as especially influential, saying that it had formed the blueprint for his own Nazi propaganda machine. Certainly, it is a very practical guide. It delves into a great many areas and asks important questions. One of the most significant questions it asks goes as follows:

“If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing it?”4

And the answer, as Bernays went on to prove with his amazing success in promoting everything from bacon and eggs to soap powder and political candidates, was HELL YES!

Working for the American Tobacco Company, Bernays had even piggy-backed a ride on the women’s rights movement. Offering encouragement to the fairer sex, for whom smoking in public was still very much a taboo, to keep on lighting their “Torches of Freedom.” Not that any similar strategy could work today obviously… well, not unless those torches were organically-grown by fair-trade tobacco farmers and rolled in chlorine-free paper supplied by sustainable forests, or whatever.

Bernays was the great promoter, perhaps the greatest, and he was keen to promote his own product, modern advertising, or as he called it propaganda, above all else. For Bernays, just as for his acolyte Joseph Goebbels, the future was propaganda:

“Propaganda will never die out. Intelligent men must realize that propaganda is the modern instrument by which they can fight for productive ends and help to bring order out of chaos.”5

*

Following Bernays, advertising no longer stops at breakfast cereals, toothpaste and petrochemical companies, having extended its parasitic tendrils throughout all areas of life, so that image becomes everything. Newspapers and magazines are glossier than ever. They radiate forth into the empty void of secular consumerist existence, visions of earthly fulfilment that can be bought (at preferential interest rates) – holidays, home improvements, house moves (especially abroad), fast cars, and millionaire lifestyles.

They tell us what is right to think about: beauty, health, fashion and that oh-so elusive of attributes, style. They tell us “how to get on”. They tell us what’s worth worrying about. DO worry about your wrinkles. DO worry about your waistline. DO worry about your split-ends. DO WORRY – because you’re worth it! Just as importantly we get to learn what is worth thinking about: success, fame and glamour, which when multiplied together make celebrity. Celebrity: from the Latin celebrare meaning to celebrate, or to honour. So whereas the ancients believed that the fixed and eternal heavenly stars were gods, we instead are sold a parallel myth revolving around “the stars of today”.

But newspapers and magazines are nothing, for their influence pales into insignificance when set in comparison to that flickering blue screen in the corner of the living room. It is our gateway to another world, a parallel dimension, where we are welcomed back each day by our virtual friends. It is a fire to warm us. A shadow-play of mesmerising potency. And here, the ever-tantalising jam of tomorrow has finally slopped over from its earlier containment within commercial breaks, to become what is now a mainstay for entire broadcasting schedules. Carrots and sticks for us to nod along to, 24/7, and three hundred and sixty-five days of the year.

It’s not even that all television is bad. Some is excellent. I would cite as an exemplar the consistently superior content of BBC wildlife documentaries, which far exceed any comparable alternative whether offered by books, radio, or at the cinema. Here is television at the very pinnacle of its achievement.

A great deal on television is produced just to amuse us, or amaze us, and occasionally, actually to inform us, and much of this merits credit too, but I do not feel it necessary to waste time pushing an open door. We all know that television can sometimes be marvellous. But we also know that most of it is junk. Junk that, with the influx of multiple digital channels, is spread ever more thinly and widely. In a modern world television certainly has its place, but we will do well never to forget its unprecedented powers:

“Right now there is an entire generation that never knew anything that didn’t come out of this tube. This tube is the gospel, the ultimate revelation. This tube can make or break president’s hopes… This tube is the most awesome God-damn force in the whole godless world, and woe is us if ever it falls in the hands of the wrong people…

And when the twelfth largest company in the world controls the most awesome God-damned propaganda force in the whole godless world, who knows what shit will be peddled for truth on this network. So you listen to me – Listen to me – Television is not the truth. Television’s a god-damned amusement park…

We’re in the boredom killing business… But you people sit there day after day, night after night, all ages, colours, creeds – We’re all you know – You’re beginning to believe the illusions we’re spinning here. You’re beginning to think that the tube is reality and that your own lives are unreal. You’ll do whatever the tube tells you. You’ll dress like the tube, you’ll eat like the tube, you’ll raise your children like the tube. You even think like the tube. This is mass madness. You maniacs! In God’s name, you people are the real thing – we are the illusion.”

Of course, if you’ve seen the film Network, from which this extraordinary rant is taken, then you’ll also be aware that these are the words of a madman!6

At the top of the chapter I quoted Orwell’s no-nonsense assessment of advertising, and advertising is indeed as he describes it: the rattling stick eliciting the same Pavlovian response in the pigs, as advertising executives wish to implant in our human minds. Their main intent to push their client’s products by making us salivate with desire. This was no different in Orwell’s time. Whilst advertising’s still more ugly parent, propaganda, has always aimed to change minds more fundamentally. It treats ideas as products and sells them to us. But the techniques in both advertising and propaganda have come a long way since Orwell’s time.

This power to propagandise has grown in large part because of television. The blue screen softly flickering away in the corner of every living room having opened up a possibility for thousands of ‘messages’ each day to be implanted and reinforced over and over. Unconsciously absorbed instructions to think in preformed patterns being precisely what Aldous Huxley thought would be needed if ever the seething and disorderly masses of any ordinary human population might be replaced by the zombie castes of his futuristic vision Brave New World. “Sixty-two thousand four hundred repetitions make one truth”, he wrote.7

Which is a joke, but like so much in Huxley’s work, a joke with very serious intent. Huxley’s vision of a future dystopia being subtler in ways to Orwell’s own masterpiece Nineteen Eighty-Four, not least because the mechanisms of mind control are wholly insidious. Huxley showing how you don’t have to beat people into submission in order to make them submit. Yet even Huxley never envisaged a propaganda system as pervasive and powerful as television has eventually turned out to be.

*

Advertising involves “the art of deception” and it has never been more artful than it is today… sly, crafty, cunning, scheming, devious, sneaky, and totally calculating. However, it is increasingly artful in that other sense too: being achieved with ever greater creative skill. Indeed, the top commercials now cost more than many feature films, and, aside from paying small fortunes for celebrity endorsement, the makers of our grandest and most epic commercials take extraordinary pains to get the details right.

Engineered to push the buttons of a meticulously studied segment of the population, niche marketing techniques ensure precise targeting with optimum impact. Every image, sound and edit honed, because time is money when you’re condensing your ‘message’ into thirty seconds. It is perhaps not surprising therefore that these commercial ‘haikus’ as regarded by some as the works of art of our own times. A view Andy Warhol (himself a former ‘commercial artist’) espoused and helped promote – though mostly he made his fortune espousing and promoting his own brand: a brand called Andy Warhol.

Warhol wrote that:

“The most beautiful thing in Tokyo is McDonald’s. The most beautiful thing in Stockholm is McDonald’s. The most beautiful thing in Florence is McDonald’s. Peking and Moscow don’t have anything beautiful yet.”8

Russian composer Igor Stravinsky is credited with a far better joke, having once remarked that “lesser artists borrow, but great artists steal”. As with Warhol’s quip, it fits its author well. Stravinsky here downplaying his unrivalled talent for pastiche, whereas Warhol could never resist hiding his gift for nihilism in plain sight.

But actually, advertising isn’t art at all, of course. Do I need to continue? It is a bloodless imitation that neither borrows nor steals, to go back to Stravinsky’s aphorism, but directly counterfeits. Feigning beauty and faking truth is all it knows, with a passing interest in the first in so far as it is saleable, and a pathological aversion to the second, since truth is its mortal enemy.

For if selling us what we least require and never thought we desired is advertising’s everyday achievement (and it is), then pushing products and ideas that will in reality make our lives more miserable or do us harm is its finest accomplishment. And the real thing? Like the stage magician, this is what the admen assiduously divert your attention away from.

Which brings me a story. A real story. Something that happened as I was driving to work one dark, dank February morning. A small thing but one that briefly thrilled and delighted me.

It was at the end of Corporation Street, fittingly enough I thought, where someone had summoned the courage to take direct action. Across the glowing portrait of a diligently air-brushed model were the words: “She’s not real. You are beautiful.”

That some anonymous stranger had dared to write such a defiant and generous disclaimer touched me. But it didn’t end there. This person, or persons unknown, had systematically defaced all three of the facing billboards, saving the best for last. It was for one of those ‘messages’ that is determined to scare some back into line, whilst making others feel smug with a glow of compliant superiority. It read: “14 households on Primrose Street do not have a TV licence” (or words to that effect).

The threat, though implicit, was hardly veiled. In Britain, more than a hundred thousand people ever year are tried and convicted for not having a TV licence. Some are actually jailed.9 But now this message had a graffiti-ed punchline which again brought home the hidden ‘message’ perpetuated by all of advertising. The spray-canned response read simply: “perhaps they’ve got a life instead.” A genuine choice the admen wouldn’t want you to consider. Not buying into things isn’t an option they can ever promote.

To add my own disclaimer, I in no way wish to encourage and nor do I endorse further acts of criminal damage – that said, here is a different piece of graffiti (or street art – you decide) that I happen to walk past on my way into work. In a less confrontational way, it too has taken advantage of an old billboard space:

the best things in life

Next chapter…

*

Addendum: a modest proposal

We are all living under a persistent and dense smog of propaganda (to give advertising and PR its unadorned and original name). Not only our product preferences and brand loyalties, but our entire Weltanschauung10 fashioned and refashioned thanks to a perpetual barrage of lies. Fun-sized lies. Lies that amuse and entertain. Lies that ingratiate themselves with fake smiles and seductive whispers. And lies that hector and pester us, re-enforcing our old neuroses and generating brand new ones. These lies play over and over ad nauseam.

Ad nauseam, the sickness of advertising, is a man-made pandemic, with modern commercials selling not simply products per se, but “lifestyles”. And think about that for a moment. Off-the-shelf ideals and coffee table opinions that are likewise custom-made. Beliefs to complement your colour-coordinated upholstery, your sensible life insurance policy, your zesty soap and fresh-tasting, stripy toothpaste.

Thanks to television, we inhale this new opium of the people all day long and few (if any) are immune to its intoxication, but then advertising operates at a societal level too – since by disorientating individuals, society as a whole becomes more vulnerable to the predatory needs of corporations. So cuddling up to the box and laughing along to the latest blockbuster commercial on the grounds that “adverts don’t affect me” just makes our own delusion complete.

I might have ended on a lighter note, but instead I’ll hand over to the late Bill Hicks at his acrimonious best (and apologises for his foul and abusive language, but unfortunately here it is fully warranted):

“By the way, if anyone here is in marketing or advertising kill yourselves…”

Bill pauses to absorb any cautious laughter, then quietly continues: “Just a thought… I’m just trying to plant some seeds. Maybe, maybe one day they’ll take root… I don’t know, you try, you do what you can…”

Still scattering handfuls of imaginary seeds, but now sotto voce for suggestive effect: “Kill yourselves…”

Another pause and then completely matter of fact. “Seriously though – if you are – do!”

And now Bill gets properly down to business: “Ahhh – No really – There’s no rationalisation for what you do and you are Satan’s little helpers okay… Kill yourselves. Seriously. You are the ruiners of all things good. Seriously. No, No, this is not a joke… Ha,ha, there’s going to be a joke coming… There’s no fucking joke coming! You are Satan’s spawn filling the world with bile and garbage. You are fucked and you are fucking us – Kill yourselves – It’s the only way to save your fucking soul – kill yourself…”

Then he comes to the crux of the matter: “I know what all you marketing people are thinking right now too: ‘Oh, you know what Bill’s doing. He’s going for that anti-marketing dollar. That’s a good market. He’s smart…’ – Oh Man! I’m not doing that! You fucking evil scumbags! – ‘You know what Bill’s doing now. He’s going for the righteous indignation dollar. That’s a big dollar. Lot of people are feeling that indignation. We’ve done research – huge market! He’s doing a good thing.’ – God damn it! I’m not doing that you scumbags…! Quit putting the dollar sign on every fucking thing on this planet!”

If we are ever to break free from the mind-forged manacles of the advertising industry then we might consider the option of broadcasting Bill Hicks’ rant unabridged during every commercial break on every TV channel on earth for at least a year – the obscenities bleeped out in broadcasts before the watershed!

While we’re about it, we will need a screening prior to every movie (during the commercial slots obviously) as well as key phrases rehashed into jingles and those same sound bites written up in boldface and plastered across every available billboard. Now, if you think this would be altogether too much of an assault on our delicate senses then please remember that is precisely what the dear old advertising industry does day-in and day-out. So wouldn’t it would fun to turn the tables on those in the business of deceit? And not simply to give them a dose of their own snake oil, but to shock us all with repeated jolts of truth instead.

*

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 Incidentally, my young nephew had added a few scribbles of his own to this advertisement and it is interesting to note where he directed his pen marks, five places in all: one over each of the girls hands, one on the back of her head and another on her ponytail. And his only scribble that was not on the girl was on top of the scollop. Bullseye!

2 Of course in Hollywood films of a bygone age when censorship was strict, sharing a fag was also used as a metaphor for sex itself.

3 Taken from the opening to Chapter 1 entitled “Organising Chaos” of Propaganda, by Edward Bernays (1928).

4 Ibid. Chapter 4, “The psychology of Public Relations”

5 Ibid. Chapter 11, “The mechanics of propaganda”

6 “I’m as mad as hell, and I’m not going to take this anymore!” These are the words of anti-corporate evangelist Howard Beale, taken from the film Network (1976). A satire about a fictional television network called Union Broadcasting System (UBS), with its unscrupulous approach to raising the ratings, Network was written by Paddy Chayefsky and directed by Sidney Lumet. Most memorably, it features an Oscar-winning performance by actor the Peter Finch, playing the part of disaffected news anchor Howard Beale. Beale, having threatened to commit suicide live on air, is given his own show. Billed as “the mad prophet”, he steals the opportunity to angrily preach against what he sees as the corporate takeover of the world, and steadily his show gathers the largest audience on television. The consequences are, of course, inevitable.

7 “One hundred repetitions three nights a week for four years, thought Bernard Marx, who was a specialist on hypnopædia. Sixty-two thousand four hundred repetitions make one truth. Idiots!” From Chapter 3 of Brave New World by Aldous Huxley, published in 1932. 

8 Quote taken from Chapter 4 “Beauty” of The Philosophy of Andy Warhol: (From A to B and Back Again), published in 1975. 

9 “According to the most recent figures, about 70 people a year are jailed for TV licence fee offences. But the scale of prosecutions for licence fee evasion is far higher and now accounts for one in nine of all Magistrates Court cases. More than 180,000 people – almost 3,500 a week – appeared before the Magistrates Courts in 2012, accused of watching television without a valid licence in, with 155,000 being convicted and fined.”

From an article entitled ‘Dodging TV licence will not be a crime’ written by Tim Ross, published in The Telegraph on March 7, 2014. http://www.telegraph.co.uk/culture/tvandradio/bbc/10684639/Dodging-TV-licence-will-not-be-a-crime.html

10 Weltanschauung: a particular philosophy or view of life; the world view of an individual or group.

Leave a comment

Filed under analysis & opinion, « finishing the rat race »

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.

*

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

*

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.

*

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…

*

 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.

*

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.

*

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 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.

Leave a comment

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

welcome to the Panopticon: a potted history of mass surveillance

Two centuries ago:

In 1791, the Father of Utilitarianism and ardent social reformer Jeremy Bentham published blueprints for a wholly new design of prisons. Called the Panopticon, from observe (-opticon) all (pan-), the design, which involved a circular annulus of cells surrounding a central lodge, allowed the guards to keep an eye on all of the inmates, and importantly, without them, in turn, being aware of when they were being watched.

Bentham had big plans for his design, suggesting that aspects of the concept might usefully be applied to the construction of hospitals, schools and workhouses.

One century ago:

H.G. Wells was the father of a good many utopias. He spent the greater part of his creative life planning the shape of future societies. One of his most complete visions is laid out in a novel entitled simply A Modern Utopia (and published 1905). The story goes that two travellers walking in the Swiss Alps suddenly discover themselves in a parallel world. A new world that is Earth (at least geographically and biologically speaking) but one where civilisation has been reconstructed on altogether more Wellsian principles.

The inhabitants of this world are guaranteed housing, food and basic essentials. Even the unemployed are provided with a minimum wage, this safety net granted as “workfare” rather than “welfare”, with its recipients being coerced into work for the greater good of the state. In this vision of Wellsian meritocracy, the total measure of individual status depends solely upon earned income: the citizens of the new society regarding being broke as “clear evidence of unworthiness”.

Meanwhile criminal types and drug-users are given very short shrift. Removed from the main body of society and placed on high security prison islands, they are also sexually segregated to ensure that such poor genetic stock can never again pollute the otherwise healthy gene-pool.

Central to this alternative civilisation, the two explorers learn, there is a world-government (Wells never can resist the idea) made possible by a monumental database, with information stored on a card-index system housed in Paris. And Wells says that “Such a record is inevitable if a Modern Utopia is to be achieved.” But of course, what Wells could not foretell was how quickly technology would render the card-index system obsolete and make the establishment of such a global database entirely achievable.

Half a century ago:

It was 1948 when George Orwell settled into seclusion on the Isle of Jura, and there began to work on his most lasting contribution to literature and language. A little over a year passed before his terrifying vision of a future dystopia would be published, entitled simply Nineteen Eighty-Four.

Nineteen Eighty-Four isn’t merely gloomy, it is hellish in altogether more Orwellian ways. A one-party state, in which every member of Ingsoc (the Party) lives under close and constant scrutiny, watched on two-way telescreens, which are highly sensitive devices that can never be turned off. Casual conversations are eavesdropped, by friends just as surely as by strangers, and children are actively encouraged to snoop on their parents; enrolling with the juvenile troops of Spies rather than Scouts (often to the delight and pride of their own brainwashed parents).

There is absolutely no place for privacy in Nineteen Eighty-Four, certainly not for anyone in the Party, with the telescreens monitoring indoors, whilst outside, and aside from the hidden microphones, it is safe to presume that everyone is probably an informant. The Party has, however, less concern for minor dissent that may flare up within the lower ranks of ‘the proles’; the masses that it regards as so ignorant and intent on self-preservation as to pose no serious counter-revolutionary threat. Although even amongst the proles there stalks the ever-present menace of the Thought Police.

Orwell’s new world of dread was forged from the same ideological foundations as the just defeated axis of Fascism. It was a world divided by class, hatred and perpetual war. A world riven and driven by Power. And undoubtedly Orwell was in part presenting his critique of the post-war Soviet Union reconstructed under that other great dictator, Joseph Stalin, with his all-new formula for Communism. Indeed, on the basis of Orwell’s images of Big Brother, it’s fair to judge that this all-powerful leader of Ingsoc (the single party governing the new alliance of Oceania1) was a caricature of Stalin.

Aldous Huxley was Orwell’s old teacher, and in his own futurist satire Brave New World (published in 1932), had envisaged a world of shopping and leisure, founded upon gentle Pavlovian conditioning of eugenically perfected infants, made ready for the soft bed of a world constructed in accordance with Freud’s pleasure principle. In Brave New World, everyone is Dolly the Sheep, and so more forcible means of coercion have become a thing of the forgotten past. George Orwell wrote of his old teacher Huxley’s prophesy as follows:

Mr Aldous Huxley’s Brave New World was a good caricature of the hedonistic Utopia, the kind of thing that seemed possible and even imminent before Hitler appeared, but it had no relation to the actual future. What we are moving towards at this moment is something more like the Spanish Inquisition, and probably far worse, thanks to the radio and the secret police. There is very little chance of escaping it unless we can reinstate the belief in human brotherhood without the need for a ‘next world’ to give it meaning.”2

Of course, it has turned out to be more complicated than that. Stalin died, and the Eastern Bloc with its many citizen spies and Stasi Thought Police was eventually overthrown by resistance within as much as without. Aldous Huxley always maintained that all forms of brutal totalitarian oppression must eventually succumb to such internal pressures, being forced to give way to a different and softer kind of centralised control, and for a short time it seemed that he was correct. But then came September 11th and how quickly in its shadows, the jackboots came back on the ground. Stomping down on the face of humanity all across the world.

Since about a decade:

In January 2002, within the months following the September 11th attacks, the US Defense Department, under the umbrella of the Defense Advanced Research Projects Agency (DARPA), began to develop a vast surveillance project, requiring a database even beyond H.G. Wells’ imagining. Set up under the direction of Admiral John Poindexter – formerly Ronald Reagan’s National Security Advisor3 – the Information Awareness Office (IAO) was intended to serve the interests of “National Security”. Its aim was to establish methods of collecting and collating information of all kinds. Records of what an individual purchased, where they travelled, what they watched, and so on, whilst also incorporating information from public records on education and health. More covert snooping was also proposed as a necessary means of analysing internet use, emails, and faxs.

Other plans included the development of “human identification at distance systems” based on biometrics, which would obviate the current reliance on human operators to keep their eyes peeled. Combined with the ever extending network of CCTV, such a system could conceivably keep track of movements of the entire population. In a world soon to be filled with automated face-recognition systems or more probably – given recent technological developments – whole body scanners, it will be unnecessary for government authorities to force the people to carry forms of identity (or under more extreme tyranny, to wear badges), because it will become impossible to hide.

By February 2003, the IAO had begun funding what they called the Total Information Awareness (TIA) Program, although by May 2003 the program had already been renamed the Terrorism Information Awareness Program in an attempt to allay growing public anxiety of its Orwellian spectre. Then in August 2003, Poindexter was forced to resign as TIA chief with concerns that his central role in the Iran-Contra affair had made him unfit to run a sensitive intelligence program. Soon after this the IAO closed and officially the TIA program was terminated with all funding removed, yet it is widely acknowledged that the core of the project remains and that funding was merely switched to other government agencies.4

Finally, perhaps some indication of the true intent of these surveillance projects may be gleaned from the original IAO logo. Featuring a planetary-sized pyramid capped by an all-seeing eye that is scanning the entire Earth, the message is surely loud enough, especially when captioned with the motto “scientia est potentia” (knowledge is power). For what is this pyramid and the all-seeing eye meant to represent? That Big Brother is watching you? That you are already inside the Panopticon? Here was the official explanation of its meaning:

For the record, the IAO logo was designed to convey the mission of that office; i.e., to imagine, develop, apply, integrate, demonstrate, and transition information technologies, components, and prototype, closed-loop information systems that will counter asymmetric threats by achieving total information awareness useful for preemption, national security warning, and national security decision making. On an elemental level, the logo is the representation of the office acronym (IAO) the eye above the pyramid represents “I” the pyramid represents “A,” and the globe represents “O.” In the detail, the eye scans the globe for evidence of terrorist planning and is focused on the part of the world that was the source of the attacks on the World Trade Center and the Pentagon.”5

Meanwhile, British governments have also brought in rafts of new legislation to extend police powers and limit personal freedom. Indeed, the first major new Terrorism Act, which was introduced in 2000 (and thus prior to the September 11th attacks), actually redefined the meaning of terrorism in order to increase the scope for police intervention. Whilst the disconcertingly titled RIP Act, which quickly followed, further extended the rights for government to intercept communications and to patrol the internet. Then, during David Blunkett’s tenure as Home Secretary, the RIP Act (or RIPA) was broadened again, becoming so extensive that almost 800 separate organisations, including more than 450 councils, have the right to invoke it. People might now be snooped on right across the country for offences no more serious than littering and under-age smoking.6

In the aftermath of the London bombings of July 7th 2005, the New Labour governments under both Blair and Brown also pressed hard for an extension of police rights to detain terrorist suspects. What had begun with seven days, quickly progressed to three weeks, and then, at least in the government’s opinion, required not less than 90 days. The justification given for these extraordinary new measures – the worst of which were thankfully rejected by Parliament – being that plots of the most diabolical kind were suddenly so widespread and complex that the ordinary course of justice had to be by-passed in order to ensure public safety. Around the same time, the introduction of national ID cards was also thwarted, in part thanks to a massive public outcry. Nevertheless, the threat of terrorism (the real risk of which is far lower than during the days of IRA attacks) is the overriding justification for ever more surveillance of our public spaces and our personal lives.7

Throughout the last decade we have all been asked to give up our privacy and other civil liberties on the grounds of enhanced security: sacrificing freedom today for the sake of freedom tomorrow, which may well be, of course, a bargain with the devil. By the end of 2006, the United Kingdom was being described by some experts as ‘the most surveilled country’ among all industrialized Western nations.8

I heard someone speaking on Radio 4 a few years ago. Wrongly convicted for a crime he was later cleared of, he had as a direct consequence spent more than ten years of his life in prison. The interviewer asked him what his first thoughts were after being released as a free man. “Well, I was horrified,” he replied, “horrified that there were just as many cameras on the outside as inside. It was like I’d never left prison.”9

Now and the foreseeable future:

Under construction by contractors with top-secret clearances, the blandly named Utah Data Center is being built for the National Security Agency. A project of immense secrecy, it is the final piece in a complex puzzle assembled over the past decade. Its purpose: to intercept, decipher, analyze, and store vast swaths of the world’s communications as they zap down from satellites and zip through the underground and undersea cables of international, foreign, and domestic networks. The heavily fortified $2 billion center should be up and running in September 2013. Flowing through its servers and routers and stored in near-bottomless databases will be all forms of communication, including the complete contents of private emails, cell phone calls, and Google searches, as well as all sorts of personal data trails—parking receipts, travel itineraries, bookstore purchases, and other digital “pocket litter.” It is, in some measure, the realization of the “total information awareness” program created during the first term of the Bush administration—an effort that was killed by Congress in 2003 after it caused an outcry over its potential for invading Americans’ privacy10.

From an article entitled “The NSA is Building the Country’s Biggest Spy Center (Watch What You Say)” written by James Bamford, the author of The Shadow Factory: The Ultra-Secret NSA from 9/11 to the Eavesdropping on America. Published in Wired magazine on March 15th, Bamford continues:

For the first time, a former NSA official has gone on the record to describe the program, codenamed Stellar Wind, in detail. William Binney was a senior NSA crypto-mathematician largely responsible for automating the agency’s worldwide eavesdropping network. […]

He explains that the agency could have installed its tapping gear at the nation’s cable landing stations—the more than two dozen sites on the periphery of the US where fiber-optic cables come ashore. If it had taken that route, the NSA would have been able to limit its eavesdropping to just international communications, which at the time was all that was allowed under US law. Instead it chose to put the wiretapping rooms at key junction points throughout the country—large, windowless buildings known as switches—thus gaining access to not just international communications but also to most of the domestic traffic flowing through the US. […]

The eavesdropping on Americans doesn’t stop at the telecom switches. To capture satellite communications in and out of the US, the agency also monitors AT&T’s powerful earth stations, satellite receivers in locations that include Roaring Creek and Salt Creek. […]

Binney left the NSA in late 2001, shortly after the agency launched its warrantless-wiretapping program. “They violated the Constitution setting it up,” he says bluntly. “But they didn’t care. They were going to do it anyway, and they were going to crucify anyone who stood in the way. When they started violating the Constitution, I couldn’t stay.” Binney says Stellar Wind was far larger than has been publicly disclosed and included not just eavesdropping on domestic phone calls but the inspection of domestic email. At the outset the program recorded 320 million calls a day, he says, which represented about 73 to 80 percent of the total volume of the agency’s worldwide intercepts. The haul only grew from there. According to Binney—who has maintained close contact with agency employees until a few years ago—the taps in the secret rooms dotting the country are actually powered by highly sophisticated software programs that conduct “deep packet inspection,” examining Internet traffic as it passes through the 10-gigabit-per-second cables at the speed of light. […]

After he left the NSA, Binney suggested a system for monitoring people’s communications according to how closely they are connected to an initial target. The further away from the target—say you’re just an acquaintance of a friend of the target—the less the surveillance. But the agency rejected the idea, and, given the massive new storage facility in Utah, Binney suspects that it now simply collects everything. “The whole idea was, how do you manage 20 terabytes of intercept a minute?” he says. “The way we proposed was to distinguish between things you want and things you don’t want.” Instead, he adds, “they’re storing everything they gather.” And the agency is gathering as much as it can.

Once the communications are intercepted and stored, the data-mining begins. “You can watch everybody all the time with data- mining,” Binney says. Everything a person does becomes charted on a graph, “financial transactions or travel or anything,” he says. Thus, as data like bookstore receipts, bank statements, and commuter toll records flow in, the NSA is able to paint a more and more detailed picture of someone’s life.

Click here to read more of James Bamford’s eye-opening article, and then, here to read a still more extraordinary article published by Wired magazine on the very same day:

More and more personal and household devices are connecting to the internet, from your television to your car navigation systems to your light switches. CIA Director David Petraeus cannot wait to spy on you through them.

Earlier this month, Petraeus mused about the emergence of an “Internet of Things” — that is, wired devices — at a summit for In-Q-Tel, the CIA’s venture capital firm. “‘Transformational’ is an overused word, but I do believe it properly applies to these technologies,” Petraeus enthused, “particularly to their effect on clandestine tradecraft.”

All those new online devices are a treasure trove of data if you’re a “person of interest” to the spy community. Once upon a time, spies had to place a bug in your chandelier to hear your conversation. With the rise of the “smart home,” you’d be sending tagged, geolocated data that a spy agency can intercept in real time when you use the lighting app on your phone to adjust your living room’s ambiance.

Items of interest will be located, identified, monitored, and remotely controlled through technologies such as radio-frequency identification, sensor networks, tiny embedded servers, and energy harvesters — all connected to the next-generation internet using abundant, low-cost, and high-power computing,”11

Orwell, for all of his profound insight and prescience, could never have imagined the sort of universal networks of surveillance being so rapidly put in place today. He didn’t see, for instance, as Huxley might have done, how people would one day almost willingly give up their privacy, and not only as the price for security, but purely for convenience and pleasure. That personal tracking devices would one day become such highly desirable commodities, in the form of mobile phones and ‘sat nav’s, that it would actually be strange not to carry one. That social networking sites would be temptation enough for many millions to divulge huge volumes of personal information, private opinions, dreams and fantasies. That others would broadcast their thoughts via emails, tweets, blogs, and all could be swept up in a worldwide web. The worldwide wiretap, as Julian Assange referred to it.

This post is another part of the immense traffic of data presumably being collected and analysed by those at the NSA (and in all probability also filtered using servers at our own GCHQ). That you are reading this is most probably being recorded too. So feel free to add a comment, although you should be cautioned that whatever you do say may later be used as evidence against you. The Panopticon is watching all of us.

Click here to read a wikipedia overview of the types of mass surveillance now used in the United Kingdom and elsewhere.

*

Additional:

Here is a Russia Today report broadcast a few days later on Friday 30th March entitled: “Minority report: Era of total surveillance zooms-in on US?”

Click here to find the same report at Russia Today website.

As for Britain, and whatever the situation right now, the government is just about to announce new measures that will open the way for GCHQ to have “access to communications on demand, in real time” with the justification being, as always, “to investigate serious crime and terrorism and to protect the public”:

A new law – which may be announced in the forthcoming Queen’s Speech in May – would not allow GCHQ to access the content of emails, calls or messages without a warrant.

But it would enable intelligence officers to identify who an individual or group is in contact with, how often and for how long. They would also be able to see which websites someone had visited.

Click here to read the full BBC news report from April 1st.

1 The setting is roughly as follows. Some time after the World War, the world divided up into three warring superpowers: Oceania (previously America, Australia and Airstrip One); Eurasia (Russia and the rest of Europe); and Eastasia (China and India). These states have since then been engaged in an endless three-sided conflict, fighting to gain control of the resources in a disputed zone which includes North Africa and the Middle East. Progress in this conflict is reported to the citizens of Oceania via a government controlled media, relaying information manufactured by the Ministry of Truth.

2 Taken from “Notes on the way” by George Orwell, first published in Time and Tide. London, 1940.

3 Poindexter had been previously been convicted of lying to Congress and altering and destroying documents pertaining to the Iran-Contra Affair.

4 These include Advanced Research and Development Activity (ARDA), a part of the Disruptive Technology Office (run by to the Director of National Intelligence); and SAIC, run by former Defense and military officials and which had originally been awarded US$19 million IAO contract to build the prototype system in late 2002.

5 Statement of the Information Awareness Office regarding the meaning and use of the IAO logo. Source: Question 15 in the IAO Frequently Asked Questions – document dated February, 2003 which can be accessed at http://www.darpa.mil/iao/TIA_FAQs.pdf

6 The Regulation of Investigatory Powers Act 2000 (RIP or RIPA) regulates the powers of public bodies to carry out surveillance and investigation, especially with regard to the interception of communication. It can be invoked by government officials specified in the Act on the grounds of national security, and for the purposes of preventing or detecting crime, preventing disorder, public safety, protecting public health, or in the interests of the economic well-being of the United Kingdom.

“Councils have used laws designed to combat terrorism to access more than 900 people’s private phone and email records in the latest example of Britain’s growing surveillance state. Town hall spies found out who residents were phoning and emailing as they investigated such misdemeanours as dog quarantine breaches and unlicensed storage of petrol. The news prompted fresh calls from civil rights groups for a reform of the Regulation of Investigatory Powers Act (Ripa), which was originally brought in to combat terrorism and serious crime but is increasingly being used by councils to snoop on members of the public. In April a council in Dorset used Ripa powers to spy for weeks on a family it wrongly suspected of breaking rules on school catchment areas. Other local authorities have used covert surveillance to investigate such petty offences as dog fouling and under-age smoking.” extract from “Council snoopers access 900 phone bills” by Gordon Rayner, Chief Reporter, Daily Telegraph, 5th June 2008. http://www.telegraph.co.uk/news/2075026/Council-snoopers-access-900-phone-bills.html

7 “Deputy chief constable of Hampshire Ian Readhead said Britain could become a surveillance society with cameras on every street corner. He told the BBC‘s Politics Show that CCTV was being used in small towns and villages where crime rates were low… ‘If it’s in our villages, are we really moving towards an Orwellian situation where cameras are at every street corner?’

‘And I really don’t think that’s the kind of country that I want to live in.’ There are up to 4.2 million CCTV cameras in Britain – about one for every 14 people.” from BBC News, Sunday, 20th May 2007. http://news.bbc.co.uk/1/hi/uk/6673579.stm

8 “Produced by a group of academics called the Surveillance Studies Network, the [Surveillance Society] report was presented to the 28th International Data Protection and Privacy Commissioners’ Conference in London, hosted by the Information Commissioner’s Office. […]

The report’s co-writer Dr David Murakami-Wood told BBC News that, compared to other industrialised Western states, the UK was “the most surveilled country”.

“We have more CCTV cameras and we have looser laws on privacy and data protection,” he said.

“We really do have a society which is premised both on state secrecy and the state not giving up its supposed right to keep information under control while, at the same time, wanting to know as much as it can about us.”

The report coincides with the publication by the human rights group Privacy International of figures that suggest Britain is the worst Western democracy at protecting individual privacy.

The two worst countries in the 36-nation survey are Malaysia and China, and Britain is one of the bottom five with ‘endemic surveillance’.”

From a BBC news article entitled “Britain is ‘surveillance society’” published on November 2, 2006. http://news.bbc.co.uk/1/hi/uk/6108496.stm

9 Unfortunately, since I did not have pen at hand – I was driving at the time! – I can no longer recall his precise words and so I have been compelled to paraphrase what he said. I have tried to be accurate so far as memory serves me.

10 From an article entitled “The NSA is Building the Country’s Biggest Spy Center (Watch What You Say)” written by James Bamford, published in Wired magazine on March 15, 2012. http://www.wired.com/threatlevel/2012/03/ff_nsadatacenter/all/1

11 From an article entitled “CIA Chief: We’ll Spy on You Through Your Dishwasher”, written by Spencer Ackerman, published by Wired magazine on March 15, 2012. http://www.wired.com/dangerroom/2012/03/petraeus-tv-remote/

3 Comments

Filed under analysis & opinion, Britain, mass surveillance, Uncategorized, USA