“For the master’s tools will never dismantle the master’s house. They may allow us to temporarily beat him at his own game, but they will never enable us to bring about genuine change.” – Audre Lorde
In the previous post, The Final Frontier – A blueprint for building a life-value rebased global economic and political system for healing and solidarity, I endeavoured to show how we can work within the present system to diagnose, treat and prevent life-disabling individual, social and planetary pathologies. Professor John McMurtry’s timely article, Beyond the Empire of Chaos: building ecology into economy, provides the evidence in exquisite detail why all aspect of our individual, social and ecological spheres have been life-depreciated and why we need to take seriously now his insights as it pertains to creating a new political and economic system that preserves and protects our life capital.
‘Natural capital’ is an understandable attempt to put a value on our living planet and all the services it provides for us, writes John McMurtry. But it fails by measuring nature in dollars and cents. We need to develop a new concept of ‘life capital’ that must be preserved from exploitation and degradation no matter what the economic cost, because we, and Earth herself, depend upon it.”
“Life capital is the underlying ground long eluding us – the ultimate base of human society and development, and the only concept which unifies across social, ecological and organic systems. It is the unseen foundation of the unifying alternative.”
What I hope to do in this article is to show where we are now, and what may ensue if we do not change course, and how we can, if we are no longer in denial and so choose, help create a life-coherent democratized political economy. This collective human effort would use McMurtry’s primary axiom of life value to steer the construction and operationalisation of a life-value based unifying alternative model of management of all of our “households”, be it at the family, community, bioregional and planetary level.
In today’s article by Peter Koenig, a former World Bank economist entitled, The Collapse of the Western Fiat Monetary System may have Begun. China, Russia and the Reemergence of Gold-Backed Currencies, it appears that China has begun to challenge US dollar hegemony, and the race is now on to create a new global reserve standard based on gold-backed currencies. He writes:
“…the Yuan late last year was accepted by the IMF in its SDR basket as the fifth reserve currency, the other four being the US dollar, the British pound, the euro and the Japanese yen. The SDR, or Special Drawing Right, functions like a virtual currency. It is made up of the weighted average of the five currencies and can be lent to countries at their request, as a way of reducing exchange risks. Being part of the SDR, the yuan has become an official reserve currency. In fact, in Asia the yuan is already heavily used in many countries’ treasuries, as an alternative to the ever more volatile US dollar.
It is no secret, the western dollar-led fiat monetary system is on its last leg – as eventually any Ponzi scheme will be. What does ‘fiat’ mean? It is money created out of thin air. It has no backing whatsoever; not gold, not even the economic output generated by the country or countries issuing the money, i.e. the United States of America and Europe. It is simply declared “legal tender’’ by Government decree.
No pyramid scheme is sustainable in the long run and eventually will collapse. It was invented and is used by a small invisible upper crest of elite making insane amounts of profit on the back of the 99% of us. Since these elitists are in control of the media with their lie propaganda, as well as the warmongering killing machine, US armed forces, NATO, combined with the international security and spy apparatus, CIA, MI6, Mossad, DGSE, the German Federal Intelligence Service (BND) and more, we are powerless – but powerless only as long as we ignore what’s really going on behind the curtain.
Our western monetary system is based on debt has all the hallmarks of a failing global monster octopus. The US banking system was deregulated in the 1990’s by President Clinton. The European vassals followed suit in the early 2000’s. About 97% of all the money in circulation in the western world is ‘made’ by private banks by a mouse click in the form of ‘loans’ or debt. Every loan a private bank hands out is a liability on that bank’s books; a liability that bears interest, the key generator of the banks’ profits. Profit from thin air! No work, no production, no real added value to the economy.
If and when the banks within this web of debt begin recalling their outstanding liabilities, they may set a non-stoppable avalanche in motion – leading to a chaotic end of the system. This end-run may have just begun. We have seen a gradual build-up since the end of WWII with the armament of the Cold War farce, and a high point with the manufactured sub-prime crisis of 2007 / 2008 / 2009, prompting an artificial and endless global economic crisis which may come crashing down in 2016 / 2017.
The damage may be humongous, leaving behind chaos, poverty, famine, misery – death. With the invisible ruling elite having cashed in, remaining on top and being liable to start again from scratch. – If we let them. It always boils down to the same: An uninformed people can be manipulated at will and is left in awe when hit by unexpected events, like acts of terror by bombs or banks.”
There is a lot more information in the article that is worthy for our own edification and critical appraisal. But for me, this is the conclusion that shocked me but at the same time provided an insight into the way forward.
“Washington may have one last joker up its sleeve – reintroducing the ‘gold standard’, the very gold standard that Nixon abandoned in 1971. The US have also been accumulating huge amounts of gold over the past 25 years. A new US dollar gold standard would most likely be set at a ratio that would wipe out all US debt, including future ‘unmet obligations’ (GAO – General Accounting Office) of about US$ 125 trillion. It would attempt to keep the western industrialized world in Washington’s orbit, but might lose most of the developing world owning natural resources coveted by the west. These countries oppressed and colonized for centuries are likely to gravitate to the new China-Russia alliance – leaving the outsourced and outwitted west alone without workforce – and with a massive but outdated military power.
To counter the build-up of this criminal last ditch sham by the western Zionist banking czars, China and Russia have been preparing over the last few years an independent financial system, delinked from the US dollar and which now incorporates the BRICS, the SCO nations, as well as the Eurasian Economic Union. This association of countries and economies account for about half the world’s population and at least one third of the globe’s economic output; a fact totally ignored by the mainstream media, for obvious reasons. The Machiavellian sinking ship does not want its passengers to jump to safety.
The 19 April 2016, announcement by China of its gold-backed yuan, no longer convertible into dollars, may just trigger an economic shift into the ‘eastern camp’. Many countries are wary and tired of western exploitation, enslavement, threats of sanctions, oppression and an ever present danger of invasion by the killing machine. The decoupling of the dollar by a third of the world economy may indeed open new horizons, creating new alliances, new hope for a more equal and just world.”
What was shocking was that nothing appears to have changed, except of more of the same, where we are using the same master’s tools to dismantle the master’s house, and enabling one death economy after the other. (Please see John Perkin’s updated The New Confessions of an Economic Hit Man for an indepth analysis of why Chinese-Russian hegemony, or a bipolar world, is not the solution.) As he mentions in his book, we need to birth a life economy. The gazillion dollar or yuan question now becomes, how do we proceed and move on?
In my expertise of practice in medicine, there is a saying that “Right diagnosis, Right treatment; Wrong diagnosis, Wrong treatment.” Given my readings and close followings of the deep politics of the past and present, only one person has provided a unifying diagnosis that can explain in one swoop all of the deficiencies in our political and economic system, and provide a treatment plan that would be fully life-coherent. He is none other than Yanis Varoufakis, the former Greek finance minister.
In his excerpted book, Europe after the Minotaur: Greece and the Future of the Global Economy, he writes:
“Self-restraint, as the philosophers know, is a rare and bewildering virtue. It is also a virtue that tends to come unstuck the more powerful we become. In this it resembles the relationship between trust and success: the stronger the bonds of trust between us, the greater our collective and individual success. But success breeds greed, and greed is a solvent of trust. Similarly with self-restraint: having it can help one succeed. But then success poses a threat to one’s self-restraint.
This paradox of success, as it pertains to self-restraint, proved the undoing of both of the global ‘realities’ that the United States created after World War II. The first time, it was the US government that fell prey to its negative engineering. The second time, it was America’s private sector, and in particular its financial sector. To see how these two failures were snatched from the jaws of success, let us consider two questions, one concerning 1971, the other 2008.
What tripped up the Global Plan, causing it to lose its footing and to collapse in 1971? The answer: the US government’s inability to exercise self-restraint vis-à-vis its own capacity to exploit its original exorbitant privilege; its ability, as custodian of the world’s reserve currency, to print global public money at will.
And what was it that wounded the Global Minotaur mortally in 2008? Again, it was an American failure at self-restraint. Only this time it was not the US government’s failure (even if a case can be made that it happened on the US government’s watch) but that of the private sector in general and of the banks in particular: the American financial sector failed spectacularly to exercise self-restraint vis-à-vis its capacity to exploit its newfangled exorbitant privilege; its ability, as custodian of global financialisation, to print global private money at will….”
“…And now what? In search of history’s next actors
Without a GSRM [Global Surplus Recycling Mechanism] materialising soon, the future is better left uncontemplated. For, on the one hand, we shall have a West caught in the poisonous webs of the dead Minotaur’s handmaidens, unable to rise to the challenges of our post-2008 world, stagnating, losing its grip on reality, failing to match its outcomes to its capacities or to create new ‘realities’. On the other hand, there will be the emerging economies, bristling with people ready to transcend constraints, to spawn new ‘realities’, to expand existing horizons. Such a two-speed world is highly inflammable, predicated as it is upon the clash between those speeding ahead economically and the others who stagnate while maintaining a virtual monopoly over military power, over the world’s reserve currency, and over the planet’s transnational institutions (the UN Security Council, NATO, the OECD, the IMF and the World Bank).
So, if a GSRM is sine qua non for a stable globalised social economy, and without it we run the risk of returning to a pre-World War II form of radical precariousness (with the added risks emanating from modern means of mass annihilation), is there a brighter, an alternative, future?…”
“…The omens are thus not good. Never before have so many powerful people understood so little about what the world economy needs in order to recover. Never before have history’s actors been so painfully absent. Our only hope is that history often forges new possibilities at a time when none seems present. So, let us allow optimism to shine through the darkness and pose the question: if the Global Minotaur is to be replaced by a well-designed, collectively agreed GSRM, who might act as the agent of this birth? Who will emerge as history’s actors this time?
Previously, I argued that this time historical agency might spring out of the emerging economies. However, I must make a confession a few sentences before the book’s end: I do not believe it will. With Europe out of contention, and the emerging nations buffeted by both the Crisis and a lack of tradition in mould-breaking on a global scale, once more it is the United States that must provide, perhaps for the last time, the missing agency. Put simply, I just cannot see how genuine progress towards building a wholesome GSRM can be made otherwise. Of course, the prerequisite for this is that America’s policy makers grasp the meaning and irreversibility of ‘their’ Global Minotaur’s demise, and are energised by the dystopian prospect of a permanently stagnation-prone world economy. Then and only then is there a chance of a collective future that is rational, stable and pregnant with an iota of hope that our latest Crisis will be allowed to unleash its creative potential.”
At once I recognised that this formed the framework to break the old mould using new tools based on life-value and life capital. In effect we would have created a Global Life-Capital Recycling Mechanism based on the primary axiom of life value, and come off of the old standard of money-value maximization. Moreso, the total stock of our life capital and life necessities would be now the defacto global reserve standard by which all currencies would be rebased, and now pegged to a new virtual currency (to be revealed below). We have now dismantled the Master’s House of Life-debasing finance and replaced it with a Life-Coherent Mansion built with life-coherent tools.
So which model do we now turn to going forward? How can we convince the best and brightest minds among us to put all of their energies and passion into birthing this new life economy into being? How can we help the politicians to see that it is in our best interest and by extention theirs to help transition and steer the collective consciousness of the global community away from a death economy, fermented on fear, debt, insufficiency, and divide and conquer strategies, to a life economy now distilled with hope, gratitude, contentment, unity and above all responsible stewardship?
Again, Yanis Varoufakis provides more details of his vision of a treatment plan which is worthy of further analysis and synthesis. Its significance lies in the fact that it has some bearing on life-value analysis of labour. (Please see Professor’s Jeff Noonan’s papers Ecological Economics and the Life-Value of Labour, and Self-restraint, Human Freedom and Conditions of Socialist Democracy.)
I will leave you with the text and video (with Q & As) of his TED Global Talk THE ECONOMIC CASE FOR AUTHENTIC DEMOCRACY: TED GLOBAL-GENEVA 8th December 2015:
“THE ECONOMIC CASE FOR AUTHENTIC DEMOCRACY: TED GLOBAL-GENEVA 8th December 2015
Yesterday I delivered a TED Global talk in Geneva on the future of democracy and capitalism. While awaiting the video, here is the text of my talk.
INTRODUCTION: DEMOCRACY IS NOT INEVITABLE
In the West we make the colossal mistake of taking it for granted. We see democracy not as the most fragile of flowers that it really is but as part of our society’s furniture – as an intransient given.
We also believe that capitalism inevitably begets democracy. It doesn’t! Capitalism may have yielded liberal democracies in America and Europe but there is nothing inevitable about it.
Singapore’s Lee Kwan Yew and his great imitators in Beijing have demonstrated that capitalism can flourish, economic growth can be spectacular, while politics remains democracy-free.
It would not be inaccurate to say that most of the emerging societies in Asia and Africa may be training their antennae toward Silicon Valley but they are not terribly keen to emulate our Western experiment with liberal democracy. China and Singapore will do for them as role models. Indeed, liberal democracy is now receding fast even in the places in which it evolved.
Earlier this year, as the finance minister of a freshly elected Greek government, I was told in the Eurogroup, the governing body of the Eurozone, that my nation’s democratic process, our elections, could not be allowed to interfere with established economic policy. I can think of no more powerful vindication of Lee Kwan Yew, of the Chinese Communist Party and of cynical friends who keep telling me that democracy would be banned if it ever threatened to change anything.
Today, now, I wish to present to you the economic case in favour of an authentic democracy. To argue, against the edicts of Lee Kwan Yew, the Chinese Communist Party and the Eurogroup, that a genuine, boisterous democracy is necessary. That without it, our economic future will be bleak, our societies nasty, and our technological innovations wasted.
Speaking of waste let me point out a little-known paradox that threatens our economies today.
I call it the Twin Peaks paradox. One peak is the mountain of debt that is casting its long shadow everywhere. In Europe, in the United States, in China, the world over. Everyone can see this debt mountain. But few notice its twin – a second peak lurking in its shadow: a mountain of idle cash belonging to rich savers and corporations too terrified to invest their savings in productive activities that can generate the incomes necessary to extinguish the debt mountain and also produce things humanity needs desperately, for example green energy.
Two numbers tell the story: In the last three months, 3.4 trillion dollars was spent in America, Britain and the Eurozone on industrial plants, machines, equipment, roads, houses, railways, schools, office buildings etc. 3.4 trillion sounds like a lot of money. But consider another number: $5.1 trillion of idle cash which is slushing around in America, Britain and the Eurozone, doing nothing except inflating stock markets and bidding up house prices.
So, a mountain of debts and a mountain of idle money form twin peaks that refuse to cancel each other out through the normal operations of the markets. The result is stagnating wages, more than a quarter of 25-to-54 year olds out of work in America, Europe and Japan, and low demand that, in a never-ending circle, reinforces the pessimism of potential investors who fear… low demand thus bringing it about by not investing. Exactly like Oedipus’ father who, motivated by the oracle’s prophesy that he would be killed by his son, unwittingly created the conditions that ensured Oedipus would kill him.
This is my quarrel with capitalism: its gross wastefulness in using available resources. The waste of so much idle money that should be energised to develop human talents, improve lives and, above all else, finance the development of new green technologies that can save Earth.
- The markets cannot address the Twin Peaks problem because of their Oedipus complex I just described.
- The nominally-democratic states of the West cannot do it either because of their deficit-phobia and an unwillingness to upset the master of finance.
- The authoritarian, top-down, states of the East know not how to empower their citizens to spend more of their savings, and to do so on things that are good for the planet.
Can I be right in proposing democracy as the remedy? I believe so.
DEMOCRACY THEN AND NOW
But first, what exactly do we mean by democracy?
Aristotle defined democracy as the constitution in which the free and the poor, being in the majority, control government. It is, of course, true that Athenian democracy excluded too many – women, migrants and slaves. But it would be very wrong to dismiss Athenian Democracy courtesy of whom it excluded. For what gave Athenian democracy its substance was not the exclusion of slaves, women and migrants. It was the inclusion of the working poor who acquired not only the right to free speech but, crucially, the right to political judgments carrying equal weight in determining matters of state.
Naturally, Athenian democracy did not last long. Like a candle that burned brightly it burned out quickly. In any case, our democracies do not have their roots in Ancient Athens but in the Magna Carta, in the 1688 Glorious Revolution and in the American Constitution.
Athenian democracy was centred on the master-less citizen who was not a servant to anyone and empowered the working poor citizen. The Magna Carta, in contrast, was a charter for masters. As for Western liberal democracy, it emerged only when it was possible fully to separate the political sphere from the economic sphere, and to confine democracy to the political sphere, while guaranteeing that the economic sphere, the corporate world, remained a democracy-free zone.
Once separated, the economic and the political spheres engaged in an epic struggle, with the economic sphere constantly colonising the political sphere, eating into its power.
Have you wondered why politicians today are not what they used to be? No, it is not that their DNA has degenerated. These days politicians may be in government but not in power because power lies in a separate economic sphere beyond their reach. It is no wonder politics attracts fewer and fewer of the bright.
Aye there’s the rub: Exactly like predators who starve to death after they have decimated the prey population, so does the economic sphere fall prey to its own success at cannibalising the political sphere. Rising corporate power increases inequality, lowers the level of demand for the corporations’ products and so CEOs become too scared to invest fearing the low demand that their fear is producing.
In short, the greater the success of capitalism at taking the demos out of democracy, the higher the Twin Peaks and the greater the waste of humanity’s wealth.
WHAT CAN WE DO? OPPORTUNITIES & NIGHTMARES
To end this waste we must re-unite the economic and the political spheres into one sphere under the control of the demos – just as in Ancient Athens, except without the slaves, nor the exclusion of women and migrants.
This is not a new idea. The Marxist Left had it a century ago when it tried to bring the working poor to the fore. We know how badly that ended. What the Soviet debacle taught us is that only by a miracle will the working poor wrestle control of government without new forms of brutality and waste.
But there is an alternative: Eliminate the working poor! Capitalism is doing this anyway by replacing human low-paid workers with automata, androids and robots. But, as long as the economic and political spheres remain separate, automation will only make the Twin Peaks even taller, waste even loftier, and social conflicts ever deeper – including in China.
The solution is to use the new technologies to unify again the political and economic spheres. But if we do unify them, we better also democratise the new unified realm lest we end up with a surveillance-mad super-autocracy – a dystopia where The Matrix–The Movie seems like a documentary.
Put differently, capitalism does not need the Marxist Left to overthrow it. It is busily creating technologies that will pull the rug from under its feet.
The question is not whether capitalism will survive the technologies it is spawning. The question is what will succeed capitalism after capitalism has overthrown itself.
A dystopia, resembling The Matrix? Or something more akin to a utopian Star Trek society, in which the machines serve humans who then spend their energy exploring the universe and debating endlessly the meaning of life in some hi-tech Agora?
It is my conviction that a happy scenario is possible. It is the Athenian Model with a Hi-Tech Makeover.
What practical forms would it take?
Let me share two examples.
At the level of the enterprise, imagine a capital market where you accumulate capital as you work, and which follows you as you move from one company to another – with each company owned solely by those who work in it at the time. Then everyone’s income comes only from capital, from profits, and the very concept of the wage disappears, as each worker receives her profit share plus any benefits from a state that tops up incomes from taxes on aggregate profits. No more separation of those who work but not own from those who own but do not work in the company – no more tug of war between labour and capital – no more gaping gap between those who save and those who invest –no more Towering Twin Peaks.
Turning to the global political economy, imagine that all national currencies have a free-floating exchange rate with one common, digital currency, let’s call it the KOSMOS, to be issued by the International Monetary Fund and the G20 on behalf of humanity. Imagine further that all trade is denominated in KOSMOS with each country paying, automatically, into a common global investment fund a sum of KOSMOS proportional to their trade deficit or surplus – money to be used to invest into green technologies in the part of the world where investment funds are scarce. This is not a new idea – it is a high tech version of what John Maynard Keynes had proposed in 1944 at the Bretton Woods conference. Except that now we have the technology to implement it in the context of a democratised global political-economic sphere.
The world that I am describing to you is a world that is simultaneously libertarian (focusing on empowered individuals), Marxist (having confined the wage-profit distinction to the dustbin of history) and Keynesian, globally Keynesian.
But above all else it is a world in which we can begin to imagine an authentic democracy.
Will such a world dawn?
Or shall we descend into a Matrix-like dystopia?
The answer depends on the political choice we make collectively.
Yes, it is our choice. And we better make it democratically!
Published on Feb 15, 2016
Have you wondered why politicians aren’t what they used to be, why governments seem unable to solve real problems? Economist Yanis Varoufakis, the former Minister of Finance for Greece, says that it’s because you can be in politics today but not be in power — because real power now belongs to those who control the economy. He believes that the mega-rich and corporations are cannibalizing the political sphere, causing financial crisis. In this talk, hear his dream for a world in which capital and labor no longer struggle against each other, “one that is simultaneously libertarian, Marxist and Keynesian.”