by Gary Griffin
There’s a certain irony that the party responsible for the creation of the welfare state should also be in power when the welfare state crashes the system.95 Social welfare, social security, Medicaid, socialism, free will, and individualism didn’t work either. Although the total price tag is not known, we’ve started with a one trillion dollar stimulus plan to begin a new administration’s democratic policies in 2009. Again, taxpayers foot this bill as well. The sad reality is that it’s not the people who created the mess who will be paying the bills. They will be dead when it finally comes due. To my knowledge, no debt has ever been paid from the grave.
America is in a pickle. Hard-working American citizens are hurting. The middle class is disappearing at an alarming rate, and no one has any answers. Our politicians play politics while our lives are in shambles. Why?
Thomas Jefferson once said that to control a nation’s economy is more dangerous than a standing army. How true! America will never be defeated militarily but economically? That’s another story altogether. The Roman Empire was never defeated, yet it doesn’t exist today. If that great empire that persisted for thousands of years fell, might America meet with the same fate?
Consider this fictitious conversation between a man and his god.
Here’s the scene: a man is born. As he grows, he realizes that he must have a means to meet his need for food, shelter, and clothing. So, he kneels to pray to his god.
“Oh, money god, I am in need,” says the man.
“Yes, my son? How may I help? Tell me of your needs,” says the money god.
The man prays, “I need food, clothing, and shelter. Please provide for me money god and send these things to me.”
“Here is some money for you, my son. Go forth and spend it to meet your needs. All I require from you is to do work to return this to me,” the money god commands.
The money god saw that it was good.
As time passed and the money ran out, the man knelt to pray again. “Oh, money god, I have a few other things on my list that I want. Can you also supply me with those wants?” said the man.
The money god responded enthusiastically, “Yes! I’m going to give you the money you require in the form of credit. This credit is debt, but you have no need to worry about that. Just ask, and you shall receive.”
The man responded, “Oh, money god, I don’t have the money today to pay for those things.”
“No problem,” said the money god. “You can pay it off in the future as you work. However, I must charge you interest on that money.”
“Why, money god? I thought it was free,” inquired the man.
“You have to pay homage to me. I am the lord your money god,” the money god responded with anger.
A few months passed, and the man lost his job.
“Oh, money god, I lost my job today, and I can’t find work,” said the man.
“My child, this is bad. No more money for you. I have spoken,” said the money god.
In a panicked tone, the man said, “But wait money god, haven’t I worked hard? How will I feed my children? Why can’t you just provide me with another job? Don’t you control this too?”
“That’s another department,” was all that the money god said.
With a pleading tone, the man said, “Oh money god, are you still up there? Are you still listening? Oh, money god, my children are hungry. I am without shelter, as my house has been foreclosed. Oh, money god, don’t you care? Where are you, money god?”
Sadly, this scene on some level is playing out throughout America. Money is the solution to all our problems — right? Not hardly.
The problem with this scene is that the man lost his job. As long as he is capable of finding a job and paying on the debt, the money train keeps moving. Here’s where people get into trouble—debt is a form of slavery. While Americans consider themselves free, it’s hard to have freedom when all that you have and own is debt. It reduces the average American to nothing more than a serf, and freedom in a country that his forefathers set free is denied. Such a future was predicted by Thomas Jefferson.96
Why is it that when we get into the situation that we are in today, the government is capable of printing up trillions of dollars, but that money never actually gets out to the working public? After it’s printed, the money is sent out to banks who loan it out to people with interest. However, they won’t loan you money if you don’t have a job. There seems to be a pattern here. The money god forgot to coordinate with the serf department, and the lender of last resort who thought there was no connection between money and work failed to print a large enough money supply so that the money god could meet all the needs of the people. As work ceased due to structural changes caused by bad social policies, the Prince Repub and the Prince Dem both moved to intercede on behalf of the people to encourage the money god to print up more money. Prince Repub pushed conservative values in the form of moralism and said that liberalism is socialism, and that the free market is the only way. Prince Dem said that change was necessary, and that he was now Progressive because he had heard the voice of the people. All the while, both princes promoted bankrupt ideas that are illustrated by a bankrupt nation and bankrupt people who are caught in a continuous time loop that never changes.
As time passed, and we prayed to the money god for relief, he became unresponsive, so the prince unleashed the leviathan.97 As the leviathan grew, he required more money in the form of taxes. The more he grew the more money he needed; until all that was left was people working to pay taxes to support the leviathan. The princes who were supposed to be protecting the people sold us out. Here we are in America the land of serfs.
How is it that the American dream has now turned into a nightmare, and how do we wake up from this nightmare?
A NEW POLITICAL PARTY AND A NEW GOVERNMENT
The emergence of a new society in America is at hand. It will require considerable work to put the new structures into place that will support the current and all future generations. How it will look will greatly depend on its creator. We, like God, have been given the special ability to create things in our own image. If left unchecked, forces will push our new society to ideas and beliefs of specific groups within our society. If current political parties have their way, it will look a lot like Prince Dem or Prince Repub, depending on who can gain control, wield the power, direct public opinion, and in the end, have the final say. Our political leadership will be presenting its version to the U.S. population as though it represents a single choice—the only choice. They present the choice as though it is a difference between the two when, in reality, they are one and the same. That sameness is found in the fact that both parties wish to use government to push their own ideologies and their ideological brands.
I suggest that the choice for our new society to be made by the American public is not one of government that consists of Prince Repub or Prince Dem. The choice before our populace is one of government and more government or liberty and freedom. That is why we are at this crossroads here in America. We have to make a choice. As we sit at this crossroads, we could take a left or a right (Democrat or Republican philosophy), but that choice would only keep the country traveling in circles. After all, if Prince Repub is the right, and Prince Dem is the left, then when we look at it these directions in terms of a geographical map representation, right would represent east and left would represent west. If you travel east far enough then you eventually end up west. Conversely, if you travel west far enough, then you also end up east. Although you will never get our two political parties to agree on this, they essentially represent the same thing. It is the same coin, just different sides.
America must move forward—not east, not west, not left, not right— forward. Neither the Republican Party nor the Democrat Party offers the solution to this problem. If fact, many of the problems we are experiencing right now are the result of their leadership, their social policies, their ideologies, in other words, their bad leadership. However, neither party is
willing to accept blame for the consequences from these bad policy decisions, but they are both quick to take all the glory for the good outcomes resulting from their decisions. Interestingly, if you really knew what they were doing, you would conclude logically that they would only make good decisions. Who intends to make bad decisions? Also, it stands to reason that if either party knew and understood what is going on, that they would move to control the current crises enveloping America – even stop it. The truth is that they haven’t such abilities, as their knowledge and understanding isn’t any greater than that of the average American citizen. Our politicians are just better at pretending that they have an answer.
To mediate the differences between two extremes found in each political party, I suggest a different term. I think the term constitutional liberal should be used. Although these have traditionally been thought of as opposites that represent either the far right or the far left, I contend that these two terms are used by interests in both extremes to mask identity, intent, and purpose. This term could be used to identify people who value the U.S. Constitution and what it stands for, namely small government with limited powers and individual rights and liberties; it could be used as a platform to create a new power base to form a new political power base.
Neither the Republican nor the Democrat parties welcome such ideas. In fact, the only thing that each party can agree on is that they don’t want a third party to capture seats in the House or Senate or win the presidency. It is, however, the entrenched interests represented by these parties that prevent American from moving forward. They do so by dividing the voting population down the center, thereby usurping our power as a nation to move forward.
Imagine stepping on the gas to make the car move forward; well, society also has an accelerator. It’s the power of force that comes from the individual creative energy created by the combustible engine of innovation as knowledge gasoline is ignited and translated into productivity through our work. This is the same power we need to move America forward, neither to the right nor to the left, but straight ahead. This is the power that will bring about the structural changes we need for American society to move forward in the twenty-first century.
As explained in the previous chapter on the social contract, that power is not derived from the government. Government is not the power source; the power comes from the people. What is this power and what is its source? What are its limits? These seem like simple questions, but for the average American, they are not simple.
At birth, every human being is born with power. That power has limits of course, but it is available to all. This power is the power to create, or, put another way, it’s the ability to produce. This is simply another way of saying that we have the power to work by transforming our ideas into finished products. A spark of creativity in the form of an idea that is brought to fruition through directed action could change your world and the lives of others. Sadly, many never come to this understanding. They never arrive at the knowledge of the truth of their power. They never realize that they have the power to create. The power to create can be used for both good and evil. This power can be either constructive or destructive.
In short, the power to move forward, to make the changes we need to make as a nation, resides with the people. The people of this nation are its only true asset. The nation’s strength and greatness can only be maintained if liberty in terms of power is returned to the people. This doesn’t mean that there’s no rule of law. In fact, the opposite is true. The greater the liberty, the greater the need for an absolute rule of law where all are equal before the law with the eyes of justice blindly applied in all circumstances. This system of government not only allows people to retain their power, it makes them responsible for the choices they make and the actions they take in using this power.
The American society is a system. Within this system, power is the rate at which work is performed. Energy is the ability to do work or cause change. Change is the key to moving our society forward into a prosperous century. We must escape the powerlessness or entropy currently enveloping the nation. The gas in a knowledge-based society is knowledge itself. Knowledge is power. Knowledge, like all power, must be applied with wisdom. Here is wisdom.
Power is the ability to do work, and work creates the productivity we need for the twenty-first century. This productivity is the only real value. This value is what props up our currency. If we wish to have prosperity, we must have hyper-productivity that is only possible through major systemic structural changes that support a twenty-first information society with a knowledge-based economy. This can only happen when government establishes social policies that represent the interests of the people and not self-interest and special interests. This must translate into a new political economy—one where individuals have the power, people are the masters, and government is the slave. In its current form with the current political parties, it’s unlikely that such changes can or will happen. We must return to a government by the people, of the people, and for the people in order to protect the prosperity of this nation for all future generations.
I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at the rear is my greatest foe.
Abraham Lincoln
THE HISTORY OF ECONOMIC THOUGHT
Economics and economic thought is still in its infancy. The men who have pursued this area of science, like all men of science, are constrained to write and speak ideas that they may refer to as theories like all other people engaged in any scientific endeavor. Like other theories, they must prove these out; they must be tested against the real world of daily affairs. What so often goes unnoticed by those who aren’t privy to the thoughts of these men is just how influenced their thinking is by others, within and without the discipline of economics. Just like the ideas that can be traced back to the beginnings of America’s political philosophies, we also have the early beginnings that can be traced back to thinkers of bygone eras and their economic philosophies.
“The ideas of economists and political philosophers,” wrote Lord Keynes, a great economist, “both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men who believe themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling the frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”98 Such ideas are embodied throughout the history of economics, and these very same ideas can be traced back to Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Joseph Schumpeter to name a few of those titans of economic thought.
The idea that some human beings are free, and that their plight in life is not determined by their birth, is a relatively new idea. For example, around 2,400 years ago Aristotle wrote that some men at birth are marked for subjection and slavery, while others are born to rule.99 It wasn’t until 1776 that the idea that men are born free and endowed with certain inalienable rights took root here in America. With this idea of freedom, there also came the need for betterment and improvement. Such needs required action or work—human labor. It was during this same year that Adam Smith published Inquiry into the Nature and Causes of the Wealth of Nations.100 With this work, men began to understand how freedom and liberty translated into economic well-being, and how the tasks that they performed fit into the whole of their society.
The Wealth of Nations, as it is commonly referred to, is an account of economics at the beginning of the Industrial Revolution that advocated a free market economy as more productive and beneficial to society as a whole. Key to the themes expressed in Adam Smith’s work is the “invisible hand” that naturally guides society through self-interest. He felt that where free markets are concerned if capital flows naturally on its own accord that it would, without t
he assistance of government, flow to the most productive hands, as the individual simply strives to better his own condition. Smith states that “the greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labor.” To illustrate this, he describes the extensive division of labor within the “trifling” industry of pin manufacture, along with the astounding resultant productivity and laborers’ dexterity; then he levers this as an introductory microcosm of the greater, yet less obvious division of labor in the broader economy. The advantages of this division were likely the driving force behind diversification of the trades and industry, and this diversification was greatest for nations with more industry and improvement. Agriculture is differentiated from industry for its comparative lack of division of labor, and the attendant lack of improved productivity; hence, while poor nations could not compete with rich nations in manufactures, they could compete in agriculture. Smith lists three causes, arising from division, of improved productivity:
the laborer’s dexterity - due to specializing, year-round, in a specific task;
time not wasted passing from one task to the next - as in agriculture, as well as the more consistent and focused effort when working in just one area; and
the machines and tools that have evolved in conjunction with increasingly specialized labor.
Of all the ideas expressed in his work, one of the most influential in classical economics is the idea of the labor theory of value. The labor theories of value (LTV) are economic theories of value according to which the values of commodities are related to the labor needed to produce them. Labor theories of value prevailed amongst classical economists, including Adam Smith and David Ricardo, culminating with the socialist theories of Karl Marx. Such ideas were a part of mainstream economic thought until the earlier part of the twentieth century. Classical economist David Ricardo’s labor theory of value holds that the value of a good (how much of another good or service it exchanges for in the market) is proportional to how much labor was required to produce it, including the labor required to produce the raw materials and machinery used in the process.101 David Ricardo stated it as, “The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labor which is necessary for its production, and not as the greater or less compensation which is paid for that labor.” In this heading, Ricardo seeks to differentiate the quantity of labor necessary to produce a commodity from the wages paid to the laborers for its production. However, Ricardo was troubled with some deviations in prices from proportionality with the labor required to produce them. For example, he said “I cannot get over the difficulty of the wine which is kept in the cellar for three or four years [i.e., while constantly increasing in exchange value], or that of the oak tree, which perhaps originally had not 2 s. expended on it in the way of labor, and yet comes to be worth £100.” Of course, a capitalist economy will stabilize this discrepancy until the value added to aged wine is equal to the cost of storage; if anyone can hold onto a bottle for four years and become rich, it will be done so much it will be hard to find freshly corked wine. There is also the theory that adding to the price of a luxury product increases its exchange-value by mere prestige. Ricardo’s labor theory of value is not a normative theory, as are some later forms of the labor theory, such as claims that it is immoral for an individual to be paid less for his labor than the total revenue that comes from the sales of all the goods he produces.