Eight Days A Week - The Fourth Wave

Eight Days a Week – The Fourth Wave
(A study on the present and previous financial and economic crises,

and how to avoid similar crises in the future)
Written by Geert Callens
You can’t judge a book by looking at the cover (Willy Dixon).

Eight Days A Week – The Fourth Wave Author: Geert Callens
Once you have read the book, you will understand the cover.
Summary
The problems we are faced with

On Bloody Monday, September 15th 2008, The Down Jones Industrial Average dropped by
504 points (4,4%), its largest drop since September 17th 2001, when trading on the New York
Stock Exchange was resumed after the 9/11 attacks.
Since then, most countries in the world are faced with a lot of financial and socioeconomic
problems:
• The most severe financial and economic crisis since the 1930s.
• Lower economic growth.
• Massive layoffs for blue collar and white collar workers alike.
• Budgetary problems for governments in most countries due to the massive
financial support given to the banks in order to prevent a financial meltdown that
could have be the result from the run on the banks by the public in order to save
their savings. Furthermore, governments receive lower income taxes, taxes on
profits of companies and revenues from TVA as private consumption has dropped.
• Problems with financing the social security system and the pension system, due to
the demographic evolution, as the post World War II baby boom generation is now
massively retiring from active duty and people tend to live longer.
In addition to this, there are also some other urgent problems to tackle:
• Environmental problems, global warming, CO2 emission, more severe storms and
inundation’s like in France, Rio de Janeiro and Pakistan in 2010, more subsidences
due to heavy rainfall and deforestation, more forest-fires due to extreme and long
periods of drought.
• Mobility problems around big agglomerations like Antwerp and Brussels in
Belgium and in many other countries, which could be solved by constructing more
roads, viaducts and tunnels. On the other hand, the Belgian government fails to
even maintain the present road infrastructure: due to the mildly severe but long
winter of 2010 the roads in Belgium are currently in a lamentable state. And the
government lacks the budgetary means to solve the problem in a fundamental way.
This seems to be a Gordian knot, which could lead to a social Armageddon. In most of the
articles one can read about this matter, economists and politicians say that the necessary
remedies will be painful for the public. But is this really so? Couldn’t it be that they do not
understand the real cause of financial and economic crises, and thus not the necessary
remedies?
2
Furthermore, economists tell diverging things about the way out of this crisis, as most
economic theories are just “ideologies in disguise”. And politicians…, well politicians are per
definition ideological and they seem to know it either.
On the diverging or even conflicting stories economists are telling us about the crisis and the
ignorance of politicians, I can refer to the following rather funny historical anecdote. Edwin
Nourse was economic advisor of Harry S. Truman, the 33rd president of the USA from 1945
till 1953. Nourse had been fond of saying “on the one hand [statement 1]…, but on the other
hand [the negation of statement 1]…” After some of these “zero-sum-statements”, President
Truman’s reaction was: “Can’t somebody bring me a one-handed economist?”
Solutions for every single problem seem to be expensive or even unpayable. They will surely
lead to higher taxes and/or inflation, eroding the purchasing power of the people and thus also
the opportunities for future economic growth. Many of these measures will be a burden on the
environment (more roads, more industrial zones, less space for nature and leisure-time...) and
create new problems.
In an interview in January 2010 with a UN diplomat I heard that the UN Millennium
Development Goals set at the start of this millennium to reduce poverty in the Third World
countries and the developing countries with 50% by 2015 will not be met, among other
reasons due to the current financial and economic crisis in the western industrialized
countries.
Furthermore, the UN diplomat mentioned that in developing countries with a reasonable
economic growth the income inequality increases: the rich are getting richer, while the poor
are getting poorer. This phenomenon can also be observed in industrialized countries like the
USA, where the purchasing power of the middle class has dropped dramatically and
concentration of wealth has increased since the days of President Nixon.
In a speech given by Mr. Karel De Gucht, at that time Belgian Minister for Foreign Affairs,
at the 62nd General Assembly of the United Nations in New York, October 1st 2007, one can
read the following:
“We live in an increasingly complex world, facing increasingly diverse challenges.
Actions taken in isolation are no longer sufficient.”
This is indeed the case for the list of problems mentioned above. Looking for isolated
solutions for problems that are interrelated will not work: it is contra-productive and
expensive. On the website of the American activist G. Edward Griffin one can read the
following lines: “One of the most profound differences between dogs and cats is that cats
focus on effects while dogs focus on causes. If you toss a pebble at a cat, it will look at the
pebble. If you toss it at a dog, it will look at you. In this respect, too many people are like cats.
They are preoccupied with the details of their own problems, and they flutter like wing-
clipped pigeons, complaining about this and that without knowing why these things are
happening”.
So let us concentrate on the causes and their interrelatedness rather than the individual effects.
A comprehensive and holistic approach is needed in order to come to a lasting solution. In
this study Eight Days a Week – The Fourth Wave, I do not look for isolated solutions for
isolated problems. I have included all the socioeconomic problems in an overall picture –
even war. By doing so, I have demonstrated that the current financial and economic crisis is
systemic. But to my own very surprise, all the problems can be solved in a very elegant and
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human friendly way. We can avoid the social setback that most of the economists and
political leaders are advocating.
The approach I have used

Any information processing system, be it automated or not, uses a certain logic on a set of
data in order to come to a conclusion. Also human beings do this.
The logic that is used can be correct or wrong. Obviously, using the wrong logic will not
result in a correct conclusion. Human beings claim to be rational, especially in the academic
world, and it is rather easy to find the faults in a line of reasoning. But on the other hand we
never seem to agree on main topics in economy – even in the academic world – and politics:
everybody claims to be sincere and to tell the correct things.
But ratio is only one part of the picture. Data are as important and – unfortunately – much
more difficult to control, as it is not just a question of being correct or wrong. This is rather
easy to verify by controlling the facts. Next to correctness, data have another aspect: are the
data complete or not? And is all the information we use in our logic relevant? In other words,
is there redundant information in our data set that might confuse us, or others?
In the following table we show what the result is of a perfectly correct logic on a set of data:
Data are → Incomplete Complete Redundant

↓
Incorrect Wrong conclusion Wrong conclusion Wrong conclusion
Correct Wrong conclusion Correct conclusion Not necessarily the

correct conclusion, as
irrelevant data might
have obscured the
correct conclusion.
We will only come to the correct conclusion when we use the correct logic on correct,
complete and no redundant data. That is why in court, the witness has to tell the truth, the
whole truth and nothing but the truth.
Furthermore, deliberately telling half of the truth is worse than telling a lie, as the receiver of
the information can expose a lie by checking the facts, but he will not necessarily search for
the data that were (deliberately) omitted.
And when a problem is correctly and completely formulated, the solution is already half way.
That is the reason why I have used in this study a holistic approach rather than an
reductionistic one, which is doomed to fail anyhow.
In an article by Raghuram Rajan, Professor at the Booth School of Business in Chicago,
written as a reaction of Paul Krugman’s critique on his book “Fault Lines”, one can read the
following lines: “First, Krugman starts with a diatribe on why so many economists are ‘asking
how we got into this mess rather than telling us how to get out of it’ Krugman apparently
believes that his standard response of more stimuli applies, regardless of the reasons why we
are in the economic downturn. Yet it is precisely because I think that the policy response to
the last crisis contributed to getting us into this one that it is worthwhile examining how we
got into this mess, and to resist the unreflective policies that Krugman advocates.”
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Indeed, before one can start to improve things, one should first know what went wrong and
why it went wrong. A good starting point is to ask the question “Cui bono?”, as in a criminal
investigation. Who took advantage of the crime?
I think some free market adepts don’t like the idea of a thorough investigation of what really
caused the financial and economic crisis (as was done in the years after 1929, leading to
several measures to restrict financial speculations and to avoid speculative bubbles), not only
because this would lead to more regulation, or this would demonstrate that they have
supported and advocated a system that is inherently unstable and thus wrong, but rather
because some of them are very well aware what went wrong and why, and they don’t like the
idea that these mechanisms would become exposed to a broader public. “Cui bono?” Not the
public in general, but a small élite. The mechanisms that cause the recurrence of financial and
economic crises are indeed also the cause of the mass atrocities all over the world (wars, civil
wars, genocides, famines…).
A lot of people in the rich countries are just NIMBY’s, who are not concerned with
genocides, famines, wars, pollution and global warming, as long as these do not happen in
their back yard and are not too visible on TV. But these same people are also affected by the
financial and economic crisis.
So, if they could understand the underlying cause of their own material misfortune, then
maybe they could be willing to show some solidarity with the people in the poor countries
who are the victims of mass atrocities and the global over-cropping of natural resources.
Reoccurrence of problems and the cause of this

During the course of history, financial and economic problems have reoccurred on many
occasions: the 1930s, the late 1970s and early 1980s, the early 1990s.
A society functions according to a certain socioeconomic paradigm, which is based on a set of
premises more or less in accordance with reality. Several social groups in society set
objectives and act toward those objectives according to those premises. If some premises do
not agree with reality, but, on the contrary, are based on a wrong understanding or
interpretation of reality or even on ignorance, then the performed actions will not lead to the
desired objective. Instead, one will be faced with unexpected obstacles. This could lead to
problems, frustration, even aggression and crises.
Because one has started from the wrong premises, one wills most likely look for the causes of
the failure and possible solutions in the wrong directions too. Otherwise one would have
started in the right direction from the beginning! One will make the wrong diagnosis. One will
even point to a scapegoat as a reason for failure1.
When a society functions according to a paradigm that is not in accordance with reality, and
when, in spite of the crisis, it still follows the same line through, when it does not learn the
necessary lessons and when it does not adapt its paradigm, then that society will again and
1
As professor Gar Alperovitz writes in the introduction of his book America Beyond Capitalism:
“Moreover, if the system itself is at fault, then self-evidently – indeed, by definition – a solution would ultimately
require the development of a new system… The conventional wisdom, of course, leaves us at a dead end. The
old ways don’t work but no one even imagines the possibility of systemic change.”
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again be faced with the same kind of crises - even with increasing intensity -, it will again and
again go through the same scenario just as the principal character in an ancient Greek drama:
“The tragic error in tragic drama is walking in blindness so that the tragic hero who intends to
accomplish a certain result with his actions accomplishes the exact opposite.”2
The cause for recurrence and periodicity in economy can be found in the fact that the current
socioeconomic paradigm is not in accordance with reality. The ever-repeating cycle of
economic crises (and wars) can only be interrupted if we succeed to transcend the limitations
of the present paradigm and if we can expand or even transcend our paradigm, cut the wrong
premises and add new correct premises to it, so it is more in tune with reality.
Does all this implies that events are predetermined and that we have to be their
helpless victims? Not really! All it means is that things move in terms of
predictable cycles that keep occurring time after time until their true cause is
discovered. Once we know their cause, we can stop them. After all, humanity
has broken disastrous cycles in the past and will do so in the future as well.
This is how all evolution occurs. We keep enduring recurring problems of one
sort or another, until they become intolerable; then someone discovers their
true cause and helps us break the cycle. Afterwards a new cycle takes over.
However, in view of the longevity of the patterns described in this work, it is
clear that disrupting them will not be easy. Nothing short of fundamental
reforms will work.
Ravi Batra: The Great Depression of 1990, p 94.
At the start of this millennium, United Nations Secretary-General Kofi A. Annan stated this as
follows: “We will have time to reach the Millennium Development Goals – worldwide and in
most, or even all, individual countries – but only if we break with business as usual.”
Muhammad Yunus, Nobel Prize Laureate for peace in 2006 has stated this as follows:,
Unfortunately, media coverage gives the impression that once we fix this
crisis, all our troubles will be over: The economy will start to grow again, and
we can quickly and comfortably return to “business as usual”.
But even if it was desirable, business as usual is not a viable option. We forget
that the financial crisis is only one of the several crises threatening humankind.
We are also suffering a global food crisis, an energy crisis, an environmental
crisis, a healthcare crisis, and the continuing social and economic crisis of
massive worldwide poverty. These crises are as important as the financial one,
although they have not received as much attention.
Muhammad Yunus, Building Social Business – The New Kind of Capitalism
that Serves Humanity’s Most Pressing Needs, p xiv
But “braking with business as usual” is very difficult. Change is indeed needed, but in what
direction and based on what socioeconomic premises? What are the wrong premises? And
what are the correct premises we are missing?
2
Claude Steiner, Scripts People Live, p 60-61.
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Some stubborn economic and social misconceptions

In the capitalistic system, one of the most important objectives of private business is to realize
profit as a reward for the invested capital and for entrepreneurship.
But there is something strange going on with this profit. We will discuss the notion of profit
from the point of view of the businessmen, the (neo-) classical economists and even (neo-)
Marxist economists, and formulate some paradoxes and inconsistencies in the line of
reasoning of all of them.
This will lead us to find the real social origin and the purpose of profit for companies. We will
demonstrate that profit for private companies is a result of the economic growth, which one
could consider as ‘profit-for-society’ as a whole. The way how this economic growth or
‘profit-for-society’ is distributed among the several economic and social participants
determines future economic growth thus future profits for companies.
However profit, a result of the economic growth and part of the ‘profit-for-society’, has
become a goal on itself. This shift in emphasis, together with some other wrong social
premises that are discussed later on, are the cause of the recurring financial, economic and
social problems. And even wars!
An injudicious feedback policy of the ‘profit-for-society’ towards the several economic and
social participants, based on the wrong economic and social premises, leads to the erosion of
the purchasing power of the “common people”, and thus to a decline of the economic growth.
A more judicious feedback policy, on the contrary, based on correct economic and social
premises, can lead leads to the increase of the purchasing power of the “common people”, and
thus to a higher economic growth, more ‘profit-for-society’ and thus higher profit for
companies, and even to a more peaceful world.
Some stubborn social misconceptions

Some other social misconceptions originated since the days of the British East India
Company, and they are even the motive for some forces in society in order to boycott the
Millennium Development Goals:
• John Locke provided an argument that has continued to dominate the modern
worldview down to the present. Once we cut through useless custom and
superstition, argued Locke, we see that society, being made up solely of
individuals creating their own meaning, has one purpose and one purpose only: to
protect and allow for the increase of the property of its members. Pure self-interest
thus becomes, in Locke’s formulation, the sole basis for the establishment of the
state. Society properly becomes materialistic and individualistic because, Locke
maintains, reason leads us to conclude that this is the natural order of things. By
the law of nature, each individual is called upon to act out his role of social atom,
careering through life, attempting to amass personal wealth, even at the expense of
other people. There is no value judgment to be made here: self-interest is simply
the only basis for society3.
• Like Locke, Adam Smith was enamored of the mechanical world view and was
determined to formulate a theory of economy that would reflect the universals of
3
J. Rifkin, Entropy, A New World View, pp. 23-30.
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the Newtonian paradigm. In The Wealth of Nations, Smith argues that, just as
heavenly bodies in motion conform to certain laws of nature, so too does
economics. If these laws are obeyed, economic growth will result. But government
regulation and control over the economy violated these immutable laws by
directing economic activity in unnatural ways. Thus markets did not expand as
rapidly as they could and production was stifled. In other words, any attempt by
society to guide “natural” economic forces was inefficient, and for Adam Smith,
efficiency in all things was the watchword4.
• Thomas Malthus, who as central information-gathering agent kept statistics for the
East India Company, found that, as population grew with a geometrical
progression while resources only grew with an arithmetic progression, scarcity
would increase. There always would be a fundamental inadequacy of life support
on planet Earth, so only the fittest would survive economically resulting in an “Us
or Them” attitude.
In this study we will demonstrate that these three premises are wrong, they are
misconceptions. We will unravel the true purpose of the economic activity and the social
origin and purpose of profit in a way that is totally different from the point of view of
businessmen and economists, whether they are (neo-)classical or (neo-) Marxist.
As pure rationality, based on incomplete or even wrong socioeconomic premises, combined
with amorality and pure self-interest (read greed) can lead and has led to immorality, these
misconceptions have led to:
• Social Darwinism, social and economic exclusion of part of the own population
(cfr. the books of Charles Dickens).
• Colonialism and imperialism, exploitation of and even genocide on the local
population of the conquered territories.
• Concentration of wealth inside countries and among countries.
• The recurrence of economic crises.
• Social turmoil, violent revolutions, civil wars, wars, and most of all war-
profiteering and even warmongering.
• The erosion of the real wealth of the “common people” due to the creeping
inflation since the introduction of the Federal Reserve System in 1913 and some
other mechanisms like “engineered” financial crises and exploding speculative
bubbles on the stock market.
• An economic system in which a human being is only economically important in
two ways: as a production factor, generating added value for the employer; and as
consumer, with money to spend. The rest are considered, in the words of Henry
Kissinger, as “dispensable eaters”.
A feasible and low-cost solution, based on some ‘humane intelligence’

This book Eight Days a Week – The Fourth Wave contains a proposal to change “business as
usual”, based on correct social and economic premises. By analyzing and explaining the
recurrence of economic crises and some economic entities and the relation with wars and the
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activities of some banks, I have found what one could call the “missing link” between micro-
and macro-economics: the real socioeconomic origin and purpose of profit for companies.
I also formulate a proposal that “breaks with business as usual” and that could very well lead
to a win-win-win-situation for business, governments and private persons alike. My proposal
would solve all of the problems mentioned above at once, and most of all, it would induce the
transition towards a more peaceful world and the abolition of violations of human rights. It
would furthermore allow meeting the objective to spend 0.7% of the GNP for aid to the Third
World countries5, as well as the Kyoto protocol. The secret power of this proposal lays in the
fact that it focuses on man as man, and not as mere production factor or consumer.
My proposal is not at all painful for the public, on the contrary. It could very well be a win-
win-win situation for business, government and the public as well. I dare to say that there is
no dilemma at all, and a viable alternative road for a social Armageddon is possible, even in
the near future, but only if we start to concentrate on the real purpose of the economy (the
fulfillment of the needs of the people) and not on the consequence of quantitative economic
growth (making a profit and creating money out of nothing).
I sincerely hope that you will pay attention to this book. I know that a book of about 290
pages is rather long, but I guarantee you, it explains the economic process in a whole new way
you have ever read in the mainstream media or heard from economists and politicians. They
usually give a chronological account of what happened, and pinpoint the problems with
Lehman Brothers or the mortgages in the USA as the cause of the financial and economic
crisis. These phenomena are not the cause, just some catalysts that triggered the whole
process. In this study you will read the real cause of economic crises (and wars) plus some
solutions to avoid similar crises (and wars) in the future.
I would like to finish this summary with the remark that I wrote the first lines of this study
already in the early 1980s, after reading Buckminster Fuller’s last book Critical Path. Those
years were characterized by both a 2-digit inflation and high unemployment, which deluded
most economists, and a lot of financial volatility in the exchange rates of the major
international currencies versus the US$, as in 1971 President Nixon had unilaterally decided
to abandon the post World War II Bretton Woods agreement of 1944. Since the 1980s I have
been updating my study with new information and evidence, both from the years since then
and from the past 400 years of history. I think my book is now ready for publication and
distribution to as many people as possible.
Mortsel, Belgium, November 11th 2010.
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Do we really need tsunamis, inundations and earthquakes before we can mobilize the conscience of
the political leaders and the public in the rich countries in order to organize massive aid to Third World
countries?
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Table of content
1 Introduction ...................................................................................................................... 14
1.1 Purpose of this book................................................................................................. 14
1.2 Cause or catalyst of the present economic crisis? .................................................... 16
2 Some striking economic recurrences................................................................................ 19
2.1 The evolution of the profit-ratio............................................................................... 20
2.2 The evolution of money-growth and inflation ......................................................... 21
2.3 The evolution of unemployment .............................................................................. 25
2.4 Relation between recurrence and paradigm. ............................................................ 27
3 Information in an economic perspective .......................................................................... 29
3.1 Matter ....................................................................................................................... 29
3.2 Energy ...................................................................................................................... 30
3.3 Matter and energy together ...................................................................................... 30
3.4 Information............................................................................................................... 31
3.5 Ratio and information............................................................................................... 34
3.6 Rationality, amorality and immorality ..................................................................... 35
4 Some strong wrong economic premises........................................................................... 37
4.1 Thomas Malthus and social Darwinism ................................................................... 37
4.1.1 Malthusianism and colonialism............................................................................ 39
4.1.2 Malthusianism and imperialism ........................................................................... 41
4.1.3 Thomas Malthus was and is wrong. ..................................................................... 57
4.2 Economic misconceptions........................................................................................ 62
4.2.1 Gross National Product per capita........................................................................ 62
4.2.2 Economic growth ................................................................................................. 63
4.2.3 Positive balance of trade ...................................................................................... 64
4.2.4 Profit, the missing link in economics ................................................................... 65
Profit according to the businessman............................................................................. 65
What is profit? What is the origin of profit? ................................................................ 67
Profit according to a neo-Marxian economist .............................................................. 67
First paradox: higher wages for employees, higher profits for the employer .............. 69
Second paradox: is a positive cash flow for one company at the expense of the rest of
the world?..................................................................................................................... 70
Profit according to (neo-) classical economists............................................................ 71
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4.2.5 Active unproductivity........................................................................................... 72

4.2.6 The economic dogma ........................................................................................... 73
5 Basic Theory on the Origin of Profit................................................................................ 76
5.1 Satisfaction of needs: Driving force of the economic process ................................. 76
5.2 Profit as a consequence of growth............................................................................ 77
5.2.1 ‘Profit for companies’ as part of ‘profit for society’............................................ 77
5.2.2 The social purpose of profit ................................................................................. 79
5.2.3 An idealistic view on economy ............................................................................ 81
5.3 Positive balance of trade .......................................................................................... 81
5.4 Conclusion................................................................................................................ 83
6 Direct consequences of the basic theory on the origin of profit....................................... 84
6.1 Evolution of the profit-ratio ..................................................................................... 84
6.2 Distribution of profit as driving force – or brake on – economic growth ................ 86
6.3 Zero-growth and its consequences ........................................................................... 91
6.4 The consumer society............................................................................................... 96
6.5 Unemployment ......................................................................................................... 99
6.6 Concentration of wealth ......................................................................................... 102
7 On the origin of wars...................................................................................................... 104
7.1 The economic “importance” of wars – Cui bono? ................................................. 104
7.1.1 The story of the pram industry ........................................................................... 104
7.1.2 Illustrations......................................................................................................... 107
Illustration 1: The glory of weapons. ......................................................................... 107
Illustration 2: Keep the fire simmering ...................................................................... 110
7.1.3 Disinvestment goods .......................................................................................... 111
7.2 To be or not to be, that’s the question .................................................................... 113
7.3 Protectionism and its relation with war – An important lesson from history ........ 116
7.4 Inflation and its relation with war – Cui bono?...................................................... 126
7.5 A 1st mechanism to get hold of the wealth of the common people: Inflation. ....... 128
7.5.1 On the origin of paper money – Cui bono?........................................................ 128
7.5.2 On the origin of democracy................................................................................ 129
7.5.3 Motives for war versus forces for peace ............................................................ 133
7.6 A 2nd mechanism to get hold of the wealth of the common people: Income taxes.137
7.7 A 3rd mechanism to get hold of the wealth of the common people: Higher prices for
essential commodities. ....................................................................................................... 142
7.8 A 4th mechanism to get hold of the wealth of the common people: Crashes on the
stock market. ...................................................................................................................... 144
11
7.9 The North-South relationship................................................................................. 146

7.10 The dangers and excesses of the banking industry ................................................ 149
7.11 An alternative banking system that really works ................................................... 152
7.12 “War Against Terror” in order to defend “The Sixth Freedom”............................ 154
7.13 Summary ................................................................................................................ 156
8 Some feasible solutions.................................................................................................. 159
8.1 Boundary conditions .............................................................................................. 159
8.2 Qualitative, sustainable growth .............................................................................. 160
8.3 Fair distribution versus concentration of wealth .................................................... 161
8.4 The dual active-recreational society: “the fourth wave”........................................ 167
8.4.1 He had a dream, that one day…. ........................................................................ 168
8.4.2 A complicated problem ...................................................................................... 170
Mobility...................................................................................................................... 171
Economic efficiency................................................................................................... 171
Personal quality of life ............................................................................................... 172
Public finances ........................................................................................................... 172
8.4.3 A possible solution ............................................................................................. 173
8.4.4 The quaternary sector. ........................................................................................ 180
8.5 Fair collection of taxes ........................................................................................... 180
9 Epilogue ......................................................................................................................... 183
10 Schematic synopsis ........................................................................................................ 189
10.1 Current geo-political and socioeconomic paradigm, based on wrong premises. ... 189
10.2 New Gaia-political and socioeconomic paradigm, based on correct premises. ..... 190
10.3 Some thoughts to brood on..................................................................................... 191
11 Some recommendations: where do we go from here? ................................................... 192
12 Appendix A: Some Notions on Communication Theory ............................................... 196
12.1 The process of communication .............................................................................. 196
12.2 Information............................................................................................................. 197
12.3 Shannon’s Law....................................................................................................... 200
12.4 Signal-spaces and paradigms ................................................................................. 201
12.5 Effective Communication ...................................................................................... 206
12.6 Trade-off between time and energy ....................................................................... 213
12.7 Implications on education and science................................................................... 216
12.7.1 Education........................................................................................................ 216
12.7.2 Science: academic versus scientific ............................................................... 218
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12.8 Conditions for effective communication................................................................ 222

12.8.1 Unambiguous Coding..................................................................................... 222
12.8.2 Time and energy............................................................................................. 223
12.8.3 Signal-space ................................................................................................... 223
12.9 A thought to brood on ............................................................................................ 223
13 Appendix B: Economy and dissipative structures.......................................................... 225
13.1 Energy and entropy ................................................................................................ 225
13.2 Dissipative structures ............................................................................................. 231
13.2.1 The origination of dissipative structures ........................................................ 231
13.2.2 The evolution of dissipative structures........................................................... 233
13.2.3 The relation between the micro and the macro level ..................................... 235
13.2.4 Symbiosis ....................................................................................................... 236
13.3 Socioeconomic systems.......................................................................................... 237
13.4 Dissipative structures, communication and creativity............................................ 243
13.4.1 Extension of Shannon’s communication-model ............................................ 243
13.4.2 Scientific evolution ........................................................................................ 248
13.4.3 Evolution of the brains ................................................................................... 249
14 Appendix C: Economy and Control System Theory...................................................... 252
14.1 An Economic Two-dimensional Flatland .............................................................. 252
14.2 A Multidimensional View on Economy................................................................. 257
15 Some Loose Ends ........................................................................................................... 264
15.1 Justification of the methodology ............................................................................ 264
15.2 Model of social evolution....................................................................................... 267
15.2.1 Evolution of social classes ............................................................................. 269
15.2.2 Evolution of geographical classes .................................................................. 269
15.3 Possible transitions and visions of the future ......................................................... 270
15.4 The “other” alternative ........................................................................................... 275
15.5 The rebirth of humankind....................................................................................... 277
15.6 An additional message to some scientists .............................................................. 280
16 Bibliography................................................................................................................... 288
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1 Introduction
In order to contract a thing, one should surely expand it first.

In order to weaken, one will surely strengthen first.
In order to overthrow, one will surely exalt first.
In order to receive, one will surely give first.
This is called subtle wisdom.
Lao Tzu
All work and no play make Jack a dull boy (or was it John?)
An American expression.
We will have time to reach the Millennium Development Goals – worldwide

and in most, or even all, individual countries – but only if we break with
business as usual.
United Nations Secretary-General Kofi A. Annan.
It is not the strongest that survive, nor the most intelligent, but the ones most
adapted to change.
Charles Darwin, On the Origin of Species.
When profit and human needs conflict, profit generally wins out – which
means people lose… Capitalism has created poverty by focusing exclusively
on profit. It built a fairy tale of prosperity for all – a dream [an American
dream] that was doomed never to become true.
Muhammad Yunus
1.1 Purpose of this book
The financial crisis of 2008, that started in the USA and swept over Europe and other
industrialized countries, proves that it is really necessary to “break with business as usual”.
Economic activity should be aimed at fulfilling the individual and collective needs of the
people. Economic growth allows for the fulfilling of more needs of more people. In this book,
I clearly demonstrate that profit for private business is a consequence of that economic growth
and that a fair distribution of that economic growth leads to more growth and more profit.
14
Unfortunately, the economy has gone astray: profit – a consequence – has become a goal on
itself. A human being is only economically important in two ways:
• as a production factor, generating added value for the employer;
• and as consumer, with money to spend.
The rest are considered, in the words of Henry Kissinger, as “dispensable eaters”.
The real cause of this misconception is that most people - even economists themselves - are
ignorant about how the economic process really functions, what the social origin and purpose
of profit are. With this book we hope to put an end to this misconception.
In the period after the Second World War, the focus has been on creating ever more new
needs of the same already affluent people. This has resulted in the ever increasing vertical gap
between the “haves” and the “have-nots”, an over-cropping of natural resources, especially of
nonrenewable fossil energy. And according to Noam Chomsky in his book Failed States, this
could even lead to a new arms race in space induced by the United States, as “… such forces
will be needed, US intelligence and the Space Command agreed, because globalization of the
world economy will lead to a widening economic divide6 and deepening economic stagnation,
political instability, and cultural alienation, thus provoking unrest and violence among the
“have-nots”, much of it directed against the United States. The space program fell within the
framework of the officially announced Clinton doctrine that the United States is entitled to
resort to “unilateral use of military power” to insure “uninhibited access to key markets,
energy supplies, and strategic resources”7.
Africa was cut off from the international trade routes once the Suez channel was constructed,
South America once the Panama channel was constructed. The majority of the people in those
countries were thus considered as “dispensable eaters”, without any right to their own natural
resources. Dictators and a rich, greedy élite in those countries, as well as wars, were very
convenient in order to protect the colonial and postcolonial international world-order.
Now in 2010 we have come to a point in human history which has been predicted by great
minds, such as Buckminster Fuller in his last book Critical Path. The Roman Empire
disintegrated as it had reached the borders of the known world that was in the reach of the
means of transport and communication of that time, and because it failed to establish a new
internal social order. This could very well happen to the industrialized world in these times.
The “United Nations Millennium Development Goals” are a noble initiative to include
underdeveloped countries as equal partners in the world economy. As I demonstrate in this
book, this is also in the interest of the industrialized world. Achieving the “United Nations
Millennium Development Goals” would surely induce economic growth, and thus profit for
private business. Unfortunately most industrialized countries are faced with economic,
financial and social problems themselves, so their financial support to the Millennium Goals
is insufficient, and I am afraid that 2015 is way too late. The Third World countries suffer
even more from the economic crisis in the Western industrialized countries, as they depend on
the export of raw materials and cheaply produced finished goods, while their own population
does not have the purchasing power to induce internal economic growth.
In most books on economy, war is considered as an external factor, a seizure in the normal
socioeconomic evolution. In this book we will integrate the phenomenon of war in the
6
Wasn’t globalization “officially” supposed to increase material welfare, also for the people in the
Third World? I think some world leaders have a hidden agenda.
7
Noam Chomsky, Failed States, p. 10.
15
economic reality. In doing so, we will get a very sharp image of what is really going on. And
this strategy will allow us to formulate an alternative that, at first glance, might look crazy,
but not crazier than the last 400 years of history.
We will formulate a proposal that breaks with business as usual, and that could very well lead
to a win-win-win-situation for business, governments and private persons alike. It would
furthermore allow meeting the objective to spend 0.7% of the GNP for aid to the Third World
countries, as well as the Kyoto protocol. The secret power of this proposal lays in the fact that
it focuses on man as man, and not as mere production factor or consumer.
1.2 Cause or catalyst of the present economic crisis?
In future history books, September 15th 2008 will be noticed as the start of the deepest
financial and economic crisis since the crash on Wall Street in 1929 and the Great Depression
of the 1930s, which was characterized by a very high level of unemployment. That dramatic
crisis asked for drastic measures: The New Deal of President Roosevelt. But the massive
unemployment during the 1930s only disappeared after the war production was increased,
first in order to support England in its war against Nazi Germany, and later as a preparation
for the entry of the United States of America into the Second World War.
Those same history books will probably pinpoint the crisis in the housing market in the
United States of America or the bankruptcy of Lehman Brothers as the cause of the current
crisis. Private persons could no longer redeem their loans, which brought a lot of banks in
trouble. From October 2008 till October 2009 hundred American banks went bankrupt. To
pinpoint the crisis in the housing market or the bankruptcy of Lehman Brothers as the cause is
not completely correct: they are not the cause, but merely catalysts that triggered the crisis.
As we will demonstrate in this study, the current western capitalistic economic system is
fundamentally unstable: the recurrence of financial and thus also economic crises and periods
of high unemployment are inherent to the system.
We all know that water freezes below zero degrees Celsius. It is however possible to cool
down very pure water some degrees below zero degrees Celsius without the water turning into
ice: it can remain liquid for even a long time. But a sudden event can instantaneously turn the
liquid water into ice. This can be done by touching the recipient, throwing something into the
liquid, touching the surface of the liquid, blowing over the surface… These events are not the
cause that the liquid water turns into ice: they are just some of the many possible catalysts that
can trigger the instantaneous transformation of liquid water into solid ice. The real cause is
that the water was well below zero degrees Celsius.
The oil crisis of 1974 is considered to be the cause of the economic crisis of the late 1970s
and early 1980s. This is not true. During the late 1960s, the Belgian mathematician and
economist Jean Pierre Van Rossem developed an econometric model. Based on his model he
predicted that an economic crisis was coming on and that unemployment would increase
dramatically, and he did this well before the oil crisis hit the western world. Here too, the oil
crisis was not the cause, but a catalyst that triggered a crisis that would have occurred
anyhow, as the recurrence of economic crisis is inherent built into the western capitalistic
system.
Already in the year 2005 the unemployment in Germany reached a post World War II record:
5 million people without a job. In order to guarantee employment and to counter the
delocalization of production facilities towards countries with lower wages, the trade unions
16
accepted to increase the working time back to 40 hours for the same level of wages. France
introduced the 35-hour workweek years ago, when Francois Mitterand was president, but
under president Nicolas Sarcozy the government has plans to increase the working time and
the retirement age. There are also intentions for cuts in spending on education by increasing
the number of students per class to 35. There is a lot of resistance from the public against
these plans.
The post World War II baby-boom generation is now massively retiring and people tend to
live longer, which puts pressure on the social security system, expenditures for healthcare and
the systems of pensions. People should work longer in order to increase the level of activity. It
is as if time is turned back in the social and economic world.
In 2005, sixty years after the end of the Second World War, some important historical facts
where remembered and got world-wide coverage in the media. Auschwitz was “liberated”
sixty years before. A number of important world leaders, as the American vice-president Dick
Cheney, were at the commemoration service, solemnly declaring that what happened there
should never happen again. More than one million people were killed in that concentration
camp. Most people do not know that the concentration camps were not only extermination
camps, but also suppliers of slave laborers to factories that where controlled by American
companies. I.G. Farben was part of the American Standard Oil company, controlled by the
Rockefellers. It had a plant near Auschwitz and took massively advantage of the cheap slave
laborers supplied by the Nazis. The British and American allied forces knew that there were
concentration camps and what was going on there, but they never did an attempt to stop the
transport of prisoners by, for example, bombing the railways towards these camps, as they did
with civilian targets is Germany. Also the I.G. Farben plant or other American owned
factories of General Motors and Ford were never bombed.
At the end of World War II Dresden was destroyed by British and American bombers. The
fire-bombs that were used were designed to produce as many victims as possible among the
civilians. The military and industrial infrastructure, on the other hand, was left intact. But
most people do not know that the main purpose of this raid was to impress the Soviet soldiers
who were advancing from the east towards Berlin and could see the blaze from a distance of
100 kilometers. Churchill wanted to give the Soviets an idea of the firing power of the
Western Allied forces. Some political and military leaders of the Western Allies had even
figured out a plan that, once Nazi Germany would have surrendered, they would enroll
German divisions into the Allied forces and then attack the communistic Soviet Union, a
supposed ally in the war against Nazi-Germany8.
A lot of book has been published on the irrationality and incredible madness of war and
genocide. I can suggest you to read the following very interesting books:
• Friedrich, Jörg, 2002, Der Brand – Deutschland im Bombenkrieg 1940-1945,
Propyläen Verlag, München, Germany.
• Pauwels, R. Jacques, 2000, The Myth of the Good War – The USA in World War
II, Lorimer, Halifax, Canada.
These books and a lot of documentaries on TV give a detailed description of the historical
facts of World War, but mostly they fail to uncover the real causes: why did all of this
happen? What is the historical background of all this suffering and killing? Usually these
8
The Myth of the Good War, J.R. Pauwels, pp. 141-151.
17
books and documentaries tell only half of the truth, some events and actions of the victors are
deliberately omitted. In this study we will try to find the historical background of the
phenomenon of war and genocide. The reader is warned: it is not a nice story; we are all both
victims of the situation but also accessory to it, against our own will.
The real cause of the present and previous crises and wars is that most people - even
economists themselves - are ignorant about how the economic process really functions and
how war relates with economy. With this study we hope to put an end to this ignorance and to
this madness. This will allow us to formulate an alternative for “The New World Order” that
some Anglo-American businessmen and political leaders are trying to impose on us.
The alternative consists of three parts
• A plan to come to sustainable growth on global level.
• A plan for a new division of labor, resulting in a spectacular increase of
employment and in productivity.
• A plan for a better collection of taxes, so the taxes on labor and the cost of labor
can decrease, even the taxes on profit for private companies.
All of this could very well lead to a peaceful world without poverty and hunger, a more stable
and inflation-free economy, and more stability on the financial markets.
18
2 Some striking economic recurrences
I'm just sitting here watching the wheels go round and round.
John Lennon.
History teaches us that humankind has nothing learned from it.

Anonymous.
Those who do not remember the past are condemned to relive it.
Santayana.
In this study we will formulate several comments on the present and the past economic crises,
and we will point at some paradoxes and contradictions between the economic policy and the
results of that policy, indicating the impotence of the political and economic decision makers
“to do something about the situation”.
As the Belgian historian Chris Vandenbroeke wrote in the mid 1980s: “The dilemma with
regard to the actual problems – the nature and the size of the crisis, the measures and
corrections to take in order to adjust the present economic policy – clearly shows the failure
of a short-term vision. Never before have had one heard so many contradictions, resulting in a
decreasing credibility in pure scientific economic research. Who is to be believed in this maze
of suggestions and recommendations? How is it possible that adepts of Milton Friedman and
those of Keynes advocate totally opposing measures? Instead of looking for a quick solution,
would it not be better to sit back and make a basic analysis of the present social and economic
relations. We should not pay too much attention to new and temporal phenomena, but we
have to look for stable and ever returning patterns in the course of time. Only with this
perspective will it be possible to discover significant factors. In the short term, every event
seems to be of great value to explain the course of things. One has to take a long historical
context to look from a distance and to put things in their proper context9.
When looking for material to write this study, I was surprised by the fact that there is so little
statistical information available describing the evolution over longer periods of time – several
hundred years – of economic entities such as unemployment, inflation, profit-ratio's, industrial
production, investments, etc. We have found fragments of information for several countries,
but unfortunately all from different periods of time or only very short periods of time. This is
probably due to the fact that one has started only recently – from the end of 19th century – to
keep records of these entities in an organized way.
In his book La Figure de Fraser, the French economist Jacques Attali has made an attempt to
describe the dynamics of economic evolution over a longer period of time10, unfortunately
9
C. Vandenbroeke, Purchasing Power in Flanders, pp. 10, 22.
10
Jacques Attali, , 1984, La Figure de Fraser, Fayard, Paris.
19
without any reference to facts and figures. The Belgian historian Chris Vandenbroeke has
compiled some very useful statistic material over several hundred years, but limited to
Flanders, the northern part of Belgium.
Fortunately we have found very valuable and interesting material on the history of the US
economy in the books of Ravi Batra (The Great Depression of 1990) and Howard Katz (The
Warmongers). My book has been inspired for a great deal by their writing.
It is also very remarkable that most authors of textbooks on the history of the economy of a
country or a group of countries limit their scope to periods in between wars, as though a war
is just a fracture in the normal evolution of the socioeconomic process, without being part of
it. For most economists, war is just an exogenous factor.
Nevertheless, we have been able to draw some conclusions out of the scarce historical
material. We will try to construct a picture of the evolution in time of some basic economic
entities, based on facts and extrapolation. The resulting picture will then be explained later on,
using a model that will be developed in a later chapter.
2.1 The evolution of the profit-ratio
On the subject of the evolution of the profit-ratio of private companies, we refer to the work
of the Belgian (neo-) Marxian economist J.P. Van Rossem.
One cannot deny the fact that in the whole western economy the profit-ratio
(the ratio between the realized profit and the capital invested in order to realize
that profit) has decreased steadily since World War II. This does not imply that
companies make less profit. It only says they have to invest more in
machinery, buildings and energy to realize the same level of profit...
Calculations show that the average profit-ratio in Belgian economy has
declined from 15.86% in 1953 to a level of 7.62% in 1977...
Nobody has ever maintained that the profit-ratio should decline, just as a stone
drops when he is released. One can think of measures to increase that profit-
ratio. However, when we analyze for example the evolution of the average
profit-ratio in Germany from 1880 till 1976 (West-Germany after 1954), we
can conclude that the profit-ratio has increased only in two periods of time: the
first time between 1915 and 1919, the second time between 1941 and 1944. In
other periods of time the profit-ratio has shown a declining trend... In the past,
the profit-ratio has increased substantially only during World War I and World
War II.
J.P. Van Rossem, Knack, January 1979, p 119.
20
Profit-
ratio
Peace Peace Peace
War War
Time
Evolution of the profit -ratio
We can represent the evolution in time of the profit margin with a saw-tooth shaped curve:
longer periods of decrease are alternating with short periods of fast increase. The period of
fast increase happens to coincide with the occurrence of a war. Is this pure coincidence or is
there a logical explanation to it?
2.2 The evolution of money-growth and inflation
Inflation is an important indicator for the evolution of the economic process and it is closely
related with the rate of money-growth: excessive growth in the money supply leads to a spiral
of increasing prices. In the book The Great Depression of 1990, written by Ravi Batra, we can
find several charts and figures describing the evolution of these economic entities for the US
economy since the 18th century. The figure below is a good résumé.
21
Inflation and money growth per decade (in %)

180 180
165 165 Inflation
150 150
135 135
120 120 Money-
growth
105 105
90 90
75 75
60 60
45 45
30 30
15 15
0 0
-15 -15
-30 -30
-45 -45
1750 1770 1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990
Time
Note the increasing trend of the peaks since the 1930s.
Here we can see that both inflation and money-growth have evolved according to a strict
periodic pattern, which was only disrupted after the Civil War. Every third decade there has
been a peak in both the rate of inflation per decade and the rate of money-growth per decade.
It is very important to stress the fact that the trend of the peaks is increasing: during the 20th
century every single peak is higher than the previous one! In systems theory periodic
oscillations with increasing amplitude are a clear indication of an unstable process! In the
words of Ravi Batra: “Finally, the money-growth cycle implies that capitalism is
fundamentally unstable and that the creation of institutions as the Fed cannot stabilize it. They
are mere palliatives that in the long run actually destabilize the system. What is needed is not
a perfunctory cure, but fundamental economic reforms.”11
Periodic oscillations with increasing amplitude ultimately lead to the breakdown of the
system. Or the system stops to exist, or it is forced to transform into a system with another
dynamic.
As with the evolution of the profit-ratio, we also find a striking coincidence between war and
peaks of inflation, or deprecation of the currency. We refer to Howard Katz and Paul
Samuelson:
11
Ravi Batra, The Great Depression of 1990, p 93.
22
Value of the US. Dollar 1790-1978.

(In terms to buy basic raw materials)
Reciprocal of Wholesale Price index, 1910-14 = 100, Logarithmic scale in cent
(The figure is rather obscure, so I suggest you to buy The Warmongers.

One day it will be mandatory reading for students at high school.)
The figure traces the value of the United States dollar since its adoption by the
Continental Congress in the 1780s. Study of this chart suggests that every time
a sharp depreciation of the currency occurs (e.g.: 1812, 1861, 1917, 1942,
1966), we have a war, and every time a major war breaks out, we have a
significant depreciation of the currency.
Howard Katz: The Warmongers, p 3.
It is also important to notice the change in pattern since 1933: prior to that year, the
purchasing power of the dollar restored to the level from before a war; after 1933 there
was a continuous erosion of the purchasing power of the dollar. This is confirmed by
the next chart.
23
Inflation in the USA.

Wildest inflation historically comes with periods of war.
1780s: Revolutionary war - War of 1812 - 1860s: Civil War - 1914-18: WWI - 1940-45:
WWII - 1950s: Korean War - 1960s: Vietnam War...
After each major war in the country's history, there has been slightly less of a price drop.
Indeed, after World War II there was no significant drop. For 80 years the general price
trend - abroad as well as here - has been upward.
The figure shows the historical ups and downs of wholesale prices. Each war is
clearly marked by a peak... As an omen for the future, note one crucially
significant fact: after World War II there was no decline in prices at all
comparable with what had followed previous wars...
Paul Samuelson: Economics, p 270-271.
24
“Omen to the future…”? To make a mere observation of a trend without looking for an
explanation is rather fatalistic. If one could pinpoint the real cause of this evolution, then
maybe one could alter the trend. The first approach is typical for academic orientated persons,
the latter for scientific orientated persons. In Appendix A we will explain the difference
between “academic” and “scientific”.
When two phenomena A and B show a correlation, then A could be the consequence of B, or
B could be the consequence of A, or both could be the consequence of a third phenomenon C,
or A and B could at the same time be each other’s cause and consequence.
Once more we stress the fact that in the period before World War II the dollar returned to its
“normal” value after each war, while after World War II the depreciation of the dollar went on
at a substantial rate. Both the coincidence with wars as well as the changed pattern of the
value of the US $ after World War II will be explained in this book.
2.3 The evolution of unemployment
Since the oil crisis in 1974, most industrialized countries in the western world have faced
periods of more or less high levels of unemployment. This recalls older persons of the years
before the Second World War. Also in previous centuries, economic crises were marked by
high levels of unemployment. Due to the surplus of labor-force, one can assume that real
wages and purchasing power will not increase in times of crisis, but rather will keep their
level or even decrease. One could take the evolution of real wages as an indication for the
evolution of unemployment. In the work of Chris Vandenbroeke12 we find some charts on the
evolution of the real purchasing power of wages in Flanders in previous centuries.
12
Chris Vandenbroeke, Purchasing Power in Flanders, p 163.
25
Purchasing power in Flanders
Above: Purchasing power of a laborer’s wage expressed in liter wheat (1) and barley (2)
Under: Purchasing power of a laborer’s wage expressed in liter rye (1) and buckwheat (2)
26
In this figure we can see a fluctuating evolution. Here we also notice a periodicity of
approximately sixty years in the return of the peaks (1500, 1620, 1680, 1740) and the descents
(1590, 1650, 1710). The same holds for the economy of America: “In the US economy there
has been at least one recession every decade, and a great depression every third or sixth
decade in the sense that if the third decade managed to avoid a depression, then the sixth
decade experienced a cumulative effect - an all-out disaster.”13
It is also remarkable that the real purchasing power in Flanders did not start to increase
substantially with the Industrial Revolution of the 19th century, but only after the First World
War, when the principle of one-man-one-vote was introduced in the political system of
Belgium, when labor unions got politically organized and found their way to the parliament.
2.4 Relation between recurrence and paradigm.
A script is essentially the blueprint for a life course...

Their lives are walked in blindness, following someone else's dictates, which
lead them to destruction.
Claude Steiner, Scripts People Live.
Throughout history, human beings have felt the need to construct a frame of
reference for organizing life's activities. The need to establish and to explain
the how’s and why’s of daily existence has been the essential cultural
ingredient of every society. The most interesting aspect of a society’s world
view is that its individual adherents are, for the most part, unconscious of how
it affects the way they do things and how they perceive the reality around
them. A worldview is successful to the extent that it is so internalized, from
childhood on, that it goes unquestioned.
J. Rifkin, Entropy, A New World View, p. 5.
With only scarce information at hand, we still can see that economic entities fluctuate
periodically in time, and that there is a correlation between their evolutions. We also notice a
relation with the occurrence of wars. Economic crises and wars seem to be related. In this
study on the dynamics and evolution of the economy we will not avoid to include war in our
analysis. But before we end this section, let us try to understand why recurrence occurs. In
doing so, we will call for a generally known concept: our paradigm. You could read the
following paragraphs already in the summary above, but we repeat them here as they are very
important.
A society functions according to a certain paradigm, which is based on a set of premises more
or less in accordance with reality. Several social groups in society set objectives and act
toward those objectives according to those premises. If some premises do not agree with
reality, but, on the contrary, are based on a wrong understanding or interpretation of reality or
13
27
even on ignorance, then the performed actions will not lead to the desired objective. Instead,
one will be faced with unexpected obstacles. This could lead to problems, frustration, even
aggression and crisis.
Because one has started from the wrong premises, one will most likely look for the causes of
the failure and possible solutions in the wrong directions too. Otherwise one would have
started in the right direction from the beginning! One will make the wrong diagnosis. One will
even point to a scapegoat as a reason for failure.
When a society functions according to a paradigm that is not in accordance with reality, and
again be faced with the same kind of crises - even with increasing intensity -, it will again and
again go through the same scenario (scripts in transactional analysis, karma in eastern
philosophies), just as the principal character in an ancient Greek drama: “The tragic error in
tragic drama is walking in blindness so that the tragic hero who intends to accomplish a
certain result with his actions accomplishes the exact opposite.”14
economic crises and wars can only be interrupted if we succeed to transcend the limitations of
the present paradigm and if we can expand or even transcend our paradigm, cut the wrong
premises and add new correct premises to it, so it is more in tune with reality.
Does all this implies that events are predetermined and that we have to be their
helpless victims? Not really! All it means is that things move in terms of
predictable cycles that keep occurring time after time until their true cause is
discovered. Once we know their cause, we can stop them. After all, humanity
has broken disastrous cycles in the past and will do so in the future as well.
This is how all evolution occurs. We keep enduring recurring problems of one
sort or another, until they become intolerable; then someone discovers their
true cause and helps us break the cycle. Afterwards a new cycle takes over.
However, in view of the longevity of the patterns described in this work, it is
clear that disrupting them will not be easy. Nothing short of fundamental
reforms will work.
Ravi Batra: The Great Depression of 1990, p 94.
And this is what this book is all about. We will evolve a model that will help us to explain the
recurrence of economic crises, the relation with war, some economic paradoxes and a lot of
other phenomena. The model will then allow us to formulate an alternative to break the
recurrence. So, I think economy really could become a “hard science” after all... once we have
returned to “hard currencies” and “real democracy”.
14
Claude Steiner, Scripts People Live, p 60-61.
28
3 Information in an economic perspective
A writer tries to convey a message to the reader by means of his text: he wants to
communicate, to transfer information. This book does not break with this tradition. As it will
probably be read by people with different backgrounds and education, I will now give a short
discussion on the concept of information by positioning it in a larger framework of
socioeconomic domains and this over a period of several centuries:
• Science
• Economy, the means of production and the question “who is very, very rich?”
• The phenomenon of war, the why of war and the means of warfare
I hope this can enthrall the reader and stimulate him to do some further thinking on his own.
3.1 Matter
Many scientists consider the conservation laws as the most fundamental laws of physics. In
the 18th century the French chemist Antoine Lavoisier was the first to formulate such a law,
the law of conservation of matter or mass, which stated that, in a chemical reaction, the total
amount of matter of the reaction compounds remains constant. This law was expressed in a
more general form as follows: the total amount of matter in a closed system remains constant.
If you burn a candle, it will get shorter and disappear, but the molecules of which it is made
do not annihilate: they will settle down as dust and smut particles in the room and on your
clothes.
Linking this law of conservation of mass to the historical evolution of the economic system,
we can say that in agricultural societies matter, more specific land, was the most important
production factor. The first kind of people that where very, very rich were those who
possessed matter in the form of land (aristocracy, owners of plantations in the colonies
oversea....) or were engaged in the transport and the processing of matter (merchants, mining
companies).
Wars and battles were almost always related to the possession of land, because of what was
growing on the land or what was underneath the surface of the land, and to get control of the
people living on that land as labor-force, very often forced to labor for just peanuts. Just think
of the many wars on the European continent and the period of colonization of territories on
other continents.
These wars were fought with material means: clubs, swords, spears, bows and arrows,
battleships powered by galley-slaves, later on came the energy powered means of warfare like
firing weapons, canons, and sailing ships. And this evolution to energy driven means of war
brings us back to science.
29
3.2 Energy
In science, the law of conservation of energy was a next milestone. By the beginning of the
19th century, scientists had realized that energy occurs in the different forms of kinetic energy,
potential energy, and thermal energy (heat), and that energy can be converted from one form
to another. As a consequence of this insight the law of conservation of energy was formulated
by the German scientists Hermann von Helmholtz and Julius Robert von Mayer, and the
British physicist James Prescott Joule. This law, which states that the sum of kinetic energy,
potential energy, and thermal energy in a closed system remains constant, is now generally
known as the first law of thermodynamics.
During the Industrial Revolution energy began to play an important role as means of
production. So there came a time that the very, very rich people were those who had control
over the energy resources (Rockefeller, Arab Sheiks...) and the transport and processing of
energy.
And wars were fought in order to secure this control over the energy resources. The weapons
used in these wars became more and more energy driven: more powerful bombs, canons with
a larger range, ships with steam engines or diesel engines, air-planes…
3.3 Matter and energy together
Later Albert Einstein formulated his famous equation E = Mc², where E stands for the
amount of energy (expressed in kilogram*meter²/second²), M for the amount of mass (in
kilogram) and c the speed of light (in meter/second). The speed of light is seemingly one of
the basic constants in Nature. This simple equation states the transformability from matter to
energy, and according to recent experiments in a physics laboratory, also vice versa. So the
two laws were combined in the law of conservation of matter and energy together.
It is important to note that even in ancient times this relation between matter and energy was
vital:
• In the time of the very, very rich landlords energy was also needed in order to
produce the material affluence: solar energy is needed to grow crops, physical
labor is needed to prepare the land, to make irrigation canals, to harvest the fruits
of nature. Next to water, solar energy was the most important ingredient for plants
to grow. Energy was needed to process and transform the matter.
• Similarly, in order to produce, store and distribute energy, matter is essential.
Windmills transformed the kinetic energy of the wind to useful mechanical
rotation. Manpower, animal power and wind energy were used to transport the
goods.
• Even in our modern times there is a mutual dependency of matter and energy: you
need drilling equipment and pumps to go after the oil, you need oil barrels and
pipe-lines to transport the oil, generators to produce electricity, batteries to store it,
copper wires to transport it...
30
So clearly, also in an economic perspective, energy and matter are interrelated. The one
cannot be processed without the use of the other.
We stress the fact that it took aristocracy ages of warfare in order to get to their level of
extreme wealth. But those who have built their empire on energy succeeded in their endeavor
in a period of little more than half a century, a period marked by a number of world conflicts
in order to get control over the supplies of fossil energy on this earth.
3.4 Information
Now at the beginning of the 21st century one of the richest men on Earth is neither a landlord
nor an oil-baron. Bill Gates has built his fortune in a period of only a few decades and he did
this in the business of information processing. So we could consider information, or
knowledge, as a third essential means of production, next to matter and energy.
In this respect it is important to stress the fact that information or knowledge was also very
important in the earlier matter or energy based societies.
• People needed the necessary knowledge and skills for an efficient agriculture, to
exploit ore and to process it to metals. They had to have the experience of
transforming nature’s energy resource like wind and water and later the fossil fuels
into useful energy.
• In our present computer controlled society, information needs matter and energy:
one need material objects in order to store information, to process it, to visualize it
and to broadcast or transmit it: books, CD’s, PC’s, displays, communication
networks. And in order to transmit or process information, energy is needed.
Even in the field of warfare information has become an important asset, if not the most
important one.
• First of all the public at home has to be brainwashed in a gigantic media and PR-
campaign, so they unconditionally accept the war “for the general good” and the
“national security”, whatever that might be. The pressing of a certain worldview
upon the people is based on information that is made ready to digest, but very
often it seems that, when the war is over, this information has no relation with
truth whatsoever: it is rather “misinformation” in order to deceive the own
population of the real reasons of the war. Just remember the imaginary weapons of
mass destruction in Iraq15.
• The “smart weapons” and the cyber-soldiers rely more and more on information
and communication technology. It is no longer a matter of numerical supremacy in
soldiers, tanks and ammunition, but to be able to make the right decisions on the
right moment in order to make an efficient (first) strike.
15
Noam Chomsky, Failed States, pp.24-27.
31
In scientific and economic perspective, information seems to be the third essential factor, next
to matter and energy. But especially in the field of economics information is something very
special when you compare it with the other two.
When I sell you a material good, you give me an amount of money in exchange for it. After
the economic transaction you have the material good and I have the money. And then I have
to go to work again in order to reproduce more of that material good in order to sell more of
it. When you fill your car with gasoline, the oil company gets some dollars in exchange, but
then that company has to replenish their supply by drilling for more oil, refine it and transport
it. In both cases there is an economic exchange of matter or energy for money, and the matter
and energy clearly switch owner. You are the owner or I am the owner, but not both of us.
When I sell you a certain quantity of information at a certain price, then after the transaction
you own the information, and I have some more money, but I still have the same amount of
information as before the transaction: you own it, but I still own it too. I can sell that
information to a third person, a fourth one, etc… I did not lose the information; I can keep
going on selling it.
In this respect one can say that information is a very special form of commodity: it can be
sold without the need for replenishment. And even when you ask a relatively modest price for
it, you can become a very, very wealthy person like Bill Gates did with his system software
and office products for PC’s, but also like Umberto Eco or Dan Brown with the books they
are writing, reaching millions of readers.
On the next page you find a schematic overview of this discussion. Based on this overview
one could assume that information is a third essential means of production, next to matter and
energy. So one could ask oneself the question if there exists something like “the law of
conservation of information or knowledge”. You might try to burn all books on mathematics
and science, but after a period of time the laws of mathematics and Nature will be
rediscovered anyhow.
32
Science Economy War
Time Laws of conservation Means of production Who is rich? Why Means of
↓
Matter Land, serfs Aristocracy, Territory Clubs, swords, spears, bows
landlords and arrows
E=mc² Energy Energy sources Oil sheiks, Control over energy Energy-powered weapons
Rockefellers resources
??? ??? Information Bill Gates Force of a worldview Satellites, “smart” weapons,
upon the people cyber-soldiers
(Knowledge)
33
3.5 Ratio and information
This was already discussed in the summary above, but I repeat it here as it is so important to
understand the implications of it. People claim to be rational – especially in the academic
world – while on the other hand they deliberately limit their scope of view for whatever
reason: academic integrity, “value-free” science, reductionism and simplicity... and the
funding of their “independent academic research”
Any information processing system, be it automated or not, uses a certain logic on a set of
data in order to come to a conclusion. Also human beings do this.
The logic that is used can be correct or wrong. Obviously, using the wrong logic will not
result in a correct conclusion. Human beings claim to be rational, especially in the academic
world, and it is rather easy to find the faults in a line of reasoning. But on the other hand we
never seem to agree on main topics in economy – even in the academic world – and politics:
everybody claims to be sincere and to tell the correct things. Maybe there is more than one
ratio?
But ratio is only one part of the picture. Data are as important and – unfortunately – more
difficult to control, as it is not just a question of being correct or wrong. This is rather easy to
verify by controlling the facts. Next to correctness, data have another aspect: are the data
complete or not? And is all the information we use in our logic relevant? In other words, is
there redundant information in our data set that might confuse us?
In the following table we show what the result is of a perfectly correct logic on a set of data:
Data are → Incomplete Complete Redundant

↓
Incorrect Wrong conclusion Wrong conclusion Wrong conclusion
Correct Wrong conclusion Correct conclusion Not necessarily the

correct conclusion, as
irrelevant data might
have obscured the
correct conclusion.
We will only come to the correct conclusion when we use the correct logic on correct and
complete and not redundant data. That is why in court, the witness has to tell the truth, the
whole truth and nothing but the truth.
Furthermore, deliberately telling half of the truth is worse than telling a lie, as the receiver
can expose a lie by checking the facts, but he will not necessarily look for the data that were
omitted.
Written communication is, just as verbal communication, a sequential process: one cannot
transfer the meaning of the message at once - as it is with visual communication - but one has
to do it word by word. One has to use a certain sequence in the things one says or writes. This
sequence is of great importance, as it can facilitate or thwart the transfer of the message,
depending on how the receiver assimilates the first ideas transferred.
Good communication is not self-evident, but rather a rarity. In Appendix A we will pay
attention to some basic notions on information theory and the process of communication. In a
nutshell we will give a description of this process of communication, the conditions that must
be fulfilled in order to achieve effective transfer of information, and what can happen if these
conditions are not fulfilled. These topics have nothing to do with the real subject of this book,
but we advise the reader to pay them some attention, as we will use them quite frequently in
the course of the story.
In that appendix we describe the concept of signal-space: the paradigm or the frame of
reference that determines the way a person perceives the world, what he accepts for real and
why he sometimes is unable to grasp certain aspects of truth, as they fall outside his signal-
space.
3.6 Rationality, amorality and immorality
Exact sciences, however important and admirable they might be, are still a
one-sided approach of nature and reality. They focus exclusively on what can
be quantified and expressed in mathematical expressions. On the subject of
“values” they have nothing to say at all. But, as a consequence of this sheer
quantitative approach, a great part of reality remains hidden for humankind.
This one-sidedness can have dramatic consequences, especially in the fields of
economy, sociology, psychology, history, study of literature, etc.
M. Wildiers, De Standaard, March 10th 1984.
From the days of Adam Smith and John Locke, economists base their theories on the
assumption that the basis of all human activity is material self-interest: let everyone try to
maximize his own material welfare, and the economy will grow smoothly. Smith explicitly
removed any notion of morality from economics, just as Locke had done with social relations.
Any attempt to impose morality on economy simply leads to violation of the
“invisible hand”, which Smith asserted was a natural law that governs the
economic process, automatically allocating capital investment, jobs, resources,
and the production of goods. People could use reason to understand this law,
Smith allowed, but just as human beings cannot control gravity, they cannot
improve on the invisible hand... Believing that men and women are basically
egoists in pursuit of economic gain, Smith’s theories subordinate all human
desires to the quest for material abundance to satisfy physical needs. There are
no ethical choices to be made, only utilitarian judgments exercised by each
individual, pursuing self-interest...
The mechanical world paradigm experienced its greatest triumph in the
aftermath of Charles Darwin’s publication On the Origin of Species in 1859.
Darwin’s theory of biological evolution was every bit as impressive as the
scientific discoveries of Newton in physics. It could well have pushed the
mechanical worldview off center stage and claimed hegemony for itself as a
complete new organizing principle for society. It never happened. Instead
Darwin’s theories became an appendage to the Newtonian world machine. The
full implications of Darwin’s discoveries were never really explored. Instead,
some of the more superficial trappings of his theory were immediately taken
35
hold of and exploited in a way that further legitimized the mechanical

worldview.
Social philosophers like Herbert Spencer seized on Darwin’s theory of the
evolution of species as a kind of proof positive of the existence of progress in
the world. Spencer and the so-called Social Darwinists turned the concept of
natural selection into the concept of survival of the fittest. In doing so, they
provided further support for the mechanical world view that holds that self-
interest leads to increased material wellbeing, which leads to increased order.
As we shall demonstrate on many occasions is this book, rationality combined with amorality
and self-interest leads to immorality. Many persons rationalize their immoral behavior with
the excuse that it is “rational”, although their actions are based on a wrong understanding of
economy and on premises that have been proven to be wrong. This will be elaborated in the
next chapter.
Furthermore, Darwin was and is still misunderstood by people who rationalize their immoral
behavior for their own self-interest. Darwin himself summarized his theory not as “survival of
the fittest”. In Darwin’s own words:
“It is not the strongest that survive, nor the most intelligent, but the ones most adapted to
change”.
And change is what this book is all about, breaking with business as usual.
36
4 Some strong wrong economic premises

business as usual.
4.1 Thomas Malthus and social Darwinism
Thomas Malthus worked in London for the central intelligence agency of the East India
Company. The powerful East India Company had been chartered in England in 1600, to
monopolize all trade with the Far East and the Indies16.
Thomas Malthus kept overall figures on the world-wide activities of the company. At that
time one knew already that the Earth was not a flat plane and thus not infinitely large, but a
globe with a finite surface. He found out that while the economic production increased over
the years with an arithmetical progression (1 2 3 4...), the population increased with a
geometrical progression (1 2 4 8...). Together with the evolution theory of Darwin this
16
From the daily newsletter of the Ludwig von Mises Institute that advocates the free market ideology.
In that article Murray N. Rothbard defends the practices of the East India Company. A trade monopoly!
37
resulted later in the notion of the survival of the fittest and Social Darwinism: there will never
be enough material wealth for everyone. So who cares about morality?
Malthus's views were largely developed in reaction to the optimistic views of his father and
his associates, notably Rousseau. Malthus's essay was also in response to the views of the
Marquis de Condorcet. In An Essay on the Principle of Population, first published in 1798,
Malthus made the famous prediction that population would outrun food supply, leading to a
decrease in food per person.
He even went so far as to specifically predict that this must occur by the middle of the 19th
century, a prediction which failed for several reasons, including his use of static analysis,
taking recent trends and projecting them indefinitely into the future, which often fails for
complex systems. The advent of industrial chemistry and use of chemical fertilizers did much
to increase crop yields and food availability17.
In Malthus’s own words18:
The power of population is so superior to the power of the earth to produce
subsistence for man that premature death must in some shape or other visit the
human race. The vices of mankind are active and able ministers of
depopulation. They are the precursors in the great army of destruction, and
often finish the dreadful work themselves. But should they fail in this war of
extermination, sickly seasons, epidemics, pestilence, and plague advance in
terrific array, and sweep off their thousands and tens of thousands. Should
success be still incomplete, gigantic inevitable famine stalks in the rear and
with one mighty blow levels the population with the food of the world.
Only natural causes (e.g. accidents and old age), misery (war, pestilence, and
above all famine), moral restraint and vice (which for Malthus included
infanticide, murder, contraception and homosexuality) could check excessive
population growth.
Malthus favored moral restraint (including late marriage and sexual
abstinence) as a check on population growth. However, it is worth noting that
Malthus proposed this only for the working and poor classes. Thus, the lower
social classes took a great deal of responsibility for societal ills, according to
his theory. In his work An Essay on the Principle of Population, he proposed
the gradual abolition of poor laws. Essentially what this resulted in was the
promotion of legislation which degenerated the conditions of the poor in
England, lowering their population but effectively decreasing poverty.
So according to Malthus, there would always be “haves” and “have-nots”. And according to
the Protestant moral of that time this was God’s will, and the have-nots had only themselves
to blame for their unfortunate situation, the haves were the lucky chosen ones – by God
Himself. Fact is to get complete control over the natural resources on Earth before someone
else does.
17
From Wikipedia, the free encyclopedia.
18
38
In On Power and Ideology Noam Chomsky describes this as “The Fifth Freedom”19: the
freedom that some countries grant themselves to get complete control over the natural
resources of minerals and energy supplies of other countries, even with the use of bribing,
force and coercion. In this book we will even formulate a “Sixth Freedom”: the freedom that
some interest groups grant themselves to create money out of nothing in an illegal way in
order to finance this “Fifth Freedom”.
4.1.1 Malthusianism and colonialism
Cover of a book describing the history of the East India Company.

Take notice of the flag!
The English East India Company, founded at the beginning of the 17th century, was one of the
first multinational companies on Earth. In the beginning, they traded with other countries and
continents by installing trade-posts along the sailing routes to India and the Far-East. They did
not have enough gold and silver as working capital to finance their trade, so barter was used,
or a certain commodity was used as intermediate medium of exchange. Shortly we will return
on this.
19
The American Constitution was designed in order to protect the people of the “new” world against its
own leaders, who might turn into despots as the monarchs of the “old” world. So four important freedoms were
explicitly stipulated in the Constitution: freedom of speech, freedom of religion, freedom from want, and
freedom from fear.
39
The original purpose of the trade-posts was to be able to take fresh supplies of water and food
during the long journey to India, and African slaves to the American colonies20. Also the
trading posts had to be supplied with goods for local trade. The space that became available
on the vessels was loaded with locally produced goods and slaves. With the voluntary, bribed
or forced co-operation of the local chefs (warlords), plantations were created to produce
locally. The estates functioned based on slave-labor and the suppression of the local
population or the nearby tribes. A nice example of what the real and ultimate intentions of the
EIC were, is the island St Helena in the Atlantic Ocean, where later Napoleon was sent into
exile. On that island, in the 1670s, the total population was forced to work as feudal serfs in
the plantations of the EIC, or they were added as cheap recruits to the EIC’s private
garrisons21.
The local population was thus isolated from their own natural resources, and in some places
even massacred, as they did not want to co-operate with the system. Rebellion was often the
result, so the East India Company had to impose their law and order by private militias, paid
by the Company itself. And the cost of these private militias started to get so high because of
the local rebellion, that it started to erode the profits of the Company. During the first half of
the 19th century, the privately-owned East India Company had full control over India and their
private militia outnumbered the regular English army.
In 1850 the colony was transferred to the Crown: the East India Company decided to give all
the land they controlled as colonies to the state - the community, the people, however with the
tacit assumption that the burdens were for the community, while the profits were still for the
Company. Young men were called in the army, paid by the community, that send them to the
colonies in order to do some “peace-keeping” and fight the local rebels. The Belgian king
Leopold II did a similar thing with Congo, which first was his private owned province. Only
after it became a Belgian colony, missionaries were sent. Before that it was not necessary, or
they were not welcome as Nosy Parkers.
Malthus's position as professor at the British East India Company training college, which he
held until his death, gave his theories considerable influence over Britain's administration of
India through most of the 19th century, continuing even under the Raj after the company's
dissolution in 185822. Malthusianism was eagerly accepted by the British power élite in order
to justify colonialism, exploitation and even extermination of those “savages”. The most
significant result of this influence was that the official response to India’s periodic famines,
which had been occurring every decade or two for centuries, became one of not entirely
benign neglect: the famines were regarded as necessary to keep the “excess” population in
check. In some cases even private efforts to transport food into famine-stricken areas were
forbidden.
However, this “Malthusian” policy did not take account of the enormous economic damage
done by such famines through loss of human capital, collapse of credit structures and financial
institutions, and the destruction of physical capital (especially in the form of livestock), social
20
Most Native American tribes where nomads and hunters. So they were a nuisance to the European
settlers, who did not like their crops to be destroyed by the migration of the Native Americans, who just followed
the migration of the buffaloes. Their life support – the buffaloes – and the native people were exterminated, as
they were not fitted to work as cheap labor on the farms and the buffaloes could not be domesticated. Just see the
film Dances with Wolves. Cheap labor had to be imported from elsewhere.
21
John Keay, The Honourable company, p. 179
22
The East India Company was officially dissolved in 1858, but the people who got rich by it did not
evaporate, nor did their way of thinking or their conduct! They are still the main forces in current geopolitical
affairs. They just went underground.
40
infrastructure and commercial relationships. The presumably unintended consequence was

that production often did not recover to pre-famine levels in the affected areas for a decade or
more after each disaster, well after the lost population had been regained.
Malthusian theory also influenced British policies in Ireland during the 1840s, in which relief
measures during the Irish Potato Famine (1845-1849) were neglected and mass starvation was
seen as a natural and inevitable consequence of the island’s supposed over-population.
Although it is popularly assumed that Malthus’s pessimistic views gave economics the
nickname “the Dismal Science”, the phrase was actually coined by the historian Thomas
Carlyle in reference to laissez-faire economic theories in general23.
4.1.2 Malthusianism and imperialism
But the East India Company kept one colony for itself, as it seemed feasible to eliminate the
original local population completely and definitively: the United States of America. Two
small anecdotes from Buckminster Fuller’s book Critical Path:
• The American brothers Elihu and Thomas Yale had made their personal fortune as
members of the East India Company. Elihu donated a large amount of fortune to
his old school, then known as His Majesty’s College of Connecticut. In 1718 the
grateful trustees renamed it Yale College in his honor. Later it became Yale
University.
• The American flag is made with the flag of the East India Company in mind. The
flag had thirteen stripes, and the Union Jack was replaced with thirteen stars, the
initial number of states in the confederation.
Flag of the East India Company First flag of the USA, sewn by Elizabeth
Griscom Ross in 1776 for
George Washington
Buckminster Fuller wrote the following interesting lines on this important event in American
history:
George Washington took command of the US. Continental Army under an elm
tree in Cambridge, Massachusetts. The flag used for that occasion was the East
India Company’s flag, which by pure coincidence had the thirteen red and
white stripes. Though it was only coincidence, most of those present thought
the thirteen red and white stripes did represent the thirteen American colonies -
23
41
ergo, was very appropriate - but they complained about the included British
flag’s superimposed crosses in the blue rectangle in the top corner. George
Washington conferred with Betsy Ross, after which came the thirteen white,
five pointed stars in the blue field with the thirteen red and white horizontal
stripes. While the British government lost the 1776 war, the East India
Company’s owners who constituted the invisible power structure behind the
British government not only did not lose [the Independence War] but moved
right into the new U.S.A. economy along with the latter’s most powerful
landowners.
By pure chance I happened to uncover this popular unknown episode of
American history. Commissioned in 1970 by the Indian government to design
new airports in Bombay, New Delhi and Madras, I was visiting the grand
palace of the British fortress in Madras, where the English first established
themselves in India in 1600. There I saw a picture of Queen Elizabeth I and the
flag of the East India Company of 1600 AD with its thirteen red and white
horizontal stripes and its superimposed crosses in the upper corner. What
astonished me was that this flag (which seemed to be the American Flag) was
apparently being used in 1600 AD, 175 years before the American Revolution.
Displayed on the stairway landing wall together with the portrait of Queen
Elizabeth I painted on canvas, the flag was painted on the wall itself, as was
the seal of the East India Company24…
The East India Company, whose flag I have shown to be the origin of ours (the
US flag) was a private [and monopolistic] enterprise chartered by the British.
Quite clearly the East India Company didn’t lose the American Revolution.
The British government lost the Revolution, and the East India Company
swiftly moved large amounts of its capital into US America.
B. Fuller, Critical Path, pp. 78, xxii-xxiii.
And of course, the Malthusian way of thinking and acting, which has been so successful to
build the British Empire, was adopted by those in command of the United States. The big
Anglo-Saxon family fortunes in the USA were made in the China-trade. In this trade, opium
was used as intermediate medium of exchange in order to buy tea and china-ware (porcelain)
from China. The fast American clippers sailed first to the countries where poppy was
cultivated, like Turkey and India, to collect the raw product or the processed opium, then
sailed to China where the opium was discharged and tea and china-ware were loaded, so they
could sail back to the USA with some more respectable goods. Also cheap Chinese labor-
forces were transported, as long as they were willing to pay in order to get to the land of
promise. They were used as cheap labor force during the construction of the Wall Street
financed and owned railways. Apparently, trade in human beings, looking for a better way of
living, is of all times.
The flow of opium into China started to irritate the Emperor of China, who saw his people
slip away, so he put a ban on the import of opium. According to the original American
Constitution, the USA had a militia system, only aimed at self-defense. There was no standing
army and no Navy for an offensive overseas war. So the Anglo-Saxon élite of the USA then
24
As if the Company was more permanent than the Queen. Popes, queens and kings, presidents and
politicians come and go, but the Company remains the same.
42
persuaded their friends in England to start a war against China. British gunboats were sent to
Shanghai in order to persuade the Chinese to change their mind. The regular army of a
country was used in order to restore the trade in narcotics! The free opium trade was even
ratified by the treaty of Nanjing (1842).
Japan is another fascinating example. Just as China and the Islamic world, it
was one of the most isolated societies in the world25. Between 1639 and 1854
only one western ship per year was allowed to enter a Japanese harbor. Then
followed the famous episode of Commander M.C. Perry, who in 1854, from
the bridge of his cruiser, forced Japan to open its harbors for western ships.
The period after this event resembles the transition the countries of Eastern
Europe had to go through after the fall of the Berlin Wall. Between 1859 and
1865 the prices in Japan rose with a factor 626! The political system was
undermined, the shogun lost his authority, and the emperor took the political
power in his own hand. The decision to modernize the country was taken
overnight. This shock-therapy was later called the Meiji-revolution of 186827.
Daniel Cohen, Globalization and its Adversaries, p. 107.
At the onset of the 20th century Russia, was to be the new “province” of the international
“free”-traders and the “free”-financiers. At that time Russia was one of the major countries in
the world without a central bank28. But the Czar of Russia very well knew what happened in
China, so he said “Njet”. He refused to open his borders for the so-called “free” international
trade and to install a private owned national bank.
Two American bankers, George Herbert Walker and Averell Harriman, got the idea to put
some money in the hands of a fellow named Lenin in order to back his Bolshevist revolution.
William B. Thompson, director of the Federal Reserve Bank, traveled in December 1917 to
Russia to donate a check of one million dollars to the Bolshevistic party! This money was
used by the Bolshevists to buy American Remington weapons. And apparently the idea
seemed to work.
The Romanov’s asked for political asylum with their cousins, the house of Hanover in
England. But the house of Hanover came into power in England with the aid of the money of
the Rothschild’s. So they denied their cousins the demand for political asylum. The Czar and
his family were murdered. After the First World War the House of Hanover changed their
name to the House of Windsor, their residence.
The Russian people were promised that, if they worked very hard, Russia would evolve into a
heaven on earth for the laborers and the farmers. Maybe they would not see the paradise
themselves, but their children certainly would … or maybe their grandchildren.
25
From the introduction of “free trade” financed by paper money or trade in opium.
26
Most likely due to the introduction of paper money.
27
See the film The Last Samurai. The main purpose of the USA and European countries was to sell
weapons to Japan, weapons that were used against the Japanese traditional rural population.
28
The Great War (WW I) was going on, and in order to finance its war expenditures Germany
borrowed money from the German Rothschild bank, the British borrowed money from the English Rothschild
bank, and the French borrowed money from the French Rothschild bank. The Federal Reserve Bank was
established in the USA in 1913, just as the federal income tax. Two lobbyists in this endeavor were the
Englishman J.P. Morgan, banker but also sales agent for the weapon industry, and Paul Warburg, both working
on behalf of the Rothschild’s. See :http://www.brasschecktv.com/page/947.html
43
In reality the totalitarian communist regime, with one party who controlled the political
system, the economy as well as the labor-unions - striking was not allowed -, terrorized its
own population, millions of “non-adapted” persons and intellectuals were killed. Private
property was not allowed. There was no freedom of speech, the media were centralized and
controlled by the communist party. The people were brainwashed. Dissident opinions or
criticism on the system were not allowed. During the period in between the First and Second
World War, American engineers helped the Soviets in order to build up their heavy industry
production infrastructure, without giving much consideration to human dignity and ecology.
Just read George Orwell’s Animal Farm.
But, for those who financed the project, the return was substantial, and the system seemed to
work: let the people work hard for little money and promise them that, if they kept on doing
this, they would once have heaven on earth. So they looked for another country where they
could introduce that very same system in another camouflage. After the First World War,
Germany was at its last gasp due to the heavy payments it had to make to the allied forces
who won the “Great War’.
A certain Prescott Bush29 - son in law of the already mentioned George Herbert Walker, and
father of. President Sr. Bush and grandfather of President Jr. Bush - together with some
Anglo-American bankers, organized financial support to a small political movement in
Germany headed by a fellow named Adolf Hitler30.
By the early part of the 20th century, control of the Bank of England had
passed to Montagu Norman, a somewhat secretive man of right wing
sympathies. Norman was an early supporter of the Nazi movement and soon
moved to finance Hitler's rearmament. Eric Butler tells us:
“Le Canard Enchainé” for August 1939 published the following interesting
item: “In 1933 there appeared in Holland a book, written by a certain
Sidney Warburg, which quickly disappeared from booksellers windows. In
it the author stated that in the preceding year, 1932, he had attended
meetings in the United States of financial gentlemen who were seeking
means of subsidizing Hitler. It appears that among those present were Sir
Henry Deterding, representatives of Morgan's bank, Mr. Montagu Norman
(governor of the Bank of England), and representatives of the Mendelsohn
Bank.”
Mr. Montagu was openly in favor of supporting the new Hitler movement
by 1931. By 1935 the Bank was openly pro-Nazi, as revealed even in the
“Financial News” of May 15 of that year.
In “Our Crowd”, Stephen Birmingham tell us that “Sidney Warburg was a
pseudonym for Max Warburg, a prominent German banker and a close
29
The U.S entered World War I in 1917. In the spring of 1918, Prescott Bush’s father, Samuel P. Bush,
became chief of the Ordnance, Small Arms and Ammunition Section of the War Industries Board. Samuel Bush
took national responsibility for government assistance to and relations with Remington and other weapons
companies. This was an unusual appointment, as Prescott’s father seemed to have no background in munitions.
Samuel Bush had been president of the Buckeye Steel Castings Co. in Columbus, Ohio, makers of railcar parts.
His entire career had been in the railroad business, supplying equipment to the Wall Street-owned railroad
systems.
30
See also http://www.guardian.co.uk/world/2004/sep/25/usa.secondworldwar
44
friend of Hjalmar Schacht (the head of the German central bank under
Hitler)”.
Howard Katz, The Warmongers, pp. 77-81.
The book quickly disappeared from booksellers windows once the Nazi’s were in control. But
a copy of the book was recovered in 1982, and the financial support was indeed given to
Hitler:
Hitler – US-Support?
The publishing company Dormer Knar from Munched in Germany announced
that they found a book written by the American banker Sidney Warburg. In
that book he wrote that American bankers have donated millions of US$ to
Adolf Hitler as a support for the organization of his Nazi-party. Warburg, who
was co-owner of the bank Kuhn Loeb en Co. from New York, describes the
three meetings he had with Hitler on behalf of American bankers, the Bank of
England and oil-companies in order to discuss the ways in which Hitler’s
political movement could be financed.
Warburg declared that Hitler received via Kuhn Loeb 10 million dollars in
1929, another 15 million dollar in 1931 and 7 million dollar when he managed
to seize the power in 1933. The book was published in Holland in 1933, just
before Warburg died, but it disappeared during the war after the translator and
the publisher were killed.
De Standaard, September 25th 1982.
And yes, it seemed to work again. Again a country with a one-party system and people who
worked hard for very little. If they did not want to collaborate, they were interned in a labor
camp or even in an extermination camp. Hadn’t Malthus said there would not be enough for
everyone? American companies made use of the slave-labor that the “prisoners” had to do.
They paid a fee to the Nazi-party, who in exchange guaranteed maximum surveillance and
minimum nutrition for the laborers. But the biggest part of the income was used by the Nazis
for the further development of their own power-structure and weapon industry. In England,
America and other countries many of the economic and financial upper-class admired the
economic miracle that was going on in Germany. What they did not want to see was the
following:
45
Map of extermination camps and labor-camps in Nazi-Germany and occupied territories.
Entrance of the concentration camp Auschwitz: “Arbeit Macht Frei31”
31
Right for Labor?
46
In 1986, Primo Levi, an Italian Jew and professor in chemistry, who survived exile by the
Italian fascists and survived a Nazi concentration camp32, wrote the following appendix in his
book ‘Se questo è un uomo33?’ (Is this a human being?)
The first rumors in the concentration and destruction appeared in the critical
year 1942. The rumors were vague, but they all had the same core: they spoke
about murder on such a large scale34, with such a cruelty and such a
complicated plot, that people were inclined not to believe these rumors,
because it was unimaginable. And this unimaginability was part of the initial
plan of the ones behind it. Many survivors of the camps, among them Simon
Wiesenthal, in the last pages of his book Murders Among Us, remember that
the SS officers very sarcastically told their prisoners: “Whatever the outcome
of this war, we have already won the war against you. Nobody of you will
survive in order to testify, and even if a few of you do, then no one in the
world will believe this. Sure, there will be doubts, there will be investigations
by historians, but there will be no certainty, as we will destroy together with
you all the evidences. And even if somewhere a piece of evidence remains, and
even if some of you survive, still the people will say that the things you tell
them are too monstrous to be believable. They will tell that these are
exaggerations from the Allied propaganda. They will believe us, we who will
deny everything, and they will not believe you. The history of the
concentration camps will be written by us”
Very strangely it was the same idea (“even if we tell them, they will not
believe us”) that gave us (the prisoners) nightmares and fueled our despair.
Almost all of the ones who survived tell or write about a dream they had while
being in the concentration camps, and which always returned, sometimes with
slight differences in details but always with the same core: that they returned
home and told passionately and liberated about the hardship they had endured
to somebody they loved and cared for, and that they were not believed, yes, not
even heard. In the most typical and cruelest form of the dream the other person
silently turned and walked away35.
32
He was professor in chemistry, and because of that he was allowed to assist German scientists in the
concentration camp by cleaning their experimental equipment.
33
Published in English as “Survival in Auschwitz : The Nazi Assault on Humanity”
34
Genocide.
35
Will you silently turn and walk away?
47
Cover of the Dutch version the Primo Levi’s book ‘Se questo è un uomo36?’
(Is this a human being?).
In England, America and other countries many of the economic and financial upper-class
admired the economic miracle that was going on in Nazi-Germany. The “common” people,
both within and out of Germany did not know what was really going on:
36
Published in English as “Survival in Auschwitz : The Nazi Assault on Humanity”
48
Hitler is the product of a grand experiment which backfired. Powerful

industrialists37 of Britain, France, and the United States38 conspired to put the
industrial might of Germany into the hands of a “socialist” dictator and then
control that dictator39 [and thus the people]. A more fascinating aspect of their
plan was to have workers of Germany joined into an all-inclusive labor union
which would be controlled by the same dictator. Hitler, being the leader of the
Nazi socialist labor party, would have dual control of government policies and
the workers. The big industrialists reasoned that were they then to direct Hitler
to dictate laws conducive to tremendous profits for them, they would have
solved all of management’s biggest problems - especially the demand for
human dignity made by laborers. The police state tactics of Hitler’s mob make
labor strikes and personal complaints a crime against the state and an affront to
their glorious leader.
Germany was to be an experiment which, if successful, was to be extended
throughout the world. All of Germany was to be reduced to the status of an
industrial slave camp. Of the several political parties and leaders fomenting in
Germany about the time of the depression, Hitler looked like the most
promising tool to implement their plan, but they did not reckon with Hitler’s
personality. He too could see how well their plan would work, and so he
dictated to go it alone for his own glory and Germany’s profit40. Hitler signed
Germany’s death warrant when he prohibited the withdrawal of funds from
Germany except in very small annual amounts. This act was tantamount to
confiscation of foreign capital, and the big industrialists moved to retaliate.
Now tens of millions of soldiers are trying to eliminate a man who was
supposed to be a puppet of millionaires. Who is to blame for giving power to a
man of such monstrous and perverted ideas?
Don’t ever feel secure that the original idea of the big industrialists will
ever be discarded by future power seekers. Hitler really made the idea work,
and the world will be plagued by his imitators for a long time to come. His
methods of coming into power, his reign of terror, his confiscation of private
property, his denial of human rights and justice, and his ruthless consolidation
of power and control over the minutiae of daily living will be the world’s
legacy from Hitler and his international backers.
Eklal Kueshana, The Ultimate Frontier, p.112.
Indeed, at a certain moment Hitler – who was only chosen as a front-man as long as he was
useful for the Anglo-Saxon captains of finance and industry – realized that the system
worked, and he decided to go for it on his own and for the glory of Germany. He had signed a
non-attack pact with Stalin in order to feel safe on his eastern border. Both very well knew the
ins and outs of the matter: both communism and Nazism had been financed by the same
Anglo-Saxon bankers and industrialists. After the invasion of Poland, he treacherously
attacked Russia in order to find even more “lebensraum” for the Germans eastward. And what
was the strategy of the Anglo-Saxon élite?
37
… and bankers…
38
… and not the “common” German people...
39
See the film For the Remains of the Day.
40
And “Lebensraum” for the German people, the Aryan race.
49
In the early stages of the war, Harry Truman’s view was simple: “If we see that
Germany is winning we ought to help Russia and if Russia is winning we
ought to help Germany and [in] that way let them kill as many people as
possible41”, what political scientist Timothy Crawford calls a “pivotal strategy
[to] prolong war”.
As already said in the quote from The Ultimate Frontier, Hitler ordained that companies could
export their financial profits only in small amounts to the home-country - for most of the
companies this was the USA and England. So Hitler became persona non grata for the Anglo-
Saxon captains of industry and finance, he had to be removed. There was a media campaign
of gigantic proportions in America in order to change the public sentiment from pro-Germany
to anti-Germany and from anti-war to pro-war. After the Japanese attack on Pearl Harbor –
the highest political and military leaders of the USA very well knew in advance when and
where the attack would take place42 – the American soldiers once more went to a war “for
freedom and democracy”.
Averell Harriman as VS-ambassador in Moscow (1943-46) with “Uncle Joe” Stalin,

attending a military parade.
The facial expressions and body language speak for themselves.
I wonder… who is most delighted with the state of affairs in Russia at that time…?
It is a remarkable coincidence that Averell Harriman, George Herbert Walker and granddad
Prescott Bush all graduated from Yale University, and that they were members of an obscure
41
A dedicated Malthusianist. War is perfect tool to solve the supposed problem of overpopulation and
to get control of the resources of the Earth.
42
This will be discussed in more detail later in this book.
50
secret society, Skull and Bones43, just as dad George Bush Sr. and his son George Bush Jr.,
and many other known persons in the American political and financial upper-class.
In 1903, the Yale Divinity School started a program of schools and hospitals in Shanghai, and
you may guess just once who used to work there as a young fellow. Indeed, Mao Zedong was
among the staff. Indeed, the very same Mao Zedong, who with his “cultural” revolution
wanted to transform China into a paradise for laborers and farmers according to the well-tried
recipe of a one-party system, no private property, heavy industrialization, the elimination of
the intelligentsia, a genocide on his own population, and to the total neglect of ecology and
human dignity.
Picture of Prescott Bush himself and … Richard Nixon.

The facial expressions and body language speak for themselves.
The hierarchy is obvious. I just wonder…
• Who is in control?
• When this picture was made: after some initiation rite? The hat seems to be crucial,
even the color seems to matter. The whiter the higher in rank? Nixon lost the
presidential elections from J.F. Kennedy. Kennedy was reluctant to escalate the
Vietnam war, printed silver backed dollars (more on this later)… and was shot.
43
In the film The Good Shepherd you can see how the CIA was formed out of this secret "club" of
students.
51
• Where this picture was made; and who are those two other fellows and who are all
those fellows on the wall?
President Nixon and Henry Kissinger got Mao out of his isolation, and George Bush Sr. was
appointed the first ambassador in China. On the subject of Nixon, I only want to say the
following. After the soap-bubble burst on Wall Street in 1929 and the following Great
Depression during the 1930s, Roosevelt tried to put things back to order with his New Deal,
and the financial system was strictly controlled by the government.
Investigations during the early 1930s of what had caused the crash on Wall Street in 1929 had
shown that the major financial companies were active not only in saving and loans for the
public, pension funds, insurances, but also in speculative investments for their own account,
using the deposits of their own clients. They perfectly knew the composition and the due dates
of the portfolios of their private clients, the pension funds and the insurance contracts. They
had foreknowledge of when what contracts would end, when cash could be received and when
payments had to be done and thus shares had to be sold in order to generate cash. They could
perfectly prepare themselves for fluctuations on the stock exchange market and anticipate
them, so the losses would be for the public and they could even make an extra profit via their
speculative investments for their own account.
To trade on the stock exchange market with foreknowledge is considered to be illegal. So
these investigations resulted in the “Glass–Steagall Act” of 1933, also known as the “The
Banking Act”. Due to this legislation, designed to protect the savings of the public, a banker
had as much decision power as a postmaster over the price of post stamps: he could no longer
decide autonomously on the level of interest for loans or savings. These were dictated by the
government. Pension funds, which after the 1929 crash on Wall Street proved to be just
hollow vessels, were allowed to invest only in government bonds with a low but secured
yield44 and no longer in shares. And there was a strict separation between investment banking
activities, commercial banking and insurance activities, as during the previous year’s banks
had used their foreknowledge in order to swindle their own clients for their own profit.
During the period of the New Deal in the mid and late 1930s, the mechanism for the creation
of money was also strictly controlled: increase in the money supply was supposed to go hand
in hand with real economic growth. After the Second World War, the value of the major
international currencies was linked to the value of gold during the conference of Bretton
Woods in 1944, and for many years the dollar had a rather fixed international exchange rate.
This was good for international trade, as this gave industrial companies financial security and
stability: they were sure what amount of money they would receive or have to pay in their
international trade.
Well, that mister Nixon abandoned most of these measures: in 1971 he blew up the Bretton
Woods agreement, the value of the dollar was no longer tied to the value of gold. Since 1973
the US$ exchange rate compared to other international currencies was no longer fixed and a
system of floating exchange rates was introduced. This has led in the subsequent years to
monetary instability in the international trade, to financial speculation and to the recurrence of
financial and economic crises, which were all fuelled by more financial deregulation under
the false pretext that the “free market is infallible”.
44
But at least the revenues went to the pension funds, the “common” people. Since 2008, the US
government bonds are automatically bought by the Federal Reserve, who buys them with fiat money created out
of thin air. So the revenues will not go back to the American public, but to the shareholders of the Federal
Reserve! More on that later.
52
The barriers between private banking and insurance activities were also abolished, and
pension-funds were again allowed to invest in shares of private companies on the stock
market.
On top of this, the “Glass–Steagall Act” was greatly redrawn in 1999 by the “Gramm–Leach–
Bliley Act” (GLB), also known as the “Financial Services Modernization Act”. On November
12th 1999 President Clinton signed this act, which allowed commercial banks, investment
banks, securities firms and insurance companies again to consolidate, as in the period prior to
the crash on Wall Street in 1929. As you can see on the picture below, many people were
attending the signing of this Act – maybe they didn’t trust Bill and they had a rope with them
to lynch him in case that “democratic son of a bitch” would refuse to sign; after all, presidents
can use their veto-right – and they all seem very enthusiastic with this stroke of a pen by
President Clinton that had a profound impact on the history of the world. As Santayana has
formulated it: “Those who do not remember the past are condemned to relive it”.
President Clinton just signed the Gramm–Leach–Bliley Act.
In the section on The evolution of money growth and inflation, we have shown some
interesting charts concerning the purchasing power of the dollar and the inflation in the
United States of America: after a period with a rather constant purchasing power of the dollar
and zero inflation, except in times of wars, the purchasing power of the dollar has been eroded
and there has been a creeping inflation ever since 1913, the year that the Federal Reserve
central banking system was introduced. This evolution was even accelerated since 1933, when
the USA officially abandoned the gold standard, and even more after the Second World War.
Indeed, after the Second World War, the USA did not return to the militia system, as dictated
by their Constitution, but they started to act as policeman on world-level. Lacking a real
enemy to fight, they declared a former ally and product of the Anglo-Saxon financial élite –
the USSR – as new enemy, a threat to our freedom, values and democracy. This resulted into
the Cold War and a crazy arms race, financed by a constant erosion of the purchasing power
of the population and sky-high budget deficits in most Western countries.
As the dollar was internationally accepted as legal tender, but as a matter of fact is made by
the Federal Reserve from mere paper and ink, you can see that over the years there has been a
53
creeping erosion of the purchasing power of companies and private persons to the advantage
of the captains of high finance. You should check the following web-site where you can see
the shareholder structure of the Federal Reserve System.
http://www.save-a-patriot.org/files/view/whofed.html
I let you to be the sole judge of the evolution of your own pension-fund, your saving account,
the market value of your home and your portfolio of shares in industrial and financial
companies.
When George Bush Sr. – former director of the CIA and the first ambassador in China after
the Ping-Pong diplomacy of Kissinger and Nixon – was president, one of his geopolitical
partners, with whom he also arranged some lucrative deals, was a certain Saddam Hussein,
leader of the Baath party, president of Iraq. Saddam also came to power after a revolution in
1963, backed by the CIA under President Kennedy. Again the leader of a unitary state and
murderer of his own people. He was useful for the USA because of his vendetta with Iran.
The ayatollahs were sitting on a big arsenal of weapons from the days of the Shah, so a war
between Iraq and Iran was very convenient to the USA.
Here we also see the mechanism that is used to turn a former ally into an enemy when he
decides to go for it on his own. As a matter of fact, Saddam Hussein was deluded into the
First Gulf War when he informed the American ambassador in advance that he would annex
Kuwait – historically a former province of Iraq, but separated from Iraq by the British because
of its oil reserves – and the American ambassador assured him that the Americans were not
interested in that “local affair” and would not interfere.
But things turned out differently. Iraq was beaten up very badly, and imposed a ban on export
of oil, except for food and medicines. There was enough oil on the world market at that time,
the prices were under pressure, so it did not harm to take one of the biggest oil producers
temporarily out off the world-market. Hadn’t the Iron Curtain fallen down and hadn’t Siberian
and Caspian oil become available on the world market?
Bush Sr. allowed Saddam to stay in power. After all, he had the perfect regime, a dictatorship.
Until Saddam made some errors. Making oil deals with Russia and France was acceptable, but
dropping the US$ as means of payment in the oil-trade and switching to the EURO was one
step too far. So he had to be removed from the stage. And he could be removed, as another
player had come on stage in order to play the role of the villain, with the approval of the
hawks in the government of Bush Jr.: Osama Bin Laden and his Al Qaeda.
54
In the Belgian newspaper De Morgen I once read an article about the former CIA agent Gary
Bernsten, who was active in Afghanistan during the “liberation” of that country. He has
written a book about this: Jawbreaker. He writes that the CIA knew that Osama Bin Laden
was hiding in the mountains of Tora Bora at the time of the American attack against the Al
Qaeda bastion, but still Osama Bin Laden could (or was allowed?) to escape. It is a known
fact that Bush Jr. did some economic deals with the bin Laden’s before he became president
of the USA.
I could continue with stories on Mobutu and uranium in Congo, the so-called Marxist
revolution in Ethiopia in order to overthrow the emperor Haile Selassie45, president Kabila Sr.
and Jr. and coltan and tin in Eastern Congo, Liberia and oil in West Africa46. But enough on
this: the mechanism is always the same.
• Financial support to a revolutionary movement in order to overthrow a regime that
does not agree with the trading rules that the international captains of finance and
oil industry are trying to impose.
• The installation of a totalitarian regime, suppression of freedom of speech and the
intelligentsia.
• People have to work very hard, but cannot accumulate personal wealth for
themselves.
• Genocide on a part of the population.
• From time to time a former dictator-friend is turned into an enemy, and a war for
“freedom and democracy” is fought once more, paid by the creation of fiat money
on which interest is due to the international captains of finance.
• After the war the borders of the countries are redrawn so that the seeds of new
future conflicts are already sown.
I would like to remind all aspirant freedom-fighters and revolutionists all over the world a
lesson some Native Americans, who collaborated with the American “blue shirts” army as
tracker and interpreter, have learned during the colonization of their land: “White men speak
with double tongue!” They too were interned in the reservations, just as the other survivors of
the massive genocide on the Native Americans. If you are contacted by someone who says
that he represents an organization – be it official, secret or private – that is sympathetic to
your case, be very careful. There is no such a thing as a free lunch! You will be presented the
bill later on. Just think of the Bolshevik revolutionists accepting one million dollar from the
director of the American Federal Reserve bank, think of the Taliban in Afghanistan being
supported by the Americans in their fight against the USSR, think of the shah of Iran and
dictator Marcos of The Philippines who both died in an American military hospital when they
were supposed to get a medical treatment. Very often people tend to tell the truth before they
die, as they want to appear before the Final Judgment with a clear conscience.
We can summarize the “theory” of Thomas Malthus and the resulting Social Darwinism as
follows:
45
The revolution was led by Mengistu Haile Mariam, hundred of thousands “opponents” were
eliminated; a “labor” party was installed.
46
Very often, geologists precede soldiers in a military conflict, be it an organized popular rising, a
revolution, or a so called war for freedom.
55
• Resources increase at an arithmetic rate, population at a geometrical rate. So resources

per capita decrease.
• Get control of resources of other countries.
• Reduce population.
• Wars, pogroms and genocides (women and children first!) meet both objectives
perfectly:
o Children have more years to live than adults, so they need more resources. The
younger they die, the more resources are left for others.
o Women can bear children. Men cannot do this, they need women to procreate.
o Men can be used as slaves, cheap labor or cannon fodder.
o No problem if people get killed on both sides: more resources per capita are
left.
There is indeed a complete lack of morality with a small but very powerful part of
humankind, a minority who organize themselves in all kind of secret societies and three-
letter-word organizations, who think of themselves as “Übermenschen”, the “chosen ones”
destined to be the shepherds of humankind, and who think of the rest of the world population
as “Untermenschen”, just a flock of sheep who need guidance until they are slaughtered. Over
the centuries, that minority has helped to install dictatorial and totalitarian regimes all over the
world and allows them to organize genocide on a part of their own population, and then turns
them into their so-called enemy in order to fight a “noble” but very profitable war for values
like “personal freedom”, “liberty” and “democracy”. And all this in combination with a
complete lack of guts with the “silent NIMBY47-majority” to stand up against all this misery
in the world and the real cause of it, as long as “it does not happen in their backyard”.
In this study we will demonstrate that there is a valid and workable alternative for this cheap
and rather boring but also very cruel soap story that history really is, based on the following
words of wisdom:
When you call yourself an Indian or a Muslim or a Christian or a European, or
anything else, you are being violent. Do you see why it is violent? Because you
are separating yourself from the rest of mankind. When you separate yourself
by belief, by nationality, by tradition, it breeds violence. So a man who is
seeking to understand violence does not belong to any country, to any religion,
to any political party or partial system; he is concerned with the total
understanding of mankind48.
J. Krishnamurti, Freedom from the Known, pp.51-52
I hope that the reader will bear this in mind when he studies history, reads the newspaper or
watches the news on television. Colonialism, imperialism and wars were all “rationalized”
based on Thomas Malthus’s ideas and the resulting Social Darwinism. Based on Malthus’
“research” and “ideology”, a human being is considered to be only economically important in
47
Not In My Back Yard.
48
A ‘globalist’ in the real sense of the world. Just plain me!
56
two ways: as a production factor, generating added value for the employer; and as consumer,
with money to spend. The rest are considered, in the words of Henry Kissinger, as
“dispensable eaters”.
4.1.3 Thomas Malthus was and is wrong.
Out of his “research” over a limited period in time, Thomas Malthus concluded that as the
population grows at a geometrical rate while the resources only grows at an arithmetical rate,
resources per capita would decrease and scarcity would increase. There always would be a
fundamental inadequacy of life support on planet Earth, so only the fittest would survive
economically resulting in an “Us or Them” attitude.
But Thomas Malthus was right over only a short time-span. Over a longer period of time, the
population growth evolves according to the S-curve elaborated by the Belgian demographer
Pierre Francois Verhulst49 in 1838: the logistic population growth model.
In poor societies with high death rate for children and no social security or pension system, a
family needs lots of children and grandchildren in order to guarantee a comfortable old age. In
rich societies, with low death rate for children and a social security and pension system, there
is no need for a lot of children, so the birth rate declines, the population levels out, and in
some rich countries even declines. Some countries even allow or stimulate immigration in
order to sustain their economic growth. And this is not just a theoretical model!
Studies have shown that with increasing material development of a society the growth-rate of
the population declines.
Demographers have discovered that the significant pattern is a transition
between two levels of stable populations that has been characteristic of all
Western countries. In pre-modern societies birth rates were high, but so were
49
I am pretty sure that his name is not known by people who graduated from Eaton, Oxford,
Cambridge, Yale or WestPoint, but they all know Thomas Malthus.
57
death rates, and thus the population size was stable. As living conditions
improved during the time of the Industrial Revolution, death rates began to
fall, and, with birth rates remaining high, populations increased rapidly.
However, with continuing improvement of living standards, and with the
decline in death rates continuing, birth rates began to decline as well, thus
reducing the rate of the population growth. The reason for this decline has now
been observed worldwide.
Through the interplay of social and psychological forces, the quality of life –
the fulfillment of material needs, a sense of wellbeing, and confidence in the
future – becomes a powerful and effective motivation for controlling
population growth. There is, in fact, a critical level of wellbeing which has
shown to lead to a rapid reduction in birth rate and an approach to a balanced
population. Human societies, then, have developed a self-regulating process,
based on social conditions, which results in a demographic transition from a
balanced population, with high birth rates and high death rates and a low
standard of living, to a population with a higher standard of living which is
larger but again in balance, and in which both birth and death rates are low.
F. Capra, The Turning Point, pp. 227-228.
Also Malthus’s conclusion that resources grow only at an arithmetic rate is wrong. Modern
evolution theory shows that species are dependent on each other for their survival. Foxes eat
chickens, but do not raise chickens. So more foxes leads to less chickens. But people eat
chickens and raise chickens. So the more people, the more chickens!
Based on these two wrong conclusions of that time, Thomas Malthus predicted increasing
tensions in the world. Half a century later, Darwin formulated his On the Origin of Species
theory. Based on the theories of Malthus and the wrong understanding of Darwin’s theory50,
among others, a basic attitude was created in the western world which could be expressed as
“you or me, but not both of us together!”
Those in supreme power politically and economically as of 1980 are as yet
convinced that our planet Earth has nowhere nearly enough life support for all
humanity. All books on economy have only one basic tenet - the fundamental
scarcity of life support. The supreme political and economic powers as yet
assume that it has to be either you or me. Not enough for both. That is why
those in financial advantage fortify themselves even further, reasoning that
unselfishness is suicidal. That is why the annual military expenditures by the
USSR, representing socialism, and the USA, representing private enterprise,
have averaged over $ 200 billion a year for the last thirty years, doubling it last
year to $ 400 billion - making a thus-far total of six trillion and 400 billion
dollars spent in developing the ability to kill ever-more people, at ever-greater
distances in ever-shorter time.
B. Fuller, Critical Path, pp. xxii-xxiii.
Since the days of Malthus, science and technology have evolved so drastically that with ever
less energy and materials more and more can be accomplished. Buckminster Fuller has given
50
“It is not the strongest that survive, nor the most intelligent, but the ones most adapted to change”.
58
several examples of this evolution from the use of water over the building of houses to the
production and distribution of electricity on a worldwide scale. He ends his discourse with the
following conclusion:
This clearly confirmed the reasonability of my working assumption that the
accelerated ephemeralization of science and technology might someday
accomplish so much with so little that we could sustainingly take care of all
humanity at a higher standard of living than any ever experienced, which
would prove the Malthusian “only you or me” doctrine to be completely
fallacious...
Neither the great political and financial structures of the world, nor the
specialization-blinded professionals, nor the population in general realize that
sum-totally the omni-engineering- integrateable, invisible revolution in the
metallurgical, chemical, and electronic arts now makes it possible to do so
much more with ever fewer pounds and volumes of material, ergs of energy,
and seconds of time per given technical function that it is now highly feasible
to take care of everybody on Earth at a higher standard of living than any have
ever known.
In order to realize this, one has only to apply already existing technologies and
use the resources that are now wasted to make weaponry and to realize profit-
for-the-few instead of creating high-quality-livingry-for-all.
It no longer has to be you or me. Selfishness is unnecessary and henceforth
unrationalizable as mandated by survival. War is obsolete.
B. Fuller, Critical Path, pp. 148-149, xxv.
But still there are people who use the resources of the earth in order to improve their own
already vast material position at the expenses of others and to strengthen their power. This is
described in a very lucid way by Buckminster Fuller in the chapter Legally Pigally of his last
book Critical Path. He gives a good overview of the origin, the development, and the
legalization of the phenomenon exploitation. On this subject, we can also recommend The
Warmongers by Howard Katz and Intellectuals and the State, On Power and Ideology and
Failed States by Noam Chomsky as very sharp analyses of the situation.
The Malthusian vision is assimilated so deeply in our western way of thinking, that scarcity
has been institutionalized so to speak. This is really the greatest obstacle for the “design-
revolution” Fuller refers to. Indeed, scarcity means business: one can ask a higher price for a
scarce good, while the prices of abundant goods are low. So the myth of scarcity must be kept
high in order to protect the western capitalistic model. Tons of fruits and vegetables are
destroyed each year in the European common market in order to keep prices at a level. The
supply of meat, milk, butter and wine is greater than demand, it costs the European tax-payers
millions and millions of whatever currency in order to preserve or even destroy these
surpluses.
An electricity or oil-company is only interested in forms of energy which reach the consumer
through a teller and which require an expensive infrastructure. Buckminster Fuller describes
how he holds several patents which could have had significant contributions to the savings of
materials and energy. Big business is not interested in developing these patents into products.
Instead they have tried to freeze them – i.e. to take them away from all of humanity – by
buying them. The implementation of these patents would be to the advantage of the
59
consumers and of humankind as a whole. But natural resources would become less scarce and
thus less expensive, so profits would decline in some fields of business. In the same way we
observe that the production of long lasting goods with high quality is something of the past.
Because of scarcity? No, on the contrary, because of the abundance! Well, at least in the
western industrialized countries. The growth of the economic process must be induced in an
artificial way.
Scarcity also means struggle for life and thus insecurity, which in turn is used to justify the
highly profitable weapon industry. Security is sold to the tax-payer, whose savings are eroded
by inflation and high taxes due to high budget deficits. The financial effort a democracy must
impose upon itself in order to maintain a substantial army and weapon industry can only be
“sold” to the tax-payer if one can point to an external enemy, who is seeking to take away our
freedom and our material wellbeing51. For this purpose, a former ally is sometimes turned into
an enemy, or an enemy is created out of the blue.
Buckminster Fuller, sometimes called the planet’s friendly genius, has formulated this as
follows.
Assuming that an atomic war would mean that both sides would lose – ergo it
would not occur – the USSR determined to outnumber and thus overpower the
USA in the design and the production of conventional air and sea armaments
and in the training and maintenance of a vastly greater standing army, where
after they felt they could negotiate constructively for the establishment and
maintenance of peaceful world-around conditions.
It must be remembered that, in their 1920s-formulated, successive-multistaged
five-year industrial planning, the Russians had assumed a World War II to
occur in the early 40s, at which time it would become evident to the private-
enterprise world that socialism could be successful – which private enterprise
had always said would be impossible – ergo, the private-enterprise-dominated
countries would start a war to destroy socialism but would do it in a highly
deceptive manner by having a Nazi propaganda offensive launched against the
German industrial cartels, which would suddenly be turned against the USSR.
This is exactly what happened. The Germans first made the USSR their ally.
When well into Poland and at the Russian border, the Nazis turned
treacherously against the USSR. The entire anti-USSR strategy of the
“Cliveden set” miscarried when, soon thereafter, the USSR and the USA
became allies.
No one in the USA can understand the bitterness as yet existent in the USSR
over the million of USSR troops and civilians killed by the Nazis, more than
25 million persons52. The USSR could not understand the USA’s rearming of
the Germans, with whom the USSR was much more concerned as a world War
III enemy than with the USA as such an enemy.
The Russians had assumed in their five-year planning that when World War II
terminated, they could be able to divert all their high industrial productivity
toward advantaging all their people in order to prove that socialism could
produce an economically desirable life-style equal to or better than provided by
51
For years, the USA controlled NATO imposed its member states an annual increase in military
expenditure of 3%, leading to higher deficits and higher profits for the military industrial companies and some
banks.
52
Malthusianism.
60
capitalism. Again the Russian planning became thwarted when Western

capitalism, which has been socialized by FDR’s New Deal, realized at the
cessation of World War II that it could not carry on without the vast
government procurement program which is associated only by war. To cope
with this situation the capitalists invented World War III, which they called
The Cold War. The Russians queried of the US, their supposed ally, “Who are
you going to fight?” and the USA answered, “You”53.
This meant that the USSR would have to focus all its high-science-and-
technology on producing armaments for decades of around-the-world cold
warring, in the conduct of which both the Russians and the USA would have to
avoid direct, all-out interconfrontation. With the joining of supreme-powers
war by direct military confrontation, neither side could withdraw without all-
out surrender. However, all-out intercontinental atomic war would mean the
end of human life on Earth. Therefore, the USA and the USSR, in testing their
respective strengths, would have to operate indirectly against one another
through their respective puppet nations, hopefully intent on drawing forth the
“secret weapons” in the other’s arsenal. Thus we have the North versus the
South Koreans, the Vietnamese versus the Vietcong, the Israeli versus the
Arabs, etc…
The Russians decided early on that atomic warheads would not be used
because the rocket delivery times traveling at 14,000 miles per hour were such
that with radar traveling at 700,000,000 miles per hour, both sides would know
ten minutes before being struck that the enemy had fired their atomic warheads
– ergo, both sides would have plenty of time to send off all their atomic
warheads, and both sides would lose. So while deceptively continuing the
atomic-warhead race with the USA, the USSR committed itself realistically to
producing the strongest navy in history. The USA politicians kept the USA
populace feeling military secure because they could point out that the USA
was developing far more atomic warheads than the USSR. The USA was doing
so because big oil money, which successfully lobbied Washington’s Capitol
Hill energy policies – knowing that petroleum would ultimately be exhausted –
fostered atomic-warhead production in order to build up the atomic technology
industry (in the development of which the US-people’s government had spent
over $ 200 billion) and its nuclear scientist personnel whom they, the world-
power-structure organizations, would need to employ in operating the atomic-
energy plants and the electrical-distribution network as world petroleum
supplies dwindled. They would need the energy meters in order to continue
exploiting the capitalist world’s energy needs.
B. Fuller, Critical Path, pp. 191-192.
53
See also Noam Chomsky, Failed States, pp.123-124: “British intelligence had also found “super-
secret appreciations of the Soviet Union as the next enemy that were circulating in Washington”. In May 1945,
as the war against Germany ended, Churchill ordered war plans to be drawn up for “Operation Unthinkable”. His
stated objective was “the elimination of Russia”, Aldrich writes… A few years after the end of World War II,
British assessments began to change. By 1951, the retiring director of navel intelligence, Vice Admiral Eric
Longley-Cook, informed the “innermost circle [that] the stolid Russians were a force for stability in the world
system”, seeking to further their objective by “psychological or economic means but ‘not a general military
offence’”. He suggested that the “main threat to strategic stability and indeed the survival of the United Kingdom
came from America”, which is preparing for “a shooting war with the Soviet Union” from which the United
States would be secure, while Britain might be destroyed.
61
During the Cold War campaign in the 1950s54, the people in the Western industrialized
countries were deceived in order to justify the enormous weapon industry, which served the
interests of only certain groups in society. But inducing fear for the enemy by misleading
propaganda was just one of the means to serve these interests. In order to develop an
enormous weapon industry and to keep a large army operational one has to spend money,
quite a lot of money. In a later section we will see how these “projects” has been financed.
4.2 Economic misconceptions
4.2.1 Gross National Product per capita
Scientists and academic oriented people like to quantify the phenomena they observe and
study, to express them in numbers. In most economic studies and reports on the economy of a
country, the Gross National Product per capita is considered to be an important yardstick in
order to compare economies of countries and to evaluate their individual progress.
The Gross National Product is calculated as the sum on the annual flow of final goods and
services (prices of oranges * number of oranges) + (prices of apples * number of apples) +
(prices of prams * number of prams)…
A quantity qi of a certain good or service is traded at a price pi. Then we can calculate the
GNP as the sum of all the mathematical products qi * pi.
GNP = ∑ qi * pi
In order to evaluate and compare the GNP’s of different countries, one divides the total GNP
by the number of people living in the country in order to get the GNP per capita. The higher
the GNP per capita, the better off the population in a country is considered. Is this true?
Let us consider two countries with the same currency, the same GNP and the same level of
population. Country A has a GNP composed of high quantities qi at low prices pi and a
substantial middle class, while country B has a GNP composed of low quantities qi at high
prices pi and with the wealth concentrated with a small upper class and no middle class.
According to the economic statistics, both countries are at the same economic level. But in
what country would you like to live? In the country where goods and services are abundant at
low prices, or in the country where goods and services are scarce and expensive? I don’t think
the choice is that difficult to make. So what is then the value of the economic yardstick GNP
per capita in order to compare the economy of the two countries?
It is also dangerous to evaluate the economic progress of a single country with this “one-
dimensional” yardstick. Due to a civil war, a military coup, a natural disaster or some other
calamity, a single country may have evolved from a situation of a GNP with high quantities qi
at low prices pi, to a higher GNP but composed of lower quantities qi at higher prices pi. So
54
The film Atomic Café is a very lucid account of this period in American history!
62
clearly in this case the growth of GNP per capita does not reflect the real economic evolution,
as people are now worse off.
Also the division of the GNP by the number of people living in the country can obscure the
real economic situation, as it does not take into account the participation level of the
population into the economic process or the composition of the population, the population
pyramid. Some countries have a very young population, with relatively few elderly people to
support; other countries have an aging population with relatively few people who are
economically active and with relatively many elderly people to support.
I think that the Gini coefficient, a measure of “statistical dispersion” commonly used to define
degrees of inequality within a given population is a more appropriate measure than the GNP
per capita in order to assess the health of the economy of a country. It is a measure of
statistical dispersion developed by the Italian statistician Corrado Gini and published in his
1912 paper "Variability and Mutability".
In Appendix C: Economy and Control System Theory we will elaborate a multidimensional
view on economy as an alternative approach to this one-dimensional GNP per capita approach
in order to measure the state of the economy of a country.
4.2.2 Economic growth
In most textbooks on economy, economic growth is considered as a necessary condition in

order for the economic process to run smoothly. Growth is supposed to give more people a
better income and standard of living, due to the “trickledown effect”. But the funny and at the
same time sad thing is that the greater the economic growth is, the wider the gap between rich
and poor people becomes. After centuries of growth, there are still poor people, their number
is growing, their misery also. A report was published in October 2009 by the United Nation’s
food program which stated that 1.02 billion people in the world have not enough food and
suffer from malnutrition, the highest number in 40 years! Even in the industrialized countries
the number of poor people is growing and the purchasing power of the middle class is
declining, as the concentration of wealth with a minority of the population increases.
The economic growth was substantial during the Golden Sixties of the 20th century, which are
considered as a period of an economic boom. As already mentioned, the output of the
economic process is now higher than during the golden 1960s. One could think that relative
growth is more important than the absolute level of production in determining the state of
economic health of society. But why is economic growth so vital? This question is seldom
stated or answered in those textbooks. Economic growth is considered as something self-
evident, not to be put to question. The nature of that growth – quality of life versus quantity of
consumption – has only recently emerged as a topic worth to be discussed.
Indeed one has become aware of the fact that a lot of dangers and inconveniences for
humankind have been created by the interventions in nature by men themselves. As a result of
the increased technical capabilities of men, actions and reactions which used to spread over
hundred or more years are now concentrated in decades. This implies that the effects of
human activity on the environment have become more intense: more pollution, CO2 emission,
global warming, more intense storms and hurricanes, more inundation’s...
Concepts like the gross national product, used to measure a nation’s wealth, can also be put to
question, as only economic activities which can be expressed in terms of money are included
63
in it: when you hit a tree with your car and you have your car repaired, then this adds up to the
GNP. Other activities, like growing your own vegetables, are ignored. Taking care of older or
sick persons at home is not an economic activity, while putting them into a hospital or a rest-
home increases the GNP.
But if growth is really so vital to the economic process, what options for further growth do we
have? Is uninhibited growth possible, or are there limitations to what can be achieved? What
is the nature of these limitations? Which groups have the greatest benefits when there is
substantial growth? Is zero-growth a possible option? And what are the economic and social
consequences of zero-growth?
Moreover, what is the unit of the entity “economic growth”? We can express distance in
meters, miles, yards, inches, etc.; time can be expressed in seconds, hours, days, years, etc.;
speed in kilometers per hour or meters per second; weight in kilograms, pounds, etc.;
electrical current in ampere... In newspapers and economic studies, economic growth is
usually expressed as a percentage. But a percentage is not a unit in itself: it merely indicates a
relative change realized over a period of time (a year, a quarter of a year) with respect to the
absolute value of the GNP realized in the previous time period (expressed in currency unit:
US $, EURO).
So clearly the unit of economic growth is currency unit per time unit55.
(US $ per year, EURO per year...).
Later on you will understand why I state this so explicitly.
4.2.3 Positive balance of trade
In those same textbooks on economy, a positive balance of trade is considered as favorable

for the economy of a country. Why? If a positive balance of trade is so favorable, it is
reasonable to assume that every single country will try to obtain this. But is it possible for
every country to succeed in this endeavor? If not so, does it make sense to put this as an
objective? By the way, what is the meaning of national borders? In the course of history, one
can recognize a trend towards ever-larger economic entities – from the Greek polis towards
the European Community –, while economic and political borders are pulled down. What is
the explanation for this evolution? And where will it lead us too, as the Earth is a finite globe?
On the other hand, in times of recessions, economic nationalism predominates international
solidarity; governments take protective measures – tariffs and quota – in order to protect their
own economy. The economic obstacles from older days are erected again. Is this to protect the
employment in their own country, or are there other motives for this reaction? In a longer
period of recession, one can also see that nationalistic feelings emerge, making political
integration virtual impossible. In extreme cases the evolution towards larger economic and
political entities is even reversed: empires disintegrate, like the USSR.
55
In mathematical terms: Growth = d(GNP)/dt.
64
Moreover, what is the unit of the entity “balance of trade”? Generally a balance of trade is
expressed in a currency unit, with the tacit assumption that it is over the period of one year.
So clearly the unit of balance of trade is currency unit per time unit, the same unit we use
to measure economic growth.
4.2.4 Profit, the missing link in economics
Profit has a very important role in our economic system. In this section we will discuss the
origin of profit. We will also discuss two extreme opinions: that of a businessman and that of
a neo-Marxian economist. And we will find out that even classical economists themselves
have some difficulties with the notion of profit.
Profit according to the businessman

From a businessman’s point of view, we can describe profit as follows:
• A company realizes a turnover by marketing a certain product or service.
• In order to do this, it has fixed and variable costs.
• Turnover minus the variable costs gives us the contribution.
• Contribution minus the fixed costs gives us profit before taxes.
• Profit before taxes minus the taxes results in profit after taxes.
Of course there are a lot of tricks in order to lower the profit before taxes – and thus the taxes
– by using different methods of depreciation, making certain costs tax-deductible, etc..., all in
a legal way. Sometimes the laws are even adapted for this purpose in order to stimulate the
economy. In this sense, financial cash flow is a better measure for profit than profit itself. So
when you read “profit” in this book think of it as “cash flow”: it is less compressible than
profit, and it has the same unit, unit of currency per unit of time. And think of cash flow as a
flux of money flowing into a company, just as a positive (negative) balance of trade can be
considered as a flux of money flowing into (out of) the country.
Part of the turnover can be realized in the home market, another part could be realized abroad.
So part of the profit can be considered as a result from turnover in the home-market, the other
part as the result of export activity.
Wages and salaries are part of the fixed and variable costs. The profit of a company is a
function of the wages and salaries it pays. If these are increased, the profit will – apparently –
decrease, and vice versa. But is this always true?
During the 1970s and early 1980s, after the Golden 1960s, the economy of most West-
European countries was no longer what is used to be: the level of profit was too low, the
return on investment was not rewarding anymore. The return on investment is the ratio
65
between the profit made and the risk bearing capital invested. In particular, the profit-ratio in
those days was lower than the high interest-rate one could get from low-risk investments as
government-bonds or saving accounts due to the two-digit inflation of those days. So the
incentive for private persons to invest in business was rather low, companies had difficulties
in finding new funds on the money market. They had to go to the bank to negotiate a loan at a
high interest rate, which had a negative impact on the working accounts of the companies.
Countries like Belgium are dependent on export, as the home market is relatively small and a
lot of energy and raw materials have to be imported in order to “feed” the economic process.
As the wages and salaries at that time (1980s) were too high compared to those of other
countries, it was difficult for companies to be competitive in these export markets. People
were laid off as a result of the decline in turnover and production. With the help of
government regulations and legislation, a policy of moderation and even reduction of wages
was pursued. Wages were no longer automatically increased when the cost of living had gone
up. All these measures were aimed to consolidate or strengthen the position of the own
economy in the international trade scene, so that, in the long run, the profit figure of
companies would increase, especially that part of the profit resulting from export activities.
This extra profit was then supposed to be an incentive toward new investments, which in turn
would create new jobs. For the same reasons, some countries – like the USA under the
Reagan and Bush Sr. administration – changed their tax legislation, reducing the maximum
level of taxation, particularly for the rich, in order to favor private business and reward
successful entrepreneurs. The dilutees of society were supposed to wait until the wealth would
have trickled down to their level, of course in diluted form.
But on the other hand we can say that as a result of the national policies of wage control and
tax reform, the real purchasing power of the majority of the population decreased while the
inequality of the distribution of wealth increased, resulting in a lower level of consumption. A
lot of enterprises realized fewer turnovers in their home market, so the part of the profit
resulting from that turnover decreased. Facts confirm this statement: in Belgium the turnover
in retail-business for a particular month in the year went down for several years after the
government started their policy of wage control in the early 1980s, the real purchasing power
of the population went down with approximately 2% each year. You have to read the table
below from left to right in order to account for seasonal influences.
Turnover retail-business in Belgium

(index 100 = 1970)
1982 1983 1984

January 128 123 119
February 127 119 116
March 148 136 129
April 150 131 124
May 140 129 128
June 145 135 130
July 126 117 114
66
In order for the economic policy to be effective, the loss in turnover (and profit) resulting
from the lower purchasing power in the home market had to be compensated by an extra
increase of the export. Indeed, in an article in a newspaper of those days one can read that the
economic activity, measured by the industrial production and the consumption of electricity,
was increasing. But the private consumption was still declining. The economic activity was
supported solely by export and by the increase of stocks of semi-manufactured articles. At
that time there was no indication of the expected increase in investments and employment.
But what if the extra export of goods and services is not enough to compensate for the loss in
turnover in the own country? And what if the other countries are faced with the same
problems and have decided to apply the same economic policy of moderation? Could it not be
that all employees and enterprises in all those countries suffer from reduced wages and
shrinking turnover? What is it good for to try to stimulate extra investments if there is no
purchasing power, neither in the home market nor in foreign markets, to buy the products that
could be produced with the extra production capacity? And what if there is an excess of
production capacity, so companies no longer need to invest?
One was well aware of this problem in most branches of industry. Already in 1978 Bob
Stouthuyzen, former chairman of the Belgian employer’s organization VEV, warned the
politicians “that it is absolutely necessary for private consumption to increase in order to get
out of the economic crisis”. An entrepreneur does not only want to produce, he also wants to
sell his products, if not abroad then on the home market.
One could indeed imagine that the economic policy of moderation and reduction of salaries
and wages could lead to the crumbling off of the economic process and our material
prosperity. All these phenomena are interrelated and could lead us into a downward spiral:
lower wages, lower purchasing power, lower turnover, fewer investments because of the
excess in production capacity, more unemployment, still lower wages... Where does this
process stop? Could it not be possible that, in the long run, this economic policy will lead us
to a social Armageddon because of its short-sightedness?
What is profit? What is the origin of profit?

There seems to be a problem with profit, the money-maker that makes our capitalistic world
go round and round. But what is profit, and how is it created? For a lot of people, not the least
for businessmen, profit exists, has always existed, and will exist forever. To put profit to
question is the same as putting life to question. It is a fact that we live and that profits are
made. So let us make the best of our lives and of profit. To think about it only leads to a
headache.
In this study, however, we will not be content with this point of view: we will try to find the
social origin of profit. This will lead us to a deeper insight in the economic process so that we
can grasp the true nature of the economic crisis and thus find a way out of it.
Profit according to a neo-Marxian economist

We have discussed already how a businessman sees the origin of profit as turnover minus
costs and taxes. Even the Belgian neo-Marxian economist J.P. Van Rossem, who could
discuss the problem emotionally and intellectually more detached, ascribes a major role to
profit in the economic process, although he gives it another origin.
67
If one likes it or not, but also in a so called mixed economy, where there is
intervention in the economy by the government, profit is still the driving force
of the economic process. As long as entrepreneurs can make profit, they will
create jobs for blue- and white-collar workers. By direct taxation of the profits
made by the companies and the salaries earned by the employees, and by
indirect taxes on consumption goods, the government acquires financial means
to run its own affairs... In a mixed economy it is perfectly feasible for
companies to maximize profit and for government to maximize welfare, but,
all things considered, the means the government needs in order to realize its
goals are dependent on the profit made by the private companies. For this
reason I say that profit is the driving force of the economy...
How does profit occurs, where does it come from? Nobody will deny that
profit is the difference between turnover, realized by selling products or
services, and the costs made to produce these. But this does not explain the
social origin of profit. Next to the government, there are two parties with
conflicting interests in our economic system. On the one side we find the
entrepreneurs, who are the owners of the means of production and who hire
labor-force. On the other side there are the employees and laborers, who do not
own any means of production, but who sell their own labor-force. As long as
the businessmen think it will yield profit, they will hire labor-force to produce
goods...
There are many ways to calculate the value of the produced goods. One
method is to express this value in terms of the energy – mechanical or human –
needed to produce these goods efficiently. So the value of a product could be
expressed in kilo-watt-hour. Usually, however, the value is expressed in the
local currency (EURO, US $,...). The transformation from values expressed in
energy to currency is a rather complicated process56, described in the theory of
energy-value...
The labor-force the blue- and white-collar workers sell to entrepreneurs and the
government is a special kind of commodity: under certain conditions it can
yield profit for the one who buys it. Here also, it is possible to express the
value of this commodity in terms of the energy, efficiently used for the
reproduction of labor-force (the value of the goods the laborers and employees
buy is a measure for the value of their labor-force). It is possible that there
exists a positive difference between the value of the goods the employees
produce and the value of the labor-force they sell. This difference is what the
economists call the surplus value, which, if it is realized, will be the profit for
the entrepreneur. This implies that we can divide a working day in two parts:
on the one side, the laborer spends part of his energy in the reproduction of his
own labor-force he sells; on the other hand, he spends part of his energy for the
production of surplus value, to the advantage of the employer. If then the
employer succeeds in selling the products, then he will realize the surplus value
of these products as profit.
J.P. Van Rossem, Knack, January 31 1979
56
If you cannot convince, then confuse.
68
In reading this analysis, we can ask ourselves several questions:

• Is it really a fact that employees and employers have conflicting interests at all
times?
• How is it possible that there exists a positive difference between the value of
goods workers produce and the value of the labor they sell to the employer?
• What are the conditions in order for the employer to realize the surplus value, i.e.
to succeed in selling his products?
• Does this analysis gives us a better explanation for the origin of profit than the
businessman’s point of view, or does it just shift the problem?
As the following paradoxes illustrate, it is not so unrealistic to ask these questions.
First paradox: higher wages for employees, higher profits for the employer
In the discussion on profit seen with the eyes of a businessman, it seemed that an increase in
wages and salaries for the employees would lead to lower profits for the company. According
to a neo-Marxian economist, employers and employees have conflicting interests. Are these
statements correct? Statements on economy are often hypothetical and academic57. The
following story, however, is a historical fact.
In 1953 my friend the late Walter Reuther, then president of the United Auto
Workers, was about to meet with the board of directors of General Motors to
form a new and timely post-World-War-II labor pact. At that time the first
“new-scientist”-prototyped computers were being assembled, put in running
order, and fine-tuned by Walter Reuther’s skilled machinists. Walter had all his
fine-tuning machinists put the following problem into their computers: “In
view of the fact that most of General Motors’ workers are also its customers, if
I demand of General Motors that they grant an unheard-of wage advance plus
unprecedented vacation, health, and all conceivable lifetime benefits for all of
its workers, amounting sum-totally to so many dollars, which way will General
Motors make the most money: by granting or refusing?” All the computers
said, “General Motors will make the most profit by granting”.
Thus fortified, Walter Reuther made his unprecedented demands on General
Motors’ directors, who were elected to their position of authority only by the
stockholders and who were naturally concerned only with the welfare of those
stockholders. Reuther said to the assembled General Motors board of directors:
“You are going to grant these demands, not because you now favor labor
(which, in fact, you consider to be your enemy), but because by so granting,
General Motors will make vastly greater profits. If you will put the problem
into your new computers, you will learn that I am right.”
The directors said, “Hah-hah! You obviously have used the wrong computers,
or have misstated the problem to the computers.” Soon, however, all their own
computers told the directors that Walter was right. They granted his demands.
Within three years General Motors was the first corporation in history to net a
57
Which is not always the same as scientific! More on this later on in Appendix A.
69
billion-dollar profit after paying all government taxes – with their profits
increasing steadily thereafter for twenty years.
R. Buckminster Fuller, Critical Path, p xxviii.
This may all seem rather unrealistic, but it is a true historical story. What is the underlying
reason for this, at first glance, surprising turn of events? What model was used to program the
computer? What can a computer do more than an assembled board of directors? Could it be
that something is hidden here that could help us to solve the economic crisis in the
industrialized world? In any case, this story clearly shows us that the interests of employers
and employees should not necessarily clash, and that an increase of wages for the employees
does not always lead to lower profits for the company.
But it is also dangerous to conclude that a huge increase in salaries for employees in
industrialized countries will rescue the economy. When the socialists gained the elections in
France in the early 1980s, their economic policy during the first years of legislation was based
on increasing the purchasing power of the lower-end income classes by granting them higher
wages and social benefits. But the result was that those people started to buy, among other
things, video-recorders imported from Japan: the extra purchasing power was spent on
products imported from abroad, making the trade balance negative and putting pressure on the
French Franc.
As an intermediate conclusion, we can only state that under certain conditions an increase in
wages and salaries can have a positive effect on profit for companies. These conditions will
be discussed in great detail later on in the book.
Second paradox: is a positive cash flow for one company at the expense of the rest of the
world?
The businessman thinks of profit as the difference between the turnover his company realizes
and the cost involved in producing and selling products or services. Even neo-Marxian
economists have their own more complex explanation for the origin of profit. As quoted
before, they see profit as the result of the realization of the “surplus value”, the difference
between the value of the products the workers produce and the value of their labor.
But let us imagine the earth we live on – or the whole universe for that matter – as one big
system, composed of several interacting smaller subsystems. Suppose a certain company is
such a subsystem. Then we can see the rest of the overall system – the earth or the whole
universe minus that one company – as the complementary subsystem. If then that one
company makes a profit (or a positive cash flow), does this imply that the complementary
subsystem is making a loss (a negative cash flow)? We can ask ourselves the question if profit
is made at the expense of others? Or is it possible that in an isolated economic system as the
Earth, every single subsystem can make a profit? If so, how is this feasible? Or must we admit
that our ideas about the real origin and nature of profit are wrong? Perhaps the description of
profit from a businessman’s point of view or even a (neo-) Marxian economist’s point of view
have led us to the wrong perception of what profit really is and how it originates in an
economic system larger than just one company or one country.
There are indeed also some flaws hidden in the (neo-) Marxian description of profit as a result
of surplus value. Van Rossem tells us “...a positive difference is possible...”, but how is it that
a positive difference is possible after all? Let us, at least in mind, unite all enterprises-
70
subsystems of the world in one big subsystem: World-Industries Inc58. On the one hand we
can say that every family man is an employee of this big company: he makes his contribution
to the production of goods and services, and in return he receives a salary. On the other hand,
he and his family are consumers of products and services marketed by World-Industries Inc.,
and they have to pay a price for these.
The amount of money the household can spend, however, cannot be higher than the salary the
employee receives by “selling his labor-force”. OK, they could buy things on credit, but one
day they have to pay back the loan with interest, so in the long run the amount of money they
can spend cannot be greater than the salary they receive. Stated in another way: World-
Industries Inc. would realize less turnover than the sum of money they paid as salary to their
employees. And salary is just one of the cost items in a working account. How could this
World-Industries Inc. make a profit? Is profit possible after all? Or does one subsystem-
company makes profit at the expenses of another subsystem?
Profit according to (neo-) classical economists

According to the concept of “evenly rotating economy” formulated by the economist Murray
Rothbard, when everything is perfectly known by everybody, technology is stabilized, and
management is perfect, then the economy evolves to a stationary state and profit tends to
decline to zero. Paul Samuelson has expressed the same as follows: “Suppose we lived in a
dream world of perfect competition, where we could read the future perfectly from the palm
of our hands and where no innovations were permitted to disturb the settled routine of things.
Then the economist says there would be no profit at all!”59
I do not agree with these statements. Economists try to let us believe that profit is not possible
in the first place. I have never found a positive proof of this statement in all the books and
articles that I have read on economy. So in a way it is an academic dogma, an invalid axiom.
But then everybody wants to make a profit. It is like Eros and Thanatos: everybody does it but
nobody wants to talk about it. But there is nothing unnatural with sex or dying, neither with
profit: they are all natural, part of life.
The question if profit is possible after all will be answered in the next chapter, where we
describe our basic theory on the origin of profit. There we will demonstrate that profit is
indeed possible without losses for other subsystems, even in a situation of perfect competition
and perfect knowledge and without need for innovations, if certain conditions are met. We
will describe the real nature and origin of profit in a manner totally different from the
businessman’s or the neo-Marxian or neo-classical economist’s point of view. In order to do
this, we will introduce an important agent in our description: time. In doing this, our picture of
the economy will become dynamic instead of static.
Let us return once more to the story of the employee of World-Industries Inc. for an additional
paradox. As a good family man, who works very hard, he is able to put some money aside on
a saving account. The bank pays him interest on the amount of money he has saved. Where
does that extra money come from? Well, the bank does not just treasure it up, it grants a loan
to a person, a company – or even a country – at a higher rate it has to pay to the family father.
All right, but that person or company has to pay back the loan, with interest. Where do they
get the extra money? By “making money”, you say. OK, but how is that money made? Stated
in another way: how is it possible that the amount of money can increase? And how is this
58
The “nec plus ultra” of globalisation: no more competition!
59
P. Samuelson, Economics, p 621.
71
decided and by whom? Is it just a matter of printing money? Who is entitled to print money?
And what about inflation? These questions, again, will be answered later on.
Moreover, what is the unit of the entity ‘profit’? Profit is generally expressed in a currency
unit, with the tacit assumption that it is over the period of one year.
So clearly the unit of profit is currency unit per time unit, coincidentally the same unit we
use to measure economic growth and balance of trade.
4.2.5 Active unproductivity
To stay competitive and increase the productivity per employee – or decrease the labor cost
per produced unit – a lot of companies have invested in automation in production and in
administration. On itself, this evolution can only be approved off: clerks and secretaries are
relieved from the burden of dull administrative routine; laborers do not have to work in
dangerous or unhealthy conditions anymore as robots can do their job.
One could indeed ask the question: which percentage of people working in industry and
government is really productive? Imagine how many people are employed in government
departments, institutions and even private companies who make no or very little contribution
to the production of goods and services, but who are just physically present at their work,
killing time by playing social games. Paul Lafargue described this situation already in 1880
very accurately as “active unproductivity”60. Indeed, is this not a form of hidden
unemployment? What is the difference between, on the one hand someone being really
unemployed and receiving unemployment benefits, and on the other hand the unproductive
employee receiving a salary? Would it not be better for society as a whole to let those people
stay at home, and let them enjoy the goods and services without them making a “contribution”
to the economic process61? This could result in savings in energy-consumption, transport-
costs, mobility problems, cost of medication and health care... This would also lead to extra
employment in the recreation business. It would benefit the trading balance of the country as a
result of less energy consumption.
One could indeed wonder if man is destined to work62! A lot of useful and pleasant things
could be done with the time that would become available if all companies would be re-
engineered with the principles of Dr. Hammer and if robots and computers would be
introduced on a large scale and if hidden unemployment would be dissolved. Are we evolving
as Homo Sapiens from Homo Ardens toward the Homo Ludens after all? Is there a society at
hand in which a minimum of human effort will be needed in order to produce the necessary
goods and services and where everybody will be entitled to enjoy the abundance?
60
Paul Lafargue, The Right to be Idle.
61
You may think this absurd. It is! But later we will work out a feasible alternative when we will
elaborate our Eight Days a Week solution. I am convinced the world is ready for a Fourth Wave.
62
“The right for labor” was a Marxist slogan! Do you advocate Marxism?
72
On the other hand, a lot of unskilled persons lose their job due to the introduction of
automation, while there is a great demand for people with technical skills in order to design,
produce, maintain, program and operate those robots and computer systems. The productivity
per capita of the persons with a job increases, but the productivity of the people who have lost
their job drops to zero. So what is the effect for the society as a whole, what is the
productivity per person, irrespective of the fact that he is employed or not63? And what can we
do about all those people who are unemployed?
Is there a society at hand in which a minimum of human effort will be needed in order to
produce the necessary goods and services and where only a minority will be able to enjoy the
abundance – the owners of the means of production and, in second degree, the technical
skilled persons –, while the other ones will live in a situation of permanent poverty because
they are no longer needed in the production process: a high labor-force reserve – i.e.
unemployment – keeps the wages of those who are working low. A society where the outcast
will receive only the basic necessary goods in order not to die from starvation or to start a
revolution, and where the established power of the élite will be maintained by a strong
internal military force and by selling or even free distribution of intoxicating drugs64, so that
the poor can build up their own world of fantasy (panem et circencem)? Haven’t there been
already civilizations of this kind in the course of time? Doesn’t that make you think of George
Orwell’s 1984 and Aldous Huxley’s Brave New World?
4.2.6 The economic dogma
Economy has been defined as “the social science dealing with the problem of choice in a
world with limited resources”, a world where the “factors” – land, capital, workforce, raw
materials, energy – are scarce: “Butter or guns”.
Thomas Malthus, who as central information-gathering agent kept statistics for the East India
Company, found that, as population grew with a geometrical progression while resources only
grew with an arithmetic progression, scarcity would increase. There always would be a
fundamental inadequacy of life support on planet Earth, so only the fittest would survive
economically resulting in an “Us or Them” attitude. To my very surprise this EIC started to
play a very important role when I was compiling my study. I am even pretty sure it still exists
as a company in one form or another, as the ideas of Thomas Malthus still dominate current
geopolitical affairs.
Within this scarcity, the economic agents – individuals, companies, banks... – are supposed to
aim for the maximum benefit for themselves, to act out of pure self-interest. Classical
economic theory, neo-classical theory, Marxist theory or neo-Marxist theory, they all start
from these same basic assumptions.
In the classical general equilibrium theory, the law of supply and demand and the “market”
take care that the price level for each product and service evolves to its optimum value. There
is no moral judgment to make on this pure rational and morally impartial “Invisible Hand”.
On the contrary, moral considerations could lead to regulations interfering with the market
mechanism and thus to a less than optimal economy.
63
I wonder… if economists have made some research on this.
64
At the end of the 19th century, labourers in the textile industry in Flanders where paid part of their
wage in gin, so they could “endure” the 12 to 14 working hours 6 days a week.
73
One of the ‘benefits’ in the capitalistic world is profit for the private companies. From a
businessman’s point of view, we can describe profit as follows:
• A company realizes a turnover by marketing certain products or services.
• In order to do this, it has fixed and variable costs.
• Turnover minus the variable costs gives us the contribution.
• Contribution minus the fixed costs gives us profit before taxes.
• Profit before taxes minus the taxes results in profit after taxes.
As already mentioned, there is something very strange with this profit, as according to some
prominent economists themselves profit is not possible at all.
So in order to keep on making profit in the capitalistic world, where only the fittest survive,
one has to set one of the following mechanisms into action, or a combination of them,
resulting in a deviation from the “optimal equilibrium”. The actions are listed as “bullets” in
an order that is economically irrelevant, and I am sure you are able to add a few more
yourself. In this book you will find many practical examples of these mechanisms:
• Mechanisms in order to realize the same turnover with less variable costs: increase
productivity, more automation in order to reduce the direct labor costs and to
increase output per man-hour, layoffs; mechanisms to guarantee cheaper input of
raw materials and energy.
• Mechanisms in order to distribute the fixed costs over a greater turnover by
increasing the scale of production and by acquiring new markets.
• Mechanisms so that customers buy from you and not from your competitor:
innovation, product advantage compared to the competition, advertising.
• Mechanism in order to create ever new products or variations on existing products
and to be the first one to skim the market.
• Mechanisms in order to eliminate the competition: mergers and acquisitions,
regulations.
• Mechanisms in order to make the customer to buy your product over and over
again: too expensive printing cartridges, built in wear-and-tear, genetic
manipulation of planting seeds.
• Mechanism in order to force the customer to buy the product from you and you
alone (monopoly, autarky).
• Mechanisms to pay less tax, or even better none at all.
• Mechanisms in order to divert costs from your account to someone else’s, or even
better to many others (pollution).
• Mechanisms in order to divert money from the pockets from the others into your
own pockets.
… and when all of the above mechanisms are no longer effective, in order to save the system
from total collapse: mechanisms to start the game all over again from the beginning (same
74
players shoot again). It is obviously unnecessary to say that the mechanism that you can set
into motion depends on your “span of control”.
This us-or-them-but-not-both-together-attitude, based on the Malthusian assumptions of
fundamental ever-increasing scarcity and zero-profit in perfect equilibrium, has resulted in the
socioeconomic world-paradigm as we know it today. Just read the newspaper and watch the
news on television, but don’t you dare to make a moral judgment as “toute est au meilleur
dans le meilleur des mondes”, to speak with Voltaire’s optimistic Candide.
Well, both assumptions are wrong. And as the mechanisms described above are based on
these wrong assumptions, they are becoming more and more irrational and immoral as you
go down the list.
If one takes a look at history, economic depressions are a result of an excess in production
capacity, lack of turnover, lack of consumers, i.e. lack of people with economic needs and
with money to spend. The people with money to spend have already more than they need, and
they can easily reduce their level of consumption. The people with real needs do not have any
money to spend. So, in a sense, there is scarcity, but only scarcity of consumers, not of
products.
Economists try to let us believe that, in the first place, profit is not possible at all without the
use of one or more of the mechanisms described above. I have never found a single positive
proof of this statement in all the books and articles that I have read on economy. So in a way
it is an academic dogma, an invalid axiom, based on the economist’s inability to explain the
real social origin of profit.
The question if profit is possible after all will be answered in this book, where we will
demonstrate that profit is indeed possible without losses for others and without using one or
more of the mechanisms listed above, even in a situation of perfect competition and perfect
knowledge and without need for innovations, if certain conditions are met. We will describe
the real nature and origin of profit in a totally different manner than the businessman’s or the
neo-classical or the neo-Marxian economist’s point of view.
This new insight, which could and will result in a very clear understanding of the economic
and political history of the world as well as the present economic, financial and political
reality, could and will lead to a new world-paradigm. And above all it will lead us to the
solution of economic and political crises, a solution that is rational and moral at the same
time, and permanent. There is another “mechanism” that works.
75
5 Basic Theory on the Origin of Profit
How wonderful that we have met with paradox. Now we have some hope
of making progress.
Niels Bohr.
In this section we will evolve a general and coherent model to describe the economic process.
This model will be very simple, even suspiciously simple. However, it will allow us to explain
the economic reality in great detail: all questions and paradoxes from the previous chapter can
be answered with this model, the recurrence of economic entities and their correlation with
war will also be explained.
This argues for the validity of the model. According to Fernand Vandamme, former professor
at the University of Gent, one should consider the following characteristics in order to make a
general evaluation of a theory65:
• The systematization of the theory. The level of abstraction and the universality of
the theory are closely related to this.
• The number of phenomena that can be explained by this theory compared to the
complexity of the theory.
• Control: diversity of confirmation and falsification.
• Objectivity, i.e. the acceptation of the theory by experts in the field concerned.
5.1 Satisfaction of needs: Driving force of the economic process
To start with, let us consider a society that lives in isolation from other societies. You may
think this is a severe constraint. But remember, think as a cosmopolitan: isn’t the Earth an
isolated system without any trade with the extraterrestrial universe? We can think of this
society as a system, composed of several smaller subsystems interacting with each other:
private persons, companies, political and social pressure groups, countries... The people living
in this society have material needs. These needs can be of individual or collective nature. The
economic process is supposed to fulfill these needs: raw materials, energy and human effort
and creativity are combined in order to produce and distribute goods and services.
As barter proved to be inefficient66, an intermediate medium of exchange is introduced:
money. This money can take several forms: pebbles, shells, cattle, metal, gold, jewels... even
paper! Money does not need to have an intrinsic value to use or to consume it. Money, as
money rather than a commodity, is wanted not for its own sake but for the things it will buy.
65
Fernand Vandamme, Economy and Philosophy of Science, p 81-82
66
Paul Samuelson, Economics, p 274-276, Barter versus the use of money.
76
A person accepts money because it is generally accepted in the society he lives in. He accepts
it because he knows – or hopes – that other persons will accept it when, later in time, he wants
to exchange it for real goods or services. It is just a matter of social convention and of
confidence, more specific confidence in the future value of that money: that other persons still
will accept it and that it still will have the same value. Later on in this book, we will see that
one could make – and has made – abuse of that confidence.
5.2 Profit as a consequence of growth
A student in economy has to struggle through several courses at university. They can be
classified in two fields:
• Economy, divided in macroeconomics and microeconomics. Productivity is one of
the key words. Growth of productivity is the objective67.
• Business administration. Profit is one of the key words. Maximization of profit is
the objective.
The relation between these fields and the premises on which these theories are built are rarely
discussed or questioned at university: how do all these theories on economy fit together, what
laws are valid on one level but not on another, can one extrapolate from one level to
another...? Students in economy study these courses in the first place in order to be able to
reproduce the material the way the professor knows it and to get a degree, not to put things to
question. If they would do so, they would question the authority of the professor, which might
jeopardize their degree and their academic career.
5.2.1 ‘Profit for companies’ as part of ‘profit for society’
As already promised, we now introduce time in our description of the economic process. Let
us assume that in the society we study, the output of the economic process at time t1 has a
certain level of production: x bread, y shoes, z prams... Against this level of production, we
have an amount of money in circulation. The ratio of the amount of money in circulation to
the level of production determines the average price-level of the products and, on the other
hand, also the purchasing power of a certain amount of money.
The purchasing power of a subsystem in our society – in particular an individual person – is
determined by the percentage of the total amount of money in circulation it can accumulate,
because this determines the percentage of the total production of goods and services it can
acquire.
Let us further assume that in the present stage of economic development there is not enough
production to fulfill all material needs. People make an effort to increase production by
combining more time, energy, raw materials and human effort and creativity in the production
of goods and services. At time t2, a period of time dt after t1, the output of the economic
67
I can recommend the article Neo-classical Micro and Macro Economics, Science or Silliness written
by Michael Albert, to be found at http://www.parecon.org/writings/neoclasseco.htm
77
process has increased with a certain amount: x+dx bread, y+dy shoes, z+dz prams... are
produced.
If the amount of money in circulation cannot be changed – we almost wrote manipulated –
because a certain scarce good is used as money, then the average level of prices must go
down. With the same distribution of the amount of money as before, at time t1, this implies
that at time t2 the purchasing power of every subsystem and every individual has increased:
with the same amount of money they can buy more things. In particular, we can say that the
purchasing power of money that was put aside has increased: with the money saved at time t1
one can buy more goods and services at time t2 than at time t1.
If the amount of money could be adjusted, then one could keep the same average price level
by increasing the amount of money in circulation with the same rate as the level of production
has been increased68: the growth of the economic production is then translated into a growth in
the amount of money in circulation. We can consider this increase in the amount of money
from time t1 to t2 as ‘profit for the society’, realized over the time-interval [t1,t2], and thus
expressed in currency unit per time unit.
The way this increase of the money-supply or ‘profit for society’ is distributed among the
several subsystems of the society determines the respective changes in purchasing power of
those subsystems: profit for companies, part paid as dividends for shareholders and part as
earnings retained in the business, higher wages and salaries for employees and laborers,
increases in pensions, interests on savings accounts... with the restriction that the sum of all
increases in purchasing power is equal to the increase of the amount of money in circulation
or the profit for the society as a whole due to increased production. Here we can see the real
origin of profit realized by companies:
Profit realized by companies is part of ‘the profit for society’, the

result of economic growth, and thus is a consequence of the growth
of the economic production.
(Remember: profit and growth are both expressed in currency unit per
time unit).
This is a very important conclusion. However it is very difficult to find any trace of it in
economic textbooks. As already stated, most economists even say that profit is not possible at
all: “Suppose we lived in a dream world of perfect competition, where we could read the
future perfectly from the palm of our hands and where no innovations were permitted to
disturb the settled routine of things. Then the economist says, there would be no profit at all!”
Only after an intense research we have found a short comment on the relationship between
profit and economic growth in a book written by the Dutch economist J. Pen: “...the social
benefits are a burden for profits, which are corroded already by the decline in economic
growth”69. However, this conclusion that profit is a consequence of economic growth will play
an important role in this book, especially because it will lead us to the explanation for the
paradoxes and questions of the previous chapter and the solution for the economic crisis.
68
See also Ravi Batra, The Great Depression of 1990, p 83.
69
J. Pen, Look, Economy, comment with the picture on p 54.
78
Next to freezing the amount of money in circulation or keeping the same average level of
prices, there is also a third possibility: the amount of money in circulation could increase at a
higher rate than the economic production. We will postpone the very interesting and revealing
discussion on this possibility until a later chapter.
5.2.2 The social purpose of profit
In the previous section we have discussed how growth of the output of the economic process
leads to ‘profit for society’ as a whole. This ‘profit for society’, expressed in terms of goods
and services or in terms of money, is divided among the different subsystems in society:
dividends for shareholders, earnings retained in business, higher wages and pensions, interests
on savings accounts.
In periods of considerable economic growth it is very well possible that all private companies
make a profit, that all employees and laborers receive higher salaries and wages and the
retired people higher pensions, that all depositors receive interests on their savings, and that
all banks receive higher interest on loans than they have to pay on deposits. We do not have to
assume imperfect competition, imperfect management, non-transparent markets and
innovations in order to justify the existence of profit, as some economists do.
Profit of a company is part of profit of society and is thus to be considered as a consequence
of economic growth. The social goal of profit is twofold:
• In the first place it is a fair reward to entrepreneurship and innovation: companies
and entrepreneurs who combine time, raw materials, energy and human effort and
creativity in an efficient way and who produce goods and services fulfilling real
needs of society and its subsystems, are rewarded with a profit. In this sense, we
can say that profit is a stimulus to avoid injudicious use of time, raw materials and
energy: inefficient companies, with high costs of production, or who are making
products not in demand, are punished with a low or even negative profit and
eventually will go out of business. Efficient companies, on the other hand, with
low production costs or making a product in great demand, will make more profit.
They will stay in business and even be able to expand their activity.
• On the other hand we can see profit as the stimulus for entrepreneurs to design,
produce and market products fulfilling real needs in society. To realize this, they
hire people and they pay them a salary for their services. Employees can then
fulfill in their needs and of those depending on them by spending money, buying
goods produced by the entrepreneurs.
Here we see a mutual dependency between employers and employees. In his last book
Critical Path, the late Buckminster Fuller has described this concept of mutual dependency as
“precession”: i.e. the mutual interaction, voluntary or involuntary, among two subsystems
belonging to a greater overall system of a higher level. B. Fuller has illustrated the concept
with a simple metaphor: the theory of the rubber cylinder70.
70
B. Fuller, Critical Path, p 141
79
Let us consider a cylinder with a rubber middle part, rigid disc ends and filled with water.
When we pull the two opposite disc ends away from one another, the middle part of the
cylinder contracts in a series of concentric circles of diminishing radius perpendicular to the
line of our pulling. This is because the volume of the water cannot change: when the cylinder
is made longer, then the middle part must contract. So the middle part and the ends of the
cylinder are tied to each other by the medium water. A displacement of one of them (the
discs) results in the displacement of the other (the middle part).
So next to the result that was deliberately achieved (the pulling apart of the discs), a not-
intended perpendicular side effect occurs (the contraction of the middle part). One could have
obtained the same result by doing just the opposite: by contracting the middle part, the discs
would move further apart. This means that pulling the discs or contracting the middle part
have the same result. In pursuing the result, is it then important, after all, which one of both
actions has been performed: pulling the discs, contracting the middle part, or a combination of
both?
We also notice that when we would have used a thinner medium – air or some gas – there
would have been less coupling between the displacements of the discs on the one side and the
contraction of the middle part on the other side: part of the interaction is lost in the elasticity
of the medium, as air is much more compressible or expandable than water.
The reader may object: “What do cylinders filed with water or some gas have to do with
economy. Isn’t this just a metaphor71?” Well, let us return to economy. By trying to obtain
more profit (pulling the discs apart), the employer invests and he allows more people to fulfill
their material needs (contraction of the middle part) as he produces and sells more products
and services and pays more salaries. Could it be possible that the opposite rule is also valid, as
with the rubber cylinder? Will profit increase (discs moving further apart) when more people
are given the means to fulfill their material needs (contracting the middle part)? I suppose you
recall the paradox from the story of General Motors that realized a higher profit after granting
higher salaries and all kind of benefits to its employees. From that story one could assume that
71
Metaphors can trigger a metamorphosis.
80
the opposite rule is indeed valid. The underlying mechanism will be explained in the next
chapter, based on the basic notion that profit is a consequence of growth, and how the
distribution of the resulting ‘profit for society’ among the several participants determines
future growth and thus future profits.
If we follow this line of reasoning, we could ask ourselves the question: what is the medium
in the rubber cylinder that links employers and employees? And what happens if that medium
becomes “thinner”? Does the mutual interaction still work then? For the first question I would
suggest the following answer: needs for goods and services. The employers produce and
market goods and services fulfilling needs of the society. The employees “sell their labor” to
the employers in order to receive a salary and to be able to fulfill their needs for goods and
services. The second question, on the medium becoming thinner, will be handled in great
detail in the next chapter.
5.2.3 An idealistic view on economy
We could describe economy as a process in which time, raw materials, energy and human
effort and creativity are combined for the production of goods and services in order to fulfill
collective and individual needs. In this process, profit is at the same time a consequence of as
well as a stimulus for growth of the economic production.
In this view, fulfillment of needs for goods and services is the driving force of the economic
process and not profit, as was even stated by a neo-Marxian economist. However, this ideal
situation is turned upside down in real life: profit, a consequence, has become a goal on itself.
As we shall see later on, this shift in emphasis has caused us a lot of trouble.
5.3 Positive balance of trade
Previously, we made already the assumption of a society living in isolation from other
societies. You may say this is not very realistic as most countries today are involved in the
international trade scheme. We also wondered why a positive balance of trade is considered to
be good for the economy of a country. A country has a positive balance of trade when it
exports more than it imports, when it produces more than it consumes so the revenues are
higher than the expenditures in its international trade. One could consider a positive balance
of trade as ‘profit for that country’ realized by its trade with other countries over a period of
time, and thus expressed in currency unit per time unit, the same unit as profit and economic
growth.
This ‘profit for the country’ is also distributed among the country’s different participants in
the international trade, just as ‘profit for society’, as a consequence of economic growth, is
distributed among the different subsystems of society. On the other hand, we can consider a
negative balance of trade as a ‘loss for the country’ in its trade with other countries.
This profit or loss for the country, resulting from its trade with other countries, accumulates
with the profit for society resulting from its internal economic growth. When the internal
economic growth stagnates, because of saturation of the market or because the needs of the
internal subsystems with money-to-buy are saturated and the internal subsystems with real
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needs have no money-to-buy, then companies can still make a profit by exporting their
products to other countries.
We can conclude that ‘profit for society’ and thus also ‘profit for a company’ can be
considered as the consequence of two factors:
• On the one side the internal economic growth and increasing consumption within
the society.
• On the other side a positive balance of trade in the society’s trade with other
countries.
Here we see the reason why economists attribute such a great importance to a substantial
growth rate and a positive balance of trade.
When faced with saturation of the internal market, it is obvious that countries will concentrate
on the second factor in order to avoid a situation of zero-growth72: they will try to have a
positive balance of trade with the other countries. In the assumption that the world is flat, and
thus an infinite plane, it is perfectly feasible for every country to have a positive balance of
trade: there is no argument to contradict this. However, since several centuries we know that
the earth we live on is a globe, and a globe has the annoying feature of being finite! The Earth
as a whole is a society living in economic isolation from other societies! The finite number of
countries on this finite globe can be divided in two classes:
• those with a positive balance of trade
• those with a negative balance of trade
The sum of the surpluses of the positive balances of trade must always be equal to the sum of
the deficits of the negative ones. This assumes that the balances of trade of all countries are
calculated in the same way. This equilibrium is a direct consequence of the fact that our globe
is finite. We stress the fact that the equilibrium between balances of trade is not static, but
rather dynamic: the balance of trade of a country can show a surplus at one time and a deficit
at another time. But there has to be an equilibrium between the surpluses and the deficits of
all countries at all times. It is also a fact that not all countries can have a positive balance of
trade over the same period of time.
Let us consider ourselves in this study as world citizens, free from any national preference or
prejudices. So we can make abstraction of the borders between countries, this means that we
consider the earth as one great economic entity isolated from other societies.
In this view there is no trade with the outside world, so there can be no positive balance of
trade, so ‘profit for society’ and ‘profit for companies’ can only be a result of the growth of
the world-economy.
72
We will discuss zero-growth and its implications in great detail in a next chapter.
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5.4 Conclusion
In this very important chapter we have unveiled the social origin of profit. We have discussed
that profit for a company as well as profit for society as a whole (a country or the Earth) is to
be considered as a consequence of the growth of the output of the economic process. We have
learned that fulfillment of material needs is the driving force of that economic process. Profit
is at the same time the stimulus for enterprises and entrepreneurs to start this process and to
keep it running, as well as the result and the reward of it.
This point of view is quite different from that of a businessman, who thinks of profit as the
difference between turnover and costs, and also different from that of some economists, who
see profit resulting from the realization of a surplus value, in one way or another. Our point of
view, however, is not in contradiction with these two.
Our point of view embraces the other two and explains that a positive difference can exist
between turnover and costs – even when all companies are united in World Industries Inc. –,
that a surplus value can be realized and that interest can be earned on a savings account. The
necessary condition for all of this is economic growth.
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6 Direct consequences of the basic theory on the origin of profit
6.1 Evolution of the profit-ratio
We have already discussed the periodic evolution of some economic entities. We have seen
that the profit-ratio of enterprises evolves according to a saw-tooth curve: long periods of
slow decline alternate with short periods of substantial increase of the profit-ratio73. To our
regret, we have also noticed a correlation with the occurrence of war. What is the reason for
this evolution and what has war to do with profit? Once more we refer to the work of the
Belgian economist Van Rossem. However, we do not agree with everything he says: our
remarks follow after his line of reasoning.
One cannot deny the fact that in the whole western economy the profit-ratio
(the ratio between the realized profit and the capital invested in order to realize
that profit) has decreased steadily since World War II. This does not imply that
companies make less profit. It only says they have to invest more in
machinery, buildings and energy to realize the same level of profit...
Calculations show that the average profit-ratio in Belgian economy has
decreased from 15.86% in 1953 to a level of 7.62% in 1977...
Nobody has ever maintained that the profit-ratio should decline, just as a stone
drops when it is released [see comment 1 below]. One can think of measures to
increase that profit-ratio. However, when we analyze for example the evolution
of the average profit-ratio in Germany from 1880 till 1976 (West-Germany
after 1954), we can conclude that the profit-ratio has increased only in two
periods of time: the first time between 1915 and 1919, the second time
between 1941 and 1944. In other periods of time the profit-ratio has shown a
declining trend...
In the past, the profit-ratio has increased substantially only during World War I
and World War II: the enormous destruction of capital goods and infrastructure
had led to a substantial increase of the profit-ratio, as the profit-ratio is the ratio
between profit and the invested capital [see comment 2 below]. This does not
necessarily imply that war is the only way to increase the profit-ration. There
are other less cruel measures one can take, but these are nevertheless also
painful. A severe decrease of wages in combination with a continued
technological progress could lead to a substantial increase of the profit-ratio
[see comment 3 below].
J.P. Van Rossem, Knack Magazine, January 1979, p 119
73
On the stock market, longer periods of slow increases are alternated with short periods of substantial
decreases. Exact the opposite evolution.
84
Comment 1
According to the concept of “evenly rotating economy” formulated by the economist Murray
decline to zero. As Van Rossem indicates, the profit-ratio has apparently the tendency to
decline in times of peace. Why? The profit-ratio is the ratio between profit and invested
capital. As discussed in our basic theory on the origin of profit, we can see profit realized by a
company as part of the ‘profit for society’, which is a consequence of the growth of the output
of the economic process.
In a stable, industrious and peaceful society ever more material needs can be fulfilled by the
effort of all participants in the economic process. As the economic production grows, the real
income of the population increases and more of their material needs can be satisfied. But this
does not mean that the consumption will grow at the same rate as their income: as the income
level increases, people tend to save more74 and there is also the law of diminishing returns.
The higher savings allow for more investments. An investment is essentially the abstaining
from direct consumption in order to provide for more consumption in the future75: money is
put aside to spend it on raw materials, energy, human effort and creativity in order to produce
new and better capital goods such as machinery and factories, so that productivity can be
increased and more consumption goods can be produced in the future. Increase of
productivity in order to cut production costs is needed because prices are under pressure as
more material needs are fulfilled and the relative affluence increases, while free competition
in times of peace puts a pressure on the price level, as competitors start to market similar or
the same products at lower prices. So the supply of saved money is accepted eagerly by the
business community in order to increase the stock of capital goods.
As material needs become ever more fulfilled, relative growth and thus ‘profit for society’
will decline. As ‘profit for society’ and thus ‘profit for private business’ decreases, and the
capital invested increases, then the profit-ratio must go down. However, if the profit-ratio has
the tendency to decrease, from what level did it originally came from (plus infinite) and how
deep can it fall (till zero or even negative)? As Van Rossem noticed, the profit-ratio decreases
in periods of political and social stability in between wars, while it increases before, during or
after a war. This increase in times of war is explained in the next comment.
Comment 2
In a stable, industrious and peaceful society we can say that the profit-ratio has the tendency
to decrease. In order to change this pattern, we can think of several possible alternatives.
The first alternative is a war. According to Van Rossem, the profit-ratio (profit divided by the
capital invested) increases during and after a war due to the destruction of capital goods. We
think this is correct, but incomplete. After a war, the society has returned to a high level of
material needs: there is great demand for basic goods like housing, food, clothes, the
infrastructure has to be rebuild,...: there are again opportunities for economic growth with
very little competition! These opportunities for growth and thus higher profit for society lead
to higher profits for private companies than during the period before the war. As there is great
demand for products and low supply, there is no fierce competition so prices are not under
pressure. Destruction of capital goods (reduced denominator) as well as the return to a high
74
P. Samuelson, Economics, Chapter on ‘Saving, Consumption and Investment’, p 209
75
P. Samuelson, Economics, p 206
85
level of material needs for basic products (increased numerator) results in an increase of the
profit-ratio. Unfortunately enough, war seems to be a very efficient tool to obtain this.
There is, however, a second alternative. We will introduce this alternative in comment 3 and
elaborate it in the next section.
Comment 3
Van Rossem stated correctly that a world war is not the only way to bring the profit-ratio back
to a higher level. But we think he is wrong when he says that other less cruel measures are
also painful and that a substantial cut in wages could result in higher profits. The latter
statement might be valid for one company (according to its working account) or for the
economy of one country over a short period of time, but on the long run this cannot be true
for the whole world seen as one economic entity. On the contrary! To prove this statement,
we repeat some already mentioned paradoxes and misconceptions about what profit really is:
• Profit, the missing link in economics, where we criticized the policy of
moderation and wage-reductions as a possible solution for the economic crisis in
the western industrialized countries.
• First paradox, where a historical fact proved that a raise in wages for the
employees and labors of a company does not necessarily leads to lower profits for
that company.
• Second paradox, where we criticized some commonly accepted theories on the
social origin of profit.
In the next section we will combine all these ideas and statements together with our basic
theory in one thesis: distribution of profit as driving force of – or brake on – economic
growth.
Additional remark
You may object that profit ratios in times of peace not always decline, as in the 1990s, when
some companies have published top profit-ratio figures, resulting in tremendous heaps of cash
and takeovers of other companies. This is indeed the case if one looks only at individual
companies. But if one takes into account that the purchasing power of the middle class has
been eroded in the last 40 year, while top multinationals manage to pay no taxes at all, we can
say that the profit-ratio of the society as a whole has the tendency to decline. Even with this
declining profit ratio, some entities manage to increase their profit ratio at the expense of
other entities. But this was justified based on the dogma that, after all, profit is not possible at
all, so somebody has to pay the price for someone else’s profit.
6.2 Distribution of profit as driving force – or brake on – economic growth
Let us again study a particular society. Suppose that the output of the economic process is
growing: ever more material needs of ever more people in that society are fulfilled. Over a
period of one year the growth has a certain level: the increase in the volume of goods and
services produced. This increase corresponds with the profit for society or the total increase in
purchasing power.
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This profit for society is divided among the different subsystems in our society: dividends for
share-holders, retained earnings for companies, increased wages for employees, higher
pensions and social payments, interests on savings accounts, etc. The several subsystems in
society see their purchasing power increased according to the percentage of the total profit for
society they are assigned or they can acquire.
An increase in purchasing power of a subsystem whose material needs are already fulfilled to
some degree – compared to other subsystems – will induce only a small or even no increase in
consumption expenditure of that subsystem. On the contrary, that subsystem will save the
major part of the extra purchasing power it has acquired. It will invest the saved money by
placing it on a savings account or by acquiring government bonds – i.e.: low risk investments
– or it will invest directly or indirectly in private companies – i.e.: risk-bearing capital.
Depending on the level of the expected profit-ratio, which reflects the return on risk-bearing
capital, compared to the interest of the low-risk investments, one will decide to invest in
shares or in government bonds. Investments in shares lead to growth in capital goods (office
buildings, factories, machinery,...), while investments in government bonds lead to growth in
public goods and services (roads, bridges, defense industry,...). Both can give a contribution
to future economic growth.
However, if the private consumption does not increase, then the ever increasing stock of
capital goods will be used far below its maximum capacity, so demand for new capital goods
will also drop and economic growth will slow down. The profit ratio will decrease. To
illustrate this, we refer to an interview with the economist Ernest Mandel, former professor at
the University of Brussels76: “These reasons together indicate how difficult it is to solve the
economic crisis. Everything one does to expand the market and to increase the purchasing
power of the population undermines the profit of the companies. And everything one tries to
improve the profit-ratio of the companies undermines the purchasing power and thus the sales
potential. To solve both problems simultaneously seems to be very difficult and it will take a
long time.”
We are surely not so pessimistic as professor Mandel when he says that it will be extremely
difficult and will take a long time to solve both problems of over-production and low profit-
ratio at the same time. Indeed, an increase of the purchasing power of a subsystem in society,
whose basic material needs are far from fulfilled, leads to an immediate increase of
consumption expenditure: that subsystem will spend the total increase of its purchasing power
to buy goods and services. If this happens in a situation where the production capacity is not
used at full capacity, then the output of the economic process can increase without need for
new investments. So it is perfectly feasible that a substantial increase in purchasing power of
a subsystem with great material needs will lead to an increase of turnover and thus to a higher
profit for society and thus to higher profits for private companies in absolute terms. As the
level of capital goods does not have to increase, this means that the profit-ratio will increase!
On the one hand we have stimulated the direct consumption and the economic growth; on the
other hand we did not have to do additional investments to increase the production capacity.
Here we have found the explanation for the paradox that higher wages for employees and
laborers not necessarily imply lower profits for employers and companies, but actually can
lead to higher profits. The board of directors of General Motors had three alternatives:
• It could divide the total profit of that year among the shareholders as dividend.
76
Interview with E. Mandel in Knack, March 14th 1984.
87
• It could decide to pay no dividend but to invest the retained earnings in extra
production capacity.
• It could grant the demands of the union.
The shareholders already drove a car, and probably would not spend the extra money they
received as dividend to buy another car, and surely not a GM car but rather a Bentley or a
Rolls Royce. An increase of the production capacity did not make sense, as there was already
capacity in excess. By granting the demands of the union and because they had set an example
to other companies in the region of Detroit and all over the USA, GM had created a large
market in their own country by increasing the purchasing power of the employees and the
laborers. They had induced possibilities for future increase in turnover and profit for the next
twenty years.
As Lester Thurow says in the foreword to The Great Depression of 1990, written by Ravi
Batra: “Essentially the economic process is like that of the wolf and the caribou. If the wolves
eat all the caribou’s, the wolves also vanish. Conversely, if the wolves vanish, the caribous for
a time multiply but eventually their numbers become too great and they die for lack of food.
Producers need consumers and if producers deprive workers of their fair share of production
income they essentially deprive themselves of the affluent consumers they need to make their
facilities profitable.”
The reader who is familiar with control systems theory will recognize in this discussion the
concept of feedback. By returning the output of a process in one way or another back to the
input of that very same process, one creates a mechanism to control the system. By feedback
of the profit for society – a result or output of the economic process – as changes in
purchasing power to the several subsystems in society, a change in the consumption and
spending pattern of society and its subsystems is induced – input of the same economic
process. This affects the very structure of the economic process itself and the future growth
and profit for society. This feedback mechanism has a quantitative effect (the size of the
growth) as well as a qualitative effect (the nature of the growth: what kind of products and
services will be in greater demand).
Growth is considered by economists to be closely related to the transformation of the structure
of the economy: in their view growth only occurs under the impulse of ever new changes in
the structure of the economy, i.e. under the impulse of changes in the consumption pattern of
the population, changes in the organization of the branches in industry and changes in
technology. On the other hand we can say that this transformation of structure is not an
autonomous process and that it is not only determined by technological progress. When
economic growth leads to an increase of the income per capita, then we can see significant
shifts in the demand for several kinds of products. When the income increases, the demand for
some products increases more than the demand for other products.
We know from control systems theory that an injudicious feedback policy could make a
process unstable. This instability is manifested by increasing and, in the long run, excessive
oscillations, which ultimately will lead to the breakdown of the system. If one knows the
dynamics of the system by means of its state-variables and systems-equations, then it is
theoretically possible for a certain subset of systems to find the best feedback policy in order
to bring and keep the system to a certain state one has set as a goal. If however the dynamics
of the system are not completely known, then one can still use heuristic rules. These are rules
of thumb, not based on a complete and correct understanding of the system, but on partial
88
knowledge, experience, common sense, intuition... Under certain circumstances, which are
often not explicitly known, they can lead to a result that is acceptable.
Based on our discussion on the effect of the distribution of profit on future growth, we could
formulate the following two heuristic rules to control the economic process:
• Rule 1: If the stock of capital goods is used at full capacity or close to that, then
we can induce investments by granting most of the profit for society to companies
and shareholders (E.g. reduced taxes on profit or, even better, financial support for
investments). The new investments will lead to an increase in production capacity
and jobs and, in time, to an increase of the consumption for the whole society. To
invest is to abstain from immediate consumption in order to be able to consume
more later in time.
• Rule 2: If the stock of capital goods is used at a level substantially below its
maximum capacity, then we stimulate consumption by granting most of the ‘profit
for society’ to those whose material needs are far from fulfilled. E.g. reduced taxes
on lower wages, higher taxes on profit or a higher capital gains tax. The increase in
consumption will lead to economic growth and more profit without having to
invest in additional capital goods. The existing stock of capital goods will be used
more efficiently and the profit-ratio will increase.
According to the conditions of the time being, we apply Rule 1 or Rule 2. The reader familiar
with economy will recognize great similarities between these rules and the principle of
Keynes, although they are not identical.
Keynes observed that businesses perform a two-pronged function: as producers
they supply goods, but they also pay incomes to households in the form a
wages, rents, interests, and profits. The households in turn spend money to buy
goods from businessmen. There is thus a circular flow, with incomes flowing
from producers to consumers and then from consumers back to producers. As
long as businessmen can sell all their goods at a reasonable profit, this circular
process continues uninterrupted. But several hitches may arise. A part of an
individual’s income is saved and deposited with financial institutions, a part is
taken away by government in the form of taxes, and a part spent on foreign
goods in the form of imports. These are what we may call leakages from the
total expenditure, and they tend to keep aggregate demand for goods short of
the aggregate supply. Counterbalancing these leakages are the three injections
to total expenditures – business borrowing for investment, government
spending, and exports. If the leakages are matched by injections, total spending
matches the total value of goods produced, and the economy may be said to be
in equilibrium, that is, it has no tendency to move up or down. If the leakages
exceed injections, aggregate demand falls short of aggregate supply and some
goods remain unsold, so that businessmen are forced to trim production and
hence their employment of labor; in the opposite case of the injections
exceeding leakages, production and hence employment tend to rise.
This, in simple terms, is the well-known Keynesian process of national income
determination. In this system aggregate demand plays an active role and
aggregate supply a passive role in the sense that the latter converges to the
former. High national income and hence high employment call for high
aggregate demand. The corollary is unmistakably clear: during years of low
89
demand, the economy suffers from high unemployment and hence recessions
or depressions. The policy prescription is also unmistakably clear: in order to
cure unemployment, the government should step in and raise aggregate
spending in the economy by means of fiscal and monetary policies.
Fiscal policies involve the weighing of government expenditure versus tax
receipts. During a depression, fiscal policy calls for a budget deficit, i.e. for
government expenditure to exceed tax revenue; but with inflation, the cure lays
in a budget surplus.
Monetary policy, by contrast, affects the economy indirectly – through its
effects on business investment. Keynes argued that monetary expansion
encourages investments, while a contraction discourages it. Hence during a
depression, the monetary policy has to be expansionary, but during inflation,
contractional.
Keynesian economics is thus the antithesis of the neoclassical ideology, for the
government is now cast in the role of a constant watchdog indispensable to
continued prosperity. The appeal of Keynesian theory lay in the fact that not
only did it properly diagnose the economic ills, but it also advocated policies
within the reach of governments.
Ravi Batra, The Great Depression of 1990, p 80-82
Here we also recognize the principle of feedback: the government uses its income (taxes, a
result of the economic process) as input to that same economic process. The rules we have
suggested however are of a more general nature: it is not only the consumption pattern of the
government that can influence future economic growth, but of all subsystems in the economic
process.
The heuristic rules of Keynes have been applied with great success after World War II in
countries with a mixed economy. Indeed, the substantial economic growth after the war can
not only be considered as a post-war recovery. Most western countries adapted a system of
mixed economy in which government had an active role and thus created a dynamic growth
pattern based on the principles of Keynes. The prime objective of the governments was to
create full employment and to stimulate material prosperity for all. They installed all kinds of
systems to redistribute and equalize incomes, they took fiscal and monetary measures to
stimulate or slow down the economy in order to level out the normal business cycles of
booms and recessions. Private business accepted the social policy of redistribution and the
labor unions accepted the policy to invest in new technologies to improve productivity. The
actions of both groups together with government spending converged into the accelerated
dynamic growth during the 1950s and especially the 1960s77.
But the government spending had a side effect. If taxes were not sufficient to finance the
public investments, the social programs and the defense programs, a lot of governments
started deficit-spending: they loaned money on the money market. The banking industry was
eager to take these loans at a higher rate than they had to pay their depositors. Politicians were
not thinking further then their next re-election and they liked to play Santa Claus to their
voters. Banks were making money with these loans, and industry and labor unions were
77
H. Van Der Wee, The Broken Circle of Affluence, p 30-32
90
happy with the government spending. So since the 1970s most industrialized countries are
faced with very high accumulated budget deficits.
Since the mid 1970s, the application of the principles of Keynes did not yield the expected
results anymore78 and the theory of Keynes has been criticized by many distinguished
economists. How does it come that these rules, once very effective, no longer seem to work?
When using heuristic rules, or when the dynamics of a system are not completely known, one
should keep in mind that these rules can only be applied successfully within certain
boundaries, not necessarily known to us.
In the first place, disturbances affect the normal functioning of a system. The consequences of
these disturbances are not always predictable. Small disturbances can usually be neglected, as
their impact on the system is much smaller than the control policy applied to the system.
Large disturbances, however, could have a severe “corruptive” impact on the dynamics of the
system.
In the second place, some state variables could undergo such a great change that they go into
saturation, i.e. they reach their limit value. As a consequence of this, the system does no
longer obey to the same rules anymore, its dynamics have changed, non-linearities might
occur.
In both cases we can say that the application of the known heuristics will not result in the
expected objective, but on the contrary might even lead to an end-result opposite to the
desired result or even worse to the breakdown of the system.
So we only have to find out which “corruptive” disturbances affect the economic system and
where saturation did occur. This is the subject of a later chapter. But first we will examine
some characteristic features of an economy with zero-growth.
6.3 Zero-growth and its consequences
When we study the evolution of economy in Western Europe, one of the most striking
phenomena is the emergence of industry, which led to the end of the Ancien Régime and the
start of a period of substantial economic growth known as the Industrial Revolution79. What
was the cause for this undoubtedly most important caesura in the pattern of social and
economic development? A lot of books have been written on this subject, with all kinds of
explanations and causal relations between phenomena. One can easily get lost in this maze of
intellectual effort. A striking evaluation of this plodding in historical research was made by
Alvin Toffler in his book The Third Wave: “Now, three hundred years later, historians are still
unable to pinpoint the cause of the Industrial Revolution”. In this section we will make a
modest attempt to find a single and simple explanation for the sudden occurrence of economic
growth after a long period of quasi zero-growth. We will do this with our basic theory on the
origin of profit at hand.
In this basic theory we have given an idealized definition of the economic process: time, raw
materials, energy and human effort and creativity are combined in order to produce goods and
services in order to fulfill collective and individual needs in society. The satisfaction of needs
is the driving force in this process, the “medium in the rubber cylinder”. When the existing
78
R. Batra, The Great Depression of 1990, p 72
79
C. Vandenbroeke, Purchasing Power in Flanders, p 56
91
needs are satisfied and no longer grow, because of stabilization in the population and because
the people are satisfied with what they have – saturation of an internal state-variable of the
system – then we have an economy with zero-growth: the output of the economic process
stagnates. This situation can also occur when raw materials, energy or creativity, the means to
produce goods and services, are lacking – saturation of input variables to the system – or
when the economic process brings so much pollution or social inharmonies with it that further
economic growth is undesirable or even impossible – saturation of output variables,
disturbances.
Another cause for zero-growth could be oppression and exploitation: oppressed people are
less motivated to work harder or to produce more than necessary, as they cannot enjoy the
fruits of their own labor. Any surplus they produce is taken away from them by the oppressing
class or system. Civilizations and societies with zero-growth have existed before, e.g. great
parts of Europe during the Middle Ages and the Ancien Régime, and still do exist. Think of
some “primitive” tribes in Africa, Asia and South-America, whose main objective is to
preserve the Earth for future generations.
As we start from the assumption that there is no economic growth, then according to our basic
theory there is no profit for society: at a certain moment in time it is not possible to fulfill
more needs than before. A population could adapt this situation by free will – e.g. if they
choose to work for a living and not to live for working – or zero-growth could be imposed
upon them in one way or another by the political system. In that society we suppose a system
of trade with money as a medium of interchange. We assume the total amount of money in
circulation as fixed, and thus a stable average price-level. When certain people produce more
than necessary to fulfill their own immediate needs they can keep their surplus instead of
consuming it. They can keep their surplus in the form of goods or money, they save. At a later
moment in time they can consume or exchange the goods they saved or spend their saved
money. But those saved goods and that saved money have kept the same value as when they
were put aside! In particular we can say that the purchasing value of the saved money has not
increased: in a zero-growth economy money cannot create money! Indeed, during the Middle
Ages people secured their money (gold, silver) by depositing it with a goldsmith and they had
to pay for that service: they paid for the security against theft. In our days, we receive interest
on our saved money as the banks manage to make money with our money.
Societies who have lived in a state of zero-growth since ancient times and have only recently
come into contact with the western banking system have great difficulties in understanding
how one can create money with money. Buckminster Fuller has illustrated this as follows:
“None of these water-people understand the western world’s banking and credit-financed
business. As a consequence four Chinese families run all the banking businesses of Java and
Sumatra and Indonesia in general. These Southeast Asians say the banker cannot lend them
the wind before the wind blows”80.
In our society with zero-economic-growth, people can provide in their living in several ways:
• By producing themselves everything they need: food, clothes, housing...
• By having a more or less specialized contribution in the economic process and
exchanging it for goods produced by others or for money, so they can pay for the
specialized contribution of someone else.
• By receiving money or goods from others if they make no active contribution to
the economic process themselves: others yield part of their income because of
80
B. Fuller, Critical Path, p 13-15.
92
solidarity (for the elder, the sick, the handicapped...), because of credulity (for the
clergy...) or because they are forced by law or coercion (aristocracy, thieves,
taxes...)
A certain subsystem in our society with zero-growth can increase its purchasing power in two
possible ways:
• In a justified way, by making a greater contribution in the total production of
goods and services.
• In an illegitimate way: by undermining or diverting the purchasing power of other
subsystems. In a later chapter we will discuss in great detail how this can be done,
how certain people manage to get hold of the wealth of the “common people”.
As long as it is possible for certain groups in a zero-growth society to acquire more

purchasing power at the expense of others – by abuse of power or by the credulity of the
people – then there is no stimulus for growth, even if the major part of the population lives in
permanent need for basic goods. Those of the ruling class have enough to fulfill their needs
and to secure their privileged position. The oppressed ones have no defense: they can only
endure the situation submissively. Think of the serfs in the early Middle Ages and the people
in most of the Third World countries and developing countries now.
However, such a situation cannot last forever; no single group can exercise social supremacy
forever. Tensions occur between the different subsystems in society, and these will eventually
lead to a new social order. This transition can evolve peacefully in a controlled way, or take
the form of a violent revolution (installation of parliamentary democracy in England, French
Revolution, the Independence War...). After such a social transformation we see that the
rights of the oppressors are restricted and that those of the oppressed ones are improved: the
new social order is consolidated by means of new regulations and laws (Magna Charta, Code
Civil, the American Constitution ...).
Those who provided in their living by withdrawing purchasing power from other subsystems
are then faced with a difficult choice:
• They can live from their capital, if they still have any left after the period of social
transition. But this means that, on the long term, they are cutting the branch they
are sitting on.
• They can make their own contribution to the economic process. But how does one
spell the word “work” (shiver-shiver)?
• They can try to live from the support given to them voluntarily by others who
make their own contribution to the economic process. But this is a rather uncertain
option considering their way of living in the past.
So, suddenly the situation of zero-growth does no longer seem to be so interesting anymore
for this group of people. But as the society is organized a little bit more righteously and the
“poor subsystems” do no longer have to yield so much purchasing power to the “parasitic
subsystems”, a quantitative and qualitative change in consumption pattern occurs resulting in
growth of the demand: a larger market is created. Initially the economic process is not
prepared for this change, but by investments in production means it is possible to adapt the
93
system to the new level of demand. Who can provide the means to make these investments?
Here lays an opportunity for those who were able to rescue part of their savings and who hate
working themselves. By investing indirectly (lending money to others) or directly (starting a
business) in means of production and by hiring people to work for them, they stimulate the
consumption and the economic growth, so profit for society and thus profit for enterprises
can be realized.
This profit for society is divided among the different participants in the economic process, so
the “capitalists” can make money out of money and the “proletarians” can acquire the means
to fulfill in more of their material needs. Again we see here the principle of the rubber
cylinder: the interests of the former oppressors and oppressed ones are in essence the same,
although they are unaware of it.
This process of mutual dependency runs smoothly as long as the economic needs, the medium
that ties them together, are not satisfied. But what happens if those needs are more and more
fulfilled, i.e. the medium in the cylinder becomes thinner, or if those who have still basic
needs are kept out of the economic process and cannot acquire any purchasing power? Will
we then not slip back to a situation of zero-growth with all its consequences for profit? And is
it possible to avoid such a regression? These problems will be discussed in great detail in the
remainder of this book. We can end this section with a conclusion:
The Industrial Revolution, characterized by its economic growth, and the birth of capitalism,
have evolved out of the Ancien Régime as a result of the emerging democracy.
Stated in a more general way: more democracy leads to more material prosperity for more
people.
Most historians are convinced that economic and social evolution are a consequence of
scientific and technical innovations: the plough and the horse-collar led to the expansion of
agriculture in the Middle Ages, the steam-engine was the basis for the Industrial Revolution.
We think, however, that these discoveries and innovations and their practical use on a larger
scale are themselves consequences of growing expectations of the people in times of social
and political (r)evolutions. Technological innovation is only an intermediate agent in this
process. Necessity is the driving force of creativity.
Some researchers, such as W.W. Rostow81 have stressed the correlation between increasing
material prosperity and the establishment of democracy. I agree with this statement, but I
would even dare to say that more democracy is the cause; more material prosperity for more
people is the consequence.
Later we will discuss some other interesting results of the emergence of real democracy... and
how certain people have found new ways to bypass democracy in order to divert purchasing
power from other people into their own pockets. It will show to be, in the words of
Buckminster Fuller, “really legally, but very piggily”.
81
W.W. Rostow, Stages of Economic Growth.
94
Post Scriptum I.
In his book Globalization and its Adversaries, Daniel Cohen notices in a “rational” and
“amoral way” that colonizators who succeeded in exterminating the local population also
succeeded in creating affluent societies: the USA, Canada, Australia, New Zealand… while in
the colonies where they did not succeed in the complete extermination [sic], the economy has
failed: South Africa, Congo, India, Indonesia, Latin America…
Mr. Cohen, I do not know if you will ever read this book, but the latter countries didn’t fail to
create affluent societies because their native population was not completely exterminated, but
because their native population was never allowed to become an equal partner in the
economic process, there was no democracy, most of them were considered as dispensable
eaters82! They were used as cheap labor force, without any purchasing power, so they could
not contribute to internal economic growth, only to the export of basic products like cotton
and rubber to the rich countries. So ‘profit for society’ and ‘profit for business’ was dependant
on the international markets controlled by the “Commonwealth” of the British Empire and
later by the American Empire! Can’t you see this? It is not a matter of complete
extermination, but of granting economic and political rights to the local people! More
democracy leads to more material prosperity for more people. Using the local people as
cheap labor and depriving them from a fair income is, on the long run, contra-productive: the
country’s economic growth and thus the profit of companies depended solely on the export, as
there was no growth of internal consumption.
Post Scriptum II:

In Noam Chomsky’s book Failed States (p. 215-216) we can read the following lines:
“Ferguson and Rogers were describing early effects of the powerful coordinated backlash
against the “crisis of democracy” of the 1960s that deeply concerned the Trilateral
Commission, which coined the phrase. The commission consisted of prominent liberal
internationalists from the three major industrial regions: North America, Europe, and Japan.
The general perspective is illustrated by the fact that the Carter administration was mostly
drawn from their ranks. The worrisome crisis under discussion was that the 1960s had given
rise to what they called “an excess of democracy”: normally passive and marginalized sectors
– women, youth, elderly, labor, minorities, and other parts of the underlying population –
began to enter the political area to press their demands. The “crisis of democracy” was
regarded as even more dangerous by the components of the élite spectrum to the right of the
commission and by the business world in general. The “excess of democracy” threatened to
interfere with the well functioning system of earlier years, when “Truman83 had been able to
govern the country with the cooperation of a relatively small number of Wall Street lawyers
and bankers.”
After October 2008, we all know the consequences of this “cooperation of a relatively small
number of Wall Street lawyers and bankers” to the Bush administration. Wouldn’t it be better
to exterminate “dispensable lawyers, bankers, intellectuals, consultants, economists and
politicians” for the “general good” of all humankind?
I really think an “an excess of democracy” is vital to the survival of humankind on this
Spaceship Earth.
82
What about dispensable intellectuals and economists?
83
A true adherent of Malthusianism.
95
6.4 The consumer society
The cause of the present economic crisis lays in the small demand for goods
which are produced. From every branch in industry one hears that the stocks
are piled up, there is no demand, no consumption. So it is not surprising that
prices are declining and unemployment is increasing, which results in lower
wages and salaries... What are the options to solve this problem?... We must
urgently seek for new markets in order to sell or exchange our products.
De Lichtstraal84, November 27 1886, Newspaper of the Belgian catholic labor
organization at the end of 19th century.
In the two previous sections we have evolved our basic theory and we have discussed some
immediate consequences of it. In this section we will introduce a new agent in the economic
process: humankind with some of his shortcomings.
In our basic theory on the origin of profit, we have stated that profit for private business is
part of ‘profit for society’, which by itself is a consequence of the growth of the output of the
economic process.
If the basic needs in society are not yet fulfilled, then justified economic growth is possible,
private business can make an honest profit and the people can fulfill ever more needs as their
purchasing power has increased. The rubber cylinder is filled with water and there is a strong
coupling between the two phenomena. The time, energy, raw materials and human effort and
creativity are well spent. Products are usually of a durable quality and designed to last for a
long period of use.
When however after a period of continued growth the basic needs of housing, food, clothes
etc. are more and more fulfilled and no new needs are created, then the economic growth
stagnates: fewer houses are built, people cannot eat more and more... For some products there
is only a substitution market. Due to the free-market competition, prices are under pressure. In
this situation of slow economic growth or even zero-growth, people could still improve
productivity and technology in order to produce the same amount of products and services
with less human effort. The time saved could then be used for more pleasant things than work,
like more creative recreation or education.
But in this economic situation profit for society is declining, thus also profit for private
business, in particular the return on invested capital: money creates less money. If there is
zero-growth then there cannot be any profit, and money surely cannot create money. As we
have seen in the previous section, not everyone is happy with this new state of affairs, in
particular those people who earned their living from the interest they received on their capital.
Very often those people have also direct or indirect control over the economic policy-making
decision process. Instead of introducing a general reduction of working time and accepting the
present level of production and consumption, sufficient to fulfill the needs of everyone,
economic growth is stimulated by creating new demands. People are talked into buying ever
new and more sophisticated products and services they really do not need, all of this under the
cloak of improving the quality of life and “keeping up with the Jones”.
84
In English: The Lightbeam.
96
In order to be able to buy these new products, people work the same amount of hours as when
there were still basic needs. It may be noted in passing that marketing – the systematized
research, planning and organization of the introduction of a product into the market – has
started to play a major role in the economic process of the USA at the end of the 1940s and
during the 1950s, at a time when the basic needs were again fulfilled after a period of
recession in the 1930s and after the Second World War.
Yet in this short time, marketing has achieved the image of society’s savior, in
the minds of many, and society’s corrupter in the minds of others. Marketing’s
good deeds have been described in various ways:
“Aggressive marketing policies and practices have been largely responsible for
the high material standard of living in America. Today, through mass low-cost
marketing, we enjoy products which were once considered luxuries and which
are still so classified in many foreign countries. Advertising nourishes the
consuming power of men. It creates wants for a better standard of living. It sets
up before a man the goal of a better home, better clothing, better food85 for
himself and his family. It spurs individual exertion and greater production...
This creation and stimulation of desire has put more people to work and, in
turn, made their desires possible to fulfill.”
Others take a dimmer view of marketing’s contribution to society:
“For the past 6,000 years the field of marketing has been thought of as made
up for fast-buck artists, con-men, wheeler-dealers, and shoddy-goods
distributors. Too many of us have been taken by the tout or con-men; and all of
us at times have been prodded into buying all sorts of things we really did not
need and which we found later on we did not even want. Occasional perusal of
contemporary supermarket shelves reveals unequivocally that manipulation of
packaging, labeling, and promotional appeals far exceeds product change.”
P. Kotler, Marketing Management, Analysis, Planning and Control, p 4-5
As usual in recent years, the 2004 electoral campaigns were run by the public
relations industry, which in its regular vocations sells toothpaste, lifestyle
drugs, automobiles, and other commodities. Its guiding principle is deceit. The
task of advertising is to undermine the free markets we are taught to admire:
the mythical entities in which informed consumers make rational choices…
Furthermore Veblen pointed out long ago, one of the primary tasks of business
propaganda is the “fabrication of consumers”, a device that helps to induce “all
the classic symptoms of state-based totarialism… The basic observation is as
old as Adam Smith, who warned that the interest of merchants and
manufacturers are “to deceive or even to oppress the public” as they have done
“on many occasions”.
Noam Chomsky, Failed States, pp. 220-221.
Next to the introduction of marketing techniques in the economic (and political) process, the
creeping inflation since the Second World War had its own contribution towards the
85
Better food? I lived in the USA in the early 1980s. I was surprised by the large number of people who
suffered from obesity. Since then this epidemy has been “exported” to the rest of the world.
97
consumer society: as people saw the purchasing power of their money steadily eroded, they
were tempted to spend their money immediately and even to buy on credit. So they bought
those new products they really did not need. Those nonessential goods are produced. This has
two immediate consequences.
In the first place this means that part of the labor force is employed in fields of business
producing and marketing those nonessential products. Instead of being content with the more
basic goods and work fewer hours, both man and wife take a full-time job in order to acquire
these nonessential goods, as they were persuaded that these “will improve the quality and
status of their lives”. The economy runs smoothly: there is a substantial growth-rate, profits
and return on investment are high, money creates money, wages and salaries can increase.
In the second place, we can say that more raw materials and energy are used than strictly
necessary. To keep the economic process running, goods of less quality are produced: they are
designed to last for a limited period of time, so they need to be replaced after a while. Basic
products like food are packed in fancy boxes in order to capture the attention of the consumer.
This leads to ever increasing piles of waste and depletion of material and energy resources.
Companies spend huge budgets on advertising campaigns in order to convince the consumer
to buy their new products, promising them a far better quality of life.
This obsession with growth has also been sold to the public by the political authorities as
“economic growth is the only way to insure that material wealth will trickle down to the poor.
We do not need political or social reforms for you to enjoy what the rich people have. All we
need is improved productivity and economic growth”. As F. Capra illustrates86 “this trickle-
down model of growth has long been shown to be unrealistic”. We can indeed notice a trend
to more inequality in the distribution of incomes and wealth between groups and classes
inside the industrialized countries, as well as between those industrialized countries and the
Third world countries, despite the growth of the economy and the increasing world trade. One
can even say that the greater the economic growth, the greater the inequality in income, as
higher incomes increase faster than lower incomes87. The generated wealth trickles down to
the level of the dilutees of society only in a diluted form.
We can indeed say that the economy has deteriorated: by creating new and stimulating
existing needs far beyond what is necessary or even healthy, the economic growth is
stimulated in order to make more profit, to make money out of money. Raw materials, energy
and human effort are combined in the production of nonessential goods and services, with as
side-effects an increasing level of pollution, both material – piles of waste, acid rain, the
heating of the atmosphere,... – as well as mental – stress, disturbed social and family relations.
Profit, in essence a consequence of economic growth, has become a goal on its own. And this
is the error which could lead to the destruction of the whole planet88.
We can ask ourselves quite rightly the question if this evolution is fair towards the generations
to come. Due to our artificially stimulated level of consumption, they will be faced with great
difficulties in order to develop the resources of the earth and they will inherit a more polluted
86
F. Capra, The Turning Point, p 225-226
87
B. Fritsch: New means of Power, p 24
88
K. Lorenz, Our Last Chance, p 160-161
98
world. I can recommend the book Entropy, A New Worldview, by J. Rifkin, and the film The
Corporation, by Mark Achbar and Jennifer Abbott, as interesting discussions of this problem.
And is our conduct fair towards the people of the Third World countries? Instead of using the
available raw materials, energy and human effort to produce goods in order to fulfill their
basic needs, we use them to make non-essential products to fulfill created and stimulated
needs in the rich industrialized countries. In addition we see that the land in those Third
World countries is cultivated mechanically on a large scale, and that the crops are exported to
the rich countries, while the profits go the few rich families in those poor countries89. As their
own natural food is no longer cultivated and because of the mechanization of the agriculture,
the rural population migrates towards the cities, hoping to find a job there. This leads to the
enormous ghettos in Third World cities and to economic emigration to the rich countries,
where these “illegals” are used as cheap labor forces. But as their number keeps growing, the
own population starts to support legal actions to send these “illegals” back90.
And above all, is this fair towards ourselves and our children? This policy of stimulated
growth based on created needs can continue as long as the people have a blind confidence in
the future. As long as the stimulated needs are not fulfilled or new needs can be created to buy
non-essential products, and as long as the material conditions are met to support this
economic growth –energy, raw materials, infrastructure, pollution – then indeed one could say
that “the sky is the limit”. In the 1950s and 1960s, based on the expectation of uninterrupted
growth, entrepreneurs kept a high level of investments, even if there were short declines in
certain components of demand. Due to the same expectations of continued growth, the people
proceeded at the same high level of consumption, even when there were short periods of
reduced income. But what happens if indeed this confidence in growth is blown, e.g. by a
crash of the stock market or an international conflict? What if there are problems with the
supply of raw materials and energy? What if the burden of pollution gets too high?
6.5 Unemployment
The 1950s and 1960s in Europe and the USA were characterized by substantial economic
growth and almost full employment. West European countries had even to attract foreign
workers from southern Europe and Northern Africa to do the dirty and heavy work (coal
mines, steel industry,…), as their own people went for better paid and cleaner jobs in the
chemical industry and the car assembly. In the 1980s we were faced with the highest level of
unemployment since the crisis that preceded the Second World War. This puzzled economists
and all kind of organizations.
International Labor Organization: Causes for unemployment are not yet

clear
The ILO expresses the feeling that the real causes for unemployment are not
yet clearly defined and thoroughly examined. According to its director Francis
Blanchard it could well be that the failures in many programs to increase the
employment could be the result of a wrong diagnosis of what is called the
economic crisis.... In a special report Employment in the world of this UN-
89
Noam Chomsky in On Power and Ideology, where he discusses “The Fifth Freedom”.
90
While financial capital is allowed to cross borders without any limitation.
99
organization, specialized in problems related to labor and employment, more

questions are left open than answered. Economists tell diverging or even
conflicting stories about the crisis... According to the ILO report the two oil
crises do not completely explain the present economic situation, although they
surely had a negative influence...
De Standaard, February 27 1984.
In this section we will explain the emergence of unemployment with our basic theory at hand.
Later on in this text we will also formulate the solution for this problem.
As long as there is confidence in the future, people keep or increase their level of
consumption, so the output of the economic process can grow year after year if one makes an
intelligent use of the economic policy (heuristic rules) on the distribution of profit as driving
force – or brake on – economic growth. Private business can realize profit, as a result of the
economic growth. In the beginning the profit margin (profit divided by the invested capital) is
high, so entrepreneurs are tempted to invest ever more. They are easily granted loans by the
banks. Business runs smoothly not only for consumer goods but also for investment goods.
Companies and private persons pay taxes, so the government has sufficient income to develop
social welfare programs and to invest in the construction of roads and other public utilities.
Everyone is happy: the governments, the employers, the employees, the unions, those living
from social welfare, those living from the money they make out of money, the bankers, they
all share from the profit for society which results out of the economic growth. In a later
section we will extrapolate this situation to the “pram-industry”, so the real impact of it
becomes crystal clear.
However, this confidence in the future can be shocked in several ways. As discussed in a
previous chapter, the profit margin has the tendency to decrease. As a result there is less
motivation to invest money in risk-bearing activities: there are fewer investments, so the
economic growth in this field of business will slow down. In the second place a political event
(sudden rise of oil-prices, military conflict, elections with an unexpected result…) could result
in a lower confidence in the future, so people return to a lower level of consumption as they
stop to buy the most non-essential goods and postpone the purchase of a new car. As people
in the western industrialized countries have such a high level of consumption compared to
those in the Third World countries, they can easily adapt their consumption pattern
downwards: they see that other people come off worse. They stop buying non-essential goods
in order to save something for the rainy days to come.
As the population spends less money, but on the contrary saves more, a great deal of the
purchasing power is not used, so the market for consumer goods stagnates or even shrinks.
The extra savings could be used to finance investments, but there is no incentive due to the
decreased level of demand, the excess in production capacity and the lower profit ratio. When
the decrease in consumption in the home market is not compensated by other opportunities for
turnover (e.g. export to other countries), then a lower level of industrial production will be the
result. When there is no redistribution of the available work, then this will inevitably result in
lay-offs or wage-cuts for employees in the field of business which are affected by the reduced
level of consumption.
Because of the increase of unemployment after a period of full employment, and because of
the reduced economic growth, people lose their confidence in the future even more... and
before we realize the scope of the problem, we are faced with a vicious circle, a downward
spiral: again the principle of feedback, but this time destabilizing, as the level of
100
unemployment keeps on growing. An economic recession is born, which can turn in a great
depression when inappropriate measures are taken.
This very same process has been described more than a century ago by Paul Lafargue in his
book The Right to be Idle which he wrote in 1880 as a reaction to the Marxist slogan Right for
Labor (1848).
A disastrous dogma
A strange madness has captured the laboring class in the capitalistic countries.
This madness has brought along enormous individual and social suffering
during the last two centuries. This madness I speak of is the love for labor, the
furious passion to work, even till the exhaustion of vitality of the individual
and his descendants...
Deceived by the fallacious theories of economists, the proletariat has
surrendered soul and body to the vice of labor, and in doing so they throw
society into an industrial crisis of overproduction. Because there is excess of
things to buy and not enough people to buy these things, mills and factories are
closed and laborers suffer from hunger and cold. The proletariat, drugged by
the dogma of labor, does not understand that the excessive labor they imposed
themselves in times of so called prosperity is the cause of their present misery.
P. Lafargue, The Right to be Idle, pp. 65-66
Since the mid 1990s, there was again a slight economic growth in some European countries,
however without substantial increase in employment. This is an indication that the gap
between the rich and the poor is getting wider. As history teaches us, unemployment in the
lower end of social classes is the perfect soil for nationalism, racism, extremism and fascism,
and thus also for war. Later in this chapter we will see how this vicious circle of loss in
confidence in the future, decreasing industrial activity and increasing unemployment usually
has been broken in the past. Later in this book we will also discuss some feasible alternatives.
From this section we can conclude that an economy based on over-consumption is like a
soufflé: as long as all conditions are perfect, as long as there is confidence in the future, it will
rise. But as soon as something goes wrong with the external conditions or internal saturation
occurs, the whole thing collapses: the process has become unstable and uncontrollable. The
reason is obvious: the economic process is no longer based on real, incompressible needs or
demands but on cultivated, expanded and thus compressible needs and whims. The rubber
cylinder is no longer filled with water, but with air, so the regulating coupling between pulling
the ends (trying to make a profit) and the contraction of the middle part (helping other people
in fulfilling more of their needs) is lost. And this coupling is lost in both directions!
In terms of system theory, this means that an internal variable of the process – needs – has
gone into saturation. As a result, the dynamics of the system have changed, so the heuristic
rules of Keynes no longer work. On the contrary, they have a destabilizing impact on the
system. We need to adapt our control policy... or we could change the system.
Based on this discussion, we can stress once more the fact that satisfaction of needs is the
driving force of the economic process, and not profit, which is just a consequence!
101
6.6 Concentration of wealth
In the previous section we have discussed how a drop in aggregate demand can lead to a
lower economic growth rate or even a drop in the Gross National Product. When the GNP
fails to keep pace with the growth in the labor force, then the level of unemployment
increases, resulting into a recession or even a depression. But according to the economist Ravi
Batra a catalyst is needed in order to trigger the deterioration of a recession or a depression
into a great depression. The following lines are a compilation of his book The Great
Depression of 1990.
Capitalism is defined as a social, economic and political system where the
means of production – industry, banks, natural resources, etc. – are owned by
private corporations and individuals, where the political system operates in the
interests of such owners, and where the distribution of national income is
determined by them. It is closely associated with the free enterprise system,
which may be defined as one where businessmen, the owners of the means of
production, are free to maximize their profit (p. 74).
So, in the capitalistic system, profit for society goes mainly to the entrepreneurs, the
businessmen, the private companies, the owners of the capitol – whoops, sorry – capital, the
rich91.
Since the rich have a higher propensity to save than the poor, concentration of
income in a few hands induces an increase in aggregate savings (p. 132) ...
When wealth becomes concentrated, three effects normally occur.
First the number of persons with few or no assets rises. As a result the demand
for loans increases because the borrowing needs of the poor and middle
income groups far exceed those of the affluent.
Second, since the poor and the middle class, who are in a majority, now have
fewer assets, the borrowers in general become less credit-worthy than before.
If a bank rejects risky borrowers, its financial structure remains sound. But in
an environment where credit-worthiness has generally deteriorated, most banks
cannot afford to be choosy, especially when they have to pay interest on their
deposits. Only a prudent bank then avoids making risky loans. Thus, as the
concentration of wealth rises, the number of banks with relatively shaky loans
also rises. And the higher the concentration, the greater the number of potential
bank failures.
A side effect of the growing wealth disparity is the rise in speculative
investments. As a person becomes wealthy, his aversion to risk declines. As
wealth inequality grows, the overall riskiness of investments made by the rich
also grows. It essentially reflects the human urge to make a quick profit (pp.
135-136)...
91
According to Gar Alperovitz, professor of political economy at the University of Maryland, College
Park, and author of the book America Beyond Capitalism (2004) the top 5% of Americans own just under 70%
of all financial wealth, and the top 1% of Americans now claim more income per year than the bottom 100
million.
102
Under capitalism wealth disparity tends to rise in the long run. A time comes
when this disparity, and the concomitant number of shaky banks, becomes so
great, that any recession can cause a collapse of the financial system92. The
bursting of the speculative bubble, another consequence of the inequity, only
adds fuel to the fire. Money supply, aggregate demand, output, and
employment then move in a downward spiral, and an ordinary recession turns
into a depression (pp. 138-139)...
Many businesses then vanish, the public loses confidence in the banks, and
unemployment climbs to levels unprecedented in recent memory. In other
words, a onetime drop in demand is not enough to cause the depression (p.
134).
Excessive concentration of wealth is a major catalyst in order to turn a recession into a

depression.
Since President Nixon allowed pension funds to invest again is shares of companies, the stock
market went up and up. In order to maximize the yield on their capital, a lot of people with
higher incomes in the US no longer deposited their salaries on a savings account with a fixed
but moderate interest rate – and some insurance of refund in case of bank failure – but they
invested it directly on an account of one of the many investment funds – without any
guarantee of refund in case of a crash at Wall Street. In order to pay for their living expenses
they then simply sold part of their shares now and then. So the major part of their savings and
thus future purchasing power was invested in speculative investments. No wonder the stock
market increased, as a lot of money was diverted to Wall Street, even without any firm
economic basis to justify this increase... besides the law of supply and demand of stocks, of
course.
92
October 2008! More than 100 banks went bankrupt in the USA in one year since then.
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7 On the origin of wars
7.1 The economic “importance” of wars – Cui bono?
We start this chapter with a story which at first glance seems rather unrealistic and even
ridiculous. But it will prove to have a clear link with reality. The story will lead us to the
notion of disinvestment goods.
7.1.1 The story of the pram industry
In this story we imagine ourselves living in a closed community: a small country, with the
strange and unpronounceable name Htrae, completely surrounded by high mountains. There is
no contact with the outside world. The society of Htrae has sufficient raw materials, energy
and technological know-how in order to fulfill the population’s basic needs for housing,
clothes, food... and prams. Thanks to the know-how and creativity of the engineers and the
scientists the means of production are well developed, so that very little human effort is
needed in the production process. Men need to work only 20 hours a week while their wives,
or vice versa, can stay at home and take care of their family, unless they want to go out work
themselves. There is plenty of leisure time for both sexes. All the needs of everybody are
amply fulfilled. The population is stable and we have a situation of zero-growth.
But a group of persons in this small country is not very happy with this state of affairs. In
previous years, when the needs were not yet fulfilled and the economy was still growing, they
used to earn their living by lending other’s people saving money to other people and receiving
an interest on this: they created money out of money. The profit they made was part of the
profit for society which resulted from the economic growth. As there is no longer economic
growth now, they have no longer an income: money can no longer create money. This implies
that, in order to provide in their living, they should either spend their own capital or find a job
and produce goods or services in demand by others. They could also depend on others for
their living. However, the laws in this country are very strict but fair: to convert wealth from
others to one’s own use in an illegitimate way is considered as a crime, and the punishments
for violation of this law are very severe.
So this group of persons is faced with a problem. They are well aware of the fact that the
income they had in former days was a consequence of the economic growth. So they decide to
induce economic growth in some way or another. However, the growth potential in the field
of consumption goods and hence in investment goods is nil. The people of Htrae cannot be
tempted to consume more than they need. By the way, they all have studied The Right to be
Idle by Paul Lafargue at school. So our group of ex-money-makers decides to set up a secret
conspiracy against their fellow citizens and they make up a plan to develop the pram industry
to gigantic proportions. This is, of course, not an easy thing to do, but they put so many
efforts in implementing and promoting this plan that they indeed succeed.
104
Several years later, thousands and thousands of prams leave the assembly line each year. A
pram is made of several components (wheels, axles, frame, cover, cushions...), made of all
kinds of raw materials (metal, wood, cotton, plastic...). In order to produce the prams as cost-
effective as possible new machines are developed and produced. The activities in the pram
industry and the supply industries absorb a lot of resources: energy, raw materials and human
effort by laborers, engineers and scientists are needed in large quantity. Working time has to
be doubled from 20 to 40 hours a week, so half of the men working in other industries can
now work in the pram business. The slogan The Right to be Idle is now taboo and replaced by
Right for Labor.
An organization of women is created, the Ymra. These women have as their only duty to go
walking with the prams. They are even paid for doing this, they are real professional
promenaders. As there are not enough babies in Htrae compared to the number of prams, they
have to put a doll in the pram. So the doll industry also knows an unprecedented boom. The
Ymra is very well organized; it has a strict hierarchical structure: women with a higher rank
wear longer earrings, more bracelets and shoes with higher heels. Those women who do the
actual walking, of course, wear flat shoes.
The prams are given a lot of maintenance so they are operational 24 hours a day. At regular
intervals in time they are replaced with new and better models, even before they are worn out.
The people in the pram industry are very good in lobbying, one even gossips that they pay
bribe to the politicians, but this has never been proved by facts. Of course there is a Secretary
of State responsible for spending taxpayers’ money as rationally as possible in order to buy
the best prams available and to keep the Ymra operational. Production is running at full
capacity, industrial output grows year after year, and profits, as part of profit for society, are
substantial.
As a matter of fact, we are faced with a situation which is the logical extension – by way of
speaking – of the consumer society and which makes even less sense. Energy, raw materials
and human effort are wasted in the production of a good (prams) and a service (walking with
these prams) which are absolutely not needed and which fulfill not even a cultivated need. I
am sure the reader doesn’t need a Ph.D. in economics in order to realize that this situation is
absurd, and that our little country Htrae better should get rid of the excessive pram production
and the Ymra, return to a 20 hours working week and fall back to the production of useful
goods and services, a production which is sufficient in order to fulfill the needs of all, even
the women in the Ymra, the men working in the pram industry and those who are earning
their living by making money out of money and are reluctant to work themselves. By doing
this, they would save raw materials and energy for later generations and they would save time
for themselves, time they could spend on more interesting and rewarding activities.
However, the situation changes drastically when a pass through the mountains is discovered
and contact is made with other societies. The economic system of Htrae no longer is a closed
one: trade with the outer world becomes possible. In addition, the people of Htrae have found
out that some of those other societies dislike each other and that they manifest their feelings in
a rather peculiar way: they run into each other with prams until those prams are destroyed. So,
suddenly the people of Htrae have found a substantial new market for their pram industry: the
demand for prams from these outside societies is so great – they no longer have to make the
prams themselves so then can concentrate on riding them into destruction, what a saving in
time! – and those other societies are always eager for the newest models. They are willing to
105
sacrifice a lot for these prams: energy, raw materials and goods are withdrawn from their own
population in order to pay for the prams93.
So our little society in the mountains continues with the excessive production of prams as
there is great demand for them. The inhabitants (and taxpayers) of Htrae no longer criticize
the pram-industry and the Ymra, they work 40 hours per week, they earn a good wage and can
afford to buy things imported from those other countries. Their material wellbeing has
increased substantially. The professional promenaders in the Ymra are also satisfied: they
have an occupation, they are paid for it and they can afford themselves fancy clothes and
luxury goods. The Secretary of State keeps his job. The economy keeps growing, so the
people earning their living by making money out of money are also happy. The pram-industry
seems to be the driving force of the economy, the source of all material abundance. It
provides jobs to a major part of the population and by exporting the prams our little country
can import goods, raw materials and energy from other countries. There is a general
consensus among the government, the labor unions, the industry, the banks and the women in
the Ymra (see illustration 1 below).
There is of course the risk that those other societies might resolve their dispute, so they would
no longer need so many prams. The economy in our little country is indeed very vulnerable.
No need to worry: special emissaries are sent to those other countries in order “to talk about
peace” (see illustration 2 below). They even allow price increases for the products imported
from those other societies so that they can sell ever more prams. As a consequence the
imported products become more expensive for the people of Htrae, who see their purchasing
power eroded. They blame the other countries for this; they are even willing to attack them
with their own Ymra.
By the way, a similar evolution could have been possible even if the pass across the
mountains would not have been discovered. By dividing the society of Htrae in two or more
groups and setting them up against each other so that they would go to the battlefield with
prams94, the demand for those prams would be induced, so the economic growth could have
been stimulated artificially, and it would still be possible to create money out of money. The
raw materials, energy and human effort in order to produce those prams and keep the Ymra
operational would then be taken away from the population of Htrae itself. But due to the
internal struggle, one could say that there is no longer one single society surrounded by
mountains, but two, three... so the stupidity of the situation is not so obvious.
So far for this rather strange story of the pram-industry on Htrae. We remember that it is fairly
easy to show that such an out-of-proportion pram industry is useless in a closed economic
system, but that it is also rather easy to defend the usefulness of it in an open economic
system. One only does have to make appeal on a few manifestations of human weakness: lust
for power, greed, ambition... Assuming that the Earth is flat and thus infinite, then no
economic system could be closed: for every finite society there exists an infinite outer world
with whom energy and raw materials and goods can be exchanged. But as already stated, we
know that the Earth is a globe and is thus finite. Let us think of ourselves as world citizens.
When we see the Earth as one closed economic system – one little country surrounded by
high mountains of infinite space –, then we can understand that it is indeed irresponsible for
ourselves and for future generations to spend so much energy, raw materials and human effort
in order to make so many useless prams, which are only used to make parades and to ride
93
See the film The Last Samurai.
94
Civil War.
106
them into destruction. Still those silly things do happen on earth! Why? And how is this
possible?
7.1.2 Illustrations
In this section we will give some examples which clearly show that the story of the pram-
industry we invented is surprisingly close to reality. The following pages are borrowed from
The Challenge written by the former French politician and writer J.J. Servan-Schreiber. He
published his book in 1981 during the economic crisis that followed the oil crisis of 1974. So
maybe these lines could teach us something of things that may happen in the near future, as
were are now, since 2008, once more faced with a financial crisis, and most likely a long and
deep economic depression.
Illustration 1: The glory of weapons95.

The Third World is corroded by its hunger for weapons. The enormous homicidal machinery
is in full expansion. There seems to be no way back. As oil prices are increasing, the
industrialized countries need more export in order to pay for their import of energy. One of
the easiest ways is to sell ever more weapons to ever more countries96.
90% of the French and British production of weapons is intended for export to Third World
countries. During the last 10 years the growth figures of the export of weapons by France was
twice that of any other commodity. In 1978 the international trade of weapons showed the
following figures:
Billion $ %
USA 12 48.0
USSR 7 26.9
France 3 11.2
Italy 1.2 3.9
UK 1 3.7
All industrialized countries fight for new markets and contracts, brokers make fortunes in
negotiating secret deals97. The most tragic thing about this trade is that most western weapons
95
J.J. Servan-Schreiber, The Challenge, pp. 170-175.
96
According to the SIRPI Yearbook of 2006, Armaments, Disarmament and International Security,
1,120 billion US$ were spent on arms worldwide, the highest level ever. With 507 billion US$, the USA
represents about 50% of the arms sales.
In 2009, the U.S. government-to-government sales to 208 countries will be $40 billion. Most of the
contracts were signed when Bush Jr. was still in office. In 2006 and 2007 more than half of the top 25 U.S. arms
purchasers in the developing world are “undemocratic governments or regimes that are engaged in major human
right abuses”, according to a report of The New America Foundation. According to that organization, there is a
92% correlation between rising oil prices and rising U.S. arm sales. From an article of Jim Wolf, Reuters.
97
See the film Lord of War.
107
are sold to countries which are already in great debt, countries who are unable to feed their
own population and who undermine their own economic development98.
With the money paid for one tank, about 400,000 $, one could build modern silos to preserve
100,000 tons of rice, which would allow for extra saving in rice of about 4,000 ton each year.
One pound of rice is enough for the daily food of a person. The price of one war airplane is
enough to invest in 40,000 small pharmacies in Third World villages. Indeed one can say that
those countries buying the weapons are on the wrong way, but meanwhile western industry
makes the profits. The industrialized countries deliver machine guns, planes and tanks on
command, and in doing so they let other pay for their military defense. The French general
Cauchie expressed this with the following words during a congress on European pram –
whoops, excuse me for this slip of the pen – weapon-industry: “Not only does the total
capacity of the European weapon industry far exceeds the potential European market, it also
can no longer exist if European governments do not increase their budgets for military
expenditures... So in order to keep military industry running, Europe has to find other buyers,
it is forced to export weapons.”
The foreign currencies a country receives is just one of the consequences of exporting
weapons. By making larger series of the same type of weapon, the own defense becomes
cheaper as development costs and investments can be spread over more units. Without export
of weapons (82 billion FF. in 1980), the French defense budget would have to be increased
with 20 to 25 billion French francs...
Thirty countries of the Third World spend more than 30% of their GNP on defense, this is
more than Europe; in 1960 this figure was “only” 13%. Egypt had the world record in 1974
with 40% of its GNP.
Third world countries even started their own weapon-industry: combat-planes are now built in
Argentina, Indonesia, Pakistan, Chili, North- and South-Korea, the Philippines, Taiwan,
Vietnam, Colombia, Thailand, India and Brazil...
Most of these countries have gained their independence by the use of weapons. To them, the
possession of and the control over weapons is a symbol of new pride and self-esteem in front
of the rest of the world. Every day one can hear voices in the western countries saying that the
“independence” of a country is closely related to its “safety”, thus to its weapons. How could
one then prevent the leaders of the Third World countries to take care of their independence in
the same way? On the contrary, they are even encouraged, as the weapon-trade does not know
any political borders and yields such a high profit. The discrepancy between the military
expenditures of the Third World and their level of development can only lead to self-
destruction for those countries, as the need for new and better high tech weaponry keeps on
growing. If they buy their weapons or they make them themselves, in either case this policy
erodes the economy of the country, because a lot of financial resources and human effort and
creativity are wasted instead of being used in the development of an economy to fulfill the
basic needs of the population.
In India, for example, the national economy is restrained by the lack of telephone lines. The
weapon industry, on the other hand, has its own communication and transport system. In 1980
Indira Gandhi made the following statement concerning nuclear weapons: “If necessary for
the general good of India, we must be able to control the most modern techniques. We cannot
afford our country to be unprepared”. But at the same time she asked herself this question: “In
joining this race for weapons, does India increase or destroy its security?”
98
Malthusianism in the purest sense.
108
The answer to this question for her and the whole world was given by the self-destruction of
the Iranian empire of the Shah. The growth of the military budget under the reign of the Shah
was impressive: 241 million $ in 1964, 4 billion $ in 1974 and 10 billion $ in 1977!
But why? The Shah explained to Anthony Sampson: “I hope that our American and European
friends will understand that there is no longer a difference between Iran and France, Britain or
Germany. It is considered as normal that France spends so much for its defense, so why not
Iran too? Our power in the Persian Gulf is now ten times stronger than the one of the British
ever has been.”
In 1978 the army of Iran was twice that of the British. It had almost 3,000 tanks (France had
about 1,000 tanks at that time). Their navy had the largest fleet of Hovercrafts. Their air-force
was the fourth in size of all countries, in 1976 it had a budget of 12 billion $. Only the most
sophisticated equipment was enough for the Shah. At the end of his reign he ordered 290
Phantom bombers, 33 light F-5 interception planes, 80 F-14 supersonic combat-planes and
160 F-16 planes. Often the weapons were already outdated by the time of delivery. Iran then
sold them to Pakistan and ordered new ones.
The Shah had made up his mind to install the world’s most modern army in his country with
the help of his military advisers of the American weapon industry. He succeeded in this
project. Nixon and Kissinger had decided to give the Shah everything he asked for (see also
illustration 2 below).
But what is an army without technical and logistic support? In order to provide these the Shah
started a program for the installation of seven air-force bases and six marine bases for the
navy. The sophisticated weaponry also demanded for highly trained personnel. Next to two to
three pilots a supersonic combat-plane demands about 30 technically trained persons for
maintenance. A country like Iran, with more than half of its population being poor farmers, is
not able to deliver the necessary pilots, navigators and technicians in a short period of time.
The whole supply of trained personnel was absorbed by the army, leaving the industry and
agriculture with the untrained ones.
During that period some businessmen made fortunes – 45 families controlled 85% of the
Iranian industry and business – and corruption was present in all layers of society. Contracts
were always accompanied with commissions or bribes to be paid to intermediate persons and
officials. At the start of the military program in Iran, senator William Dulbright made the
following comment after a visit to the country in 1976: “I have been in Iran and I saw a very
poor country. There are a few rich, but most of the people only believe in the revolution. I
think we do not serve this country by selling weapons to it.” A few years later senator Edward
Kennedy made a similar statement after a visit to the region: “Teheran has started to change
its economic potential into a military one”. He also urged the American government to review
its policy in the Gulf, which was based on the excessive military power of the Shah. Richard
Helme, the American ambassador in Teheran, expressed his concern on the growing presence
of American military advisers and agents of the weapon-industry.
During this one-sided development, the agriculture of the country was neglected, although
more than 75% of the population were farmers. People without land and without an income
left the countryside and went to the cities, hoping to find a job. Instead they formed the basis
for the revolution which was preached to them by Ayatollah Khomeini.
It is interesting to note that this enormous military force has served nobody, not the Shah, not
the American public, only the American weapon industry. The only result was that this one-
sided development has eroded the regime of the Shah and that the western influence in this
109
part of the world was no longer welcome. But if one studies the order-book of the western
weapon-industry today, one sees that the western world has learned nothing out of this story.
Illustration 2: Keep the fire simmering99

Kissinger has kept Metternich’s secret in mind. His example and inspirator had indeed a
peculiar way of handling diplomatic affairs: he told one thing to the Russian Czar, another to
the king of Prussia, and still another to the king of France. He knew that each one of them
would keep the secret to him and that years could pass before they would find out what he had
said to the others. So in the mean time...
Kissinger has applied the same formula: one truth for Sadat in Egypt, one for Assad in Syria,
another for Feisal in Saudi-Arabia – and the real confidentiality’s were for the Shah in Iran.
Kissinger was sure that they did not trust each other so they would not exchange their secrets.
So he would remain the master of the game, at least for some time.
And so it happened. When two of the rulers in the Gulf area did talk to each other and found
out that Kissinger had told them different stories, then this situation was resolved by simply
saying that they must have misunderstood him. But after a few rounds of this merry-go-round,
the indiscretions on the Kissinger-talks accumulated, so they created more distrust than
confidence in the American policy.
The secretary [Kissinger], however, has never hidden his real intentions. He was not really
interested in a deal on the price of oil. His real concern was to develop a strong military force
in Iran against the Soviet Union, in order to protect the Arabian oil fields and to secure the
transport of oil to the west.
As the Iranian income from oil increased year after year, the Shah’s hunger for more and
better weapons kept growing. The price was even irrelevant. The Pentagon was ordered to
give him everything he asked for. But after some time Iran could no longer pay the bill. In
1974 Kissinger and the Shah found a simple solution to this problem: the price per barrel was
increased. In this way Iran’s income from oil was increased, so it could order more weapons,
while Kissinger promised that America would have no objections when the Shah imposed one
price increase after the other. In 1974 50% of the American export of weapons went to Iran....
while people in America, Europe and all over the world had to pay more and more for their
energy, money which was used to buy weapons (prams) which had no use at all100, money
which ultimately was diverted to the weapon-industry as profits.
I hope that these two historical analyses have illustrated the story of the pram-industry and
that the reader now has a full understanding of who is interested in the excessive development
of the pram-industry. In the next section we will return to our basic economic model in order
to explain this situation.
99
100
Except for the war between Iran and Iraq. Have you ever understood the reason why they were
fighting? Saddam Hussein came to power after a coup with the support of the CIA and was backed-up by the
USA government at that time. Divide et impera?
110
7.1.3 Disinvestment goods
In a normal economic system one can divide the civil production, the goods and services
which are produced, in two categories:
• Consumption goods: these are intended to be consumed or used by you and me.
They satisfy a real or a cultivated need of humankind.
• Investment goods: these are not consumed by you and me, but they are useful or
necessary in the production and distribution of consumption goods or other
investment goods (machinery, office buildings, communication and transport
infrastructure...)
In the initial phase of the evolution of an economic system, both categories contribute to the
economic growth and thus to profits. They allow to make money out of money. When needs
are not yet fulfilled, the category of consumption goods can grow, and this growth in turn
stimulates the growth in the field of investment goods, as long as the material conditions of
energy and raw material allow further growth. As long as the growth rate and the return on
investment are sufficient, there is no problem.
We have already discussed the consequences of a lower growth rate due to the saturation of
the market, free competition and of the accumulation of capital goods: profits are eroded, the
return on investment is lower, unemployment increases. Initially this can be solved by
stimulating the economic growth: the government can start programs to build new roads, new
needs can be cultivated, etc. But these measures have their limits. As we have already
discussed, the growth rate and the profit ratio has the tendency to decline in times of peace in
between wars.
Let us forget for a moment that we are world citizens and place ourselves in the position of a
person who earns his living by making money out of money. We are faced with the following
problems: the return on investment of our capital is too low, so some people are forced to use
their saved money in order to live instead of making more money out of them. We will now
outline a possible solution to this unfavorable situation, a measure which has been the solution
to an economic crisis on several occasions in the course of history. But we will also argue that
this kind of solution has become obsolete. Instead we will outline an alternative later in this
book, an alternative which is feasible... and which is probably the only possible solution.
The profit ratio is equal to the profit (numerator) divided by the invested capital (divisor).
Profit is too low due to the slow economic growth, due to overproduction and free
competition. The invested capital is too high due to the accumulation of ever more machinery
and industry buildings. So the solution of the economic crisis seems to be obvious: we should
return to a situation where there are again real opportunities for growth so the numerator can
increase, and where the level of invested capital is reduced so the divisor is smaller. The
question remains: how do we get to this situation?
Well, we could start with the development of a third category of goods in our economic
system, next to consumption goods and investment goods: the category of disinvestment
goods. Initially, this new category would give us the opportunity to stimulate the economic
growth in an artificial way by producing and marketing these disinvestment goods, and then,
when this field of business is sufficiently developed and starts to show signs of saturation
itself, to use these goods for two purposes:
111
• Primo: to return society into a situation where there are again real needs and thus
potential for growth, so that money can again create money.
• Secundo: to destroy the excessive supply of investment goods, i.e. to disinvest on a
large scale, the larger the better.
The profit ratio would increase at once! The reader has probably already figured out what is
meant here with the term disinvestment goods: the goods produced by the weapon industry
and the services taken care of by the army, goods and services which are not really needed in
such a massive quantity and could be compared with the pram-industry and the Ymra in our
story of Htrae. But these disinvestment goods are very useful in stimulating the economy
when consumption goods and investment goods are in a period of zero-growth, they create
jobs, so the problem of unemployment can be handled in an artificial way for some time, and,
on the long run, they can solve the economic crisis as described above: war, massive
destruction.
As Konrad Lorenz has stated already in 1984: “It is a mistake to think that the world is ruled
by politicians. Behind them stand the true and only rulers of the world: big business. The arms
race ever continues on both sides of the Iron Curtain, despite all conferences and disarmament
talks, not because the Russians and the Americans are afraid of each other, but because the
industry earns a lot of money out of it101.” And for Malthusiantistic reasons, of course.
At this point we can again formulate the following conclusion: the arms race
and wars are used (fomented) to preserve the mechanism of creating money
out of nothing from total collapse.
You might make the following objection: if capital goods are destructed, then we all become
poorer. Yes indeed, but the question is who is “we all”? In a peaceful growing economy,
people can afford to save, to put some money aside in for example a pension fund, on a saving
account, in government bonds. It is striking that after a financial crisis like the Great
Depression pension funds were just hollow vessels. So for many years they were restricted in
the way they could invest the money of the millions of people: they could only make very
secure investments in real estate or government bonds. But then comes a time – people tend to
forget – that these pension funds are allowed once more to invest in risk-bearing stocks. As
the good money of millions of people is diverted to the stock exchange, and because of the
law of supply and demand, the stock market becomes a bull market, it goes up and up, and
secure money is diverted to insecure investments. People start to follow the market and put
also other savings in the stock market, and even a major part of their monthly income goes to
the stock market. And the people who sell the stocks receive a lot of good money. So if there
is a major destruction of capital goods, which then is the big looser?
In order to justify that the tax-payers money is “invested” in the field of disinvestment goods,
one has used arguments as employment, security and the threat of the communist world or
101
K. Lorenz, Our Last Chance, p. 119.
112
terrorists102. It is a dangerous evolution that, in spite of more economic uncertainty, there is

one branch in industry which is not affected: the military industry. Per definition, there can be
no overproduction in this field, as one is sure to find a buyer for the goods produced: the
government. Under President Reagan the defense budget of the USA has increased year after
year, while the NATO has imposed a yearly increase of 3% on its member states. And the
deeper the economic crisis in civil production, the greater the pressure on politicians to
increase military expenditures in order to “create jobs”. This resulted in an acceleration of the
arms race, which increased the risk for war, as these weapons were sold to all kinds of
unstable regimes all over the world. And this also resulted in higher budget deficits, so
governments had to loan more money, and certain groups in society earned quite a lot of
money by “selling loans”. In the summer of 2007, Bush Jr. proposed to increase the export of
weapons to the neighboring countries of Iran in order to “increase the safety in the region”.
And very coincidentally shortly thereafter there was a crash on the stock-markets.
I hope I have enfeebled the argument of employment by showing the stupidity of it in the
story on the pram-industry.
7.2 To be or not to be, that’s the question
The armament race since the Second World War, induced by the weapon industry, had of
course another direct consequence: ever more raw materials and energy are used in the
production of ever more “prams” or disinvestment-goods. The growth in this category of
business provided profits and jobs to a lot of people, who otherwise would be forced to find
another, maybe less paid job to earn their living. But the goods that these people need for their
living are now also available, even with all the energy, raw materials and human effort wasted
in the production of these prams. If one would reduce the production of these prams, there
would be more resources available to fulfill more needs of more people, while those working
in the branch of the disinvestment-goods even would not have to work at all! One should even
give them more for working not at all than for working in the pram-business! Why don’t
people see through this situation? Or are they still deluded by the ideas of Thomas Malthus?
However, since the days of Malthus science and technology have evolved so drastically that,
with ever less energy and materials, more and more can be accomplished. Buckminster Fuller
has given several examples of this evolution from the use of water over the building of houses
to the production and distribution of electricity on a world scale. He ends his discourse with
the following conclusion:
fallacious...
Neither the great political and financial structures of the world, nor the
specialization-blinded professionals, nor the population in general realize that
sum-totally the omni-engineering- integratable, invisible revolution in the
metallurgical, chemical, and electronic arts now makes it possible to do so
102
Enemies which have been created by the financial élite themselves!
113
much more with ever fewer pounds and volumes of material, ergs of energy,
and seconds of time per given technical function that it is now highly feasible
to take care of everybody on Earth at a higher standard of living than any have
ever known.
In order to realize this, one has only to apply already existing technologies and
use the resources that are now wasted to make weaponry and to realize profit-
for-the-few instead of creating high-quality-livingry-for-all.
It no longer has to be you or me. Selfishness is unnecessary and henceforth
unrationalizable as mandated by survival. War is obsolete.
But still there are people in high positions who abuse the resources of the earth in order to
improve their own already vast material position at the expenses of others and to strengthen
their power. This is described in a very lucid way by B. Fuller in the chapter Legally Piggily
of his book Critical Path. He gives a good overview of the origin, the development and the
legalization of the phenomenon exploitation of the major part of the population by a small but
powerful élite. On this subject, we can also recommend The Warmongers by Howard Katz
and Intellectuals and the State, On Power and Ideology and Failed States by Noam Chomsky
as very sharp analyses of the situation.
Next to the scientific and technological evolution described by Fuller, we can also stress the
fact that demographic evolution has changed since the days of Malthus. Studies have shown
that with increasing material development of a society the growth-rate of the population
declines. As already discussed, Thomas Malthus was right over only a short time-span. Over a
longer period of time, the population growth evolves according to the S-curve, elaborated by
the Belgian demographer Pierre Francois Verhulst already in 1838: the logistic population
growth model103.
103
I am pretty sure that most students in economics or politics have learned about Thomas Malthus at
university, but that they were never instructed about the logistic population growth model of Pierre Francois
Verhulst. Economic science is an ideology in disguise!
114
The Malthusian vision is assimilated so deeply in our western way of thinking, that scarcity
has been institutionalized so to speak. This is really the greatest obstacle for the “design-
revolution” Fuller refers to. Indeed, scarcity means business: one can ask a higher price for a
scarce good, while the prices of abundant goods are low. So the myth of scarcity must be kept
high in order to protect the western capitalistic model. Tons of fruits and vegetables are
destroyed each year in the European common market in order to keep prices at a level. The
supply of meat, milk, butter and wine is greater than demand, it costs the European tax-payers
millions and millions of whatever currency in order to preserve or even destroy these
surpluses.
An electricity or oil-company is only interested in forms of energy which reach the consumer
through a teller and which require an expensive infrastructure. Buckminster Fuller describes
how he holds several patents which could have had significant contributions to the savings of
materials and energy. Big business is not interested in developing these patents into products;
instead they have tried to freeze them – i.e. to take them away from all of humanity – by
trying to buy them. The implementation of these patents would be to the advantage of the
consumers and of humanity as a whole. But natural resources would become less scarce and
thus less expensive, so profits would decline in some fields of business. In the same way we
observe that the production of long lasting goods with high quality is something of the past.
Because of scarcity? No, on the contrary, because of the abundance! Well, at least in the
western industrialized countries. The growth of the economic process must be induced in an
artificial way.
Scarcity also means struggle for life and thus insecurity, which in turn is used to justify the
highly profitable pram industry. Security is sold to the tax-payer, whose savings are eroded by
inflation and high taxes due to high budget deficits. The financial effort a democracy must
impose upon itself in order to maintain a substantial army and weapon industry can only be
“sold” to the tax-payer if one can point to an external enemy, who is seeking to take away our
freedom and our material wellbeing. For this purpose, a former ally is sometimes turned into
an enemy, or an enemy is created out of the blue.
By the Cold War campaign in the 1950s104, the people in the Western industrialized countries
were deceived in order to justify the enormous pram-industry, which served the interests of
certain interest groups in society. But inducing fear for the enemy by misleading propaganda
was just one of the means to serve these interests. In order to extend an enormous weapon
industry and to keep a large army operational one has to spend money, quite a lot of money.
In a later section we will see by what means these “projects” has been financed, how certain
groups in society have elaborated mechanisms in order to get hold of the wealth of the
common people.
104
The film Atomic Café is a very lucid account of this period in American history!
115
7.3 Protectionism and its relation with war – An important lesson from history
Santayana.
We have asked ourselves already the question why a positive balance of trade is considered to
be good for the economy of a country. We found the answer to this question in our basic
theory on the origin of profit: the surplus of a positive balance of trade is to be considered as
profit for the country, which accumulates with the profit for society resulting from internal
economic growth.
When internal growth stagnates because of saturation of the home market or because of lack
of purchasing power with major groups of the population, then business can still make a profit
by exporting their products to other countries. In order to do this, they have to be competitive
with the industry from other countries. But what happens when these foreign markets also
become saturated, so that prices are under pressure as a result of the fierce competition? In
order to keep their market share in the foreign markets, companies can try to lower their labor
cost, sometimes with the help of the wage control policy of the government. But this will
result in lower purchasing power and less turnover at the home market, so the internal growth
will slow down even more. The loss in profit as a result of the lower internal economic
growth must then be compensated by more export in order to increase the surplus in the
balance of trade.
Another popular measure countries often adapt is to devaluate their currency in order to make
their own products cheaper compared to those of other countries, so that export will increase
and import will decrease, with a more positive balance of trade as end-result. But then the
import of raw materials and energy becomes more expensive, which results in higher
production costs: a devaluation of the currency must then be accompanied with a strict wage
control policy, indeed resulting in lower purchasing power, etceteras, etceteras, etceteras...
If a country’s foreign trade is focused on other industrialized countries that are themselves
faced with the same economic problems (stagnation of the internal consumption) and
applying the same economic policy, then this policy will not result into a lasting solution of
the problem, on the contrary! Let us imagine all those countries as being part of one economic
system. Then it is obvious that the whole system (i.e. all countries) will be subject to an
economic crash as described in the section on the consumer society (the soufflé). The internal
demand of the whole system is undermined and cannot be compensated by extra export of
goods as the outside world of the industrialized world (the Third World countries) does not
have the purchasing power to buy those products, which are not even adapted to their basic
needs.
No need to worry: countries or a group of countries return to the protectionism of former
days. Products from abroad are subject to import tariffs and quota or severe technical
specifications. Some of the western countries are very ingenious in finding new measures to
discourage the import of foreign products. Those countries argue that those protectionistic
measures are taken for “the general good” and to protect the employment in their own
countries. But is this really the reason? Does protectionism hurts only the other countries,
their industry and their employees? For a thorough analysis of protectionism we refer to
Howard Katz. During his argumentation he often refers to the relation between protectionism
116
and war. Sorry for the rather long analysis that will follow, but it rather crucial in order to
understand the relation between war and economy. Those who do not remember the past are
condemned to relive it!
Autarky is economic isolation, the sealing off of a group of people from any
trade or economic relationship with others. Like war, paper money and
prescription105, it benefits one part of society at the expenses of everyone else,
yet is defended by appeals to sacrifice for the good of the whole.
If we will keep firmly in mind that the whole has no existence apart from the
individual people who make it up, then we can understand that such calls for
sacrifice are simply demands that one person sacrifices himself to another. One
man must spend his time in the army, while another gets rich on government
contracts; one man must suffer the depreciation of the currency on a fixed
income while another gets rich by paying off his debts in dollars of less value;
one man must risk his life while another sits behind a desk in Washington.
Of course, during such periods of sacrifice there is a great pretense that the
sacrifices are to be fair. But the sacrifices are never fair. Indeed, since the
whole point of the war is for the power structure to exploit the people, the
sacrifices are not intended to be fair. If it were not for the unfairness and the
benefits flowing to certain powerful persons thereby the war could not be
worth it to anyone and would probably not occur. As professor Charles A.
Beard pointed out: “Of course it may be shown that the “general good” is the
ostensible object of any particular act; but the general good is a passive force,
and unless we know who are the several individuals that benefit in its name, it
has no meaning. When it is analyzed, immediate and remote beneficiaries are
discovered; and the former are usually found to have been the dynamic
element in securing the legislation106.”
This general rule applies accurately to tariffs, quotas, commodity agreements
and other assorted paraphernalia which serve to intervene in the free flow of
trade across national borders. We repeatedly hear the cry of the labor unions
(in rare agreement with management and stockholders) urging to “buy
American107”. The argument is that, if we buy American-made goods in
preference to foreign, it will increase the number of jobs in America, raise our
standard of living and benefit the whole country.
The error in this can be seen most easily if we go back to the time when tariffs
and quotas were applied, not only between countries, but between different
parts of the same country. It was only in the 19th century that the Zollverein, or
custom union, was adopted in Germany so that goods could exchange between
any two parts of the country without interference. Similarly, the US
Constitution prohibited states from putting tariffs on goods from other states.
If it is beneficial to America to wall herself off economically from the rest of
the world, then it must be beneficial to New York State to isolate herself
105
Forced “service” in the army.
106
The offices of the Carlyle Group are on Pennsylvania Avenue in Washington DC, midway between
the White House and the Capitol building, and within a stone’s throw of the headquarters of the FBI and
numerous government departments.
107
On Labor Day 2010, President Obama repeated this appeal to the American public.
117
economically from the rest of America. Similarly, it would be even better if

New York City cut off all trade with the outside. If this idea is correct, the
height of prosperity could be achieved if the island of Manhattan would refuse
to trade with anyone else in the world.
If we carry an idea to its logical extension we can often see a fallacy in it
which would otherwise escape us. If Manhattan were to isolate itself, it would
starve within a few weeks. There would be a mass exodus (or starvation) and
when the smoke had cleared several decades later, all that would be left would
be a handful of farmers scratching out a bare living from the rocky soil.
The general principle is that trade is good. It must be good because it occurs
voluntarily; if it did not benefit both parties, it would not take place. Thus, the
more trade the better. When someone interferes with our trade, we become
poorer. The special interests who advocate autarky in our society today only
propose minor interferences with trade, with the effect that the resulting losses
are not noticed (as the isolation of Manhattan would be).
When Americans buy Japanese goods, it does not throw American workers out
of a job any more than New Yorkers’ purchases of Californian goods throws
New York workers out of jobs...
If a Japanese firm (or the American firm across the street for that matter) offers
the same product that you are producing at a lower cost, it is true that, in the
short run, this may put you out of a job. This is part of the incentive which
consumers use on producers to induce them to move into the areas appropriate
to their special skills, thus getting the maximum advantage from the division of
labor. If a group of Japanese can produce color television sets more efficiently
than you, then it is better that they be producing television sets and that you be
doing something else. In general terms, it is better that those people who can
grow oranges best grow oranges, those who can build TV sets best build TV
sets and those who can operate computers best do so, etc.
The irony is that, if a social planner were trying to design an economic system
whereby each person worked in the area best suited to his special skills, he
would probably design a militaristic-authoritarian system with a central
authority testing everyone and ordering them into appropriate jobs. Yet the
simple measure of leaving people free in their economic choices accomplishes
this goal far more effectively than an authoritarian system ever has and does so
without the use of coercion.
What the autarkists are proposing is that they have the right to make television
sets (and be paid for this), even when the consumer does not want those
television sets (and similarly for other goods). If this proposal were applied
generally, it would lead to a situation where those better at growing oranges
are fixing high tension wires and those better at writing music are planting
corn. Our response to those people should be to say: “You have no right to
force us to pay more for television sets just because you want to receive a
higher wage. If you can’t make television sets more efficiently than the
Japanese, the fault is with you; you do not deserve (and will not long retain)
your higher standard of living. If you want to earn more than the Japanese, find
something you can do better than they can.”
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So there is no benefit to America from tariffs or quotas or other aspects of

autarky, rather the reverse. And there is a clear loss to the American consumer
who intends to purchase a restricted good. Americans who want to buy color
TV sets in 1979 will find prices generally higher because of the 40% quota
recently pressed upon Japan.
The advocates of tariffs, etc. will usually concede these principles in the long
run, but argue for a tariff to counter the short-run effects of a fluctuation in
trade. One might think from this that the country is free of tariffs and quotas
most of the time and that most of those which are put on have provisions
causing them to expire within a few months. But this is not the case. Once the
tariff advocates have pressured Congress into adopting one of their measures,
they never advocate its repeal. Actually, the long run is composed of a
succession of short runs. Just as the people who pledge themselves to a
balanced budget over the long term but a deficit for this year run a perpetual
deficit, so the people who advocates tariffs as a short-term measure keep
perpetual tariffs. Man always lives in the present, and if he decides on
something for the present, he will have it all the time.
Neither is it true that free trade costs jobs in the short run. A fluctuation in the
conditions of trade may throw some people out of work, but for the
government to respond by autarky causes the loss of more jobs. When trade is
free, decisions are made by thousands, perhaps millions, of consumers. Since
people change their buying patterns slowly, any shift in jobs which results will
be gradual, and the industry will have time to adapt. But a tariff is put on by a
single body108 (the government) and is not gradual. Thus the shift in economic
behavior, and hence in jobs, is sudden. If Holland retaliates for our tariffs on
her steel by putting tariffs on our glass products, then the loss of jobs in the US
glass industry is sharp and sudden. There is no time to adjust.
The assumptions of the autarkist are arrogant and immoral. When a man
decides to make his living by offering a product on the free market, he is
competing for our favor. He has no right to compel us to buy his product,
which is what is happening when compulsion is used to add a tariff to his
competitor’s product. He only has the option to make a good enough product
that we will find it to our interest to buy it at his price. His employment in this
line of work is conditional upon our consent. He only has a right to work in
that field, if we choose to buy his product. He has no right to make a product
and demand that people buy it or force them to buy it.
Yet that is what tariffs are. They constitute a demand by the producer of the
good that he has a right to be employed in that line. If people prefer another
product, he will interfere with their freedom by taxing (a tariff) or banning (a
quota) that product. People who infringe on the freedom of others have no
moral claim to it themselves109.
108
...which can be more easily infiltrated and manipulated than thousands and thousands of producers
and customers...
109
Pure self-interest thus becomes, in Locke’s formulation, the sole basis for the establishment of the
state. Society properly becomes materialistic and individualistic because, Locke maintains, reason leads us to
conclude that this is the natural order of things. By the law of nature, each individual is called upon to act out his
role of social atom, careering through life, attempting to amass personal wealth, even at the expense of other
people. There is no moral judgment to be made here: self-interest is simply the only basis for society.
119
When the US Government imposes a tariff on Japanese goods, it is hurting

American consumers of those goods in order to benefit the American
producers. Modern liberals often talk about autarky as though it were a
problem of international relations and as though each nation gained a benefit at
the other’s expense when it imposes restraint on trade. But the example above
of the completely isolated Manhattan shows that this reasoning is in error.
When America imposes a tariff on Japan, it is sacrificing the large majority of
American consumers to the minority or American producers; when Japan
retaliates with a tariff, it is sacrificing its Japanese consumers to the Japanese
producers. Two nations erecting tariff barriers against each other are each
cutting off its nose to spite its face.
Tariffs began when a criminal gang acquired additional power and became a
feudal dukedom and then realized that, rather than rob the merchants who
passed by all at once, it was better to rob a fixed percentage each time and
leave the merchant enough to stay in business and come back next year. Tariffs
are a complete triumph of might over right - totally unjustifiable, but a tribute
to the stubborn conservatism with which the human race clings to any and all
institutions. Modern autarky is another proof that patriotism is the last refuge
of a scoundrel. When these people urge us to buy American, they are claiming
both our wealth and our freedom as a sacrifice to their interests.
H. Katz: The Warmongers, Appendix I (Autarky versus free trade) pp. 249-
254.
Besides, when all countries start to take protective measures, then this will result in economic
warfare, which could even escalate into a real military war.
Moving ahead to consider World War II, it appears at first glance that there
were real reasons for fighting, unrelated to paper money. Hitler was an evil
man with aggressive designs. He had to be stopped. But a close look will show
us a more complex situation; first consider the Pacific theater.
The US-Japanese sector of World War II was caused by a third110 aspect of
paper money, relating to international trade. Governments can force their own
citizens to accept paper as a legal tender, but they are not able to force
foreigners to accept it. This creates a problem; when I sell something to a
citizen of another country, what should I ask from him in payment?
If both countries are on a gold standard, the problem is solved. For example, if
the US $ is 25.8 grains of gold and the French franc is 5.16 grains of gold,
clearly five franc equal a dollar. If I sell something to a Frenchman, then I must
ask five times as many francs from him as I would ask dollars.
But if the countries are not on the gold standard, the problem is more complex.
The franc will still have value to some Americans – those who wish to import
from or travel in France – and I can sell the francs to those Americans, but it is
not clear what they will pay me. What they will pay depends very much on
how badly they want the French goods. In this case there will be a market
where people exchange foreign money, and the number of francs which are
110
The first and second aspect will be discussed in a later section of this chapter.
120
equal to one dollar will vary from day to day according to supply and demand
(depending on how many people want to buy French goods and what French
prices are doing relative to American prices). On one day a franc might
exchange for 19 cent, on another day for 18 cent, or again for 20 cent.
Because the rate of exchange varies from day-to-day this is called a system of
floating exchange rates, as opposed to a gold standard where the exchange rate
is fixed.
The system of floating exchange rates brings extensive vested interests into
play as follows. Suppose I am an American steel producer selling steel to
people in California for $300 per ton. Suppose a Japanese steel producer can
make and ship steel to California, allowing himself a reasonable profit, for
100,000 yen a ton. If the exchange rate between dollars and yen is 500 yen
equals one dollar, then the Japanese firm can charge 200 dollars a ton and
undersell me in the California market. He will get the business, and I will not.
On the other hand, if the exchange rate is 200 yen equals one dollar, he will
have to charge 500 dollars per ton to make the same profit. Thus I can
undersell him and get the business. The same reasoning applies to many other
products. Clearly it can be very important to businessmen in both countries just
what the exchange rate is, and when the rate is fluctuating every day, it
drastically affects their profits.
When a business suffers a disadvantage because of fluctuation in the foreign
exchange rate, it is likely to run to the government to ask for a special favor to
offset the disadvantage. In the example above, where the exchange rate was
disadvantageous to the Japanese firm, their government gave them special
subsidies (taken from the rest of the Japanese people) to enable them to sell
steel at competitive price in America. When the exchange rate is in the other
direction, the American firm is likely to ask that a special tax be put on all
goods coming from out of the country – a tariff – or ask that the quantity of
goods coming from outside be limited by law – a quota. It does not matter that
tariffs and quotas injure the American consumer by forcing him either to pay
more for foreign goods or to buy higher priced American goods. Even though
many more consumers are injured by tariff and quota legislation than
producers are helped by it, Congress rarely fails to put the special interests of a
particular industry above the interests of the American people in this regard.
Under a system of floating exchange rates, international trade becomes a cut-
throat business. First the exchange rate moves; then injured businessmen in
one country demand a subsidy to compensate. Elements in the other country
retaliate with a quota. Then the rate moves back, but the producers do not want
to give up their subsidy. People yell “unfair competition”. There is a general
rising of tempers as these groups discover that their basic interests are in
conflict.
The raising of tempers does nothing to aid international harmony, but there is a
worse effect. In a period of floating exchange rates and increasing tariffs and
quotas, nations which are self-sufficient may suffer a reduction in their
standard of living. But nations which are not self-sufficient are put in an
impossible bind. A country that cannot produce enough food for its people,
like Japan or England, must sell manufactured goods abroad in order to pay for
the goods it imports. If foreign countries prevent this by a barrier of tariffs or
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quotas, the country will starve. In that case it may resort to war to conquer
agricultural areas so that it will be assured of a food supply.
Cordell Hull, Secretary of State under F.D. Roosevelt, was well aware of this
phenomenon as he stated: “Unhampered trade dovetailed with peace; high
tariffs, trade barriers, and unfair competition with war. Though realizing that
many other factors were involved, I reasoned that, if we could get a freer flow
of trade – freer in the sense of fewer discrimination and obstructions – so that
one country would not be deadly jealous of another and the living standards of
all countries might rise, thereby eliminating the economic dissatisfaction that
breeds war, we might have a reasonable chance of lasting peace.”
Richard Gardner tells us: “He [Hull] had written to Secretary of State Lansing
that the chief underlying cause of the conflict which began in 1914 could be
found in the strenuous trade conquests and bitter trade rivalry being conducted
prior to the outbreak of the war”.
H. Katz, The Warmongers, pp. 69-71.
Howard Katz illustrates the relation between economic rivalry and war as follows:
This factor was a contributing cause of World War I, which we did not
examine as it did not relate to American entry. Let us now consider it in
relation to World War II. When a country isolates itself economically by
tariffs, quotas and the like, it is in a condition called autarky. In the Dark Ages
every village or castle lived in autarky; that is, they had no economic
intercourse with their neighbors.
Japan is an industrial nation which does not grow enough food for its people. It
must sell its products abroad in order to pay for food and raw materials. In the
early 1930s the western nations abandoned the gold standard (England in 1931,
the USA in 1933, France in 1935); there followed a period of floating
exchange rates and increasing autarky. As Noam Chomsky points out:
“Western economic policies of the 1930s made an intolerable situation still
worse, as was reported regularly in the conferences of the Institute of Pacific
Relations (IPR). The report of the Banff conference of August 1933 noted that
“the Indian government111, in an attempt to foster its own cotton industry,
imposed an almost prohibitive tariff on imported cotton goods, the effects of
which were of course felt chiefly by Japanese traders, whose markets in India
had been growing rapidly.... Japan, which is a rapidly growing industrial
nation, has a special need for mineral resources and is faced with a serious
shortage of iron, steel, oil, and a number of important industrial minerals under
her domestic control, while on the other hand, the greater part of the supplies
of tin and rubber, not only of the Pacific area but for the whole world, are, by
historical accident, largely under the control of Great Britain and the
Netherlands”. The same was true of iron and oil, of course. In 1932, Japanese
exports of cotton piece-goods for the first time exceeded those of Great Britain.
The Indian tariff, mentioned above, was 75 percent on Japanese cotton goods
and 25 percent on Britain goods. The Ottawa conference of 1932 effectively
111
Still a British colony at that time!
122
blocked Japanese trade with the Commonwealth, including India. As the IPR
conference report noted, Ottawa had dealt a blow to Japanese liberalism.
Japan did not have the resiliency to absorb such a serious shock to its
economy. The textile industry, which was hit most severely by the
discriminatory policies of the major imperialist powers, produced nearly half
of the value of manufactured goods and about two thirds of the value of
Japanese exports, and employed about half of the factory workers... It was in
no position to tolerate a situation in which India, Malaya, Indochina and the
Philippines erected tariff barriers favoring the mother country, and could not
survive the deterioration in its very substantial trade with the United States and
the sharp decline in the China trade. It was, in fact, being suffocated by the
American and British and other Western imperial systems, which quickly
abandoned their lofty liberal rhetoric as soon as the shoe began to pinch.
England, like Japan, is an industrial nation, which cannot grow enough food
for her people and must sell manufactured goods in order to buy food from
abroad. England dealt with the problem of autarky by a policy of imperialism –
conquering weaker countries around the world and using them as sources of
food. This provides a convenient excuse for war, which in turn will create a
need for paper money. It is not surprising that 20th century Japan adopted the
policy of 18th and 19th century England – securing trading areas by military
conquest of weaker countries. Americans have been taught that Japan was the
aggressor in World War II; this is true, but the US did not exactly lure her to
the side of peace. William L. Neumann points out:
“When an effort to set a quota on imports of bleached and colored cotton
cloths failed, President Roosevelt finally took direct action. In May of 1936 he
invoked the flexible provision of the tariff law and ordered an average increase
of 42 percent in the duty on these categories of imports. By this date Japan’s
cotton goods had begun to suffer from other restrictive measures taken by
more than half of their other markets. Japanese xenophobia was further
stimulated as tariff barriers rose against Japanese goods, like earlier barriers
against Japanese immigrants, and presented a convincing picture of western
encirclement. The most secure markets were those which Japan could control
politically; an argument for further political expansion.”
Japan conceived the idea of the Greater East Asia Co-prosperity Sphere, a free
trade zone in eastern Asia wherein Japan would provide the manufactured
goods and several other countries would provide the food and raw material –
under Japanese domination of course. Royama, a leading Japanese liberal of
the time, wrote that his country’s aim was: “... not to conquer China, or to take
any territory from her, but instead to create jointly with China and Manchukuo
a new order comprising the three independent states. In accordance with this
program, East Asia is to become a vast self-sustaining region where Japan will
acquire economic security and immunity from such trade boycotts as she has
been experiencing at the hands of the Western powers.”
We begin to see that the Pacific theater of World War II might have been
avoided had the Western powers, including the US, not imposed trade
restrictions, including the closing of the Californian market, on Japan. Political
pressure to close this market stemmed directly (in the manner described above)
from the abolition of the gold standard in 1933.
123
In fact, we can go further and state that Japan not only could have dissuaded
from making war on America: she positively had to be dragged kicking and
screaming into the attack on Pearl Harbor. Many Americans wondered at that
time (and subsequently) whether Japan was crazy? How would she hope to
defeat the USA? Japan was not crazy. Here is the story112.
Japanese expansion was blocked by what she called the ABCD countries -
America, Britain, China and the Dutch – three of which were enemies of
Germany; so Japan allied with Germany on the principle that the enemy of my
enemy is my friend. Meanwhile investigations by the Nye and Pujo
Committees here in the US brought out many facts surrounding the US entry
into World War I. This created a large isolationist sentiment, a group of
Americans who would no longer believe their government and who were
violently opposed to any American involvement in a European war.
As Roosevelt began to realize the importance of stopping Hitler113, he was
faced with the fact that a substantial body of opinion would simply not believe
him. And we can be sure that this isolationist sentiment (which had a good
historical foundation in America’s traditions) was encouraged by Nazi
sympathizers. Although this was not a majority, Roosevelt knew enough not to
try to take a divided country into war with Germany – exactly the policy which
had been such a disaster two decades before.
It would be nice to say that FDR heroically rose to the challenge and rationally
persuaded the American people of the evil of Hitler and of the essentials
difference between World War I and World War II. But this is not the case.
Roosevelt chose to get into a war with Germany through their alliance with
Japan.
By one restrictive action after another, he began to block Japanese plans for
expansion in the Far East, confronting them with the alternative: make war on
America or give up the entire plan for the Greater East Asia Co-Prosperity
Sphere. At the same time he left Pearl Harbor unprotected as an inviting target
– hoping that the Japanese would take the bait and pull a sneak attack as they
had done to initiate the Russian-Japanese war. Three days before Pearl Harbor
the New York Times commented editorially:
“Japan is facing international economic siege and she is very vulnerable...
Scarcely able to sustain herself in foodstuffs, she is heavily dependent upon
imports of other raw materials. For such industrial and military necessities as
petroleum, iron, steel, aluminum, lead, zinc, copper, tin, machine tools, wool
and cotton she relied chiefly upon the United States, the British Empire and the
Netherlands’s Indies, nations which are now enforcing against her a rigid
economic blockade.”
112
See also http://www.geocities.com/Pentagon/6315/pearl.html and Noam Chomsky, Failed States, p.
84, where he describes that by November 1940, more than one year before Pearl Harbor, the USA had already
made plans to bomb Tokyo and other big cities in Japan – cities made of rice-paper and wood – with fire-bombs,
and “that there would be no hesitation about bombing civilians”.
113
Hitler signed Germany’s death warrant when he prohibited the withdrawal of funds from Germany
except in very small annual amounts. This act was tantamount to confiscation of foreign capital, and the big
industrialists moved to retaliate.
124
Admiral Theobald, in his book The Final Secret of Pearl Harbor, explains that
the US Intelligence had cracked the Japanese code prior to World War II. A
select number of machines had been built (the Purple machines) to decode the
Japanese messages. The messages sent from Tokyo to the Japanese embassy in
Washington in November and early December 1941 – all available to
Roosevelt – leave no doubt in the mind of any reasonable person that an attack
was planned. Yet Pearl Harbor, a point of obvious vulnerability, was not
warned and was not even given a Purple machine.
The commander of Pearl Harbor would have done better to have read the New
York Times than to have waited for orders from Washington. Interviewing an
American diplomat involved in the Japanese negotiations in his column for
December 4 1941, Arthur Krock asked: “How would you state the prospects
now?” and received the answer: “It is conceivable that the Japanese will move
aggressively at any time.” The Times of Sunday morning, December 7th, would
have told him that civilians were being evacuated from Manila (like Honolulu,
then the capital city of an American territory) and the paper of December 1st
would have brought him the opinion of the First Lord of the British Admiralty
that there existed “very grave danger that the war at sea may extend to the Far
East... if Japan breaks with and attacks the United States...”
If the American people did not know Roosevelt’s intentions, the Japanese
leaders did. They must have reasoned as follows: Roosevelt wants to fight
Germany. If we strike first and deal a knockout blow to the US Pacific Forces,
Roosevelt will have his German war. Then he will be anxious to make peace
with us so he can concentrate on Europe. We can negotiate favorable terms
with America which allows us the flow of raw materials we need to continue
our Asia Wars. Dangerous? Yes, but there was little alternative. Roosevelt had
just cut off Japan’s source of scrap steel; she had only 15 months supply. Oil
was crucial. While the business or labor elements which had originally
supported the Greater East Asia Co-Prosperity Sphere might have been willing
to abandon it had they known that it would involve war with the United States,
control had passed to dedicated militarists who were not willing to make such a
decision. This is the reason America fought the Pacific theater of World War
II.
Unfortunately, these facts, well known to serious students of the subject, are
not taught in our schools. Too many people are unwilling to believe that their
hero, Franklin D. Roosevelt, deliberately let thousands of American soldiers
die in a surprise attack, of which he had advance knowledge. Those who
purposely close their eyes to reality are like sheep, destined to die for someone
else’s end. Americans who would not face the truth about World War I died
unnecessarily in the Pacific theater of World War II and in Vietnam114.
And if we of the present generation are not ready to face the truth as it is
(rather than as we wish it to be), in a few years we will again be dying in an
unnecessary war to further the goals of someone who wants to take away our
freedom.
114
Afghanistan, Iraq…
125
Or as Santayana has said: “Those who do not remember the past are condemned to relive it”.
In the next section we will explain how a war can be “financed”.
7.4 Inflation and its relation with war – Cui bono?
We have discussed already the “why” of war based on our economic model and the
Malthusian world view. When needs for products and services reach a certain level of
saturation so that people no longer buy more and more, or people still in need do not have the
purchasing power, then economic growth will stagnate, so money can no longer create
money. In that situation, a war can be used in order to reduce, next to the level of population
(Malthusianism), also the level of capital invested (destruction = disinvestment) and, at the
same time, to return the society to a level where there again are basic needs and thus potential
for growth: the profit-ratio will increase and money can once more create money. By the
introduction of protectionistic measures like tariffs and quota, governments try to protect the
own already saturated market for the benefit of the own producers. Countries depending on
the export of manufactured goods in order to pay for their import of energy, raw materials and
food are cut from their markets. They are then faced with the choice of internal social
conflicts, which can jeopardize their internal power structure, or an external conflict, in which
the aggression is ventilated toward the outside world.
We have already a presumption of who will benefit from a war in the first place. But how do
these people succeed in leading a society into such an adventure? One instrument is of course
war propaganda and the manipulation of the media in order to deceive the people about the
real nature of the war. Indeed, economic recession and unemployment are the perfect soil for
nationalism, racism, extremism and fascism. It is rather easy to point to an external enemy as
a scapegoat.
… and in all times. May the lights in the land of plenty shine on the truth some day…
126
The psychological base of war115.

There is a belief – widespread in our society – that feeling any emotion of
hostility is a wrong or immoral thing. People who accept this belief do not like
to admit their hostile emotional states, even to themselves. Such a person will,
of course, feel anger and hate. Human emotions are automatic responses to the
outside world. If a man perceives something which is evil and a threat to his
values, hostility (and often fear) is automatic. It is part of his make-up as a
human being.
Such responses are not in themselves bad. In a good person the hate will be
directed at the evil and will act as a psychological motive for him to fight the
evil and preserve his values. But when people deny their hate, pretending to
themselves that it does not exist, then the hate ceases to be under rational
control.
The most familiar example of this is the man who grovels before his superiors
and takes out his aggression on his subordinates or his wife and children.
Instead of feeling hate for the person who has caused his frustration, he simply
hates the weakest available party116. This is not in accord with justice. It is not a
rational policy; and it will do nothing to deter future frustration. But this man
cannot subject his hate to a rational process because he will not even admit that
it exists. One may see many examples of this type in the Armed Forces.
Another example may be found in certain members of minority groups who are
servile to those who have the power in our society and take out their hostility
in criminal acts against random passers-by. Again this does nothing to deter the
injustice to which these groups are often subject.
The result of this is that a huge number of people are walking around with
irrational hostility – a free-floating hate caused by events in their personal lives
but not directed at the rational object of their frustration. If a politician can
reach out and channel that hate, he will strike a deep public chord and win a lot
of support.
The following method for channeling hatred has a long and successful history:
“Look out there”, the politician says, “There is The Enemy. He is not like us.
He harbors vicious and aggressive designs against us. He is evil.”
If one studies history, one is struck by the number of times that this syndrome
dominated countries so that each of them became the Enemy to the other. Each
element in the syndrome has a function:
115
116
Immigrants, people with another skin color, another religion…
127
The enemy is outside: This allows the politician to unite all elements of the
society. There is no one to fight back.
He hates us: This alleviates the guilt which people feel because
the truth is the opposite, and the essence of this kind
of personality is the belief that any hatred is immoral.
He is different: Thus easier to hate. Again one is struck by the

frequency with which countries fight those who are
similar to themselves. The Germanic tribes of
Western Europe, all basically similar in culture, who
have bitterly fought each other since they overran the
Roman Empire are one example. The Greek city-
states are another.
He is evil: Thus worthy of hate.
But in order to convince the own population that the enemy is outside, that he hates us, that he
is different and that he is evil is one thing. To finance a war is quite another thing.
7.5 A 1st mechanism to get hold of the wealth of the common people:
Inflation.
7.5.1 On the origin of paper money – Cui bono?
During the Middle Ages gold and silver coins where used as means of exchange in the
economic system. The very rich people did not keep their money at home, but with a
goldsmith. For the rent of space in a safe they paid a fee to the goldsmith. In return they
received a certificate on their name, which they could use as proof of their credit-worthiness
in an economic transaction. They also had to pay a fee for every deposit or withdrawal they
made on their account.
But in order to complete an economic transaction, the gold and silver had still to be physically
transported from the goldsmith of the buyer to the goldsmith of the seller. And then there
where people like Robin Hood, who robbed the money transports.
The goldsmiths got the idea to issue certificates on bearer. This dramatically reduced the
physical transport of gold and silver, as the people started to use those certificates instead of
the real money as means of payment. They did this in the knowledge that they could always
exchange the certificates for real money – gold and silver – with the goldsmith who had
issued them.
128
The goldsmiths noticed that the people did not bother to collect the gold and silver anymore,
and that their income on deposits and withdrawals had declined drastically. So they got the
idea to issue more certificates than they had coverage in precious metals. They could not use
these extra certificates themselves; this would be a too obvious fraud. And there were always
people who collected part of their real money in deposit. No, the goldsmiths printed 5 times
more certificates than they had coverage117, and lent these at a certain interest to people in
need of money. So they earned money on something they did not own. One can raise
questions on the morality of this practice, but the system seemed to have a positive effect on
the economy, as it induced economic growth. This mechanism is probably one of the triggers
for the Industrial Revolution, next to the following topic.
7.5.2 On the origin of democracy
In those days the aristocracy was the power-structure in society. The king or the local
aristocracy autonomously decided on the level of taxes the people had to pay. Very often they
used the technique of re-minting: gold and silver coins collected as taxes were melted, a less
precious metal was added and new coins were stamped. So they could spend more money
than they had collected as taxes. Inflation was created. They did this in order to increase their
budgetary capacity, e.g. in order to finance a war against another king, the payment of the
administrative, juridical and military apparatus needed in order to guarantee that the
population paid the taxes to the aristocracy.
In England something happened which could very well have reshaped the course of history in
a dramatic way. The people revolted against King Charles I, who was decapitated (1642), and
they installed a republic with an elected parliament. During this republican period under
Cromwell there was a real tyranny, very much similar to the period of Robespierre in France
after the French Revolution. People were induced to spy on each other, and a lot of innocent
people were executed. After some time, the people of England decided to return to the
monarchy, but under the condition that the new king would accept the Bill of Rights. This Bill
stipulated that the power of the king should be subordinate to the authority of the Parliament,
chosen by and representing the people – well, part of the people as only the well-off citizens
could vote.
This king William started – as was the tradition in those days – a new war with France. But
the war was dragging along and cost a lot of money. At a certain moment William was short
of money, so he asked the Parliament for a tax increase. The people grumbled and were more
than sick of the never-ending war, so the elected members of Parliament were only willing to
vote a tax-increase of three million pounds. The king was still in need of two million pound
more. He tried to borrow the remaining sum, but could only raise half of the amount, forcing
the interest rates to very high levels.
So King William was faced with a big problem. In 1691 a certain William Paterson got the
brilliant idea to start with a central bank in order to manage the monetary affairs of the king.
A starting capital of 72,000 pounds in gold and silver was collected, and then the bank printed
162/3 times more paper certificates than they had coverage, for an amount of 1,200,000 pound.
That money was lent to the king at an interest of 81/3%. The yearly interest, 100,000 pound,
was thus greater than the originally invested capital!
117
This was the start of the fractional reserve banking system which is still “common practice” in these
days, and the cause of a lot of calamities in the financial world, especially for the public who has a blind faith in
what the banks are advising them.
129
The king could continue his war with France by spending the lent money on warships,
weapons, ammunition, horses, paying the soldiers, food for the horses and the soldiers. But
against this sudden influx of money in the economic system, there was no similar increase of
economic production, and according to the law of supply and demand prices started to soar
up, so also the cost of living of the common people. There was a hyperinflation.
The population recognized that they could buy less with that paper-money. They lost their
confidence in those certificates. So they went to the goldsmiths – who in the mean time had
become bankers – in order to exchange the certificates for real gold and silver. The ones who
came first were lucky, and then there was no more gold and silver in the safes of the bankers,
so the banks went bankrupt. The first central Bank of England also crashed.
You see, hardworking people who produced real economic value, who provided jobs to
others, who paid taxes and then also tried to save some money for their old age, well these
people were taken in. Just as in 1929 and 2008. What is the difference between a hedge fund,
that loans money in order to speculate on the stock market, and a bank that issues more loans
than it has deposits?
Morality of the story so far: when people can decide in a rational way to go to war or not, and
when they are directly confronted a priori with the real cost of a war, then people are more
peace-likely, just for economical reasons. But since those times, wars have always been
indirectly financed by the creation of paper money out of nothing, and lending this money to
those in authority. The creators of the money earned a lot, so those in authority, who
supported this mechanism, could also have some part of it in order to finance their (re-)
election campaign. The common people where confronted with inflation, their savings were
eroded. They paid for the war in an indirect way during the war and long after the war was
over, as their money lost its original value.
In England and the USA, the Bank of England118 and the Federal Reserve are private banks,
with a private shareholder structure. In other countries, fortunately, the central bank is under
political and social control, and the creation of money follows more or less the real economic
evolution.
Only two presidents of the USA have ever tried to stop this mechanism of creating money out
of nothing, by pulling the authority of issuing money to the government, away from the
private central bank, as is even stipulated in the 16th amendment of The American
Constitution: Abraham Lincoln and J.F. Kennedy. You know what happened to both of them.
Under the British mercantile system, the colonies were supposed to supply raw materials like
cotton, which were then processed in the English mills into fabrics, which where then
exported, so the British Isles could pay for the import of their food and other necessities.
Control over cotton in those days was considered just as crucial as control over oil in these
days119.
118
The Bank of England was nationalized in 1946, but since then dividends were still paid to private
shareholders. The nationalization could go along as in 1944 the International Monetary Fund and the Bank for
International Settlements were established during the conference of Bretton Woods: the mechanism of creation
money out of nothing was lifted to a global level.
On the website http://www.prosperityuk.com/prosperity/articles/kerby.html you find the story of a bill
proposed by Captain Henry Kerby in the British House of Commons on December 22nd 1964 in order to
withdraw the power to issue money from the Bank of England and to bring this under the authority of the
government.
119
Noam Chomsky, Failed States, P. 93.
130
One of the first things President Lincoln did after he came to office, was to close the USA
borders from free trade in order to stimulate the domestic industrial production120, against the
economic and financial interests of the British mercantilists. In that time money was issued by
private banks in the United States. Lincoln decided that money should be issued by the
government: the famous greenback notes. The two measures resulted in his death. He was
shot by John Wilkins Booth. What was the motive for this murder and who was behind
Booth? On the website http://home.att.net/~rjnorton/Lincoln74.html six theories are
formulated, and it is very well possible that the truth is a combination of two or more of these
theories.
The fourth theory is rather interesting:
Lincoln’s assassination was the result of a conspiracy of powerful international
bankers.
This theory is that Abraham Lincoln was killed as a result of his monetary
policies. John Wilkes Booth would be seen as a “hired gun”. In its simplest
terms, the theory is that Lincoln needed money to finance the Civil War. He
was offered loans at high interest rates by bankers in Europe led by the
Rothschilds. Rather than accept the loans, Lincoln found other means to fund
the war effort.
More importantly, the British bankers opposed Lincoln’s protectionist policies.
Some Englishmen in the 1860s believed that “British free trade, industrial
monopoly121 and human slavery travel together.”
Lincoln’s policies after the Civil War would have destroyed the Rothschilds’
commodity speculations. After the war, Lincoln planned a mild Reconstruction
policy which would have enabled a resumption of agriculture production. The
Rothschilds were betting the other way on high prices caused by a tough
reconstruction policy toward the South.
Lincoln was viewed as a threat to the established order of things, and he was
assassinated as a result. The goal was to weaken the United States so the
Rothschilds could take over its economy. An article titled “The Rothschilds’
International Plot to Kill Lincoln” was published October 29, 1976, in New
Solidarity.
120
In India Mahatma Ghandi introduced the spinning wheel in every household and stimulated local salt
production from sea water. He was shot too.
121
As advocated by the British East India Company.
131
In the early 1960s President J.F. Kennedy was reluctant to send more ground troops to
Vietnam. He also took the decision that the government should issue the money, backed by
the value of silver122. He was shot too by…, well yes, by whom? According to the Rolling
Stones in their song Sympathy for the Devil: “After all, who shot the Kennedy’s, it was you
and me”. Actually the system you and me have been born in, living in, the system that we
have to endure.
On the website http://www.john-f-kennedy.net/thefederalreserve.htm you can find an article
written by Anthony Wayne on this matter. Here are some highlights.
On June 4, 1963, a virtually unknown Presidential decree, Executive Order
11110, was signed with the authority to basically strip the Federal Reserve
Bank of its power to loan money to the United States Federal Government at
interest. With the stroke of a pen, President Kennedy declared that the
privately owned Federal Reserve Bank would soon be out of business. The
Christian Law Fellowship has exhaustively researched this matter through the
Federal Register and Library of Congress. We can now safely conclude that
this Executive Order has never been repealed, amended, or superseded by any
subsequent Executive Order. In simple terms, it is still valid…. “United States
Notes” were issued as an interest-free and debt-free currency backed by silver
reserves in the U.S. Treasury.
Source:
http://usrarecurrency.com/1963$5UnitedStatesLegalTenderNoteSnA51298086
A.htm
122
http://www.john-f-kennedy.net/thefederalreserve.htm
132
1963 $5 United States Legal Tender Note FR-1536 (front and back)
The silver-backed dollar notes were characterized by the red serial number.
President Kennedy was assassinated on November 22nd 1963, and the United States Notes he
had issued were immediately taken out of circulation. Since then the Federal Reserve Notes
continued to serve as the only legal currency of the nation. According to the United States
Secret Service, 99% of all U.S. paper “currency” circulating in 1999 are Federal Reserve
Notes.
7.5.3 Motives for war versus forces for peace
Let us return to the England of the 17th century. Once the king could no longer determine the
level of taxation, but this was decided by an elected parliament, the common people refused to
pay higher taxes in order to finance a war.
At this point we can begin to see the operation of an important social force.
When democracy entered the history of a major European power – most
particularly establishing the principle that the people could only be taxed
through their elected representatives – it acted as a force for peace. It did not
do this for any idealistic reasons. There is no evidence that the 17th century
English were less warlike than other peoples. They loved the bands and the
parades and the uniforms of war; they hated the outsider; they erased from
133
their minds the suffering of their countrymen and glorified the killing of the
enemy – just like all other people of that time and this.
Where democracy acted as a force for peace was not in regard to any spiritual
motives, but in the very practical motive of cost. War is expensive. War, in
effect, is mass destruction. Every war must be paid for, and it must be paid for
by the people of the country doing the fighting (wars financed by loot and
booty being a figment of some militarist’s imagination). Under a monarchy or
dictatorship the people have no say over expenditures. Taxes are seized from
them against their will. But in a democracy they vote (or choose
representatives who vote) their level of taxation.
The people’s seizure of political power coupled with the average person’s
unwillingness to pay the cost of war showed itself in 1693 to be an important
new political force – a force for peace. It could have brought a new era to
world history. But a method was found to circumvent this force...
The British Parliament of 1693 was up against a new political force. Politicians
had discovered the people’s unwillingness to pay for war. The solution was to
deceive them about the costs...
At this point a new motive for war has been created. The government is
desperate for funds and is willing to resort to unsound financial methods –
methods which could not be tolerated in peace. The banker creates money out
of nothing, lends it to the government and profits from the interest. War is of
great financial interest to the bankers.
The perceptive reader may raise an objection: “I see how the king got the
money he needed. But after all, war is not fought with money. What are needed
are real goods: horses, arms, foods, transportation, etc. If we could create real
goods by simply printing paper notes, then, in war or peace, why should
anyone bother to work? Paterson provided the paper notes for the war, but who
provided the real goods?”
The answer is that the English people of the time provided them: the same
people, who through their elected representatives had refused to provide the
goods via taxes, wound up providing them through the paper money.
When the king spent William Paterson’s Bank of England notes, using them to
acquire real wealth, then that much wealth was taken from the people of
England. When they went to their markets, they found that a given amount of
money would buy less. In short, there was a deprecation of their currency.
Here we have a second motive for war, or more precisely, the removal of what
would otherwise be a motive for peace. Bank issues of paper money hide the
cost from the people. In the final analysis the people must pay for the war123;
there is no one else who can manage such sums. When the war is financed
through taxation, the cost is presented to each person in advance, and he is able
to make a rational decision: is this war, and the benefits to be gained from it,
worth the additional burden?
But when the war is financed by depreciating the currency via paper money,
the true cost is hidden from the people and becomes apparent only afterward.
123
And the financial and economic crises.
134
In this case, the costs are not judged according to a rational standard; rather
people act on the basis of emotions and mystical notions of power and glory.
Thus, paper money provides a motive for war in two ways124:
• The true cost of the war is hidden from the people so that they cannot make a
rational decision whether or not to bear it.
• Through the operations of paper money the bankers make huge profits. Since very
large paper issues are only associated with war, then if the banker can foment a
war, he can enjoy these profits.
The principle of 1693 was continuously repeated. In the history of nation after
nation, subsequent to the attainment of democracy, the people never
shouldered the costs of a war in the direct and rational form of taxation. It was
always imposed on them by deception via paper money.
Thus there is a close correlation between paper money and war...
H. Katz: The Warmongers, pp. 14-21.
So far Howard Katz in his revealing book The Warmongers125. In this book he gives a
complete overview of the wars in which the United States of America were involved until
Vietnam. He reveals for each of these wars who has had the most financial advantage and at
whose expenses. He also analyzes the Cold War politics and clearly shows who is really in
control behind the curtains. At the end of his book he gives a very interesting discussion on
the American Constitution, how it was carefully designed in order to avoid all the abuses of
power by the aristocracy in medieval Europe, where people were exploited by their own
rulers, and how the Constitution was violated each time America was involved in a war, under
the pretext that it was necessary to sacrifice individual freedom for the general good, to
protect the free world against foreign aggressors.
In America there are two kinds of law. There is the ordinary law, made by the
government and acting as a constraint on the people, telling us that we must do
this or that and threatening us with penalties if we do not comply. But there is
another law, the people’s law which operates on the government, that is, the
Constitution: the people made the Constitution to act as a constraint on the
government, telling it what it may do and threatening its officials with
penalties126 if they do not comply.
In addition to providing the moral basis for government, the process of framing
principles in a constitution and leaving the application of those principles to a
continuing body has a further advantage. It allows the question of government
to be considered in the manner conducive to the most effective use of the
human mind – the framing of abstract principles according to rational
considerations and the deduction from those principles of specific application
to meet specific circumstances. Perhaps this is why, when we look at the
124
The third one has already been discussed: autarky, combined with floating exchange rates of
currencies whose value is no longer related to the gold standard.
125
See also Batra, The Great Depression of 1990, pp. 14-20
126
Impeachment.
135
provisions of the US Constitution, we are struck by their genius, and when we

look at the times in history when we have deviated from the Constitution, we
are ashamed and apologetic. Most particularly, war is a time when the human
mind is at its worst. Every war generates a wave of emotion which blots out
rational action. This is relevant to an anti-war movement because the
Constitution contains a number of provisions designed to guide the nation to
war in the most rational way, provisions which are routinely flouted in a war
manufactured by the banker-conspiracy to help subordinate us. These are:
1. the prohibition of paper money;

2. the requirement that Congress declare war127;
3. the absence of any Federal conscription power;
4. the militia system.
H. Katz, The Warmongers, p. 228-229.
By the way, would it not be possible to finance our pram-industry in the same way as the king
of England financed his war? Buckminster Fuller claims that the Cold War was invented and
fomented after the Second World War in order to justify the very expensive nuclear research
and the arms race – both very profitable for certain groups in society – in the eyes of the
people in the western world. It was indeed after the Second World War that the United States
abandoned their traditional policy of isolation and neutrality – as stipulated in their
Constitution. At that time they did not disbanded their army as they have done after previous
wars. Now we can fully understand the evolution of the purchasing power of the American
dollar:
• The large deprecations are the result of manipulation of the dollar by using paper
money in order to hide the cost of war from the people and at the same time to
withdraw purchasing power – real wealth – from them to finance the war. Before
the Second World War America has disbanded its army after every war and has
returned to the militia system and to the gold standard, so the purchasing power of
the dollar was restored at the same level as before the war.
• The continuous erosion of the purchasing power of the dollar since the 1930s is
due to the manipulation of the dollar, not only to hide the cost of several wars to
the tax-payer, but also to finance the Cold War arms race and to hide the cost of
keeping an enormous army and secret service operational worldwide. Not only the
American people have paid for the arms race, but the whole western world, as the
dollar is generally accepted in international trade (for how long?).
From this discussion we have learned that inflation is a perfect instrument in order to siphon
off purchasing power from one subsystem in society to another. In a situation of low or zero
economic growth, where there is no profit for society and thus no increase of purchasing
power for the society as a whole, and money can no longer create money, certain groups can
still acquire more purchasing power at the expense of others. They even succeed in creating
money out of nothing. These tactics are not so visible and violent as the one used in the old
127
... and not the president or the government.
136
days, when people were forced by their oppressors-rulers to finance the war and the army, but
they yield the same result: it still remains exploitation of one group in society by another.
Interestingly, two years after the establishment of the Bank of England the old
practice of coin clipping and alloying base metals with the gold – which had
gone one since virtually the invention of money – was ended by a reminting of
the debased coinage. With the new methods of exploitation in place, there was
no need for the old. Power to debase the currency thus passed from the king,
representing the old aristocracy, to the banker, representing the covert
aristocracy, and there it remains to this day.
H. Katz: The Warmongers, p. 41.
At this point we can once again formulate a conclusion: More democracy leads
to more peace. Reduction of democratic rights carries the seeds of war.
7.6 A 2nd mechanism to get hold of the wealth of the common people: Income
taxes.
Inflation is one method to get hold of the wealth of the common people in order to pay for the
war. But there are really no limits to the imagination of those in real control of geopolitical
affairs. Here is a second method: the introduction of income tax in the USA prior to the First
World War. Buckminster Fuller has described this in great detail in his book Critical Path.
The supreme leaders of the American Revolution were of the southern type –
George Washington and Thomas Jefferson. Both were great landowners with
direct royal grants for their lands, in contradiction to the relatively meager
individual landholdings of the northern Puritan colonists.
With the revolution over, we have Alexander Hamilton arguing before the
Congress that it was not the intention of the signers of the Declaration of
Independence that the nation so formed should have any wealth. Wealth,
Hamilton argued – as supported by Adam Smith – is the land, which is
something that belonged entirely to private individuals, preponderantly the
great landowners with king-granted deeds to hundreds and sometimes
thousands of square miles, as contrasted to the ordinary colonists’ few
hundreds of acres of homestead farms128.
Hamilton went on to argue that the United States government so formed
would, of course, need money from time to time and must borrow that money
from the rich landowners’ banks and must pay the banks back with interest.
Assuming that the people would be benefited by what their representative
government did with the money it borrowed, the people gladly would be taxed
in order to pay the money back to the landowners with interest. This is where a
century-and-a-half-long game of “wealth”-poker began – with the cards dealt
only to the great landowners by the world power structure.
128
Try to understand the American Civil War with this in mind.
137
Obviously, very powerful people had their land given to them by the king and
not by God, but the king, with the church’s approbation, asserted it was with
God’s blessing. This deed-processing produced a vast number of court
decisions and legal precedent based on centuries and centuries of deed
inheritances. Thus, landlord’s deed evolved from deeds originally dispensed
from deeds of war. Then the great landlords loaned parcels of their lands to
sharecropping farmers, who had to pay the landlords a tithe, or rent, and
“interest” out of the wealth produced by nature within the confines of the
deeded land. The landlord had his “tithing” barn within which to store the
grains collected in the baskets (fiscus is Latin for “basket”; thus the fiscal year
is that which winds up within the basketed measuring of the net grains
harvested). The real payoff, of course, was in regenerative metabolic
increments of the botanical photosynthetic impoundment of Sun radiation and
hydrocarbon molecules’ structuring and proliferation through other hydrogenic
and biological interaccommodations129. Obviously none of this natural wealth-
regenerating and -multiplying was accreditable to the landlords.
When I was young, there were people whom everybody knew to be very
“wealthy”. Nobody had the slightest idea of what that “wealth” consisted, other
than the visible land and the complex of buildings, in which the wealthy lived,
plus their horses, carriages and yachts. The only thing that counted was that
they were “known to be” enormously wealthy. The wealthy could do
approximately anything they wanted to do. Many owned cargo ships.
However, the richest were often too prone to live in very unostentatious ways.
Of course, money was coined and the paper equivalents of metallic coinage
were issued by the officers of banks of variously ventured private-capital-
banking-type land systems. Enterprises were underwritten by wealthy
landowners, to whom shares in the enterprises were issued and, when
fortunate, dividends were paid. “Rich” people sometimes had their own private
banks – as, for instance J.P. Morgan and Company. Ordinary people rushed to
deposit their earnings in the wealthy people’s banks.
For all the foregoing reasons nobody knew of what the wealth of the wealthy
really consisted, nor how much there was of it. There were no income taxes
until after World War I130. But the income tax did not disclose capital wealth. It
disclosed only the declared income of the wealthy. The banks were capitalized
in various substantial amounts considered obviously adequate to cover any and
all deposits by other than the bankers involved in proclaiming the capital
values. These capital values were agreed upon privately between great
landowners based on equities well within the marketable values of small
fractions of their vast king-deeded landholdings.
“The rich get richer and the poor get children” was a popular song of the early
1920s131. Wages were incredibly low, and the rich could get their buildings
built for a song and people them with as many servants for another song. But,
129
What Bucky is telling: added value is produced on Earth by the Sun in a pure natural way, something
no person or corporation ever can accomplish.
130
This may surprise you, but later on you will read the reason for this.
131
A contemporary version goes like this: “The poor stay poor, the rich get rich. That’s how it goes.
Everybody knows that the boat is leaking and that the captains lied.”
138
as with uncalled poker hands, nobody ever knew what the “wealthy” really
had. I was a boy in a “comfortable off” family, not a “wealthy” family – not
wealthy enough to buy and own horses and carriages. To me the wealthy
seemed to be just “fantastically so”.
This brings us to World War I. Why is it called the First World War? All wars
until this time had been fought in the era when land was the primary wealth.
The land was the wealth because it produces the food essential to life. In the
land-wealth era of warring the opposing forces took the farmers from the land
and made soldiers of them. They exhausted the farm-produced food supplies
and trampled down the farms. War was local.
In 1810, only five years after Malthus’s pronouncement of the fundamental
inadequacy of life support on planet Earth, the telegraph was invented. It used
copper wires to carry its messages. This was the beginning of a new age of
advancing technology. The applied findings of sciences brought about an era in
which there was a great increase of metals being interalloyed or interemployed
mechanically, chemically, and electrolytically. Metals greatly increased the
effectiveness of the land produced foods. The development of non-rusting,
hermetically sealed tin cans made possible preservation and distribution of
foods to all inhabited portions of our planet Earth. All the new technology of
all the advancing industry, which was inaugurated by the production of steel in
the mid-nineteenth century, required the use of all the known primary metallic
elements in various intercomplementary alloyings. For instance tin cans
involved tin from the Malay straits, iron from West Virginia mines, and
manganese from Southern Russia.
The metals were rarely found under the farmlands or in the lands that belonged
to the old lords of the food-productive lands. Metals were found often, but not
always, in mountains all around the world, in lands of countries remote from
one another. Mine ownerships were granted by governments to the first to file
claims.
It was the high seas, intercontinental, international trafficking in these metals
that made possible the life-support effectiveness of both farming and fishing.
The high-seas trafficking was mastered by the world around line-of-supply
controllers – the venturers and pirates known collectively as the British
Empire. This world-around traffic was in turn financed, accounted, and
maximally profited in by international bankers and their letter of credit, bills of
exchange, and similar pieces of paper. International banking greatly reduced
the necessity for businessmen to travel with their exported goods to collect at
the importers’ end. Because the world-around-occurring metals were at the
heart of this advance in standard of living for increasing numbers of humans all
around the world, the struggle for mastery of this trade by the invisible,
behind-the-scenes-contending world power structures ultimately brought about
the breakout of the visible, international World War I.
The war was the consequence of the world-power-structure “outs” becoming
realistically ambitious to take away from the British “ins” the control of the
world’s high-seas lines of supply. The “outs” saw that the British Navy was
guarding only the surface of the sea and that there were proven new inventions
– the submarine, which could go under water, and the airplane, which could fly
above water – so the behind-the-scenes world-power-structure “outs” adopted
139
their multidimensional offensive strategy against the two-dimensional world-

power-structure “ins”. The invisible-power-structure “outs” puppeted the
Germans and their allies. The invisible-power-structure “ins” puppeted Great
Britain and her allies. With their underwater strategies the “outs” did severely
break down the “ins” line of supply.
J.P. Morgan was the visible fiscal agent for the “in” power structure, operating
through Great Britain and her allies. The 1914 industrial productivity in
America was enormous, with an even more enormous amount of untapped US
metallic resources, particularly of iron and copper, as backup.
Throughout the nineteenth century all the contending invisible world power
structures invested heavily in U.S.A.-enterprise equities132. Throughout that
nineteenth century, the vast resources of the U.S.A. plus the new array of
imported European industrial tooling, the North American economy
established productivity. The U.S.A. economy took all machinery that had
been invented in England, Germany, France, and Europe in general and
reproduced it in America with obvious experience suggested improvements.
In 1914 World War I started in the Balkans and was “joined” in Belgium and
France on the European continent. The British Isles represented the
“unsinkable flagship” of the high-seas navy of the masters of the world oceans’
lines of supply. The “unsinkable flagship” commended the harbors of the
European customers of the high-seas-line-of-supply control. If the line of
supply that kept the war joined on the European continent broke down
completely, then the “outs” would be able to take the British Isles themselves,
which, as the “flagship” of the “ins” would mean the latter’s defeat.
In 1914, three years before the U.S.A. entered the war, J.P. Morgan, as the
“Allies” fiscal agent, began to buy in the U.S.A. to offset the line-of-supply
losses accomplished by the enemy submarines. Morgan kept buying and
buying, but finally, on the basis of sound world-banking finance, which was
predicated on the available gold reserve, came the point at which Morgan had
bought for the British and their allies an amount of goods from the U.S.A.
equaling all the monetary bullion gold in the world available to the “ins” power
structure. Despite this historically unprecedented magnitude of the Allied
purchasing it had only fractionally tapped the productivity of the U.S.A. So
Morgan, buying on behalf of England and her allies, exercised their borrowing
“credit” to an extent that bought a total of goods worth twice the amount of
gold and silver in the world available to the “ins”. As yet the potential
productivity of the U.S.A. was but fractionally articulated. Because the “ability
to pay later” credit of the Allied nations could not be stretched any further, the
only way to keep the U.S.A. productivity flowing and increasing was to get the
U.S.A. itself into the war on the “ins” side, so that it would buy its own
productivity in support of its own war effort as well as that of its allies.
By skillful psychology and propaganda the “ins” persuaded America that they
were fighting “to save democracy”. I recall, as one of the youth of those times,
how enthusiastic everyone became about “saving democracy”. Immediately the
U.S.A. government asked the British and their allies, “What do you need over
132
Remember Great Britain loosing the American Independence war but the East India Company
swiftly moving its interests to the U.S.A.
140
there?” The “ins” replied, “A million trained and armed men, and the ships to
carry them to France, and many, many new ships to replace the ships that have
been sunk by submarines. We need them desperately to keep carrying the tanks
and airplanes, weapons, and munitions to France”. The “ins” also urgently
requested that the U.S. Navy be increased in strength to equal the strength of
the British Navy and therewith to cope with the German submarines, “while
our British Navy keeps the German high-see fleet bottled up. We want all of
this from America”.
America went to work, took over and newly implemented many of the U.S.
industries, such as the telephone, telegraph, and power companies, and
produced all that was wanted. For the first time in history, from 1914 to 1918,
humanity entered upon a comprehensive program of industrial transformation
and went from wire to wireless communication; from tracked to trackless
transportation; from two-dimensional transport to four-dimensional133; from
visible structuring and mechanical techniques to invisible – atomic and
molecular – structuring mechanics.
Within one year the million armed and trained U.S.A. soldiers were safely
transported to France without the loss of one soldier to the submarines134.
Arrived in France, they entered the line of battle. With the line of supply once
more powerfully re-established by the U.S. Navy and its merchant fleet, it
became clear that the “ins” were soon going to win.
J.P. Morgan, now representing the “allied” power structures’ capitalist
system’s banks as well as serving as the Allies’ purchasing agent, said to the
American Congress, “How are you going to pay for it all?” The American
Congress said, “What do you mean, pay for it? This is our own wealth. This is
our war to save democracy. We will win the war and then stop the armaments
production”. Morgan said, “You have forgotten Alexander Hamilton. The U.S.
government doesn’t have any money. You’re going to pay for it all right, but
since you don’t have any money, you’re going to have to borrow it all from the
banks. You’re going to borrow from me, Mr. Morgan, in order to pay these
vast war bills. Then you must raise the money by taxes to pay me back”135.
To finance these enormous payments Mr. Morgan and his army of lawyers
invented – for the U.S. government – the Liberty Loans and Victory Loans.
Then the Congress invented the income tax.
With the U.S. Congress’s formulating of the legislation that set up the scheme
of the annual income tax, “we the people” had, for the first time, a little peek
into the poker hands of the wealthy. But only into the amount of their taxable
income, not into the principal wealth cards of their poker game.
133
Yes, four, two dimensional on the surface of the oceans, one under water and one in the air.
134
They were scheduled to die in the fields of Flanders, not to die a useless death at sea.
135
You might think there is one step too much: why a loan from Mr. Morgan’s bank? Wouldn’t it be
cheaper and more rational if taxes were raised so the government could then pay directly for the warfare without
first lending money from the bank, so Mr. Morgan could not make a profit on his loan? But as already stated, the
cost of the war is never presented a priori to the people in a direct, rational way – taxes directly related to the war
– but the cost is a posteriori presented in an indirect way: the first introduction of income taxes in American
history and the depreciation of the currency when the newly established Federal Reserve Bank started to spend
the money created out of nothing.
141
During World War I, U.S. industrial production has gone to $178 billion. With
only $30 billion of monetary gold in the world, this monetary magnitude
greatly exceeded any previously experienced controllability of the behind-the-
scenes finance power structure of the European “Allies”.
World War I over, won by the Allies, all the countries on both sides of the
warring countries are deeply in debt to America. Because the debt to the
U.S.A. was twice that of all the gold in the “ins” world, all the countries
involved in World War I paid all their gold to the U.S.A. Despite those
enormous payments in gold all the countries were as yet deeply in debt to the
U.S.A. Thereafter all those countries went of the gold standard.
B. Fuller, Critical Path, pp. 78, xxii-xxiii
3rd
7.7 A mechanism to get hold of the wealth of the common people: Higher
prices for essential commodities.
In the early 1970s, the shah of Iran was allowed to continue his excessive military spending
by increasing the price of oil, with the consent of the Nixon and Kissinger: purchasing power
of all the people all over the world was diverted into the pockets of the American weapon
industry. As oil is one of the main energy resources in the economic production process, this
has lead to a world-wide double digit inflation that lasted for about a decade, so the erosion of
purchasing power was even enforced.
After the disintegration of the USSR in the early 1990s, the southern former USSR states
around the Caspian seas got their independence from Russia. The Americans swiftly took
interest in the vast supplies of oil and natural gas in that region: American oil companies
moved in and American military bases were installed in those countries.
A plan of European companies to build a oil-pipeline from the Caspian sea through former
Yugoslavia to the Adriatic sea was thwarted by the war in the Balkans in the mid 1990s, in
which three ethnic groups – who had lived peacefully together for 50 years after WWII -
were set up against each other: Muslims, Orthodox Christians and Roman Catholic Christians.
As Julius Caesar said: “Divide et Impera”.
After September 11th 2001, Afghanistan was attacked under the pretence that Bush wanted to
get hold of Osama Bin Laden and that the Taliban – a former USA ally at the time the USSR
was in Afghanistan – should be defeated. The Americans never got hold of Osama, but the
war was very convenient in order to get control of the region and to build a pipeline from the
Caspian Sea to the Indian Ocean.
After the first war against Iraq, that country was allowed to export only a limited amount of
oil, just enough to be able to pay for the import of food and medicines. After the second war
against Iraq, the Americans got full control over the oil-supplies of Iraq.
Now the USA controls the major supplies of oil on Earth… and the price of oil is soaring to
unprecedented heights, so the price of electricity and natural gas will follow this trend. All the
people of the world have to pay more for their transport and their heating or air-conditioning,
the cost of production will increase: we are facing once more a period of hyperinflation. This
142
is completely in line with what Ravi Batra has predicted in his book The Great Depression of
1990136.
Inflation and money growth per decade (in %)

180 180
165 165 Inflation
150 150
135 135
120 120 Money-
growth
105 105
90 90
75 75
60 60
45 45
30 30
15 15
0 0
-15 -15
-30 -30
-45 -45
1750 1770 1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990
Time
Note the increasing trend of the peaks.
I’m just sitting here watching the wheels

go round and round.
(John Lennon)
History teaches us that humankind

has nothing learned from it.
(Anonymous)
(Santayana)
We are once more paying the bill of the war a posteriori, while some companies like
Halliburton (Dick Cheney) and The Carlyle Group (Bush Sr.) are making a huge profit out of
this.
136
In the beginning of the 1990s, there was indeed an economic dip, but not as great as Ravi Batra had
expected. But then there was the First Golf War. The high expenditure in the category of desinvestments goods
was very convenient in order to avoid a great depression.
143
7.8 A 4th mechanism to get hold of the wealth of the common people:
Crashes on the stock market.
And Jesus went into the temple of God, and cast out all them that sold and
bought in the temple, and overthrew the tables of the moneychangers137,
and the seats of them that sold doves138,
And said unto them, “It is written, My house shall be called the house of
prayer; but ye have made it a den of thieves”.
St. Matthew 21-12,13.
We have seen that the evolution in time of the profit margin of companies follows a saw-tooth
shaped curve: longer periods of decrease in between wars are alternating with short periods of
fast increase during the war. The stock exchange has the inverse evolution: long periods of
slow increase alternate with short periods of sharp decrease.
After the soap-bubble burst on Wall Street in 1929 and the following Great Depression during
the 1930s, Roosevelt tried to put things back to order with his New Deal, and the financial
system was strictly controlled by the government. A banker had as much decision power over
interest rates as a postmaster over the price of post stamps; he could not decide autonomously
on the level of interest for loans or savings. These were dictated by the government. A strict
division between save and loan banks and investment banks was imposed, just as a strict
division between banks and insurance companies. Pension funds were allowed to invest only
in government bonds with a low but secured yield. The mechanism for the creation of money
was strictly controlled: increase in the money supply should go hand in hand with real
economic growth. After the Second World War, the major international currencies were
linked to the value of gold at the conference of Bretton Woods in 1944, and for years the
dollar had a rather fixed international exchange rate compared to other currencies. This was
good for international trade, as this gave industrial companies financial security and stability:
there was no or little uncertainty on the prices of import and export products and services.
In 1973 President Nixon abandoned most of these measures: the value of the dollar was no
longer tied to the value of gold and pension-funds were again allowed to invest in shares of
private companies. The division between banks and insurance companies was abandoned.
And in 1999, with one stroke of a pen, President Clinton abandoned the strict division
between save and loan banks and investment banks.
The story goes that there was a very big party on Wall Street that day: the money of the
“common people” could again be used for more speculative investments. Capitol Hill houses
democratic and republican senators and representatives. But the capital controls the Capitol,
and even the White House.
137
At that time, every city in Palestine had its own coins. In Jerusalem, pilgrims for Eastern had to
exchange their coins in order to be able to buy a dove. In was the tradition to release a pigeon, just as the Roman
Catholic pope is still doing at Eastern Sunday.
138
The doves were domestic ones: once they were released by the pilgrims who bought them, they flew
back to their dovecote where they got some food. And then they were transferred once more to the temple for
another flight. Making money out of the credulity of common people is of all times and can take many forms!
144
When a lot of private people and employers pump money into the stock market each year, for
their private pension-fund or a collective pension-fund for the employees, then the stock
market must go up. The value of shares increases beyond a level that is normally considered
as healthy, based on the yearly dividend they pay or the ratio of the profit per share versus the
value of the shares on the stock market. And as the value of the shares goes up, more and
more people are willing to divert part of their real savings towards the stock market. They
divert savings from their saving account, with a low but rather secure interest rate just above
the inflation rate, towards the volatile stock market, in the hope to have a higher return. This
means that banks have to pay less interest on saving accounts to the public, while they can
charge a fee on every transaction the public makes on their portfolio of shares and investment
funds. The risk is thus completely shifted from the bank towards the public, while the banks
increase their income free from any risk.
Now most of the post the WWII baby-boom generation is retiring and they are collecting their
private and collective pension-funds. This means that the funds have to sell part of their
shares in order to have cash money. Inside traders know when this is going to happen and
on what funds and shares this will happen!
The common belief of financial “experts” and even economists is that, when a major
correction occurs on the stock-market and the value of the shares sharply drops, wealth has
been destroyed. This is pure nonsense. Real wealth is determined by economic production,
not by the value of some piece of paper. The purchasing power of those who lost a major part
of their fortune or their pension-fund in the crash on the stock market has indeed been eroded.
But they themselves have voluntarily diverted their real purchasing power during many years
towards those who sold their shares “just-in-time”, cashing their profit!
If a private person or a pension-fund is eager to buy shares on the stock market at any price,
then there must be someone else willing to sell them, as he is satisfied with the profit he can
realize, or companies can issue new shares in order to increase their working capital in order
to invest in capital goods or to finance acquisitions. There is a continual transfer of real wealth
towards the persons who cash their shares and take their profit, and towards companies who
issue new shares. So, over a period of many years, the real wealth of common people has been
diverted to a system that is nothing else than a pyramid game, a Ponzi scheme, in which most
of the participants act as lemmings, while inside traders take their profit “just-in-time” and
stock brokers and banks charge a fee for every exchange on the stock market. And then one
day the whole pyramid collapses, the end of the Ponzi scheme.
Who do you think buys the shares after a major drop in value? Very often companies buy
their own shares, so they have to pay fewer dividends to “outsiders”. And more often the
“insiders” with foreknowledge, who are sitting on a heap of cash given to them by the
common people, buy the same shares they had sold just before the crash. Same players on the
financial pinball-machine get a bonus and can shoot again.
145
7.9 The North-South relationship
The previous sections dealt with the phenomenon of war as an offshoot of an economic crisis:
the saturation of the market, overproduction, high unemployment, the accumulation of too
many capital goods, the introduction of protectionist measures and the high profitability of the
“pram-industry”, financed by taking away purchasing power from the people through the
creation of fiat money and inflation. All these ingredients constitute a perfect soil for the
seeds of war.
During the Cold War period, we usually thought of the tensed relations between NATO (more
specific the USA) and the Warsaw-pact (more specific the USSR) as a possible cause for war.
But this was just propaganda in order to justify the enormous military expenditures by the
NATO allies, not a real threat. The relation between the rich Northern hemisphere and the
underdeveloped South, however, is much more explosive than the East-West contrasts of that
time and could lead us to a real global conflict.
In 1972 Robert McNamara published his first historical message: “There is
now an economic burst between the North and the South. This flaw constitutes
a very deep cleavage in the sociological crust. It will result in tremendous
storms and earth quakes. If the Northern part of the world will not try
everything in order to narrow the gap between the very successful North and
the very poor Southern part of the world, then at the end of the road nobody
will be secure anymore, regardless the size of our arsenals and troops”...
In his introduction to a study made by specialists of different nationalities
Willy Brandt has written the following: “Our commission was unanimous in
its conclusion that a revision of the relations between the two parts of the
world is very urgent. The economic system that has been operational since the
Second World War has now led to a situation where it holds more
disadvantages for the Third World countries than advantages. A complete new
equilibrium must be found, a new international economic order. This is a
historical mission”...
In 1960 Franz Fanon wrote already: “We must continue to convince the
capitalistic world that the basic problem of this time is not to be found in the
struggle between communism and capitalism. The Cold War, the conventional
and nuclear arms race must stop at once. One should on the contrary invest all
the resources, which are now wasted on the arms race, in the underdeveloped
countries and give them technological and financial help. The destiny of the
whole world is dependent on this.”
J.J. Servan-Schreiber, The Challenge, pp. 156, 301, 135-136.
The situation between the Northern and Southern hemisphere is now indeed very tense, even
explosive, especially with this “created” War Against Terror which is aimed at Islamic
people, and not in the least because of the enormous evolution in communication technology.
Due to the fast and easy transfer of and access to information, the earth we live on seems to
get smaller, more compact, than it used to be. We could compare this situation of the world
now with that of most European countries in the 19th century.
146
In those days European countries had a small élite of very rich people with under them a mass
of poor illiterate people without any possessions or political power139. There was no middle
class as we have now. The poor people had little knowledge of the mechanisms by which the
rich secured the extreme wealth they lived in. But because of the industrialization it was
necessary to give the laborers a minimum of education in order to read and understand written
orders and instructions. In doing so, the poor were given access to a new form of information:
they could read books and papers. Those books usually dealt with life in the upper classes, as
there was little literature about the lower classes. So through these books the lower classes got
an insight in the world of the rich, they became aware of another world and they started to
question the situation: “Why do we have nothing and they have everything? Why don’t we
have the right for some material wellbeing? After all, it is we who do the work and they enjoy
the fruits of our labor!” Social reformers started to write books on this matter and through
pamphlets this emerging consciousness started to find its way to the lower classes in society,
who started to organize themselves in unions and political parties. This new evolving
consciousness has led to the class-struggle, which in some countries has led to violent
revolutions and drastic political reforms, while other countries diverted the aggression to other
countries by waging war.
Most West-European countries have been able to avoid such revolutions by administering by
driblets more democratic rights and material welfare to the lower classes. As discussed in
section on distribution of profit as driving force of economic growth, this transfer of
purchasing power to the people most in need of material goods has resulted in an enormous
stimulus for the economic growth – and even in more profit for the upper classes! We could
say that Marx and Keynes go hand in hand in this matter. Because of the gradual distribution
of economic welfare among all social classes, one has been able to control the social tensions,
for the better of all classes in society.
Nowadays we have a similar situation worldwide with tensions between the rich
industrialized world and the poor Third World countries. In the underdeveloped and
developing countries the majority of the population lives in extreme poverty and in need of
the basic goods and utilities to survive. In the ghettos of the large cities in Asia, Africa, South-
and Central-America, millions of people live in permanent need for food and medical care.
But due to the fast evolution of the technical communication media, especially television,
films and the Internet, those people are informed about the situation in the rich countries. In
Mexico City for example, families with seven or more children live in sheds built of trash and
corrugated asbestos, girls of fourteen years old have to sell their body – the only thing they
have – on the street because their father does not earn enough money to support his family.
But very often those families have bought a second hand television set. And then they watch
American soap operas like Dallas and Dynasty and they see the extreme luxury some
Americans live in. Not every person in the USA lives like JR. Ewing, but on their television
set the poor family in Mexico City does not see the unemployed workers in Detroit and other
industrial centers, they do not see the tramps living on the streets of Philadelphia and looking
for food in the trash cans, there are no or very few series on television about these people and
they are surely not broadcasted in the Third World countries. There people do not know that
since the beginning of the Reagan administration in the early 1980s the minimum wages in
the USA have fallen by one third in real terms, and that the increasing concentration of wealth
has destroyed the American middleclass, the basis of civil production.
So a new consciousness is emerging in the Third World countries: “How does it come that
people in the North enjoy such material wealth while we can’t even find enough food and
139
Read the books of Charles Dickens, Victor Hugo and others.
147
clothes and proper housing? Don’t we have a right for these basic goods?” This insight is
even sharpened because most of these people are well aware of the fact that the industrial
process in the North is based on import of cheap energy, raw materials and manufactured
articles from the Third World countries and export of expensive finished goods, investment
and disinvestment goods towards the underdeveloped countries. And who has control over
these prices? Besides, only a small portion of the population in the Third World countries
takes advantage of this worldwide over-cropping. The majority of the people in the
underdeveloped countries are not able to buy the products they produce themselves. In
tropical countries where Nature is abundant people didn’t had to work very hard. But then the
colonists came, who took possession of their land and started mono-culture agriculture on
large scale aimed at export to the rich countries at very low prices. The local people were cut
from their own natural resources, so they were forced to work for the landlords at minimum
wages, too low to live, too high to die. So, in a way, the Middle Ages were exported to the
colonies. This situation is similar to the one of most European countries in the 19th century.
Deceived by the false theories of economists, the proletarians have surrendered
their body and soul to the curse of labor, and in doing so, they have led society
into an industrial crisis of overproduction. Because there is excess of supply of
goods and shortage of people able to buy, factories and mills are closed and
laborers suffer from hunger and cold. The proletarians, drugged by the dogma
of labor and not knowing that their excessive labor in times of so-called
prosperity is the cause of the crisis and their own misery, they should run to the
granary and shout: “We are hungry, we want food. Although we have no
money and are beggars now, it is we who have harvested the grain and selected
the grapes.”
They should attack the warehouses of monsieur Bonnet in Jujurieux, the
inventor of the “industrial convents” and yell at him: “Monsieur Bonnet, here
are your clear-starchers, your silk-throwsters, your spinners, your weavers”.
They shiver in their patched cotton clothes, although they have made the silk
clothes that you have sold to the whores of Christianity. The poor girls worked
thirteen hours a day so they had no time to dress up. Now they are unemployed
and have the time, but they cannot afford the silk clothes they have made for
others. As soon as they had lost their milk-teeth, they have dedicated their lives
to your fortune, while living in poverty themselves140.
P. Lafargue, The Right to be Idle, pp. 65-66.
A small minority in the underdeveloped countries is able to live in extreme wealth, while at
the same time they have the money to acquire the political and military means in order to
suppress their own population. This situation holds two dangers. First, think of what could
happen if the suppressed population manages to overrule the possessing opposing class and
acquires control over that military apparatus, as actually happened in Iran? A former ally of
the western industrialized countries can turn into an opponent. Secondly, think of what could
happen if the rulers in those countries become aware of the aggressive feelings of their own
population toward the rich and try to secure their own position by diverting the aggression
towards another country, against the rich Northern part of the world141? What if those
140
See the film The Corporation, in which the situation of female laborers in Third World countries,
working for Western multinationals, is described.
141
Al Qaeda, the Taliban...
148
countries cut off the supply or increase prices of energy and raw materials vital to the
economic process of the industrialized countries? Is there really no other way besides military
action and suppression in order to resolve this explosive situation?
Once more we end this section with a conclusion: Democratization of information can lead to
more equality and more prosperity for more people.
7.10 The dangers and excesses of the banking industry
The smarting imbalance between the saturation in the rich northern part of the world on one
side and the extreme poverty in the southern part on the other side not only carries the danger
for a global war. It could also result in severe difficulties for the capitalistic banking system,
as they have granted excessive loans to Third World Countries in order to finance
megalomaniac projects, project which are not in the interest of the local population, but which
yield profit for western companies like Halliburton. The book Confessions of an Economic
Hitman, written by John Perkins, is a very good analysis of this policy: poor countries are
talked into and “sold” big infrastructure projects in order to bring them to a debt level that
they will never be able to pay back. So they become puppet states of the USA’s industrial and
financial élite as they have lost their financial, political and thus economic independence. The
following facts from the 1980s illustrate the scope of the problem and also its evolution in
time:
The four largest American banks have granted loans to Brazil for an amount
that is more than their own capital. Other international banks have also
engaged in this adventure. Brazil has a debt of 57 billion dollar and has to pay
a yearly interest of 13 billion dollar. Demands for new loans are rejected, as
they would only serve to pay the interests. So Brazil has suddenly become
“unhealthy” for foreign capital. It still has a dangerous weapon: blackmail.
Think of what would happen to the western banking system if a country like
Brazil would refuse to pay back its debts. In 1980 the total debt of the Third
World countries had reached the astronomic figure of 350 billion dollar. Until
1974 these countries paid back their loans on a regular basis, but not anymore.
J.J. Servan-Schreiber, The Challenge, p. 160.
We are facing a disorder in the international monetary and banking system.

Because of the immense debts of the Third World countries (650 billion dollar
already in 1984) a lot of financial analysts fear for a disaster, as those countries
will not be able to pay their debts. Some have even stopped paying interests on
loans! Besides, in order to pay back their debts, those countries would have to
have such excessive surpluses on their balance of trade for longer periods of
time that this would result in a structural imbalance in the world economy.
Interview with professor E. Mandel in Knack, March 14 1984.
149
The ten largest banks have more than 50 billion dollar on loan to developing
countries. This sum amounts to roughly 100% of their shareholders equity; if
all the loans went into default, the banks’ capital would be wiped out.
Time, August 29 1988.
But there is a second phenomenon, less known to the public but even more threatening to the
banking system. Due to the saturation of the markets and the resulting pressure on prices,
companies that want to stay in business are forced to invest ever more in order to improve
their productivity and to make acquisitions in order to increase the scale they are working on
and to gain market-share. Not all of these investments and acquisitions can be financed by
using retained earnings or by attracting new risk-bearing capital from stock-holders. So
companies are forced to take loans from commercial banks. And these banks are eager to “sell
loans”, to make money out of money in order to be able to pay back the interest to their
depositors. These banks often neglect to do a thorough risk analysis. But when the expected
economic growth does not come and turnover is not what it ought to be, then these companies
are in trouble to fulfill their financial obligations toward the banks. This in turn results into a
difficult time for these banks, as they have used the money of other people, their depositors, to
“make these loans”.
In the USA one can see thousands of cases which remind us of the early 1930s,
farmers who can no longer pay their mortgage and so lose their land and
equipment, resulting in an endless loop for the local economy: loss of
purchasing power, other businesses going down, less tax-revenues for local
communities...
But these are the small farmers. Think of the level of debts the large
multinationals are living with, billions and billions of dollars... This makes the
banking system very vulnerable, here lays the real danger. I would not predict
a total collapse of the financial system. But surely we will see an evolution to
more regulation and more financial support from the government, paid for by
the tax-payer, in order to divert the financial crisis. The American government
cannot afford to let the Chase-Manhattan bank to go down the drain, for the
Chase-Manhattan bank is the American government. So the crisis of the
private banking world will be reshaped into a larger public deficit, paid for by
every American.
Interview with professor E. Mandel in Knack, March 14 1984.
Almost 1,500, or roughly 11% of the 13,700 commercial banks in the US are
still on the Federal Deposit Insurance Corporation list of troubled institutions.
Many of these banks are already doomed, and hundreds of others could be
sunk by a continued rise in interest rates, which means that they would have to
pay more to depositors.
Time, August 29 1988.
The severity of the situation at that time was well understood by the US government. Father
George Bush, who inherited the problem from Ronald Reagan, made up a plan to set aside
285 billion dollar to rescue the “savings and loans industry”, whereof 157 billion dollar will
150
come from tax-payers’ money. And in 2008, Bush Jr. asked for 700 billion dollar from the
tax-payers! Remember, from October 2008 till October 2009 hundred American banks went
bankrupt!
This whole evolution can easily be understood in terms of our basic theory. As the economic
system in the western world suffers from saturation and fierce competition, while at the same
time the Third World countries and the former Comecon countries do not have the purchasing
power to buy the surpluses of the rich countries, the world economy stagnates. In a zero-
growth economy, one can no longer create money out of money, so banks can no longer make
a profit: it is impossible for them to receive a higher interest on the loans they make than the
interests they have to pay on the deposits they have collected. What could cause such a
positive difference? If the banking world keeps to such a difference between interests on loans
and interests on deposits in times of zero-growth, then this can only be accomplished by
extracting purchasing power from other socioeconomic entities, such as companies, private
families – the “common people” –, other industrialized countries or Third World countries.
The multilateral agencies have become net takers of money from Latin
America. Commercial banks lent 6 billion dollar of new money to the
continent last year. But they extracted more in interest – around 26 billion
dollar...
Both this hemorrhage of cash, and the inability of most governments to take
tough economic measures, has squeezed the continent’s growth. Only Chile
and Columbia have grown by more than 3% in each of the past three years. It
is no coincidence that those two countries now spend the lowest proportion of
their export earnings on debt-service.
The Economist, February 11th 1989, p. 83.
This clearly illustrates that in a situation of low or zero economic growth, the banks with their
money-making mechanisms have a destabilizing influence on the economic process: the
economic crisis is sharpened, which can result in negative growth, and this is in nobody’s
interests, not even the banks’!
On the excesses of the banking industry, we can refer to the book La Trahison de la Finance
[The Betrayal of the Financial World] written by the investment banker Georges Ugeux. In
this book he gives an in depth analysis of the financial crisis of 2008 from within the very
heart of the financial world. He also formulates some necessary measures that should be taken
on national and international level in order to avoid similar crises in the future.
In his book he gives a good description of all kind of financial constructions the financial
whiz kids of the investment banks and other banks have engineered in order to create the
maximum of profit out of money of others (their depositors, their own clients and even their
own shareholders) and to shift the risk as much as possible to other parties, very often their
own clients or other financial institutions. Warren Buffet once labeled these “derivates” as
financial weapons of mass destruction: credit default swaps, short selling, collateralized debt
obligations, private equity funds, leverage funds, hedge funds, the use of equity capital for
proprietary trading, trading for own account against the own clients. Mr. Ugeux explicitly
states that this kind of financial practices and non-transparency are bosom-friends. This non-
transparency made that, during the crisis of 2008, the banks no longer trusted each other and
151
refused loans to other banks, while they still expected that the public would have confidence
in them.
Central banks and governments in several countries had to intervene on a never seen scale,
using taxpayer’s money in order to counter a run on the banks and to restore the confidence of
the public and the enterprises in the whole financial system. And some of these banks (like
Goldman Sachs) even dared to use the total amount of financial support they received from
the US government in order to pay excessive bonuses to their traders (“trade sharks” in the
words of Mr. Ugeux) and high dividends to their shareholders (financial institutions are
responsible for 10% of the employment, but they pay 25% of the salaries!)
Therefore Mr. Ugeux advocates simpler financial techniques and products, so that the size of
the investment, the possible risks and opportunities become more transparent and easier to
assess. He also calls for a better capitalization of the banks, more international control on
banks in a financial world that has become more and more transnational, and more honesty
within the financial world and better communication toward their clients and shareholders.
The financial institutions should also reconsider their prime raison d’être and socioeconomic
mission: provide an intermediate financial service to enterprises and the public in general by
providing credit for purposeful projects and a fair compensation for those who provide the
money. The long term economic and social role should prevail over the urge to make a quick
buck. A possible approach is outlined in the next section.
7.11 An alternative banking system that really works
Mr. Muhammad Yunus, a former professor in economics in Bangladesh, was granted the
Nobel Prize of Peace in 2006 for his Grameen Bank project of microcredit: a bank that lends
money in small amounts to the poorest people, even to beggars, and is making a profit in
doing so. In his own words:
The financial crisis has shown us more clearly than ever where capitalism fails.
Originally the credit market was designed to serve people’s needs. It was
designed to provide businessmen with capital to found or expand companies.
Thanks to home mortgages, people were able to buy homes and pay the costs
over a long period of time. Student loans funded education for millions. Banks
that provided the credit earned a reasonable profit. Everyone benefited.
But traditional capitalism demands ever-increasing profits, and it creates
powerful incentives for smart people who used their creativity to make that
possible. Over time, competing financial institutions aimed for higher and
higher profits in the credit market using clever feats of financial engineering.
They repacked mortgages and other loans into sophisticated instruments whose
risk level and other characteristics were hidden or disguised. Then they sold
and resold these instruments, earning a slice of profit on every transaction. All
the while, investors eagerly bid up the prices, scrambling for unsustainable
growth. Blinded by these unrealistically high rates of return, they never made
an effort to question the risks hidden inside those financial instruments. They
gambled that the system’s underlying weakness would never come to light.
But it did. With the collapse of the housing market in the United States, the
whole house of cards tumbled down with such momentum it surprised even
those of us who had been skeptical about the financial system all along.
152
Millions of people around the world who did nothing wrong are suffering. As
always, the ones who are hit the hardest are the poor – especially the “bottom 3
billion,” who were already living at a bare subsistence level. They are being hit
hard by the combined effects of the food crisis, the environmental crisis, and
the financial crisis. It its current, incomplete form, capitalism has badly failed
its social responsibility.
So far, governments struggling to alleviate the combined crises of 2008-2010
have kept themselves busy coming up with super-sized bail-out packages for
the institutions responsible for creating the financial crisis. Unfortunately, no
bail-out package of any size has even been discussed for the victims of the
crisis: the bottom 3 billion and the planet itself.
Today’s crisis has been a valuable reminder that all people around the world
are undeniably connected. The fate of Lehman Brothers and that of the poor
women working in a garment factory in Bangladesh are linked. Therefore, I
have repeatedly urged that this mega-crisis be taken as an opportunity to
redesign the existing economic and financial system. This is the time to bring
the world together and to change our economic architecture so that this type of
crisis never occurs again. Social business can be a key element of this change.
that Serves Humanity’s Most Pressing Needs, pp. 198-199.
The more time you spend among poor people, the more you become convinced
that poverty is not the result of any incapacity on the part of the poor. Poverty
is not created by poor people. It is created by the system we have built, the
institutions we have designed, and the concepts we have formulated.
Poverty is created by deficiencies in the institutions we have built – for
example financial institutions. These banks refuse to provide financial services
to nearly two-thirds of the world’s population. For generations they claimed it
could not be done, and everybody accepted that explanation. This allowed loan
sharks to thrive all over the world. Grameen Bank questioned this assumption
and demonstrated that lending money to the poorest is not only possible but
profitable.
During the global financial crisis that began in 2008, the falsity of the old
assumptions became even more visible. While big conventional banks with all
their collateral were collapsing, around the world microcredit programs, which
do not depend on collateral, continued to be as strong as ever. Will this
demonstration make the mainstream financial institutions change their minds
about their traditional definition of creditworthiness? Will they finally open
their doors to the poor?
I am quite serious about this question (although I know all too well what the
likely answer is). When a crisis is at its deepest, it can offer a huge
opportunity. When things fall apart, we can redesign, recast, and rebuild. We
should not miss this opportunity to convert our financial institutions into
inclusive institutions. Nobody should be refused access to financial services.
Because these services are so vital for people’s self-realization, I strongly feel
that credit should be given the status of a human right.
153

that Serves Humanity’s Most Pressing Needs, pp. xii-xiii.
We can create a poverty-free world if we redesign our system to take out its
gross flaws which create poverty. We can create a world in which the only
place you would be able to see poverty is in poverty museums [like Holocaust
museums]. Someday, schoolchildren will be taken to visit these poverty
museums. They will be horrified to see the misery and indignity that
innumerable people had to go through for no fault of their own. They will
blame their ancestors for tolerating this inhuman condition for so long – and
rightly so.
that Serves Humanity’s Most Pressing Needs, pp. xiii.
I don’t have anything to add to this, or maybe yes, I do have.
7.12 “War Against Terror” in order to defend “The Sixth Freedom”
After the disintegration of the Communist East block and the end of the Cold War, the USA
was suddenly faced with a problem: the military industry, responsible for a great part of
scientific research and employment in the USA, had lost their raison d’être. And what to do
with the CIA and the NSA?
So a new enemy had to be created
The achievements of Bush administration planners in inspiring Islamic
radicalism and terror are impressive. The senior CIA analyst responsible for
tracking Osama bin Laden from 1996, Michael Scheur, writes that “bin Laden
has been precise in telling America the reasons he is waging war on us. None
of the reasons have anything to do with our freedom, liberty, and democracy,
but have everything to do with US policies and actions in the Muslim world”.
Scheur notes that “US forces and policies are completing the radicalization of
the Islamic world, something Osama bin Laden has been trying to do with
substantial but incomplete success since the early 1990s. As a result it is fair to
conclude that the United States of America remains bin Laden’s only
indispensable ally142”. From his detailed study of Al Qaeda, Jason Burke draws
a similar conclusion. “Every use of force is another small victory for bin
Laden”, he writes, creating “a whole new cadre of terrorists” for a “cosmic
struggle between good and evil”, the vision shared by bin Laden and Bush.
142
And vice versa.
154
In On Power and Ideology Noam Chomsky defines “The Fifth Freedom” as the freedom that
some countries grant themselves to get complete control over the natural resources of
minerals and energy supplies of other countries143, even by war. We could even define a
“Sixth Freedom”: the freedom that some interest groups grant themselves to create money out
of nothing in an illegal way in order to finance this “Fifth Freedom”.
The solution they have engineered in order to defend this “Sixth Freedom” is phenomenal, as
they succeeded to hit three targets in one stroke.
• The Islamic Taliban in Afghanistan, former “freedom fighters” in the war against
the USSR occupation and secretly supported by the USA, were redesigned into an
international, invisible and elusive enemy, so the new “War Against Terror” can
go on indefinitely. Osama Bin Laden and Saddam Hussein, two former business
partners of Bush Sr. en Bush Jr. were promoted to the enemies No 1 and 2 (in
whatever order you want) of the four American Freedoms (freedom of speech,
freedom of religion, freedom from want, freedom from fear).
• The wars in Afghanistan and Iraq “against terrorism and for democracy” were very
convenient to get absolute control over the world supplies of fossil fuels (the Fifth
Freedom) and even opium. Osama Bin Laden is still not found, neither are the
weapons of mass destruction in Iraq.
• And once the fundamentalist Islam will be defeated, a new area of profit will be
created for the “Sixth Freedom”, the freedom that some people impute themselves
in order to create money out of nothing144.
In order to clarify the last “target”, let us elaborate on the Islamic religion. In the Islam it is
considered to be a sin against the will of Allah to live from the interests of money (usury).
Only saved money, not the interest, and the proceeds of own labor are allowed as means for
subsistence. So, in most Islamic countries, this religious prescription has prevented the
development of a banking system as we know it in the western world: the very religious
people kept their money at home. Because of this, a new form of banking system was
developed in some Arabic countries.
In keeping with the Koran’s ban on usury, Islamic bankers have devised an
unorthodox “interest-free” system. It is not only gaining acceptance at home,
but is forcing conventional Western banks eager for Muslim [petrol] dollars to
adapt some of their own entrenched rules...
The institutions in all these countries share a common guiding principle.
Instead of receiving a fixed return in the form of interest, depositors share the
risk of investment with the bank and split the resulting profits – or bear part of
the losses. To apply that principle, however, Muslim bankers have been forced
to devise a bewildering array of investment plans. Under “mudaraba”, banks
lend money, and clients provide management expertise for a project: the two
“partners” then split any profits on a pre-agreed basis, but losses are born by
the bank alone145. “Murabaka” enables banks to buy commodities and resell
143
According to their Malthusian paradigm.
144
I once read a report that stated that 30% of the Gross National Product of the United Kingdom comes
from financial transactions in The City.
145
Really, can you imagine your bank doing this?
155
them to borrowers at a higher price. Under “Musharaka” banks and clients

jointly contribute capital to a project, and share either the rewards or the losses.
In all of these arrangements, as Indian economist Mohammed Nejatullah Sidiqi
puts it, “the banks cease to be lenders and become partners in enterprise146”.
Newsweek, May 7th 1984.
Hence, in this system interests on savings are not paid automatically: money does not create
money out of nothing. Interest on money, i.e. increase of the amount of money, is balanced by
real economic production: the successful completion of a project, the creation of added value,
economic growth. In the western banking system, on the contrary, money itself has become a
commodity with a price: the interest one receives for a deposit or pays for a loan. In that
system there can be creation of money without real economic added value. This may lead us
to inflation, so purchasing power is diverted in a very sly way from one group in society to
another. As we have discussed in great detail in the section on the motives for war versus
forces for peace, together with Howard Katz, our banking system holds a real danger for war.
• On the one hand people are not directly confronted with the cost of the arms race
and of warfare when governments finance military expenditures with the creation
of money of the blue instead of raising taxes.
• On the other hand certain groups in society can earn a lot of money, if they
succeed to stimulate the arms race, by selling weapons as well as loans to the
government. It is an interesting and revealing exercise to unravel the clew of
interests of arm producers, the banking world and politics147.
“The War Against Terror” was invented in order to defend the “Sixth Freedom” and the
“Fifth Freedom”.
7.13 Summary
We now end this rather long analysis – I hope you have enjoyed yourselves – of the present
economic situation with a résumé of the most important topics and relations discussed.
In the industrialized countries there is at the same time material abundance and saturation of
the markets, unemployment, a growing inequality in income and wealth: this results into a
stagnation of the economic growth. Together with the enormous accumulation of capital
goods over the years, this leads to lower profit ratios. In former times, war was very often the
“offspring” of such an economic depression in the capitalistic world. After a war, due to the
massive destruction with the aid of disinvestment goods, the society returned to a state of
greater needs for material goods and a lower level of capital goods, so the profit ratio could
jump to a substantial higher level.
Inflation, one of the symptoms of an economic crisis, increases the danger for war in two
ways. On the one side, the real cost of the arms race is kept secret for the tax-payer. On the
146
The beginning of the end of “active unproductivity”.
147
The Englishman J.P Morgan was at the same time arms trader and agent of the Rothschild’s in the
USA.
156
other hand, certain groups in society can make huge profits by creating money out of nothing
and lending it to the government, who need the money for their military expenditures. As
these groups usually have rather close connections with the producers of these weapons, they
have a double interest in this affair. There is indeed a strong coupling between the financial
world, the weapon industry and the political power, as President Eisenhower once said148.
Due to the increased protectionism there are ever more economic tensions among
industrialized countries themselves and with the developing countries. And last but not least
we have the ever growing gap between the industrialized and developing countries and the
Third World Countries.
Taking all this into consideration, we can conclude that something has to be done about the
situation. War as a solution to an economic crisis is no longer possible. In the good old days,
wars were fought with conventional weapons, so the destruction – the disinvestment – was
limited in space and in time. After such a conflict, those who survived could start to rebuild
the economic system. Nowadays, a lot of countries have nuclear weapons or have the
knowledge to produce them. The destructive power of these weapons is not limited in space
and in time. Larger parts of the world would become inhabitable for longer periods of time
due to radioactive fallout and nuclear winter. There would be many more victims in an
extreme short period of time, which increases the risk for epidemics. After a nuclear conflict it
would take a very long time for the economy to regain a moderate level of production. By the
way, for whom would the economic system be rebuilt? And who would do it? With
conventional wars, the persons who took advantage of the situation kept far away from the
battlefields, they even did business with both fighting parties. But could they survive a
nuclear war now? And if they could, who would provide them with the abundance they now
live in?
So, to be effective “in solving the economic crisis”, is must be a conventional war. But with
the spread of nuclear know-how and material all over the world, who can guarantee this? Due
to the increased effectiveness and precision of cruise missiles and other assorted weaponry,
there is an increased probability that nuclear weapons will be used in case a country tends to
lose a conventional war. Is there really no other way out of this MADness149?
In the next chapter we will argue that there is indeed an alternative for war and military
adventures (the capitalist way) or for violent revolution (the communist way): there is a
another way to get out of this mess. The economic crisis can be solved in a very simple,
elegant and human-friendly way. The solution that will be outlined will result in new
opportunities for economic growth for the industrialized countries and at the same time
dissolves the tensed situation among industrialized countries and the smarting imbalance
between North and South. It’s so easy you know.
People asking questions lost in confusion

Well I tell them there’s no problem, only solutions
Well they shake their heads and look at me as if I lost my mind
I tell them there’s no hurry...
I’m just sitting here doing time
I’m just sitting here watching the wheels go round and round
I really love to watch them roll
148
Halliburton, Carlyle Group…
149
MAD: Mutually Assured Destruction.
157
No longer riding on the merry-go-round

I just had to let it go
John Lennon, Watching the Wheels.
We will indeed once more fool around with time in a very surprising manner that will meet
the aspirations of a great deal of people.
158
8 Some feasible solutions
You may say I’m a dreamer

But I’m not the only one...
John Lennon, Imagine
8.1 Boundary conditions
In the previous chapters, we have seen that an economic crisis in the western industrialized
countries with all its symptoms of the consumer society, unemployment, erosion of the
purchasing power, arms race, risk for war etc. is caused, as a matter of fact, by the material
abundance we live in – at least most of us. As our needs are relatively well satisfied,
compared to other parts of the world population, we can easily reduce our level of
consumption when our faith in the future is shaken by some event like an oil crisis, a crash in
the financial world, a military conflict, a preprogrammed terrorist attack... But this reaction,
which is normal and even sound at the individual level, causes a reduction of turnover and
employment for the economy as a whole. Besides, due to the excessive use and abuse of raw
materials and energy in our consumer society, these production factors are becoming more
and more scarce, and we are left with a more and more polluted environment. This saturation
of internal state variables (needs), input variables (raw materials and energy) and output
variables (goods, pollution) results into a change in the dynamics of the economic system,
characterized by a decline of the economic growth.
We have argued that, in theory, a society with zero economic growth is possible. On a smaller
scale it is even feasible in practice: “primitive” tribes in Africa and South-America, and
religious communities in the USA like the Amish have this kind of society, with as most
important features lack of aggression internally or towards the others, cooperation with one
another, sharing with each other and the subjection of personal ambition to the objectives and
the ideals of the group. To apply this system with its features in our patriarchal and
individualistic western world, characterized by competition and aggression, would ask for a
drastic change in our mentality: now most people work for themselves or for the small group
they are related to, if necessary against other groups and individuals. Some people even live
off the labor of others; and in times of crisis we look for a scapegoat to blame and to whom
we can direct our aggression.
We have to be realistic in this matter: it is not possible to impose a drastic change in attitude
and paradigm on people overnight, it is a process that takes generations. A society with zero
economic growth, where there is no exploitation and where the technological attainments are
not used to increase consumption, but instead to reduce working time, so people have more
time for creative leisure time, such a society is not yet at hand in the near future – although,
the solution I will formulate might appeal to a lot of people.
So, in formulating our alternative, we will have to take the present stage in the evolution of
humankind into account as a boundary condition. Therefore, let us examine if there are any
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possibilities to stimulate the economic growth in a positive and justified way. In doing this, we
might find an alternative to war – the capitalistic way out of an economic crisis for the last
four centuries – or revolution – the communist way-out of a socioeconomic crisis during the
last centuries.
From our Basic Theory we know that ‘profit for companies’ is part of ‘profit for society’,
which is a consequence of economic growth. The absolute level of economic production is in
this respect irrelevant: in a country where everyone is a billionaire and where nobody is
spending any money but everybody is hoarding it up, the economy will go through a recession
or even a depression.
In the rest of this study we will elaborate some alternatives in order to stimulate economic
growth in a justified way:
• qualitative growth instead of quantitative growth
• give people with real needs more purchasing power
• give people who’s needs are amply fulfilled more time in order to consume more,
not necessarily more goods, but rather more services.
We will end this chapter with a naughty addendum in order to come to a more fair collection
of taxes.
8.2 Qualitative, sustainable growth
In the first place we can say that even in the industrialized countries there are still possibilities
for justified economic growth, at least if we divert the nature of the economic growth.
In the previous decades, the focus was on quantitative economic growth: ever more cars on
ever more highways, ever more electrical gadgets in the households, ever more “prams”. Due
to the fierce competition – in itself a result of the excessive consumption and the saturation of
the market – those products are made as cheap as possible, they are designed to last for a
preprogrammed amount of time, they are outdated in no time, and they end their life on top of
ever increasing piles of waste..., all this in order to create a substitution market so the
economic process can keep on going and growing.
An alternative to this quantitative growth is qualitative growth: better cars that last longer, are
safer and consume less fuel, more durable clothes, better housing, healthier food, a cleaner
environment, a better health care... The higher quality of these goods and services, rightly
expressed in higher prices, can also result in an increase of the output of the economic
process. So this implies profit for society and thus profit for private business. The profit is in
the better quality, not in the higher quantity. With qualitative growth, based on more durable
products, less raw materials and energy are used in the production process; less waste is
produced as the products can be used longer. So, from an ecological point of view, qualitative
growth makes sense. This new orientation of economic growth demands a change in the
purchasing pattern of the “Jones”, of you and me. Instead of buying ever more products we do
not really need, tempted as we are by advertising, we should adopt a more critical point of
view toward producers and demand products of a higher quality. The increasing influence of
consumer organizations is in this respect an interesting evolution. A lot of companies have
become quality minded, as they have become aware of the fact that better quality and safety
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adds value to the product and that the consumers are willing to pay a higher price for it.
Everyone can stimulate this evolution by purchasing products of higher quality that last
longer: then the producers will have to follow the market. This goes for shoes, for cars, for
clothes... The satisfaction one has from quality products is much higher than from their cheap
counterparts, and in the long run they are more economical and ecological as they last longer.
But before people are willing to make this change in purchasing pattern, they first have to
regain their faith in the future, which is now shaken due to the economic crisis, the high
unemployment and the increased political insecurity. In the previous chapter, when we
discussed the consumer society and unemployment, we have seen that faith in the future is
essential in order for the economy to run smoothly in a society where the basic needs of food,
clothes and housing are fulfilled for the majority of the people. The economic crisis we face is
not a good soil to restore this faith in the future. As long as people are worried about the
future, they will economize on their spending; they will buy cheaper products of poor quality,
so producers will make these products.
Because of the saturation of the markets in the western world, the lack of faith in the future
and the ecological considerations, quantitative growth is no longer possible or desirable.
Qualitative growth is an alternative in the long run, but not immediately feasible. What other
possibilities for economic growth do we have besides the branch of the disinvestment-goods?
8.3 Fair distribution versus concentration of wealth
Do you remember the story we described about General Motors, which has led us to “the
theory of the rubber cylinder”? If not, we suggest that you read once more the section “First
Paradox: higher wages for employees, higher profits for the employer” in chapter 4 and the
section on “Distribution of Profit as Driving Force of Economic Growth” in chapter 6. In
those sections we have already formulated the solution to the economic world crisis: all
elements for our alternative have already been discussed. In this rather short chapter we will
only recapitulate already known concepts and relate them into an overall picture.
Some interest groups in society cannot live in a situation of zero-growth, as they can no
longer create money out of money. They get wicked: they use inflation, floating currency
exchange rates and high budget deficits in order to divert purchasing power from other groups
in society toward their own pockets, they stimulate the growth of the “pram-industry” in order
to sell security against the enemy – real or even imaginary –, they even dare to manipulate the
public opinion in order to start a real war and to bring the society back into a situation where
there are again real opportunities for growth.
Okay, let us accept this as an additional boundary condition to our solution, a fact that is
beyond our control but has to be taken into account. In the section “An idealistic view on
economy” in chapter 5 we stated that satisfaction of needs is or ought to be the basis of the
economic process. Satisfaction of needs is the goal. Satisfaction of ever more needs of ever
more people leads to economic growth, which means profit for society. This can then be
distributed over the several socioeconomic groups in society: among others profit for
companies and interest on invested capital. Profit is at the same time consequence of as well
as driving force towards more economic growth, i.e. more satisfaction of needs.
After Second World War, the emphasis was primarily on ever more created needs of the same
amount of already affluent people in western countries. But let us, on the contrary, focus on
ever more people! What had caused the increased growth in turnover and profit for GM in the
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1950s and 1960s? What had caused the substantial economic growth in Europe and the USA
after the Second World War? As discussed these were induced by the diversion of purchasing
power to the people in real need. Those people did not hoard the money, but spent it
immediately, and in doing so, they made economic growth and more profit for business
possible. On several occasions in the course of history this principle has given a justified
impulse to the economic system and the profit ratios of the private companies. If we look at
the world as it is today, can’t we find people in need of basic products so that we can pull
once more the card of the rubber cylinder?
On a world population of 6.4 billion people, 1.3 billion people million people live in
“extreme” poverty on an income of less than 1 US$ a day, 2.7 billion live in “absolute”
poverty on an income of less than 2 US$ a day. Each day a lot of people, especially children,
are starving to death or are dying from lack of basic health care.
1979 was the UN year of the child. As a matter of fact, of the dead child. 30
million children younger than 5 died from starvation in that year. The others,
who survived, suffer from eye-diseases and affections of the nervous system,
caused by lack of proteins in their “diet”. 80% of all children in the world
suffer from this. 500 million Asians, 140 million Africans, 90 million people in
Latin America have not enough drinking water. Two thirds of humanity suffers
from time to time from diseases caused by drinking polluted water.
J.J. Servan-Schreiber: The Challenge, p. 128.
In 1974 the leaders of the rich western countries made a commitment to eliminate poverty
completely in the world by the year 2000. They promised to spend 0.7% of their GDP to
development aid to the Third World countries. At a UN conference in Copenhagen in 1995
they had to admit that no much progress was made, but they reaffirmed their 0.7% pledge and
their aim to eliminate poverty in the world. At a UN conference in New York they had to
admit that only 0.2% of their GDP was spent on aid to the Third World countries. At that
millennium conference they solemnly signed the Millennium Development goals to reduce
the number of people living in “extreme” poverty with 50% by the year 2015. At a UN
conference in Monterey in 2002, the rich countries said it was impossible to eliminate poverty
completely, but they engaged themselves to bring the level of aid to 0.4% of their GDP by the
year 2006. At a UN conference in 2005 they admitted that even this 0.4% was not feasible150.
Promises, promises… promises that were never kept; objectives that were never met. Because
of the prevailing Malthusianism with some political leaders in the rich countries, it has never
been the intention to meet the objectives.
But a substantial and direct diversion of purchasing power from the saturated industrialized
countries and the very few rich in the Third World countries toward these “extreme” and
“absolute” poor people can at the same time save the western economy from a total collapse,
and help those people in the Third World to fulfill the basic needs of drinking water, food and
health care. This would also reduce the tensions between North and South, as well as between
the competing industrialized countries who skim each other markets. And above all, it would
take the wind out of the sails of those who are convinced that only a jolly good war can solve
the economic crisis. The level of security in the world would increase and there would no
longer be need for an excessive pram-industry in order to stimulate economic growth.
150
Ricardo Petrella, Pour une Novelle Narration du Monde, p. 78-79.
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So what we need is a worldwide Marshall-plan, in which the industrialized countries would

give substantial financial, technical and logistic support to the Third World countries, supply
them with the means and the know-how in order to satisfy the basic needs of their population,
and treat them as equal partners in the international trade by giving them fair prices for their
raw materials, manufactured products and their energy resources. No need to say that it is
essential that the financial help should not disappear to the Swiss bank accounts of corrupt
politicians and officials of those countries, but really must reach the people in need. This calls
for more democratic rights and installation of unions in the Third World countries in order to
prevent the rich getting richer and to allow the poor to acquire some purchasing power.
What America was for the destroyed economies of Europe and Japan
immediately after the war, that is what the industrialized countries mean to the
Third World today. The ideas of the Marshall-plan were at the same time
simple and ingenious. After the war, America could have let Europe and Japan
in a state of destruction and take advantage from its strong economical and
technical lead in order to increase its supremacy. But in doing so, America
would have weakened itself. In a world half destroyed, America’s production
capacity would have been of no use at all. Europe was in no way an equal
partner. In economical terms, America would have become an island,
surrounded by a sea of misery and poverty. It would have forgotten the mistake
of 1919, which lead to the great depression, to fascism and finally a new war.
The team that outlined the Marshall-plan was well aware of the priorities for
America: to help other countries in order to help itself. When America supplied
means for recovery and development to Europe and Japan, it derived profit
from this help to the same amount or even more than those who received that
help. The world had discovered a new law of survival, development and
interdependence in the international scene.
Nowadays there exists the same interdependence between the industrialized
countries and the Third World. But the application of the principle must be
different, as times and nations have changed since then.
In the years after the war, the Marshall-plan has given financial help to
countries who had the technical know-how and the basic infrastructure to
rebuild their industries. Provided with the means, they were able to do the job
themselves... America saw how these countries regained their strength and
again became active partners in the international trade scene.
From then on began a period of permanent economic growth and expansion as
never before in history. This period lasted for 30 years, and due to the effect of
the positive feedback of the affluent society, the financial help of the Marshall-
plan was paid back a hundred-fold to the USA. The established rules of the
eternal game in international trade were overthrown: it was no longer a game
of give and take, but one had applied a higher system, in which both the giver
and the receiver gained at the same time. The development of one party had a
positive influence on the development of the other. This was an economic
principle of a higher order, from which all parties involved could benefit.
All? Well, at least those in a certain closed group of countries. The rest of the
world did not seem to exist, was neglected. And that part of the world had no
means to speak for themselves or to stand up for their rights.
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Today, we can say that the western world will not regain its economic growth
by itself; it will suffocate, its internal social order will disintegrate if it does not
change its point of view towards the Third World and if it fails to guide these
countries on the way of development. This is the only way in which the
industrialized world can regain its former dynamic. The new law of survival
and interdependence has spread all over the world.
In the Third World lays hidden an enormous potential for economic growth on a global scale.
The potential, if realized, can result in profit for humanity as a whole and, in particular, for the
industrialized countries and those who love to see their capital breeding like rabbits without
working themselves. Their interests, our interests and the interests of the people who now live
in poverty and starve to death are one and the same!
A worldwide Marshall-plan to speed up the development of the Third World countries will
also result in a much more stable world-economy. The different countries will have a more
balanced level of welfare, so there will be less risk for a sudden collapse of the consumption
level in the rich countries: there will be less saturation in one country and shortages in another
one at the same time. A general increase of the standard of living in the developing countries
will also solve the problem of excessive growth of the population on earth. For this, we refer
once more to Fritjof Capra.
Demographers have discovered that the significant pattern is a transition
between two levels of stable populations that has been characteristic of all
Western countries151. In pre-modern societies birth rates were high, but so were
death rates, and thus the population size was stable. As living conditions
improved during the time of the Industrial Revolution, death rates began to
fall, and, with birth rates remaining high, populations increased rapidly.
However, with continuing improvement of living standards, and with the
decline in death rates continuing, birth rates began to decline as well, thus
reducing the rate of the population growth. The reason for this decline has now
been observed worldwide.
Through the interplay of social and psychological forces, the quality of life – -
the fulfillment of material needs, a sense of wellbeing, and confidence in the
future – becomes a powerful and effective motivation for controlling
population growth. There is, in fact, a critical level of wellbeing which has
shown to lead to a rapid reduction in birth rate and an approach to a balanced
population. Human societies, then, have developed a self-regulating process,
based on social conditions, which results in a demographic transition from a
balanced population, with high birth rates and high death rates and a low
standard of living, to population with a higher standard of living which is
larger but again in balance, and in which both birth and death rates are low.
The present global population crisis is due to the rapid increase of population
in the Third World, and the considerations outlined above show clearly that
this increase continues because the conditions for the second phase of the
demographic transition have not been met. During their colonial past the Third
World countries experienced an improvement in living conditions that was
151
Pierre Francois Verhulst.
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sufficient to reduce death rates and thus initiated population growth. But the
rise of the living standards did not continue, because the wealth generated in
the colonies was diverted to the developed countries, where it helped their
population to become balanced. This process continues today, as many Third
World countries remain colonized in the economic sense. The exploitation
continues to increase the affluence of the colonizers and prevents the Third
World population from reaching the standard of living conducive to a
reduction of their rate of growth.
The world population crisis, then, is an unanticipated effect of international
exploitation, a consequence of the fundamental interrelatedness of the global
ecosystem, in which every exploitation eventually comes back to haunt the
exploiters. From this point of view it becomes quite apparent that ecological
balance also requires social justice. The most effective way to control
population growth will be to help the people in the Third World achieve a level
of wellbeing that will induce them to limit their fertility voluntary. This will
require a global redistribution of wealth in which some of the world’s wealth is
returned to the countries that have played a major role in producing it.
An important aspect of the population problem, which is generally known, is
that the cost of bringing the standard of living of poor countries to a level that
appears to convince people that they should not have excessive numbers of
children is very small compared to the wealth of the developed countries. That
is to say, there is enough wealth to support the entire world at a level that leads
to a balanced population. The problem is that this wealth is unevenly
distributed, and much of it is wasted.
The primary goal of this book is to show to a broader audience that it is of the utmost
importance for the rich industrialized countries to divert part of their welfare to the people in
the developing countries, both to solve the economic crisis in the capitalistic world as well as
to reduce the economic and political tensions in the world and to avoid the possible outburst
of a war. For a description of a blueprint for a worldwide Marshall-plan, we gladly refer to
Alvin Toffler, J.J. Servan-Schreiber and Muhammad Yunus. We will just give a short outline
of the basics of such a plan.
First of all, we emphasize that massive help for the development of those countries does not
mean the implementation of heavy centralized industries, which are characteristic of the
second wave in Europe, to speak with Toffler. The examples we have seen in the 1960s and
the 1970s clearly show that such a policy leads to a greater dependence for the Third World,
more exploitation, to greater internal contrasts in those countries, to excessive growth of cities
and ghettos, and to the disruption of their social, economic, agricultural and demographic
structures. The developing countries have suffered from political colonialism until after the
Second World War. Those who have tried to imitate the western world in their development
since their political independence, are now faced with a new form of economic colonialism,
as they are dependent of the economic situation in the industrialized countries for the prices
they receive for their raw materials, energy and products. A worldwide adoption of the
western economic model based on excessive consumption would also stress the possibilities
of the ecosystem to its limits and certainly lead to an ecological disaster, as we can see
already in several countries.
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The financial and economic help should rather be characterized by decentralization and
consist of small-scale level projects. First of all there is great need for education in the Third
World – especially for girls and women –, focused on the direct needs of the population, in
order to impart the elementary principles of hygiene, health care and birth control, taking into
account local customs. At the same time agriculture must be developed, not in the direction of
mono-culture for export, but to supply the local people with sufficient and diversified food, so
that the migration to the cities and the development of ghettos can be stopped. We do not
preach the return to a strict agrarian society as in former centuries. Modern tools and
techniques should be applied such as
• irrigation
• bio-engineering in order to reduce the use of pesticides and chemical fertilizers
• fermentation of bio-mass and use of solar energy in order to supply in the local
energy needs
• ecological integrated industries where as little waste as possible is produced, and
where waste is recycled
• application of computer- and communication technology in order to spread know-
how to remote places
Professor Rudy Rabbinge, a Dutch agronomist, claims that the Earth can produce food for 40
billion persons when state-of-the-art techniques would be used worldwide! As A. Toffler and
J.J. Servan-Schreiber clearly demonstrate, these agrarian societies are very well suited to
implement these technological attainments, so they do not need to go through the process of
heavy industrialization. To speak with Toffler: they can skip the second wave and evolve to
the third wave in a very short time, if given the proper help and education to the local people.
Of course, fair prices for the products coming from the developing countries is a mandatory
condition in order to stop the economic colonialism, characteristic for the second half of the
20th century. But there also must be a reduction of the internal imbalance in the distribution of
wealth in the developing countries themselves: human rights and working conditions must be
improved, the organization of the people in labor unions must be allowed, there must be a
redistribution of the property of land...
And what about the funding and organization of such an immense project?
At this moment the immense budgets for defense obstruct the realization of
such a plan. In 1987 the worldwide spending on defense and war have
surpassed one thousand billion dollar: more than the annual income of the one
billion poorest people on earth. Three quarter of this spending is done by the
industrialized countries. To these facts one has to add the enormous intellectual
capital that is wasted in this business. Half a million researchers with a
university degree work full-time on the development of new weaponry
systems152. They could use their talents for other purposes. With the money the
world spends on defense on one day, one could establish an effective program
against the expansion of the deserts. The expenditures of ten days would
152
The USA is complaining of their trade deficit with Japan. In Japan they make consumer products and
investment goods in demand all over the world, while the USA has concentrated its efforts on the perfection of
disinvestment goods nobody needs any longer. So who’s to blame? Or are they doing once more an effort to
create new markets for these disinvestment goods?
166
suffice to supply all slumps in the Third World cities with drinking water,
sewerage and sanitary. Half a day would be enough to restore the tropical
woods, to fight erosion, to save vital water supplies and to purify severely
polluted underground water layers. Where else should one look for the
funding?
Interview with the French agronomist René Dumont in Knack, September 6th
1989.
Well... we might even allow for some little inflation in the industrialized countries, as an
investment!
And who would have to supervise the design and implementation of such a plan? As
discussed by B. Fuller in Critical Path and The Group of Lisbon in their report Limits to
Competition, big business and big banking have become supra-national, while the political
decision making is still done in the old-fashioned way by several hundred local pseudo-
democratic and even totalitarian governments. Indeed, in order to implement an economy
designed to satisfy the real needs of humanity it is time to install a world parliament and
government based on real democracy, with real decision-making power and no veto-right for
some privileged countries.
8.4 The dual active-recreational society: “the fourth wave”
Daniel Bell, who used the term for the first time, saw the post-industrial
society as a knowledge based society. This term is useful to describe what
could be a “third” area in economic history. After the agricultural era, with
land as most important means of production, came the industrial era, with
human labor as most important source of economic activity, an era that Marx
labeled the era of added value. We now live in a time in which knowledge is
the most important means of production. This view has the merit that it gives
the post-industrial society a historical dimension, which is not far from the
equivalent of the “end of history153”, as it is difficult for us to imagine what a
fourth era of human society might be.
Daniel Cohen, Globalization and its adversaries, p. 60.
A few critical remarks on this view:

• The description of economic eras that we have given at the beginning of this book
seems more appropriate than the one of Mr. Cohen. In the agricultural era human
labor was very important, even more important than during the industrial era with
its energy driven machines.
• Concerning the “end of history”, let us try to look further than our economic nose
is long, and focus on man as man, and not as as means of production or as
consumer. And it is really not that difficult for us to imagine what a fourth era of
human society might be: we will propose a “fourth era” in human civilization, the
153
Like in Francis Fukuyama’s The End Of History.
167
beginning of a totally New World Order, but then an order which is advantageous
to all of humankind, and not only the ones who assign themselves the “Fifth and
Sixth Freedom”.
I can accept that most people will find it difficult to yield part of their wealth or purchasing
power toward the Third World countries or low-wage countries. But this process is already
going on anyhow: a lot of industrial companies and service companies like call-centers and
software development have moved to lower-wage countries, where now a middle class is
developing, while most of the western countries are faced with a too low level of activity in
order to guarantee the pensions and social security system for the post World War II baby-
boom generation that is now massively retiring. But according to my humble opinion
something can be done about this. And the proposed solution is very agreeable to us all: we
just give the people more time to consume, especially in the recreational area, while at the
same time we increase the economic growth and the profit-ratio of the companies.
business as usual.
Impossible to break with business as usual? Just proceed with reading!
8.4.1 He had a dream, that one day….
Modern Times
At the end of the 19th century, in most countries “common” people, men and women alike,
had to work six days a week, with 12 to 14 working-hours per day, even children had to work.
Only the Sunday was reserved for Our Lord. The majority of the population was considered
as mere production factors, and thus a cost. The laborers did not have the time nor the money
to consume the things they were producing themselves. This can be read in the novels of
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Charles Dickens and Victor Hugo, and also in the book The Right to be Idle, written by Paul
Lafargue in 1880.
In this small book, which he wrote as a reaction to the Marxist slogan Right for Labor (1848),
Paul Lafargue argued that too much labor and not enough consumers leads to overproduction,
as the “poor bourgeoisie” very well had the purchasing power, but their needs were already
amply fulfilled, so there was no or little increase in consumption. The laborers, on the other
hand, were in no position to “absorb” the excessive production, so economic crises and
unemployment were inevitable. According to Paul Lafargue “right for labor” without “right
for consumption” was the cause of economic crises and unemployment.
A disastrous dogma
A strange madness has captured the laboring class in the capitalistic countries.
This madness has brought along enormous individual and social suffering
during the last two centuries. This madness I speak of is the love for labor, the
furious passion to work, even till the exhaustion of vitality of the individual
and his descendants...
Deceived by the false theories of economists, the proletarians have surrendered
their body and soul to the curse of labor, and, in doing so, they have led society
into an industrial crisis of overproduction. Because there is excess of supply of
goods and shortage of people able to buy, factories and mills are closed and
laborers suffer from hunger and cold. The proletarians, drugged by the dogma
of labor and not knowing that their excessive labor in times of so-called
prosperity is the cause of the crisis and their own misery, they should run to the
granary and shout: “We are hungry, we want food. Although we have no
money and are beggars now, it is we who have harvested the grain and selected
the grapes.”
They should attack the warehouses of monsieur Bonnet in Jujurieux, the
inventor of the “industrial convents154” and yell at him: “Monsieur Bonnet,
here are your clear-starchers, your silk-throwsters, your spinners, your
weavers”. They shiver in their patched cotton clothes, although they have made
the silk clothes that you have sold to the whores of Christianity. The poor girls
worked thirteen hours a day so they had no time to dress up. Now they are
unemployed and have the time, but they cannot afford the silk clothes they
have made for others. As soon as they had lost their milk-teeth, they have
dedicated their lives to your fortune, while living in poverty themselves155.
P. Lafargue, The Right to be Idle, pp. 65-66.
As the increasing use of machines destroyed jobs for laborers on a large scale, the proletariat
considered these machines as their enemy: laborers threw their lumps (in French: sabot) into
the spinning machines and the weaving-looms in order to sabotage them. Paul Lafargue, on
the other hand, favored the use of new technology, machinery and automation in as many
processes in agriculture and industrial production as possible. This would indeed decrease the
need for human labor and destroy jobs. But his thesis was that humankind was not destined to
154
Textile mills, where women and children had to work in miserable conditions.
155
See the film The Corporation, in which the situation of female laborers and children in third world
countries, working for Western multinationals, is described.
169
live to work alone, but to work just enough to have a comfortable life and have some time left
for other, more pleasant activities156. He advocated a substantial use of machinery in order to
increase productivity, but also combined with a decrease of working hours per day and a fair
distribution of the material wealth towards the laborers that would be the result of the
economic growth. So one could say that already in 1880 Paul Lafargue had a visionary dream
that one day people would have to work only 8 hours per day and that they would have 2
days off during the weekend, and that this would lead to more material welfare for all, even
the bourgeoisie, the “capitalists” and the industrialists.
At the end of the 19th century the world was not yet ready for his “Rerum Novarum” ideas.
Marxists, socialists, economists, industrialists and politicians all rejected his visionary ideas,
each for their own narrow-minded reasons. Paul Lafargue, who was the son in law of Karl
Marx, committed suicide157 in 1911 together with his wife Laura Marx, disillusioned as they
were with the state of world affairs in their time. They lived through a period of social
struggle and turmoil, while they knew that another world was possible, to the advantage of all
of humankind. Then followed a period with violent revolutions in some countries like Russia,
The Great War, the Great Depression, and finally the Second World War. After that, a new
area in history finally arrived in most industrialized countries, with the general right to vote
and organized labor unions, a workweek of 5 days and 8 working hours per day, which
resulted in an unprecedented economic growth in these industrialized countries. Paul Lafargue
never got the credits for it.
8.4.2 A complicated problem
For the majority of the world-population the division of the week now consists of 5 working-
days of 8 hours plus, for many of them, 2 extra hours for commuting from and to the working-
place. And then there are the 2 weekend-days.
156
All work and no play makes Jack a dull boy.
157
Other people who said they “had a dream, that one day…” are usually shot or crucified: Christ,
Mahatma Ghandi, Malcom X, King, , bishop Romero…
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Day 1 till 5 Day 6 till 7

Population Active Off
(panem) (circencem)
This arrangement has some disadvantages on several domains.
Mobility
In many countries you can see every morning and evening of a working day the structural
traffic jams of people commuting in their private cars in and around the big agglomerations
where work is concentrated. Also public transport is overloaded and people are literally
squeezed into the wagons of trains and metro-cars and in busses. To avoid that in the near
future we will all stand still in our cars or suffocate in the train-wagons or busses, heavy
investments are needed in the sectors of public transport and the construction of new roads. In
some countries highways are constructed on a dual level or under the ground. Some countries
invest heavily in fast trains. Both measures need rather expensive investments. Due to the
present world-wide economic situation most governments do not have the budgetary capacity
to take adequate measures. In some countries they barely succeed in maintaining the present
infrastructure. Higher taxes have a negative influence on private consumption, and thus on the
economic growth. During the rush-hours the mobility infrastructure is overloaded, but for the
rest of the day it is used to a much lower degree. Part of the trains and busses is then not used
at all. Therefore further investments seem to be foolish.
From Friday-evening on you can see then the migration to the holiday-resorts and weekend-
houses in the countryside, on the coastlines or in the mountains. Roads are again overloaded
with people leaving the cities for the weekend. This problem of mobility causes a lot of daily
stress for most of the people during working-days as well as during the weekend. It lowers the
quality of life and has a very negative influence on the productivity of the transport of goods
and the economy as a whole. It is a waste of time and money for private persons and
professionals alike. And cars in a traffic-jam pollute more than cars that can drive along.
Economic efficiency
There is also a structural imbalance for the efficiency and the useful load of the production
infrastructure, the public infrastructure and the recreational infrastructure. The means of
production like factories and office-buildings are used only 5 days a week and during the 2
days of the weekend they are idle, not productive, empty. On the other hand there is in many
regions a need for new industrial areas, to create new jobs. But this means less space for
housing, land for agriculture, recreational areas and natural parks. In some branches of the
economy with continual production, like the petrochemical industry or the ports, there is
activity seven days a week, at the cost of higher wages for the weekend-work.
The infrastructure of schools and universities is also not used to its full capacity as they are
empty during the weekend. Shopping centers are overcrowded on Saturday with people and
their cars, but during working days they are often an oasis of peace and rest, unless they are
located near offices, where they are frequented only during lunch hours or after the working
hours. In some countries shops are already open around the clock and in other countries the
big commercial companies demand the governments to legalize flexible working hours so
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they do not have to pay extra for weekend work and evening-work. This at the expense of the
quality of life of the employees, who have to work out solutions for practical problems such
as babysitter, transport of children to and from school, and also at the expense of the small
independent shopkeepers who have to adapt their business-hours if they do not want to lose
their customers. Sport infrastructure and cultural infrastructure is used only during the
evening hours on working-days and of course during the weekend.
Personal quality of life

This division of time has also some disadvantages on the personal level.
When you buy furniture or a washing-machine, these are usually delivered at your home
during working hours on a working day, so you have to take a day off from work. When there
is some work to be done at your home by a plumber or electrician, some roofing or painting
has to done, then the professionals come to your house during the normal working hours and
you have to sacrifice holidays for these practical matters. There is also a problem with the
accessibility of public and private services like the townhouse, the post-office, the bank, the
social security office, the dentist, the doctor,... whose opening-hours synchronize with your
normal working hours. So another day off is sacrificed. Some of these services have opening-
hours till 7.00 PM or on Saturday morning, but this means extra costs and a burden for the
employees and their children.
In this stressful society a lot of people want more quality of life, are fed up with the rush-rush
way of life. They want a better balance between time for commuting and actual working time;
they want more time for recreation and their family.
Public finances
Most governments have financial problems due to the situation of the world-economy and the
demographic evolution. Their budgetary capacity is dependent on economic growth and the
level of activity or the unemployment of their population.
The economic growth of a country is supported by two components: internal economic
growth and the surplus of their trading balance as a result of export to other countries.
Countries are dependent on the economic situation of their trading partners for their export-
level, and for most countries the situation is not so good. In order to be competitive the cost of
production and the wages should be lowered, but this erodes the purchasing power of the own
population and thus the internal economic growth.
The post World War II baby-boom generation is getting older and life expectancy has
increased considerably in recent years, so in most countries the public and private systems of
retirement-pensions will be under great pressure. In some countries people are already warned
that they will have to work longer in order to increase the level of activity in order to keep the
public and private pension-systems viable. On the other hand it is difficult for older people to
get a well-paid job in this fast evolving technological society.
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8.4.3 A possible solution
This seems to be a Gordian knot. Solutions seem to be expensive or even unpayable, they will
lead to higher taxes or inflation, and they will never be acceptable for everyone in society.
Many of these measures will be a burden on the environment (more roads, more industrial
zones, less space for nature and leisure-time...) and create new problems.
And then you have the blissful optimist who once sang “There are no problems, only
solutions” and “People say I’m crazy doing what I’m doing”, you know, the guy who sent the
immortal song “Imagine” into the world.
Before his successful solo-career John Lennon was member of the Beatles, a band which
compiled an impressive series of 27 N° 1 hits.
In their songs you can discover a lot a social, personal and spiritual wisdom, (Let It Be, The
Long and Winding Road... ), and one of these songs might well enter the history as the “Ode
an die Freude” of this century:
Eight Days a Week
Ooh I need your love babe,

Guess you know it’s true.
Hope you need my love babe,
Just like I need you.
Hold me, love me, hold me, love me.
Ain’t got nothin’ but love babe,
Eight days a week.
Love you ev’ry day girl,

Always on my mind.
One thing I can say girl,
Love you all the time.
Hold me, love me, hold me, love me.
Ain’t got nothin’ but love babe,
Eight days a week.
Eight days a week

I love you.
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Eight days a week

Is not enough to show 1 care,
Ooh I need your love babe,
Eight days a week ...
Love you ev’ry ...
Eight days a week. Eight days a week. Eight days a week.
Let us indeed try to manage our time in a more creative way. How could we organize an
eight-day-week? Maybe we could arrive to what I would call the “dual active-recreational
society”.
Well, imagine(!) that one part of the active population and the kids at school and students at
university are active the first 4 days, and that they are off the next 4 days, and the other part is
off the first 4 days and active the next 4 days.
Day 1 till 4 Day 5 till 8

50% of the population Active Off
(panem) (circencem)
50% of the population Off Active
(circencem) (panem)
As a matter of fact, every “physical” socioeconomic entity would be divided into two
“logical” entities that are alternating active and idle, so the “physical” entity would be used at
full capacity. This would indeed result into a dual society, but not a vertical one with people
with a job and people without a job, “haves” versus “have-nots”, but rather into a sort
horizontal timesharing system across the whole of society of “actives” and “not-actives”, and
with less “have-nots”.
Imagine all the people
Sharing all the world...
John Lennon, Imagine
And what is left of our Gordian knot?
• Structural traffic jams in the morning and the evening would be considerably
reduced without need for huge investments in roads and public transport. They
both would be used in a more optimal way every day of the week and every hour
of the day.
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• Transport of goods would be leveled out in time and would be more productive as
there would be less traffic-jams. Professional, recreational and private transport
would be more leveled out in time
• Air-pollution and CO2 emission could be reduced due to better transport efficiency
• Factories, offices, public services, schools, hospitals, recreational facilities would
be used at full capacity. This means a higher productivity, a higher profit-ratio
(profit/invested capital)
• The level of activity would increase considerably, also for the older but still
young-of-heart part of the population that still can make a valuable contribution to
a productive society. Their experience can be indeed of great value for the younger
ones.
• This would introduce a system in which there is a backup for every job, which is
advantageous for companies. Nobody is indispensable and there would be a better
transfer of knowledge and skills.
• Public and private services would always be accessible during normal business-
hours for part of the population. No need to sacrifice days off, or for overwork in
the evening or work on Saturday.
• People would be able to spend more quality time with their family, for recreation
and sports. This proposal meets the demand for less working-time and more
leisure-time that lives among most of the people. People with a holiday resort or a
sailing-boat would be able to make more use of it.
• Absenteeism from work due to sickness or burnout syndromes would be reduced,
with as consequence a positive effect on the cost of labor and cost of the social
security and health care systems.
• For a lot of people it offers the opportunity to combine work with study, without
having to go to evening-school after a hard day of work. Or to start their own
business.
• Unemployment would decrease and taxes could be lowered.
• There is no need for expensive investments in new infrastructure to implement
this. On the contrary, the infrastructure of roads, offices, factories, schools, trains,
busses, leisure-time infrastructure is already available but not used at full capacity.
• As the infrastructure could be used at full capacity, the production of goods could
be increased without need for investments. The new division of working time
would result in more consumption, but not necessarily of products but rather of
services, especially in the recreational business. This means that the GNP of a
country, the employment and the export could increase, resulting in a better
balance of trade and lower budget deficits.
And what would be the cost of all of this? “Nothing” is maybe too optimistic, but we might
end up with a better utilization of all kinds of infrastructure without having to do large
investments and without need to increase taxes. It is more a matter of organization than of
infrastructure, a different way of organizing our life.
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Of course it is necessary to do further investigations on the social and economic benefits of

this proposal. This should be done in a social debate, coordinated by a team of not only
economists and managers, but also sociologists, engineers, labor unions, organizations
representing small entrepreneurs, pedagogues, youth-organizations, political parties,
governmental services, and this in co-operation with international organizations like the UNO,
ILO, UNCTAD, IMF...
Many questions remain to be answered.
• Is it possible that one country could implements this alone, or should it be done on
a continental level or on global level? I don’t think it matters. The “shop” of the
country would be permanently open for business, and even now countries are
situated in different time-zones on the globe and some of them are islands. So
every country can make its own arrangements, even region by region.
• What is the influence on wages, on the one side what employers have to pay and
on the other side what employees can earn?
• What is the influence on energy consumption and pollution? Surely the electricity
consumption would be more equalized over the week, so the consumption peaks
and dips would be leveled out. The total production of electricity could be
increased, while investments in higher production capacity or in the distribution
network could be postponed. Immediately a higher profit-ratio for electricity
companies! Or lower prices?
• Maybe a working-day of 9 hours is socially acceptable if there is less traffic-jam
and a “weekend” counts 4 days? So every day of the present seven-day-calendar
half of the population would work 9 hours a day. For the employees this means a
reduction in working time of 21%, while the useful load of factories and offices
would increase with 57%! (see the simulation at the end of the section.)
• Unemployment would evaporate instantly. In the future one could use the number
of working hours per day in order to “fine-tune” the economy. Imagine, time as
means of investment. Indeed, isn’t time money, as they say in English?
• What would be the effect on drug abuse, crime figures and violence in society,
when more people would be able to find a job and have enough leisure time? What
would be the effect on absenteeism from work and on the cost of healthcare?
• Is there a need for a new calendar system or is it feasible with the present “seven
days a week calendar”? According to me the present calendar system is just fine; it
is just a matter of organization, of time management. On a certain week part of the
population would start their work-period on a Monday and work till Thursday, the
other part of the population would then work from Friday till Monday, so the first
group would then take over on the next Tuesday, etc. The start of a work-period
for a person would shove up one day each week. This becomes clear when you
look at the simulation at the end of this section.
• How does this proposal fit in the trend towards globalization and with the transfer
of production facilities and services, like call-centers and software-production, to
the lower-wage-countries?
• When can it be introduced? Very often social changes of this magnitude have been
introduced after a major war (5 days working week, the general right to vote...).
More on that subject later on, but I don’t think we have to wait for such an event.
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We better do it at the beginning of a school-year. The family-unit should indeed be

the central focus-point in this social (r)evolution.
And another N° 1 of the Beatles is “We can work it out”!

This proposal might induce some resistance from religious factions. But which one? For the
Muslims Friday is the day of prayer, for the Jews the Saturday is the Sabbath, for the
Christians Sunday is the day reserved for the Lord... It is difficult to satisfy everyone with that
many religions...
On the other hand every day in the week could be a day for prayer, contemplation or
meditation for part of the population... Isn’t religion a private matter between an individual
person and his Creator? And the self-employed people, well they can decide themselves how
they will arrange their time.
I have discussed this idea already with a lot of people, and I found out that once they realize
that time is just a convention, they understand the scope of the idea and what the impact could
be on society and their personal life. Most of them said they wished this regime was already
implemented, but at the same time they were very skeptical about the willingness of political
leaders to do something about it, or of other people to accept this new way of living.
The greatest single obstacle to the resolution of great problems in the past was
thinking they could not be solved – a conviction based on mutual distrust.
Psychologists and sociologists have found that most of us are more highly
motivated than we think each other to be! For instance, most Americans polled
favor gun control but believe themselves in the minority. We are like David
Riesman’s college students, who all said they did not believe advertising but
thought everyone else did. Research has shown that most people believe
themselves more high-minded than “most people”. Others are presumed to be
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less open and concerned, less willing to sacrifice, more rigid. Here is the
supreme irony: our misreading of each other158.
M. Ferguson, The Aquarian Conspiracy, pp. 447-448.
Or as John Lennon has formulated in his song Imagine:

But I’m not the only one
I hope someday you’ll join us
And the world will be as one
One world? Well, rather a dual society, but then not a vertical one with “haves” at the top and
“have-nots” at the bottom, but a horizontal one in which the burden for making the “panem”
and enjoying the “circencem” are evenly distributed. Indeed a New World Order, but then to
the advantage of everybody.
158
Induced by the mass media, as very clearly illustrated by Noam Chomsky in Failed States, in the
section Public Opinion and Public Policy, pp. 228-236.
178
Simulation: The least common multiple of 7 and 8 is 56. So let us consider a 56 day period.
Present situation Future situation
Working- Working-
Hours Working- Hours hours/ hours/
facilities hours/ facilities person person
Week Day are used person are used group 1 group 2
1 Week 1 Monday 8 8 9 9
2 Tuesday 8 8 9 9
3 Wednesday 8 8 9 9
4 Thursday 8 8 9 9
5 Friday 8 8 9 9
6 Saturday 9 9
7 Sunday 9 9
9 Tuesday 8 8 9 9
10 Wednesday 8 8 9 9
11 Thursday 8 8 9 9
12 Friday 8 8 9 9
13 Saturday 9 9
14 Sunday 9 9
16 Tuesday 8 8 9 9
18 Thursday 8 8 9 9
19 Friday 8 8 9 9
20 Saturday 9 9
21 Sunday 9 9
23 Tuesday 8 8 9 9
25 Thursday 8 8 9 9
26 Friday 8 8 9 9
27 Saturday 9 9
28 Sunday 9 9
30 Tuesday 8 8 9 9
32 Thursday 8 8 9 9
33 Friday 8 8 9 9
34 Saturday 9 9
35 Sunday 9 9
37 Tuesday 8 8 9 9
39 Thursday 8 8 9 9
40 Friday 8 8 9 9
41 Saturday 9 9
42 Sunday 9 9
44 Tuesday 8 8 9 9
46 Thursday 8 8 9 9
47 Friday 8 8 9 9
48 Saturday 9 9
49 Sunday 9 9
51 Tuesday 8 8 9 9
53 Thursday 8 8 9 9
54 Friday 8 8 9 9
55 Saturday 9 9
56 Sunday 9 9
Total hours (sum) 320 320 504 252 252
Reduction of working hours per person: 21,25 %

Increase in hours facilities are used: 57,50 %
Intermediate conclusion: Short of labor force

Economic efficiency would increase considerably
Final conclusion: Some fine-tuning is needed, but looks very promising
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8.4.4 The quaternary sector.
During the course of history, the economic and social landscape went through an enormous
evolution. Until the early Middle Ages, the major part of the population was working on the
fields as serfs, later came the mediaeval towns with the craft-guilds and the commercial
guilds, which took care of the “industrial” production and the trade.
Due to the advancing mechanization since the Industrial Revolution, less and less people
needed to work in the agricultural sector (the primary sector), and more people were
employed in the industry (the secondary sector). By the use of automation like the assembly-
belt, less people were needed in the industry and employment in the secondary sector
decreased, while more and more people worked in the service industries (the tertiary sector).
So far the classical division of employment which is used by economists: people are
employed in the primary, the secondary or the tertiary sector. But this point of view lags far
behind reality, primarily because this vision fails to focus on man as man; it just considers
people as a means of production.
It is my solemn conviction that man is not created only to work. All work and no play makes
Jack a dull boy. Most people do not go to work because they like it, but in order to make a
living in order to fulfill their needs. And once they make enough money, they spend a
substantial part of it on things and activities they really like: a good dinner in a restaurant,
going to the movies, listen to music, do some sport, a visit to the sauna, a trip to an exotic
island,… in brief: they want to enjoy themselves during their leisure time.
And this brings us to the “quaternary sector” (I admit, not directly an original name): the set
of human activities that involves leisure time in the widest sense of the word: the hotel and
catering industry, the cultural sector, the film and music industry, tourism, sport,… This
sector already exists159, its turnover and employment are even gigantic in these days, and
fortunes are made by entertainers and sportsmen. And when the eight days a week regime
would be introduced, the economic importance of this quaternary sector could increase
considerably, and become more important than the other three sectors combined. It could
generate a substantial economic growth and thus also profit for society and for companies, so
there would be no need any more for the sector of disinvestment goods and wars in order to
pull the profit ratio to a substantial higher level.
8.5 Fair collection of taxes
On the international financial markets, 180 dollar is daily traded per man,
woman or child, and this with a world population of 5.6 billion people. The
world trade in commodities is about 4,000 billion dollar per year. One does not
need a computer to calculate that only 1% of the exchange in foreign
currencies has something to do with the international trade in commodities.
The rest is pure trading, with as sole purpose portfolio management and the
satisfaction of a gambling instinct.
Armand Van Dormael, The Power behind Money, p. 7.
159
I even think that this sector is historically the oldest sector.
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One of the measures proposed by NGO’s in order to accelerate the development of the Third
World countries is the introduction of a Tobin-tax: a very small tax on large international
financial transactions, with two purposes:
• to create more stability on the financial markets, which would ultimately lead to
less fluctuating currencies and more economic stability;
• to raise funds for the development of the Third World countries.
History teaches us that it is very difficult to organize a tax-system that is fair and has no
loopholes, and that fiscal engineers always find cracks in it, so that the people who can afford
to pay these fiscal whiz-kids pay less taxes than the other people. A world-wide control
organism would have to be created in order to monitor that the Tobin-tax is paid correctly.
And this creates once more what P. Lafargue has described as “active unproductivity”: a lot of
people who cost a lot of money, but who have no active contribution whatsoever to the
production of real goods and services. Therefore I propose the following alternative for the
Tobin-tax.
On one of the UNCTAD conferences I heard former vice-president of the United States Al
Gore suggest to introduce the United States Generally Accepted Accounting Principles for
companies all over the world, so it would be easier to make a clear assessment of the health of
companies. There was at that time a lot of protest from the part of the NGO’s, as they saw this
proposal to be too much in line with the trend of globalization of the world-trade and the
world-economy: it would be easier for American companies to decide which foreign
companies to acquire, in which countries to invest, etc.
I think however this is not a bad idea, at least when it is linked to the following simple rule:
all companies in the world should use the same start-date/time and end-date/time for their
financial year. And with “time” we do not mean local time, but Greenwich Meridian Time
(GMT).
The argument for this is as follows: now multinationals set up constructions in which most of
their subsidiary companies (Ci), located over many countries and continents, or even within
the same country, have financial years with different start-date and end-date.
Calendar year X Calendar year X + 1

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
C1 Financial year C1
• In the 4th quarter of calendar year X the company C1 buys for a great amount parts,
semi-manufactured goods or end-products from its sister-company C2. In doing so,
the profit of company C1 goes down, and it will pay less taxes.
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• In the 1st quarter of calendar year X + 1 the company C2 buys for a great amount
parts, semi-manufactured goods or end-products from its sister-company C3. In
doing so, the profit of company C2 goes down, and it will pay less taxes.
• In the 2nd quarter of calendar year X + 1 the company C3 buys for a great amount
doing so, the profit of company C3 goes down, and it will pay less taxes.
• In the 3rd quarter of calendar year X + 1 the company C4 buys for a great amount
doing so, the profit of company C4 goes down, and it will pay less taxes. Etc.
As a result of this carrousel, multinationals manage to pay lower taxes or even no taxes at all:
the generated cash-flow is transferred from company to company and goes around the world,
without ever resulting in a profit that can be taxed. And this holds a double unfairness:
• In most countries nowadays, the tax-burden is carried by the working-class people,
there is very little tax-contribution from the part of the companies, especially the
multinationals, and there are very little or even no taxes on big fortunes.
• And due to lower declared profits, a lower dividend is paid to the many small
shareholders, while CEO’s and members of the board of these multinationals
assign themselves gigantic remuneration’s and stock options.
And the funny thing is that in some countries, like Belgium, the co-ordination centers of the
multinationals, which optimize this system of tax-evasion, receive even extra fiscal
advantages compared to other companies who pay their fair share of taxes.
I am convinced that the proposal to “synchronize” the financial years of all companies all over
the world would result in enough fair taxes so that:
• the already long-time proposed target to spend 0.7% of the GNP in aid to the Third
World countries could be met quite easily;
• the taxes for individuals could be lowered, especially the taxes on wages and
salaries;
• … and that even the taxes for companies could be lowered.
On the other hand, this proposal will lower the costs of the tax-controlling systems and of the
organizations trying to detect fiscal fraud, as the system of “transfer pricing” and invoice
carrousels will no longer yield the same result anymore. It would even be totally impossible.
Some bookkeepers, accountants and fiscal consultants will get the cold shivers while reading
this proposal, but you have to agree with me: on the long term, honesty is the best policy!
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9 Epilogue
In all times and all cultures, among all races and all religions there have always been people
who considered themselves as “Übermenschen” and the others as “Untermenschen”, whom
they could exploit as slaves, serfs, cheap labor-force and as cannon-fodder, destined to die for
the interests of the power élite. Even people of their own creed, race and country were
sacrificed. This has resulted in the society as we know it today: a dual society with “haves”
and “have-nots”, among countries as well as within countries.
In this book we have tried to prove that there is an alternative point of view: there are only
“Nebenmenschen”. And we also propose a dual society, but then not a vertical dual society,
but rather a horizontal dual society in which everybody makes a productive contribution in the
generation of wealth, but is also entitled to enjoy the fruits of his own labor: the burden and
the delights are shared more equally. And this is to the advantage of both “Übermenschen”
and “Untermenschen”. We refer once more to the work Howard Katz.
War and the covert aristocracy.

In the Dark Ages, when feudal lords kept the vast majority of people in
serfdom, war was a necessary institution to preserve the structure of society.
This is because in that type of society the people suffered such incredible
hardships and injustices at the hand of the nobility that, despite the extent to
which they were bound down by fear of authority and by superstition, there
was always a severe danger that the people would rise up and destroy their
feudal lords.
To prevent the hostility of the people from being turned against the nobility
(who were the source of their suffering), the nobles constantly fomented wars.
This directed hostility outward against an outsider (whom it was safe to hate)
and prevented rebellion against the lord. Thus, two feudal lords at war with
each other were, in fact, both maintaining their domination of the respective
peasants.
Our society does not have feudal lords, but similar principles apply. We made
a valiant attempt in the 17th and 18th century to get rid of the aristocracy. We
succeeded only in part. In The Paper Aristocracy160, an aristocracy was defined
as a “small élite who, through control of the government, have obtained special
privileges in law and are thus enabled to live as parasites on the labor of
others” and who “by means of this exploitation... amass large amounts of
unearned wealth”.
The desire for unearned wealth is very old. While it would be unduly
pessimistic to say that it is inherent in human nature, it is certainly true that it is
very widespread among the population - especially among the practically
oriented, worldly type of person. The lowest expression of this desire is the
common criminal, whose range of thought only extends to a few months and
years.
160
Another book written by Howard Katz.
183
But the same desire actuated by more powerful minds has given rise to social
systems where robbery and exploitation are systematized and legalized and
where resistance to the robber is a crime. Such was the social system of the
Dark and the Middle Ages where a tiny minority exercised complete material
domination over the population. They bound the men to the land in order to
steal the product of their labor; they raped the women; they administrated the
“law” which they had instituted. In this society the practice of torture was
commonplace, and the life of a peasant was cheap.
The proclamation of the rights of man by the English Parliament of 1688 and
the French assembly of 1789 did not fully end this unhappy state of affairs.
The aristocracy could no longer openly assert its special privileges, but the
desire for unearned wealth and accompanying benefits did not die so easily.
When the old feudal aristocracy was destroyed, another group of men set about
to achieve its goals by different means.
While the principle of the feudal aristocracy was open and explicit, the
principle of the new aristocracy is hidden. It is a covert aristocracy, and in this
regard we may divide human history into three periods:
1. Open Aristocracy. Exploitation by the aristocracy was publicly affirmed
and defended. This period ended in the 17th century in the Anglo-Saxon
countries (one may take 1642 or 1688 as the date) and later in the other
European countries.
2. Covert Aristocracy. The exploitation had to go underground and operate
by deceit161. This is the stage of most countries in the world today.
3. The Society Based on Justice. This third period is still in the future162
when exploitation will cease and when each man will receive the product
of his own labor163.
The bankers164 are the main (but not the only) element in our covert
aristocracy. Using many of the tried and true principles of the aristocracy
(authoritarianism, statism and the use of an intellectual priesthood to deceive
the public) they have created a system whereby they live off the labor of the
vast majority.
In 1688, when the old aristocracy was toppled in England, the new aristocracy
was on hand. We have seen how democracy is inherently a force for peace. But
war, the standby of the old aristocracy, became an important device for the
new. Through the creation of the Bank of England, war and paper money
became inextricable mixed in a way which allowed the bankers – and their
other associated vested interests – to seize the wealth of the people. In this
161
This covert aristocracy also managed to topple down some of the old open aristocracy, like the
Romanoff’s in Russia, or they replaced them with a new more “manageable” open aristocracy, like the House of
Hanover in England. The Romanoff’s were related to the House of Hanover, so they asked their “cousins” for
political exile in England. The cousins said “No”. The Romanoff’s where killed, probably with Remington
weapons. After WWI the House of Hanover changed its name to the House of Windsor.
162
Eight Days a Week – The Fourth Wave!
163
Millions of workers, working for nothing. You better give ‘em what they really own (John Lennon,
Working Class Hero).
164
Fortunately not all bankers, but rather a small élite who for centuries has made kings and presidents.
184
sense there is a ruling group in America – and in every other country in the
world – today.
We can now, perhaps, better understand how men foment war for economic
motives. The covert aristocracy continues many of the traditions of the old
medieval aristocracy. Wealth may not be its only goal, but it always requires
an economic base. It would not be an aristocracy if it did not live in great
wealth without working. Wealth and power are inextricably mixed for this
class, which cannot lose one of these elements without losing the other.
It is hard to conceive of a man who will cold bloodedly send another human
being (let alone thousands or millions) to die only for his material self interest;
few could do this if they understood the situation in those terms. But when the
motive is strong, most men’s capacity for self-delusion is infinite. By whatever
process, they come to believe that the war which advances their wealth and
power is absolutely essential for the salvation of mankind. It is true that J.P.
Morgan and Company dishonestly maneuvered the United States into a war
which greatly swelled their pocketbooks, but it is also true that they believed
that the extension (and preservation) of the Anglo-Saxon way of life hung in
the balance. Once a man’s self-interest is involved, he can usually find some
“ideal” in terms of which to justify his actions.
We can also see how men who might be deterred from war by an increase in
taxes are not deterred by the loss of life and liberty. In time of war a hysteria
grips the nation. The public debate is governed primarily by emotion with very
little space left for reason. The average man is propagandized with songs,
slogans and heroic statements. In this frame of mind, even human life itself
becomes cheap.
But the issue of a tax increase to finance the war – although far less threatening
man’s values than the loss of life – shifts the debate to a far different level. In
our society, we are used to treating economics as a rational subject. While men
may be highly irrational in other areas, they pride themselves on their
calculated rationalism in the field of economics. Shift the subject to the cost of
the war, and suddenly the average man is no longer swept away by heroic
songs or eloquent speeches. He cannot calculate the value of a human life, but
he can calculate the value of the tax increase you are passing along to him.
And as small as this value is in the scheme of things, he sees that the war is not
worth it.
Interestingly, two years after the establishment of the Bank of England, the old
practice of coin clipping and alloying base metals with the gold – which had
gone on since virtually the invention of money – was ended by a reminting of
the debased coinage. With the new method of exploitation in place, there was
no need for the old. Power to debase the currency thus passed from the king
(representing the old aristocracy) to the banker (representing the covert
aristocracy), and there it remained to this day.
Furthermore, this explains why there is a great deal of injustice directed inward
during wartime and why in many respects the society returns to a condition
approximating that of the Middle Ages. It explains why freedom of speech is
often violated in time of war, why forced labor is introduced (especially for the
military), why dissent is not tolerated and why unsound financial policies are
185
followed. These things are not means to win the war; in fact they operate to
weaken the society and make for a less efficient war potential. For the ruling
group which desires the war, they are the end itself, and the war is the means to
bring them into being.
H. Katz, The Warmongers, pp. 39-42.
Fortunately, in all times and all cultures, among all races and all religions there has always
been people who considered themselves and all other people as ‘Nebenmenschen’. They have
tried to express this in all kind of manners: rational and scientific, but also in all kind of arts:
novels, poetry, paintings, sculptures, music, films… As examples we quote two masterpieces.
John Lennon’s Mind Games seems to be a modern version of Ode an die Freude, written by
Friedrich von Schiller and put on music by Ludwig von Beethoven in his 9th symphony.
We’re playing those mind games together

Pushing the barriers planting seeds
Playing the mind guerrilla
Chanting the mantra peace on earth
We all been playing those mind games forever
Some kinda druid lifting the veil
Doing the mind guerrilla
Some call it magic the search for the grail
Love is the answer and you know that for sure

Love is a flower you got to let it, you got to let it grow
So keep on playing those mind games together

Faith in the future outta the now
You just can’t beat on those mind guerrillas
Absolute elsewhere in the stone of your mind
Yeah we’re playing those mind games forever
Projecting our images in space and in time
Yes is the answer and you know that for sure

Yes is surrender you got to let it, you got to let it go
So keep on playing those mind games together

Doing the ritual dance in the sun
Millions of mind guerrillas
Putting their soul power to the Karmic wheel
Keep on playing those mind games forever
Raising the spirit of peace and love
(I want you to make love, not war,
I know you’ve heard it before)
John Lennon, Mind Games
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German English
O Freunde, nicht diese Töne! Oh friends, not these tones!
Sondern lasst uns angenehmere Let us raise our voices in more
anstimmen, und freudenvollere! Pleasing and more joyful sounds!
Freude, Schöner Götterfunken, Joy, fair spark of the gods,

Tochter aus Elysium, Daughter of Elysium,
Wir betreten feuer-trunken, Drunk with fiery rapture, Goddess,
Himmlische, dein Heiligtum! We approach thy shrine!
Deine Zauber binden wieder, Thy magic reunites those
Was die Mode streng geteilt; Whom stern custom has parted;
Alle Menschen werden Brüder, All men will become brothers
Wo dein sanfter Flügel weilt. Under thy gentle wing.
Wem der grosse Wurf gelungen, May he who has had the fortune
Eines Freundes Freund zu sein, To gain a true friend
Wer ein holdes Weib errungen, And he who has won a noble wife
Mische seinen Jubel ein! Join in our jubilation!
Ja, wer auch nur eine Seele Yes, even if he calls but one soul
Sein nennt auf dem Erdenrund! His own in all the world.
Und wer’s nie gekonnt, der stehle But he who has failed in this
Weinend sich aus diesem Bund! Must steal away alone and in tears.
Freude trinken alle Wesen All the world’s creatures

An den Brüsten der Natur; Draw joy from nature’s breast;
Alle Guten, alle Bösen Both the good and the evil
Folgen ihrer Rosenspur. Follow her rose-strewn path.
Küsse gab sie uns und Reben, She gave us kisses and wine
Einen Freund, geprüft im Tod; And a friend loyal unto death;
Wollust ward dem Wurm gegeben, She gave lust for life to the lowliest,
Und der Cherub steht vor Gott. And the Cherub stands before God.
Froh, wie seine Sonnen fliegen Joyously, as his suns speed

Durch des Himmels prächt’gen Plan, Through Heaven’s glorious order,
Laufet, Bruder, eure Bahn, Hasten, Brothers, on your way,
Freudig, wie ein Held zum Siegen. Exulting as a knight in victory.
Seid umschlungen, Millionen! Be embraced, Millions!

Diesen Kuss der ganzen Welt! Take this kiss for all the world!
Brüder überm Sternenzelt Brothers, surely a loving Father
Muss ein lieber Vater wohnen. Dwells above the canopy of stars.
Ihr stürzt nieder, Millionen? Do you sink before him, Millions?
Ahnest du den Schöpfer, Welt? World, do you sense your Creator?
Such’ihn über’m Sternenzelt! Seek him then beyond the stars!
Über Sternen muss er wohnen. He must dwell beyond the stars.
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Unfortunately, in all times and all cultures, among all races and all religions there has always
been people whom we could describe as NIMBY’s (Not In My Back Yard): people who are
not concerned about what happens to their fellow human beings (war, genocide, poverty,
pollution), as long as it does not occur in their back yard165.
Eight Days a Week – The Fourth Wave could well be the start of a new phase in human
evolution, towards a society based on justice. In this book we have pushed some barriers and
hopefully we succeeded in planting some seeds into the mind of the reader.
• Next to consumption goods and investment goods we have introduced the notion
of disinvestment goods in order to incorporate the occurrence of war in the
description of the economic process.
• Next to the four fundamental freedoms described in the American constitution
(freedom of speech, freedom of religion, freedom from want, freedom from fear)
and the Fifth Freedom described by Noam Chomsky (the freedom that some
countries grant themselves to get complete control over the natural resources of
minerals and energy supplies of other countries, even with the use of force and
coercion), we have introduced the Sixth Freedom: the freedom that some interest
groups grant themselves to create money out of nothing in an illegal way in order
to finance the Fifth Freedom.
• Next to the classical division of economic sectors (agriculture, industry, services),
we have added a fourth sector, the leisure time industry, which could well become
the most important one in our 4+4 days a week regime.
I hope this has expanded your vision of the world, your paradigm, and that you now can see
current world-affairs in a wider context. In appendix A we will elaborate this concept of
paradigm, and describe how paradigms originate and evolve. In the other appendices we will
use this to knowledge to describe the evolution of the socioeconomic paradigm in relation to
the evolution of other hard and soft sciences. And this should stimulate the reader to change
his thinking from geopolitical terms into more Gaia-political terms.
165
Keep this in mind the next or first time you read The Book of Job in the Bible. This is also related to
the concept of (instant) karma in eastern religions.
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10 Schematic synopsis
10.1 Current geo-political and socioeconomic paradigm, based on wrong premises.
• Consider things in a rational way, no moral considerations are needed. After all, amoral is not the same
as immoral.
• Thomas Malthus:
o Resources increase at an arithmetic rate, population at a geometrical rate. So resources per
capita decrease.
o Get control of resources of other countries.
o Reduce population.
o Wars, pogroms and genocides (women and children first) meet both objectives perfectly:
Children have more years to live than adults, so they need more resources. The
younger they die, the more resources are left for others.
Women can bear children. Men cannot do this, they need women to procreate.
Men can be used as slaves, cheap labor or cannon fodder.
No problem if people are killed on both sides: more resources per capita are left.
• Social Darwinists:
o Survival of the fittest.
• Profit is not possible according to economists:
o Evolution of profit ratio: declining in times of peace due to free competition and accumulation
of capital goods.
o Actions to increase profit ratio:
Consumer society: induce demand for non-essential products and services.
Disinvestment goods (armament industry):
• When not used:
o To stimulate growth (they contribute to the GNP, just as
consumption goods and investment goods, or a broken window).
• Once used:
o To reduce the level of invested capital (lower denominator of the
profit ratio).
o To increase the demand for goods during and after the massive
destruction (higher numerator of the profit ratio).
o To reduce the level of population.
• Joseph Schumpeter: creative destruction (Capitalism, Socialism and Democracy, 1942).
o In his mind: creative innovation destroys old techniques and businesses (CD replaces LP and
audio tape, MP3 and iPod make CD obsolete).
o According to others: destroy in order to recreate and rebuild (Halliburton and The Carlyle
Group).
• “All men are equal, but some are more equal than others”, so there are always winners and losers, it is
“us or them”.
• Rationally and amorally spoken, war meets all requirements perfectly! So this cannot be immoral. It is
for the good of “us” against “them”!
• So let us start first, a preemptive strike is better than no strike, even if there is no real reason for it. One
could always provoke a reason.
• Furthermore, financing a war by fiat money is very lucrative for some people, while the silent majority
does not realize that inflation and higher taxes erodes their incomes, accumulated savings and pensions.
• Multinationals pay very few taxes due to system of transfer pricing.
Î Just study the past, look at the newspapers and the news on TV, makes you wanna cry.
Whish your heart was made of stone.
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10.2 New Gaia-political and socioeconomic paradigm, based on correct premises.
• Consider things in a rational way and moral way. Rationality combined with amorality and pure self-
interest leads to immorality.
• Thomas Malthus was right for only a short time-span. Over a longer period of time Pierre Francois
Verhulst is right, with his well known S-curve (the logistic population growth model, 1838).
o In poor societies with high death rate for children and no social security or pension system, a
family needs lots of children and grandchildren in order to guarantee a comfortable old age.
o In rich societies, with low death rate for children and a social security and pension system,
there is no longer need for a lot of children, so the birth rate declines, the population levels out,
and in some rich countries even declines.
• Modern evolution theory: species are dependent on each other for their survival.
o Foxes eat chickens, but do not raise chickens. More foxes lead to fewer chickens.
o People eat chickens and raise chickens. The more people, the more chickens!
• Profit for companies is part of the ‘profit for society’, which is the result of economic growth.
o Distribution of the ‘profit for society’ over the socioeconomic participants determines future
growth:
Socioeconomic participants whose needs are amply fulfilled will not necessarily
consume more and will not necessarily induce future growth and future profit.
Socioeconomic participants with still needs to fulfill will consume and induce future
growth and thus future profit.
• Sustainable growth in a compassionate society for all instead of consumer society for the happy few.
• “All men are equal”. And it is “us and them together”.
o 4 + 4 = 8 days a week:
4 days work for half of the population.
4 days leisure time for the other half of the population.
Alternating, so infrastructure is used completely 8 days a week. No need for
investments in order to boost the profit ratio.
No unemployment, less crime.
• Peaceful world society.
• Inflation free world society.
• Fair tax collection when all companies all over the world use same fiscal year in their accounting
system (in Greenwich time, not local time), so transfer pricing and tax-evasion are no longer possible.
Î Heaven is here on Earth, if you want it.
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10.3 Some thoughts to brood on.
An old Jewish story goes like this. A man dies. In the world beyond he is allowed to choose
himself between heaven and hell166, which is, indeed, rather exceptional. The man does not
like to take the risk to buy a pig in a poke, so he asks for a short visit to both places before
making a decision.
First he is shown hell: a beautiful decorated room with long tables dressed with the most
delicious food and drinks. Then a door is opened and the guests of Beelzebub enter the room,
all dressed in magnificent clothes. But all persons seem to have the same handicap: both their
arms are stiff, they cannot bend them, so they cannot reach to their mouth. From the moment
they see the food, they rush toward the tables. In doing so they push each other aside with one
arm and try to grab everything they can with the other, much more than they can eat. But then
they fail to bring the delicious food to their mouth, and out of anger and despair, they start to
hit each other with the duck à l’orange, the lobsters and that sort of things. As Jean-Paul
Sartre would say : “L’Enfer, c’est les autres”.
After this visit to hell, the man is given a glimpse of heaven: exactly the same scene. The
same beautiful room with the same tables full of delicacies. Again the guests enter the room,
dressed in exquisite clothes and again with two stiff arms. Each soul calmly walks towards the
table, they all carefully select a piece of food... and reach it to the mouth of the person next to
them. All this happens in a serene atmosphere. They all enjoy the delicious banquet. So here
we could say: “Le ciel, c’est les autres.”
What alternative would you choose to spend the rest of your days?
166
Heaven is where the policemen are British, the cooks are French, the mechanics German, the lovers
Italian and everything is organized by the Swiss. Hell is where the cooks are British, the mechanics are French,
the lovers Swiss, the policemen German, and everything is organized by the Italians.
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11 Some recommendations: where do we go from here?
No socioeconomic system can last long unless it rests on an appealing

ideological structure. In this regard, capitalism is no exception. And as with
every elitist system, its ideological thread is sound in theory, but tenuous in
reality....
We have already seen that in an acquisitive era intellectuals come forward to
offer theories justifying the supremacy of the acquisitors. To many
intellectuals, it seems to matter little how specious their justification is, as long
as it serves their purpose167.
Ravi Batra, The Great Depression of 1990, pp. 74, 75.
There is nothing wrong with being wrong because one uses the wrong premises. Nobody is
prefect, everyone makes mistakes. So a reconciliation commission like in South Africa after
the Apartheid regime could be a good step.
But deliberately keep on doing wrong, when knowing one is wrong and knowing what the
correct premises are, is a criminal offense.
So, let us inform all the people all over the world what the correct premises are that could and
should lead to a new Gaia-political and socioeconomic paradigm, and an Alternative New
World Order favorable for all of humankind. Students in economy, engineering, business
administration, politics and sociology should be informed with the correct socioeconomic
premises: it is not “us or them”, but “all of us together”.
And most of all, let us elect politicians and presidents who support this new world view.
But in the bubble168 of the White House, sometimes you learn the wrong
lessons of history and fail to recognize this reality. You become so focused on
protecting the president, you don’t realize you’re rolling the dice and losing
control of the problem (p. 229)…
The national media can help change our political culture as well. There is
much they do right, but it is often overshadowed by what they do wrong.
Network news has been losing viewers in recent times. There are many
reasons, including the proliferation of news sources, many now tailored toward
specific audience interests. But one important reason, I believe, is that the
networks are stuck in the past. Their national news desks remain focused on
covering the horse race of the permanent campaign, not only during election
years but continually, emphasizing controversy, and talking about who’s
winning and losing in Washington rather than really digging into the big issues
Americans care about – the economy, health care, education, crime, war, and
peace.
167
Economy, an ideology in disguise.
168
In Appendix A we will elaborate on the concept of “bubble”.
192
To break out of their slow ratings decline and their creative rut, the news media
need to learn to think in new ways. The American public hungers for truth169 –
not just as it relates to petty partisan squabbles and the controversy of the day,
but larger truth, including the hard truths we too rarely hear emphasized on
television or see written prominently about in our major newspapers and
magazines. The network that can find a way to shift from exclusively
emphasizing controversy, the conventional horse race and image-driven
coverage to give a greater emphasis to who is right and who is wrong, who is
telling the truth and who is not, and the larger truths about our society and our
world might achieve some amazing results in out fast-changing media
environment. I’ll bet I’m not the only viewer who would be energized by
programming like this. The political drama is entertaining for me, as for most
politicos, but Americans would be better served and more responsive to news
that focuses more on the larger truth (p. 321).
The Bush administration will soon recede into history. Future historians will
debate the long-term consequences of the fateful decisions made by President
Bush and his chief advisors for years to come. But I hope all Americans will
participate in the conversation about what we can learn in regard to the right
and wrong ways to govern from the last eight years of our shared history. It
can be difficult, even painful, to look on our own mistakes. Its tempting to
focus on the obvious triumphs or ignore the history altogether in our constant
quest for a better tomorrow. But I’m convinced there’s much to be gained from
thoughtful, candid, and probing self-examination… and that requires an honest
look at what happened (p. 323).
Scott McClellan, What Happened, Inside the Bush White House and
Washington’s Culture of Deception.
Indeed, we urgently need to redefine our system of values on the level of society, but perhaps
even more on our own individual level. This is also one of the conclusions of Herman Van
Der Wee, professor in the history of economy at the University of Louvain, at the end of his
book The Broken Circle of Affluence.
The establishment of a new international economic order is not limited to the
problem of fulfillment of material needs only. Other aspirations of man must
be met. Fr. Hirsch has drawn our attention to the ever-increasing tensions that
exist between the material and social effects of the affluent society. As material
needs are ever more fulfilled, there seems to be a growing number of social
needs and social tensions. A new kind of social competition has arisen: people
want to take a better position on the social ladder in order to “stay ahead of the
crowd”. But in essence this results in an enormous waste of energy and
resources: the infrastructure in order to meet this new demand for social
upgrading and differentiation demands a permanent and ever increasing
investment in the production of goods and services that are not essential. This
also leads to the consolidation of inequality. The solution can only be found in
the transcending of material aspirations by humankind. A spiritual dimension,
an existential “Weltanschauung” must be added to the material craving...
169
“May the lights in The Land of Plenty shine on the truth some day”, Leonard Cohen, Ten New
Songs.
193
Social systems that are focused only at the optimization of economic growth
and neglect the spiritual and existential aspirations of individuals will never be
able to bring complete satisfaction... The solution to these tensions cannot be
found on the level of society only. A new world is not only created by
revolutions and the establishment of new social systems, but essentially in the
heart of each individual... A new internal revolution is needed, a new ideology
in order to stimulate the development of society and the world. The Western
countries have, in this regard, the material and spiritual170 possibilities to be
innovative, to open new horizons for a better world where rationality,
creativity and equality can be combined in a new harmony. This is the ultimate
challenge of this crisis.
H. Van Der Wee, The Broken Circle of Affluence, pp. 400-401.
I hope this book has contributed to a better tomorrow, as it is an honest look at what
happened. But now it’s up to you, yeah you, the individual! Share this book with all the
people you care for, don’t leave it on the bookshelf as “The history book on the shelf is just
repeating itself”, as in the song Waterloo of ABBA.
In the preface of his book Failed States, Noam Chomsky refers to the book America Beyond
Capitalism written by Gar Alperovitz:
The selection of issues that should rank high on the agenda of concern for
human welfare and rights is, naturally, a subjective matter. But there are a few
choices that seem unavoidable, because they bear so directly on the prospects
for a decent survival. Among them are at least these three: nuclear war,
environmental disaster, and the fact that the government of the world’s leading
power is acting in ways that increase the likelihood of these catastrophes171. It
is important to stress the government, because the population, not surprisingly,
does not agree. That brings up a fourth issue that should deeply concern
Americans, and the world: the sharp divide between public opinion and public
policy, one of the reasons for the fear, which cannot casually be put aside, that
“the American system” as a whole is in real trouble – that it is heading in a
direction that spells the end of its historical values [of] equality, liberty, and
meaningful democracy…
The will of the public is banned from the political arena.
Noam Chomsky, Failed States, p.1, 225.
If you don’t have any idea for a birthday or a Christmas present, just give this book as a gift.
If you reach just 2 other persons and they also reach 2 persons and so on… well, after 20
iterations you can reach out to 220 = 1,048,576 persons. And if you start with 3 persons, and
they also reach 3 other persons and so on, well, after 20 iterations you can reach out to 320 =
3.486.784.401 persons, half of the world population! Don’t leave the initiative to the
government or the politicians alone; don’t wait for their solution, as it will cost you a lot of
170
Personally, I found my inspiration in the East. I can recommend the films Seven Years in Tibet, The
Last Samurai and Memories of a Geisha. And the practise of Yoga or Tai Chi.
171
I would like to add the financial and economic meltdown of 2008 to this list.
194
money. And this will lead to the end of your welfare. But Eight Days a Week – The Fourth
Wave could very well be the solution to your problems. Just give it a fair chance.
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12 Appendix A: Some Notions on Communication Theory
Watch your thoughts, they become your words.

Watch your words, they become your actions.
Watch your actions, they become your habits.
Watch your habits, they become your character.
Watch your character, it becomes your destiny.
12.1 The process of communication
Communication is the process of transfer of information from one point in space and in time –
the source – to one or more other points – the destination(s).
This process of transfer of information takes place within a communication system. The
elements of a communication system are represented in the following figure.
Coding Demodulation
Source Channel Destination
Modulation Decoding
The elements of a communication system
The source produces the information in a certain way: the message. This message can be a
sequence of signs (characters, symbols...). This message is transferred to one or more
destinations via the communication channel, which bridges the distance in space and in time
between source and destinations.
Very often the message in its original form is not suited for immediate transmission over the
channel. An intermediate process is needed to match the physical outlook of the message to
the characteristics of the channel, and this, of course, without altering the information content
of the message. This intermediate process can consist of coding and modulation. With coding
all the elements of the original message are replaced on a one to one basis with elements of
another set of signs. In the modulation process, one or more characteristics of a carrier, suited
for transmission over the channel, are altered according to the values of the signs in the
message. The resulting signal is then transferred over the communication channel. At the
destination side, the reverse process takes place: the received signal is demodulated and
decoded before the message can be presented to the destination(s).
To illustrate this, we can describe verbal or written communication between two persons in
terms of this model. The sender wants to transfer some idea or some notions to the receiver.
As telepathy is the exception rather than the rule, the sender has to use coding and
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modulation: he expresses his thoughts in words and sentences (coding), which he can then
pronounce (modulation of a stream of air during exhalation, which produces variations in
pressure in the air) or write down (modulation of a blank piece of paper). When the variations
in pressure in the air reach the ear of the destination or the piece of paper is handed over to the
destination, that person hears or reads the words (demodulation) and makes a deduction of
what the other person wanted to say (decoding).
We emphasize that the transformation from a concept into a word or a sentence – and vice
versa – is not always unique: a concept can be described in several ways and words or
sentences can be interpreted in several ways. This is the first problem that can arise during the
communication process: sender and receiver use different coding/decoding rules. The
information is mutilated: the message arrives incorrectly, misunderstood.
12.2 Information
In the previous section we used the word information without giving much thought to the
concept behind that word. Indeed, information has become an ordinary word in our world of
televisions, satellites, internet and computers. But what does it stand for? Few people ask
themselves: “What is information?” Obviously, information is something immaterial, a
creation of the mind: we cannot touch it, it does not smell, we cannot eat it... How can we
define it – qualify it? And how can we measure it – quantify it? Let us consult some experts in
this field. The following discussion is based on the book Communication Systems, written by
Professor B. Carlson.
The concept information can be defined and treated in a pure mathematical way. This is done
in what is called information theory, a scientific discipline that originated in the 1940s thanks
to pioneering work by C.E. Shannon.
In the previous section we have described information as that which is produced by the source
in order to be transferred to the destination. This implies that, before the transfer was done,
the information was not available to the destination. Otherwise the transfer of information
would be of no value to the destination. Let us proceed with this line of thought and take the
following example. A man has planned a trip from San Diego to Chicago by plane the next
day. In order to know what clothes he has to take with on his journey, he calls the weather
bureau in Chicago. Suppose he gets one of the following weather forecasts:
• The sun will rise.
• It will rain.
• There will be a tornado.
The information the person receives is obviously different in the three cases. The first
message has no information content at all, as we are pretty sure that the sun will rise the next
day, even without that forecast. As it does not rain every day in Chicago, the weather forecast
for rain gives some more information to the man, information he did not have before he made
the phone call to the weather bureau. The third message gives him even more information, as
tornadoes are rather unusual for the region.
We notice that the messages are listed in order of decreasing likelihood and increasing
information content. The more unlikely a message is, the more information it contains. So we
197
could say that information has something to do with uncertainty, more specific: the
uncertainty for the destination of what the message will tell him.
Let us now take a look at the other end of the communication process. For the sender, the
information content is a measure for freedom of choice among many possible messages. If the
sender has a great freedom of choice among many possible messages, then there is a great
deal of uncertainty with the destination as for what message will be sent. If on the other hand
there is only one possible message and thus no freedom of choice for the sender, then there is
no uncertainty with the destination and there is no information transferred in the message.
If we consider information from the viewpoint of freedom of choice for the source, or, on the
other side of the channel, as uncertainty for the destination, it is clear that the value of
information is related to probability (likelihood). Messages with a high probability, indicating
little choice for the sender and little uncertainty for the receiver, contain a small amount of
information; on the other hand, messages with a low probability contain a lot of information.
Based on these considerations, one can formulate the concept of information mathematically
as follows. Consider a source that can produce several messages. Let A be one of those
messages and Pa the probability that A will be selected for transmission (with Pa somewhere
between 0 and 1). Consistent with our discussion above, we can write the information content
associated with the message A as a function of its probability Pa:
Ia = f(Pa)
where the function f(.) is to be determined.

As a first step toward finding the function f(.), intuitive reasoning suggests that the
information content should be a positive quantity:
Ia = f(Pa) > 0 for Pa between 0 and 1 (1)
Secondly, the information content of a message, which is almost certain to be selected, is very
small:
lim f(Pa) = 0 (2)

Pa → 1
I.e.: when Pa approaches 1, f(Pa) becomes infinitesimally small.
Furthermore, if we consider two messages A and B with different probabilities to be selected,

the one with the lowest probability has the largest information content:
f(Pa) > f(Pb) when Pa < Pb (3)
These conditions we impose on the function f(.) are a direct consequence of our discussion
above. There are many functions fulfilling the requirements (1), (2) and (3). However, we
impose a fourth condition. Let us consider the transmission of two messages which are
statistically independent. When a message A is transmitted an information content Ia is
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delivered to the destination. When a second, independent message B is transmitted with an

information content Ib, then the total information content received by the destination is likely
to be the sum of the two information contents of the two messages: Ia + Ib. To understand
this, one can imagine the two messages A and B to being produced by a different source.
Suppose that the two messages came from the same source, then we can define the compound
message C = AB. If A and B are statistically independent, then
Pc = Pa.Pb (. stands for product or multiplication)
so
f(Pc ) = f(Pa.Pb )
and because
Ic = Ia + Ib
we can say that

f(Pa. Pb) = f(Pa) + f(Pb) (4)
It is mathematically proven that there is one and only one function, which satisfies all four
conditions, namely:
Ia = logb (1/Pa)
(Logarithm with base b of the inverse of the probability)

To refresh your memory of mathematics:
n
n = logb N is equivalent to b = N
n
n = log10 N is equivalent to 10 = N
2
As an example we can say that log10100 = 2 because 10 = 100.
The base of the logarithm determines the unit in which the information content is expressed.
When we take b = 2, then the unit is the bit (binary digit). As an example we consider a
source which can produce only two messages A and B with the same probability of
occurrence Pa = Pb = ½. In this case:
Ia = Ib = log2(1/½ ) = log2(2) = 1 bit.
Each message of that source gives us one bit of information. Tossing head or tail with a coin
or throwing odd eyes with a dice gives us exactly one bit of information.
We stress the fact that the probability to throw head or tail with a coin or odd eyes with a dice
is ½ under the assumption that the coin or dice is not loaded. The probability of a message is
always conditional, and so is its information content. The destination must have some
knowledge in advance of the fact that it is an honest coin or dice. This knowledge determines
199
the probability of occurrence that the destination will give to the different messages and thus
the information content of those messages.
What we have to remember from the discussion above is:
• The information content of a message is function of its probability.
• An unusual message – one with a low probability – contains a lot of information.
• The information content of a message is relative in the sense that it is conditional
on the foreknowledge of the destination: the theory of relativity contains a lot more
information (news) for a high school student than for a university student in
physics, as their foreknowledge is different.
12.3 Shannon’s Law
An important law in information and communication theory is the law of Shannon, named
after C. E. Shannon. In the previous section we have defined the information content of a
message as a function of its probability. The source wants to transmit a message with a certain
information content. We can ask ourselves the question if this can be done instantly, or is
there a limit on the speed at which information can be transmitted?
Communication and information theory teaches us that a communication channel has a
limited capacity C to transmit information. This capacity is an upper limit for the rate R at
which an information content I can be transmitted without errors. The rate R, defined as the
information content I (expressed in bits) divided by the time T needed for transmission
(expressed in seconds), cannot be greater than the capacity C:
R=I/T<C (bits / second)
This expression is known as Shannon’s law. As a consequence, we can state that a minimum
amount of time is required to transmit a certain information content I over a channel with
capacity C:
T > Tmin = I / C (seconds)
The greater the information content we want to transmit, the greater the amount of time we
will need to do so: the source needs more time to transmit; the destination needs more time to
receive and to “digest” the information. As the information content is a function of the
probability of the message, we can say that it will take more time to transmit an unusual or
unlikely message than to convey something that is self-evident in the eyes (or ears) of the
receiver.
As the probability of a message and its information content are conditional with respect to the
foreknowledge of the destination, we can conclude that it will take more time to transmit the
same message to one destination than to another, one with more foreknowledge. It will take
more time to explain the theory of relativity to a high school student than to a student in
physics at university: as the university student has a broader view on physics and
mathematics, his channel to receive is wider and the information can be transmitted in a more
compact form (see also next section).
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We remember a very important rule: the time needed to transmit information is greater when
the message is less likely to the receiver of it, and thus dependent on the foreknowledge of the
receiver.
12.4 Signal-spaces and paradigms
In the previous section, the reader might have been a little overwhelmed by the use of
mathematical formulas. It was really not essential for the understanding of this book to go in
such a detail. But we have a very good reason for doing so, as we will explain later in this
appendix. In this section we will again use mathematics, not with formulas but with abstract
concepts such as multi-dimensional spaces.
The reader surely has heard or read about Pulse Code Modulation (PCM) and digital storage
and transmission of data. As an example we can think of a compact disc, on which music is
not stored as an analog or continuous signal – as it used to be on the vinyl rock ‘n roll records
we bought years ago – but in the form of a sequence of discrete (separate) “ones” and “zeros”,
the famous bits. The key to this technical achievement is the fact that a continuous signal (as
music or speech) can be represented or coded by a finite number of discrete values, can be
stored and transmitted in that form, and that out of that coded form the original continuous
signal can be reproduced.
This phenomenon was described mathematically by H. Nyquist, who proved the following
theorem:
A continuous signal s(t) with bandwidth B can be represented unambiguously
by sampling it uniformly at a rate which is greater than or equal to twice the
bandwidth of the signal. The sampling gives us a string of values, which
represent the signal unambiguously.
The bandwidth of a signal is a measure for the rate at which the signal changes in the course
of time, and is expressed in Hertz (Hertz = 1/second). A signal, which changes faster in time,
has a greater bandwidth. We can grasp this Nyquist theorem intuitively as follows: consider a
continuous signal s(t), with bandwidth B Hertz (see figure below.).
201
Value
s(t)
r(t)
s1 s2 s3 s4 s5 s6 s7
Time
P: sampling period
Sampling of a continuous signal.
We sample this signal s(t) periodically, i.e. we register the values of that signal at regular
intervals every P seconds in time: s1, s2, s3... The string of values s1, s2, s3 ... we get from
sampling gives us some information concerning the signal s(t), but does not necessarily
identifies that signal unambiguously. Sampling of other signals might also result in the same
string of values. In the figure, for example, the same string of values represents also the signal
r(t). So there is uncertainty as to which signal we have sampled.
But when we increase our sampling rate – let’s say double it, as in the figure below – our
sampling points are doubled over a period of time: our string of values becomes denser (more
values per second), and it gives us more information on the signal. The uncertainty on which
signal the string represents gets smaller, because this string can represent fewer signals. In the
figure below one can see that the signal r(t) is no longer represented by the string of values s1,
s2, s3...
202
Value
s(t)
r(t)
s1 s2 s3 s4 s5 s6 s7
Time
P: sampling period
Sampling of a continuous signal at the double rate.
If we increase our sampling rate to twice the bandwidth of the signal, i.e. 2B, then the signal
s(t) is the only signal with bandwidth less than or equal to B which can be represented by the
string of values s1, s2, s3 ... which contains 2B values per second. There is no longer
uncertainty about the signal. The minimum sampling rate 2B is called the “Nyquist rate”.
Another way to grasp this theorem is to recall the last time you went into a discotheque. Very
often one uses stroboscopes in order to create a psychedelic atmosphere. A stroboscope
produces a “chopped” beam of light, a sequence of short flashes of light. So all the bodies
dancing on the tunes of Jumpin’ Jack Flash seem to move in a hacked way, as the continuous
movement is sampled by the chopped light-beam, and it is difficult to see who is who and
where. But when the frequency of the stroboscope is increased to a certain level, the
movement of the bodies becomes smooth: the sampling rate is then higher than the threshold
value.
Let us now consider a source of information that produces signals having a bandwidth not
greater than B Hertz. Suppose we monitor this source for a period of time T. Any signal s(t)
produced in that time can be represented by 2B values per second. During the whole time-
interval T the signal is then unambiguously represented by D = 2BT values s1, s2,... sD. This
has led the people involved in information and communication theory to introduce the concept
of signal-space. The signal s(t) can be represented by a vector S in the multi-dimensional
space with D = 2BT dimensions. In this signal-space, one can define an orthogonal base of
unity vectors, an orthonormal grid. The vector S is uniquely represented in this grid by its D
co-ordinates s1, s2,... sD . We can represent all signals with bandwidth B or less and a duration
time no longer than T seconds by a vector in that multi-dimensional signal-space. This signal-
space can be seen as the abstract representation of the actual source of information. Each
signal the source can produce is represented as a vector (an arrow) in this signal-space. This
sounds all rather abstract. Let us try to give an example with D = 2 and D = 3
203
X3
X2
s2 S s3
S
s2
s1 X1 s1 X2
D=2
X1
D=3
Signal spaces with dimensions 2 and 3.
In the case D = 2 the signal-space is a plane with as grid (x1, x2). A signal is represented by a
vector with co-ordinates (s1,s2). It is also possible to give a picture of a three-dimensional
signal-space, but beyond that... It is rather difficult to visualize a space with four or more
dimensions, although this is mathematically perfectly feasible.
We can summarize as follows: our source with bandwidth B Hertz produces in a time-interval
of T seconds a signal s(t) which can be represented as a vector S in a multi-dimensional space
with dimension D = 2BT and orthogonal grid (x1, x2... xD). The vector S can be decomposed
in his components according to the unity vectors:
S = s1.x1 + s2.x2 + ... + sD.xD
Let us now consider the side of the receiver. Here we can define the signal-space of the
receiver in an analog manner. The receiver is able to receive signals with bandwidth B’ Hertz.
Signals that last T seconds can be represented in a multi-dimensional signal-space with
dimension D’ = 2B’T.
The signal-space of the sender (receiver) determines which messages it can send (receive).
For a human sender/receiver one could draw a parallel between the concepts paradigm and
our signal-space. A person’s paradigm determines how he perceives the world around him
and what messages he is able to formulate or to understand.
We know already that we can consider language as the vehicle of the thought
process, as Wittgenstein has put it. We find this important point of view also in
the work of the linguist Benjamin L. Whorf: “Thinking is done in the language
itself: in English, in German, in Sanskrit, in Chinese, etc. Every language is a
big structured system on its own. The expressions of it are culturally
predestined. An individual not only communicates by language, he also
analyses nature, observes and relates phenomena, directs the process of
thinking and builds his consciousness with the help of language.”...
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We have already discussed this relation between thought and speech when we
quoted Wittgenstein. We have seen that the process of thinking is canalized for
a great deal by language. Whorf speaks of a system of structures, of forms in
language determining the way of thinking: our thoughts are molded by
linguistic forms and rules, different from language to language...
Whorf’s teacher and colleague Edward Sapir, another representative of the
early American science of language, said: “People not only live in an objective
world, or in a world we call society. They also live in the world of their
particular language, which became the medium of expression in their society.”
An Eskimo woman will see her world in another way than the physicist
Werner Heisenberg will see his. A trained astronomer will look at the sky in a
different way than a farmer living in the mountains. This is because of the
different languages they speak. In reality, a person’s perception of the real
world – his world – is molded unconsciously for a great deal by the language
he speaks. As Wittgenstein has put it in his book Tractatus Logico-
philosophicus: “The borders of my language are also the borders of my
world.”...
Benjamin L. Whorf has expressed the same as follows: “One has discovered
that the linguistic system of a language, in other words its grammar, not only
functions as a system for reproducing thoughts, but that it plays an active role
in the creation and molding of thoughts, that it is just like a skeleton [a grid]
that guides the thought process of an individual. The creation of thoughts is not
an independent, rational and objective process, but, on the contrary, is
influenced for a great deal by the grammar of the language and a person’s
vocabulary. We see the world according to the rules given to us by our mother
tongue. The world presents itself to us as a kaleidoscopic flow of impressions,
to be organized and systematized in our mind by means of the linguistic
system in our mind.”
W. Fuchs, Thinking with Computers, pp. 41-43.
We hope that these considerations on language and communication have helped you to
understand and accept our parallel between the concepts signal-space, with its orthonormal
grid, and paradigm. When a person receives information, he will always try to relate it with
things he is familiar with, he will decompose the signal s(t) in its elementary components s1.x1
+ s2.x2 + ... + sD.xD according to the orthonormal grid of his (by definition limited) signal-
space – or paradigm.
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12.5 Effective Communication
Based on the previous discussion we can define effective communication as follows:

communication between sender and receiver is effective if all possible messages the sender is
able to produce can also be received correctly by the receiver.
In our representation with the signal-space this implies that the signal-space of the receiver at
least should include the signal-space of the sender. If, for example, the dimension of the
sender (suppose D = 3) is greater than that of the receiver (suppose D’ = 2), then effective
communication is impossible a priori. The sender could produce a signal S = s1.x1 + s2.x2 +
s3.x3, while the receiver could only recognize two components: the third component would be
invisible to him, it would not fit in his signal-space. This problem has been described in a very
lucid way by Edwin Abbott Abbott in his story of Flatland in 1884.
In this story a square, trained in mathematics, tells about an experience it had with the third
dimension. Before we let the square tell his story172, we will first give some background
information. All inhabitants of Flatland are flat; they can perceive only the two dimensions of
their flat world. They all have geometric shapes. The hero of our story is, as already
mentioned, a square. His wife is, as all female persons, a thin rectangular. Laborers and
soldiers have the shape of a triangle, office workers are square-shaped and public officers are
regular pentagons [sic]. Finally there are the priests who are polygons with so many sides one
can hardly see their corners. They pretend to be circles, which represents the nec plus ultra of
perfection in Flatland.
Woman Laborer Soldier Office Public Priest

worker officer
One day a strange thing happens to our square: a sphere ‘comes out of the blue’, as this
creature from the world of three dimensions happens to pass the plane of Flatland. This visitor
is perceived by the square as a circle, able to make himself smaller or greater.
172
We have based our version of the story on the book Modern Mathematics written by W. Fuchs
206
But let us tell the square its own story:

“I went to the stranger to invite him to take place, but I was struck with amazement by what I
saw. He changed his size in a way I had never seen before. As I wanted to be sure of what I
saw, I ran to him, and started to feel all over his body – very impolite of me, I agree. I could
not feel any corner. Never in my life had I met a more perfect circle. He did not move while I
turned around him and touched him everywhere I could. Then he started a dialogue, which I
will try to reconstruct here”.
Stranger: Are you finished?
Me: Forgive me my rudeness, noble sir, I do not want to be impolite, but your
appearance makes me nervous and curious. But could you first tell me, where do
you come from?
Stranger: Well, from space of course, where else should I come from?
Me: I beg your pardon, sir, but aren’t we in space here?
Stranger: My dear, what do you know about space, tell me, what is space to you?
Me: Space is infinite length and width.
Stranger: Ah, there we are! You do not even know what space is. You can only think in two
dimensions. But I came to show you the third dimension: there is also height next to
length and width.
Me: You must be joking. We also speak of length and height or width and thickness, and
we give four names to the two dimensions
Stranger: I do not mean three names, but really three dimensions.
Me: Could you show me or explain to me in which direction that third dimension,
unfamiliar to me, can be found?
207
Stranger: I came from that direction. It is above and underneath us.
Me: You mean north and south, I presume.
Stranger: No, that is not what I meant. I mean a direction in which you cannot see, because
you do not have an eye in your side.
Me: Excuse me sir, but if you take a look you will see that I have a sound eye in the
intersection of my two sides.
Stranger: Yes, I see it, but to look in space you do not need an eye on your perimeter, but on
your surface, that is on what you probably call your interior. In Spaceland we call
that your surface.
Me: An unseen eye in my interior! In my stomach? You are pulling my leg!
Stranger: I am not in the mood for that. I tell you that I came from space, from the land of
three dimensions from where I looked upon your plane, that what you call space to
yourself. From there I could see everything what you call a body, a surface enclosed
by three or more sides. I saw your houses, churches, even your wardrobe and your
cash-box, also your inner body, your stomach; everything was visible to me.
Me: That is all easy to say for you, sir.
Stranger: But not easy to prove, you mean. But I will prove it to you. When I came to here, I
saw four of your sons, the pentagons, in their room with their two cousins, the
hexagons. I saw your youngest kid, the hexagon, talk to you for a while, then he
went back to his room. After that I arrived here. How did I do that, could you make
a guess?
Me: I assume you entered through the roof.
Stranger No, no, your roof has been repaired recently and there is no hole in it. I told you
already that I came from space. Aren’t you convinced of it by what I told you about
your kids?
Me: You could have informed yourself before coming here.
Stranger: (absent- mindedly) How could I explain it to this fellow?… Wait, I have an idea. If
you see a straight line, how many dimensions do you think is has?
Me: The gentleman treats me as if I was an ignorant, who does not know anything from
mathematics, someone who thinks that a line has only one dimension. No sir, we
squares know better. A woman, although we call her a line, is in reality and
scientifically spoken a very thin rectangular, with two dimensions, a length and a
width, or thickness.
Stranger: But the fact that she is visible means that she has still another dimension
208
Me: As I told you already, we see the length, and we assume the width, which is,
although very small, still measurable.
Stranger: You do not understand me. When a line would only have length and no thickness,
she would not occupy space and so she would be invisible.
Me: I must admit that I do not understand what you mean.
Stranger: Height is a dimension for me, just as length and width are dimensions for you. But it
is difficult to see for you because in your Flatland heights are so small.
Me: Sir, it is easy to control your statement. You say I have a third dimension. A
dimension has a direction and can be measured. Then measure my height and show
me its direction, then I will be convinced. Otherwise....
Stranger: (thinking) That is impossible, how can I explain it?…Well, listen very carefully.
You live in a plane. What you call Flatland is the flat surface of what I could call a
liquid, and you move in that plane without being able to escape from it or sink. I am
not a flat figure, but a body. You call me a circle, but in reality I am an infinite
number of circles, one on top of the other and with diameter varying from 0 to 10
inches. When I cross your plane, an intersection is created, which you rightly call a
circle. Even a globe – as I am called in my world of origin – must present himself as
a circle to the people of Flatland. Your two-dimensional world is too thin to contain
me. I can only show you a tiny slice of myself, a circle... But I see that you do not
believe me. Watch me very carefully. I will go up. You will see this, as my circles
will get smaller until only a dot is left, and then I will disappear completely.
I (the square) could not see that he was “going up”, but the circle indeed became smaller until
it vanished before my eyes. I rubbed my eyes to be sure I was not dreaming. But it was no
dream. From the depths of nowhere came the hollow voice of the stranger: “You see, I have
disappeared completely, are you convinced now? Take care, I will slowly return and you will
see my intersection with your plane getting bigger.”
Although I saw the facts before my eyes, the reason of them was totally obscure to me. All I
could understand was that he had made himself smaller, disappeared, then came back and
finally made himself bigger again. When he had regained his original size, he sighed deeply,
as he noticed the bewildered look on my face indicating I still did not understand. After a
while I heard him saying to himself: “I will try to explain it by analogy.”
Globe: Tell me, mister mathematician, when a dot would travel over a distance in the
direction north, and it would leave a shining mark, how would you call that mark?
Me: A line segment.
Globe: How many ends does a line segment have?
Me: Two.
209
Globe: Suppose this line segment moves parallel to itself from west to east, so that every dot
of that line segment leaves a shining mark. Then a diagram is formed. How would
you call it?
Me: A square.
Globe: How many sides does a square have, and how many corners?
Me: Four sides and four corners.
Globe: Now try to imagine the following. Think of the square of Flatland moving upward
and parallel to itself.
Me: What, to the north?
Globe: No, not to the north! Upward, so it leaves Flatland. Think of every dot of your inner
surface moving upward in that direction. Is that clear to you?
I had to control myself, the square said, because I felt the urge to attack the stranger and to
kick him back into the space he came from, out of Flatland anyway, just to get rid of him. But
I managed to stay outwardly calm.
Me: What kind of figure is developed by that move? I am sure there must be a name for it
in the language of Flatland!
Globe: Oh sure, that is very simple. But by the way, you shouldn’t call the result a figure. It
is better to speak of a body. I will describe it to you by the method of analogy. We
start with a dot, and because it is a dot it has only one end. A moving dot generates a
line segment with two ends. A moving line segment generates a square with four
ends. Now you can answer your own question: 1, 2, 4 are elements of a geometrical
progression. What is the next element?
Me: Eight.
Globe: Correct! The moving square generates something you do not have a name for, but we
call it a cube, with eight ends. Are you convinced now?
Me: And does that creature have sides, just as corners or ‘ends’ as you call them?
Globe: Of course, but not what you call sides, but what we call sides. You would call them
bodies.
Me: And how many sides or bodies does this so-called cube have?
Globe: How could you ask! A dot has no sides, a line segment has two sides, by way of
speaking, and a square has four sides. 0, 2, 4 are elements of an arithmetical
progression. What is the next element?
210
Me: Six.
Globe: Exactly. You see, you have answered your own question. The cube is surrounded by
six sides, this means by six creations as yourself. Is everything clear now?
Me: You monster, impostor, dream or devil, I will no longer bear your insults! You will
die or I will die!
And I threw myself on him.
In another book you can read the following version of this close encounter of the third kind
(Ferguson, Marilyn, 1985, The Aquarian Conspiracy - Personal and Social Transformation in
the 1980s, Paladin Books, London.)
In the durable Victorian fantasy, Flatland, the characters are assorted geometric
shapes living in an exclusively two-dimensional world. As the story opens, the
narrator, a middle-aged Square, has a disturbing dream in which he visits a
one-dimensional realm, Lineland, whose inhabitants can move only from point
to point. With mounting frustration he attempts to explain himself – that he is a
Line of Lines, from a domain where you can move not only from point to point
but also from side to side. The angry Linelanders are about to attack him when
he awakens.
Later that same day he attempts to help his grandson, a little Hexagon, with his
studies. The grandson suggests the possibility of a Third Dimension – a realm
with up and down as well as side to side. The Square proclaims this notion
foolish and unimaginable.
That very night the Square has an extraordinary, life-changing encounter: a
visit from an inhabitant of Spaceland, the realm of Three Dimensions.
At first the Square is merely puzzled by his visitor, a peculiar circle who seems
to change in size, even disappear. The visitor explains that he is a Sphere. He
only seemed to change size and disappear because he was moving towards the
Square in Space and descending at the same time.
Realizing that argument alone will not convince the Square of the Third
Dimension, the exasperated Sphere creates for him an experience in depth173.
The Square is badly shaken:
There was a dizzy, sickening sensation of sight that was not like seeing; I saw a
Line that was not a Line; Space that was not Space. I was myself and not myself.
When I could find my voice, I shrieked aloud in agony, “Either this is madness or
it is Hell”.
“It is neither, calmly replied the voice of the Sphere, It is Knowledge174; it is Three
Dimensions. Open your eyes once again and try to look steadily.”
173
The Sphere pushed the Square out of Flatland into Spaceland.
174
Gnosis, direct personal experience.
211
Having had an insight into another dimension, the Square becomes an

evangelist, attempting to convince his fellow Flatlanders that Space is more
than just a wild notion of mathematicians. Because of his insistence he is
finally imprisoned, for the public good. Every year thereafter the high priest of
Flatland, the Chief Circle175, checks with him to see if he has regained his
senses, but the stubborn Square continues to insist that there is a third
dimension. He cannot forget it, he cannot explain it.
So far for the story of the square in Flatland. You can read some other funny adventures of the
square in The Fourth Dimension written by Rudy Rucker. Rudy Rucker even discusses
“parallel” two-dimensional worlds, and how one world would look like seen from the other
one through a “peep-hole”. Weird!
We see that there is a total lack of effective communication between the two: the sender
(globe) is not able to explain the third dimension to the receiver (square). Even if sender and
receiver have signal-spaces with the same number of dimensions, the problem of non-
effective communication can still arise. We illustrate this with an example.
X3
s3 S S
s2
s2 X2 X2
D=2
X1
D=2
Two signal spaces with D = 2 and just one dimension in common
The sender, at the left, produces the signal
S = s2.x2 + s3.x3
175
Actually an ordinary polygon, pretending to be a perfect circle.
212
The receiver, at the right, can only recognize the component s2.x2 of that signal, because the
other component lays outside his signal-space. There is loss of information.
In general, we can state that effective communication between a sender and a receiver is
possible176 only within the intersection of their signal-spaces. Transmission of information
outside their common signal-space is not possible by the communication process itself, as was
demonstrated in the discussion between the globe and the square. “To speak about language
presupposes a language”, Wittgenstein wrote. “This implies that, in a way, one cannot teach
the use of a language, not in the way one teaches to play a piano. What I mean is this: I cannot
transcend language by the use of language itself177.” In our abstract representation with
signal-spaces, this means that it is impossible for the sender (globe) to transfer the extra
dimension he has to the receiver (the square) only by means of the communication process.
This conclusion has important consequences for education and science in general. We will
discuss these consequences in a later section.
12.6 Trade-off between time and energy
It takes time and energy in order to transmit information from sender to receiver. One of the
basic features of communication systems is the trade-off between time and energy needed in
order to transmit information:
• By using more energy, one can save on the time needed, i.e. one can transmit the
information in a shorter period of time.
• By allowing more time for the transmission of information, one can save on
energy, i.e. one need less energy in order to transmit the information.
The time T (seconds) needed for transmission of a certain quantity of information I (bits) is
also related to the bandwidth B (Hertz) of the communication channel. When the bandwidth
of the channel is larger, then the capacity C (bits/second) of the channel is larger, so the rate
of transmission R = I/T (bits/second) can be larger. More bits of information can be
transmitted per unit of time, so less time is needed to transmit the quantity of information I.
In a communication system there are always non-intended disturbances – noise – which
interferes with the actual signal being transmitted. This makes it a little bit more difficult for
the receiver, as he does not know which part of the signal he receives is the signal actually
sent by the sender, and which part is due to noise – or other senders who deliberately disturb
the real signal. In communication theory one has proven the following relation, known as the
Hartley-Shannon law:
C = 2B . log2 (1 + S/N)
where
• C is the capacity of the channel (bits/second)
176
…is possible but does not necessarily occur. The two parties must be aware that there is an
intersection. Two fans of the Rolling Stones, who never met before, are waiting for the bus to come: they will
not start to speak about the Stones, but about the weather, as they are both standing in the rain.
177
Just as one cannot transcend Ratio by the use of Ratio itself.
213
• B is the bandwidth of the channel (Hertz = 1/second)

• S is the power level in the signal (Watt)
• N is the power level in the noise signal (Watt)
So one has several options in order to increase the capacity C of the channel and to decrease
the time T needed in order to transmit a certain quantity of information I.
• One could increase the bandwidth B. In our model sender and receiver have their
respective signal spaces. One could see the overlapping of their signal-spaces as a
measure of the bandwidth: more overlapping means a greater bandwidth, so less
time and/or energy is needed. But this increase in overlapping usually asks for
some initiative and co-operation of the receiver, which, unfortunately, usually also
asks for some coercion (see the cost-benefit analysis in the next section).
• One could reduce the noise level N, eliminate the disturbing signals, but this is not
always obvious, especially with communication among human beings: who is
telling the true signal and who is telling the false signal?
• One could increase the signal level S. Indeed, sometimes people start to yell at
each other when their message does not seem to get through. But as we have seen
in the story of Flatland, this does not necessarily improve the communication.
When the signal sent falls outside the intersection of the respective signal-spaces,
then no amount of yelling will improve the communication. If one tries to transmit
Hi-fi music over a telephone-wire with a limited bandwidth, then the quality of the
music at the receiver’s end will not become Hi-fi just by increasing the volume on
the stereo equipment at the sender’s end.
So in communication between human beings – bestowed with free will, sometimes evolved
into stubbornness – these options are not so obvious. But as engineers are – as the word
implies – sometimes very ingenuous, they have found a technique in order to circumvent a lot
of these problems in technical communication systems. If you take a picture – a snapshot – of
a certain part of the surface of the earth from a plane or a satellite, the picture is usually rather
hazy due to the distance: the real signal is attenuated too much, so a lot of the details are lost.
But by flying over the region with a constant speed and capturing data of a rectangular region
which “moves” over the surface of the earth, then information on one particular detail – e.g.
point P – on the surface is contained in the signal over a longer period of time – the time for
the plane to fly from A to B. By applying the technique of convolutional integration on the
recorded signal it is then possible to construct a detailed picture of the area covered.
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A reconnaissance plane recording an area
The US Army has used this technique in order to get detailed pictures taken out of a plane or a
satellite of countries considered being the enemy to the people of the USA, and it is also used
in PC technology. Next time you scan a picture into your PC, try to understand what you see
on your screen: during the scanning process a rather hazy image appears on the screen of your
PC, but then the PC takes some time in order to process the received signal, which results in a
very sharp image. You can even choose the resolution you want. If you want a high resolution
– a high information content – the scanning and processing will take more time: you have to
scan the image at a slower speed and the PC needs more time for the processing of the “raw”
image to the “clear” image. So the trade-off between information-content, energy and time is
not only valid in the transfer but also in the manipulation of information.
In this book we have tried to use the same technique: we have studied some facts and events
from the obscure past – sometimes at a rather slow pace in order to get the most out of it – and
interrelated them to each other – convolution – in order to get a clear view on the past and the
present.
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12.7 Implications on education and science
Effective communication between sender and receiver is possible only in the intersection
region of their signal-spaces. When a sender transmits a signal with a component outside the
signal-space of the receiver, the latter is not able to grasp this component. In this section we
will apply this conclusion in two special forms of communication: education – as
communication between teacher and student – and science – as communication among
scientists and between scientists and Nature.
12.7.1 Education
Education is the process of molding peoples mind, more specific the shaping of their signal-
space, the way they perceive the world and react to it. One can ask the question: how does the
paradigm of a person develop? A little child has a limited view of the world, a grown person
has a broader perception of it, and, as we have seen in the previous section, this perception
can differ from one person to another. So the question can be formulated as follows: how does
a person’s signal-space expands? What is the trigger for this growth? And how does it come
that one person succeeds better in this than another person?
As discussed before, this expansion of the signal space is not possible by the communication
process alone. Imagine someone who has never eaten or even seen a mango, and you want to
explain to him what a mango tastes like. You can try to describe the fruit and compare it to
other types of fruit. This description, however detailed, will never be accurate enough to
specify a mango and its taste. The one and only effective way is to give the other person a
mango, so that he can see, feel, smell and finally taste it. By personal experience (action) the
person can expand his signal-space, can add a new dimension to it. Karl Bühler has always
stressed the fact that observation has to be considered as an activity. This is true for every
action of cognition and exploration178.
A mother can tell her child: “Take care not to touch the fire, as it will hurt you”, but the child
will not be able to appreciate (decode) the message if it did not had the experience of pain
before, and if it has not yet learned to associate the words “fire” or “hurt” with physical pain.
The signal-space of the child must have been expanded by own experience of pain in order for
the child to understand what the mother says. As Ortega y Gasset has formulated it: “The
body is the policeman and the teacher of the mind”179.
If own, sometimes painful experience would be the only way to expand their signal-space,
people would build up only a rather limited signal-space, in the first place determined by their
own direct surroundings. However, the signal-space is expanded for a great deal by education:
the teacher imparts knowledge to the student. But he is not able to do this by the process of
verbal or written communication alone. By this communication process he can only make
relations with – linear combinations of – concepts already familiar to the student. He cannot
impart concepts totally new to the student just by talking about them: these concepts are
contained in his signal-space, but not in the student’s one. The teacher – as a sender – has a
larger signal-space180 than the student – as a receiver. Effective verbal or written
communication in one direction from teacher to student is not possible. Or the teacher has to
do something and show what he means, or the student must give his full participation and
178
K. Lorenz, Our Last Chance, pp. 60-61
179
W. Fuchs, Thinking with Computers, p 45
180
At least in his own field of specialization, not necessarily as a human being.
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make an effort to expand his signal-space, so he can receive the message181. By repeating,
reformulating and applying the concept, the student can show towards the teacher that he has
understood the material correctly or that he misunderstood it. Effective communication from
student to teacher is perfectly possible because the signal-space of the teacher – in general –
contains the signal-space of the student. Education is, in essence, feedback-communication
from student to teacher.
The true teacher knows you can’t impose learning. You can, as Galilee said,
help the individual discover it within. The open teacher helps the learner
discover patterns and connections, fosters openness to strange new
possibilities, and is a midwife to ideas. The teacher is a steersman, a catalyst, a
facilitator – an agent of learning, but not the first cause.
Everyone who has studied probably has had, at one time or another, the experience of going
through a course or a textbook, making neither head nor tail of it. By making an effort –
spending energy – and going through the course once more – spending time – the insight
grows and the material becomes familiar. By feedback of his perception towards the teacher
by means of exercises, rehearsals and examinations the student can prove that he understands
the material. Perhaps he will not succeed at once so he has to retry. The expansion of his
signal-space does not come by itself: it requires energy and time to do so.
It is human nature to be rather opportunistic – if not to say lazy – in spending energy and
time: there must be a reward in order to do so. With most individuals external motivation is
more dominant than internal motivation. Why would a person put time and energy in
learning? This is done after making a cost-benefit analysis. The person asks himself,
consciously or unconsciously, the following questions:
• What will I gain if I put the effort in expanding my signal-space, if I try to make
myself familiar with the new concepts? This could be a certificate, a grade,
promotion, acknowledgment.
• What will it cost if I do not put the effort in it? This could be reexamination, no
certificate, no grade, lay-off, disapproval.
If the reward and/or the punishment seem important enough to the person, then he is willing
to put the time and effort in learning in order to expand his signal-space. If they do not seem
important enough, he probably will not make the effort.
Here we can see an explanation for the decreasing quality in the education system and the
lower education level of social minority groups: due to the economic recession, the high level
of unemployment with young people and the lack of perspectives for a well-paid job, there is
less motivation with a lot of students to put effort in their studies.
The signal-space of a person is formed for a great deal during his education at school. Once
he has left school, he will still expand his signal-space, but predominantly in those directions
that will bring benefits to him and avoid costs. This means in directions indicated to him by
his job. Other directions require an effort without promise of any immediate gain: they do not
181
This is the reason why we have included some mathematics in this appendix: to help you realize that
effort is needed in order to assimilate something unfamiliar.
217
catch his attention; he is not willing to spend time and energy on them. This is sad, because
the rewards/punishments are not always immediately visible. Often they only appear after a
long time. This shortsightedness can have strong implications later in time.
We can also understand the concepts “selective cognition” and “prejudice” in this context.
When a person is confronted with something or somebody in a first, superficial way, he will
usually form himself quickly a first impression: he projects his perception on already known
dimensions in his signal-space – pegs to hang things on. Later impressions on the same thing
or person are related to the dimensions already known, and thus are biased by the first
impressions. Elements of the message that fit on the existing pegs are accepted and thus
reinforce the first superficial impression, while components strange to the first impression or
even in contradiction with it and which do not fit in the frame are ignored, even if one thinks
of himself as basically an “intellectual”182.
In this section we have seen how important education is. Costs and benefits are crucial in this
process. The system is based on rewards and punishment. The molding of the signal-space of
individuals and consequently also the paradigm and value-system of a society is basically
done at school and university. Having control over the process of education or the media is
the same as having control over the direction in which a society will think and act183.
Demagogues of all times – and of this time – have always been aware of the
fact that man sticks to the ideals he gained during childhood184.
They knew – and know – how to manipulate this. If one once had a discussion
with an indoctrinated person, one clearly sees that he screens all counter-
arguments and discards all other values with an extreme light-heartedness...
It is most peculiar how a fanatic person adopts such a feeling of personal
freedom from this unconditional surrender to a certain doctrine. He identifies
himself completely with the values and ideals he has been impregnated with.
He does not see the strait waistcoat he is wearing. He does not see that he has
lost the most essential feature of human beings: the freedom of thought.
K. Lorenz, Our Last Chance, pp. 139-140.
12.7.2 Science: academic versus scientific
One could define science as the whole set of human activities aimed at gaining insight in
reality, Nature. The nature of reality is of an infinite complexity and variety. In our model of
the communication process, we could represent reality as a signal-space with an unknown
number of dimensions, a great deal of them still unknown to us. Every scientist communicates
with reality from his own signal-space: he questions reality, he performs experiments, and he
gets answers from reality, the results of his experiments, which he will try to fit in his signal-
space. No scientist will dare to claim that his signal-space contains that of reality. Although
his insight can grow, he is still limited in his view of reality. As Merleau-Ponty has
182
Read “academic”, people who do not have the time to expand their signal space, as they are too busy
to make ever new linear combinations of unity-vectors in their own limited signal-space.
183
Noam Chomsky, Failed States, the section on Institutionalizing State-Corporate Control, pp. 236-
241. “The long-term-consequences for the society could be severe”.
184
At Eaton, Cambridge, Oxford, Yale, Harvard, most students learned about Thomas Malthus, but
were never instructed that he was wrong and that Pierre Francois Verhulst was right.
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formulated it: “So long as I keep before me the ideal of an absolute observer, of knowledge in
the absence of any viewpoint, I can only see my situation as being a source of error. But once
I have acknowledged that through it I am geared to all actions and all knowledge that are
meaningful to me, and that it is gradually filled with everything that may be for me, then my
contact with the social in the finitude of my situation is revealed to me as the starting point of
all truth, including that of science and, since we are inside truth and cannot get outside it, all I
can do is define truth within the situation”185.
Based on the work of Edward de Bono we can make some interesting remarks on the subject
of progress of scientific research seen as an activity and as a process of communication. Mr.
de Bono has written some very interesting books on the subject of creativity. One of these
books is The Use of Lateral Thinking, in which he compares scientific activity with “digging
holes”. The reader will find it easy to draw a parallel between the concept “signal-space” and
the holes of Mr. de Bono.
It is one thing to suggest that new ideas are useful, profitable and exciting, but
quite another thing to suggest that something deliberate can be done about
having new ideas. No one would disagree with the first suggestion, but most
would doubt the second.
There are two opposite ways of improving a process. The first way is to try to
improve it directly. The second is to recognize, and then remove those
influences that inhibit a process. If a car does not seem to be moving fast
enough, the driver may either press harder on the accelerator or he may make
sure the brake has been fully released. To design a car that goes faster the
designer could either put in a more powerful engine, or reduce the weight and
air resistance that slow the car down.
It may be more useful to study stupidity in order to understand intelligence. It
may be easier to see what the stupid person lacks186 than to see what the clever
person has extra. Instead of trying to understand why one person invents, it
may make more sense to see why other people do not. If it is possible to obtain
some insight into what prevents the emergence of new ideas, either in general
or in a particular person, then it may be possible to improve the ability to have
new ideas.
Lateral thinking is made necessary by the limitations of vertical thinking. The
terms lateral and vertical were suggested by the following considerations.
It is not possible to dig a hole in a different place by digging the same hole
deeper. Logic is the tool that is used to dig holes deeper and bigger, to make
them altogether better holes. But if the hole is in the wrong place, then no
amount of improvement is going to put the hole in the right place. No matter
how obvious this may seem to every digger, it is still easier to go on digging in
the same hole than to start all over again in a new place. Vertical thinking is
digging the same hole deeper; lateral thinking is trying again elsewhere. The
disinclination to abandon a half-dug hole is partly a reluctance to abandon the
investment of effort that has gone into the hole without seeing some return. It
is also easier to go on doing the same thing rather than wonder what else to do:
there is a strong practical commitment to it.
185
M. Merleau-Ponty, Le Philosophe et la Sociologie, pp. 136-137.
186
All fans of Malthusianism back to school!
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It is not possible to look in a different direction by looking harder in the same

direction. No sooner are two thoughts strung together than there is a direction,
and it becomes easier to string further thoughts along the same direction than
to ignore it. Ignoring something can be hard work, especially if there is not yet
an alternative. These two sorts of commitment to the half-dug hole may be
regarded as commitment on invested effort and commitment of direction.
By far the greatest amount of scientific effort is directed towards the logical
enlargement of some accepted hole. Many are the minds scratching feebly
away or gouging out great chunks according to their capacity. Yet great ideas
and great scientific advances have often come about through people ignoring
the hole that is in progress and starting a new one187. The reason for starting a
new one could be dissatisfaction with the old one, a temporal need to be
different, or pure whim. This hole-hopping is rare, because the process of
education is designed to make people appreciate the holes that have been dug
for them by their betters. Education could only lead to chaos if it were to do
otherwise. Adequacy and competence could hardly be built on the
encouragement of general dissatisfaction with the existing array of holes. Nor
is education really concerned with progress: its purpose is to make widely
available knowledge that seems to be useful. It is communicative, not creative.
To accept old holes and then ignore them and start again is not as easy as being
unaware of them and hence free to start anywhere. Many great discoverers like
Faraday had no formal education at all, and others, like Darwin or Clerk
Maxwell, had insufficient to curb their originality. It is tempting to suppose
that a capable mind that is unaware of the old approach has a good chance of
evolving a new one. A half-dug hole offers a direction in which to expend
effort. Effort needs a direction and there are few more frustrating things than
eager effort looking for a direction. Effort must also be rewarded by some
tangible result; the more immediate the results, the more encouraged is the
effort. Enlarging the hole that is being dug offers real progress and an
assurance of future achievement. Finally, there is comfortable, earned
familiarity with a well-worked hole...
Oilmen do not perhaps find it so difficult to appreciate the paradox that sitting
about deciding where to dig another hole may be more useful than digging the
same hole deeper. Perhaps the difference is that, for an oilman, digging costs
money, but for scientists and industrialists, not digging is more expensive.
Without a hole, how can a mind exert its well-trained effort? The shovels of
logic lie idle. There is no progress, no achievement. Today, achievement has
come to be ever more important to the scientists. It is by achievement alone
that effort is judged, and to pursue his career a scientist must survive many
such judgments.
No one is paid to sit around being capable of achievement. As there is no way
of assessing such capability it is necessary to pay and promote according to
visible achievements. Far better to dig the wrong hole (even one that is
recognized as being wrong) to an impressive depth than to sit around
wondering where to start digging. It may well be that the person who is sitting
around and thinking is far closer to digging a much more valuable hole, but
187
I hope this book has convinced you that there is a new economic hole worth to be elaborated.
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how can such a thing be judged until the hole is actually started and the result
becomes visible?
In the long run it may be far more useful to have some people about to achieve
the right thing than have everyone actually achieving things of lesser worth,
but there are few who are willing to invest in mere possibility. In the present
system who can afford to think? Who can afford the non-progress of abortive
thought?
An expert is an expert because he understands the present hole better than
anyone else except a fellow expert, with whom it is necessary to disagree in
order that there can be as many experts as there are disagreements – for among
the experts a hierarchy can then emerge. An expert may even have contributed
towards the shape of the hole. For such reasons experts are not usually the
first to leap out of the hole that accords them their expert status, to start
digging elsewhere. It would be even more unthinkable for an expert to climb
out of the hole only to sit around and consider where to start another hole. Nor
are experts eager to express their expertise as dissatisfaction with the hole, as
dissatisfaction is too eagerly expressed, and often more forcibly, by many
others who have not earned the right to be dissatisfied. So experts are usually
to be found happily at the bottom of the deepest hole, often so deep that it
hardly seems worth getting out of them to look around.
Because the mind is happier enlarging by logic an existing hole, because
education has encouraged this, and because society has elected experts to see
that it is done, there are a lot of well-developed holes continually enlarging
under the impact of logic effort. Many of the holes are extremely valuable in
terms of the ore of practical knowledge that is removed from them. Others are
a waste of effort.
There is nothing wrong with a hole that is a waste of effort. At least there is
nothing wrong with its location, though the size may be extravagant. There
ought to be many more such holes in original places. Many of them might well
be a waste of effort, but some of them could turn out to be extremely useful.
But to start such holes more people would have to escape the powerful
commitment there is to the dominant hole.
The effect of the dominance of old and apparently adequate ideas is often
underestimated. It is assumed that an old idea should be regarded as a useful
stepping-stone to something better until that something better turns up. This
policy may be practical but it can inhibit the emergence of new ideas. If a good
cartoonist has captured with a few dominant lines the impression of a face, it is
extremely difficult to put that impression aside, look at the face again and
come up with a new way of expressing it.
Sects, which assemble on mountaintops on predicted days of doom to await the
end of the world, do not come down on the morrow shaken in their ideas, but
with a renewed faith in the mercifulness of the Almighty. New information that
could lead to the destruction of an old idea is readily incorporated unto it
instead, for the more information that can be accommodated, the sounder the
idea becomes. It is like putting some drops of quicksilver on a surface. If you
make one drop larger and larger, it approaches neighboring drops, and as soon
as it touches them, they lose their identity and become shifted bodily into the
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larger drop. As with dominant ideas, the big drop always swallows up the
smaller one; it is not a matter of compromise...
Dominant ideas need not always be so obvious for them to exert just as
powerful an organizing influence on the way a person thinks and approaches a
problem. Old and adequate ideas, like old and adequate cities, come to polarize
everything around them. All organization is based on them, all things are
referred to them. Minor alterations can be made on the outskirts, but it is
impossible to change the whole structure radically and very difficult to shift
the center of organization to a different place.
Edward de Bone, The Use of Lateral Thinking, pp. 21-26.
So far Edward de Bono in one of his books on creativity. The picture he draws of “academic
experts” sitting in their different holes describes in a very lucid but accurate way the
syndrome of real scientific progress: too much specialization leads to problems of
communication among academics of different disciplines and even among academics of the
same discipline (remember the hierarchy). It is almost epidemic. It also leads to the fixation of
academic thinking in very rigid patterns. So you may now better understand the following
quote:
Problems cannot be solved at the same level of consciousness that created
them.
Albert Einstein.
You have to transcend the limitations of your signal-space, your paradigm, your frame of
reference, your ratio and take a bird’s eye view over the field of holes. You have to leave your
own Flatland in order to have what may seem at first a dizzy, sickening sensation of sight, but
on the long run may prove to be a very rewarding and liberating one, not only on personal
level, but also for humankind as a whole and for future generations, your children and your
grandchildren.
12.8 Conditions for effective communication
In this appendix we have discussed a few basic concepts on the subject of information and
communication theory. Now we can formulate some conditions that must be satisfied in order
to achieve effective communication. If one of these conditions is not met, problems will arise
for sure.
12.8.1 Unambiguous Coding
The transformation of a concept into a word in order to describe that concept, and vice versa,
must be unambiguous in both directions. This is usually not the case with every day speech. A
concept can be described by more than one word, often with a slight difference in meaning. A
word can also cover more than one concept. So there is a chance of mutilation of information:
the receiver can give another meaning to the word than was intended by the sender. In
colloquial speech, however, there is enough redundancy built in, so the receiver is able to
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deduct the right meaning of the message out of the context. There is also the possibility of
feedback-communication: the receiver in turn can respond to the sender so the sender can
determine by this feedback that the concept or message was interpreted correctly or was
misunderstood.
A source producing symbols that are not absolutely essential to convey information is said to
be redundant. The redundancy of English text, for example, is estimated to be about 50%. Yu
shld b abl t red ths evnto svrl ltrs r msng. We have built a lot of redundancy in this book.
Certain concepts and relations were stressed again and again and were described from
different points of view. By doing this, we hope that the essence of the message will have
been understood by the reader.
12.8.2 Time and energy
Due to the limited capacity of a communication channel, one needs a minimum amount of
time to convey a certain quantity of information. This amount of time is greater when the
information-content of the message is greater. The amount of information, and thus the time
needed, is greater when the message sounds more unlikely. In order to receive new
information one has to do an effort. So if the receiver does not spend enough time and energy
in receiving and processing the message, then effective communication will not be possible.
We warn the reader that a lot of information contained in this book probably looked
unfamiliar at first glance, especially the notion that more purchasing power for the ones with
real needs can lead to higher profits for private business. Please spend enough time on it and
make an effort. A second reading of this book in whole or in part, after a period of reflection,
might be useful.
12.8.3 Signal-space
Effective communication between sender and receiver is possible only within the intersection
of their signal-spaces. In this book a number of signals were transmitted to the reader which
might fall outside his signal-space, or which might even clash with his fixed opinions and way
of thinking. It is up to the reader to evaluate those signals in a critical but open-minded
manner, and, eventually, to expand his signal-space. At several stages in this book we have
discussed the rewards or punishments that could follow if the reader does make or refuses to
make the effort to abandon some prejudices and fixed opinions.
12.9 A thought to brood on
In this appendix we have gained some insight in the process of communication. Much to our
regret we have to conclude that a lot can go wrong when two people communicate:
• There is not always an unambiguous relationship between what is meant and what
is said.
• The receiver does not always give enough time to the sender to convey his
message.
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• The sender is afraid to start the communication in the first place, as he is afraid
that his message will not be understood as he hopes it should be understood (self-
censorship).
• The signal-space of the receiver might be too narrow to grasp the full content of
the message: he receives what he can or likes to receive.
• The receiver is not always willing to spend the time and effort to expand his
signal-space in order to receive more signals if he does not see any direct gain of it
– especially in the age of video-clips and TV commercials.
In designing a technical communication system, the designer of it will take care that these
problems do not occur. He is situated, by way of speaking, at a higher level than the
components of the communication system. He is at the outside of the system, so he can
impose his directives to the sender and the receiver in order to achieve effective
communication between both of them.
Designer
Sender Receiver
A designer can impose his directives both onto the sender and the receiver.
A human being is at the same time a sender and a receiver of information. If somewhere in the
Universe, at a higher level, there is a designer of our communication system – a Master
Builder – we can conclude that, from an engineering point of view, he did a lousy job! The
communication process between human beings does not function properly: people do not give
each other enough time to explain new ideas, a lot of people argue to prove they are right
instead of having a discussion to solve the problems, and new ideas are shattered on walls of
unbelief, indifference and resistance...
Maybe there is no Master Builder? Or did He deliberately design us such a lousy
communication system by giving us free will instead of imposing His own will...? The book
of Job…? So that we would not live the life of a NIMBY…? That we should share in each
other’s mind…? So that things could become better…? To share each others intellectual and
material wealth…?
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13 Appendix B: Economy and dissipative structures
A lot of people think that the history of the world is predestined and that it has
a goal. In reality the evolution follows unpredictable routes. On this reflection
we have based our belief in the possibility of creativity, freedom and, above
all, sense of responsibility of mankind.
K. Lorenz, Our Last Chance, p 10.
One reason the idea of historical determinism has traditionally invited so much
hostility can be traced to a popular misconception. True, the concept means
that history follows a set pattern; that society evolves and undergoes
transformations in tune with a discernible rhythm. But it does not imply, as is
commonly believed, that humanity cannot make its own destiny; nor does it
signify fatalism and resignation before the might of the Providence. All
historical determinism means is that, while man indeed is the architect of his
own fate, he has to operate within bounds determined by a higher principle:
Nature.
R. Batra, The Great Depression of 1990, p. 24.
In system theory, it has been shown that for a certain set of systems, one can “force” them to
evolve to a predefined end-state by applying a control-policy. But the path towards that end-
state is usually “fluctuating”: the several state-variables, output-variables and also the control-
variables oscillate around certain values. These oscillations are determined by the system
equations, the eigen-values and eigen-frequencies. This is the case for systems in the “linear”
region. But if some state-variables show signs of saturation, non-linearities can occur,
resulting in seemingly chaotic behavior. So both statements by Konrad Lorenz and Ravi Batra
have their “region of validity”. And here’s the reason why.
13.1 Energy and entropy
Western society has been influenced for a great deal by Newtonian physics and the advance of
the method of science. From the 17th and 18th century onward, as contrasted with the
Hellenistic way of thinking, scientists confined themselves to the study of what can be
measured, quantified and expressed in mathematical expressions – mathematical expressions
which then allowed them to make predictions of the experimental results. This mathematical
approach towards reality has had great influence on the way man perceived the world.
For Aristotle, physics was the science of processes, of changes that occur in
nature. However, for Galileo and the other founders of modern physics, the
only change that could be expressed in precise mathematical terms was
acceleration, the variation in the state of motion. This led finally to the
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fundamental equation of classical mechanics, which relates mass m and

acceleration a to force F:
m . a = m . d²r/ dt² = F (1)
Henceforth physical time was identified with the time t, which appears in the
classical equation of motion. We could view the physical world as a collection
of trajectories, such as the figure below. shows a “one-dimensional” universe.
A trajectory represents the position X(t) of a test particle as a function of time.
The important feature is that dynamics make no distinction between the future
and the past. Equation (1) is invariant with respect to the time inversion t Æ -t:
both motions A, “forward” in time, and B, “backward” in time are possible.
However, unless the direction of time is introduced, evolutionary processes
cannot be described in any nontrivial way.
Ilya Prigogine, From Being to Becoming, p. 2.
X(t) X(t)
t t
A B
World lines indicating the time evolution of the coordinate X(t)

corresponding to different initial conditions:
(A) forward in time; (B) backward in time.
So classical physics described an “invariable” world, a world without qualitative evolution,

where time is just a mathematical variable: the physics of being, as Prigogine has labeled it.
This is manifested in the law of conservation of energy, which states that the total quantity of
energy in the universe cannot change: energy can change from one form to another – e.g.
kinetic energy can change into potential or electrical energy and vice versa – but the sum of
all forms of energy remains the same.
Since the end of the 18th century, one has started to make distinction between useful and not-
useful energy, as not all transformations of energy are possible. In this respect we can say that
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the transformation of kinetic energy into potential energy and vice versa cannot go on forever,
as some of the kinetic energy is lost as heat or thermal energy due to friction, and this heat
cannot again be transformed to potential energy. So in the course of time the amount of
potential and kinetic energy will decrease while the amount of useless thermal energy will
increase. To describe this irreversibility, one has introduced the concept of entropy next to
that of energy.
As already mentioned, dynamics describe processes in which the direction of
time does not matter. Clearly, there are other situations in which this direction
does indeed play an essential role. If we heat part of a macroscopic body and
then isolate this body thermally, we observe that the temperature gradually
becomes uniform. In such processes, then, time displays an obvious “one-
sidedness”...
The second law of thermodynamics as formulated by Rudolf Clausius
strikingly summarizes their characteristic features. Clausius considered
isolated systems, which exchange neither energy nor matter with the outside
world. The second law then implies the existence of a function S, the entropy,
which increases monotonically until it reaches its maximum value at the state
of thermodynamic equilibrium:
dS/dt ≥ 0
The second law of thermodynamics, then states that irreversible processes lead
to a kind of one-sidedness of time. The positive time direction is associated
with the increase in entropy.
Ilya Prigogine, From Being to Becoming, pp. 5, 6.
Entropy can be considered as a measure for disorder: in an isolated system, that has no
interaction with other systems, the disorder will increase in the course of time, structures are
degraded. In such an isolated system there will never again arise ordered structures just by
themselves. If, for example, hot water and ice are put together in a thermally sealed container,
then after some time one will have lukewarm water. And never again will one find ice and hot
water together in that same container if it is left by itself.
A clockwork, for example, is a relatively isolated system that needs energy to
run but does not necessarily need to interact with its environment to keep
functioning. Like all isolated systems it will proceed according to the second
law of thermodynamics, from order to disorder, until it has reached a state of
equilibrium in which all processes – motion, heat exchange, and so on – have
come to a standstill.
F. Capra, The Turning Point, p. 291.
In nature, however, one does not only see this evolution from order to disorder or chaos.
Certain systems and organisms show strong tendencies towards more order. Sometimes very
complex structures and forms of organization become manifest. As an example we can think
of the evolution of an impregnated ovum towards a human being with its complex system of
227
tissues and organs. These evolutions, which in a way are also irreversible, seem to be in
contradiction with the entropy-law.
But we must stress the fact that the law of entropy is only valid in isolated systems, which
have no exchange of matter or energy with their surrounding world. As a matter of fact, such
systems are rather unusual and very often of a technical origin, created by man. In nature we
will rather find closed and open systems.
• Closed systems exchange only energy with their surroundings, and no matter.
• Open systems can exchange both energy and matter with other systems.
Open and closed systems have the possibility of continuously importing free energy from the
environment and to export entropy. This means that increasing entropy, in contrast to isolated
systems, does not have to accumulate in the systems and increase there. Entropy can also
remain at the same level or even decrease in the system (see figure below).
deS
diS>0
An open system in which diS represents entropy production

and deS represents entropy exchange between system and
environment.
So the evolution towards more order in an open or closed system is not in contradiction with
the second law of thermodynamics. An open or closed system interacts with its surrounding
systems and thus can be considered as an integral part of a larger system. According to the
second law of thermodynamics, entropy or disorder can continually increase in the larger
system if this is an isolated system, while order can increase in one or more of its subsystems.
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And when the overall system – like the Earth – is not isolated, but open or even closed,
order can increase in all of its subsystems!
The book Entropy, A New Worldview of Jeremy Rifkin is in this respect wrong, as Mr. Rifkin
fails to recognize that the entropy law is only valid in isolated systems, and the Earth is a
quasi closed system: there is energy exchange with the rest of the Universe, as radiation of the
Sun is absorbed, used in all kind of physical, meteorological and biological processes, and
low valued thermal infrared radiation is expelled back to the Universe as heat. And there is
even a small amount of matter that is exchanged: meteorites enter the atmosphere and
satellites and other space craft are sent into orbit or even to other planets. But this exchange of
matter is so small that it can be neglected. The Earth can be considered as a closed system,
with the Sun as its main energy source.
But how does this happen that in not-isolated systems the internal order can increase? Is there
an underlying mechanism that governs this evolution? This question has fascinated
generations of scientists, as it is related to the question on the origin of the world and the
origin of life. According to the reductionistic approach in science, based on classical physics,
the origin of life is a result of sheer luck, and living organisms should be considered as “an
accident”, a pathological phenomenon in a pure materialistic dead world. By accepting pure
coincidence or sheer luck as the initial cause of life, every further questioning on the meaning
of life becomes irrelevant.
Classical thermodynamics was focused primarily on isolated systems in their state of
equilibrium – where entropy has reached a maximum and increase of entropy has stopped –
and on systems which are very near to this state of equilibrium – in which a deviation from
this equilibrium was considered as a temporal disturbance and in which evolution could only
lead towards the equilibrium state itself. During this evolution, the increase in entropy is very
small, the deviations from the equilibrium are small, so one can assume linear relations
between the increase of entropy and the different variables of the system. As a result of these
linearities, the mathematics to describe these systems are rather easy and well understood.
This explains why scientists have confined themselves for so long to the study and
exploration of this part of thermodynamics: they had found themselves a hole and they had
the tools to dig it deeper. We just mention two results that came out of this digging process,
and which will proof to be very important in the course of this discussion.
In 1931, Lars Onsager discovered the first general relations in non-equilibrium
thermodynamics for the linear, near-to-equilibrium region. These are the
famous reciprocity relations. In qualitative terms, they state that if a force –
say “one” (corresponding, for example, to a temperature gradient) – may
influence a flux “two” (for example, a diffusion process), then force “two” (a
concentration gradient) will also influence the flux “one” (the heat flow)...
The general nature of Onsager’s relations has to be emphasized. It is
immaterial, for instance, whether the irreversible processes take place in a
gaseous, liquid, or solid medium...
A second general result in this field of linear non-equilibrium thermodynamics
bears mention here. We have already spoken of thermodynamic potentials
whose extrema correspond to the states of equilibrium toward which
thermodynamic evolution tends irreversibly. Such are the entropy S for
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isolated systems, and the free energy F for closed systems at a given
temperature. The thermodynamics of close-to-equilibrium systems also
introduces such a potential function. It is quite remarkable that this potential is
the entropy-production P itself. The theorem of minimum entropy production
does, in fact, show that in the range of validity of Onsager’s relations – that is,
the linear region – a system evolves towards a stationary state characterized by
the minimum entropy production compatible with the constraints imposed upon
the system....
The stationary state toward which the system evolves is then necessarily a non-
equilibrium state at which dissipative processes with non-vanishing rates
occur. But since it is a stationary state, all the quantities that describe the
system, such as temperature concentrations, become time-independent.
Similarly, the entropy of the system now becomes independent of time.
Therefore its time variation dS = 0 vanishes. But we have seen that the time
variation of entropy is made up of two terms – the entropy flow deS and the
positive entropy production diS. Therefore dS = 0 implies that deS = - diS < 0
(so it is negative). The heat or matter flux coming from the environment
determines a negative flow of entropy deS, which is, however, matched by the
entropy production diS due to irreversible processes inside the system. A
negative flux means that the system transfers entropy to the outside world.
Therefore at the stationary state, the system’s activity continuously increases
the entropy of its environment. This is true for all stationary states. But the
theorem of minimum entropy production says more. The particular stationary
state toward which the system tends is the one in which this transfer of entropy
to the environment is as small as is compatible with the imposed boundary
conditions...
Linear thermodynamics thus describe the stable, predictable behavior of
systems tending toward the minimum level of activity compatible with the
fluxes that feed them.
Prigogine, Stengers, Order out of Chaos, pp. 137-139.
For non-scientists this may all seem rather esoteric. But in the third section of this appendix
things will become clear when we will stress the importance of these conclusions in relation
with the evolution of socioeconomic systems.
Since the 1970s studies in thermodynamics have crossed the border of systems near to
equilibrium. In systems that are in a state far from equilibrium, the relations between the
different variables of the system are rather non-linear and one is confronted with phenomena
of a totally different nature. In linear systems, in a state near to equilibrium, the irreversible
process of increase of entropy can only lead towards the equilibrium. Remember that
according to the concept of “evenly rotating economy” formulated by the economist Murray
decline to zero. But in non-linear systems, in a state far from the equilibrium, this is not the
case!
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According to the second law of thermodynamics, isolated systems evolve toward the state of
thermodynamic equilibrium, regardless their initial state. Due to the supply of energy and
matter from the surrounding systems, open and closed systems can evolve towards a state
which is not the thermodynamic equilibrium, but which is notwithstanding stable: an
equilibrium of a higher order. This principle has been studied in great detail by Professor Ilya
Prigogine of the University of Brussels, who was granted the Nobel Prize chemistry in 1977
for his pioneering research and the elaboration of the theory of “dissipative structures” and
self-organizing systems”.
I would like to stress the fact that Prigogine’s findings do not only apply to pure chemical
systems, but rather to all kind of systems, whether they are natural or socioeconomic: it has
everything to do with the mathematics of linear and non-linear systems.
13.2 Dissipative structures
The study of the behavior of open and closed systems in states far from the thermodynamic
equilibrium has resulted in a new branch in thermodynamics, which transcends classical
thermodynamics and where non-classical concepts are used such as history of a system, order
and stability as a result of fluctuation, consecutive instabilities and catastrophes in systems,
and coherence of a system as a whole.
13.2.1 The origination of dissipative structures
Open and closed systems interact with their surrounding world: they both exchange energy
with other systems, open systems also exchange matter. In irreversible processes in isolated
systems near the state of equilibrium, entropy increases while ordered structures are
destroyed. In open and closed systems, on the contrary, which are in a state far from
thermodynamic equilibrium, ordered structures can evolve spontaneously – this mechanism
will be explained later in this section. These ordered structures are called “dissipative
structures”. These are structures which themselves maintain energy and matter penetration by
way of exchange with the environment and which give rise to the self-organization of globally
stable structures over extended periods of time188.
By extracting energy and matter – i.e. ordered structures – from their surrounding world and
by degrading these, using their components as input in their internal process of self-renewal,
these systems are able to maintain their state far from the thermodynamic equilibrium, so that
a stable structure originates. During this process entropy (disorder) is produced, which is then
“dissipated” towards the surrounding systems in the form of degenerated matter (waste) and
degenerated energy (heat). Think of your own body as a dissipative structure: you eat
delicious food, which smells good and tastes good and looks good, which is digested in your
body, used as energy source and material for growth and cell renewal ... and which is then
“dissipated” as something that is lukewarm and stinks. But this material, in turn, can form the
input for other living organisms: plants, which feed animals, etc., which in turn end their life
on your table!
The construction and maintenance of such an internal organization and order is done at the
expense of the surrounding systems: there is a permanent interaction with the outside world
188
E. Jantsch, The Self-Organizing Universe, p. 29.
231
needed in order to extract highly ordered energy and matter from them and to expel low
valued waste and thermal energy towards those same surrounding systems. However, the
construction of such an internal order is, within certain boundaries, independent from the
surrounding systems: the system itself has a certain autonomy with respect to the outside
world in the way it organizes its internal structure. So the dissipative structures are also called
“self-organizing systems”. In this sense, the constitution of your body is irrelevant to the exact
composition of your food, although it may influence your body mass index and health if some
kind of food in your diet are lacking or are too abundant.
Besides this duality of autonomy from the outside world for the organization of its internal
order on the one side, and permanent interaction and exchange of energy and matter in order
to feed the construction and maintenance of that structure on the other side, dissipative
structures are subject to still another – at first sight – paradox: their stability in a state far from
the thermodynamic equilibrium. Dissipative structures continuously extract ordered structures
and energy from their surrounding world in order to organize and maintain their internal
structure. This policy prevents them from slipping down towards the static equilibrium state
where entropy (disorder) is at its peak, where the increase of entropy has stopped, where time
and evolution have stopped and where the system is dead so to speak. On the contrary, the
system keeps on functioning in a state far from equilibrium. At the same time self-organizing
systems tend to have a high degree of stability, but this is not a static stability as with the
thermodynamic equilibrium, characterized by invariableness and stiffness, but rather a
dynamic stability, in which the overall structure of the system remains the same while there is
permanent change in its components. This process of permanent changes occurs according to
rhythmic oscillations: organized dynamic structures are a result of rhythmic patterns.
The dynamic stability of a self-organizing system on the macro-level is based on permanent
oscillations on the micro-level. These oscillations on the micro-level play also a basic role in
the origination itself and the evolution of dissipative structures. When the deviations from the
equilibrium state reach a certain level, for example due to positive feedback, this can result in
a qualitative change in the nature of the system itself.
The system stabilizes in a new organization structure quite different from its near-equilibrium
state and characterized by higher energy extraction from its surrounding world than in the
former equilibrium. The new order that has originated in this way can be of a temporal or a
spatial nature. In temporal dissipative structures, the passing of the threshold triggers the
system to leave the equilibrium state so it comes in a “loop”: the system keeps on going
through the same cycle according to a fixed pattern and in a fixed amount of time, both
specific for the origination structure the system has reached.
232
The figure above shows the limit cycle behavior of the Brusselator. The same periodic
trajectory is obtained for different initial conditions (the initial conditions 1, 2 and 3 all lead to
the same periodic cycle). The letter S represents the unstable steady state: this means that if
the system is in state S, even the smallest disturbance is enough in order to force the system to
leave that state (via 4 to the same periodic cycle)!
13.2.2 The evolution of dissipative structures
The fluctuations that caused the origination of a dissipative structure out of a region near the
equilibrium state do not cease to exist, but, on the contrary, constitute the basis for further
evolution of the system from one stable organization structure towards another. In a way, a
dissipative structure is stable within certain boundaries of these fluctuations. If they become
too large, then the system can become unstable and this might result in a complete
reorganization of the system.
When the system is disturbed, it has the tendency to maintain its stability by
means of negative feedback mechanisms, which tend to reduce the deviation
from the balanced state. However, this is not the only possibility. Deviations
may also be reinforced internally through positive feedback, either in response
to environmental changes, or spontaneously without any external influence.
The stability of a living system is continually tested by its fluctuations, and at
certain moments one or several of them may become so strong that they drive
the system over an instability into an entire new structure, which will again be
fluctuating and relatively stable. The stability of living systems is never
233
absolute. It will persist as long as the fluctuations remain below a critical size,
but any system is always ready to evolve.
The study of the stability of a certain system is not an easy task, especially when unknown or
unpredictable corruptive phenomena are in the play. But still we can formulate a very
interesting rule on this subject.
Nevertheless, one general result has been obtained, namely a necessary
condition for chemical instability: in a chain of chemical reactions occurring in
the system, the only reaction stages that, under certain conditions and
circumstances, may jeopardize the stability of the stationary state are precisely
the “catalytic loops” – stages in which the product of a chemical reaction is
involved in its own synthesis.
Prigogine, Stengers, Order out of Chaos, p. 145.
This general conclusion will proof to be of great value when we discuss the evolution of
socioeconomic systems later on in this appendix.
In a region of stability, the behavior of the system is determined by a certain syntax, and is, to
a certain degree, predictable. When the system migrates from one stable organization
structure (region of stability) towards another, it remains in a transit zone for a short period of
time. And it is typical in such a transit zone that the system has the choice among at least two
different organization structures it can evolve to. Therefore this transit zone is also called a
bifurcation zone. This choice for the system introduces chance into the picture: it is not
always predictable which one of the several possible options the system will choose in such a
bifurcation point, so one cannot predict the precise evolution of the system in this region of
instability. Remark the contrast with the predictability in the region of stability!
In this respect we can say that a certain dissipative structure is just one phase in the evolution
of a dynamic system, in which longer “deterministic” stability zones alternate with shorter
“probabilistic” bifurcation zones. In these bifurcation zones the system has the freedom of
choice for its further evolution, and the further it has evolved from the equilibrium state, the
more options it can or has to choose from.
A second property of a system in a transit zone, next to the freedom of choice among at least
two options, is the principle of maximum entropy production. A particular aspect of this self-
determination is the principle of maximum entropy production which holds near the unstable
phases, in which a new structure forms. During the transition, entropy production increases
significantly, whereas close to an “autopoietic” stable state it tends towards a minimum. In
other words, the system does not spare any expense for the creative build-up of a new
structure – and justifiably so as long as an inexhaustible reservoir of free energy is available
in the environment. At first, high energy penetration and maximum entropy production act as
force for change, whereas after the establishment of a new basic structure there is a gradual
shift toward a criterion of minimum entropy production per unit of mass189.
A system can evolve through several organization structures, which become more and more
complex. The structures further away from the “dead” equilibrium state are characterized by a
189
E. Jantsch, The Self-Organizing Universe, pp. 50, 141.
234
greater extraction of energy and matter from the surrounding world and an increasing
production of entropy, which is dissipated towards that same surrounding world. Due to the
increased complexity of the organization, a greater flow of information is needed in order to
assure the coordination of the several components and subsystems. And this increased
information flow, by itself a result of the increased complexity, can also stimulate evolution:
complex structures evolve quicker than simple ones. And due to the increasing number of
options in the bifurcation points, ever more organizational structures can arise: there is an
evolution from simplicity and unity towards complexity and diversity at an ever-increasing
speed190.
13.2.3 The relation between the micro and the macro level
Dissipative structures cannot exist on their own: they need their environment from where they
can extract energy and matter in order to feed their internal processes and to where they can
expel degenerated products (waste and heat). So one has to consider these systems as a part of
a larger encompassing macro system.
On the other hand, a dissipative structure itself can be composed of several subsystems, which
by themselves are also dissipative structures and which feed their internal processes by
sharing the amount of energy and matter that the overall system has extracted from its
environment... or by extracting the necessary resources from other structures within that
overall structure.
This leads us to the notion of a leveled structure, in which each unit on a certain level is at the
same time part of a structure of a higher level and by itself composed of several structures of a
lower level. In this leveled structure there is interaction and interdependence among
components on the same level and across levels.
Many aspects of the relationships between organisms and their environment
can be described very coherently with the help of the concept a stratified
order, which has been touched up earlier. The tendency of the living systems
to form multi-leveled structures whose level differ in their complexity is all-
pervasive throughout nature and has to be seen as a basic principle of self-
organization. At each level of complexity we encounter systems that are
integrated, self-organizing wholes consisting of smaller parts, and, at the same
time, acting as parts of larger wholes. For example, the human organism
contains organ systems composed of several organs, each organ being made up
of tissues and each tissue made up of cells. The relationship between these
system levels can be represented by a “system tree”.
In this leveled order of dissipative structures each system is linked with its environment by the
exchange of energy and matter and by feedback-loops, both stabilizing and destabilizing. This
allows for a very complex evolution. The circumstances in which the system of a micro level
evolves are determined by the macro level. But the evolution of the macro level itself is the
190
Cfr. the principle of ephemeralization formulated by B. Fuller in his book Critical Path.
235
resultant of the evolution of the underlying micro level. So both levels influence each other’s
evolution. This is called co-evolution.
In such a stratified order, certain rules that are valid on one level can be overthrown on
another level. So it is very well possible that the same action yields opposing results on two
different levels: an action, which is good on one level, can be bad on another level. These
considerations may seem rather strange for the minds of the people in the west. On the other
hand, they are very characteristic for several eastern philosophies.
In order to contract a thing, one should surely expand it first.
In order to weaken, one will surely strengthen first.
In order to overthrow, one will surely exalt first.
In order to receive, one will surely give first.
This is called subtle wisdom.
Lao Tzu
13.2.4 Symbiosis
A dissipative structure extracts the energy and matter, needed for its existence and evolution,
from its environment. This environment can be the surrounding world of the encompassing
system, or it can be another subsystem within the overall system.
In the latter case we could think of the situation as if the one system is parasitizing on the
other. If, however, the one system is extracting too much energy and matter from the other
one – if it exploits the other to the limit – then this system destroys its own source of vital
resources, and thus endangers its own existence and evolution.
In a balanced ecosystem animals and plants live together in a combination of
competition and mutual dependency. Every species has the potential of
undergoing an exponential population growth but these tendencies are kept in
check by various controls and interactions. When the system is disturbed,
exponential “runaways” will start to appear. Some plants will turn into
“weeds”, and some animals into “pests”, and other species will be
exterminated. The balance, or health, of the whole system will be threatened...
Detailed study of ecosystems over the past decades has shown quite clearly
that most relationships between living organisms are essentially cooperative
ones, characterized by coexistence and interdependence, and symbiotic in
various degrees. Although there is competition, it usually takes place within a
wider context of cooperation, so that the larger system is kept in balance. Even
predator-prey relationships that are destructive for the immediate prey are
generally beneficent for both species. This insight is in sharp contrast to the
views of the Social Darwinists, who saw life exclusively in terms of
competition, struggle, and destruction. Their view of nature has helped create a
philosophy that legitimates exploitation and the disastrous impact of our
technology on the natural environment. But such a view has no scientific
justification, because it fails to perceive the integrative and cooperative
principles that are essential aspects of the ways in which living systems
organize themselves at all levels.
236
As it is very well possible that opposing rules may be valid on the micro level and the macro
level, we should not be surprised if individual greed and self-interest lead towards the creation
of “pests” and the destruction of the overall system, while on the other side cooperation and
altruism of individuals and groups can have a positive influence of the system as a whole,
ergo also on those who take advantage of it. When two subsystems are competing for the
available energy and matter necessary for their survival and evolution, this might result into
conflict and struggle. But this could also lead towards a forced evolution. From time to time
during its evolution, every organism is forced to create a new environment for itself, because
the old one is occupied by another one. These circumstances could be one of the reasons why
species evolve to a higher level191. The system is forced to be creative in order to secure its
own survival. In doing so, it can evolve towards a situation which, as a matter of fact, might
be better than the previous one. As an introduction to the next section, we will apply this idea
on a socioeconomic system.
England is supposed to be the country where the Industrial Revolution started.
Very often historical studies mention only the positive aspects of this
evolution. But essential to the start of the Industrial Revolution was the
impotence of England at the end of the 18th century to compete with its
neighboring countries. Compared to Flanders, England was no longer of
economic importance. It was standing at a crossroad: or it had to give up its
economic, political and military supremacy to other countries, or it had to
change its economy very drastically by the introduction of technological
innovations. There was no other way to compete with countries with a low
level of labor-cost. The introduction of the spinning-machine, the shuttle and
the steam engine in industry induced a radical change in the life of laborers and
in the economy as a whole. The resulting substantial increase of productivity
was a new agent in the economic process, so competition was no longer only a
matter of the level of labor-cost.
C. Vandenbroeke, Purchasing Power in Flanders, pp. 56-57.
13.3 Socioeconomic systems
A lot of the ideas and concepts on dissipative structures, discussed in the previous sections,
have been implicitly used in this book when we discussed economy. We have no intention to
repeat all of this. We will confine ourselves to the most striking similarities between
dissipative structures and socioeconomic systems. We think that these could form the basis
for a further detailed study, which is beyond the scope of this book.
On several occasions in previous chapters we have looked upon enterprises, social groups and
countries as if they were systems constructing and preserving their internal order. In order to
do this, energy and matter are extracted from the surrounding world and used to feed the
internal processes while degraded energy and matter are dissipated towards the environment
(thermal and other kinds of pollution). Perhaps we could consider the striving for profit as the
realization of more internal order – and dissipating more entropy towards the environment –
while making a loss is the equivalent of increased internal chaos or entropy. In this respect the
question we have formulated in the section on economic misconceptions – whether profit is
possible and whether one system makes profit at the expense of loss for another system –
191
237
could be compared to the question how it is possible that some systems succeed in increasing
their internal order at the expense of other systems.
In an isolated economy (autarky) with zero-growth, there can indeed be no profit. But
countries are open systems: they exchange matter and energy with their surrounding world: an
individual country can increase its internal order; it can make a profit for society. And when
we consider the earth as a whole, then we can speak of a closed system: only exchange of
energy is possible with the “outer world”, but still it can increase its internal order, it is
possible to make a profit for all of humanity!
And if the overall system is not isolated, but open or even closed like Spaceship Earth, profit
can increase for all of its subsystems! It does not has to be “us or them”!

fallacious...
In this respect we can also understand the evolution of the profit-ratio as described in the
section on the evolution of the profit-ratio. In times of war, which surely are bifurcation
zones, the profit-ratio increases suddenly, just as there is maximum entropy production near
unstable phases in the evolution of dissipative structures. The profit-ratio shows the tendency
to decrease in between wars, just as the entropy production tends to a minimum in the stable
region of a dissipative structure.
We have also stated that a socioeconomic entity has no raison d’être on itself, but should be
considered as a subsystem that has a certain role to play inside a system of a higher level and
in interaction with other entities within that system. The notion of co-evolution between the
micro-level and the macro-level has been introduced in the basic assumption of our economic
model that profit (micro-level) is a consequence of growth (macro-level), and that the way
how profit is divided among socioeconomic subsystems on the micro-level determines future
growth on the macro-level.
The way socioeconomic subsystems evolve is conditioned by the evolution of the overall
system, but at the same time we can say that the overall system is the resultant of the
underlying subsystems. From this co-evolution follows the idea that seemingly conflicting
interests – higher wages for employees versus higher profits for employers – can form a unity
if we consider them from the level of the overall system. Rules which are valid on the micro-
level can yield the opposite result if applied to the macro-level.
From the interplay of opposites follows the periodical behavior of economic entities. Within
certain boundaries of the fluctuations, the economic system evolves according to a stable,
well-defined and even predictable pattern: it has a strong dynamic stability. So one can
understand the periodicity and the recurrence of most economic entities as shown in the
238
chapter 2: the system keeps on going through the same cycle according to a fixed pattern and
in a fixed amount of time: about sixty years, two generations. In the US economy there has
been at least one recession every decade, and a great depression every third or sixth decade in
the sense that if the third decade managed to avoid a depression, then the sixth decade
experienced a cumulative effect – an all-out disaster192.
Disturbances and fluctuations can be neutralized by applying negative feedback mechanisms.
If we consider the economy of a country in its initial stage, when the elementary needs are not
yet fulfilled, as after a war, then we can see reciprocity relations. The principle of the rubber
cylinder described by Buckminster Fuller in the section The Social Purpose of Profit is, as a
matter of fact, nothing else than the principle of reciprocity introduced in the theory of
thermodynamic systems by Onsager: in a young economy the pursuit of profit and the
satisfaction of needs have a mutual influence on each other. By trying to increase his turnover
and his profit, a businessman hires employees. So these employees are now in a condition that
they can satisfy their needs. And by increasing the wages of the employees, so their
purchasing power increases, the companies can make a greater turnover and more profit. The
feedback mechanism has a stabilizing influence and is used to “fine-tune” the economy
(Keynes). One thinks in terms of equilibrium and continual growth and progress, equilibrium
of supply and demand, complete employment
But, alas, the necessary condition for the system to become unstable – the catalytic loop
mentioned in the previous section – is also fulfilled. One of the state-variables of the system
plays a role it its own synthesis: profit is at the same time a result of economic growth, while
the distribution of profit determines future growth and thus future profit. So, when the
fluctuations of certain variables become too large, due to the positive feedback-loops – the
rich becoming richer and the poor becoming poorer – then the whole socioeconomic system
becomes unstable, the oscillations grow193 to such an amplitude that certain variables go into
saturation, non-linearities occur so that the system’s internal dynamics change drastically. A
bifurcation zone is reached. The former model of the economic process is no longer adapted
to the economic reality, as a new socioeconomic system has evolved.
Under the watchful eyes of the Keynesian policy-makers, capitalism seemed to
be operating smoothly for a full quarter of a century following the Second
World War. There were mild collapses occasionally, but no duplication of the
1929 tragedy194. But just when the war against economic crises seemed to have
been won, another intractable problem, potentially more dangerous than large
scale unemployment, cropped up and has persisted since 1969 – namely the
coexistence of inflation with a high level of unemployment. This problem
eluded Keynes, for there is supposed to be a trade-off between unemployment
and inflation in the Keynesian system: both cannot rise or decline at the same
time. As yet there is no consensus among economists – there hardly ever is –
as to how the new challenge should be met. The problem admits of no simple
and politically feasible solution195.
R. Batra, The Great Depression of 1990, p. 72.
192
193
See the charts in the section the evolution of money-growth and inflation from The Great Depression
of 1990 written by Ravi Batra.
194
But October 2008 surely was a new bifurcation point!
239
In this respect we can understand why there have been so many different “economic schools”
in the course of history: the economy changes in the course of time, so there can be no
economic theory that is valid in all circumstances and for all times. One should rather think of
it as a temporal stage in the evolution of a dynamic system.
Economists tend to freeze the economy arbitrarily in its current institutional structure instead
of seeing it as an evolving system that generates continually changing patterns. To grasp this
dynamic evolution of the economy is extremely important, because it shows that strategies
which are acceptable at one stage may become totally inappropriate at another196.
As discussed in the previous section, we can propose a stratified order to describe the
socioeconomic systems:
• Spaceship Earth.
• Political and economic power-blocks.
• Countries.
• Socioeconomic groups (branches of industry, unions,...).
• Socioeconomic entities (families, companies,...).
• Individuals.
Most of these systems are open: they exchange matter and energy with their surroundings.
Only the system of the highest level is closed, as the Earth exchanges mainly energy with the
Universe (useful solar energy is taken in while low-valued thermal energy is dissipated
outwardly) and no or very little matter is exchanged. In this stratified order, each subsystem
tries to construct its own internal order by extracting useful energy and matter from its outside
world and by expelling entropy and disorder to its outside world. This outside world can be
the system of a higher level, a lower level or the same level.
In the latter case we can say that one subsystem is parasitizing on another one. As the
exploited system is obstructed in its striving for more internal order, or even worse, as its
internal order is destroyed by the extraction of energy and matter and by the entropy
dissipated by the other system197, we can say that this surely will not happen by free will: there
will be oppression of one system by the other, oppression that might even be imbedded in the
legal system198. This parasitism, based on oppression, cannot go on forever. Tensions arise
between the exploited and the exploiting socioeconomic subsystems, and these tensions
increase as the internal order of the exploited system is more and more hampered, so its very
survival is at stake.
When these tensions exceed a certain level, a zone of instability and turmoil is reached, a
bifurcation point characterized by the fact that the systems have the choice – in a way to speak
– from at least two options. One option could lead to the integration of the two subsystems
into a new system, which then extracts the matter and energy needed for its evolution from a
third system. The situation of parasitism, exploitation and oppression continues: “internal
parasitism” is then replaced by “external parasitism”. Lower classes in the two merged
195
Eight days a week?
196
197
Shell in Nigeria, see the film The Age of Stupid.
198
See Buckminster Fuller, Critical Path, chapter Legally Piggily.
240
systems are granted more rights and material wellbeing as a reward for their support during
the turmoil, while exploitation becomes an “export product”. But after a period of stable
evolution, problems will rise once more due to the depletion of matter and energy in the third
system or the increasing tensions between the third system and the other two. Again
integration of the third system can occur, etc.
In this respect we can understand the evolution towards socioeconomic power-blocks of ever
increasing magnitude, parallel with the arising of democracy in the western world. Nowadays
we can recognize as major socioeconomic power-blocks the capitalistic western world, the
former communistic countries, the Asian emerging economies, and the poor southern
hemisphere, that functions as source of cheap labor, raw materials and energy, without being
able to increase its own economic internal order. Now, at the beginning of the 21st century,
humankind has reached the physical borders of its ecosystem. This holds the danger that the
western world could fall back from a system of external parasitism to a system of internal
parasitism: as matter and energy can no longer be extracted from other subsystems, the
different subsystems within a power block might try to increase their order at the expense of
other subsystems: power-blocks could then disintegrate199 instead of integrate to a system of a
higher level, social evolution is then reversed in time. The society falls back to a lower level
of evolution, with less democratic rights and less material wellbeing for all the social classes,
except, of course, those in command, the military and the intellectual priesthood.
But if a certain group of subsystems feed their internal processes by importing energy and
matter from their outside world, then there is no need for internal exploitation, oppression and
parasitism within the system. If we apply this on the highest level of our stratified order,
Spaceship Earth, then we can see that a world society with social justice and without
parasitism and oppression of one subsystem over the others is only possible if the subsystems
import all or most of the energy they need from outside the Earth. The establishment of solar
energy and renewable energy from wind and tidal waves, geothermal energy and
hydroelectricity as the basic energy source for our social and economic system is not only an
ecological must, but also a necessary – although not sufficient – condition in order to evolve
to a society with social justice, where all socioeconomic entities can live with each other
without mutual aggression, parasitism or oppression. Ecology, development of the Third
World countries and the cry for peace (make love, not war), which have been supported on an
intuitive basis by generations of young people since the Summer of Love of 1967 and the
anti-war movement, are inseparably linked to each other. And now they seem to be
scientifically supported by the “systems view of life”, which has originated out of the theory
of dissipative structures and self-organizing systems.
The systems view of life is an appropriate basis not only for the behavior and
the life sciences, but also for the social sciences, and especially for economics.
The application of systems concepts to describe economic processes and
activities is particularly urgent because virtually all our current economic
problems are systemic problems that can no longer be understood via Cartesian
science.
Conventional economists, whether neoclassical, Marxist, Keynesian, or post-
Keynesian, generally lack an ecological perspective. Economists tend to
dissociate the economy from the ecological fabric in which it is embedded, and
199
Is this respect we can understand the fall of the Roman Empire, as it failed to install a new internal
socioeconomic order once it had reached the borders of its physical world, borders which were imposed by the
level of communication and transport technology at that time.
241
to describe it in terms of simplistic and highly unrealistic theoretic models.

Most of their basic concepts, narrowly defined and used without the pertinent
ecological context, are no longer appropriate for mapping economic activities
in a fundamentally interdependent world.
In order to elaborate this new vision in science, economy and society, it is of paramount
importance that a joint effort is made out of different academic disciplines, ignoring the
traditional and institutionalized boundaries. A bird’s eye view over the field of holes in
needed. Today, we urgently have to extract out of the synthesis of every scientific discipline
the key elements, and incorporate them in a harmonic and cosmic overall picture... To
accomplish this endeavor demands for a cyclopean mind, as it transcends the capabilities of a
single human being. This intellectual and cultural effort can only be tackled with a reasonable
chance for success by a group of scientists and researchers200.
On the other hand, we must not ignore the importance of individual efforts as sources of
renewal within rigid and outdated structures.
We believe that models inspired by the concept of “order through fluctuation”
will help us with these questions and even permit us in some circumstances to
give a more precise formulation to the complex interplay between individual
and collective aspects of behavior. From the physicist’s point of view, this
involves a distinction between states of the system in which all individual
initiative is doomed to insignificance on the one hand, an on the other,
bifurcation regions in which an individual, an idea201, or a new behavior can
upset the global state…
Be it biological, ecological, or social evolution, we cannot take as given either
a definite set of interacting units, or a definite set of transformations of these
units. The definition of the system is thus liable to be modified by its
evolution. The simplest example of this kind of evolution is associated with the
concept of structural stability. It concerns the reaction of a given system to the
introduction of new units able to multiply by taking part in the system’s
processes.
The problem of the stability of a system vis-à-vis this kind of change may be
formulated as follows: the new constituents, introduced in small quantities,
lead to a new set of reactions among the system’s components. This new set of
reactions then enters into competition with the system’s previous mode of
functioning. If the system is “structurally stable” as far as this intrusion is
concerned, the new mode of functioning will be unable to establish itself and
the “innovators” will not survive. If, however202, the structural fluctuation
successfully imposes itself – if, for example the kinetics whereby the
“innovators” multiply is fast enough for the latter to invade the system instead
of being destroyed – the whole system will adopt a new mode of functioning,
its activity will be governed by a new “syntax”.
200
J.B. Quintyn, A Cultural Journey Through Biology, Mathematics, Cosmology, Theory of Relativity,
Cosmogony, p. 191.
201
Eight days a week?
202
... the system is “structural unstable” (it is!) and ...
242
Prigogine, Stengers, Order out of Chaos, p. 206, pp. 189-190.
It is up to us, “the people”, to do something “for the people” about what is described in this
study. But you and I cannot do this alone. It has to be done “by the people”. The first step is to
reach out and touch somebody’s mind, pushing barriers and planting seeds fast enough, to
inform other people, your family, friends, colleagues… who might be interested in this matter.
They can then inform other people, and so one. Maybe then world affairs can be changed.
Consider the following table, and you will be surprised how easily and fast you can reach out
to the whole world after some “iterations”: you share this study with 2 persons, they share it
each with two other persons, and so on. After 10 “iterations”, 210 = 1,024 persons have been
reached. But you could also inform 3 persons, or 4… The result is really spectacular.
2 to the power 10 is 1,024 Your street

3 … 59,049 Your community
4 … 1,048,576 Your town
5 … 9,765,625 Your state
6 … 60,466,176 Some other states
7 … 282,475,249 Your country
8 … 1,073.741,824 Some other countries
9 … 3,486,784,401 Half of the world population
Beyond that, we have to go extraterrestrial.
13.4 Dissipative structures, communication and creativity
13.4.1 Extension of Shannon’s communication-model
In appendix A we have introduced some basic notions on information and communication

theory. Our line of thoughts was based on the information theory elaborated by Shannon and
others. We have explained and illustrated several topics, such as
• The information content of a message, determined by its probability of occurrence.
• The capacity to transmit information over a channel and the minimum time and/or
energy needed in order to transmit a message.
• The concept of signal-space as the abstract representation of the paradigm of a
person or a society.
But this theory has its limitations: it only deals with “stable communication structures” in the
sense that, once the signal-space of sender and receiver are given, these two can only
communicate within the intersection of their two signal-spaces. The communication model
243
evolved in appendix A is applicable on the transfer of information that fits in an a priori

defined and rigid structure. This is indeed the case for most technical communication systems.
Living organisms, and man in particular, are able to handle stimuli and signals which do not
fit in their initial signal-space, and they can even adopt the structure of their signal-space in
order to encompass this new information. This dynamic process of expansion of signal-spaces
is not covered by the Shannon-model described in appendix A. So we were forced to illustrate
this with the help of the metaphor of digging holes of Edward de Bono. We then also made
allusion of the existence of a new hole that would help us in understanding the origination of a
new hole. In electronics this is called “bootstrapping”. In the textbook Integrated Electronics
on page 277 we read: The term arises from the fact that, if one end of a resistor changes in
voltage, the other end of it moves through the same potential difference; it is as if the resistor
were “pulling itself up by its bootstraps203”.
In the classical theory, communication is mainly considered as a one-way transfer of
information from the source to the destination. The transmitted message falls within a
predefined and rigid structure. Furthermore, this process of transfer of information leaves the
sender and receiver unchanged. When for example the destination has received a message
with a certain probability of occurrence and thus a certain information content, then the
chance for another transmission of the same message remains the same: next time the same
message is received the destination receives the same value of information.
Carl Friedrich von Weizsäcker has defined information as “that which generates new
information”204. According to him, the purpose of communication is not only the sheer
transfer of information from sender to receiver, but also to influence the receiver and to
induce a certain change in his behavior. The receiver can then react in a way which is not
predefined in his signal-space: new information-unity-vectors are created. His son, Ernst von
Weizsäcker, calls this kind of information “pragmatic information”. This pragmatic
information is composed of two aspects: confirmation and novelty (see figure below).
203
I find this a rather amusing thought. A levitating resistor?
204
E. Jantsch, The Self-Organizing Universe, p. 50-53.
244
Pragmatic
Information Shannon -
Weaver
100% Novelty 0%
0% Confirmation 100%
Pragmatic (effective) information is composed of the two components

novelty and confirmation, and reaches a maximum when both
components are balanced. After E. von Weiszäcker (1974).
Confirmation is that part of the information that fits within and thus strengthens the existing
knowledge of the receiver: confirmation completely falls within the existing signal-space of
the receiver, so no new insights or ideas are transmitted. Confirmation does not induce any
changes with the receiver, so the pragmatic information content is nil.
Novelty, on the contrary, is information which lays completely outside the signal-space of the
receiver and in most cases will confuse that receiver: the stimuli and signals he is faced with
are perceived as erratic and chaotic, as he cannot project them on known concepts, on already
established information-unity-vectors of his signal-space a that time, he does not know how to
handle the new information. So, complete novelty has no pragmatic information content
either.
Confirmation and novelty are complementary aspects of pragmatic information: when one of
the two is high, the other is low. Only a combination of confirmation and novelty results into
a reasonable pragmatic information content, and in between the two extremes lays a
combination which yields a maximum of pragmatic information, i.e. can have a strong
influence on the behavior of the receiver.
With the help of Erich Jantsch we can describe how a person’s signal space is expanded, and
we do this in terms of the theory of self-organizing systems.
245
We may now easily establish the connection between this model of pragmatic
information and the ordering principles at work in equilibrium and non-
equilibrium structures (see figure below).
Entropy production
Pragmatic
Information
Dissipative structures
Autopoiesis
Equilibrium
structures
Instability
A B
threshold Equilibrium
100% Novelty 0%
0% Confirmation 100%
Dissipative structures transform novelty into confirmation, whereas equilibrating structures tend
towards maximum confirmation. Dissipative structures may evolve through states characterized
by maximum novelty (instable threshold) to new states characterized by a balance between
novelty and confirmation (autopoiesis). In this transition, the entropy production reaches a
maximum (area A), whereas in autopoiesis it tends toward a minimum (area B).
A hundred per cent confirmation corresponds to a system in thermodynamic

equilibrium. That pragmatic information becomes zero at this point is the
correlate of the impossibility of bringing about any directed effect in
equilibrium. A hundred percent novelty, in contrast, may be interpreted as the
instability phase in which stochastic processes cease to confirm the old
structure and have not yet established the new structure. Everything happening
in this phase is novel. In between, in the balance between novelty and
confirmation, we find the domain of autopoiesis.
The scheme according to figure above also allows the representation of the
change in entropy production occurring when a new dissipative structure is
born. Entropy production205, is this context, is nothing else but the production
of structure, implying at the same time more information and more
confirmation. Immediately beyond the “chaos” of the instability threshold
maximum entropy production is needed to attain a certain degree of
205
More entropy is less structure. I think Jantsch meant here that energy is needed in order to create
more structure. In doing so, the high valued energy is degraded to entropy, which is then dissipated. So, in this
sense there is entropy production, but also consumption of energy. This remark of me is in line with the rest of
his explanation. I have added this remark in order to counter Malthusianistic organizations which still adhere the
principle of creative destruction, like the Halliburton Company and the Carlyle Group. You do not need
destruction in order to create new forms of organization. This can be done by mutual agreement and consent.
246
confirmation. Area A in the figure above has to be “won” very quickly by hard
work206. After the formation of an autopoietic structure, however, the system
oscillates in a balance between novelty and confirmation and has to do work
only to the extent that novelty must be coped with continuously, as exemplified
by area B in the time unit. This work, or entropy production, never becomes
zero because the structure is “kept busy” by novelty entering through the
exchange with the environment. In the scheme, it is pushed toward the left so
that maintaining the balance requires ever new work (movement towards the
right in the scheme). In this way, novelty is continuously transformed into
confirmation. Cognition is not a linear process, but a circular process between
the system and its environment.
E. Jantsch, The Self-Organizing Universe, pp. 52-53.
A lot of the considerations that we have formulated in appendix A can be understood in these
terms. There we have said that there is no transfer of information possible outside the
intersection of the signal-spaces of sender and receiver. Now we can expand this view: if
there exists already a certain intersection between the two signal-spaces, and there is the
intention with both communication partners and they are willing to spend the energy and time
to transfer novelty into confirmation, then communication can result into an increase of the
region of intersection. This increase of the intersection of the signal-spaces in turn results into
better communication opportunities and also an increase of the individual signal-spaces of
both parties. Both their paradigms have been expanded thanks to exchange of their mutually
exclusive information-unity-vectors. Isn’t this the proof that interdisciplinary research is a
must, while specialization, in the long run, leads to pure confirmation, to mummification, to
intellectual death?
Communication is possible only where the cognitive domain of autopoietic
systems overlap sufficiently. In intellectual discussions, too, a “dialogue of the
deaf” only too often results. The other system has to have the possibility, in
energetic and functional respects, of partially realizing the same dynamics.
Communication is not giving, but the representation of oneself, of one's own
life, which evokes corresponding life processes in the other. This is the way in
which living systems communicate with each other.
So we can recognize the origination of an irreversible process: the expansion of the signal-
space of all parties involved in the communication process by the continuous transformation
of novelty into confirmation.
In the fourth of the books in which Carlos Castenada transmits the world view
of the shaman Don Juan of the Mexican Yaqui Indians, there is a striking
parallel and generalization of this principle. According to Don Juan, reality is
divided into two aspects, one of which (the tonal) comprises the regularities of
a world ordered by our concepts, whereas the other (the nagual) represents the
unexpected. The latter aspect may be mastered by creative thought and action
and by spontaneous decisions (i.e. by free intuitive will). Thus the task of life
206
I hope one day you will join us!
247
is the never ending transformation of the nagual into the tonal, of novelty into
confirmation. The British Nobel Laureate in Physics, Brian Josephson (1975),
has pointed out that this implies a new expression for the directedness of time,
for the irreversibility of life processes.
But indeed, in order to let the process of expansion of its signal-space take place, the receiver
must be willing to do the effort to gain new experiences and to transform these into
confirmation.
Each system has to make its experiences by itself, has to cope by itself with its
structural problems and has to itself secure the energy flow to unfold its life...
True learning is never rote learning, but always stimulated experience by
oneself.
In this respect we can see that having an open mind towards novelty is the same as having an
open mind towards life itself. To isolate oneself from novelty and new ideas and to base one’s
opinion purely on (academic) confirmation can only lead to mummification, to rigidity, to
intellectual death.
13.4.2 Scientific evolution
The insights we have gained in our discussions on dissipative structures and self-organizing
systems as well as previous considerations on pragmatic information, novelty and
confirmation can be applied to describe how scientific ideas evolve in the academic world.
Based on their scientific research and the results of their experiments, scientists deduct
general rules and principles, which in turn constitute the fundamentals of a scientific theory.
Further experiments are then set up and their results interpreted in terms of that theory. The
aspect confirmation rules over novelty, novelty is as much as possible reduced to
confirmation, which increases the authority of the theory. In terms of dissipative structures,
we can say that “established” science is the region of stability, where determinism is
dominating. Unfortunately, it happens often that novelty, which cannot be reduced to
confirmation within the ruling theory, is ignored or even rejected.
There are striking examples of facts that have been ignored because the
cultural climate was not ready to incorporate them into a consistent scheme.
The discovery of chemical clocks probably goes back to the nineteenth
century, but their result seemed to contradict the idea of uniform decay to
equilibrium. Meteorites were thrown out of the Vienna museum because there
was no place for them in the description of the solar system.
Prigogine, Stengers, Order out of Chaos, p. 307.
248
But with the help of technological means, the scientist increases his field of observation, he
can expand the intersection of his signal-space with Nature. In doing so, he is faced with ever
more phenomena and experimental evidence which cannot be reduced from novelty into
confirmation. The ruling theory, which is like a stable and even rigid organization pattern, is
faced with an increasing pressure of facts, so that after some time a small number of scientists
start to question the validity of that theory. Then science goes through a crisis, it has reached a
bifurcation point it its evolution. It is a striking feature of such a transformation period that a
lot of attention and energy is spent by the “confirmationists” in trying to save the old theory,
while others, the “novelists”, are vigorously examining the new phenomena and searching for
a new consistent theory. Basic principles, which were once commonly accepted knowledge,
are put to question. This usually happens by individuals or small groups, and totally
unorganized or uncoordinated. If often falls out of the control of the establishment. As with
thermodynamic dissipative structures, several options are possible: scientists can start to dig a
new hole on several places. Chance and intuition play an important role in this.
The holistic knowledge of the system’s own evolution which corresponds to
re-ligio and which may already be observed in chemical dissipative structures,
may be called in-tuition, which is literally learning from within. Intuition is not
structural knowledge, but knowledge of one’s own historical process. In this
way, intuition becomes the only factor to guide direction when in processes of
fast change, the orientation by means of stored information and by means of
interpreting the exchange with the environment all fail.
Initially, the collective resistance and criticism from those who still adhere the well elaborated
holes and established theories because of their academic status and the “unacademical”
approach of the others is a brake on the individual attempts for an intellectual “renaissance”.
But once one of these new theories becomes more and more structured and successful in
explaining experimental results, then the academic world is willing to accept it. More and
more scientists start to work on it, so it is elaborated to a well-proportioned theory. Again we
enter a stable region, were all experimental results will be described in terms of the new
theory. Novelty has become transformed into confirmation.
So we can see scientific evolution as a succession of longer regions of stability, characterized
by collectivity, rationality and determinism, alternating with short bifurcation regions, where
individual creativity, intuition and very often pure chance prevail.
13.4.3 Evolution of the brains
The main feature of the evolution of life from the most primitive organisms towards the
present day Homo Sapiens is the evolution of the brain and the neural system207. All the stages
of this evolution are still present in any human being. According to the American
neurophysiologist Paul D. MacLean one can see the brain as being composed of three parts
(the “thriune brain”), each with their own structure, features and information-processing
207
E. Jantsch, The Self-Organizing Universe, p. 165-169.
249
capacity. Each of the three parts has evolved during a certain stage in the evolution of living
organisms.
First there is the part that developed about 250 to 280 million years ago, together with the
reptiles (the reptilian brain). One of the main characteristics of this part of the brain is the
difficulty to process new information, it cannot handle new situations. It is, so to speak,
genetically pre-programmed and it does not provide the ability to learn. Emphasis is
completely on the processing of the aspect of confirmation of information. This part of the
brain uses very little energy.
In the second place there is the limbic brain, which originated together with the first mammals
about 165 million years ago. This part has already a limited capacity to handle new stimuli,
but at the same time it is considered to be the cause of the fact that most human beings stick
too long to certain prejudices and idée’s fixes.
And finally, there is the neo-cortex, which originated together with the primates (apes and
human beings) 50 million years ago. In this part of the brain lay the powers to abstract, to
reason, and to transcend the limitations of the immediate environment, in the sense that man
develops the mental power to change the world around him according to his will (self-
reflexive mind). Totally new information can be processed, new information (ideas) can be
created. This part of the brain uses most of the energy. It is a striking feature with man that
this part of the brain is more developed than with any other living being, and, although the
brain constitutes only a small part of the total weight of the human body, it takes the major
part of the total consumption of oxygen and energy.
This is in complete agreement with the model described by Jantsch: transformation of novelty
into confirmation demands a lot of energy. With the evolution of living organism towards
higher forms, the consumption of oxygen in the brain has increased. Conversely, would it then
be possible to stimulate the mental evolution of an individual or of humanity as a whole, if the
supply of oxygen to the brains could be increased in one way or another?
As already mentioned, the three different types of brain are present in the human brain.
According to which type prevails, an individual person shows creative tendencies and has an
open mind to new ideas – creative people are usually very open minded and have a good
sense of humor – or he shuts off the unfamiliar and “hostile” outside world and concentrates
himself in confirmation (prejudices): “The brain destroys in several steps of abstraction part
of the information – that part which cannot be expressed in the mental situation model208. We
may also say that confirmation is increased at the cost of novelty if novelty cannot be coped
with209.” Selective cognition leads to prejudices, prejudices lead to selective cognition.
I hope I have been able to stimulate your neo-cortex and your appetite for novelty. And that
you fully understand this statement from Albert Einstein: “Problems cannot be solved at the
same level of consciousness that created them.”
We repeat here some lines from our section on the relation between recurrence and paradigm.
When a society functions according to a paradigm that is not in harmony with reality, and
again be faced with the same kind of crises – even with increasing intensity –, it will again
and again go through the same scenario (scripts in transactional analysis, karma in eastern
philosophies), just as the principal character in an ancient Greek drama: “The tragic error in
208
Signal-space!
209
250
tragic drama is walking in blindness so that the tragic hero who intends to accomplish a
certain result with his actions accomplishes the exact opposite210.”
economic crises and wars can only be interrupted if we succeed to transcend the limitations of
the present paradigm and if we can expand or even transcend our paradigm so it is more in
tune with reality.
210
Claude Steiner, Scripts People Live, p 60-61
251
14 Appendix C: Economy and Control System Theory
14.1 An Economic Two-dimensional Flatland
In our basis theory on the origin of profit we made the simplified assumption that there is a
proportional relationship between the amount of money in circulation M and the average price
level P. This is not the whole picture, as money has a “velocity”. The following lines are
borrowed from Paul Samuelson’s book Economics.
In this discussion professor Samuelson uses the following economic concepts:
• GNP = Gross National Product
• M = the amount of money in circulation
• V = the “velocity of circulation of money” per year
• P = the average price level
• Q = the real (as distinct from current dollar) GNP
It is a historical fact that as dollar GNP has grown, so has M. With M now ten
times as large as before World War II, dollar GNP is even more than ten times
as large as its earlier figure...
Why should there be any connection? M is a stock magnitude, something you
can measure at an instant of time like any other balance-sheet asset. GNP is a
flow of dollar income per year, something that you can measure only from
income statements that refer to the passage of time between two dates211.
A new concept can be introduced to describe the Fisher-Marshall ratios
between two such different magnitudes: it is called the “velocity of circulation
of money” per year and is written as V.
Definition of velocity: The rate at which the stock of money is turning over per
year to consummate income transactions is called the velocity of circulation of
money (or more exactly, the income velocity, V).
If the stock of money is turning over very slowly, so that its rate of dollar
income spending per year is low, V will be low. If people hold less money at
each instant of time relative to the rate of GNP flow (prices of apples * amount
of apples + prices of oranges * amount of oranges + ...)212, then V will be high.
The size of V will tend to rise with interest rates213. Also V can change over
time with changes in financial institutions, habits, attitudes, expectations,
computer communications, and relative distribution of M among different
211
Just as profit or cash flow for a company, or a balance of trade for a country.
212
Apples, oranges: quantity sold per year!
213
I would say V tends to rise with the rate of inflation! If real interest rates (interest rate minus
inflation) are high, people will be inclined to save more and spend less, so V declines. But of course, when
inflation is high, interest rates are also high, but real interest on saved money is low, so people spend their money
faster as it looses its value in their pocket and on their savings account. Thus V increases with inflation!
252
kinds of institutions and income classes. These changes in V need not,

however, be abrupt, volatile, or completely unpredictable214.
In every case, this formal definition of the velocity of circulation of money
holds:
V = GNP / M = (Σ pi*qi) / M = (P * Q) / M (unit = per year)
Here P stands for the average price level and goes up and down with an index
of the price level, while Q stands for the real (as distinct from current dollar)
GNP and has to be computed statistically215 by the process of deflating GNP
with a price index...
After economists have invented the concept of velocity of circulation of
money, they can rearrange its formal definition to get a new identity called the
“Quantity Equation of Exchange”:
M*V=P*Q
or
P = (V/Q) * M = k * M 216
where k is a positive proportionality constant217...
The crude Quantity Theory: If 1975 M is nine times 1939 M, then an

adherent of what can be called the “crude Quantity Theory of Money and
Prices” would have to predict that the 1975 price level P should be almost
exactly nine times 1939 P 218. The fact that prices have only quadrupled in that
period would be a refutation of this crude notion that the price level moves in
direct proportion to the money supply...
The idea behind the Crude Quantity theory is simple. If the government effects
a thousand-fold increase in M, then one can predict there will be a galloping
inflation in which P rises 1,000-fold – or more cautiously, at least somewhere
214
... as V, a result of how fast people are spending their money, is more difficult to manipulate than M,
as we have seen in the section on inflation.
215
(Σ pi*qi) is the product of a 1*N matrix with a N*1 matrix, and thus a scalar. But stating that Σpi*qi =
P * Q, the product of two scalars, is mathematically nonsense.
216
Concentration of wealth results in a lower V, as rich people tend to hoard up their money. This
results in a lower P, and thus to unemployment, lower wages, lower economic growth and thus to… lower future
profits for companies. Distribution of wealth, on the contrary, results in a higher V, as people with basic needs
tend to spend their money. This results in a higher P, and thus to more employment, higher wages, higher
economic growth and thus to… higher future profits for companies.
217
Constant at a certain point in time, but not constant over a time period. So it would be better to write
P(t) = k(t)*M(t)!
218
Note the error in this statement! It assumes that k=V/Q has remained constant over the years. But I
am pretty sure that Q has increased considerably from 1939 to 1975, so it is wrong to conclude that 1975 P
should be nine times 1939 P! This simple, “proportional” type of reasoning is typical for the two-dimensional
thinking of most academics.
253
between 500-fold and 2,000-fold. Crude as this notion is, there is some
usefulness to it. Thus when the head of the German central bank denied that its
printing carloads of currency had anything to do with the 1920-1923 trillion-
fold increase in prices, his statement was nonsensical. If he had said, “I am just
a civil servant, forced, by the clamor of the populace in a defeated nation with
grave external and internal disorganization, to take part in an upward race
between P and M” – if he had said this, we could feel sorry for him. But who
can deny the elementary fact that a vastly larger bidding of German marks for
a limited supply of goods has to send prices expressed in marks skyward?
Money differs basically from ordinary goods like wheat or steel. We want
wheaten bread for its own sake, steel for hammers or knives. We want money
only for the work it does in buying us wheat or steel219. If, in 1923, all German
prices are a trillion times what they were in 1920, it is natural to want about a
trillion times as much M as in 1920220. Therein lays the valid core of the crude
Quantity Theory. But we must be wary of extrapolating it to real-life cases
where all Ps [prices] have not changed in the same balanced proportions.
Rudimentary as it is, then, the rude Quantity Theory linking P directly to M is
useful to describe periods of hyperinflation and various long-term trends in
prices, such as those in Spain and elsewhere in Europe after the New World
treasure was discovered221.
Since galloping inflation can put an intolerable strain on a democratic society,
it is well to preach the crude Quantity Theory in season and out of season – not
because in its crudest form it is in season very often, but because it is so
urgently needed in those disorganized times when its message is in season222.
A sophisticated Quantity Theory: Few people still subscribe to the crude

Quantity Theory. But we should not use its inadequacies to damn the valuable
truth that the money supply can have important effects on macroeconomic
magnitudes such as investment, employment, production and prices...
Economists such as Chicago’s Milton Friedman are not surprised to find M
growing sevenfold while P only triples; for they believe that only in time
periods when real output remains roughly the same – say, at a high-
employment level – can one expect M and P to be directly related. They expect
M and GNP (or PQ) to be related. This belief is based upon the hypothesis that
219
Although, some people hoard up money just for the sake of money, even if they have already enough
wheat and steel! Money can’t buy me love, but politicians, and even armies and countries are just a piece of
cake.
220
Or was it the other way around: because 1923-M was a trillion times as much as 1920-M, 1923-
price-level was a trillion times as much as in 1920. Indeed, according to the law of supply and demand, when
demand is low, prices are decreasing... except when more money is printed and put into circulation by the central
bank.
221
There was a sharp increase of the amount of gold- and silver-money in circulation as the queens and
kings of that time started to make coins of that gold and silver coming from the New World and started to spend
that “new” money, created out of something that came from outside their own country and this increase was not
balanced by a proportional increase in real production inside the country.
222
The fall of 2008, more than 700 billion dollar created out of nothing by the Federal Reserve!
254
the velocity of circulation V can be predicted to be reasonably constant, or, if

not constant, it is at least subject to predictable changes...
A sophisticated Quantity Theorist cannot be accused of believing that V is a
fundamental constant of nature. What he does believe is that controlling the
behavior of M will help much to control GNP, for the reason that the resulting
changes in V will be either so small or so predictable as to make one confident
that dollar GNP will still move in the same direction of M.....
P. Samuelson, Economics, p 286-287.
Whatever the subtle differences between “sophisticated” or “crude” may be, P is related to M.
Governments have a limited impact on V, but they can ”control” M very easily, with the
stroke of a pen they can create 700 billion dollar out of the blue.
We have also noticed in this discussion that a multidimensional problem has been reduced to
a one-dimensional cause-and-effect relationship. E.g: Σ pi*qi was reduced to PQ, expressed in
currency unit per time unit. PQ as one entity makes sense to me, but what are the values of P
(average price-level) and Q (real, deflated GNP) as separate entities? Economists use
statistical computation, based on a subset of pi’s and qi’s and deflating techniques in order to
calculate price indexes and deflated GNP. I really wonder if the outcome of these
manipulations – based on subsets of data – have anything to do with our multi-dimensional
life and reality. P. Samuelson argues that as prices in 1923-Germany were higher than in
1920, so 1923-M should also be higher: a cause-effect relationship. In my footnote, I have
turned his line of reasoning upside-down: indeed what is cause and what is effect?
Reality is very complex, one could see it as a signal-space with an infinite number of unity-
vectors x1, x2, x3, x4, x5,... In order to understand reality one can select one of them, say x1,
and explain e.g. 50 % of a certain phenomenon in terms of correlation between x1 and the
phenomenon. A correlation, however, is not necessarily a cause and effect relationship
between x1 and the phenomenon.
By adding a second unity-vector, say x2, one could explain maybe 75 % of the phenomenon,
by adding a third one, let’s say x5, one could perhaps explain 85%, etc.. But by taking x4, x2
and x7, one could maybe have explained 90% of the phenomenon. The more unity-vectors are
included in the picture, the more one can explain a phenomenon. But the chosen subset of
unity-vectors is also important: some have a greater influence on the phenomenon than other
ones, based on their “eigen-values”.
A researcher in management training techniques has discovered a rather funny thing: most
theories confine themselves to only two unity-vectors, rather arbitrarily chosen, in order to
explain a phenomenon223, as this is rather easy to visualize on a flat slide or to print in a book,
and thus easy to sell to their audience, while theories with three or more unity-vectors are
difficult to represent and thus difficult to sell.
In the discussion above we have also noticed this trend to “truncate” reality to only two
dimensions: in the equation MV = PQ we have four variables, so this equation was reduced to
P = kM, easier to grasp, forgetting the fact that Q and V and thus also k change in time. This
223
X-Y theories, so every academic inclined person can elaborate his own theory.
255
habit to think only in two-dimensional correlations and then even accept them as a cause and
effect relationship is typical for of a lot of academic oriented scientists, not only economists.
Economists tend to picture the economic process in circular flow diagrams like the ones
below224. The first figure is a rather “static”, book-keeper-like description, as it is difficult to
explain how economic growth can occur: it describes a situation of equilibrium; it is the two-
dimensional graphical representation of the national product account of a country over the
period of one year, but what does it says for the next year?
Goods flow and earnings flow.
Î Wages, interests, profit, etc, in $ Î
Í Productive services Í
Business Public
Î Goods and services Î
Í Consumption, purchases, in $ Í
In the figure below, savings and investments are added in order to make the picture more
“dynamic” so one can “understand” how the economy grows and at which rate.
224
See Samuelson, p. 180, p. 231.
256
Goods flow and earnings flow,

A more dynamic view.
Î Wages, interests, profit, etc, in $ Î
A: Technological Í Productive services Í

change,
Lowered interest
rates
Business Public
Z: Savings
Î Goods and services Î
Í Consumption, purchases, in $ Í
In a lot of textbooks the input at A is presented as a “pump”, the output at Z as a “sink”.

Pumps and sinks are hydraulic devices, used by plumbers. So, a “more hydraulic view” is a
more appropriate subtitle for this figure than “a more dynamic view”. And A does not come
out of the blue, and Z does not disappear into a black hole, as if the saving and loan “industry”
is not an integral part of the economy. And what about government spending?
So, just consider the figure as a two-dimensional metaphor of economics. Metaphors are very
often used in order to disguise the fact that one does not know the rational explanation. If you
cannot convince, then confuse.
14.2 A Multidimensional View on Economy
In order to get a more scientific picture of the dynamic behavior of the economy I suggest to
consult some expert in the field of control-systems theory. The following discussion is based
on Control Systems Theory written by Professor Olle I. Elgerd, chapters 3 and 5.
One of the most attractive aspects of control-systems theory is its general applicability to
control problems of the most varying engineering types. In the following, maximum
advantage will be taken of this fact in order that the presentation will be fully acceptable to
any senior engineering student. Indeed, the book should not prove impenetrable to students of
biology, medicine, and business, who quite often are concerned with control problems of
great complexity.
257
At the outset, it should be pointed out that we shall be concerned with systems. Webster
defines a “system” as a “collection of objects united by some form of interaction or
interdependence225”.
The control engineer invariably will be interested in the dynamic, or live, characteristics of a
system. As a rule, the “objects” making up the system will not be in a state of a static
equilibrium relative to each other and the surrounding world. Under the influence of external
stimuli, the state of the system will be changing with time in a manner entirely attributable to
the character of the stimuli and the bonds of interaction.
In principle, it is possible to change the state of a system in any prescribed fashion by
properly choosing the inputs, at least within reasonable limits. In other words, one may exert
influence on the system state by means of intelligent manipulation of its inputs. This then, in a
general sense, constitutes a controlled system. The figure below depicts the general structure
of a control system.
General control system structure.
Disturbances
Input or Output or
reference Control z1 z2 zk controlled
commands forces
variables
r1 u1 c1
r2 u2 c2
Controlling . Controlled .
.
.
System . System .
. . .
rp um cp
... Output
monitoring
Feedback channel
The output of the system is measured by the p variables c1, c2, ..., cp, which in some way are
related to the state of the system. It should be pointed out that these visible and measurable
output variables do not necessarily need to tell the whole story about the state of the
controlled system. It may be desired to control only part of the system, or it may not be
physically possible to measure all the so-called “state-variables”, as they remain invisible to
the outside world of the controlled system. In the following, the c-variables will be referred to
alternately as outputs and controlled variables.
225
Society is thus clearly a system! See also appendix B on economy and dissipative structures.
258
Direct control of the system is exerted by means of the m control forces u1, u2, ..., um. These
forces are applied by the controller, which always constitutes both the brain and the brute-
force [sic] portion of the overall system. The controller determines proper control action
based upon the input or reference commands r1, r2, ..., rp, and information obtained, via output
sensors, concerning the actual output c1, c2, ..., cp. This constant output monitoring, made
possible through the presence of the feedback channel, is the distinguishing mark of all high-
precision control systems. The feedback results in a closed-loop signal flow, and the term
closed-loop control is often used...
The general block diagram would not be complete without the inclusion of k disturbance
inputs z1, z2, ..., zk, In most practical situation, it is necessary to control the system in spite of
the corruptive [sic] influence of various effects that we may classify collectively as
disturbances. These corruptive inputs may be of external origin, or they may emanate from
within the system itself [sic]...
It is appropriate to give the following strictly general definition of system state:
The state of a system is the minimum set of numbers of variables226, the state
variables, which contain sufficient information about the past history of the
system to permit us to compute all future states of the system – assuming, of
course, that all future inputs (control forces) are known and also the equations
(bonds of interactions) describing the system.
The number n of state variables defines the order or the dimensionality of the system.
Sometimes the term state-space is used to designate the n-dimensional coordinate space in
which the state of the system ranges227. The figure blow depicts the situation in a three-
dimensional case. (For higher dimensions, it is difficult to visualize the situation
geometrically.)
226
The truth, the whole truth, and nothing but the truth.
227
Remember Appendix A, where we introduced the concept of a multi-dimensional signal-space.
259
State trajectory in a three-dimensional state space.
x3
t=0
x2(0) x2(t)
x2
x1
Initially, at t = 0, the total system state can be expressed by the n numbers x1(0), x2(0),...,
xn(0). Under the influence of the m control forces and the bonds of interaction, the state of the
system will change. The updated state at time t can be expressed by the n numbers x1(t), x2(t),
..., xn(t). In consequence of this interpretation, we define the state of the system as the n-
dimensional vector x(t), which has as its components the n numbers or state variables x1(t),
x2(t),..., xn(t), that is
x1(t)
x2(t)
x(t) = .
.
.
xn(t)
or more concisely
260
x1
x2
x= .
.
.
xn
In addition to the state vector x, the m-dimensional control-force vector u, the k-dimensional
disturbance vector z and the n-dimensional function vector f can be defined:
u1 f1 z1
u= u2 f= f2 z= z2
. . .
. . .
. . .
um fn zk
In terms of the vectors x, u, z and f, the behavior of the system can be described by the
differential vector equation:
dx/dt = f(x,u,z,t)
This means that the change of the system over time is function of the state itself, the control
force applied and the corruptive disturbances, and of time itself. Indeed, in some cases the
interaction and interdependence of the objects of the system can change over time228.
As already stated, it is appropriate to warn the student not to confuse the state variables of a
system with the system outputs c1, c2, ..., cp, shown in the figure above (general control
system structure)229. It is true that in certain cases they are identical, but more often than not
the output vector is not equal to the state vector. We define the output vector c as the p-
dimensional columns vector.
228
As described in Appendix B, Economy and Dissipative Structures: “In this respect we can
understand why there have been so many different “economic schools” in the course of history: the economy
changes in the course of time, so there can be no economic theory that is valid in all circumstances and for all
times. One should rather think of it as a temporal stage in the evolution of a dynamic system.”
229
A lot of economic figures that are published on a regular basis (growth percentages, unemployment
rates, inflation percentages,…) and that are eagerly interpreted by Wall Street analysts are not necessarily the
state variables! I think, together with Ravi Batra, that distribution of wealth as expressed in the Gini-coefficient
is a more appropriate state-variable than, for example, the Dow Jones or the GNP per capita.
261
c1
c2
c= . where p ≤ n
.
.
cp
Ordinarily, the output vector is related to the state vector in the linear fashion230:
c = Cx
where C is a p*n matrix referred to as the output or measurement matrix.
c11 c12 c1n

c21 c22 c2n
C= . . .
. . .
. . .
cp1 cp2 cpn
so that ci = Σj cij*xj.
In linear, analog systems, given the system variables x and the system equations f, one can
study the behavior of the system, the effects of the feedback and control policy u on the
system itself and its output c. This is done by using Laplace transformations, matrix-
transformations (“normalization”), determining the n eigen-vectors and n eigen-values of the
n-dimensional system, and plotting these n eigen-values in the two-dimensional s-plane,
where for preserved stability, the eigen-values (or poles) must be located in the left side of the
s-plane (figure below). The shaded region is the “forbidden zone” for the poles or eigen-
values, as the system then becomes unstable.
230
Unless a state variable goes into saturation, so non-linearities occur and the dynamics of the system
change drastically. The usually applied control policy then no longer yields the desired result.
262
The two dimensional s-plane.
jω
In essence, the Laplace-transformation is a very useful tool in order to truncate a multi-

dimensional system to a two-dimensional representation of the system, without losing the
whole picture of the system! There is no sacrifice of correctness and validity for the sake of
visual simplicity. When continuous monitoring of a system is replaced by periodic sampling,
the Laplace-transformation has to be replaced with the z-transformation.
I know, this all seems very complex and esoteric to most of you, as indeed all this information
comes from a hole that is quite different than the hole in which most politicians and
economists have been trained. Economists give advice to politicians who make decisions with
long-term implications on socioeconomic systems like branches of industry, countries or even
the whole Earth. Most politicians have been trained in political sciences, economy, business
administration or law, some even in chemistry... But there are very little engineers who pursue
a political career, alas...
It is beyond the scope of this book to elaborate in a profound way the use of concepts of
control systems theory on the field of economy. But I hope that one day this book could
contribute a little bit to the destruction of the walls of mutual ignorance between economy and
other more “hard” sciences. Nothing less than a multidisciplinary approach can be successful.
Things are getting better, as we share in each other’s mind.

I know, John Lennon.
263
15 Some Loose Ends
15.1 Justification of the methodology
I think some readers might have thought at the beginning of this study: “Déja vu, he is going
the neoclassical way of economy”. Others will have found occasions to label the author as a
somewhat late-developed Marxist, as he criticizes capitalism, profit, creation of money out of
money, and the consumer society. Still other readers will have been irritated by the slow and
rather schoolish takeoff in the first chapters. It is indeed only after some time that the story
goes crescendo to arrive at a fortissimo231:
“ Oh no232! We are in the wrong paradigm!”
It is because of the needed shift in paradigm that we have spent so much attention in
Appendix A on the process of communication and that we have evolved our basic theory so
slowly: it takes time and energy for both the sender and the receiver in order to transmit a new
paradigm with the help of the linear process of written communication. I hope the reader will
forgive me for putting a strain on his patience.
And finally, there will be those who will be offended by the “unscientific” approach. I would
like to defend the method I used with the following argumentation. Indeed, it is a different
approach than other studies dealing with economy... or is it sociology... or political history...
or moral philosophy...? Scientific studies, in the classical sense of the word, usually discuss
one of these topics in isolation, and therefore show major deficiencies.
Authors of these studies limit themselves carefully and even scrupulously to their own
academic field of research and specialization in order not to compromise their academic
reputation. The boundary areas and interfaces with other disciplines are very often neglected,
and if they are taken into account, they are defined once at the onset of the study and then
forgotten or considered to be static, unchanging, and exogenous233. In this respect, we stress
the fact that since Locke and Smith, economists have banned the aspects of morality and
social justice out of their field of study under the pretense that these concepts cannot be
quantified in an objective and rational way. These aspects of reality are considered to be the
concern of other, rather “soft” sciences such as sociology and moral philosophy. “We, the
economists, can only give scientific advice on pure economic matters in a society where
resources are limited234 and where people act in a pure rational way235 in order to maximize
their material wellbeing”. Phenomena such as oppression, exploitation and war are very
carefully neglected.
But on the other side, sociologists and moral philosophers do not always have the necessary
economic background in order to see the impact of the economic system on their field of
231
... much alike the way Duane Allman plays the lead guitar on Loan me a Dime on an album of Boz
Scaggs
232
...or some four-letter-word which could accompany a tap on the forehead.
233
Think of the holes of Edward de Bono.
234
Are they?
235
Do they?
264
study and vice versa. So interfaces and boundary areas between different scientific disciplines
are usually neglected, as they are not understood. And if an individual scientist dares to cross
the border, he is very often excommunicated by his “fellow” scientists, without being
accepted by another discipline. He becomes a gypsy, an outlaw236.
Furthermore, in these classical studies a reductionistic and fragmented approach is used. One
field of study, such as economy, is already too complex and vast for this approach. So it is
unraveled in a multitude of smaller disciplines, theories and specializations – to catalog them
is already a discipline by itself! –, all studying a small part of the “big” economy. So
economists are tempted to introduce assumptions and approximations which should replace
the interfaces with other specializations in the field of economy237. But once these idealized
approximations and assumptions are defined, such as free competition and open markets and
informed, rational consumers, they are neglected when it comes to putting things into practice
by politicians and businessmen. Conclusions valid on one level of the economy – a private
company – are applied without scruples on a higher level – the economy of a country –,
because they suit the aspirations of certain elements in society to enrich themselves.
We also have the strong impression that all these economic theories and disciplines do not fit
together in a coherent way. For sure they are not valid all at the same time under the same
conditions. Okay, they all may be valid when certain specific boundary conditions are met,
but there is only one reality: so one could at least expect the boundary conditions to be
consistent with each other. I am pretty well sure that if one would try to integrate all economic
disciplines into a coherent model, one would find a lot of incompatibilities and internal
discrepancies: there is no consistency, it’s just patchwork. So most of the books, which
discuss a subject as this one in the traditional reductionistic way, very seldom manage to
explain things in a coherent manner, but rather describe them and give only time-limited
stand-alone explanations of a few phenomena. In order to explain things to the bone, one
should first see the overall picture.
The greatness of Hellas lies in the fact that one tried to order all this
fragmented knowledge, that one tried to unite the multitude of phenomena in
one overall picture called natural philosophy. Indeed, the highest goal of the
Greek philosophy was to construct a cerebral and harmonic model of nature
and reality. The basic feature of all Greek philosophers is the fact that they
were seekers of unity. But this feature can be found in sciences of all time. As
Louis de Broglie has put it: “C’est l’espoir toujours renaissant des théoriciens
de la physique d’arriver, malgré la complexité sans cesse plus grande des
phénomènes connus, a construire des doctrines synthétiques de plus en plus
vastes, dont chacune contient et complète les précédentes”...
We stress the fact that the core of philosophical activity is the double effort of
synthesis and generalization, this is the unification and harmonization of all
things and phenomena. We have to underline that “synthesis” and
“generalization” are not the same, but two succeeding stages of study and
research. Already in 1936 Alexis Carrel raised the alarm in his book Man the
Unknown when he noticed that a lot of scientists were trained to a high degree
236
Antony Sutton, Professor of economic history at Stanford University, once made an attempt when he
published a popular version of his academic research on war-profiteering during the Great War and the Second
World War. He explicitly mentioned names. He was dismissed. By “Googling” a little bit you can find the
reason why.
237
In systems theory this is called “defining the boundary conditions”.
265
of specialization at universities238, while very little attention was given to

generalization and synthesis. With this, he meant generalization of one field of
science. But this is the first step. Today we have to go a step further, as the
synthesis of one field of study is no longer sufficient. We have to extract out of
every science its basic principles and unite them into a coherent, self-consistent
overall picture of the world239.
J.B. Quintyn, A Cultural Journey Through Biology, Mathematics, Cosmology,
Theory of Relativity, Cosmogony, pp. 27, 191.
So, in this book we have tried to follow this “holistic” approach. Starting from one basic
assumption240 – profit as a consequence of growth – we have elaborated in a logical way a
model of the economic process, without introducing any further assumptions, but also without
banning certain aspects of the real world as it is, and not as one would wish it to be, to
paraphrase Francis Bacon. In doing this, we have taken care to avoid internal contradictions.
Every field of study that would like to gain the quality label “scientific”241 should be put to
this acid test of self-consistency.
By consciously letting ethical and moral aspects to intrude into our line of reasoning, we have
been automatically guided towards phenomena such as over cropping of natural resources,
degradation of the environment, exploitation of social groups and other countries, and war.
We have not called upon “objectivity” to ban these topics in order to keep the study
“academic” and “rational”, or upon simplicity in order to keep the problem manageable. On
the contrary, we have incorporated these aspects in the overall picture. In doing so, our
insights have grown, have become broader, deeper, brighter.
And finally, one could criticize this study on its basic assumption – profit or cash flow as a
consequence of growth242. “As a whole, this study is self-consistent, but it is not firmly
based”. Indeed, we did not give a real scientific proof of our basic assumption243. We have
used a very simple line of reasoning in order to let the reader intuitively accept it244. However,
in defense of our basic assumption or axiom we would like to postulate three arguments.
• The dimension analysis fits: profit and economic growth are expressed in the same
unit: unit of currency per unit of time (E.g. $ per year)245. Usually economists tend
to express growth figures in percentages and profit in currency units. But a
percentage is relative to an absolute value, and both growth and profit are realized
over a period of time!
238
They are paid to do that by the power-system they live in to “educate” the minds of young people.
See also appendix A on communication and science. Remember the EIC College, Eaton, Oxford, Cambridge,
Harvard and Yale University, WestPoint...
239
I am in great debt to professor Quintyn, as he was the first person who really understood me. He
gave me the zeal to proceed with the endeavour to finish this book.
240
In mathematics one would call this an axiom.
241
Which is not the same as “academic”.
242
... and/or a positive balance of trade. But as we think as cosmopolitans, we see the Earth as one little
country surrounded by mountains of infinite space. So growth is the only remaining cause of profit.
243
For God’s sake, where should I get the statistical data? Which company publishes honest profit
figures and pays honest taxes?
244
According to Spinoza intuition is the highest form of knowledge.
245
Think cosmopolitan, forget national borders and balances of trade, also expressed in currency unit
per time unit.
266
• The model that we have evolved out of the basic assumption has allowed us to
explain economic reality (and some other realities) in great detail without need for
further assumptions and without need for discarding social phenomena or moral
considerations.
• The model is free of internal contradictions.
Based on these considerations, we dare to say that the approach used in this book is more
scientific than those of most academic economists, who work reductionistic, fragmented and
“free of” moral considerations. If we say “scientific”, we think of the hard empirical sciences
such as physics. Physicists are already a long time aware of the fact that one can approach
reality only with the help of models and theories, and that the value of the models and theories
is determined by the amount of experimental phenomena one can explain with these, and not
by the volume of paper one can fill with them. And if one experimental result is in
contradiction with the theory, then the theory and not the experiment is sanctioned. Reality is
always above theories and models.
I think very few economists would dare to put their models to such an acid test. Furthermore,
if an experiment is physics turns out differently than expected from the theory, the
consequences are usually limited in space and in time. When an architect builds a house, he is
hold responsible for the quality of the house. When an engineer designs a bridge and the
bridge collapses, then he is responsible. But when putting economic theories into practice by
political and economical leaders of a country, then the scope of these “experiments” is much
greater, the consequences can be felt for a long time, and human beings are involved! I think
this asks for a little bit more sense of responsibility and reality! As Ravi Batra has expressed it
when he discusses Reaganomics: "It is as if semantics and rethorics were going to generate an
economic miracle and frustrate the law of mathematics246".
I hope that, at the end of this book, our basic assumption and the method I have used have
gained some credit in the eyes of the reader. And that he realizes that there is really no
alternative to Eight Days a Week. It is the logical next stage in the evolution of economy and
humankind: The fourth Wave.
15.2 Model of social evolution
Nous voici donc rendus au moment ou il faut se décider à faire le grand saut
dans l’inconnu épistémologique, le même saut qu’on fait en leur temps ceux
qui ont analysé les formes sociales à partir des acquis des sciences de l’époque.
J. Attali, La Figure de Fraser, p. 72.
If history teaches us one thing, it is the fact that the production of the intellect
is changing according to the production in the material world.
K. Marx, F. Engels, Communist Manifest.
246
See also Howard Katz, The Warmongers, The economic whores of Babylon.
267
Based on our discussions on economy, and on Professor Prigogine’s theory of dissipative

structures discussed in Appendix B, we will now try to construct a model, a framework, in
order to describe the basic dynamics of the evolution of human society.
• Let us divide according to a certain criterion society in a number of subsystems.
Each subsystem can be divided itself in smaller subsystem. Later in this section we
will give two examples of how we could do this.
• Each of the subsystems tries to achieve a certain goal: satisfaction of needs in
order to survive inside the larger overall system (urge to survive).
• In doing so, material and energy is taken as input from other subsystems and used
to feed the internal processes, while output is produced, consciously or by
accident, toward those other subsystems. All the subsystems are imbedded in the
overall system – Spaceship Earth and Nature with all its resources of energy and
raw materials.
• There is a dynamic interaction between the several subsystems: the output of one
subsystem can be the input of another subsystem.
• Although the processes and dynamics at the lower levels may seem chaotic and
unpredictable, as decisions are made independently by thousands of small
subsystems, the overall system still evolves according to an orderly, rhythmical
pattern with a certain periodicity. In systems theory one speaks of the “eigen-
frequency” or “characteristic frequency” of a system247.
• When this dynamic interaction between the subsystems shows a constant pattern
over a longer period of time, we can speak of a social structure (the stability zone
of a dissipative structure).
• The urge to survive in man is manifested as satisfaction of needs, search for
security and even egotism and greed, but it can also appear as love, altruism
(toward family, country, humanity as a whole) and creativity248 (indeed, apparent
opposing entities can form a unity!).
• This urge to survive, together with free flow of information as catalyst, induces an
evolution in the social structure from one quasi stable structure (quantum-level) to
another, characterized by more material wellbeing, more democracy, and more
equality for more people in a larger economic entity with more and faster
throughput of information.
• During this evolution, the transition of one social structure to the other is the result
of growing imbalances among subsystems in the overall social structure. These
imbalances ultimately lead towards a bifurcation point, a state of crisis, where the
interactions among the subsystems are restructured and also leads to changes in the
internal process of those subsystems themselves, resulting in a new pattern, which
will again be constant over a longer period of time, a new social structure has
originated.
247
E.g. a swing has its own eigen-frequency depending on its length and mass. If one applies a
rhythmical force on that swing with the same frequency as the eigen-frequency, then the swinging is sustained. If
the frequency of the external force does not match with the eigen-frequency, then the swing will slow down and
come to a standstill.
248
According to the spiritual advancement of a person, one of these manifestations will dominate the
other. See Elisabeth Haich, Sexual Power and Yoga.
268
• But as society goes through a bifurcation point, there is also the possibility to fall
back to a lower “quantum-level” of social organization.
Let us illustrate this with two examples.
15.2.1 Evolution of social classes
Let us take as subsystems the social classes in society. With the model described above, we
can understand the leveling of social classes: over the ages there has been an evolution from a
social structure with a very small upper-class, whose living conditions were far better than the
larger lower class, while there was no middle-class, towards a social structure with a large
middle class whose living conditions are even better than those of the former upper-class.
Satisfaction of needs and greed were the driving force of the dynamic interplay between the
subsystems249, in casu social classes, which due to the principles of feedback, has resulted into
economic growth: ever more input (raw materials, energy, human effort) is processed to ever
more output (goods, services, but also pollution), while some of the subsystems can take more
and other less advantage out of the growth.
By the growing satisfaction of needs in one of the subsystems, and because the pursuit of
profit keeps on functioning as goal on itself (greed), this leads to growing imbalances and a
period of exploitation begins: one subsystem parasites on the other, it tries to secure its own
position at the expenses of the others250.
Due to this exploitation and because the aspect satisfaction of needs of the urge to survive
also keeps on functioning in the subsystems which are exploited, tensions occur among the
subsystems. With information-flow as catalyst, this results in one way or another (see infra)
towards a reorganization of the social structure – a quantum leap –, by which the exploited
subsystems gain more rights and the privileges of the oppressors are reduced a little bit. Both
subsystems integrate into a system of a higher level with a new internal dynamic and a new
social order. More material wellbeing, more democracy and more freedom for more people
inside the society, unfortunately very often at the expense of the material wellbeing and
freedom of the people outside that society.
15.2.2 Evolution of geographical classes
Let us now take as subsystems geographic areas. With our model at hand and with the
evolution of the social classes in mind, as given in the first example, we can now understand
the evolution towards ever growing economic and thus political entities.
By the growing satisfaction of needs in one subsystem, there may arise saturation of the
market. Or it may also happen that the resources of raw material, land and energy, needed as
input for the economic process of the subsystem, get depleted. So another subsystem is
249
Think of the rubber cylinder.
250
“Persons in a privileged position will always first risk their total destruction before giving up any of
their privileges. Intellectual short-sightedness, often simply called stupidity, is undoubtedly one of the reasons
for this”. J.K. Galbraith.
269
colonized in order to create new markets and/or acquire new resources of energy and raw
materials, so the economic process in the first subsystems can keep on growing.
In the early stage of the colonization, the stage of the explorers and pioneers, growth can
occur for both subsystems, as products, new techniques and know-how are exchanged
between the two, but after some time there will again arise saturation in the first subsystem.
As the aspect greed of the urge to survive keeps on functioning, the colonization leads to
straight exploitation, with all its characteristics of oppression and violence. This preserves
also the social structures in the colonizing systems as it feeds the internal process and allows
some social classes in it to enrich themselves considerably, while the lower classes can pick
some grains.
But the aspect satisfaction of needs of the urge to survive keeps on functioning in the
oppressed subsystems: so tensions occur between the geographical subsystems. With
information-flow as catalyst this results into a reorganization of the relations, where the
former colonized areas are integrated together with the colonizer into an economic entity of a
higher level, with more equal distribution of wealth and more political democracy and
equality.
In this respect, we can understand the evolution of the medieval castle, whose residents
“colonized” the surrounding farmers and serfs by selling them security and protection –
especially against themselves, the trick of the Mafia is indeed very old – in exchange for food
and other goods, over the industrialized countries of the 18th and 19th century, with England251
as major colonial force, to the economic and political power-structures of these days. What
will be the next step in this evolution?
15.3 Possible transitions and visions of the future
As already stressed on several occasions in this study, the transition of one social structure to
another is the result of ever growing imbalances among subsystems. The tensions resulting
out of these imbalances ultimately lead towards one of the three following ways of
transformation. Only the first two, having the aspects greed and satisfaction of needs of the
urge to survive as driving force, have been recognized by Locke, Smith, Malthus and Marx.
• The first way: by a revolution from the bottom of society against the top and
directed to the inside of society, the oppressed ones succeed to overthrow the
established parasitizing order. This way of transformation is driven by the aspect
satisfaction of needs of the urge to survive. This could be called the Marxist way.
• The second way: by fomenting war from the top of society towards the outside,
the established order tries to secure its privileges by anticipating the revolution of
the lower classes and by diverting the aggression in the form of a war towards an
external “enemy”, so that other regions can be conquered and colonized252. Often
this is accomplished by making internal concessions: the lower classes of the own
society are granted some more rights as a reward for the support they have given in
251
Thanks to the East India Company and Thomas Malthus.
252
This could be in a form of economic imperialism, where the colonized country remains politically
“independent”, while the leader is a puppet of the economic colonizing force. Marcos in the Philippines, the
Shah of Iran,… After they were expelled from power they both died in an US army military hospital. They were
never able to publish their memoirs.
270
the war against the “enemy”253. In this respect, it is interesting to note that the
country with the oldest pseudo-democratic traditions and the least violent social
revolutions has also created the largest colonial empire: England254. In this
evolution, the aspect greed of the urge to survive is the driving force. This could be
called the capitalistic or imperialistic way.
• The third way: by eliminating consciously and in a controlled manner the
tensions between the subsystems – social classes as well as geographic classes or
countries. This transformation should be tackled from the top – changed politics, a
democratic world government – as well as from the bottom – changed moral values
– and from within – changed pattern of consumption in the rich countries – as
towards the outside – a world-wide program to help the Third World in its
development.
In doing so, we should let us guide by an ecological awareness, and the aspects love and
creativity of the urge to survive should prevail over greed and self-interest instead of being
hollow slogans. These higher aspects of the urge to survive become manifest when the
individual person succeeds in transcending his own little ego and the interests of his own
group (family, social class, country, race...). A lot of people are already aware of this fact.
The first and most safe step in this new evolution is to adapt modesty; the first
effort lies within ourselves. We have to conquer our own ego... The 40 pages
of the report [of Taif] are introduced with a personal, polite and above all
solemn letter of Sheik Yamani, president of the “committee on long term
strategy”255. In these pages are outlined the guiding principles in order to
establish a new order in the world, as a replacement of the order that was
enforced by the Western countries on the former colonies after the Second
World War. An order which now, three decades later, has proved not to
function anymore…The main issue of the document of Taif is no longer oil
and its price per barrel, but which vision for the future is needed for the world
as a whole256. As a matter of fact, it discusses the need for a rebirth, a new
renaissance. Power structures disapproving or fighting or ignoring each other
stand helpless. The world has to learn to cooperate, but never before has one
been so afraid of each other...
The document of Taif257 is not a rigid program, but rather a call, a message,
pointing all of us to our responsibility. In the first place toward the western
countries: they can no longer act as despots, but they should rather be a partner
and work together with the other countries towards the birth of a new world
order...
J.J. Servan-Schreiber, The Challenge, pp. 290, 11, 12.
253
In most European countries the right to vote for every man was introduced after WW I, while the
women had to wait until after WW II.
254
A tradition that was later inherited by the USA, not the people of the USA, but the guys behind the
curtain in real control, and with colonialism replaced by imperialism. And with the East India Company still in
control, even when it officially no longer exists. It is now just called The Company.
255
Didn’t Sheik Yamani fell into disgrace with King Feisal? Why? Some external “diplomatic” pressure
from the guys behind the curtains? In exchange for a small increase in the price per barrel, paid by you and me?
256
Eight Days a Week and a Fourth Wave!?!
257
This report never received the attention it deserved in the western media due to the filtering effect of
“mass” media (see Noam Chomsky in On Power and Ideology), as they were only interested in the price of oil.
271
With the next social transformation, which is imminent, the whole population of the earth
could be integrated in one economic entity, labeled as “Spaceship Earth” by Buckminster
Fuller. Capitalism in its current form will disappear – just as communism has done – as
political and economical system. A new structure of society will emerge, in which the whole
population of the earth will live peacefully in freedom together on the basis of equality and
fraternity in an unprecedented material affluence for all as they share the resources of the
earth.
Imagine there’s no countries

It isn’t hard to do
Nothing to kill or die for...
Living life in peace...
Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man
Sharing all the world...
John Lennon, Imagine.
The means to accomplish this are already at hand. It is only a matter of willpower and mutual
trust. This has been proven at length by B. Fuller in his last book Critical Path, where one can
read the reflection of a whole life at the service of humankind.
Critical Path comprehensively traces all important trends of history that have
led to this moment in humanity’s potential first-stage success and its opening
of a whole new chapter of humanity’s ever functioning in local support of the
integrity of eternal regenerative Universe.
To know now what we could never have known before 1969 – that we now
have an option for all humanity to make it successfully on this planet in this
lifetime – is not to be optimistic. It is only a validation of hope, a hope that had
no operationally foreseeable validity before 1969. Whether it is to be Utopia or
Oblivion will be a touch-and-go relay race up to the final moment. The race is
between a better informed, hopefully inspired young world versus a running
scared, misinformed brain-conditioned, older world. Humanity is in its final
exam as the whether or not it qualifies for continuance in Universe as mind,
with the latter’s access to the design laws – called by science the generalized
principles – governing eternally regenerative Universe.
Human minds have a unique cosmic function not identifiable with any other
phenomenon – the capability to act as local Universe information-harvesters
and local Universe problem-solvers in support of the integrity of eternally
regenerative Universe.
At the present cosmic moment, muscle, cunning, fear, and selfishness are in
powerful control over human affairs. We humans are here in Universe to
272
exercise the Universe-functioning of mind. Only mind can apprehend, abide

by, and be lead by truth. If human mind comes into control of human affairs,
the first thing it will do is exercise our option to make it.
If you read the entire Critical Path book carefully, including its sometimes
long but essential detailed considerations, and pay realistically close attention
to these considerations, you will be able to throw your weight into the
balancing of humanity’s fate. While you258 could be “the straw that breaks the
camel’s back”, comparatively you can also be the “straw” – straw of intellect,
initiative, unselfishness, comprehensive integrity, competence, and love –
whose ephemerally effective tension saves us.
The invisible tensive straws that can save us are those of individual integrities
– in daring to steer the individual’s course only by the truth, strange as the
realized truth may often seem – wherever they may lead, unfamiliar as the way
may be.
The integrity of the individual’s enthusiasm for the now-possible success of all
humanity is critical to successful exercise of our option. Are you
spontaneously enthusiastic about everyone having everything you can
have?259
For only a short time, in most countries, has the individual human had the right
of trial by jury. To make humanity’s chances for a fair trial better, all those
testifying must swear “to tell the truth, all the truth, and nothing but the
truth”260. But humans have learned scientifically that the exact truth can never
be attained or told. We can reduce the degree of tolerated error, but we have
learned physically, as Heisenberg discovered, that exactitude is prohibited
because most exquisite physical experiment has shown that the act of
measuring always alters that which is measured.
We can sense that only God is the perfect – the exact truth. We can come ever
nearer to God by progressively eliminating residual errors. The nearest each of
us can come to God is by loving the truth. If we don’t program the computer
truthfully with all the truth and nothing but the truth, we won’t get the answers
that will allow us to make it.
When we speak of the integrity of the individual, we speak of that which life
has taught the individual by direct experience. We are not talking about loyalty
to your mother, your friends, your college fraternity, your boss, who told you
how to behave or think261. In speaking of the truth we are not talking about the
position to take that seems to put you in the most favorable light.
It was the 1927 realization of the foregoing that brought the author
[Buckminster Fuller] to reorganize his life to discover what, if anything, the
little, penniless, unknown individual, with dependent wife and child, might be
able to do effectively on behalf of all humanity that would be inherently
258
Who, me, the writer? Or you, the reader?
259
This is probably the most important sentence of this whole study! Muhammad Yunus has
expressed this as follows on page 86 of his book Building Social Business : “Is the desire to impact the
world as strong as the desire to make money? That’s the whole issue.”
260
Remember our remark on “half the truth”.
261
Remember our discussion in Appendix A on how a person’s paradigm is molded by education.
273
impossible for great nations or great corporate enterprises to do262. This

occasioned what is described in my “Self-disciplines”.
With world-around contact with youth, generated by invitations to speak to the
students of over 500 universities and colleges during the last half-century, I can
conclude at the outset of 1980 that the world public has become disenchanted
with both the political and financial leadership, which it no longer trusts to
solve the problems of historical crisis. Furthermore, all the individuals of
humanity are looking for the answer to what the little individual can do that
can’t be done by great nations and great enterprises.
The author thought that it would be highly relevant to the purpose of this book
to enumerate those self-disciplines that he had adopted and used during those
fifty years. Only those self-disciplines can cogently explain why he adopted
the design science revolution and not the political revolutions (the strategy of
history)263.
B. Fuller, Critical Path, pp. xxxvi-xxxvii.
Just as we have stressed in this book, so does Fuller rejects the possibility of a political
revolution. He rather advocates a “design revolution” accompanied with a “moral revolution”
in the heart of each individual person. J.J. Servan-Schreiber also describes the possibilities of
a technical (r)evolution in order to uplift humankind to a higher level of development.
Everything in the future will have to change. The industries of the future will
have to be developed as soon as possible. New inventions must go into
production as quick as possible. Only in this way will it be possible to create
new industrial activities and new employment to replace the old ones.
A new financial and economic system must be elaborated before the
international money markets drop the dollar as exchange currency and the
international monetary system collapses under the huge deficits and debts.
And finally, all economic agreements will have to be rephrased and united in a
“new international economic order”. An order that may not be restricted to the
industrialized western world, but should also allow the Third World countries
to play their part.
A new economic vision must evolve, because unless the Third World is given
the possibilities to develop, there will be no economic expansion at all. New
inventions from scientific research will not develop to new products, there will
be no investments.
But the world does not seem to be ready for this new reality. However, it could
have a liberating and stimulating influence if all intelligence could be coaxed
in order to tackle the most gigantic mission of the century in a methodological
and common effort, especially with as goal the attainment of equality for all of
mankind.
262
I realized this after reading B. Fuller’s book Critical Path.
263
For a list of these Self-disciplines we gladly refer to the book Critical Path.
274
15.4 The “other” alternative
If we will be able to make the transition towards the social structure of a higher order will
depend on the path we choose to follow. We hope that by now the reader has understood that
there is another way next to violent revolution and war, there is a Third Way open for us to
get to the Fourth Wave.
But in order to follow this third way, we urgently need a course correction. Those in
command of Spaceship Earth guide it towards the first way (revolution) or the second way
(war and imperialism). As long as our democratic rights such as the right to vote, freedom of
speech, free flow of information, a constitution to control those in power, etc., have not been
dismantled, we have the possibility and the responsibility to urge those in command to make
the necessary course alteration, and, if necessary, we have to assign new steersmen.
If we fail to do this, we will return to an Orwellian society, where hate against the others is
stimulated, where “excess of democracy” are replaced by “order and law”, imposed by all
means at the expense of individual freedom “for the general good”, where fear for Big
Brother is cultivated and where every form of awakening love is nipped in the bud by raising
one person (Winston) or social or ethnic group against the other (Julia): Divide et Impera264.
Indeed, a society could fall back to a lower level, it could make a major step backwards. This
is now a real danger for several reasons. First, there are now clear signals that people in
Europe are willing – again – to sacrifice personal freedom to a new Fuhrer, in the hope that he
will “solve all the problems” of unemployment, huge budget deficits, lack of security and
crime in the large cities, drugs, etc. What a lack in personal responsibility! History has proven
us several times already that this is not the way to do it! They are paying the Mafia for
protection with their personal freedom and their personal wealth!
But the major danger is that the physical borders of the Earth are reached, so further
colonization and diversion of aggression towards the outside is no longer possible with the
present state of space technology. In this respect we can understand why the Roman Empire
has disintegrated when it had reached the physical borders of the world according to the
means of transport, communication and navigation systems available at that time. We can
avoid this step back into the future if we succeed in preventing the dismantlement of our
freedom and our rights and the resurrection of economic barriers, both leading us to war. The
next step upward in the evolution of social structures - the next quantum leap - is only
possible by leveling within Spaceship Earth itself, in two ways.
This development can only come from the Third World. There is no other “new
front” on this earth. The continual failures in the dialogue between North and
South have created suicidal tendencies at both sides. In the North this is
manifested as neo-protectionism. To defend this, they argue that cheap
products of the Third World – cheap because of low wages – flood the markets
in the North and will harm industry and employment. But statistics are in
contradiction with these arguments.
The import of products from the Third World countries, together some 14
products, has resulted in France in the loss of no more than 25,000 jobs over a
period of 6 years, especially in the branches of textile and ready-to-wear
clothing. But the export toward the Third World has created 100,000 new jobs
over the same period, mainly in the branches of machinery and electronics.
264
Divide and rule. See also K. Lorenz, Our Last Chance, p. 163, The undesirable autonomous man.
275
When an underdeveloped country starts to develop and to produce, then it must

import more machinery and technology than it can export goods. So in the
developed countries net employment grows – there is no exception to this rule.
But there is also a second front inside the industrialized countries that was not yet recognized
when J.J. Servan-Schreiber and Alvin Toffler wrote their visionary books: Eight days a Week
– The Fourth Wave.
If we fail to accomplish this leveling in the world, among countries and within countries, if we
do not change our value system and our paradigm, and if we do not let us guide by moral
considerations instead of material egotism, then inevitably we will become the victim of our
own short-sightedness, we will be destroyed by forces which we have put into motion
ourselves. In eastern philosophies this is called the Law of Karma.
Instant Karma’s gonna get you

Gonna knock you right on the head
You better get yourself together
Pretty soon, you’re gonna be dead
What in the world you thinking of
Laughing in the face of Love
What on earth you tryin’ to do
It’s up to you, yeah you

Gonna look you right in the face
You better get yourself together darling
Join the human race265
How in the world you gonna see

Laughing at fools like me
Who in the heck d’you think you are
A super star
Well, alright you are
Well we all shine on

Like the moon and the star and the sun
Ev’ryone come on
Gonna knock you of your feet
Better recognize your brothers
Ev’ryone you meet
Why in the world are we here?

Surely not to live in pain and fear
265
“Race” as in Indianapolis as well as the species as well as a strong current!
276
Why on earth are you there

When you’re ev’rywhere
Come and get your share

Like the moon and the stars and the sun
Come on and on and on
Yeah yeah alright ah ha
John Lennon, Instant Karma.
15.5 The rebirth of humankind
What will become of humankind in the future cannot be predicted. But surely
it will be conditioned completely by processes which take place within man
himself.
I think the cause of the economic crisis in the western industrialized countries has become
clear: the medium in the rubber cylinder has become too thin, the economic process is no
longer based on real needs, so it has become unstable, the goal – fulfillment of needs – and its
consequence – economic growth, making a profit – have changed roles, the circle of affluence
is broken. On top of this we have seen that the imbalance between the rich and the poor
countries as well as the rich and the poor in the rich countries further destabilizes the
economic and financial system266. By the policy of moderation and protectionism, one part of
society parasitizes on another group, so the consequences of the crisis are amplified both
inside the industrialized and Third World countries as well as between the North and the
South267. We hope that the reader has come to the realization that the solution cannot be found
in this direction and that this policy can only lead to social regression, confrontation and war.
The only valid option is to prepare consciously and in a controlled manner the next logical
quantum leap in the evolution of society: humankind must adapt an ecological consciousness,
develop a worldwide international solidarity across racial and religious and political barriers,
and above all – while they still have the possibilities – the rich countries have to give priority
to the development of the Third World. This whole project can be accomplished. This has
been clearly demonstrated by Buckminster Fuller in his last book Critical Path. But the path
is indeed critical and delay can no longer be tolerated. And it has to be done if the whole of
humankind, even the affluent ones, want to survive. We hope that this has become clear in
this study. To dissolve the last doubts I can recommend The Warmongers by Howard Katz,
The Challenge by J.J. Servan-Schreiber, The Third Wave by Alvin Toffler and Building Social
Business – The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs by
Muhammad Yunus as additional reading.
266
See also K. Lorenz, p. 83: Affluence and poverty.
267
So it is more a global problem between haves and have-nots.
277
There are indeed enough resources on earth to allow a better material wellbeing for
everybody, the people in the Third World and in the industrialized world. It no longer has to
be us or them. But the supplies of raw materials, energy as well as the technical know-how
are geographically concentrated, so very few countries are independent from others. But it
never has been intended that one country should be completely independent from the others:
growth and evolution do not spring from homogeneity and autarky, but rather from diversity
and exchange, as we have discussed in a previous chapter! It has always been the intention
that we should realize ourselves, by our own free will and our rationality, that we can
accomplish much more with cooperation, solidarity and synergy268 than with confrontation,
war and economic autarky.
Love and fraternity, once part of an ideal, have become crucial to our survival.
Jesus enjoined his followers to love one another; Teilhard de Chardin added,
“or you will perish”269.
M. Ferguson, The Aquarian Conspiracy, p. 443.
The following quote comes from Mr. Muhammad Yunus’ book:

The biggest flaw in our existing theory of capitalism lies in its
misrepresentation of human nature. In the present interpretation of capitalism,
human beings engaged in business are portrayed as one-dimensional beings
whose only mission is to maximize profit. Humans supposedly pursue this
economic goal in a single-minded fashion…
No doubt human beings are selfish beings, but they are selfless beings, too.
Both these qualities coexist in all human beings. Self-interest and the pursuit of
profit explain many of our actions, but many other make no sense when
viewed through this distorting lens. If the profit motive alone controlled all of
our human behavior, the only existing institutions would be ones designed to
generate maximum individual wealth. There would be no churches or mosques
or synagogues, no schools, no art museums, no public parks or health clinics or
community centers. (After all, institutions like these don’t make anyone into a
tycoon!). There would be no charities, foundations, or non-profit organizations.
Obviously human beings are driven by selfless motivations as well. The
existence of countless charitable institutions supported by personal generosity
demonstrates this… And yet this selfless dimension has no role in economics.
This distorted view of human nature is the fatal flaw that makes our economic
thinking incomplete and inaccurate. Over time, it has helped to create the
multiple crises we face today. Our government regulations, our educational
systems, our social structures are all based on the assumptions that only selfish
motivations are “real” and deserve attention. As a result, we invest vast amount
of time, energy, money, and other resources in developing and supporting for-
profit businesses. We assume that for-profit businesses are the chief source of
human creativity and the only way to address society’s problems. And even as
our problems get worse, we fail to question the underlying assumption that
helped to create those problems in the first place.
268
TEAM = Together Each Achieves More
269
Love is the only engine of survival, so repent if you want a future.
278
Once we recognize this flaw in our theoretical structure, the solution is

obvious. We must replace the one-dimensional person in economic theory with
a multidimensional person – a person who has both selfish [rational] and
selfless [moral] interests at the same time.
that Serves Humanity’s Most Pressing Needs, pp. xv-xvi
As already stressed several time, this crisis holds a real danger, but it also gives us the
opportunity to start to build a new and better world, assuming that we succeed to change our
value system and to adopt a new consumption pattern, and above all, assuming that we learn
to transcend our own little ego and to trust our fellow human beings.
And this may be the most important paradigm shift of all. Individuals are
learning to trust – and to communicate their change of mind. Our most viable
hope for a new world lies in asking whether a new world is possible. Our very
question, our anxiety, says that we care. If we care, we can infer that others
care too.
The greatest single obstacle to the resolution of great problems in the past was
thinking they could not be solved – a conviction based on mutual distrust.
Psychologists and sociologists have found that most of us are more highly
motivated than we think each other to be! For instance, most Americans polled
favor gun control but believe themselves in the minority. We are like David
Riesman’s college students, who all said they did not believe advertising but
thought everyone else did. Research has shown that most people believe
themselves more high-minded than “most people”. Others are presumed to be
less open and concerned, less willing to sacrifice, more rigid. Here is the
supreme irony: our misreading of each other.

But I’m not the only one
I hope someday you’ll join us
Imagine, John Lennon
We have also discovered who is to blame for the crisis: “We have met the enemy and they are
us!” Or rather some less distinguished manifestations of the human urge to survive: lack of
faith in the future which results in greed, an unrestrained desire to accumulate material goods
and money and to “protect” them by all means, even at the expense of our surroundings,
nature, and our fellow human beings. And these vices of us are seized upon with both hands
by clever guys who manage to get rich by selling us a pup, so that they can acquire ever more
means to swindle even more. Indeed, Marilyn, the supreme irony! Our value system and our
way of living have to be rebuilt from the bottom up. Everyone has to redefine for himself the
meaning of “happiness” and “wellbeing”. In doing so, let us keep in mind the following
wisdom from the I Ching, the Book of Changes.
279
After a time of decay comes the turning point. The powerful light that has been
banished returns. There is movement, but it is not brought about by force... The
movement is natural, arising spontaneously. For this reason the transformation
of the old becomes easy. The old is discarded and the new is introduced. Both
measures accord with time; therefore no harm results.
It is now up to you to make the choice.
I hope that by now the reader will have realized that the cover of this book is just a cartoon
version of the ideas expressed in it.
15.6 An additional message to some scientists
I can recommend the book Merchants of Doubt written by Professor Naomi Oreskes and Erik
Conway on the systematic dissemination of false “scientific” studies in order to deny the
harmful effects of global warming, the dangers of smoking, second hand smoking and other
phenomena.
There is one important story that I missed in the book: the introduction of aspartame in the
food chain as a replacement of sugar as “sweetener”, a breathtaking story on the origin of this
purely chemical product, the machinations of a certain politician-businessman and some Cold
War “scientists” in order to have aspartame approved by the FDA, and the toxic side(?)
effects of this “sweetener”. This has been already thoroughly investigated and documented by
Dr. Betty Martini. She has set up an organization with as goal to ban aspartame from the food
chain: http://www.mpwhi.com/main.htm
In the United Kingdom there are already several chain stores who have decided to ban all
products containing aspartame from their shelves. So scientific and civic attention and
activism do matter! Let this be a stimulus for all of us who really do care about public health
and the future of humankind on this planet Earth to carry on.
In a review on Merchants of Doubt in The Observer/The Guardian I read the following: “The
far right in America, in its quest to ensure the perpetuation of the free market, is now hell-bent
280
on destroying the cause of environmentalism”. But perpetuation of the free market is only one
side of the coin: Malthusianism and Social Darwinism, leading to genocides and wars is the
other side of the coin.
The motives of the far right are mainly ideological. Ideology comes first, money follows
automatically. And they are just the visible 10% top of the iceberg that generates the money.
The invisible 90% and their hidden agenda are explained in this book.
As Professor Oreskes writes in her book on page 213: “We take for granted that great
individuals – Gandhi, Kennedy, Martin Luther King – can have a great positive impact on the
world [All three of them died by a bullet, because their visionary ideas on the future of
humankind as a whole on planet Earth was orthogonal to the “vision” of the 90% invisible
part of the iceberg. I could add Bishop Romero, Malcolm X and many others to this list.] But
we are loath to believe the same about negative impacts – unless the individuals are obvious
monsters like Hitler or Stalin. But small numbers of people can have large, negative impacts,
especially if they are organized, determined, and have access to power.”
I would like add to this: “access to the necessary funds, or the magical mechanism to create
the necessary funds out of thin air”: a small numbers of people who acquired the “license” to
create “fiat money” out of nothing in order to finance their “projects”.
http://www.save-a-patriot.org/files/view/whofed.html
You may focus on the 10% top of the iceberg of visible “scientists”, but these are just
“dispensable thinkers” and can be sacrificed, often with a financial bonus, and replaced at any
time. The invisible 90% of the iceberg who supports them financially and ideologically is
much more important. As I demonstrate in this book, just as Professor Antony Sutton did in
his research, the monsters Hitler and Stalin really did receive financial and industrial support
from that same small number of people. To understand who they are, and why they are doing
what they are doing is more important than what they are doing.
The warfare arsenal of the “merchants of death” may be impressive, but their “magic box”
and “conjuring-book” are also rather poorly equipped, just as the one of the merchants of
doubt. They always use the same tricks, and these can be easily exposed once you know the
mechanism and the why behind them. You can read this in chapter 4 of this book: “Some
wrong economic premises”.
To know that these things do happen and even who is behind these schemes is one thing, to
understand why is quite another story. As the Greek philosopher Plato describes in his
Allegory of the Cave of, we should not only focus on the shadows on the wall, but try to
understand what really causes these shadows. When one has found the real cause, one can
understand that both topics are related: they have the same origin. The mechanisms that cause
the recurrence of financial and economic crises are also the cause of the mass atrocities all
over the world (wars, genocides, famines, civil wars,…) and the systematic dissemination of
false “scientific” studies in order to deny the harmful effects of global warming, DTT,
aspartame, and tobacco, and to defend the “free market”.
A lot of people in the rich countries are just NIMBY’s, who are not concerned with
genocides, famines, wars, pollution and global warming, as long as these do not happen in
their back yard and are not too visible on TV. But these same people are also affected by the
financial and economic crisis. So, if they could understand the underlying cause of their own
material misfortune, then maybe they could be willing to show some solidarity with the
people in the poor countries who are the victims of mass atrocities and the global over-
cropping of natural resources.
281
In addition to referring to the book Merchants of Doubt, I mention the following list of
historical “events” that I borrowed from the following website:
http://www.apfn.org/apfn/experiment.htm
I don’t think it needs additional comment. It very well illustrates how some scientists still
think like Thomas Malthus, and that they ban any morality from their “experiments”.
1931 Dr. Cornelius Rhoads, under the auspices of the Rockefeller Institute for Medical
Investigations, infects human subjects with cancer cells. He later goes on to establish
the U.S. Army Biological Warfare facilities in Maryland, Utah, and Panama, and is
named to the U.S. Atomic Energy Commission. While there, he begins a series of
radiation exposure experiments on American soldiers and civilian hospital patients.
1932 The Tuskegee Syphilis Study begins. 200 black men diagnosed with syphilis are
never told of their illness, are denied treatment, and instead are used as human guinea
pigs in order to follow the progression and symptoms of the disease. They all
subsequently die from syphilis; their families never told that they could have been
treated.
1935 The Pellagra Incident. After millions of individuals die from Pellagra over a span of
two decades, the U.S. Public Health Service finally acts to stem the disease. The
director of the agency admits it had known for at least 20 years that Pellagra is caused
by a niacin deficiency but failed to act since most of the deaths occurred within
poverty-stricken black populations.
1940 Four hundred prisoners in Chicago are infected with Malaria in order to study the
effects of new and experimental drugs to combat the disease. Nazi doctors later on
trial at Nuremberg cite this American study to defend their own actions during the
Holocaust.
1942 Chemical Warfare Services begins mustard gas experiments on approximately 4,000
servicemen. The experiments continue until 1945 and made use of Seventh Day
Adventists who chose to become human guinea pigs rather than serve on active duty.
1943 In response to Japan’s full-scale germ warfare program, the U.S. begins research on
biological weapons at Fort Detrick, MD.
1944 U.S. Navy uses human subjects to test gas masks and clothing. Individuals were
locked in a gas chamber and exposed to mustard gas and lewisite.
1945 Project Paperclip is initiated. The U.S. State Department, Army intelligence, and the
CIA recruit Nazi scientists and offer them immunity and secret identities in exchange
for work on top secret government projects in the United States.
1945 “Program F” is implemented by the U.S. Atomic Energy Commission (AEC). This is
the most extensive U.S. study of the health effects of fluoride, which was the key
chemical component in atomic bomb production. One of the most toxic chemicals
known to man, fluoride, it is found, causes marked adverse effects to the central
nervous system but much of the information is squelched in the name of national
security because of fear that lawsuits would undermine full-scale production of
atomic bombs.
282
1946 Patients in VA hospitals are used as guinea pigs for medical experiments. In order to
allay suspicions, the order is given to change the word “experiments” to
“investigations” or “observations” whenever reporting a medical study performed in
one of the nation’s veteran’s hospitals.
1947 Colonel E.E. Kirkpatrick of the U.S. Atomic Energy Commission issues a secret
document (Document 07075001, January 8, 1947) stating that the agency will begin
administering intravenous doses of radioactive substances to human subjects.
1947 The CIA begins its study of LSD as a potential weapon for use by American
intelligence. Human subjects (both civilian and military) are used with and without
their knowledge.
1950 Department of Defense begins plans to detonate nuclear weapons in desert areas and
monitor downwind residents for medical problems and mortality rates.
1950 In an experiment to determine how susceptible an American city would be to a
biological attack, the U.S. Navy sprays a cloud of bacteria from ships over San
Francisco. Monitoring devices are situated throughout the city in order to test the
extent of infection. Many residents become ill with pneumonia-like symptoms.
1951 Department of Defense begins open air tests using disease-producing bacteria and
viruses. Tests last through 1969 and there is concern that people in the surrounding
areas have been exposed.
1953 U.S. military releases clouds of zinc cadmium sulfide gas over Winnipeg, St. Louis,
Minneapolis, Fort Wayne, the Monocacy River Valley in Maryland, and Leesburg,
Virginia. Their intent is to determine how efficiently they could disperse chemical
agents.
1953 Joint Army-Navy-CIA experiments are conducted in which tens of thousands of
people in New York and San Francisco are exposed to the airborne germs Serratia
marcescens and Bacillus glogigii.
1953 CIA initiates Project MKULTRA. This is an eleven year research program designed
to produce and test drugs and biological agents that would be used for mind control
and behavior modification. Six of the subprojects involved testing the agents on
unwitting human beings.
1955 The CIA, in an experiment to test its ability to infect human populations with
biological agents, releases a bacteria withdrawn from the Army’s biological warfare
arsenal over Tampa Bay, Fl.
1955 Army Chemical Corps continues LSD research, studying its potential use as a
chemical incapacitating agent. More than 1,000 Americans participate in the tests,
which continue until 1958.
1956 U.S. military releases mosquitoes infected with Yellow Fever over Savannah, GA
and Avon Park, FL. Following each test, army agents posing as public health officials
test victims for effects.
1958 LSD is tested on 95 volunteers at the Army’s Chemical Warfare Laboratories for its
effect on intelligence.
283
1960 The Army Assistant Chief-of-Staff for Intelligence (ACSI) authorizes field testing of
LSD in Europe and the Far East. Testing of the European population is code named
Project THIRD CHANCE; testing of the Asian population is code named Project
DERBY HAT.
1965 The CIA and Department of Defense begin Project MKSEARCH, a program to
develop a capability to manipulate human behavior through the use of mind-altering
drugs.
1965 Prisoners at the Holmesburg State Prison in Philadelphia are subjected to dioxin, the
highly toxic chemical component of Agent Orange used in Vietnam. The men are
later studied for development of cancer, which indicates that Agent Orange had been
a suspected carcinogen all along.
1966 CIA initiates Project MKOFTEN, a program to test the toxicological effects of
certain drugs on humans and animals.
1966 U.S. Army dispenses Bacillus subtilis variant niger throughout the New York City
subway system. More than a million civilians are exposed when army scientists drop
lightbulbs filled with the bacteria onto ventilation grates.
1967 The CIA and Department of Defense implement Project MKNAOMI, successor to
MKULTRA and designed to maintain, stockpile and test biological and chemical
weapons.
1968 The CIA experiments with the possibility of poisoning drinking water by injecting
chemicals into the water supply of the FDA in Washington, D.C.
1969 Dr. Robert McMahan of the Department of Defense requests from congress $10
million to develop, within 5 to 10 years, a synthetic biological agent to which no
natural immunity exists.
1970 Funding for the synthetic biological agent is obtained under H.R. 15090. The project,
under the supervision of the CIA, is carried out by the Special Operations Division at
Fort Detrick, the army’s top secret biological weapons facility. Speculation is raised
that molecular biology techniques are used to produce AIDS-like retroviruses.
1970 United States intensifies its development of “ethnic weapons” (Military Review,
Nov., 1970), designed to selectively target and eliminate specific ethnic groups who
are susceptible due to genetic differences and variations in DNA.
1975 The virus section of Fort Detrick’s Center for Biological Warfare Research is
renamed the Fredrick Cancer Research Facilities and placed under the supervision of
the National Cancer Institute (NCI) . It is here that a special virus cancer program is
initiated by the U.S. Navy, purportedly to develop cancer-causing viruses. It is also
here that retrovirologists isolate a virus to which no immunity exists. It is later named
HTLV (Human T-cell Leukemia Virus).
1977 Senate hearings on Health and Scientific Research confirm that 239 populated areas
had been contaminated with biological agents between 1949 and 1969. Some of the
areas included San Francisco, Washington, D.C., Key West, Panama City,
Minneapolis, and St. Louis.
1978 Experimental Hepatitis B vaccine trials, conducted by the CDC, begin in New York,
Los Angeles and San Francisco. Ads for research subjects specifically ask for
promiscuous homosexual men.
284
1981 First cases of AIDS are confirmed in homosexual men in New York, Los Angeles
and San Francisco, triggering speculation that AIDS may have been introduced via
the Hepatitis B vaccine
1985 According to the journal Science (227:173-177), HTLV and VISNA, a fatal sheep
virus, are very similar, indicating a close taxonomic and evolutionary relationship.
1986 According to the Proceedings of the National Academy of Sciences (83:4007-4011),
HIV and VISNA are highly similar and share all structural elements, except for a
small segment which is nearly identical to HTLV. This leads to speculation that
HTLV and VISNA may have been linked to produce a new retrovirus to which no
natural immunity exists.
1986 A report to Congress reveals that the U.S. Government’s current generation of
biological agents includes: modified viruses, naturally occurring toxins, and agents
that are altered through genetic engineering to change immunological character and
prevent treatment by all existing vaccines.
1987 The Department of Defense admits that, despite a treaty banning research and
development of biological agents, it continues to operate research facilities at 127
facilities and universities around the nation.
1990 More than 1500 six-month old black and hispanic babies in Los Angeles are given an
“experimental” measles vaccine that had never been licensed for use in the United
States. CDC later admits that parents were never informed that the vaccine being
injected to their children was experimental.
1994 With a technique called “gene tracking”, Dr. Garth Nicolson at the MD Anderson
Cancer Center in Houston, TX discovers that many returning Desert Storm veterans
are infected with an altered strain of Mycoplasma incognitus, a microbe commonly
used in the production of biological weapons. Incorporated into its molecular
structure is 40 percent of the HIV protein coat, indicating that it had been man-made.
1994 Senator John D. Rockefeller issues a report revealing that for at least 50 years the
Department of Defense has used hundreds of thousands of military personnel in
human experiments and for intentional exposure to dangerous substances. Materials
included mustard and nerve gas, ionizing radiation, psychochemicals, hallucinogens,
and drugs used during the Gulf War .
1995 U.S. Government admits that it had offered Japanese war criminals and scientists
who had performed human medical experiments salaries and immunity from
prosecution in exchange for data on biological warfare research.
1995 Dr. Garth Nicolson, uncovers evidence that the biological agents used during the Gulf
War had been manufactured in Houston, TX and Boca Raton, Fl and tested on
prisoners in the Texas Department of Corrections.
1996 Department of Defense admits that Desert Storm soldiers were exposed to chemical
agents.
1997 Eighty-eight members of Congress sign a letter demanding an investigation into
bioweapons use & Gulf War Syndrome.
The editor’s preface to The Warmongers is a very interesting addition to this list.
285
Throughout the history of man, a struggle has raged between those

philosophies proclaiming the necessity for men to live according to the
decisions of a higher authority, and those philosophies which have identified
man’s nature as requiring the independent use of an individual’s rational
faculties.
Most of man’s story has been dominated by the proponents of the authoritarian
philosophy. The material progress of the 19th and 20th century is a result of the
founding of the United States of America, representing the culmination of
years of struggle and development of the individualistic English rational
philosophers270. While the United States broke free of the decadence of the Old
World Power and authoritarianism, it remained free for only a short while271,
succumbing to civil war, WW I and WW II.
How the secular proponents of the authoritarian philosophy, the “shepherds” of
mankind, have led our nation into these disasters and their present plan is the
subject of this book272. Whether they are able to ensnare America in a world
confrontation in 1981 or 1985 will largely determine the course of humanity
for the next several centuries.
Our age will see a resolution of this great struggle. If the victorious philosophy
is the correct one273, then mankind will rapidly advance into the space age of
the future. If the incorrect philosophy temporally triumphs, then societies will
recede to a feudal style to wait for a re-emergence of rationality.
Should the “shepherds” fail in their plans, then forces which have been
building up since 1946274 will sweep them aside for the foreseeable future –
possibly forever.
On the question of motive, secular level proponents of authoritarianism seek
power and riches – goals which have always been sufficient for them to justify
whatever methods they have used. Their philosophic counterparts, however,
have always claimed they were seeking the good of mankind – perhaps for the
same reason a shepherd looks after his sheep. Whatever their motives, what is
of greatest concern to us is that their secular plans are conducted in secret.
Why? Would they lead mankind to the slaughter?
This book demonstrates that such plans do exist and that they are kept hidden
from the public views.
Stephen A. Zarlenga, Editor in Chief.
And the following recommendation comes from a scientist who through his research had
come to the realization that time is just a construction of the mind:
270
You see, they are not so bad the English people. But some of them still think Britannia (read the East
India Company) rules the waves. But individual yachtsmen can do this too!
271
Remember the East India Company, swiftly shifting its interests into the USA!
272
Howard Katz, The Warmongers.
273
I’m pretty confident on this, with a little help from my friends.
274
The mind guerrilla!
286
It is quite remarkable that we are at a moment of profound change in the

scientific concept of nature and of the structure of human society as a result of
the demographic explosion. As a result, there is a need for new relations
between man and nature and between man and man. We can no longer accept
the old a priori distinction between scientific and ethical values. This was
possible at a time when the external world and our internal world appeared to
conflict, to be nearly orthogonal. Today we know that time is a construction [of
the mind] and therefore carries an ethical responsibility.
The ideas to which we have devoted much space in this book – the ideas of
instability, of fluctuation – diffuse into the social sciences. We know now that
societies are immensely complex systems involving a potentially enormous
number of bifurcations exemplified by the variety of cultures that have evolved
in the relatively short span of human history. We know that such systems are
highly sensitive to fluctuations. This leads both to hope and a threat: hope,
since even small fluctuations may grow and change the overall structure. As a
result, individual activity is not doomed to insignificance275. On the other hand,
this is also a threat, since in our universe the security of stable, permanent rules
seems gone forever. We are living in a dangerous and uncertain world that
inspires no blind confidence, but perhaps only the same feeling of qualified
hope that some Talmudic texts appear to have attributed to the God of Genesis:
Twenty-six attempts preceded the present genesis, all of which were

destined to fail. The world of man has arisen out of the chaotic heart of the
preceding debris; he too is exposed to the risk of failure, and the return to
nothing. “Let’s hope it works” (Halway Sheyaamod) exclaimed God as he
created the World, and this hope, which has accomplished all subsequent
history of the world and mankind, has emphasized right from the outset
that this history is branded with the mark of radical uncertainty.
Prigogine, Stengers: Order out of Chaos, pp. 312-313.
Radical uncertainty? Have some faith in my project. It is really not a matter of “radical
uncertainty”, rather of our inevitable destiny as humankind on this Spaceship Earth to really
make it, as Buckminster Fuller has written in his book Critical Path. Indeed, Halway
Sheyaamod!
My next book will be about an Octopuses Garden in the Sun observed from within a Yellow
Submarine.
275
As Buckminster Fuller has proved with the life he decided to live.
287
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Eight Days a Week – The Fourth Wave

(A study on the present and previous financial and economic crises,

Written by Geert Callens

You can’t judge a book by looking at the cover (Willy Dixon).

The problems we are faced with

The approach I have used

Data are → Incomplete Complete Redundant

Correct Wrong conclusion Correct conclusion Not necessarily the

Reoccurrence of problems and the cause of this

Some stubborn economic and social misconceptions

Some stubborn social misconceptions

A feasible and low-cost solution, based on some ‘humane intelligence’

Mortsel, Belgium, November 11th 2010.

4.2.5 Active unproductivity........................................................................................... 72

7.9 The North-South relationship................................................................................. 146

12.8 Conditions for effective communication................................................................ 222

In order to contract a thing, one should surely expand it first.

We will have time to reach the Millennium Development Goals – worldwide

Charles Darwin, On the Origin of Species.

1.1 Purpose of this book

1.2 Cause or catalyst of the present economic crisis?

2 Some striking economic recurrences

History teaches us that humankind has nothing learned from it.

2.1 The evolution of the profit-ratio

Peace Peace Peace

2.2 The evolution of money-growth and inflation

Inflation and money growth per decade (in %)

Value of the US. Dollar 1790-1978.

(The figure is rather obscure, so I suggest you to buy The Warmongers.

Inflation in the USA.

2.3 The evolution of unemployment

Purchasing power in Flanders

2.4 Relation between recurrence and paradigm.

A script is essentially the blueprint for a life course...

3 Information in an economic perspective

3.3 Matter and energy together

Science Economy War

Time Laws of conservation Means of production Who is rich? Why Means of

Data are → Incomplete Complete Redundant

Correct Wrong conclusion Correct conclusion Not necessarily the

3.6 Rationality, amorality and immorality

hold of and exploited in a way that further legitimized the mechanical

4 Some strong wrong economic premises

We will have time to reach the Millennium Development Goals – worldwide

4.1 Thomas Malthus and social Darwinism

4.1.1 Malthusianism and colonialism

Cover of a book describing the history of the East India Company.

infrastructure and commercial relationships. The presumably unintended consequence was

4.1.2 Malthusianism and imperialism

Howard Katz, The Warmongers, pp. 77-81.

Map of extermination camps and labor-camps in Nazi-Germany and occupied territories.

Entrance of the concentration camp Auschwitz: “Arbeit Macht Frei31”

Hitler is the product of a grand experiment which backfired. Powerful

Averell Harriman as VS-ambassador in Moscow (1943-46) with “Uncle Joe” Stalin,

Picture of Prescott Bush himself and … Richard Nixon.

President Clinton just signed the Gramm–Leach–Bliley Act.

• Resources increase at an arithmetic rate, population at a geometrical rate. So resources

4.1.3 Thomas Malthus was and is wrong.

capitalism. Again the Russian planning became thwarted when Western

4.2 Economic misconceptions

4.2.1 Gross National Product per capita

4.2.2 Economic growth

In most textbooks on economy, economic growth is considered as a necessary condition in