Home Uncategorized Synthesis Found: Governmentalism.

Synthesis Found: Governmentalism.

In “Synthesis Lost” the honorable Paul Krugman courageously ponders the unthinkable:“you have to ask why, if markets are imperfect enough to generate the massive waste we’ve seen since 2008, we should believe that they get everything else right. I’ve always considered myself a free-market Keynesian — basically, a believer in Samuelson’s synthesis. But I’m far less sure of that position than I used to be.

Indeed, the economic beliefs that built-up civilization, East or West, rested on a completely different notion: the irreplaceable genius of government funded & commissioned Public Works.

Pont Du Gard: Not built By The Free Market
Pont Du Gard: Not built By The Free Market

Pont Du Gard: Not built By The Free Market

The aqueduct above brought water to Nimes (Latin Nemausus, local Celtic god).

The first three aqueducts built into Rome, about 23 centuries ago, later carried 400,000 tons of water into the city, each day

The first one, the Aqua Appia (312 BCE) was one of two major public projects commissioned by the censor Appius Claudius Caecus; the other was a strategic, super strong and super durable road between Rome and Capua, way south.

Eleven (11) giant public aqueducts served Rome at her peak, some piercing mountains through tunnels. Although extremely expensive to build and operate, the water the aqueducts brought to the public was free. So were the uncountable baths found in all Roman cities (many had curative properties… Thus, RomanCare was free!). 

Rome was not called a Republic for no good reason.

That Republic worked as long as the law limiting wealth absolutely was enforced; as I have argued, globalization was the undoing of the law first, and the republic, next. A vivid lesson for today, when the situation is pretty much the same.

Don’t try to explain the relevance of Public Works to the economists who helped bring the present Greater Depression, slowly morphing into a Great Degeneration. They will look around with boiled cod eyes.

In “Colbert Good, Keynes Not So Smart” and in “To Save The World, Please default!” I have attacked Keynes as one of the creator of the vengeful Nazi mental system and a promoter of the powerlessness of the plebs (I may fire another blast against him, and his admirers some day soon). “Keynes” does not deserve to be honored in economics. All the more as the correct parts of “Keynesianism” have been known ever since there are serious governments, and they erect pyramids. 

Here is a proof:

Grand Canals Of China: Built By Government
Grand Canals Of China: Built By Government

Grand Canals Of China: Built By Government

The Grand Canal Hangzhou-Beijing, 1,800 kilometers long,  was built from 581 BCE to 1290 CE (when the Mongols/Yuan finished an elevated section to reach Beijing, using locks, the first summit level canal in the world). At some point during the Sui dynasty, 14 centuries ago, over a 6 year period, 3 million worked on the Grand Canal.

Looking at this, one understands better why China has built a gigantic Very High Speed Train network. It’s the very Chinese thing to do.

The Middle Kingdom found, all by itself, just as Egypt, the Middle East, Persia, Roma, and Europe (starting with Francia and the re-emerged Italian Republics), that only public works can achieve certain tasks. The most important tasks.

Grand Canal: Public Utility For 26 Centuries.
Grand Canal: Public Utility For 26 Centuries.

Grand Canal: Public Utility For 26 Centuries.

So much for the concept “Keynes”. Now for eliminating the so-called “free market”, as a most fundamental concept. (In a follow-up essay, I will explain what allows the free market in the first place,”governmentalism“).

There is an entire religion around the free market. It is immodestly compared to god, complete with his ”invisible hand“. Adam Smith, a student of the French physiocrats, had mentioned the “invisible hand” no more than a handful of times in his entire works. Wall Street made a cult of these two words… Yet, Adam Smith was a government official, and no rabid free marketer. Some of the French economists had previously stridently, and correctly, called for freeing the markets… but for excellent reasons. However:

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THERE IS NO REALLY FREE MARKET:

This is a basic, but fundamental observation. The free market is a carefully contrived illusion, a myth. Plutocrats have recently exploited that myth, to make their hands invisible as they manipulate society into submission. (That’s why the plutocrats want us all to worship the ‘invisible hand’, so that we will worship their invisible influence too!)

As long as there were ferocious Marxists all over to bark naïvely about “capitalism”, plutocrats had to stay honest enough to prevent a critical mass of critics to not go over to the other side. But, when Stalinism collapsed, the ex-USSR embraced the Harvard version of plutocracy (not as bad as Hitler’s, but still pretty bad). On the other side of the Amur, cynical Chinese plutocrats embraced all capitalists willing to change from their pesky, expensive workers at home. Soon enough, the German Socialist Chancellor introduced tough reforms of the German welfare state, making it distinctly less comfy… And it, literally, worked!

The leftists, the progressives, the socialists, the liberals and the humanitarians were thrown in total confusion and spastic despondency by this collapse of the idols. Still are. (Hence Obama’s feverish clinging to Warren Buffet and Summers).

All the more as a heavy propaganda from the plutocrats, pouncing for the kill, insisted that the ‘free market’, namely themselves, was everything. In a word: god.

Yet. There always was no free market, and there will never be any free market. The free market is a playground set-up by the government, always. That’s done through various laws and regulations, and the exchange of personnel.

That became very clear in 2008. The ex-chairman of Goldman Sachs, Sec. of Treasury that G.W. Bush and Barack Obama had left in total control, Hank Paulson, went on his knees to beg Nancy Pelosi, a democrat in control of Congress, for nearly a trillion dollars to save all the largest banks of Wall Street (we are now, with “Quantitative Easing”, and counting a similar aid in Europe, well above ten trillions!).

Pelosi gave the People’s money to Paulson.

Yet that was not hers to give. In a democracy, people would have voted to see if they wanted all their money to go to the richest owners in the land.

Left unsaid was the fact that the richest people in the land had lost all their money to the… richest people in the land. To themselves! It’s a case of insurance fraud: plutocrats stole the loot, and then asked the people to pay for it.

Pelosi gave all the People’s money to the richest, because she is an immensely rich woman, and got there by being extremely kind to families controlling assets 100 times (of more) her own wealth. By being kinder than ever, to the powers that be, no doubt her family will prosper, further and better than it would otherwise.

The entanglement of plutocracy and supposedly democratic politics is a worldwide phenomenon. For example Pompidou, director of bank Rothschild in France, was selected as Prime Minister by president De Gaulle, and then later succeeded him. In Britain, past Prime Ministers Thatcher, Major and Blair, were handsomely rewarded, no doubt to encourage their successors to be just as kind to plutocrats. Clinton, a simple man driven by basic instincts, was little more than the puppet of Goldman-Sachs’ Robert Rubin, and then his assistants Summers and Geithner (all of them plutocratically connected, just as Susan Rice, a fixture of plutocracy under Clinton, now Obama’s National Security Adviser.).

In the Obama administration, most personnel with a say in economics are young multi-millionaires shuttling back and forth between White House, giant banks and Wall Street; this corruption is even considered an objective criterion of seriousness. It is reproached loud and clear to Janet Yellen, the very qualified, and prophetically accurate, Vice President of the Fed,  who ought to be the obvious successor to Bernanke, to “lack experience” at being such a corrupt double dipper!

There is no such a thing as an economy independent of the government. The government rules. The real question is who is ruling the government. (In the USA, the likes of Susan Rice rule, for now more than 20 years, in her case; she was only elected by the plutocracy, but that’s good enough; Summers, just as unelected, was in the White House already 32 years ago…).

In a democracy, We the People rule. In a plutocracy, an oligarchy of admirers of the Dark Side rules, more or less invisibly. That oligarchy will use whatever means to stay in power, and their impudence knows no bounds. As Anne of Austria, queen and regent of France, sneered to the head of the Paris Parliament during the Fronde:“Do you believe this is a republic?”

Question, Ms Anne of Austria:”When and how did it stop being republic?” Answer: well, insensibly. Just the way a frog is being boiled by rising the temperature slowly. And that is exactly what today’s plutocrats, who hold the government, are doing.

Banks using leverage insured by the government are not private, but agents of the state. Indeed, they could not exist without that insurance and implicit back-up (“the lender of last resort”). They claim to be private, so that the few individuals who manage and “own” them can grab what are, truly public funds and public profits.

Jamie Dimon, for example, is a rogue agent of the private-public financial system. The government gave him the huge bank Bears-Sterns in the famous “Jamie deal”.

A number of private mercenaries feeding at the teat of the Public are the dark lords of that system. While of course denying that this teat is a teat, or has any milk, or value.

(That’s why plutocrats love Summers; because he is so dark; the richest banks have been given eight trillion dollars, in the USA alone; the problem Summers will have to solve is how they keep most of that while making it appear otherwise; the trick of paying TARP with QE may not work again…)

There is no such a thing as an independent financial system when the fractional reserve system is used. Finance is an instrument of the government, at least proportional to the leverage used. For example with 3% reserve, one can view a bank as 97% government (and 3% private!).

Why? Because if there was no governmental back-up, people who have deposited money in the bank, understanding that the bank has lent 30 times the money it really has, would rush to recover their money. In hours, the bank would have zero reserve, and then would be bank-rupt.

Hence a new synthesis has to be founded, with these truths made central. I call it “governmentalism”.

Grand Canal: No Mountain Is High Enough To Stop The Government
Grand Canal: No Mountain Is High Enough To Stop The Government

Grand Canal: No Mountain Is High Enough To Stop The Government

It’s nothing new.

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Patrice Ayme

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