The underlying facts are simple. An economy exists to support the physical existence of society and to enrich the life of its people. In other words, real wealth is the outcome of physical production and the creation of physical, cultural, and scientific infrastructures that benefit society towards this end.
This premise has been largely rejected by society from the mid 1960s on. It has been replaced by the notion, which has actually been conjured up in much earlier times, that wealth can be created by purely financial means. This notion was popularized together with the "post-industrial society" doctrine. Today, we are facing the end result of the folly of embracing this doctrine.
Let's examine this folly, that literally became law from the mid 1960s on. At around this time the myth had been promoted globally that wealth can be created by financial speculation. One doesn't need an industry, so it was said. One doesn't need production of physical goods and infrastructures. It has been said that it is more profitable for society to concentrate on financial speculation, to let your money work for you. Indeed, huge profits have been drawn from spectacular financial practices.
The only problem is that non-productive processes do not produce the slightest bit of wealth for society, except for the predators within the economic system. The huge profits that have been drawn over the years by the countless financial 'industries' were not profits in any fundamental sense derived from increased production that enhanced the status of society, but were in fact predatory profits that were quite literally stolen from the living of society by clever means. In real terms, these predatory profits were stolen from the physical economy that supports the living of society. The global economic collapse is the direct outcome of this process. (see illustration)
We also face a corresponding world-financial collapse. Huge financial equity portfolios have been created over the years, consisting of numerous types of financial aggregates. These have been considered to represent wealth, while in real terms they represent nothing more than a financial claim against the tangible wealth produced in the physical economy. The problem is, the physical economy has been collapsed below the break even point. People are dying. Instead of producing surplus profits for society, the physical economy can no long produce enough gain in its economic system to maintain its own operation and the needs of society, much less satisfy the astronomical financial claims that stand against it, which renders the financial claims literally worthless. (see illustration)
Let me illustrate this with a brief example: Suppose that in 1965 the economy produced ten tractors for $10,000 each, and society's financial portfolio contained $100,000 to purchase those tractors. Now that the economic strength of society has collapsed to half of what it once was, only five tractors are being produced. However, society's financial portfolios have grown 10 fold doing this time through speculative looting and other processes. Does this mean that society is ten times richer? No. It means that society is half as rich than it once was, because all it can buy with its ten fold increase in financial wealth, are those five tractors that are still being produced. This fundamental relationship would still be the same, even society's financial wealth had risen a hundred times during that period. It would still only be able to buy those five tractors that are being produced.
At the present time, it is estimated that the total financial aggregates, including derivatives, which stand in various ways as claims against the physical economy, exceed ten years worth of the gross domestic product of the entire world.
The economic collapse that this overloading of the economy set in motion is becoming acute now, even though it has been going on since the mid 1960s. The collapse began gradually at first, but as the parasite (the predatory financial system) grew into a monster parasite, the physical collapse accelerated.
In the initial stages, the pain that the parasite inflicted could be tolerated. One by one, the wounds were being patched up or cleverly concealed. Later, as the parasite developed further, the rescue measures became more and more exotic, while the parasite remained protected. In today's world enormous efforts are being made to keep the parasite alive, even while it destroys entire nations and devastates even the industries of the wealthiest nations on earth.
We have now come to the point that vast amounts of liquidity (new printing press money) is being poured onto the speculative financial system in order to subsidize the feeding of the parasite that still remains protected at an enormous cost to society. Hospitals are shut down. Social safety nets are torn apart. Education crumbles. Transportation, farming, and other supply infrastructures decay. Technological and scientific development has ground to a halt. With entire industries all but shutting down, workforce layoffs have become epidemic. And still, the parasite remains protected while the remaining economic resources of society are devoted, literally by the force of law, to the feeding of the parasite, the speculative financial system.
At the present time, the infusion of new money to keep the speculative system alive is greater than the financial aggregates that this infusion is trying to protect. (see illustration)
The chief reason why the parasite remains protected at all cost, is the illusion of wealth that society sees in it. In real terms, the fancy financial portfolios that society has labored to build for itself in stocks, bonds, and other debt holdings, aren't worth the proverbial red nickel since the productive economy, that they are claims against, has been bled to death to create this imaginary wealth.
This is where we are now. For as long as the living of society is sacrificed to keep the parasite alive, things will get worse and more and more people will pay the price with their life, which is already happening on a much larger scale than the death toll inflicted by the September 11 destruction of the World Trade Center towers in New York. Society has deprived itself to such a point that people are dying at ever increasing numbers in the quiet recesses of their private living, because of the parasitic deprivation, especially in the nations of South America. (see illustration)
Ultimately, it will be recognized that a society cannot exist, much less develop itself, on an economic platform that is based on stealing from one other. We are not at this point yet. This recognition has not been made. In fact, public thinking is controlled to prevent the recognition from being made. Instead of society quitting the insane financial games that are destroying the foundation for its physical existence, the games become constantly intensified, and are rapidly being driven to the point of a systemic disintegration. (see illustration) For decades LaRouche has issued warnings of the dangers involved, now that the game is threatening civilization itself, the biggest names in the game, like Warren Buffet, are beginning to agree, although without offering policies for a solution.
The currently outstanding debts have become literally unpayable. An economy that has been so severely depleted of its economic strength that it is collapsing at an ever greater rate, that can't even sustain itself, will never produce the surplus wealth required to satisfy the debt claims. Even huge corporations that once were deemed as solid as the rock of Gibraltar are collapsing under unplayable debt loads in times of a general economic collapse. And the debt load is huge. (see illustration)
Evidently, a shift in thinking needs to be achieved, and will be achieved at some point, inevitably. It will be recognized that instead of stealing from one another, society must recommit itself to the general welfare principle. Instead of tearing one another down with deprivations, society must go back to the proven principle of supporting one another by creating the infrastructures and industries on which its welfare depends, if not its physical existence.
For this rescue operation, a global financial reorganization is required that puts the presently bankrupt system through an orderly shutdown process to protect what is still functioning, to protect employment, pensions, food and energy production and other essential elements, before the system disintegrates completely. By the same process society must create a new system that protects its welfare from the predatory processes that are presently destroying its economic existence. The requisite policy proposals have been put on the table a long time ago, and they will be enacted inevitably since society does wish to survive. The question is how deep a collapse society is willing to tolerate before it acts to rescue itself? Another question is: At what stage will we reach the point of no return? The possibly must not be ignored that a New Dark Age collapse unfolds, if society doesn't act, in which a large portion of humanity dies as in previous times in history.
If society does decide to act, to rescue itself, a huge task awaits it to rebuild its economies. At the present moment it will take app. 25 years of in intensive effort to build itself out of the depression that has already begun, and to get back to the level of prosperity that existed in the mid sixties before the collapse process began. This rebuilding task is so huge that it must be pursued as a global effort in which the best capabilities and resources, and the greatest development needs are brought together. The requisite policy proposals have also been put on the table a long time ago, and they too will be enacted inevitably since society does wish to survive.
The bottom line is, that we face the potentially brightest future we ever imagined with virtually infinite resources at our hands, or a new dark age that no person living today will see the end of it. We are at the cross roads at this stage. At this critical junctures we face the potential also for huge wars as the masters of the present system aim to draw attention away from the impending systemic collapse, as if this would solve anything. Nevertheless, the potential for these huge wars is very real, and so is the potential for these wars to become nuclear wars. The irony is, that the USA is insanely pushing for a world engulfing war that it lacks the economic resources to win (estimated at a cost of two to 3 billion dollars a day) in times of the country's worst economic crisis. The U.S. military has the residual resources to start such a war and to cause huge damage, and set the world on fire with it, after which anarchy will likely reign by which global economic development becomes an unfullfillable dream for a long time to come.
The question before us at the present stage is literally a question of our humanity as human beings. If we choose to develop our humanity and relate to one another as human beings as we face the challenges that this may include, we can win. This means that society has to put a man with the requisite spiritual and scientific qualification into the U.S. White House, into a position that allows that man to implement the spiritually and scientifically policies of human sanity. Unfortunately, the field of qualifying candidates is very narrow. In fact, I know of only one person on the U.S. political scene whose policy proposals have a spiritual and scientific foundation and can be described as sane. That person, of course is well known and honored throughout the world, except in the U.S. where he is the most maligned, slandered, (and hated by the establishment) economist and politician. His name is Lyndon H. LaRouche Jr..
The man is hated in the U.S., because his policy proposals would necessarily put an end to the looting practice that has destroyed the nation and the world economy over the last 35 years. The policies that he proposes can and will work and recover the nation if they are implemented.
But what are the alternative? The economic collapse and drive towards war is presently accelerating. The U.S. economy is said to have lost 700,000 jobs in the month of November 2002 - that's a staggering loss for the space of just a single month. It doesn't take a great genius to project this trend forward, to what lies ahead.
The bottom line is, that unless LaRouche gets his place in the White House where society needs to have him, or someone with equal qualifications (who presently can't be found on the political scene), then the U.S. has no chance to survive through the near term as a nation. People will necessarily die in large numbers from causes of their lost civilization when fascist policies begin to rule. On the other hand, a real economic recovery program, modeled somewhat after the Franklin Delanor Roosevelt recovery program, could get the U.S. back to its 1965 level of prosperity in about 25 years, or sooner depending on the intensity of the implementation.
That's our present situation. What happens in the immediate period ahead as we go into the year 2003 will determine the future of society for decades to come. The answer that society has given so far has already become a life and death question for many who has loft their life in the collapse process. Right now, the momentum is strong towards more fascism and an accelerating rate of death. Thus, it become a question of individual responsibility to support the man who has a proven track record of over thirty years running, to swing the tide against fascism, economic collapse, and death. The time has come to put aside the slander, the hatred, the cynicism, and to make it a top priority to save civilization that all of our existence depends on. That is the only course society has towards peace and its own survival.
It is my hope that society will make this choice, because the alternative is really unthinkable.
Rolf A. F. Witzsche
The above is an editorial analysis by Rolf A.
F. Witzsche, based on the ideas and presentations by the American Economist Lyndon H. LaRouche Jr..