6: Paper for the People’s Assembly on 7th December 2013

Clive Menzies – founder of the Critical Thinking project at the Free University and member of Occupy London Economics Working Group (EWG)

The EWG doesn’t, as yet, have an agreed homogeneous set of proposals to address the shortcomings of the current economic system. The group comprises a spectrum of opinion from those who see the current system as needing reform to those who are seeking a paradigm shift, ie. a new economic system. However, there is broad agreement on sharing the value of land and resources for the common good and the provision of an unconditional citizens income. The knotty issue of interest on money remains contested.

Critical Thinking(1) has undertaken extensive analysis of the economic system and looked at economic ideas, long suppressed, such as the work of Henry George, Margrit Kennedy and the Social Credit movement, as well as contemporary unorthodox developments (Zeitgeist and others). Our work has sought to identify the root causes of the many problems in the world and over the course of the last two years has identified three systemic flaws in the current economic system:

Private capture of the value of land and resources which should be shared

Interest on money

The means to life being conditional on paid employment

A study published in the New Scientist(2) in 2011 revealed that 40% of 43,060 transnational corporations (TNCs) are controlled by just 147 “super entities” many of which are the global banks and financial companies. This group controls 60% of the revenues of these 43,060 TNCs which means, in effect, they run global business. The study examined public records (shareholder registers and common directorships) but did not seek to ascertain the beneficial ownership of nominee company holdings or trusts on the share registers of these super entities. Circumstantial evidence suggests control of these super entities is concentrated among a few family dynasties such as the Rockefellers, Rothschilds, Vanderbilts, Morgans, Carnegies, Warburgs etc. They collude through think tanks and meetings such as the Council on Foreign Relations, Brookings Institute, Chatham House and Bilderberg to set the world agenda, corrupting politics, media, NGOs and public institutions. These ruling elites have shaped the world in their interests for centuries and are on track to create a one world government through supra-national institutions they dominate (UN, World Bank, IMF etc.). The early Bilderberg meetings were instrumental in driving forward the Common Market (EU) agenda and are a major impetus behind trade agreements which destroy liberties, democracy and public services.

The ruling elites’ power is derived from the three flaws listed above (control of land, money and labour) which are the means by which they accrue even more power and wealth while the majority are enslaved to the economic system - fodder for the machine.

A flawed economic system

Henry George wrote in Progress and Poverty(3) (1879) how vibrant economic progress in America was always accompanied by abject poverty. Many years study showed the underlying cause was the private appropriation of land and resources which are gifts from nature and whose value is created by the community but captured by parasitical landowners. He proposed a 100% land value tax, an idea adopted by Lloyd George and Winston Churchill which would remove the necessity to tax employment and enterprise. But the idea was quashed and suppressed, from public and academic discourse, by vested interests, ie. Landowners.

More recently, Fred Harrison, who has spent 40 years studying and promoting the work of Henry George, wrote The Traumatised Society in which he describes how progressive dispossession from our land birthright has eliminated our ability to think clearly. He explains how the process of dispossession began five centuries ago when Henry VIII confiscated the monasteries, prior to which virtually 100% of the surpluses from the land were available to the public purse. Following the enclosures of common land, by the early 19th century, only 4% was levied from the land in taxes.

In the early 1990s, Harrison urged Boris Yeltsin to retain land in common ownership but banking interests prevailed, allowing Russia’s land and resources to be appropriated and exploited by global corporations and former public servants who became oligarchs.

If the value of land and resources was to be shared for the common good, as natural law intended, poverty and deprivation would disappear.

The second fundamental flaw has been understood for millennia. It is no accident that the major religions prohibited usury - lending money at interest. The establishment of the privately owned Bank of England in 1694 created our interest based money system which prevails today. It allows private banks to create money from nothing and charge us interest for the privilege of using it.

Margrit Kennedy wrote Interest and Inflation Free Money(4) in 1995 and drew on data for West Germany over previous decades. She found everyone pays interest. When you buy a railway ticket, within the cost is the interest element levied on the capital investment to provide stations, track and rolling stock. Similarly, when you buy food, the cost includes interest on the investment in buildings, plant, machinery and transport. Kennedy also found that interest treats people differently. She divided the West German population by income and analysed the interest they paid and received. She found the bottom 80% of the population paid twice as much interest as they received but the top 10% received twice as much interest as they paid. ie. the lowest four fifths of the population paid all their interest to the top 10%. And the top 0.01% received 2,000 times what the top 10% received on average. The interest system drives inequality; it is unavoidable.
Kennedy also found that the ability to pay the interest diminishes over time. Over the period 1968 to 1989, West German wages and national income rose by less than 400% but interest on national debt rose by a whopping 1,360%. ie. Debt interest rose much faster than the income to pay it.

Interest on money discounts the future which is why we’re depleting our resources and damaging the environment at an accelerating rate. Future returns are calculated with reference to (interest based) Discounted Cash Flow (DCF) which means for example, a forest is worth more as logged timber today than left standing for future generations. Environmental destruction is an inevitable consequence of the interest based money system because we demand a “time value” for money.

The other major flaw stems from the industrial revolution and the Protestant ethic, that paid employment is a prerequisite for the means to life. Once people had been dispossessed of the land and the means to house, clothe and feed themselves, they were driven into factories in order to survive. Landowners and parasitical collectors of interest gain an extraordinary share of the total wealth by exploiting those who create it. Since the industrial revolution, accelerating productivity has rendered full employment undesirable, unachievable and unnecessary. We are now in the position of having to create jobs that are destructive, without real purpose or just bureaucracy gone mad.

The progressive monetisation and bureaucratic control over the lives of individuals, combined with having to work long hours to survive, has limited the opportunities to think, congregate and discuss how to create a better world for us all and future generations. Increasing distraction by media, which is controlled by the few, ensures we don’t question the way things are too deeply. Information is suppressed or corrupted to fit the narrative of vested interests. We are seduced into thinking that changes of government will make a difference but both left and right are working within the framework of the dominant economic system, controlled by the few. Politics is reduced to puppet theatre.

So what is to be done?

The Critical Thinking project, which emerged from Occupy London in January 2012, has been exploring these issues and the above summary is the result of extensive analysis. We are now developing a blueprint for a New Economy, which fosters greater equality, cooperation and fairness while working for the interests of all and a sustainable future. The New Economy5 is founded on three fundamental principles:

100% of surpluses (before labour or capital are applied) from land and resources are to be shared for the common good

Complete prohibition of interest on money

Unconditional citizens income to provide the means for a comfortable life for all

An economic system, founded on these principles will eliminate homelessness because interest free money would be created centrally to fund public housing and infrastructure. Everyone will receive a citizens income which means that survival is no longer a preoccupation. Paid employment becomes a choice rather than an obligation, balancing the power between employer and employee – no need for unions to protect workers rights, they can vote with their feet. No longer would people be enslaved to a 40+ hour working week.

Critics will be quick to question affordability but they are thinking in terms of the current unfair distribution of wealth. Applying these principles will make it affordable. These ideas have been in existence for over a century. It’s about time we applied them to begin to eliminate many of the problems in the world which are symptoms of a broken economic system.