Is a Permanent Revolution Occurring? Part 2

By [post_author] –

Posted on Freedom Advocates on April 22nd 2008 

The process is exemplified as outfits like the Trilateral Commission, the SPP and its satellite organizations like the North American Competitiveness Council  further “economic integration”—the removal of all impediments to the spread of global corporatist capitalism. At its highest development global corporatist capitalism evolves into global socialism. When it cannot develop, it falls into crisis and must resort to some form of fascism.

Our present reality is that of crisis. This explains Homeland Security, Real ID, and so on. Hayfield calls the source of the crisis “the flaw of capitalism”: overproduction and underconsumption. More is produced than can be consumed. The need to get more money into consumers’ pockets so they can consume what capitalism produces explains inflation (more fiat money chasing what is produced) and boneheaded schemes such as the economic stimulus checks to be mailed to taxpayers from the government next month.

The solution to the flaw of capitalism is the Permanent Revolution. Central to the Permanent Revolution is economist Joseph Schumpeter’s discovery: creative destruction. Schumpeter’s words (from his landmark Capitalism, Socialism and Democracy): “Capitalism … not only never is but never can be stationary….  The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.” This process “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in” (pp. 82-83).

Alan Greenspan read Schumpeter, agreed, and the rest—as the saying goes—is history. Our power elite—or radical capitalist class (bankers, CEOs, CFR and TC connected intellectuals)—does what it does not simply because it can, but because it must. Within a capitalist economy, the choice is stark: creative destruction or stagnation and crisis. Creative destruction means globalization, as capitalistic innovations seek new employees and new markets.

In Hayfield’s view, our choice is just as stark: globalization or sovereignty. Capitalism or our American republic. The process of creative destruction will sweep this republic into history along with the aristocratic classes of an older Europe if the Permanent Revolution continues.

The idea of creative destruction is gaining new attention among academic economists who also agree with Schumpeter that it, and not price competition, reflects the essential nature of capitalism. An example is economist Arthur M. Diamond of the University of Nebraska at Omaha, who writes that “if Creative Destruction is the essential fact about capitalism, we would expect that the more open the economy is to Creative Destruction, the faster will be the rate of technological advance, and the greater will be the improvements in longevity, health and quality of life” (paper entitled “Creative Destruction: The Essential Fact About Capitalism” presented at George Mason University last summer). There are two brands of competition, the competition that exists between two producers of X’s and that which exists between any producer of X’s and a producer of Y’s, where Y’s represent a technological innovation that could sweep X’s into history. Examples: calculators vs. slide rules, or automobiles over horses and buggies. But is creative destruction a process to be associated with one economic system, corporatist capitalism?

Let’s make no mistake about it: creative destruction is a feature of our economy. Our system, moreover, does overproduce. Some might argue that Says’ Law is relevant: supply creates its own demand. This adage from classical economics may be true in a twisted sense: the oversupply of houses—plus easy credit—led to a lot of consumers buying houses they couldn’t afford having been offered deals that were risky for both parties, leading in turn to today’s record-high foreclosure rates and the subprime mortgage lending mess.

I don’t consider myself an economist but a philosopher who considers both economics and history to be important. The latter supply data with which the social and political philosopher must work. The philosopher tries to generalize if he can. Here are our questions. Is creative destruction a process to be associated with one economic system, or a manifestation of something larger? Might we distinguish creative destruction per se from creative destruction hijacked?

We humans have always been problem solvers. Paraphrasing Frederic Bastiat from The Law (mid-1800s), man always tries to satisfy his desires with the least possible effort. As long as there has been a human race, we have sought better and more efficient ways of doing things—with genius inventors leading the way (e.g., Gutenberg’s printing press or Fulton’s engine). Sometimes the inventions have been disruptive. Over the long run, they improved the human condition.

Consider Otto Bettman argument in his The Good Old Days—They Were Terrible (1974), cited by Diamond. Bettman observes that stench from animal waste (from horses used for transportation), disease, the tedium and need to use muscle power just to cook in fireplaces or clean one’s clothes, and the unhealthy and dangerous conditions in the majority of workplaces prior to the 20th century, all made life precarious and often short. These all militate against romanticizing the world before the rise of capitalism. The capitalist mode of production cleaned up the world, made it healthier and safer, more efficient, and led the way to lifestyles that would have been Utopian by earlier generations’ standards!

In this case, couldn’t creative destruction be the manifestation in our particular society, in our chapter in history, of the desire to find better ways of doing things—ways to accomplish more with less? A capitalist economy may just allow this manifestation to flourish and dramatically improve people’s lives! Diamond’s essay lists five major discoveries or inventions of the era that gave birth to capitalism: running water and indoor plumbing, electricity, the internal combustion engine, chemical engineering (which led to plastics and medicines), and communications technology (from the telegraph to the telephone and eventually radio). We could add computing machinery and information systems to this list.

But does creative destruction have a dark side? The academic economists must show that creative destruction has continued to benefit the majority in the economies it dominates. Diamond’s essay by his own admission doesn’t address: “how big is the destructive part of creative destruction? Or put differently: how much are workers hurt?” The jobs created should be better and more numerous than the jobs destroyed. Wages and salaries should go up, as the proverbial rising tide lifts all the boats. Except for an underclass that has always subsisted on society’s margins, this was generally the case. Is it still the case today?

The answer, sadly, is No. If we pass the reins of the argument into the hands of economist and commentator Paul Craig Roberts, a different picture emerges of a nation whose manufacturing base is disappearing not simply because of technological change but specific political moves (e.g., NAFTA). Good-paying jobs have been replaced not with better-paying jobs but jobs in the “service sector” that pay substantially less. Roberts’s “The Fading American economy” (April 10) cites the Bureau of Labor Statistics: the U.S. economy lost 80,000 private sector jobs in March alone, half of them in manufacturing. Today, 13,643,000 Americans work in manufacturing. Government, on the other hand, employs 22,387,000. Leisure and hospitality (services) employs 13,682,000. There are, that is, more waiters, waitresses and bartenders than there are production workers. Wholesale and retail (services) employ 21,467,000. Professional and business services employ 18,036,000. Education and health services employ 18,699,000. Financial activities employ 8,228,000. Public and private debt, meanwhile, has skyrocketed.

America’s largest single employer, in this case, is government. Manufacturing comprises under 10 percent of total employment. Everything else is services—where many of the jobs pay starvation wages. The gulf between the extremely rich and extremely poor is widening all over the world, with our middle class gradually disappearing. Is this the portrait of a healthy capitalistic system, portraying the dynamic creative destruction of the academic economists? Or does it manifest what many observers (Lou Dobbs is an example) see as an attack on the middle class?

What makes the latter view tempting is that a relatively affluent (and well educated) middle class has the leisure to ponder questions of governance and economy. It produces thinkers—who may learn to question authority. Those who want power thus have a motive to want a society where there is no middle class and to act accordingly: debauching the currency, throttling the Constitution, formulating “free trade” agreements that send jobs overseas for cheap labor, importing cheap labor to compete with American workers for American jobs, dumbing down the government schools, and so on.

In the last analysis, I find the argument for an autonomous process that is in many respects running on autopilot—driving capitalism into a global mode on its own so that, at its highest stage, it can evolve into socialism and then into communism, to be unconvincing. Collectivist theories of society far predate capitalism, after all; they go back as far as Plato. In modern times, G.W.F. Hegel and Jean-Jacques Rousseau put them forth, as did Robert Owen in the English-speaking world. The Marxists and the Fabians would discover them and learn how to use them.

Meanwhile, huge banking interests such as the Rothschilds had discovered fractional reserve banking: the wonders of generating “wealth” out of thin air and creating economies encouraging indebtedness. These were specific decisions. No process was driving them except what Nietzsche would call their will to power; capitalism was still in its infancy in the late 1700s when Mayer Amschel Rothschild was training his five sons in the fine arts of money lending. No process forced his sons to foment wars and then bankroll both sides—except their learned desire for power. Likewise, no process forced their descendents to create the Federal Reserve. If anything, the international banking cartel used Hegelian dialectic to create conditions (the Panic of 1907 comes to mind) whereby a stabilizing central bank seemed necessary.

These people wanted power; those that came in their wake often openly stated their thoughts, as when Arnold Toynbee attacked national sovereignty before his fellow globalists and then suggesting that they “deny with our lips what we are doing with our hands,” the latter being the conscious hijacking of Western civilization. National sovereignty had to be undermined as a barrier to a global domination that was far easier to achieve by stealth, through the power of the purse (corporatism), than openly and by the power of the sword (tyrannical government alone). Given the dumbing down of the educational system as well as the many diversions of the mass entertainment culture which has never had too few consumers, the masses could be brought along willingly, with a minimum of reluctance and dissent.

Although my portrayal of the Permanent Revolution differs from his, I believe Terry Hayfield’s work is around 80 percent right—which is enough for me to recommend studying Hayfield Research (one might call it). He was the first to impress upon me the importance of the Fabian Society, and for that I am grateful. Fabian Society influence does permeate those institutions that have guided the world toward “global governance” including the World Bank and the Bank for International Settlements—because their method (penetrate and permeate) has worked. We ought to study it. There is much more to his research that space limitations preclude my discussing here. Hayfield’s accumulation of data into a single, sustained package is remarkable, considering he hasn’t labored under ideal circumstances (he isn’t a tenured academic with hours of free time on his hands).

The issue between us: what really drives modern history? Is it an autonomous force? Or all-too-human greed and lust for power? I don’t think the enemy of freedom for persons and sovereignty for this nation is a malignant process. Something fundamentally benign—the desire to improve human life through invention and innovation (which in Schumpeter’s hands became creative destruction)—has been hijacked. The hijackers took the reins of capitalism itself, destroyed the laissez faire system and created corporatism. This system indeed has many of the irrationalities and malignancies Hayfield attributes to capitalism, courtesy of the irrational decisions of many of its participants.

Because our mindset is mostly collectivist as we grovel before the power of the state, I do not think our system can rightly be called capitalistic any longer. Even ownership of private property is nominal at best. We have already evolved into a socialist society. I don’t believe Mr. Hayfield will agree with me. How does one determine which of us is correct? Whether the system we have now will indeed use creative destruction to rise above its present crisis, and whether it will evolve into the self-regulating classless society of communism if it isn’t revealed for what it is and stopped—or whether its internal mechanisms (our irrational monetary system, for example) will lead toward systemic collapse.

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