HOW CAN WE MAKE IT GENUINELY FREE? 

“WAR IS PEACE”, “FREEDOM IS SLAVERY”, “IGNORANCE IS STRENGTH”.

THE DOMINANCE OF DOUBLESPEAK AND BUZZWORDS TODAY SHOULD LEAD US TO SUSPICION OF *ALL* WORDS THAT ARE UNDEFINED. THERE NEEDS TO BE AT LEAST SOME JOINT UNDERSTANDING OF KEY WORDS BEFORE PLUNGING INTO ANY DISCUSSION.  MORE THAN THAT, THERE NEEDS TO BE SOME CLARITY REGARDING WHERE A SPEAKER IS “COMING FROM”.

In most of my lectures, my positions become clear in the course of my presentation and certainly towards the end.  However, let me show my cards at the start with two observations.

The first is that it seems to me that modern people confuse religious unbelief with religious illiteracy.  I do not have to believe in Islam to understand the basics of Islam; I do not have to be an atheist to know the basics of atheism, just because I know the basics of the Jewish Bible or of the New Testament, does not necessarily mean that I am Christian or Jewish.

Anyway, if one avoids getting lost in the detail, I think you will agree that the whole story of the Jewish Bible, which Christians call the Old Testament, is that God takes the initiative to reveal Himself, His character, and His principles to a people, the Hebrews (known today as Jews), who are characterised or described by that very Jewish Bible itself, as being of a hard heart and a stiff neck.

Why does God reveal Himself to them, and not to any other peoples?  Because God sees in them, says the Jewish Bible, at least some minimum willingness to respect Him and follow His ways, in contrast to the peoples around them who are wholly given over to institutionalised self-centredness and its consequences: greed, exploitation, and injustice.

And what is the purpose of God’s revelation of Himself and His character to the Hebrews? To keep them supernaturally from destruction and indeed to bless them extraordinarily from an earthly point of view, so as to make them a light and a blessing to the rest of the world. In order to experience all that (salvation from political and economic destruction, and being a nation that blesses the world) the people as a whole have to have a certain orientation; at the very least: acknowledge and respect God and live in the light of His character, His ways, which are summed up in the laws and the commandments.  The Jewish Bible, the Old Testament, does record remarkable individuals who went beyond those minima and really wanted to find God and were close to Him all their lives. The New Testament, in the Letter to the Hebrews, chapter 11, has a long list of these people, whom it celebrates as spiritual giants, spiritual heroes. However, the OT is not only about these individuals. As a whole, the Jewish Bible records clearly the question of whether, even with God’s revelations, God’s own chosen people were going to be people of unbelief (and therefore belong, as it were, to the line of Cain) or people of belief (the line of Seth). The obedience or disobedience of a single man or woman can and does influence the people as a whole for good or evil. However, even righteous kings may feel that they have limits on what they can do if they are to retain their kingship and even their lives (they can only alienate so many people if they are not to be the subject of a coup). So, ultimately, what matters is not the character of one or two kings, prophets or other individuals.  What matters is the character of the people as a whole.  We see in the Jewish Bible that, as long as the people as a whole respect God and maintain a certain minimum respect for His law, they are guaranteed political freedom and economic prosperity.  When they disrespect the Lord and depart from the rule of law, it is equally demonstrated that they will inevitably, however long God in His grace and love supernaturally stays or stops the consequences from coming upon them, the consequences will inevitably come upon them and those consequences are: political (national) destruction, exile and slavery.

In contrast to the Jewish Bible whose laws and principles are given to keep safe and prosperous a whole people, the teachings of Jesus the Lord are given to individuals and groups whose hearts have been supernaturally softened by God, so that they can learn much more deeply about becoming agents of blessing, demonstrations of the power of the Holy Spirit to progressively create God’s character in us, so that we can become channels of extraordinary blessing.

In other words, the Jewish Bible has a global and national perspective, a systems perspective; the New Testament has an individual and group perspective.  Without the Jewish Bible, we understand nothing of the New Testament.  Without the New Testament, we understand nothing of how we can individually be transformed and play our individual part in enabling the flourishing of humanity, which is what God desires, according to both the Old and the New Testament – even though any such flourishing will not be accomplished fully, however hard we try and however effective we may be – such human flourishing will be accomplished fully only when Jesus the Lord returns to earth.

As I say, we do not have to believe any of this; but it is illiterate to not even know it.  And I am afraid too many Christians and Jews have a ridiculously high level of illiteracy about what is supposed to be their own tradition. Similarly, too many free marketers claim to believe in free markets, but are illiterate about free markets. A potted history of markets

In ancient times, markets were not so important as kings and armies, but such markets as existed were, in principle, in the control of the merchant class.  I call them ‘merchant-controlled markets’ or, simply, ‘merchant markets’ even though they had to respond to the whims of the king or ruling group.

The ultimate example of a merchant market was India, where there was a merchant caste (actually, that of my ancestors!) which was given free rein by cultural and spiritual sanction to have economic dominance, for example, with the ability to charge whatever rate of interest the market would bear – within living memory of 3600% a year – reducing much of the population to slavery (though national double-speak in India prefers to call it ‘bonded labour’).

There are of course even today areas of India and of the world where merchant markets exist, but they become fewer and fewer, because they have been progressively taken over by ‘capitalist markets’ (capital plus technology), which started with the Industrial revolution.

This is not to say that there was no technology earlier.  Rather, it is to say, that the technology was more at the command of kings than in alliance with merchants. Capitalist markets may well be ruled by kings or cliques or political parties, but capitalist markets sanctify the marriage of capital with technology.  In other words, in any society characterised by capitalist markets, the technologist acquires at least as much importance as the merchant or provider of capital.

If merchant markets run riot have bad social consequences (and they do), then capitalist markets have worse social consequences. From the Victorian era, the worst excesses of ‘capitalist markets’ began to be cleaned up, initially exclusively by the efforts of Protestants or, to be more precise, Evangelicals, leading to the rise of ‘regulated markets’ in the West, and leading directly in non- Protestant countries, to ‘state-controlled markets’ (Russia, China … North Korea) but leading in Western countries to ‘over-regulated’ markets as these countries became less Protestant – when there is no conscience or “internal police”, then one needs many more “external police”.

However, from the 1980s, the burden of these “external police” was felt by society to be too much (that is what happens as belief continues to fade from the public square), and “regulated markets” started being “de-regulated”, giving rise to ‘global markets’ (naturally, technology played a role in globalisation, but technology is always subservient to politics – which is why the largest tech companies have such armies and huge budgets for lobbying politicians).

Since 2007 or so, as competition to the West from the East came to a head, and as the great challenge of declining demand became that of over-production, national elites changed from beating the drum about globalization, to beating the drum of nationalism, and so we enter the current era of ‘DEglobalising markets’.

Just as “state-controlled markets” represent a throw-back to a “merchant market” which only survives at the pleasure of the ruler or ruling class, so also “deglobalising markets” represent a throwback, and the question is whether new global rules will make the world safe for global markets again, and indeed what shape markets will take in a world of global-oversupply in view of the incredible possibilities which are being opened by the incredible speed of the emerging (and in fact also rapidly merging) new technologies: Quantum, Biological, Robotic, Artificial Intelligence and Nano (which are being shortened for convenience as Q-BRAIN ).

BUT I am running ahead of myself!  My point is that markets need to be seen in their context, which can be summarised in the form of the following key questions:

• How important is the market to a particular society?
• What role does technology play in society and markets?
• How do we deal with market abuse, market manipulation, oligopolies and monopolies?
• What do we do to ensure stable and fair markets?
• How do we deal with the consequences of market processes (environmental degradation, economic and financial volatility, social inequality, political instability)?
• Can the market ever be ‘completely free’?
• Even the jungle isn’t ‘completely free’!

SO whatever do we mean by free markets?  Well, a market cannot be free if it limits, prevents or makes difficult the rise of talent from any part of society, and that means that society as a whole must ensure that there is public education and some minimum investment in a national system of infrastructure.  You may recollect that this is precisely what the Jews were required to do by God in the Jewish Bible.

Further, a market cannot be considered free if there is not a level playing field, and that requires some minimum rules in relation to at least seven areas, which I have detailed here:

• Environment
• Health
• Safety
• Currency stability
• Equal application of the law to all
• Care for the physically, emotionally or mentally disadvantaged
• Differential expectations and punishments.

Allow me to suggest to you that, today, there are at least three key ways in which the market is not free:

1. Perverse subsidies 2.      Cronyism 3.        Debasing the currency

I will make a few remarks in relation to each of these.

1. First, as always, definitions: what I mean by ‘perverse subsidies’ are those that are demonstrably damaging and significantly damaging in terms of

• the economy
• the environment
• or society as a whole.

So how might subsidies be “perverse”, how ARE most subsidies perverse?   

Well they are “perverse”

• directly because they draw resources away from higher priorities (education, environment, health, infrastructure), and – indirectly by:
• environmental degradation due to over-exploitation of natural resources, loss of landscape, pollution…
• benefiting the the rich at the expense of the poor
• lowering global demand and therefore market prices for certain kinds of products
• undermining investment decisions
• reducing pressure on businesses to become more efficient
• leaving consumer behaviour increasingly out of touch with reality. As you know there is a whole class of people, including not only lobbyists but also so-called “thought leaders” and indeed Members of Parliaments around the world, who are focused on preventing, and incentivised to prevent, the abolition of perverse subsidies. What are the grounds on which the abolition of subsidies is opposed? Of course because it will disadvantage those who will lose the subsidies (including loss of certain jobs) but also because, it is said, it will weaken domestic competitiveness,
• reduce trading opportunities as costs rise for customers, and – most important!
• threaten public support for the party in power.

The question, however, is whether these are merely excuses, in view of the fact that subsidies go to groups that support a party that gets into power, as a

“reward” for having helped to put the party in power. This vicious cycle subverts leaders’ responsibility for all of society – and you may recollect that the Jewish Bible specifically charges leaders with responsibility for all of society.

Now you would be right if you were to ask, and I hope you are asking: is this issue of perverse subsidies really that big a deal?

Well, it was only yesterday, wasn’t it, that there the public statement by ‘John Doe’, the anonymous whistle-blower of the Panama Papers, in which he said “It is an open secret that in the United States, elected representatives spend the majority of their time fundraising. Tax evasion cannot possibly be fixed while elected officials are pleading for money from the very elites who have the strongest incentives to avoid taxes relative to any other segment of the population.”

I don’t know if you consider $5.3 trillion a year a big number but that’s like throwing a $10 note out into the street every minute of every day and night throughout the year.  And that is for fossil fuels alone!

Moreover, fossil fuels are only the SECOND most “perversely subsidised” sectors.  The most “perversely subsidised” sector is agriculture.

But the perverse subsidy for fossil fuels needs to be seen together with the perverse subsidy for road transportation: in the UK, according to the last figure that was publicly available, in response to a Parliamentary question ten years ago (and so of course vastly more expensive now!), the Highways Agency stated that building one mile of motorway cost an average of £29.9 million, while adding an extra lane to a motorway costs £10m a mile, and building a mile of dual carriageway costs £16.2m.

We can carry on discussing perverse subsidies for water, fisheries and forestry – and we can also have another whole discussion about how some interest groups, whether Planned Parenthood or banks, consider they have some sort of constitutional right to subsidies.

Dodging those discussions for the present, let’s look at the good news:

• Current economic conditions mean that governments are being forced to look for ways to reduce expenditure – even if they don’t always do that most sensibly!
• Unilateral commitments have been made by several countries – e.g. Bangladesh, New Zealand, Russia.
• Multilateral commitments are now being made more often and more comprehensively – e.g. the Sustainable Development Goals – if you are interested in a Relational Evaluation of the SDGs, please look it up on the Relational Thinking website^[1], (which also has links to the work of the movement in specific areas such as business, economics and finance). So we come to the wonderful reality of how contemporary markets, specifically in the West, are becoming more cronyist.

2. As always, let us ask what is meant by Cronyism.

Well, that’s simple, I’m the President of country X, and I like you so I give you responsibility for Y, even though you don’t know as much about the subject as someone else.  This has always been done.  So what’s wrong with the practice from the perspective of free markets?  Well, apart from its inherent unfairness, it causes higher inequality which is not based on merit, and that will inevitably lead to lower investment by those who don’t feel so favoured, and therefore lower growth.  Moreover, it will lead to poorer quality of public and private community projects, it will reduce motivation, it will lessen the value that you and I get in the market for our money.

Why is cronyism rising, even in the West?  As Samuel Gregg put it “Cronyism is a way of life for many business and political leaders, including plenty on the conservative side, despite (their) claims of valuing economic liberty” ^[2] Actually, their claim of valuing economic liberty (or free markets) becomes the wall of mythification behind which they can continue being cronyist.

In one of the most transparent and efficient countries in the world, the USA, the 2016 annual report of its Government Accountability Office (GAO), released only a couple of weeks ago, on April 13, pointed out that, in its first five annual reports (2011-2015), it presented over 200 areas and 544 actions for Congress or executive branch agencies to reduce, eliminate, or better manage fragmentation, which could result in savings of ‘tens of billions of dollars’.

For the Pentagon alone, the GAO made 152 major proposals for policy changes and improvements to avoid waste from duplication: “The Defense Department has so far implemented only 37.5 percent of these”, the GAO said.³⁰ When fraud exists for so long, and on such a massive scale, but no one is shot or prosecuted or demoted for it, I don’t know what it indicates to you: does it indicate collusion from top to bottom in that particular area?

I have, earlier, raised another question, regarding the revival of cronyism in the West; I will leave both questions hanging for the moment and will return to these in my last slide – which is coming up fast.

BUT let’s look at the last of my 3 key fetters or chains on the free market:

3. What is meant by ‘debasing the currency’?

It is the art and science of lowering the real value of money.  This is a wellknown phenomenon, well-studied by economists and political scientists, particularly in connection with commodity money

(e.g. gold or silver coins): a c o i n w a s s a i d t o b e “debased” if the gold, silver, copper or nickel which was its “basis” or “base” was decreased or reduced from what it was supposed to have, resulting in a mismatch between its stated value and its real value.

For example, the value of the silver denarius in Rome was gradually decreased by the government altering both the size and the silver content. Originally, about 4.5 grams of only near-pure silver was used but, by the time of the Julio-Claudian dynasty, the silver content had dropped to approximately 4 grams, then it decreased to 3.8 grams under Nero, continuing to shrink in size and purity, until by the second half of the third century, it was only about 2% silver.  To go from 100% to 2% is quite a feat, isn’t it?

But why would any king or government want to debase a country’s currency?

Because it is an easy way for the ruler or ruling class to make economic gains at the expense of citizens: in the old days, by reducing the silver or gold content of a coin, a government could make more coins out of a given amount of the substance. The resulting over-supply of coin, while the amount of actual goods and services in a country remained relatively static, resulted in inflation. Meaning that the purchasing power of the citizens’ currency is reduced, while the government uses the debased currency to buy luxuries, build monuments, wage wars or pay off its debts nowadays, called “government bonds”).

Nowadays, the production of money involves no gold, silver or copper, it involves at best mere paper (increasingly often, what is involved is only digits on a computer screen) so don’t think that moving from 100% to 2% during the Roman Empire was a particularly remarkable debasement: nowadays infinite debasement is possible, provided businesses and citizenry don’t revolt – and they are “pacified” by double-speak such as “rise in the value of your house” (when in fact it means a drop in the purchasing power of the currency).

In theory, it is possible for a small amount of debasement, and therefore increased availability of currency, to fund projects that promote economic growth – and, if so, inflation could possibly occur only short term and not in the medium or long term.

However, debasement of currency was usually done, and continues to be done, mostly to finance wars and projects that are extravagant, wasteful or otherwise economically unproductive.

How much debasement of money (reduction in the buying power of our money) has in fact taken place?  Well, here are figures for the UK over the last 750 years – and you will note that most of the debasement has been done in the last few decades.

What is the picture in the USA?  It is not such an old country, so here is a shorter time-frame, but that demonstrates the point even more clearly about the acceleration in the rate of debasement of our money, starting around 1970s.

Let me conclude by drawing your attention to the parallel rise of atheism, agnosticism and other kinds of unbelief in the West, and by asking the question, might this have anything to do with the increasing distortion in free markets in the West?

We have plenty for discussion there!

But, so that we don’t completely lose sight of the new realities being created by Q-BRAIN, let me draw your attention to my agenda for action:

Eliminate perverse subsidies, cronyism & currency debasement Establish a “global level playing field”:

• Abolish tax havens
• Close tax loopholes
• Set corporate tax at a realistic level
• Restore taxes for the richest part of the population

Embed “workfare” rather than “welfare”

Note particularly that the rich like to bias the system in their own favour – i.e. by reducing their responsibility – e.g. by reducing taxes. Yet the Biblical principle is that of differential responsibility, i.e. more is expected from the rich than from the poor in the Biblical system. That system is much more concerned about ensuring that differences of wealth don’t become too great than it is concerned about ‘wealth creation’ and ‘wealth preservation’. Those are the preoccupations of the mostly self-centred and selfish neo-rich who now strut across the world’s stage, and who are the main agents who have always distorted free markets, or never even wanted really free markets.

Allow me to conclude with the reminder that the Relational Thinking movement has spent a lot of time and money researching such issues.  Do look up the resources available at www.relationalthinking.net.

Thank you.

 [1] www.relationalthinking.net

[2] http://www.crisismagazine.com/2016/crony-capitalism-inefficient-unjust-and-corrupting ³⁰ http://www.gao.gov/duplication/action_tracker/all_areas.