Guest Post: R.I.P, Homo Economicus: On the End of Ubiquitous Poverty and the Beginning of Universal Abundance

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Submitted by Free Radical

R.I.P, Homo Economicus: On the End of Ubiquitous Poverty and the Beginning of Universal Abundance

“I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race.” – John Maynard Keynes, Economic Possibilities for Our Grandchildren, 1930, [author’s emphasis]

There have of course been some “important” wars (though in truth they were, and remain, mere installments in a Long War that is by no means over).  And there has of course been an “important” increase in population (the abreaction, for the most part, of the premodern underbrush that was uprooted amid the modern nation-state’s relentless campaign of unification, centralization, and consolidation).  But let us give Keynes his due for imagining a time, in the not-too-distant future, when “the economic problem” – which is to say, the scarcity that impels all economic endeavor – will at long last have been solved, and universal abundance is at hand.  Let us do so, however, with no illusions about who the man was, fully acknowledging that he was “a charming but power-driven statist Machiavelli, who embodied some of the most malevolent trends and institutions of the twentieth century” – so malevolent, in fact, that one is left to wonder what Keynes might have had to do with the fact that, eighty years later, a solution to “the economic problem” seems more out of reach than ever.

After all, standardizing for population growth since 2005, the chart below would now indicate that fully 5.5 billion people live on less than ten dollars a day, while nearly a billion live on less than a dollar a day:

And while America’s poor appear to be quite well off by world standards, the fact is that they now represent nearly 14% of the U.S. population and that their numbers are skyrocketing, as the real unemployment rate surges toward 25%:

And not surprisingly, food stamp use is also skyrocketing:

 

Which is to say that Americans in general are an ugly mix of Stanley Johnsons so buried in debt that their toys have either already been taken from them or soon will be,  their spending now in freefall, as it returns to its historically sustainable level (after, in all likelihood, overshooting it):

All of this happening as income inequality rises to extremes not seen since 1929:

But this was to be expected, after all, as the fascism inherent in the U.S. banking system reaches its apotheosis in the privatization of profits and socialization of losses, such profiteering, regardless of how it manifests itself, being standard operating proce-dure for the state.  For while it “is almost universally considered an institution of social service,” the state is really nothing more than “the systematization of the predatory pro-cess over a given territory.”  Why?  Because

the state cannot even exist without committing the crimes of extortion and robbery, which states call taxation; and as a rule, this existential state crime is but the merest beginning of its assaults on the lives, liberties, and property of its resident population.

And simply put, these assaults – whether perpetrated by the U.S. fascialist state or variations upon this theme elsewhere around the world – have so impoverished the masses (why else would they be the masses?) that to contemplate an imminent solution to “the economic problem” admittedly seems absurd.

Nonetheless, let us return to Keynes meditation thereon and, in particular, to his ob-servation that the historically “slow rate of progress, or lack of progress, was due to two reasons – to the remarkable absence of important technical improvements and to the failure of capital to accumulate.”  For surely this is so, not just because the state’s “predatory process,” century after century, has so hampered capital accumulation as to stunt technological advance but because, in the last century, the state’s predations were fully systematized.  And they were systematized in no small part because of Keynes’ absurd belief that “there are no intrinsic reasons for the scarcity of capital.”  For just as there is not (there never was, nor will there ever be) any genuine capital accumulation that is not the result of savings – specifically, the saving of productive work of one form or another – so is there an inherent limit to capital.  And as savings are nothing other than deferred consumption, it is clear that one cannot simultaneously consume that which one defers the consumption of, which is to say, one cannot have one’s cake and eat it too.

This is precisely what Keynesianism attempts to do, however, facilitated by the attendant notion that money is not a good used as a medium exchange but simply a medium of exchange that, being irredeemable for any good, can accordingly be generated without limit.  No wonder, then, that with both capital and money thus unhinged from economic reality, governments, in thrall to this alchemical fantasy – would systematically plunder their countries’ economies to the point of grinding them to a halt:

A major part of the growth in the last 100 years and especially in the last 40 years has been built on an unsustainable build-up of debt levels. These debt levels will continue to swell for another few years until the coming hyperinflation in the West leads to a destruction of real asset values and a debt implosion.

We have hell to pay for the sins of Keynesianism, in other words, the only question being what level of hell we descend to.  And as this is largely a function of how long the journey takes, it is in turn a function of how “successful” governments’ extend and pretend policies are, meaning that the longer they delay the onset of economic reality, the deeper into hell we will descend.

So again, under the circumstances – that is, given governments’ unremitting deter-mination to exacerbate the devastation that their Keynesian folly has already caused – how can we even contemplate a solution to “the economic problem,” much less postulate an imminent solution?

We begin by considering what our lives would be like if we hadn’t been subjected not only Keynesianism but to its indispensable precondition – that is, if we had lived all this time within the liberating confines of sound money, which by definition has two complementary and vitally important aspects: (1) “It is affirmative in approving the mar-ket's choice of a commonly used medium of exchange,” and (2) “It is negative in ob-structing the government's propensity to meddle with the currency system.”  And since gold has manifested these two aspects for over five thousand years, we assert without equivocation that a sound monetary system is a 100-percent-reserve gold standard that accordingly “secure[s] the economic system against the evils both of inflation and of de-flation/depression.”

And let us also assert that however beneficial this twofold security would be, such a monetary system would do much more than that.  For “the typically modest increase in the quantity of money and volume of aggregate spending that takes place under a gold standard is accompanied by actually falling prices [author’s emphasis],” the greater production and supply of a good (or service) being a result of the greater efficiency that is expressed as Total productivity = Output quality and quantity / Input quality and quantity.  That is to say, as input quality rises and input quantity falls, both output quality and quantity rise, resulting in the increased productivity that is reflected in the ability to offer the same product (or service) for less or, alternatively, a better product (or service) for the same price.

And we have of course been experiencing this very phenomenon for many decades now, as the cost of computing power has fallen precipitously, the industry’s productivity increasing in accordance with what has come to be known as Moore’s Law:

The computer/electronics industry, in other words, has accomplished what the rest of the economy has not – i.e., an increase in productivity sufficient to offset government-induced inflation – the point being that in a truly sound-money economy, the gain in purchasing power would be across-the-board.  That is, increased productivity would result, over time and in all sectors of the economy, in falling prices that would not be deflationary for the simple reason that they would not be the result of a monetary contraction, the difference between the two being all the difference:

What this means is not only that in a sound-money economy, prices would fall as productivity rises; it also means that in an increasingly computer-driven, nano-technological, sound-money economy – where computing power rises as machine size falls – productivity would grow exponentially, not only driving prices down at a similar rate but ultimately driving them to the vanishing point , which is to say, to zero. 
For example:

We are awash in energy (10,000 times more than required to meet all our needs falls on Earth) but we are not very good at capturing it. That will change with the full nanotechnology-based assembly of macro objects at the nano scale, controlled by massively parallel information processes, which will be feasible within twenty years. Even though our energy needs are projected to triple within that time, we’ll capture that .0003 of the sunlight needed to meet our energy needs with no use of fossil fuels, using extremely inexpensive, highly efficient, lightweight, nano-engineered solar panels, and we’ll store the energy in highly distributed (and therefore safe) nanotechnology-based fuel cells. Solar power is now providing 1 part in 1,000 of our needs, but that percentage is doubling every two years, which means multiplying by 1,000 in twenty years.

Let’s say that by “extremely inexpensive,” we’re talking about the solar equivalent of dollar-a-gallon gasoline in 2030.  We are then talking about a less than one-cent-gallon equivalent seven doublings later and less than a tenth of a cent three doublings after that, meaning that by 2050 the world’s energy needs would be met at virtually no cost. And simply put, to apply this same logic to the economy as a whole is to understand how “the economic problem” stands to be solved and how universal abundance therefore stands to be achieved.  Not eons from now, not millennia, not centuries, but decades.

While Keynes had only a faint notion of this hyper-productivity dynamic, we can at least give him his due for imagining that it wouldn’t be long before man would be “faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”  For that “science and compound interest” are nothing other than the exponential growth in technology that, aided and abetted by sound-money’s inherent price-reducing proclivity, do in fact have the power to free man “from pressing economic cares.”

Unfortunately, however, we must also give Keynes his due for helping to postpone that day, his contempt for what he perceived as a barbarous relic leading to FDR’s confiscation of the people’s gold in 1933 and thus the end of what remained of the gold standard in the United States (the world gold standard ending in the Nixon Shock of 1971).  For with no further restraint on the international banking cartel, the full fury of the stealth tax would be loosed upon the world and vast swaths of its people (most notably the American people) sold into debt slavery, the supreme irony being that “the eco-nomic problem” could well have already been solved, had a sound monetary system been in place during the near-century that the cartel’s foremost member has held sway.  For the pseudo-productivity of much of the U.S. economy would have been genuinely so, as would the rest of the world’s.  And the wars that could not have otherwise been funded would not otherwise have been fought, nor would our socially debilitating welfare programs have had the wherewithal to entrench themselves, the combined depredations of which have sapped incalculable amounts of humanity’s time, talent, energy, and imagina-tion.

Even so, such is the ordinary man’s inborn ingenuity that despite those depreda-tions, he may yet find himself, in 2030, confronting the fact that “his real, his permanent problem” isn’t a problem at all.  For what Keynes didn’t envision is that the ordinary man a century later, having decades before begun to internalize his machines, would be quite extraordinary, empowering himself to the point of not only boldly going where no man has gone before but of becoming what no man has ever been before.  No longer having to struggle with the problems of tired old homo economicus, that is, a vibrant young homo abundus would be charting a course that would have been beyond his predecessor’s wild-est dreams.

But as those dreams may yet be shattered, we will postpone further examination of homo abundus until we’ve taken full measure of “the predatory process,” beginning with my next submission: “The Twin Pillars of Civilization.”