Posted Feb 23, 2022 by Martin Armstrong
While Nigel Farage spoke at our 2019 WEC in Rome, he said he came because our events were the “alternative to Davos.” For years Schwab and I have been on opposite sides of the table. The stark difference between myself and that of Klaus Schwab boils down to the divergence in economics between Adam Smith and Karl Marx.
Smith approached the subject from the realization of not knowing how the economy functioned. He embarked upon a path of discovery and came upon his monumental revelation of the Invisible Hand. Innovation can only come from the frontlines, and that is the individual who witnesses an opportunity to create something to fill a need. That can never be the role of government and the movie “Mr. Jones” illustrated what happens under government central control. Communism could not produce enough food so Stalin stole it from the Ukrainians, causing 7 million to die of starvation all to pretend communism did not fail.
That came to a head with the famous 1959 Kitchen Debate where Nixon showed that private innovation raised the living standards of the people because it came only from those of the frontlines — the people. This idea of material “equality” and focusing only on that aspect dehumanized society and deprived it of innovation from the people. This became the stark difference between Smith and Marx, which to this day distinguishes even me from Klaus Schwab.
It was the academics who rejected the idea of laissez-faire and the Invisible Hand and took the idea that they could improve society by manipulating the people assuming the business cycle was not inevitable. They took the position that the government held the power to control the economy at will. This became the “New Economics” or Keynesian Economics, which even Keynes admitted he was wrong before he died. Former Chairman of the Federal Reserve, Paul Volcker, said in his “Rediscovery of the Business Cycle”: “[T]he ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as “the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment.”
Schwab is not evil. He is just an academic who believes that government has the power to alter the economy and the future. He has created his Young Global Leaders and his Global Shapers all to be indoctrinated with his philosophy that we are not individuals but mere worker bees in a hive destined to serve the queen or, in this case, the government.
These academics look down upon society with disgust – the great unwashed. They fail to see that all innovation comes only from the freedom to think. They are repulsed by the thought that we are of any value to society. They believe they are far more intelligent than the workers below, so why bother to even speak to us? Julian Huxley was part of the establishment of the United Nations setting out the goals of UNESCO where he outright stated that “unrestricted individualism is equally erroneous.” He saw the individual as meaningless.
This is the philosophy that individualism is evil because they need to make sure that nobody has more materially than anyone else. They fail to understand that all innovation comes from the individual, and some dream of owning their own business, while others want no responsibility and just to earn what they need to in order to go off with other pursuits. That is human nature. We are individuals, not worker bees.
I had written before that while I was doing my historical research at Princeton University, one professor with who I became friends said that I reminded him of Einstein. I was shocked. I did not see myself in the same category. Then he explained it did not matter what field; the key was curiosity. Leonardo Da Vinci dug up dead bodies because he was curious about how the body functioned.
Then I understood what the comparison was. It was not a level of intelligence of average v genius. The key was simply “curiosity” about what makes anything function. Einstein had that curiosity in physics. Adam Smith in economics and Da Vinci was interested in the human body.
I was curious about what made empires, nations, and city-states rise from nothing and fall into the dust of history. I saw the world evolve in cycles. Former Federal Reserve Chairman Arthur Burns and Paul Volcker also came to the realization that the business cycle was in fact unbeatable.
Hence, the difference between Klaus Schwab and me is that I believe that indeed the business cycle is inevitable. In contrast, Schwab believes, as do most academics, that it can be manipulated, tempered, controlled, and eliminated. But to do so, you must extinguish humanity, for it is collectively the individual spirit that results in the rise and fall of empires, nations, and city-states. It is impossible to defeat the business cycle for contained within it is not just the individual, but everything including climate change, which is cyclical and has also been a key factor that once again cannot be controlled by this nonsense of powerful state regulation. It is not fossil fuels that cause climate change, for CO2 was also released when society throughout the ages burned wood to stay warm in winter. In 535 AD, then Emperor Justinian I declared the first environmental law called the clean air act. As much as we think things change, they remain the same — history repeats.
Civilization has expanded ONLY during warming periods. It always contracts during global cooling periods. One blunt reason for that has been simply that crops fail during winters and need the warmth of the sun to grow. Thus the food supply has declined during global cooling, and that has promoted the cycles in plagues as well. Even during the American Revolution, the ground would be frozen two feet deep. Pictures of Washington Crossing the ice-packed Delaware River was an example, for we were coming out of the Little Ice Age that bottomed in the mid-1600s. I never saw such ice in the Delaware River, and that is where I grew up.
There stark difference between Klaus Schwab and me boils down to the fact that the business cycle always wins. NEVER has anyone who has taken upon themselves to restructure the world economy based solely upon this belief that they can defeat and control the business cycle ever actually succeeded. All these theories of state control have ever caused is nothing but death, civil war, and international war.
Hence, I believe in humanity and that we are not all the same. Some are great physicians and others traders, and yet others are content to just spend time with their family and career is secondary. That is what the business cycle embraces. Those who are simply jealous of the material wealth of others and create theories to justify robbing others for their own personal gain have been around for a long time. I have always found it curious that it is one of the prohibitions in the Ten Commandments not to covet other people’s wealth implying that this has been the dark side of humanity that has always risen and fallen over the ages.
For this reason, my curiosity has led me to see that society is like a rainforest. It is so complex that academics will never see it from a lofty window looking down upon the people they regard as inferior to them mentally – the great unwashed. We cannot create a rainforest, for the complexity is far beyond our comprehension. Every species is a food source for another, and that includes plants. Remove just one, and the ripple effect unleashed is unpredictable. For example, importing cane toads to Australia or releasing Burmese pythons that were once pets into the Everglades that eat alligators altered the balance in nature as new preditors emerged without their own checks and balance.
This is the danger of the theories that Schwab has embraced. The arrogance of elitism without understanding how the business cycle truly works.
Tags: Adam Smith, Business Cycle, Communism, individualism, Invisible Hand, Keynes, Keynesian economics, Leonardo Da Vinci, Marx, Schwab