chapter seven


© Andy Turnbull, 2005


Mind Benders rule the world but they don't own it. The metasystem that does is the financial industry, which grew out of the metasystem of the traders.

As we saw earlier, traders probably played a key role in the development of civilization and they formed one of the root metasystems. Even under the army they kept a special position but through most of history they remained subject to the whims of armies and rulers.

That began to change in the 13th Century when a group of North European traders formed a loose system of their own. The Hanseatic League -- often called The Hanse -- united merchants from about 200 towns and cities in North Germany and around the Baltic Sea. The Hanse was a metasystem, rather than a system, because it had no center, no recognized leader and no chain of command. The merchants had no military ambitions but in 1361 when Denmark's King Valdemar IV attacked the Hanseatic town of Visby, on the island of Gotland in the Baltic, they sent a fleet to Denmark. Valdemar beat off their first attack but in 1370 the merchants sacked Copenhagen and forced Valdemar to sign the humiliating treaty of Straslund. In 1402 the Hanse assembled another war fleet to capture the pirate Klaus Stortebecker, who had been raiding Hanse shipping in the Baltic.[1]

At this point The Hanse behaved like a system, rather than a metasystem, because the attacks on Copenhagen and the capture of Stortebecker must have been planned and organized. Still, the traders were independent individuals and we might say they were among the last of the old breed. The first of the new breed were the English traders of the Muscovy Company, formed in 1555 by Sebastian Cabot and granted a monopoly of Anglo-Russian trade under Queen Mary I. This was the first English joint-stock company in which the capital remained in use instead of being repaid after every voyage. Individual traders operated like hunting and raiding parties, but trading companies operated like armies.[2]

The Muscovy Company did not rank as a major player on the world stage but the East India Company did. Incorporated by royal charter on Dec. 31, 1600, it competed with the Dutch East India Company for the East Indian spice trade.

The original company faced opposition to its monopoly, which led to the Establishment of a rival company and the fusion of the two in 1708 as the United Company of Merchants of England trading to the East Indies. The combination was and is generally called the 'East India Company.'

This is an example of traders who must be seen as takers, rather than makers. With a private army the East India Company took over the Indian state of Bengal in 1757 and for the next 16 years Indian state policy was decided by merchants in London. The company's rule was so oppressive that the British government took control of India through The Regulating Act of 1773 and Pitt's India Act of 1784.

From the average Indian's point of view the rule of the East India Company was still control by an army but this time traders owned and controlled the army. This is a significant difference because the traders themselves had no power except what The System gave them.

Through most of history the army ruled, and all other systems were subservient to it. Now -- in India, at least -- traders ruled and the army was subject to their will. Armies still rule some areas of today's world but in many countries, other components of The System have more power.

The East India Company also had a significant influence on the American colonies. The Governor of the East India Company was also the first Governor of the Virginia Company, which established the settlement of Jamestown on Chesapeake Bay. Other colonies were founded by The Plymouth Company, The Council For New England and The Massachusetts Bay Company -- all joint stock companies.[3]

The Boston Tea Party was as much a protest against the East India Company as against the king. The Stars and Stripes flag that Betsy Ross made for George Washington was a take-off on the flag of the East India Company, which is now the state flag of Hawaii.

Canada was explored and partly developed by The Hudson's Bay Company, which was incorporated in 1670 to seek a northwest passage to the Pacific and to exploit the lands that drained into Hudson Bay. The company now operates a chain of department stores.[4]

The trading companies were a new kind of organization -- traders who operated like an army and who, in fact, owned armies -- but they were still part of The System. The merchants were 'gentlemen adventurers' and the companies were powerful because they had monopolies granted by the crown.


The next big step in the human story was the industrial revolution. Historians tell us that it brought prosperity, but the first stages of the boom were a disaster for most people.

The revolution itself may have been caused partly by good weather. Historians tell us that just before the industrial boom the world entered one of the longest periods of good weather in human history.

With good crops and easy living, farmers raised more children. Because there was no work for them on the farms many of these children moved into towns to work as craftsmen, and competition among large numbers of craftsmen produced new developments.

Transportation was another factor. The first big project of the industrial revolution was a 27-mile canal, opened in 1759 by the Duke of Bridgewater to carry coal from his mine to the developing town of Manchester.

Without transportation, manufacturers could not work on a large scale. This canal, and others completed in the next 100 years, made manufacturing practical because they gave English manufacturers a way to move raw materials to their factories, and to deliver finished products to market.

Industrial iron was another key. Men had been using iron for tools and weapons for more than 2000 years but it was too expensive for other uses because it had to be smelted with wood. England's forests could provide wood to smelt enough iron to make tools and weapons, but not enough to build bridges and other structures.

You can't smelt good iron with coal but in 1760 Abraham Darby cooked coal into coke, which can make good iron, and the age of industrial iron began. The age of steam began in 1781 when one of James Watt's assistants developed the crankshaft that made it possible for a steam engine to turn a wheel.

Any one of these events could have sparked a boom. Together, they set the stage for a super-boom.

The first commercial railway line was opened in 1827 to join the English towns of Stockton and Darlington, and for the next 100 years railways sparked industrial growth such as the world has never seen.

The industrial revolution created a new situation because the new manufacturers were heirs of the village artisans, not of the army and its hangers-on, and because they became wealthy by their own efforts rather than because they had the favor of a ruler. Even more important, the industrial revolution gave the average man a chance to beat The System.

We have already discussed makers and takers. Up to this point the church and the army and the landowners -- all of them takers -- were the important powers in society. As a general rule, makers had little power.

Poor men were not given trade monopolies and they had little chance to become landowners but, for a while, almost any tradesman could dream of becoming a manufacturer. Equally important, the industrial revolution spawned the union movement which gave significant power to union leaders. After the industrial revolution, commoners might hope to gain wealth and even power.

But even as it opened some doors to craftsmen the industrial revolution began the destruction of the extended family that had been the basis of human society since the days of hunters and gatherers.

When the children of hunters and gatherers marry they may establish their own homes but in most cases they stay close to one set of parents. In some cultures the married couple live in the man's home camp and in others they live in the woman's home camp. Either way the man or the woman or both are related to most of the people around them and they join in hunting and gathering parties with their parents or in-laws, and with their brothers and sisters.

Where parents and children and brothers and sisters form a unit we can logically expect to find aunts and uncles and nieces and nephews. In fact a whole camp of hunters and gatherers might consist of a single extended family. This is not a rigidly defined unit because people may move back and forth between two or more families in which they can claim membership, but it is a very stable grouping.

And it works very well because an extended family can take care of most human needs. Parents and grandparents offer experience and wisdom, working adults know most of the technology and hunting skills of the era and the younger generation guarantees the future. With wives and/or husbands adopted from other families the extended family includes some genetic diversity and if it were stranded on an island it could probably live in comfort and establish a new population. The two or three or more extended families that make up a basic hunting and gathering community would certainly be self-sufficient.

Most farming communities were also based on extended families but many of them fell apart in the industrial revolution because people had to move to take jobs in the new factories. Ten or fifteen miles is nothing to a hunter-gatherer but it is a very long way to an agricultural serf who is not used to travel beyond the limits of his lord's estate, or an industrial worker who has little leisure time. If two brothers each move fifteen miles in different directions they will probably lose touch with each other, and they may even lose touch with the parents and grandparents they left behind. They would also lose touch with most of their cousins, aunts, uncles, nieces, nephews and so-forth.

The move to the mill towns promised cash and the excitement of a new way of life to people from small villages but many of the people who made it found themselves trapped. Some could go home but if too many members of an extended family went to the mills, there was no family left to come home to.

Some families that did not go to the mills voluntarily were forced to move by the enclosure of common lands. Until the 18th century some lands around English villages were held in common but, from about 1750 to 1860, the gentry fenced most of the commons and took them as private property. In Scotland the more violent and severe 'clearances' lasted from about 1810 to 1820.[5]

Now the same process is occurring in some third world countries, where wealthy farmers drive peasants from the land to make way for cash-crop plantations. The peasants move to cities where they form a pool of cheap labor for factory owners.[6]

When the land is gone the family breaks up. That's a benefit to The System, but a disaster for people.

Nuclear families have been splitting off from extended families since the days of hunters and gatherers, but most of the splits were temporary. If a woman wanted to gather craft materials -- willow for baskets, perhaps -- she might have brought her children to help collect and carry the material, and her husband would have come along to protect them from predators. Some trips might have taken a nuclear family away from the main camp for days or weeks at a time.

But the craftsmen and all the members of their nuclear families were still part of an extended family. Villagers lived in nuclear families but their extended families lived nearby and the connection was maintained. When armies put slaves and serfs to work as farmers, most of the slaves and serfs lived and worked as families.

The 'enclosures' of England, the 'clearances' of Scotland and the modern land grabs of the third world destroyed most of the extended families they displaced. With no land to live on the families had to break up, because slum landlords do not want large cohesive groups of tenants.

The breakup of the extended family was good for The System but bad for people. After their extended families break up most people live in nuclear families, which are good for The System but not for humans.

The advantage to The System is that a nuclear family is weak and can be bullied. The disadvantage for people is that a nuclear family has no back-up if anything goes wrong.

One industrial worker can earn enough to feed, clothe and house a wife and children if he is healthy and has a job; but not if he is sick, injured or unemployed. One woman can keep house for a man and care for her children if she and they are healthy and if her man is employed, but if her man or her children are sick she will be overworked. If she gets sick there is no-one to care for her, her husband or her children.

Widows and widowers and people who are too old or too sick to work have serious problems in a society of nuclear families. The old may be able to live with their children but, in a culture of nuclear families, they will be a burden on the children they live with.

That's a big change because in an extended family the grandparents are a tower of strength to their children. Grandparents have already raised a family, with the help and supervision of their own parents, and they can help raise their grandchildren.

They can also help in emergencies, and so can other members of the family. Because the members cooperate an extended family is strong, and easily able to handle problems that would create emergencies for a nuclear family. If a man in an extended family is sick or injured, or loses a job outside the family, that's a minor problem because one man's cash contribution is only a small share of the family income.

If a woman in an extended family is sick or injured she has sisters and sisters-in-law to take care of her children, and if the children are sick she has a half dozen or more assistant nurses and the experience of at least two generations of mothers to help care for them. Even death is less serious in an extended family, because a widow or widower has family to share the load and orphans will still live in the families they were born into.

Children in an extended family have playmates of their own age and two or three generations of adults to supervise, teach and protect them. Old folk in an extended family have a safe and comfortable place to live among people who love them, and the satisfaction of knowing that their experience and advice can be put to use.

All this is lost when extended families break up. The move to mill towns and the break-up of the extended families was traumatic for men but it was worse for their wives, because life in the mill towns was even more un-natural for women than for men.

When men moved to town they could adapt, as their ancestors adapted to hunting and raiding trips. Men have always worked away from their homes, and the move to the factory was not a big step.

But women had been the guardians of their homes and families, and they lost both when they moved. Most village women worked in their homes but the yards of town houses were not big enough for vegetable gardens, there were no wild foods to gather and most of the row houses had no room for looms, kilns or other tools of traditional women's work.

Some of the women who moved to towns went to work in factories but factories that had jobs for men did not have many jobs for women, and vice versa. When a man and his wife both worked in factories they often worked in different factories and became, in effect, members of different groups.


The industrial revolution also changed the Establishment by tipping the balance of power within the military-industrial complex in favor of the industrial side. For thousands of years soldiers were more important than their weapons and even when advanced weapons -- such as a bronze sword rather than a stone axe -- gave one man an advantage, the better soldier might still win almost any engagement.

But the winner of a modern war is the side with the best weapons, not the best soldiers. Because of that the modern military-industrial complex is controlled by the industrial component rather than the military. In years gone by a military general outranked anyone in business or trade but in the modern world a general may leave the military to work for a commercial company.

The industrial revolution also spurred the growth of the financial industry, which financed the new factories and the mines and railways that served them.

Many people date the development of modern banks from the 17th century when goldsmiths in London, England, began to accept money for safekeeping and to lend it out at interest. Because most loans were taken in the form of credit rather than cash the goldsmiths could lend out more money than they actually had on deposit. As long as they kept enough on hand to cover withdrawals the system worked well, and it became the key to industrial development.

By this time most Europeans were locked into a cash economy but that was a problem for some because there was very little cash. It just did not exist.

Aristocrats didn't need much money because they owned land and they could order serfs to work their farms, to make weapons for their armies, to build their castles and perhaps build a mill for their estate. If the serfs or the peasants wanted something, that was not the aristocrats' problem.

It was a problem for the peasants because the lord's mill could and often would charge free farmers extortionate rates to mill their grain. Every village wanted its own mill but in the days before banks there was very little actual money in circulation and a whole village could not raise enough cash to build a mill.

But because it can lend more money than it has on deposit, even a small bank can finance a mill. Let's look at the construction of a new mill in the village of Gooblegoo. This is a poor village, partly because local farmers have to haul their grain 20 miles to the lord's mill at Bumblerum and pay a small fortune to get it milled.

There isn't enough money in the whole of Gooblegoo to pay for a mill but three years ago local boy Jack Lender came back from Goobopolis, where he had worked in one of the newfangled banks, and he established the Bank of Gooblegoo. He didn't have much capital but he didn't need much, in those days, and now he's doing all right. He still doesn't have enough to build a mill, but that's no problem.

This year another local boy, Joe Miller, has come home with ten years' experience working at the mill in Bumblerum, and he wants to build his own mill in Gooblegoo.

The local currency is Goobles (G) and Lender agrees to lend Miller 1,000 of them. As it happens he has only G496 on deposit but that doesn't matter because he won't even have to pay out that much.

Miller needs land for his mill and he buys a riverside lot from John Farmer for G200. Farmer takes Miller's cheque to the bank where he applies part of it to his mortgage on the farm and the rest to the money he owes Jack Mason for work on his house. Mason uses his share to pay off the loan he took to buy a horse and wagon. Miller has spent G200 of his loan, but so far not one cent of cash has actually left the bank.

Now Miller hires Mason to build the building for his mill, Peter Carpenter to finish the interior, Bill Wheelwright to make the wheel and so forth, and he pays them all with cheques on his account at the bank.

Because most of them owe money to the bank and they all have savings accounts they deposit their cheques in the bank and write others to pay their debts. They take some cash for groceries and beer, but most of the money never actually leaves the bank.

In effect the people of Gooblegoo cooperate to build the mill in return for Miller's promise to mill their grain in the future, and the bank brokers the deal.

That's a valid function because there isn't enough money in the whole village to pay Farmer, Mason, Carpenter, Wheelwright and the others in cash. Miller can and will pay for the mill by milling grain, but that will take years and the tradesmen who built the mill have no grain to be milled.

Without the bank there could be no mill. Through the bank people can cooperate to build the mill and, over time, everybody who uses flour will pay for it.

For convenience we pretend that the bank had money to lend but in fact there is no real money and the bank is actually a broker for the community. When the bank lends Miller enough money to build his mill, it acts as an agent for the farmers who want a local mill.

The bank makes a profit on the deal but that's fair, because it provides a service and it takes a risk. In this case Lender must be able to judge the local need for a mill and Miller's ability to run it. If both are in place the mill will be a success but if Lender misjudges the need -- or if a drought or some other problem wipes out the next few crops of wheat or if the mill catches fire and burns -- Miller will go broke and Lender will be on the hook for the money. His risk is actually greater than Miller's because if the mill fails Miller will go from broke to bankrupt, but Lender may lose an established business.


Early stockbrokers also performed a valuable function because they too helped to finance the industrial revolution.

Most people date modern stock brokerage from the 12th century, when Flemish brokers began to buy and sell bills of exchange in an open air market in front of the house of the Van der Buerse family, in the city of Bruges. By the early 1600's shares of the Dutch East India Company were being traded at the 'bourse' -- a word derived from the name Van der Buerse -- in Amsterdam and in 1773 London stock traders who had previously been meeting in coffee houses, moved into their own building. The first American stock exchange was established in Philadelphia in 1791 and the next year a group of 24 merchants and brokers began trading under a tree at 68 Wall Street. In 1817 the New York brokers decided to organize formally as the New York Stock and Exchange Board and, in 1863, the New York Stock Exchange adopted its present name.

Stockbrokers sold shares in new ventures and they helped finance the industrial revolution but, partly because of the railways, they also tended to centralize power.

The railways were important because they were by far the biggest consumers of capital investment and, at the same time, the most powerful financial interests. They consumed capital because they were so very expensive to build and they were powerful because by building or not building a line, or even by offering more or less service, they held life and death power over industries and even over towns and cities. As modern industry developed the interests of the railways merged with the interests of big factories and the banks into a cozy metasystem.

One factory might compete with another but both depended on the same bank and the same railway and, often, both the bank and the railway would be represented on the boards of both. As trade unions developed, even factories that had no other ties found themselves united in opposition to trade unions.[7]

Between them the bankers and the stockbrokers and the owners of the railways and factories gained enormous wealth and power and, like the army and the priests and the agents in the occupied village, they found they had common interests. As in the original establishment two men who might be competitors or even enemies on one level might have common interests on another and, even as enemies, they might cooperate in areas where their interests coincided.

But for a hundred years and more businessmen were not accepted by the Establishment because they were makers who actually produced wealth. A nobleman might consider a railway builder or an industrialist to be a good fellow and all that but anyone who produced wealth, rather than inherited or took it, was still a tradesman. By this time Aristotle was no longer the unquestioned authority on everything but his view, that "those who rule must not work and those who work must not rule," was still accepted as a basic principle.

It was perhaps because of this that bankers -- who were never seen to work even when they performed useful functions -- were among the first of the new rich to be accepted by the Establishment. The lord of the manor may sneer at his banker but sooner or later he may himself need a loan and, when he does, he has to accept the banker as an equal.

The stockbroker was accepted for the same reason. Like the banker he was never seen to work, he was never seen to trade in physical goods and, sooner or later, a nobleman might need his help. Because there was more money to be made in railways and factories than in farms the nobles wanted in, and the stockbrokers held the keys to their access.

As the banks and the stock market and industries grew they formed a metasystem that excluded non-members. Some conspiracy theorists suggest that the financial industry deliberately ignores the needs and rights of small business but that's an unjustified assumption. Big business does ignore the needs of small business but not because of any conspiracy. It ignores small business because systems look after their own interests first, and the interests of big business are best served by big business.

Suppose that before Miller began to build his mill Lender's Bank of Gooblegoo had been absorbed by the Bank of Goobopolis, with a head office several hundred miles away.

Because the bank has to control its money the local manager in Gooblegoo will not have authority to approve a big loan. Instead he will refer Miller's application to head office where it will be considered by people who have never met Miller and who know nothing of Gooblegoo.

But they do have contacts in the milling business because one of the bank's directors, Fred Fingerinpie, is also a director of Titanic MegaMills Inc. which already owns a dozen mills and which owes the bank a more than a million Goobles. The bank's officers will, naturally, discuss Miller's application with Fingerinpie.

And Fingerinpie realizes that very few of the villages around Bumblerum have mills. When he mentions this to Titanic MegaMills the company sees an opportunity to buy the existing mill in Bumblerum and expand it to handle milling for the whole district.

Titanic MegaMills will have to borrow the money to do that, of course, but it's already a good customer of the Bank of Goobopolis and, as a big company, it knows how to prepare a prospectus that will impress bankers. Further, it knows which of the bank's officers should be invited to help inspect a seaside resort that one of Titanic MegaMills's subsidiaries might buy.

Now the Bank of Goobopolis has two loan applications to consider. Somebody the bankers have never heard of wants G1,000 to build a new mill in Gooblegoo and a regular customer with a proven track record wants G5,000 to buy and enlarge a mill in Bumblerum. The loan to Titanic MegaMills is obviously good business for the bank but the loan to Miller is questionable -- especially considering that Titanic MegaMills is going to enlarge the mill in Bumblerum and will certainly take some of the business that Miller is counting on.

A small independent bank might support small independent business but a bank that is part of The System will support businesses that are part of The System. In the modern world a banker would worry about a loan to a small businessman because the independent has no track record, because he probably has not prepared what the banker would consider a 'professional' business plan and because of the danger that if the independent businessman develops a new market, or finds a good location, some big business will move in and crowd him out.

That will change if the small businessman gets a franchise from a big company. Bankers know that franchised businesses work and that the company that sells the franchise will handle the business plan. They also know that any potential competitor will have to think twice about moving in on a franchise that is part of a big system. An independent business is a poor risk but a business that is part of a system is a good investment.

In a small-scale economy Miller might be able to raise money on the stock market, but the brokers in Goobopolis are all working on multi-million Gooble offerings and they have no time to raise G1,000 for Miller. Even if they wanted to help Miller their best customers are huge pension and mutual funds that invest tens and hundreds of thousands of Goobles at a time, and are not interested in small business.

It would cost a fund about as much to appraise and administer an investment of G100 in Miller's mill as a G100,000 investment in Titanic MegaMills' stock, so it's good business for the fund to invest in Titanic MegaMills rather than Miller.

The huge blocks of money controlled by pension and mutual funds are a serious problem in the modern world because funds are judged by the increase in the price of the stocks they buy and, if they want to look good, they must buy stocks that will increase in price.

But big funds handle so much money that they can't afford to make small investments. A big fund has to invest in big companies and that's a problem because big companies can't grow very fast.

Miller's G1,000 mill might legitimately double its value in a few years but that would be a gain of only a few hundred Goobles a year. Titanic MegaMills might conceivably double itself too, but only by buying other companies. Titanic MegaMills is already very big, and the economy is not big enough to allow big companies to grow fast.

If you work it right though, you can make the price of a stock rise without any real growth. You do it by increasing profits and you can increase profits by gutting the company.

So ideally a mutual fund wants to see companies taken over by corporate rapists who will shut down research and development, cut back on customer service and use cheaper materials. That will drive profits up for a while and the price of the stock will rise with them. When the rapist moves on the insiders know it's time to sell, and leave the suckers holding the empty shell of what was once a solid and profitable company.

In a world in which takers are seen as respectable citizens, this is good business practice.

The perfect scenario for the mutual fund manager is to buy into a company just before a corporate rapist takes over, and sell just before he leaves. If he serves his own and his clients' best interest, the manager of a very big mutual fund is an enemy of society.

In fact most big business is inimical to human society, if only because big businesses are part of -- and therefore must serve -- The System. The owner of a small business has to respond to his customers because they are also his neighbors, his friends and sometimes his relatives, but the manager of a local branch can respond only to his head office -- which is interested only in the 'growth' or the profits he can deliver.


The metasystem of the financial industry also transfers wealth from individual humans to systems and the people who serve them through the mechanism of inflation, which it creates by debasing the value of our money.

When the Bank of Goobopolis financed the purchase of the mill in Bumblerum it actually created the money it loaned to Titanic MegaMills and, if you create more money without creating more goods, you devalue money.

That's Say's Law, attributed to the early 19th-century economist Jean-Baptiste Say. He was concerned with supply and demand and with prices, and he assumed that one would affect the other. In rough terms Say's Law says that the value of money is determined by the goods it will buy and, in theory, all the money in the world should be just enough to buy all the goods in the world. It will never work out exactly on a world scale, of course, but we can see the principle on a local scale.

If a hypothetical closed community has 100 units of money and 100 units of goods, the average price of goods will be one unit of money per unit of goods. It won't go higher because if the supply of money runs short while vendors still have goods to sell they will reduce prices in order to sell all they have. It won't go lower because if the price drops buyers will still have lots of money while there are few goods left to buy, and prices will rise.

If the bank had loaned G1,000 to Miller that would have put G1,000 more money in circulation in Gooblegoo but when Miller built his mill there would also have been another G1,000 worth of physical property in the village, so the loan would not have devalued the money.

But the mill at Bumblerum already exists and if Titanic MegaMills buys it for, say, G3,000 that money is new to the village and there is no new property to balance it. Now the value of the Gooble is reduced because there are more Goobles in circulation but no increase in the physical goods they can be used to buy.

Fred Fingerinpie thinks he is a positive factor in the economies of Bumblerum and Goobopolis, but that's an illusion. In fact he's good for The System, but bad for the people.

He thinks he is a positive factor because he owns or controls businesses that employ more than a hundred people, but that's just one side of the story. The other side is that Fingerinpie didn't start any of those businesses. He bought them, with borrowed money, and before he bought them they employed nearly two hundred people. By consolidating some functions, cutting back on service and laying off workers Fingerinpie increased profits enough to pay off the loans he took to buy the businesses, but he has created nothing and he harms his fellow citizens in several ways. He creates unemployment when he consolidates operations and lays off workers and he creates poverty among people who still have jobs because the loans he takes to buy existing businesses debase the Gooble, and workers' earnings now will not buy as much as they would before.

Furthermore, Fingerinpie and his cohorts will cause further damage to the economy of Bumblerum because where Miller would have bought his supplies and services from local suppliers, Titanic MegaMills is already dealing with suppliers in Goobopolis and if it needs anything for the mill in Bumblerum it will order it from Goobopolis. If the mill in Bumblerum needs a lot of goods or services the supplier in Goobopolis will open a branch in Bumblerum and, because it already has the mill's business, it may be able to crowd the local supplier out of business.

The System likes Fingerinpie because he consolidates small systems into bigger ones, but his net contribution to the economy is negative. Nothing has been created but Fingerinpie is somehow getting a lot of money. In effect, he is taking it from the people whose jobs have been eliminated and others whose wages are devalued.

That's good for The System and for Fingerinpie and for the bank that lends him money, but most of humanity loses.

This problem is multiplied in the modern world when dozens of wheeler-dealers take billion-dollar loans to buy, take over and merge huge companies. The flood of new money creates inflation, which gives the borrower a bonus which makes it easy to pay the loan off. Because the borrower profits from inflation he can pay off the first loan and borrow another billion, to buy another established business and start another round of inflation.

Further, because wheeler-dealers tend to buy and sell established companies rather than start new ones they seldom create any real wealth to balance the new money they pour into The System. Because their manipulations devalue all our money, the wealth they gain creates poverty for everyone else.

In the few cases where rich people do start businesses they tend to start businesses like Enron, which buy and trash other businesses. Most productive new businesses are started by relatively poor people who have training and experience in hands-on production. Henry Ford, the Dodge Brothers, the Wright Brothers, Thomas Edison and others were all middle class tradesmen when they began their businesses.

This may sound like a leftist rant but that's just a political label. I consider myself a conservative, because I respect people who create wealth rather than those who take it. For the most part people who inherit great wealth do not get training or experience in hands-on production, and thus would not be in a good position to start a productive company. People with hands-on experience may earn great wealth, but they usually do it with companies they started while they were relatively poor.

If I borrow to build something new the bank advances money on my production and the ultimate result will be more wealth to be shared by all. If I borrow to buy existing property the bank agrees to share everybody else's production with me. That's not fair, because the bank does not own the production it agrees to share.


In the modern world the value of money fluctuates because it is also a commodity in its own right. Currency traders buy and sell billions of dollars worth of different currencies every day, hoping to profit when one or another rises or falls by a few points. The currency trade is possibly the biggest business in the world, in dollar terms, and more money is traded as a commodity than is used to buy and sell real goods.

Some currency traders make bit profits and some take big losses. In 1995 England's famous Baring's bank was broken by one of its own currency traders, who lost more than a billion dollars in a couple of days.

Whether they win or lose currency traders are a malign influence on real trade, because they manipulate a huge reserve of money that is not connected to real value. The trade in currency has evolved into a high-stakes casino in which traders who add nothing to the general welfare can make or lose billions and, incidentally, cause serious harm to makers and even national economies.

At the same time the stock market, which began as a mechanism through which investors could support the efforts of traders and makers, has evolved into another casino in which gamblers bet on the fortunes of one enterprise or another. They can win their bets by backing a winner but they can win even more by choosing a loser -- or perhaps by arranging for an enterprise to lose -- and "selling short." Players on the stock market can also gain by spreading false information about the prospects performance of this or that enterprise, by using 'inside information' or even, as several recent examples in both the U.S. and Canada have shown, by outright fraud.

But perhaps the most serious offense of the stock market is that it makes profit the only measure of business success. Henry Ford made billions but he is remembered for his accomplishment of making automobiles available to working men, rather than for the profit he made. Thomas Edison became wealthy, but he is remembered for electric light and the phonograph, rather than his wealth. George Eastman is remembered for camera film, Alexander Graham Bell for the telephone, Elisha Otis for his elevator and so-forth. All these men made millions of dollars but, in every case, the money was a secondary accomplishment. Many modern millionaires, on the other hand, have never made any real contribution to society and some are parasites who have done real harm.

Modern takers are more elegant than the bandits and armies of old, but they are certainly brothers under the skin. Rather than force of arms the takers of the financial industry use force of law -- The System itself -- to take things, but they still take things.

In prehistoric times a band of hunters evolved into bandits, raiders and eventually armies. In modern times the bankers, stockbrokers and money-changers who once supported makers and traders have evolved into modern corporate raiders. As The Baron and his men pretended to protect villagers the modern financial industry pretends to create prosperity for the makers they exploit but, in both cases, the protection and the prosperity are for the takers, not for the makers.

Where the villagers of old had to support The Baron and his soldiers modern workers have to support CEO's who are paid millions -- and sometimes tens or hundreds of millions -- of dollars a year. Some CEO's do good work but some of the best-paid ones have actually destroyed the companies they were paid to manage and others seem to provide the same kind of leadership that von Holst's minnow provided after a pre-frontal lobotomy.


Between them the Traders, the financial industry and The Mind Benders now share global power.

Apologists for big business say it is more efficient than small business because of what they call 'economies of scale.' The pin-makers that Adam Smith wrote about in Wealth of Nations were efficient because they made a lot of pins and, up to a point, the more you make of any given product the cheaper it is to make each individual item.

But that applies only up to a point and most big companies in the modern world have long passed that point. Many of them have to spread their production over many factories because they are so large that, rather than, 'economies of scale,' they would suffer from costs of scale if they tried to operate from a single factory.

The advantages that most big companies enjoy are based on the scale of their advertising and propaganda, not on their production. Because big companies can flood the world with their advertising, smaller companies that may produce better products for a lower price are not able to sell them.

Concentration and centralization among traders also helps to drive small manufacturers out of business. Because mass-market chain stores want to stock the same goods in every store, they don't buy from small manufacturers who can not produce enough goods to stock every store. Because they can't distribute through the chain stores that many of us shop at, small companies are at a disadvantage.

Further, the enormous size of modern markets limits innovation. Most big companies are controlled by managers or salesmen rather than craftsmen and, because they need very large sales to sustain their production, they are reluctant to 'take a chance' on a new idea.

George Eastman invented roll film, but the Eastman Kodak Company did not develop either Polaroid or digital photography. IBM and Remington Rand made some of the first computers, but they did not develop home or small business computers. The makers of aero engines did not develop the jet and the car makers that dominated the world in the 1950's had little to do with the development of modern cars. In fact Chrysler Corporation had to be propped up by the U.S. government and Ford was in serious trouble before the "big three" learned to copy the designs of smaller and more progressive companies.

Most big companies resist change because they see no need for it. They like the world as it is, and they know that any change could threaten their dominance.

Up to this point a fragmented world economy has offered niches in which small companies could develop new technology, but that's changing fast. The biggest of the big companies are now global and they have created a new metasystem they call the 'global market.' In the world of the future there may be no niche markets, and no opportunity for small companies to introduce new technology.

Some people see the global market as an economic development but in fact it's a shift in the balance of power between the systems we call governments and the metasystem of commercial interests.[8]

Through most of history the systems we call national governments have been the supreme rulers of the world and, within their own countries, they used to be able to enforce their will against all comers.

Now the systems we call 'trans-national corporations' are among the most powerful entities in the world. They are independent entities, predators of humanity and accountable to no-one, and some of them are richer and more powerful than many national governments.

Each of the 15 biggest trans-nationals has a gross income bigger than the Gross National Product of any one of 120 independent countries. The 350 biggest trans-nationals control about 40% of the world's merchandise trade and their sales are equal to about one third of the GNP of the industrialized countries.[10]

And their power will continue to increase because national governments are limited by geography, more or less, but commercial corporations are not. A national government may have a world-wide presence -- as Britain once had and as the United States now has -- but its influence can be maintained only by the power of large and very expensive military forces.

Commercial systems don't have that problem, partly because they are willing to leave the appearance of power to national governments. Where governments ruled with physical power trans-nationals use 'campaign contributions' or promises of jobs and sometimes outright bribery to buy the cooperation of politicians and civil servants.

Commercial systems with global power are not a new development. About 300 years ago the British East India Company conquered several independent states to create and rule the empire that is now India, and the Dutch East India company was also very powerful.

But commercial systems with sovereign power are new. The British and Dutch East India Companies were wealthy and powerful but the governments of England and Holland were able to control them. When the British East India Company abused its power, the British government took control of India.

Even though the two East India Companies were global powers they were subject to national governments because they were based in one country, and were not able to move their head offices or their ownership out of that country. Modern trans-nationals can not be controlled because they can move their factories and their offices anywhere and because their ownership is so wide-spread and so international that, in effect, it does not exist. For practical purposes, these huge companies are autonomous and not subject to control by any human agency.

If a national government tries to control a trans-national corporation the corporation can move the part of the operation that the government wants to control -- or even its head office -- to another country with a more cooperative government.

In a human world that would not be a significant threat because if a commercial company defies a national government the government should be glad to see that company move away, but we do not live in a human world. The System has taught both people and governments to rely on systems and we believe that we 'need' the jobs that 'only' big companies can provide. We do need jobs, of course but, because we believe that only very big companies can provide them, big companies can flout the law.

In most western countries an 'incorporated' or 'limited' company is supposed to have about the same rights and duties as an individual citizen, but in fact a corporation has far more rights than an individual. As a Canadian I would face considerable paperwork before I could take a job in the United States or Germany or Mexico, but almost any corporation is welcome to set up an office or a subsidiary almost anywhere in the world. There would still be paperwork, of course, but the process is less rigorous for a corporation than for an individual.

Further, corporations are forgiven sins where an individual is not. Under American law a convicted felon may not work for the American government but many of the biggest corporations in the United States have been convicted of at least one felony. If the law were enforced the American government might be forced to buy airplanes, motor vehicles and even military hardware from foreign companies. That would not be practical and, because laws can't be enforced, corporations know that they can flout them.


The global market got its official start at an international economic conference in Bretton Woods, New Hampshire in July of 1944. One of the avowed intentions of the conference was to help the non-industrial countries of the 'third world' catch up to the industrial countries, but it didn't quite work that way.

The assumption was that world trade would be good for everyone but while trade has expanded by a factor of about twelve, the poor countries are now poorer than ever before.

Paul Bairoch, director of the Center for International Economic History at the University of Geneva, estimates that in the year 1750 per-capita GNP was about the same in most countries around the world. The common people of Europe were not as well off as the common people of Asia, but the difference was not significant.

By 1900 the world was divided into industrial -- mostly Europe and North America -- and non industrial countries, and per-capita GNP was about three times as high in industrial as in non-industrial countries. By 1938 the disparity was about four to one, and by 1950 about five to one.

Then came the global market. From a ratio of about five to one in 1950 the disparity in per-capita GNP between rich and poor countries rose to seven to one in 1970 and nearly eight to one in 1977. By the year 2000, it was about 18 to one.[10]

The global market has also played a key role in the revival of slavery, because illegal migrants who hope for a better life in a 'developed' country have little protection and can be enslaved. Other slaves work in third-world countries, making goods for sale in the developed countries. National Geographic magazine says that in the heyday of black slavery in the United States an adult male slave cost the equivalent of $40,000 in modern money but child slaves now sell for an average of $35 each in India and a teen-aged East European girl, suitable for use as a sex slave or prostitute, costs about $1,000 in some Western European countries. The National Geographic article estimates that there are now about 27 million slaves in the world today, including 100,000 to 150,000 in the United States.[11]

The stated purpose of the global market is to equalize the distribution of wealth about the world but the observed effect is to increase disparity. It's obvious that the global market is a failure and if humans ruled the world it would be abandoned, but humans no longer rule the world. Systems do and, because the global economy gives commercial systems sovereignty over the national governments that once ruled, they support it. For practical purposes the metasystem of national governments has given the metasystem of trans-national corporations almost unlimited license to prey on humanity.

Under World Trade Organization regulations private companies can challenge any 'nontariff barriers' that conflict with their 'right' to trade around the world. Challenges are judged by a council in Geneva.[12]

Even countries that used to control their own affairs are losing their independence. The WTO over-ruled American clean air laws that ban the import of goods made by methods that harm the ozone layer. American fishermen are not allowed to use drift-nets that kill porpoises but the WTO does not allow the U.S. to ban the sale of fish from countries that allow the use of drift nets.[13] The agreement may even prevent the United States from banning the sale of food contaminated by residues of pesticides that are illegal in the US.[14]

This is heady stuff and commercial systems are not going to give it up lightly. Most big commercial corporations already have a great deal of influence with governments and, in future, we can expect the power of governments to fade.

The managers of trans-national corporations don't see this as a problem because they are mesmerized by their own propaganda; but it is a problem for people because governments have to at least pretend to protect human rights and commercial corporations do not. In the modern world commercial corporations are able to ignore human values and environmental concerns, and even to flout laws at their convenience. As they gain power, we can expect to see even less concern for humanity.

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