Martin Armstrong: The Collapse of Capitalism or is it Socialism?

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The Collapse of Capitalism or is it Socialism?

What does this mean for Government?

There have been plenty of articles asking whether Capitalism is now dead. The problem is the question already presumes an outcome and fails to realize that we are still in the middle of the greatest Economic Transformation in the history of mankind. We are in fact not seeing the collapse of capitalism, but are in the final stage of the death of Socialism.

Governments will rail against the collapse of Socialism because it has been the source of their power – “vote for me and you get something for nothing.” We are in the final phase - a transition which is taking the form of a "tsunami of spending" to try to make it all better. What we must be concerned about will be who gets blamed when it fails?

Lifting this rock allows the scorpions to surface. It is more akin to opening Pandora's Box and allowing a swarm of evils to escape and torment mankind. We have no choice but to speak very frankly, for unless we truly understand the nature of events, there is no way to close the box and make it all better. As Saint Jerome said of Rare: "When Rome fell, the Romans were still laughing." They had no idea of what was taking place and just assumed Rome was impregnable. We can only stop an event if we recognize it is happening.

If we are afraid to ask the correct question, then perhaps we are too biased to comprehend what we have done and take responsibility for our own actions? To paraphrase Edward Gibbon in his memorable epitaph on Rome: We were the capitol of democracy, the citadel of the earth, the terror of tyrants, illustrated by the footsteps of so many triumphs, enriched by the leadership in economic freedom that was the beacon to so many nations. This spectacle, how is it fallen?

The Greatest Economic Transformation

It may seem strange, but we have been undergoing a battle of economic philosophy that transcends so many concepts that unless we step back, we will have difficulty understanding the trend. This battle has often been laced with efforts to control mankind. For within this battle, we will fight religion, politics, scientific innovation and progress spanning technology in all areas, but also issues that include both slavery and labor that all create what has become known as our economy.

Sometimes we are too close to a problem that it is just impossible to see. When man landed on the moon and sent the first pictures of Earth rising, only then could we see what our world truly looked like. We are facing the very same problem. The change that we now see and are debating, is still from the view of a fly on an elephant's back. We do not know we are even on an elephant or what is an elephant.

Our society is still growing and changing. We are going through puberty where the youth rebels against the parent. The profound change, the Great Economic Transformation, became bluntly visible back in 1989 where the world economy began to change with the fall of Communism. That fundamental change was truly an Economic Transformation wave which is now causing the collapse of socialism in the Western nations. What we are facing is confusing. Nevertheless, if we want to see the elephant, it is time to take flight.

There is a very core structure to the economic society of man. The Industrial Revolution was not just a slogan. It is hard for modern man to look back from where he now stands and comprehend the meaning of "revolution" as it was truly expressed. The way of life prior to the Industrial Revolution remained essentially the same from Greek times, Rome, middle-ages, and the birth of the United States. The word "Economics" was an English translation of a book written by a great mind and a diversified man of tremendous experience - Xenophon (ea 431-350 BC). Xenophon was a brilliant, practical man. He began life early on as the commander of the elite Greek force known as the "Ten Thousand.” Xenophon admired Socrates profoundly, and developed a dislike for extreme democracy for the very crime it had committed by ordering Socrates to be executed for his ideas. Xenophon wrote three works on the subject casting Socrates in a different light than that of Plato - the "Apology" - “Symposium” - "Memorabilia." Yet in the field of finance and economics, his political work is what the powerful committee on Capital Hill is named after - "Ways and Means" written around 351 BC advocating peace rather than war between the Greek states. But we owe the very word “Economics" to the title of his truly master work - "Oeconanicus" that simply meant in ancient Greek - how to regulate the household. It was a How-To Book for Gentlemen Dummies that explained how to manage your estate from growing crops, managing slaves, and your wife.

What does this have to do with the Industrial Revolution? Everything! Life as society knew it was completely different before the 19th century. The same economic model had existed for thousands of years around a self contained farm-like enclave. The Romans called them "villa" and we call them "plantations." This is how society operated. Villa were independent estates that were virtually self-sufficient. The work force was composed of slaves purchased after battle in ancient times, or serfs in the middle-ages, or imported African slaves. The King of England had even used the criminal laws to create labor. Any misdemeanor allowed the King to sell someone as a laborer for a certain period. Instead of prison, you were sent, at first, to America. When the American Revolution began, the destination changed to Australia.

During the 3rd century AD, money became rare following a hyper-inflation. This caused tremendous hoarding and an economic contraction strengthening the villa model. The Roman Emperor Diocletion (284-305 AD) tried, to revive the empire like Ronald Reagan & Margaret Thatcher, and created many of the practices still employed today. To be able to collect taxes, passports were created and people could not move without permission. To tackle inflation, he substituted wage and price controls as did Richard Nixon. He redesigned the entire monetary system, i.e. Bretton Woods 1944.

When Rome fell after 476 AD, the concept of the villa prevailed. Life survived because of this self-contained economic model. This evolved into feudalism during the 9th and 15th centuries due to the increase in population and the inability to acquire wealth to establish a villa. Towns would form and the landlord became the nobility. Castles were constructed because of the lack of security. Charlemagne (742-814) began to reconstruct the old Roman Empire. This economic model received its first major shock that not even the fall of Rome had inflicted. The Black Plague in the 13th-14th Centuries killed about 1/3rd of the population making labor scarce and causing landlords to start to pay wages in addition to a percentage of the crop and free housing. Yet, predominantly, the economy was still agrarian and the model was still the villa.

In Russia, the seeds of the 1917 Revolution were sowed during the reign of Ivan IV (the Terrible)(1530-84), when he confiscated lands of his enemies to give to his supporters. Ivan found the lands worthless once the serfs fled. He then decreed that the serfs would be bound to the land for life in order to maintain its value. He essentially made all Russians living on farms slaves of the state. This eventually created the pool of discontent that fueled into the bonfire of Revolution years later.

Of course in the United States, the slavery issue was recognized as wrong and a real problem, especially after the language written by Thomas Jefferson in the Declaration of Independence. This issue dominated early politics, and perhaps came to a head when the Supreme Court showed it was indeed, as Judge Posner refers to it, the "Political Court." In 1857, the Supreme Court held that blacks were just property in the case of Dread Scott, who sued for his freedom when his master traveled to a state that did not allow slavery. The Civil War was not fought over racism. It was fought over the collapse of the economic system of labor. Racism emerged more so as a bitter response by the South attaching blame for their demise to the freedom of the slaves.

We can see that slavery was a very ancient practice as outlined by Xenophon in "Oeconanicus." It was how the villa model maintained its economic viability for thousands of years. In Roman & Greek times, the economy was 90% agrarian. However, that declined to 70% in the 1870s, 40% in 1929, and finally 3% by 1980. It has been this villa model that was undergoing the Great Economic Transformation to the Industrial Revolution.

The Great Economic Transformation has been the growth of society through progress and technologies. We have been evolving even in our understanding of economics, since the nature of the economy is in fact changing with each passing year. We must look at this transformation and understand that as the changes in labor have taken place, everything else in our world also changes. Had it not been for the Black Death, there would never have been a shortage in labor giving birth to wages that led to payroll taxes.



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Yes, Martin is in jail, but the circumstances regarding his incarceration are not as cut and dry as you might think.
While I do not pretend to know whether the governments allegations are true or not, his story is quite unique, and compelling.
A few minutes spent reading the story of Martin Armstrong, and your assumptions might be changed.

As for this article
I thought it was brilliant essay of history and economics
recommended to read in its entirety