The Invisible Hand of Devil

Written By Omar Javaid, Sr. Editor, Critic Magazine

Do you have an urge to understand Economics? If not then you better should think otherwise, as this guarantees an insight into the modern day Pandora box of problems, even related to your personal life. Study of economics can help you understand and do something about the issues which leave you wondering or clueless, such as: why satisfaction is gradually being drained out of your life? Why you have started to feel more insecure for yourself and for your family? Why our lives are gradually being filled with items offering temporary pleasures, from video games, to iPods, or even sex, but are getting increasingly void of anything offering a more lasting effect? Why threat of being laid off has increased many folds today? Etcetera ... comprehension of the problem and its actual root cause means half of it has solved; understanding the forces driving the economics engine today ensures just this.

The Invisible Hand

Think about it … present day economic practices i.e. free market philosophy more commonly known as capitalism with laissez fair characteristics, with interventions of "cooperate sponsored government" acting as a catalyst in the process; has gone too free, astray I would say, with no reins to guide or tame, rather driven by a crazy lust to have more over most of what is earned, and has made "invisible hand" (term from Adam Smith), an invisible hand of devil instead; the soul driving force behind the contemporary economic engine, indeed.

Invisible it is for those, who are frantically immersed in routines, working for corporations, earning their living and paying their debts, and spending the remaining time to release the stress accumulated, by even more distraction of glamorous facade of ever higher standard of living, a plethora of material pleasures, sex at best? Doesn’t this make almost all of us? And most marvel it openly, but also subconsciously suppress the void it leaves behind … but some don't as for them the opportunity cost of this void, this gap, this gasp, this empty feeling, makes the contemporary proposition of so called materialistic modernity, truly unfeasible.

Humans are different from Animals. A part from higher of IQs, ability to communicate, and freedom to make a choice, "Lust" (with a capital L) is another notorious differentiator. Animals, ironic it may seem, has a natural tendency to create a harmony with their surroundings, they consume only what they need, thus creates a balance with the ecosystem keeping its sustainability intact. The ecosystem encompassing the entire world has been surviving and thriving since millions of years just because all elements has kept this balance in place, by only consuming what is needed. There has been events of "Creative Destructions"[1] (a term more related with capitalistic system) when one sub-ecosystem gets destroyed through earth quakes, storms, floods, hurricanes but this infect serves the very purpose of maintaining the balance, the equilibrium at the macro level. Humans can chose to maintain this balance with nature also, only if they consume and do what’s needed for survival and healthy growth of their body, minds and souls, however that’s seldom the case, lust to have more of what’s needed is the underline motivating factor of most human actions today, sufficient to disturb the balance maintained in the ecosystem.

Adam Smith’s theory of “Self Interest” being the driving force of lassie fare, as he called it, actually turned out to be “Lust”; when his theories were put into practice. More commonly it’s called as “Wants” by marketers, whose satisfaction has become the motto of everyone’s life today. All the efforts of higher standard of living, at least, and higher level of power, without considering the social and economic consequences, at most, prove just this. Think about what’s causing global warming? Think about $14 cents / Kg paid to the coffee bean farmer in Uganda against $26.4 price tag in the market with a Nescafe brand name?[2] Think about what has caused the world experience two world wars already? Think about Income disparity leading to a hike in crime rate?[3] Think about exponential increase of suicides particularly farmers who takes loan from a bank[4]? Think about hundreds of billions of dollars spent of cosmetics, cigarettes, health care of animal pets, alcoholic drinks[5], and pornographic material[6] (totaling $350 billion) but cannot extract around $80 billion to alleviate poverty?[7] … If it’s not Lust then what is it?

The Economics of Exploitation

Mother of all Lusts, is the lust for Power, in economic context if the system allows the elite to enslave and control the human resource to keep them passive and submissive to the system, allows them to snatch and exploit natural resources, allows them to enjoy unlimited power to create and control money supply, even allows them to initiate wars and kill millions, and has blind folded the “haves” and murdered their sensitivity against the “have-nots”, If that’s happening, then my hypothesis of Lust being the driving force of the economic engine, will be proven correct.

The fact is that the present economic system does allows the elite to enjoy such a power, statements of Mayer Amschel Rothschild, Josiah Stamp and concerns of Thomas Jefferson gives us a lead that something fishy does happens.

Mayer Amschel Rothschild: "Allow me to issue and control a nation's money and I care not who writes its laws!”

Josiah Stamp: “Banking was [is] conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits",

Thomas Jefferson: “I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from the banks, and restored to the people to whom it properly belongs”

The Money Making Jugglery

The trouble starts with the money issuing power of the private banks. Apart from Central Banks role in printing of fiat currency, private banks are allowed to use modes such as check, money orders, demand drafts, other forms of IOUs, and most famous of all credit and debit cards. Such modes seem to make our lives easy, but in real serve a sinister purpose. Whenever bank give a loans of some amount, say $1000, it doesn't use the depositors money in real, because it’s the depositors money and he can claim it any time, however the bank simply issues a check of the said amount. Since this check is acceptable as a mode of payment thus any banks accepts it and writes the same amount in name of the person depositing it. No physical transfer takes place, and money is created right when the second bank accepts the amount, simply out of thin air.

Central Bank allows private banks to keep a certain amount of deposits to them, this amount is called "Cash Reserve Requirement" (CRR), it is less than 10%, and in most cases less than 5% of all the deposits, that means if we have deposited $100 in our bank accounts (which are called as banks liabilities) banks can "create" loans worth $95 if CRR is 5%, these loans are termed as assets. Remember, money stored in deposits has purchasing power, and generally all the sum in all the deposits is termed as broad money or money supply. Since the initial deposits remain intact, and loaned amount when goes into deposits of other banks, simply adds to the money supply, creates new money every instance any specific amount of loan or credit is issued by any bank.

If a bank’s give you some credit, either in form of mortgages, car loans, credit card loans, personal loans, or loans for your business, new money supply is injected into the economy which the lending banks claim as their assets. They own this money supply and you owe it to them. You then spend day and night working hard to make enough money to pay it back, however the banks just create it with a flick of a pen!!! ...

Now the important part, banks doesn't just demand the principle amount they have loaned you, though they also demand interest over it, if 97% of the money supply in an economy has been created as debt[8], and that’s the money we all need to pay back with interest, but only amount of money that exists is equal to the principal or the debt in the entire economy, then how come all of us can pay it back with the interest build over it? The answer is we cannot, and this creates a vacuum, means that some folks will get bankrupt, homeless or deprived of anything of value pledged against their debt, simply because there isn't enough for everyone to pay back ... and that’s exactly the point!

This serves three agendas:

1) Bankruptcies or Foreclosures: Since bankruptcies are mathematical part of the equation hence cannot be avoided. This gives an opportunity to Private bankers to own real wealth, i.e. your home, your car, or even your business which you have to let go to avoid the legal action in case of bankruptcy. At the global level, International financial institution do exactly the same by allowing they indebted countries to go bankrupt so that their real natural resources like mines, oil reservoirs, etc whose worth is many time more than the principal amount, are taken over as collateral! What do you think they would prefer, principal with interest (where interest is there sole earning) or the real collateral? It would be like penny wise pound foolish otherwise … What a deal, isn’t it!

2) Passiveness of the Society: The very fear of bankruptcy drives us, keeps us straitjacketed in our routine, keeps us passive, keeps us distracted by material pleasures offered by the so called free market, so that we don’t get enough time to ask what's happening to our lives, where are heading and why; that’s virtual slavery, that’s important for the elite so that they are not bothered by the protest of the masses! Henry Ford said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” In the end, after all the debt payments we are left with little money to help the poor even if we wants to, the stress of debt payments over every individual has increased over time[9] and recent credit crunch has made the situation even worse.

3) Inflation: to keep the economy running government has to inject sufficient amount of money via the banking system so that the vacuum created by the shortage caused by the debt payments with interest, is adjusted. This injection of money supply has to be continuous, thus leads to devaluation of currency simply because the growth in production of goods is never matched with the increase in money supply. Expectation of a potential price increase in the future as the past trends depicts, keeps you spending today out of fear that he prices will be high in the future

Breaking the Shackles

To break the shackles you need to be debt free, the real question to ask is; can you live a debt free life, without compromising on your standard of living? That’s where your lust comes into action; a bigger home, a bigger car, latest gadgets, designer clothing’s, a luxury vacations and everything debt can buy but your basic income can't, you yearn all this to tame the beast within. If that’s the purpose of your life, if you assume that you can bring satisfaction and happiness by being a part of this vicious circle, then I would say that you have been conditioned by the advertisers and marketers who wants to keeps you indebted, shackled or enslaved into the system, so that you can live a life fulfilling the Lust of those sitting at the very top.

To be debt free, you need to be “Lust Free”.

Debt isn’t that bad in the literal sense, it is a facilitator like in many business transactions or in case of a personal medical emergency. The idea here is to put a hold on a habit of indebting ourselves for unnecessary pleasures. Hence in order to that that, I would suggest you to unlearn things taught by the mouth piece of media, and realize where the real source of satisfaction, inner security and Happiness lies! Have you ever wondered that those who are happy don't run after things that they don't have, rather they realizes the value of their possessions and enjoy them fullest. Have you every realized that you own many things, which are so valuable, that you wouldn't want to exchange them not even for a billion dollars, think about it ... for example: think how precious are your eyes, your ears, your hands, your brain, and not for forget your reproductive organs ... would you like to live without any of these for say $1 billion? Or how about the relationship you have with your children's, your wife (only if you love her), and most importantly your relationship with God...? I think that some of the readers will prefer a hand full of bucks for these precious things. If that's you, then better stop reading this article; instead look around and in history to see the fate of such people who preferred material benefit over their relationships and other priceless things which have been bestowed on them by the Al-Mighty Creator.

The Utopian Example of Economic History

Think about a place, where there is no poverty, no fear of cheating or theft, there exists absolute security of individual property rights, you can blindly trust anyone, no fear of bankruptcy or foreclosures, there isn’t any assumed or real scarcity of resources, where there is negligible inflation, and there isn't any fear of losing possessions in any accidents because along with the government everyone assumes their responsibility to raise the victim back on his feet, some people have more wealth and others have less, however they all prefer to maintain a bare minimum standard of living so that there isn't any sense of economic discrimination in the society, the only tax is on income of 2.5% on total annual earnings exceeding a certain limit ... sounds like utopia, no it isn't, this world has already seen such a society near about 1400 years back, which lasted many hundred years.

The Recipe

It’s a million dollar question whether a society with such economic characteristics can exist today or not, the answer to this question lies in the belief and value system that prevailed during that time. The most fundamental characteristic (in economic sense) of that society were:

• People tend to focus specifically on needs, even if they had much more to spend. They use to save a fraction of their income, and give most in charity or invest in any form of business (this allowed the wealth to flow in every nook and corner of society and generated employment), the focus was not on accumulating but on sharing the earnings with others, as the wealth was considered a blessing from the Al-Mighty Creator and Sustainer. Similar was the case with loses incurred in business partnership, which were shared also to avoid damage hurting any single person.

• There wasn't any racial, gender, sectarian, religious or economic class discrimination what so ever, everyone enjoyed equal rights and economic opportunities, even the employer and employee opted to wear similar cloths and eat same food, all out of their own free will.

• Wastage was considered as sin, the focus was on utilization of resources in the most efficient manner and for maximum welfare and productivity.

• Dealings were transparent, there was no breach of trust and promises in any form of exchange or contract in the market place, even if potential of loss existed, it was a religious obligation just like all other points!

• There weren't any lending institutions, however any individual in need could borrow either from the central bank (Bait-ul-Mall, as it was called), or any person who had enough; guess what! This borrowing use to be interest free!

• The focus of each individual was toward the mutual welfare of the society as a whole, each individual was a welfare institution in himself and assumed responsibility to help his close relatives, neighbors, and society as a whole, even at the cost of his own material benefit, however always use to enjoy returns in the form of psychological and spiritual satisfaction, this was his greatest worldly achievement.

Such a code of conduct followed by everyone eventually eliminated all factors from the society causing poverty, creating such a secure environment that it any one experiencing accidental financial vulnerability, had no worried and could always stand back on his feet. This was a time when it was possible for a young beautiful girl loaded with expensive jewelry, to securely travel hundreds of miles on the back of the camel (the best transport available for long distance at that time).

The value system, we just talked about, was embedded in everyone’s mindset.

The heads of the state acted as a role model of humility and super strong will. Serving each person was the core purpose of their existence. They assumed responsibility of even a dog dying of hunger thousands of miles away from the capital. It was a society where human welfare was sought as top most priority, which even include uplifting the self respect and dignity of each individual by facilitating the deserving to become economically independent (self respect and dignity is lost whenever any person extend hands to seek help or debt). However just as a precaution, all individual and property rights were protected by specific laws and punishments, which were purposefully kept strict and violent enough to keep everyone from thinking, even mistakenly, about violating any ones basic rights intentionally, let alone theft or murder. In a nut shell, If Adam Smith would have been alive; he would have explained the "Invisible hand" at work, not as "Self Interest" of individuals but as "Social Interest", paradoxically sought by each member of society.

Why such a culture seems utopian today? The major barrier standing against such a society, in my view, is today’s economic paradigm built around self interest, which negates any human action which looks beyond individual's interest or in other words give preference ‘haves’ over ‘have-nots’.

The Myth of Scarcity

Scarcity of resources is another fallacy at the core of conventional economic philosophy. It is assumed that there are limited resources however the wants of people are unlimited. This concept overlooks following important facts

a) All natural resources particularly fuel or minerals have existed since hundreds and thousands of years until human intelligence and knowledge evolved to a level where it was possible to utilize these resources. So it’s self deception to assume human civilization depends upon oil, gas, or other minerals, even food or clean water etc, fundamentally the real and infinitely available resource is human intelligence, knowledge and creativity, rising exponentially day by day, however around lust thus becoming increasingly dangerous for human survival.

b) If you aren’t an atheist, then you would readily believe that there is a Creator of this universe, who has created this planet and us of course, and has also provided everything necessary for our survival, such as oxygen, water, food, etc. by the way if you are an atheist, then have you ever thought that since a couple of centuries human population has increased exponentially, then how come the percentage of oxygen in the atmosphere has remained the same despite of its consumption increasing with the same rate?

c) The scarcity is experienced only when the producers for the sake of their profits (which they have to earn to avoid getting bankrupt or ensure shareholders value) holds on to their production so that reduced supply pushes the prices up, hence their profits, case in point: OPEC oil embargo. OPEC hasn’t increased its production capacity since decades despite increasing demands. Do you know that almost double the amount of food is produced on planet earth then it’s required to feed every mouth anywhere in the world? Still hundreds of thousands of children die of hunger every year!

d) The illusions of resources being scares is also created by the dynamics of money supply, as it is sucked by those hands which are most indebted to the banks to avoid foreclosures, since total debt in an economy (with interest) is greater than the money supply available thus there always remains a vacuum, particularly among the lower class. Money supply created as debt tends to restrain the flow of money in every nook and corner of the society thus becomes fundamental reason of visible scarcity.

"Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another." Milton Friedman

The Invisible Hand of Conscience

The idea of social interest sought by each individual seems paradoxical and utopian, probably a mysterious force of motivation acting behind sacrifice of self-interest over social-interest. It must be understood that each of our action is directed toward some incentive, pleasure, satisfaction or happiness, whether it’s helping the poor or driving a Ferrari. We chose what offers us most. So question remains what kind of incentive would we get for preferring social interest over self interest? For choosing fulfillment of basic needs instead of indebting ourselves for luxuries? For sacrificing our pleasures for those who are more deprived? The incentive has to be greater in any sense if we intend to exchange our present life style build around luxuries and glamour with a one build around service and sacrifice! The riddle is resolved only when its realize that incentive is in fact ‘Spiritual’ as it satisfies the appetite of our conscience, it’s an incentive much greater then offered by material luxuries. Give it a try to have a taste, if you don’t agree.

Please make it clear that money and all those things which money can buy cannot assure happiness, it’s an established fact today[10]. The socio-economic system being proposed here, talks on eliminating all those factors which are detrimental for happiness, if you are in an assumption that such a society will not encourage development in technology, increase in life expectancy, equal gender rights, advancement in healthcare sciences etc, then you are missing the very basic point, the society is rather built around the very concept of improving living conditions not an elite but everyone instead.

Conclusion

This system can said to build around spiritual interest of each individual. In such a system all economic activities remain in strict compliance to the fact that physical, psychological and spiritual welfare of each human will remain supreme within each exchange, service and production activity. The invisible hand of conscience will dominate every move, will derive every action, will inspire every effort. It will base on needs, not wants therefore will be capable of maintaining the balance in accord with the ecosystem. There will be no lust to have more for less, and without evaluating or realizing the broader consequences at macro level, no will intend to declare an act feasible. No doubt scope of human knowledge is limited and will remain limited, therefore guidelines to establish such a balanced and just system have to sought from spiritual references, I will not name a particular document or scripture to avoid being biased, however I will invite every reader to search for a document or scripture which has been most widely accepted as unadulterated and sourced from the higher being, if there be any. Just to give you a hint, the society which existed 1400 years back, were strictly following guidelines of a particular scripture. Don't take my word, please search and research yourself, as there is still hope, still a chance to improve, still a bacon of light no more visible due to dense fog of contemporary norms, values and standards, we can help things better, only if we look for the right thing at the right place, for our sake, and for the sake our children’s. The selection lies at our disposal.

Robert Fogel, Winner of 1993 Nobel Prize of Economics says in his book “The fourth great awakening and the future of Egalitarian”:

At the dawn of the new millennium the critical issue are no longer whether we can manage business cycle or whether the economy is likely t grow at a satisfactory rate. It is not even whether we can grow without sacrificing the egalitarian advances of the past gains cannot be ignored, the future egalitarian in America rests on the nations ability to combine continued economic growth with an entirely new set of egalitarian reforms that adhere to the urgent spiritual needs of our age, secular as well as sacred. Spiritual (or immaterial) inequity is now as great a problem as material inequity, even greater.

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[1] Creative Destruction: This term was coined by Joseph Schumpeter, the twentieth-century economist. He used this term to describe the role of technological changes in the modern capitalistic society.

[2] ‘Stuffed and Starved’ a book by Raj Patel, page no. 9 & 10

[3] http://www.apsu.edu/oconnort/crim/crimtheory09.htm

[4] ‘Stuffed and Starved’ a book by Raj Patel

[5] The state of human development, United National Development Report 1998, Chapter 1, p.37

[6] http://en.wikipedia.org/wiki/List_of_countries_by_pornography_industry_revenue_per_capita

[7] Extrapolated from the statistics presented in ‘The state of human development’, United National Development Report 1998, Chapter 1, p.37

[8] From the book ‘The Grip of Depth’ by Michael Rowbotham, page 13.

UK Money Supply Has Tripled Since 1997: www.dailyreckoning.com.au/uk-money-supply/2007/10/09/,

also see www.prosperityuk.com/prosperity/prosperity.html

[9] http://www.creditaction.org.uk/assets/PDF/stats/2008/october.pdf

[10] Washington Post, Monday, July 3, 2006; Page A02; Science Confirms: You Really Can't Buy Happiness