Nationalists and the Markets

by David Ellerton




'You have to choose between trusting the natural stability of gold and the honesty and intelligence of members of the government. With due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold'.

--George Bernard Shaw, 1928


1. Introduction

Recently, nationalist comrades have been asking me for my opinion on the Occupy Wall Street protests. The question uppermost in their minds is: should nationalists support these protests? Or should they oppose them?

In order to answer that, we need, first, to look at another question: what is wrong with the Western world economies today? Why is there a financial crisis?

In day-to-day reporting of economic and financial events, we heard a lot of phrases which have become clichés. Among them are the following recommendations, on courses of action, which come from politicians, journalists, economists worldwide: 'We must lower interest rates to stimulate spending'; 'We must raise interest rates to cool down the overheating economy'; 'We must raise interest rates to strengthen the dollar'; 'We must increase government deficits to put more money in the pockets of consumers, to encourage them to spend'. This sort of language, and thinking, makes up the Keynesian school of thought which has dominated economic thinking in the West, and the world, for the past sixty or so years.

Before that period, though, classical economics was the dominant paradigm. Politicians, intellectuals, journalists, economists, bankers, businessmen, all spoke the language of the gold standard. (Marx wrote the first few chapters of his 'Das Kapital' on gold and currency). This article will be more or less about the same thing. However, some readers may find it disorienting, simply because they are so used to Keynesianism, which has become part of the air we breathe. Rest assured, the economics of the matter are very simple, and I myself have no economic training - what I am writing about here I have learned from contemporary popular authors and journalists on the subject.

2. Gold

Most of the financial crises in the past forty or so years can be traced back to one single cause: America, and the world's, abandonment of the gold standard back in 1971. Under the old Bretton Woods system, the US dollar was fixed to the value of gold (the US dollar was worth 1/35th of an ounce of gold, which is another way of saying that the gold price, in US dollars, was $US35/oz.). In turn, the rest of the world's major currencies - the pound, the franc, the deutschmark, the yen, the Australian dollar, and so on - were fixed to the US dollar (even the Russian ruble was fixed, surreptitiously, to the US dollar). The prevailing monetary system was one of a gold standard and fixed exchange rates.

The basis for the system was the understanding, among politicians and economists at the time, that gold was, simply put, money. The value of gold never changes, or, if it does, it does so incrementally that any change isn't really noticeable at all. Which is why gold has been used for money for thousands of years. Nowadays, of course, we see the dollar price of gold rising or falling every day: but this is dollars fluctuating in terms of gold. Dollars fluctuate, gold stays the same. Dollars, in fact, have no inherent value - they are pieces of paper (or plastic) or digits in an electronic bank account.

So, how did the Bretton Woods gold standard system operate? The US Federal Reserve injected, or withdrew, dollars into circulation, every day, to make sure that the gold price stayed fixed at $US35/oz. Injecting huge quantities of dollars into circulation devalues the dollar: increasing the supply of dollars this way makes it less valuable. Conversely, withdrawing large amounts of dollars from circulation revalues the dollar, making it more scarce, and more valuable. (In other words, the value of a currency goes up or down with supply and demand, just like any other commodity). Before 1971, the Federal Reserve would pay attention to the market price of gold, and withdraw, or subtract, US dollars from circulation accordingly.

For example: suppose the market price of gold floated up from $US35/oz. to $US40/oz. Speculators would buy ounces of gold from the Federal Reserve for $US35/oz. and sell them, on the market, for $US40/oz., making a tidy $US5 profit each time. The Federal Reserve would see its stocks of gold disappear, and so start withdrawing dollars from circulation, until the market price of gold plummeted back to $US35/oz.

Conversely, suppose the market price were to drop to $US30/oz. Speculators would buy gold, at the market, for $US30/oz. and sell to the Federal Reserve for $US35/oz., again making a $US5 profit for each transaction. The Federal Reserve would create money - print money - and use that newly-created money to pay for those ounces of gold. By injecting currency into circulation this way, the Federal Reserve would be devaluing the dollar, and so, the market price of gold would slowly climb up to $US35/oz. again.

(At this point, the reader will ask: does the Federal Reserve need huge stocks of gold to maintain a gold standard? The answer is no: speculators won't, under this system, exchange ounces of gold for $35 at the Fed's 'gold window', unless there is a disparity between the market price of gold and the Fed's target. That is, speculation and arbitrage won't pay off. Historically, gold standards in Britain, the USA and other countries were maintained even with very small stocks of gold in the central banks).



In its train, the devaluation brought about massive inflation. When dollars buy less and less of an ounce of gold, they buy less of other things too. During the post-war gold standard years, oil stayed around $US2.90 a barrel (!) for thirty years, but, after the abandonment of the gold standard, rose to the then-ruinous price of $US35 a barrel. Other prices in the economy rose too, of course, and so did interest rates and unemployment. Needless to say, this inflation had political effects: the careers of Nixon, Heath and Whitlam were destroyed, the Western world saw political, moral and social upheaval and chaos - student radicalism, terrorism, riots, mass industrial unrest, and a general decline in morality (Keynes, famously, wrote that there is no surer way of debauching the morals of a nation than by debauching its currency). While the West was brought to its knees, the Third World was more or less wiped out. The seventies (especially in Latin America and Africa) was a decade of coups, revolutions, civil war, famine and chaos. The destruction of the Third World economies prompted millions of non-whites to migrate to the (comparatively more wealthy) Western lands - and they did migrate, first in the hundreds of thousands, then in the millions.

3. The 2000s and the Australian commodities boom
Given all this, why did America - and the world - abandon gold? America had been on the gold standard for almost every year of its existence, leaving it briefly only during the Civil War; but by 1971, it came under the sway of Keynesian and monetarist economists, who disliked the discipline of the gold standard. Nixon was told, by his economic advisors, that abandoning gold would have two beneficial effects.

The first was that, by injecting huge amounts of dollars into circulation, an inflation would result, and this would, in turn, bring about strong economic growth and low unemployment (monetarism).

The second beneficial effect was that, by abandoning the discipline of gold, the Federal Reserve could turn its attention to manipulating interest rates - lowering them, in fact. Low interest rates discourage consumers from saving their money, encouraging them to spend it instead (Keynesianism).

All of this sounds familiar to modern readers, and, in fact, none of these arguments have ever gone away. Today's journalists, politicians, central bank chairmen (like Bernanke), economists, still rigidly adhere to these doctrines. (An accompanying argument for abandoning gold was a mercantilist one: without a gold standard, or fixed exchange rates, America could devalue its currency, thereby making its currency cheaper and bringing about an export-led boom, and 'improve' its trade deficit with Japan. Again, this is a doctrine which is widespread today).

Given the prevailing intellectual climate, the odds were stacked against the survival of the gold standard. America, in fact, began to wind it down in 1967, when the Federal Reserve stopped converting, on demand, gold into dollars, or vice versa, instead paying bonds which, the Federal Reserve promised, could be redeemed for gold at an unspecified 'future date'. At the same time, the Federal Reserve began to engage in 'pump-priming' exercises, injecting large quantities of dollars into circulation, in order to bring about the economic boom that the Keynesians and monetarists had augured. Finally, it became too much for the Federal Reserve: it could not serve two masters - classical economics and Keynesian/monetarist economics - at the same time, and so opted for Keynesian/monetarism. In August 1971, with deep misgivings, Nixon suspended the gold standard, and the rest is history.

To flash forward from the 1970s to the present, we now see the underpinnings of the 2008 financial crisis. From 2000 to 2008, the US gold dollar price rose from $US250/oz. to $US1000/oz. - smashing the previous record high of 1980. This was a major devaluation. Among the accompaniments of a devaluation are inflation, and several economic pathologies. Commodity prices (oil, copper, zinc, aluminium, pork bellies, soy beans, land) start to rise, followed by prices in the service economy (waitressing, law, dentistry, bus driving, etc.).

In fact, during an inflation, there is a sequenced rise of prices through the economy. Inflation could be compared to the hot air filling up a balloon. It makes itself felt in one part of the economy before the other. During an inflation, when the commodity prices rise (and these are the first to rise), investors become convinced that there is a real profit to be had in those sectors. Land is a commodity, so is gold, so is oil. Rising metal prices in the 2000s triggered off a huge mining boom in Australia (not seen since the Poseidon nickel boom of the 1970s) and rising land prices, a real estate boom in the US and Australia. Unfortunately, all the investors in, for instance, mining, were tricked. Commodity prices may be going off the charts during an inflation, but, in the end, so are other prices (the cost of production, for instance), as well, and these will, eventually, wipe out any profit.

To use an international example. Suppose that prices for gold, copper, zinc, aluminium, lead and nickel rise to stratospheric prices in US dollars. In practice, Australia exports to the US, not to get US dollars, but to buy US goods with those dollars. Because of the weak US dollar, prices in the US rise and rise, and so all the US dollars earned by the Australian mining companies don't buy as much of a US good any more. If the US dollar declines by 50% against the Australian, the Australian buys 50% less of a US car than it did before the 50% devaluation, because US car prices have risen.

This is what economists called 'the money illusion'. Inflation, brought about by a currency's weakness, deceive people into thinking that there is a boom - when really it was just inflation.

One of the other pathologies brought about by inflation is increased levels of investment and lending. Because a dollar is losing value, every day, holders of those dollars (banks and other institutional investors) want to get rid of them as quickly as possible. The declining value of the currency means that the currency becomes a hot potato, which has to be passed from hand to hand, lest the holder gets burned. Often, too, the holder of the currency will seek to abandon it and invest, instead, in hard assets - like gold, land and diamonds - whose value doesn't change.

(Why doesn't the value of these hard assets change? Because commodities such as land, gold and diamonds aren't easily consumed, whereas commodities such as oil, coal, soy beans, wheat and pork bellies are. This gives investors additional incentive to invest in gold and land. Again, this is another reason why massive amounts of money were shovelled into mining and into real estate in the 2000s).

4. The meltdown of 2008

Under a system of floating exchanges, the value of the dollar - in terms of gold and other currencies - is completely uncertain. No-one knows what it will be worth, from one day to the next. Under a gold standard, a central banker is constrained by keeping the currency fixed to gold; under a floating exchange rate system, he can choose any target he wants - and that target can change from day to day. In the summer of 2008, the Federal Reserve abruptly changed course, and allowed the gold/dollar price fall from a (then) all-time high of $US1000 oz. to $US700 oz.

I remember, at the time, welcoming the drop in gold (and other commodity prices), because I believed it would signify the end of the inflation and a return to a measure of monetary (and financial) stability. But I didn't appreciate (and the rest of the world didn't) how highly leveraged so many investment banks (and ordinary Americans) were. They were flush with cash, 'hot money', during the inflationary investment and lending boom; now, suddenly, they found the supply of liquidity drying up. Dollars were now in scarce supply, and one of the signs of that scarcity was a falling gold/dollar price.

It is a terrible situation for a borrower to be in - to have borrowed huge amounts of dollars when they were cheap, and now, all of a sudden, having to pay them back when they were expensive. To illustrate this, imagine that everyone holding Australian dollar balances in bank accounts were to check their accounts, one morning, to find that 33% of the money in there yesterday had vanished: that is, the total supply of Australian dollars had shrunk by a third. The economic consequences would be catastrophic. Undoubtedly, with fewer Australian dollars in circulation, the dollar would become more valuable, and buy more, and so prices would drop across the board. But the old debts, from the time before the magical disappearance of 33% of Australian dollars, would remain at the old price level.

To return to the summer of 2008. At the height of the deflation, the Federal Reserve embarked on a new policy: paying interest on excess reserves. When one bank - say, the Commonwealth - sends a request to withdraw money from another (say, Westpac), Westpac has to make sure that it has sufficient cash, on standby, to accommodate that demand. That store of cash is called reserves. Banks keep these reserves close to hand, in their vaults, so to speak, and also deposit any excess reserves in special accounts with the central bank. In 2008, the US Fed introduced a policy of paying interest on those excess reserves, and at a favourable rate as well. This was disastrous for failing banks and investment funds, which, at the time, needed to borrow liquidity - and fast - from other banks in order to meet their commitments, which were quite substantial. Deflation meant that homeowners and other borrowers were unable to repay their loans, and so banks and other financial institutions which had lent, heavily, to these borrowers were, all of a sudden, in danger. When an individual, of course, needs a huge amount of money very quickly, he can try and sell his house or car. But, often, assets like cars and houses aren't turned into cash very quickly - that is, they are not liquid. Failing banks were now in the same position in 2008. Unable to turn their assets into cash quickly enough, they needed to borrow liquidity - i.e., excess reserves. But the other banks which could provide that liquidity were less inclined to lend their money when more profit could be made by depositing it with the Fed and having it earn interest. One of the consequences was that the US stock market plummeted on the announcement of the Fed's new policy in October.

Because of the rapid appreciation of the US dollar, the US economy in 2008 underwent a brutal, forced deflation. Oil fell from $US140 a barrel to below $US40, while the US Consumer Price Index went from 5.5% in the June quarter to 0% in December quarter to -2% in March quarter 2009. The US dollar also appreciated against currencies like the euro.

(It is worth pointing out that, up to deflationary spell in late 2008, the world's currencies also lost enormous value. The Australian gold dollar price, for example, went from $AU550/oz. in 2004, where it had been sitting for years, to around $AU1300/oz.).

5. Measuring the market's worth

The deflation of 2008 had a devastating effect on the capitalist economies. But how do we measure that effect?

One method is by looking at the value of the stock market. The DJIA is a measure which records the value of a random average sample of US capital - a chunk of the capital of America's biggest employers and producers. If we were to go to a casino, gather up all the chips of the wealthiest gamblers there, place them in a pyramid, and then take out a chunk of that pyramid - then we would have the DJIA (in an American casino), or the All Ords (in an Australian), or the London FTSE, or the German DAX...

The way to record the value of that handful of chips is to divide it by the price of gold. In the 1970s, the DJIA bottomed, and bought only 1 oz. of gold; it recovered, under Reagan and Bush Sr., in the 1980s; it reached an all-time high of 42/oz. during August 1999, at the peak of the late-90s boom and the biggest bull market in the history of the world; in Bush Jr's first term, from 2000 to 2004, it was at a comfortable 25/oz. In Bush Jr's second term, it declined to 17/oz.; in 2008, to 11/oz.; and, during the darkest days of the 2008 financial crisis, it bottomed at 6/oz. - where it had last been in the early 1990s. Similarly, Australia's All Ords hit an all time high of 14/oz. in 1970, stayed at 1/oz. during most of the 1970s, climbed above 7/oz. for the Howard years, and is now around 2/oz.

This method of assessing a market's value isn't perfect, of course, and doesn't give the whole story. But, contrary to those who say that the stock market represents 'pure speculation' with no relation to 'the real economy', the stock market's value does correlate to economic growth, a rising standard of living and low unemployment: in a bear market (like the 1930s, or the early 1970s, or the late 2000s) the economy of the 'real world' hurts too, with these economic indicators going into reverse.

6. The present situation

One would think that 2008's disastrous monetary episode would bring pause to the world's central bankers and make them rethink monetarism and Keynesianism, but no. Bernanke's response - an orthodox Keynesian/monetarist one - was to begin a program of 'quantitative easing', that is, pumping huge amounts of money into circulation. The Federal Reserve perceived, correctly, that the crash of 2008 was mainly because of the liquidity; so it reversed course, and began adding huge amounts of that liquidity. It overshot the mark, however, and the US dollar was again devalued to an enormous degree: the gold-dollar price climbed to over $US1900/oz. this year, beating all records. Even the Australian dollar is now worth more than the American.

In the meantime, the Obama administration undertook a Keynesian program of 'public works' spending (that is, spending on 'jobs creation' for mainly Afro-Americans) and deficit spending, which produced zero jobs. Obama has reacted to the failure of his policy by declaring the need for higher taxes (on 'the rich') to pay for more jobs programs which create no jobs. Obama and the Democrats are mentored by Jewish advisors, such as Bernanke, Timothy Geithner, Robert Reich, Larry Summers and Paul Krugman, who can't understand why the orthodox Keynesian formulas aren't working.

In Europe, the Continent is seeing a 'debt crisis'. Greece has brutally high tax rates - a 16% payroll tax on employees, 28% on employers, for example - which encourages tax evasion, and brings about economic stagnation. As a result, the Greek government is unable to pay the interest on its debt. The European bankers, which are heavily invested in Greek bonds, stand on the brink, possibly to the same extent that banks did back in 2008.

What if Greece were to leave the euro and return to the drachma? The results would be disastrous. Greece's debt is denominated in euros, and, were Greece to return to the drachma, the drachma's value would probably plunge against the euro. If it fell by 50%, and became a near-worthless currency (which it was before Greece adopted the euro), Greece's euro-denominated debt would be worth twice as much.

The Keynesians and monetarists are suggesting this course, because they want Greece to print away its debts - that is, print billions of worthless drachmas and pay its debtors that way. It's the oldest trick in the book, financially speaking, and one Weimar Germany used in its attempt to escape its Versailles debts, and Zimbabwe too (for its debts to the UK). (Probably, it was old in the days of ancient Egypt and Babylon).

To illustrate this with an example. The states and territories of Australia are on a system of fixed exchange rates. Tasmanian dollars exchange, at an equal value, to Queensland dollars; Northern Territory dollars exchange on equal value with Victorian dollars. In other words, Australia enjoys a monetary union not unlike that of the Eurozone. Were the New South Wales government to become bankrupt, it could, possibly, pay down its debts by leaving the union and inventing its own currency (New South Wales dollars) and, by resorting to the printing press, pay off its debtors in New South Wales dollars, in just the same way as the Keynesians and monetarists are advocating for the Greek government. But this course of action would be unwise.

One can see that, in 2011, the old way of doing things - Keynesian, monetarism, floating exchange rates, the 'Bernanke standard' (as opposed to the gold standard) - hasn't worked; on top of that, the governments of Europe and America want socialism for the bankers and brutal austerity (spending cuts and tax hikes) for everyone else. Hence, Occupy Wall Street and the outrage - really a moral outrage - against bankers, financiers, politicians, economists and EU bureaucrats, who make up the ruling class of the Western world.

7. Greed



At this point, a critical reader may argue that, so far, I have been too far soft on finance capitalism and the 'capitalist greed' which got us into the present crisis. The way I have presented things here, it as though all the people who invested, so heavily, in banking, finance, commodities extraction (gold mining, oil drilling, etc.) and real estate were simply responding to the economic incentives of that time. These incentives were false, distorted, because of monetary policy, and in particular, the absence of a gold standard.

There are a large number of corollary causes of the 2008 financial crisis. One is the deregulation of American banking in 1999, which allowed ordinary deposit banks to engage in the risky enterprise of investment banking; the other is the proliferation of strange financial derivatives in the 2000s (such as Collaterised Debt Obligations and Credit Default Swaps) which helped finance the sub prime mortgage boom. Then, in America and Australia, it was the generous capital gains tax treatments of property, introduced in 1997 and 1999 respectively, which encouraged heavy investments in that sector. As well as that, there were the infamous 'mark to market' accounting rules, in America in the 2000s, which led to banks and other investment institutions having their assets valued, for accounting purposes, on the basis of what they would fetch on the market at the time. (Because of the bear market at that time, those assets were valued at a very low rate indeed, which meant that, on paper, those firms appeared broke).

All in all, though, things wouldn't have gotten to where they are now, had we not abandoned the gold standard in 1971.

It is true that there have been speculative bubbles occurring at the same time that the gold standard was in full swing. In the late 1920s, for example, there was a Florida land boom, which took place even though the US dollar was firmly fixed to gold at the rate of $20.67/oz. all throughout that decade. Bankers can always lend out of stupidity and investors can always borrow, and invest, out of stupidity. Sometimes these speculative bubbles can occur and have no relation to the wider economy as a whole (i.e., they come about regardless of what the fiscal and monetary policy is at the time); at other times, they are closely related to it.

As an example of the latter, there is the example of the US oil-producing states, such as Texas, which, in the 1970s, enjoyed economic success which was in contrast to the other states of the US at that time, because of the commodities boom. John Tamney, in 'Governor Perry's Speech Disqualifies Him for the Presidency', 18/10/2011, writes:

Today's Texas boom is merely a repeat of the 1970s when a cheap dollar money illusion similarly reared its ugly head.

Much like today there was a rush among Americans to Texas in the ‘70s as a nominally high price of oil turned the commodity state into a boomtown relative to other parts of the U.S. wilting under those same weak dollar policies that invariably retard investment in growth initiatives. Of course what Perry doesn't remember is that with Ronald Reagan's strong dollar ascendance in the ‘80s, the price of oil collapsed. And with the collapse of crude, so did the Texas economy decline such that its unemployment rate in the ‘80s was two percentage points higher than the national average. That U.S. taxpayers were forced to bail out so many bankrupt Texas S&Ls in the ‘80s was clearly a function of the money illusion luring lots of energy investment that logically went bust once dollar policy returned to a more credible course.

http://www.realclearmarkets.com/articles/2011/10/18/governor_perrys_energy_speech_disqualifies_him_for_the_presidency_99312.html

Of course, the oil boom in the South was the subject of the popular American early '80s soap, 'Dallas'. The mining states of Queensland and Western Australia today fulfil the role of Dallas, Texas, in today's Australia. Should another sustained downturn in gold and other commodities occur, as it did in the early 1980s, Western Australia and the Australian mining sector as a whole will be in the same disastrous position as the Texans and Dakotans, and the Middle Eastern oil producers, at that time. They will become victims of a ruinous deflation, which can be just as harmful as inflation.

8. Occupy Wall Street and the Jews

Obviously, given what I have written here is correct, the solution to our present economic problems would be a return to gold. At present, the Federal Reserve adopts an interest rate target: it adds (or subtracts) currency from circulation in order to raise or lower interest rates. Most central banks around the world, including Australia's Reserve Bank, and Europe's European Central Bank, do the same. In order to restore a gold standard, the Federal Reserve could abandon its interest rate targeting, and simply keep gold fixed at a certain level - say, $US1600/oz. The rest of the world could peg their currencies to the US dollar, and the world would be back on gold.

One effect of this would be a pruning of the (at present) gargantuan financial sector. Louis Woodhill writes that the financial sector in the US took up only 4% of GDP, or $US42 billion, back in 1970; now it takes 8 percent, or $US1.2 trillion in 2010. The reason why the financial sector has become bloated, and so many derivatives have appeared, is because of the uncertainty produced by the lack of a gold standard. For instance, a trucking company has to consider what the price of fuel will be in six months. In today's world - where the price of oil regularly crashes, and then rises - a wrong guess on the price of fuel can have serious consequences. Which is why derivatives exist, to insure the trucking company against fluctuations, or lock in a prearranged price for fuel. Which means that derivatives can be a good thing. But surely it would be easier, and cheaper, to go back to gold and the 'good old days', when the oil stayed the same, despite decades of wars and upheavals in the Middle East?

So why can't we return to gold? The answer is complex, but, in my opinion, it comes back to question of race and ethnicity.

Theoretically, anti-Semitism and anti-Islam are sophisticated ideologies. They both subscribe to views regarding Semitic (that is, Jewish, or Muslim) behaviour which stem from the beliefs of the respective tribes: Islamic behaviour comes from the Koran; Jewish behaviour from the Talmud, Judaism, Jewish religious and cultural history (or what Gilad Atzmon calls 'Jewishness'). The classical anti-Semitic thesis is not that all Jews are evil and malign (although quite a few Jews, like the mass-murderers Beria and Henry Morgenthau Jr. (originator of the Morgenthau Plan) could be described as evil and malign): no, it is that when Jews predominate in a certain area (e.g., business, economics, politics, finance), their influence tends to be destructive - even when the Jews in question intend to do good (and there are plenty of well-intentioned Jews in the US Jewish élite).

A partial confirmation of this thesis can be found when one analyses the behaviour of Jewish-Americans who predominate in the US (and, increasingly, transnational) financial sector, and also at the highest levels of government (which are in charge of US fiscal and monetary policy, and financial sector regulation). Jewish-Americans tend to predominate as opinion-makers - in journalism, government, academia, and so on - when it comes to US policy on Israel and the Middle East but also on the economy and finance. (One only has to look, for instance, at how many 'talking heads' on a US finance television program are Jewish-American). It is these American Jews who really set the tone when it comes to US economic policy, and they have done so for years, just as they have in US foreign policy in the Middle East.

Yockey writes that Jewish-Americans have political dominance in the US, and that they achieved this dominance in 1933 (which he calls the 'American revolution of 1933') with the election of Roosevelt. But there was a second revolution, a kind of financial revolution, which took place in 1971.

For nearly two hundred years, American economic success had been founded on the talent, know-how and skill of Anglo-Saxon American men, and on the gold standard. America (and other gold standard countries, e.g. Britain) had gone off gold, temporarily (usually during a period of war), but had always returned to it. Classical economics reigned. Keynesianism and monetarism had always been around, in some form or another, but the sturdy Anglo-Saxons stuck to the old classical ideas for monetary policy (without ever, it must be said, fully understanding them). It was a case, so far as Anglo-Americans were concerned, of having the correct actions (i.e., maintaining a gold standard) but rather vague ideas as to how the whole thing worked.

In 1971, however, Nixon (counselled by the Jewish-American economists Herbert Stein and Milton Friedman) took America off gold, and monetary chaos broke out.

Something that a gold standard does is constrain central bankers to keeping the currency firmly fixed to gold: other than that, they don't have much to do. In a floating, gold-less, world, however, the central banker adds (or subtracts) liquidity at his discretion, in order to 'fight inflation' or to 'increase inflation' and thereby 'create jobs'. In other words, he relies not on a fixed rule (i.e., a gold standard) but on his own individual judgement. Which means that he, in order to make a success of things, must be a very clever and far-sighted individual. A genius, in fact. So, in the post-1971 era, we saw the rise of the Jewish genius central banker - Ben Bernanke and Alan Greenspan (the so-called 'Master of the Universe').

It has to be said, too, that Jewish-Americans, in the chaotic post-Bretton Woods era, did do some very clever, innovative things and devise some innovative financial products. But then, this is part of the perceived Jewish ability to make a buck in times of economic chaos. As Nathan Lewis writes, in his study of the Weimar-era hyperinflation:


The [German] middle class failed totally to respond to the inflationary environment with rational financial actions. The middle class was accustomed to investing in government bonds, and stayed with their bond investments until they were finally obliterated. Only a very small subset of individuals -- mostly Jews by the sound of it, as one would expect given Jews' better understanding of finance and speculation -- moved their assets into inflation-proof vehicles such as gold or foreign currencies linked to gold. For the most part, the middle class was completely bewildered by the whole episode, never able to understand rationally what was happening to them. Their assets were stripped as they were sold to pay for food. Grand pianos, paintings, automobiles, high-quality furniture, expensive furs, jewellery, silverware and the like were sold for a few pounds of potatoes. The middle class seems to have been able to hold onto their houses, but beyond that they were scraped down to the literal shirts on their backs.

['Learning from Germany', at: http://www.newworldeconomics.com/archives/2010/101010.html]

The question is: were the financial innovations designed to shield investors from the effects of monetary chaos really necessary? The markets, and the economy, were, in many ways, stronger in the 1960s (in the US, Australia and the world) and it was in that period that we did without some of the novel financial practices introduced in the 1970s.


It is impossible to quantify how many people have benefited from monetary chaos and floating exchange rates, let alone which specific ethnic groups, e.g., Jewish Americans. Something we can be sure of, however, is that there would be tremendous intellectual resistance from establishment Jewish-Americans against the reinstitution of a gold standard. The majority of Jewish-Americans in business, finance, politics, academia, journalism, would put up a fight against a return to gold; each of these opposing Jewish-Americans would differ as to why gold is 'wrong'; they would only agree that is 'wrong'. (One can find a handful of Jewish-American commentators, of course, who do advocate a return to gold; but these are not establishment voices to the extent that Paul Krugman is, or Milton Friedman was). The classical anti-Semitic model of Jewish behaviour predicts that Jews don't want to solve problems, they want problems to continue - the same problems that they helped introduce. We can see a partial confirmation of that thesis in our problems today.

Interestingly, some Jewish-American journalists, publicists and pro-Jewish/Israel activists (all the same thing these days) have accused some in the Occupy Wall Street movement of "anti-Semitism". How much substance there is in this is difficult to say: one first has to define "anti-Semitism", something these Jewish-Americans are reluctant to do. What I think exists, in the Occupy Wall Street movement, is an intuitive recognition that Jewish-American domination of politics, and finance, hasn't worked. That is, as policy-makers, Jewish-Americans are guilty of wrong actions; as opinion-makers, wrong ideas.

9. Options for Australia
Can't Australia return to a gold standard? In truth, gold standards only work for very large countries (or economic zones, e.g., the Eurozone).

Supposing that, for instance, the Australian Reserve Bank had maintained its currency at $AU550/oz. from 2004, while the rest of the world (Russia, China, America, Britain, the Eurozone) went on to devalue theirs. Australia's currency would, more or less, be gold, and, in effect, become Australia's most valuable export. All the rest of Australia's industry would be crushed. At present exchange rates, one Australia dollar would have bought $US3.16.

Switzerland, in the 1970s, tried the same experiment: it kept its currency fixed to gold in the 1970s, while the rest of the world was floating, and devaluing, its currencies, but eventually gave up the exercise after the crushing of (the already very small) Swiss industry.

Strangely, Switzerland is now suffering from a similar problem. The Swiss franc is quite strong, relative to the euro, and so, at the margin, Swiss shoppers prefer to go to the neighbouring Eurozone country of Germany to pick up cheap bargains. Japan is suffering from a strong currency, relative to the US dollar and the euro, as well, and there is fretting, among Australia's commodity producers, over the high exchange rate of the Australian dollar compared to the American.

This is why, when one country devalues dramatically, as the US has done, sooner or later, all the other countries in the world must devalue. Otherwise, the country has to suffer the horrible effects of deflation - when the rest of the world's prices rise compared to the country's own. (Such effects can be mitigated if the country lives in complete economic isolation from the rest of the world. Cuba, perhaps, qualifies, as does North Korea; but both countries are dependent on the outside world for aid, and that aid is given to them for free).

Only the big economic producers, with a big internal market, can cope with a gold standard: the USA, Russia, the Eurozone, China. Small countries, with a small currency area (that is, the economic zone in which the currency is used), such as Australia, Vietnam, Cameroon and Paraguay, cannot do it. If the US is on gold, it matters little if, for instance, Thailand or Peru or Iceland choose to devalue their currencies against the US dollar. But, if those countries were on gold, and the US was on floating exchange rates and devaluing its currency (as it has been for the past ten years), then those countries would be in trouble.

One option for Australia is to form a 'Pacific Union' with New Zealand and the Pacific countries, with one currency (similarly, it has been suggested, in the Scandinavian press, that Sweden, Norway and Denmark form a 'Nordic Union'). In such a union, perhaps, a gold standard perhaps can be implemented, because the currency area is big enough.

In the interim, however, Australia's best course of action would be to abandon interest-rate targeting and take up the policy of fixed exchange rates with a larger trading partner - e.g., Japan, which has, at the moment, a strong currency. The Reserve Bank would expand, or contract, the supply of dollars to meet the exchange rate target, that is, to keep the dollar fixed to the yen. (In just the same way, the Reserve Bank expands or contracts the dollar supply in order to keep the overnight interest rate fixed at, say, 4.75%).

10. Options for nationalists
 
Given all this, should nationalists be advocates for a return to gold and fixed exchange rates? The answer is: not really. The main problem is that the topic is mainstream, politically. Advocates for gold regularly have opinion-pieces published in Forbes, the Wall Street Journal and the rest of the mainstream right-wing press. They are also, too, part of the campaign - behind the scenes - for Republican candidates in the upcoming US presidential election. As well as that, one can detect, in the political mainstream, a growing unease regarding the present monetary system, a recognition that it doesn't work and hasn't been working for the forty years since the break-up of Bretton Woods. There isn't widespread agreement that the gold standard is the way out of our predicament, only that the existing system needs to be changed.

Possibly, the world has been too long off gold ever to return to it: central bankers lack the experience of implementing, and maintaining, a gold standard, and perhaps they couldn't do so today even if they tried. In any case, we are not returning to gold any time soon, but that is beside the point. Nationalists shouldn't embrace tendencies which are part of the political mainstream.

Take environmentalism, for instance: in 2011, everyone is an environmentalist. Even the biggest multinational corporations want to be portrayed as friends of the earth and lovers of the environment. As anyone who works in an office for a big company knows, the cafeteria is decked out with separate rubbish bins for recyclable waste, organic waste and 'landfill', and all employees are meant to take care and put their rubbish in the appropriate bin. All of this would have been unthinkable twenty years ago.

Supposing that a big nationalist party declared itself to be 'environmentalist', and ran on a green platform. The question has to be asked: why would anyone vote for a nationalist party on the basis of its 'green' credentials? Environmentalism and nationalism was a radical combination back in the days of Weimar Germany, and a vote-winner for the NDSAP (the NSDAP, perhaps, was the first green party). But now, everyone is a green, and if any voter wants environmentalist policies, they will vote for the Australian Greens, who stand more of a chance of getting elected than any nationalist party. Similarly, there are other popular Green parties in Europe (mainly on the Continent) which do a better job with environmentalism than any nationalist party ever could.

No, we need to concentrate on the racial and anti-immigration platform because, among other reasons, the political mainstream can't pilfer it from us. As well as that, there are other policies out there which any mainstream politician or journalist would be reluctant to appropriate. One such policy would be, for instance, of all meat and other animal products (including leather), which the electorate would, for obvious reasons, reject outright. That is just one example. There are probably a few others which would serve our need for product differentiation - making nationalism radically different to anything else out there.

But, by all means, nationalists should study the topics touched upon in this article: economics, exchange rates, monetary policy, etc. The more familiarity they have with the present mainstream discourse on these subjects, the better.

The only difference between us, however, and the mainstream writers on these subjects is: we nationalists look for the deeper underlying causes of things. An everyday economist or journalist will look at what happened to the world once it left gold; a nationalist, on the other hand, should be asking why - what were the underlying racial (and spiritual) causes?

Overpaid, and loving it.

By Michael Kennedy



The world is stagnating after the Global Financial Crisis of 2008.  The cowboy bandits of Wall Street, the architects of the GFC, perhaps the only accomplishment outside of growing their own portfolio, got off basically scott free.  Many are expecting Global Financial Crisis Mark II.  As every cloud comes with a proverbial silver lining, the silver lining around the clouds of the financial storm is the increased awareness of people that something is wrong, and something needs to be done.  Discussion about the flaws of our financial system are propelled by the sense of urgency and despair.  The "Occupy" movement is gaining traction and gaining support.  They may not understand the issues and have much of an idea of the cause of financial catastrophes, and some may be there purely to try and promote an even worse alternative, but they at least understand that morality has a place in economics.  That's a start, a good start.

The mood has certainly shifted.  Misplaced optimism about a never ending housing bubble is all but gone and something else is happening which is even more foreboding.  The media is now openly stating that the boom is finished, and that things may well be on their way down.

An article in The Age¹ by the economics writer for the Sydney Morning Herald titled "Top Bosses' riches are undeserved"1 doesn't just call into question whether our top CEO's are overpaid, but openly states they aren't.  A bold move, for a mainstream publication.

Her argument is that in Australia, we have many Oligopolies, and that making a profit in an Oligopoly isn't that hard.  Corner the market, and you have your customers hostage.

Our greatest period of economic growth and prosperity, a period when the standard of living was on the increase, rather than the current trend downwards, was during a period when high incomes were taxed quite thoroughly, and where CEO remuneration where closer to that of average worker than today.  Arguments that we NEED to pay our CEO's exorbitant ransoms fall flat as soon as one realises that our current economy is in a miserable state.  The large quantities of money that CEO's rake in and pull from our economy seems inversely proportional to the health of our economy.  Given the sick state of Western economies, we are clearly paying big amounts for nothing, yet CEO's, like snotty school children stamp their feet down and demand more and more, lest they leave.

They know where the door is.

The arguments that they, Free Market ideologues, 'too much Ayn Rand' Capitalists and their assorted lick spittles put forward as justifications are nonsensical at best.

One argument is risk.  CEO's deserve a Kings ransom because of risk.  Given that they shed jobs at an astounding rate, it can be hardly argued that they get paid because they 'risk' losing our jobs.  If the share price of the stock of the company can increase through out sourcing, off to India those jobs go. Also, during a bull market, making a profit and increasing your share price is a given, no risk there. The only personal risk is their career, their job.  But when the WORST case scenario is that you leave with hundreds of thousands, or more likely, millions of dollars, it can hardly be considered a risk. Many Australians would jump at the chance to take a risk, where the losing position is making enough money to be set for life.  Risk, hardly.  A CEO can run a company into the ground, lose hundreds or thousands of jobs and even commit fraud, and come out better off.  Ralph Norris has little to worry about.  A $16 million per-annum pay packet, and a taxpayer guarantee to back up the banks in case they fail.  He has risk, but it is the government which ultimately is stopping the banks from failing, through regulating them, and underwriting them with tax payers money.

Another popular argument is the importance of their job.  Well, when neurosurgeons, ambulance drivers and pilots get paid millions, I'll take this argument seriously.

The fact is, our corporations, our businesses have been hijacked by a boys club, an inner circle of parasites who are merely using the economic instruments that others have built as a vehicle for bleeding our country dry.  We don't live in an ideal free market economy, or even a Capitalist one.  We live in a plutocracy, where corporate interests have bought our politicians, and our supposed "free market" has been usurped for the benefit of a few crony sociopaths who masquerade as entrepreneurs and have suckered many others into believing that they are anything other than socialist crooks.

To go against this excess greed is not advocating socialism, or a desire to be like North Korea.  In fact, if anything, our corporations are replicating that philosophy here.  It is highly unlikely that North Korea's leaders choose to be paid marginally more than their workers.  They no doubt do well for themselves, because they too, of course, deserve it, or so they would argue.  North Korea's boys club is just as busy convincing their populace that their austere lifestyle is necessary, while they horde the excess for ourselves.  Sound familiar?  Profits are privatised and losses are socialised.

Why are there huge remunerations, and why aren't ordinary Australians, who are supposedly now Howards "mum and dad" shareholders simply exercising their right to vote against this excess in companies they part own?  All working people are supposedly shareholders through their superannuation, and we are constantly reminded that we must have a strong share market and not interfere with super profits as it is in our interests.  But why don't we do anything about it?  When you look at who actually owns the shares of these companies, it is generally large financial companies.  You may own parts of Australian businesses through your super, but it is your super fund which votes.   Quite simply, because shares are owned by similar large companies, they are the ones who exercise power, and they would benefit from voting for larger and larger remunerations, as it sets the industry standard which will apply to them.  If you are a high level executive of CEO of a company which owns shares in other companies, then voting for a pay increase in the companies you own, means an increase for you as well.

There are people who are worthy of being wealthy.  People who are truly entrepreneurs, who actually create a business and enhance the nation.  Australians are not succumbing to "tall poppy syndrome", but are rightfully outraged at what is essentially hoarding through unproductive means wealth.  They are outraged that our nation, our livelihoods and futures are being stripped so someone who knows where their next thousand hot meals are coming from, and has already a lifestyle better than pretty much any human who ever lived, can get even more.

True entrepreneurs are people like Dick Smith, who has added to our business sphere, who has supported the nation which game him such opportunity.  Even now Dick Smith is still supporting the nation, arguing against our unsustainable population growth and supporting Australian made products by offering Australian made and owned varieties of popular foreign owned goods. Dick Smith is an example of the type of wealthy person we could use more of, people who's personal wealth represents the wealth that that person adds to our nation.

1http://www.theage.com.au/opinion/politics/top-bosses-riches-are-undeserved-20111101-1mttj.html?comments=302#comments

Free Market Fallacy

by Michael Kennedy

The Free Market. The ideological pinnacle of neo-liberalism, the idea which will give wealth to all, eliminate poverty, create every kind of good and service imaginable, cure disease, make the trains run on time, save the environment and bring unicorns back from extinction. It is touted as the economical panacea, the cure all for any social or economic woe which may come up. Supposedly, if we are to take its supporters at face value, the free market is the only moral way for people to earn wealth, the only successful financial ideology which can exist. Everything else is just godless socialism. Neo-liberalism, an ideology which puts the market above all, puts the market as the arbitrator of morality, as the determining factor of the future of society. It is essentially left wing liberalism or anarchism applied to money.

In 1776, Adam Smith, a Scottish economist published “The Wealth of Nations”, a book advocating the abolishment of government interference in matters of economic importance and advocated commerce and trade without barriers and without limitations (much in the same way the Liberals advocate movement of people without barriers of limitations). This 'free market' was to be controlled by the 'invisible hand', market forces which would keep unfettered trade, production and consumption in check. The 'invisible hand' would play the role which the government would have played in regulating the free market. Simply put, it supposedly works like this. Rather than have the government intervene on behalf of employees, setting minimum wages, minimum conditions and such, the 'invisible hand' of the free market would provide the same safety net. Supposedly, if there were no regulations regarding employment and employees were also as free in choosing where to work and negotiating conditions, then employers who offered sub-optimal conditions would find themselves unable to hire people, as people would be choosing to work with companies who offered better conditions. So the competition for labour between employers would see those who offered the poorest conditions unable to compete, and thereby having to raise the standard of their wage and benefits to attract the employees they desire. This is the 'invisible hand', an example of the mechanism by which neo-liberals believe their free markets would work. This is supposedly the force which will lift the 3^rd world out of poverty, as jobs go overseas offering these unfortunate peasants jobs which may pay $2 an hour instead of $1. Capitalists regard this as the free market improving the condition of life for these people, completely overlooking the fact that a slightly less evil form of exploitation is still nevertheless exploitation.

Another example which they put forward might run like this. A company which produces products at a great cost to the environment, would lose custom due to people boycotting those product due to the environmental damage their production entails. If customers who had freedom to choose between competitors, then people who value the environment would not purchase their goods. This comes at a financial cost to the company, and they may find themselves in a position where spending extra for 'greener' production would result in greater profits from greater sales. Under neo-liberalism, a company would be free to buy pristine old growth forest, and raze it to the ground for profits. Their solution to those who argue that the environment should be protected, is that citizens who value that forest are also free (should be free) to pool their money to purchase it and protect it. Don't like the fact that a refinery is going up next door and going to drop toxins next to the school? Just get the parents to pool their money together to buy the land! Neo-liberals actually put forward these exact arguments without any sense of irony, sarcasm or shame.

Neo-liberalism also advocates abolition of government sponsored programs, programs such as social security and public health care which are tax payer funded. Again, they advocate that market forces can produce all that is needed. Jobs abound (there is no need to be unemployed) and people would find capitalistic ventures by which they can make a business selling help to those who need it. The education system need not be public and tax payer funded, but those who desire to educate themselves or their children should pay, and those who don't make use of those services shouldn't have to. It is to many an appealing argument. Why should someone who doesn't have a car, pay for roads? Why should someone who doesn't have a child, pay for primary schools? I work hard, why should the fruits of my efforts, the money I earn, be taken and given those who don't? Neo-liberalism pushes personal responsibility head of social welfare. Only personal responsibility exists, and according to neo-liberalism, one only goes without because of their failures, and any tax dollars used to help them is theft from the hard working and creative. It's a seductive train of though which appeals to peoples sense of entitlement, to their perceived superiority and self righteousness. Like Liberalisms obsession with social rights which must be absolute, neo-liberalism takes the same attitude towards economic rights. The liberal catch cry “take your hands off my body” (in regards to abortion) could just as well be a neo-liberal catch cry of “take your hands off my wallet”.

The free market, the idea that an economy and society can work with no regulation and provide optimal results is the fundamental principle which drives neo-liberalism, a dominant ideology in today’s world. Free-marketism is based on a number of assumptions which as we will soon find out, are simply not true. We are given simply examples of two stone age people trading food for manufactured tools as the archetypal form of free trade, with the insinuation that free markets today work with similar simplicity.

This hypothetical example is easily debunked. One of the fundamental assumptions is that people trade on equal terms. As two people reach a deal, advocates of neo-liberal free markets say that both people would reach a consensus which maximises the individual advantage of the trade for both as far as is possible. For two children trading collector cards, this may be true, but is it true for all cases? Is the employee just as free to negotiate as the employer? Practical experience which we are all familiar with shows that this scenario is just a day dream, a non-existent hypothetical example that we are given as what is supposedly the norm. For someone who's job has been lost, who has a mortgage and children who need to eat, the negotiation of a contract for a new term of employment is less than equal. Does the prospective employee have the freedom to argue against the clauses in the contract which not only demand “reasonable overtime” where required, but also states that it will be unpaid? For the job candidate, its take it or leave it. It's take the job or foreclosure. It's accept the conditions grudgingly, or walk away without means to feed the family and watch a solution to the supposed skills shortage take it instead, because they have lower standards. The fundamental principle which supposedly guides the 'invisible hand' from employers having to accept lower and lower standards is greatly flawed. Unequal trade abounds and it is only through the pressure of trade unions or government laws, that one party doesn't have the opportunity to completely and utterly subjugate another through the leverage they find in being owners of property and means of income.

Another example is a young person competing against a baby boomer investor buying a house. Is there equality here? The boomer has had the advantage of free education, relatively higher wages and having sold another investment property which they subdivided at great profit. They can easily outbid the younger person because of different histories, different economic conditions and different periods of time they experienced them. They were paid more for perhaps doing the same job, due to different environmental conditions. They had less competition for work, less expenses to remain socially competitive. Even the simple fact that someone has had more time to save up money creates and inequality. The point is that two people putting equal work mentally and physically do not end up with the same financial earnings. Chance and environment play a role, but does this mean the person who ended up with less is less deserving of the same property? It's hard to justify an answer of 'yes', but this is the reality of our society. It can be argued, that the younger person should just settle for less, but anyone with even basic knowledge of our housing market knows that even 'entry level' properties are out of their range. Does government restriction on the release of land make the issue worse? To a degree yes, and perhaps by 'freeing' the release of land according to free market ideals might solve this issue, but land developers would simply create the artificial shortage themselves, instead of the government, as it is profitable to do so, and that is exactly what they would do.

Economic interactions and the factors which influence the means by which people can acquire capital through their efforts are complex, seemingly random and never exactly repeatable. Free market economics simply doesn't take this into account, and instead, neo-liberalism blames the individual for any shortfall, rather than recognising the complex external environment, technological and social shifts which can greatly influence peoples financial outcomes despite the same input. Seemingly simply properties, like ones history, date of birth and location can give them great leverage or disadvantage over others when trading goods or labour on the market. To ignore this fact is to turn a blind eye to the chaotic events which prevent fair trade to occur. Events beyond peoples control leads to some having the ability to exploit others, and neo-liberalism provides no means of recourse to those who are economically exploited or powerless, as it assumes that their fate is their own responsibility, and that it is within their means and within the means of the free market to lift them out.

The fallacy of the informed consumer.

Earlier we mentioned the example of the customer who chose to boycott or avoid a product based on the environmental practices of the company. It may be employment standards that a customer is concerned in, or something more directly related to the product, such as their quality control and for the example of companies which produce food, hygiene and cleaning standards. A customer may be able to make an informed choice, if all operations relating to the creation of the product were transparent and all information available. With the recent spill in the Gulf of Mexico from offshore oil drilling, someone may wish to use 'market forces' and their purchasing power to avoid buying fuel obtained from oil extracted from risky offshore drilling. Now, is the customer who is about to purchase petrol really able to determine which processing plant the fuel came from, from which shipment of oil? Is the customer seriously able to trace back the supply chain all the way back to the rig the crude oil was extracted from? A customer buying a sandwich is able to get the best deal, if they are able to compare every sandwich available for sale in the world. These might be extreme examples, but lets take more common examples. In a completely deregulated pharmaceutical market, how can you determine whether the paracetamol you are giving to your child was produced with quality high enough to avoid potentially harmful contamination? Are you as a customer, able to make this determination for yourself? For the invisible hand to guide companies towards social responsibility and sustainability, for the invisible hand to stop people from literally killing others and the earth for profits, not only must the population of 'consumers' be aware enough to realise what monetary value must be placed, but they must also know the complex web of interactions and processes which end up creating the product. Potentially possible but infeasible. People would end up spending their whole lives in research, in order to try and avoid business with those who could potentially harm or kill, or cause great social and environmental harm.

Witness the 'cheap' products from Chinese manufacture. The free market has led to manufacturing going offshore, but these goods can only be produced cheaply due to human exploitation and disregard for the environment. Practices which exist there would not be legal here in Australia, nor tolerated, but the distance of China, the lack of knowledge and information available of the true cost of manufacture means buyers here can't make informed choices.

There is no complete freedom anyway.

Lastly, the rich corporate oligarchs who push neo-liberalism do not operate and CAN NOT OPERATE in a completely free, deregulated world. Corporations exists because of government law. Some form of state apparatus must exist for property rights, the very cornerstone of capitalism, to exist. Some form of law against theft must exist, and laws against fraud. Copyright law, which allows large record companies to operate cannot exist without state intervention and market regulation. In a true free market, an artist would not be able to ensure that they are the recipient of commercial sales of their work, but it is only because of government intervention that a music artist can ensure that the revenue stream from the sale of their art goes to them.

Without government intervention, the legal apparatus which enables trade to even exist, wouldn't, and would leave behind a state of anarchy. Neo-liberalism never demands the removal of government, only the extraction of the state from affairs which affect the earnings of the wealthy, of those who have influence, of capitalists. When a government uses its power and funds to make a nation more appealing to investors, no free marketeer objects. When the government of the U.S. bailed out Wall Street due to their own mismanagement of an over financialised money market, neo-liberals did not object. Working class Libertarians who are also pro free market did, but quickly ditched the cause in favour of more dubious ones, such as rallying against science. Perhaps led to these causes by the very businesses which have hijacked the Tea Party and usurped the concern of Americans for the future of their country for their own purposes.

Complete government de-regulation would not allow neo-liberalism to exist. Bill Gates would be poor if not for government spending which developed computer technology or for government enforced copyright and patent law. How else can Microsoft make their money, without having monopoly over the sale of their own products? Hedge fund managers would be nothing if not for the legal structure which allows the financial entities that they trade to be recognised universally. Property developers need state sanctioned ownership of land to develop. So given that no neo-liberal truly argues zero government interference, from where do they draw the line where government regulation should stop? Why is government enforcement of property rights acceptable, but taxation not? On what moral basis?

The basis by which free markets have been portrayed has moral are flawed and do not seem to have originated as the conclusion from an objective study of humanity. Assumptions that parties can trade on equal terms, that the non monetary value of aspects of life such as clean air can be effectively factored in to consumption by consumers are simply absurd. Free market ideology suffers from the same fundamental form as anarchism. Without organised structure, the strong simply overpower the weak and there are no checks and balances on their actions. Nations and people exist or die on the whims of the oligarchs, the commons disappears and base human emotions such as fear and greed become primary social drivers. Look at our current economy as an example of what happens when fear and greed are its prime movers.

Opposing neo-liberalism doesn't necessarily mean supporting a centrally controlled economy or extreme economic egalitarianism where everyone is equal, as many neo-liberals suggest. It is merely a recognition that existence is a constant compromise between freedom and co-operation. A prosperous society, which by definition encapsulates the ‘group’ category beyond the individual or his sole family, requires a balance between free enterprise, free trade, and state regulation and government projects. History has shown that the most prosperous period of the 20th century was not when neo-liberalism become dominant in the 1980's, but when free enterprise and economic freedom was living alongside large government funded projects and regulation.

One doesn't have to have unfettered free markets for a just and prosperous society. Economic dogmatism has caused much misery in the 20^th century, and with the 2^nd decade of the 21^st century starting in the economic train wreck that is the remains of the Global Financial Crisis, a crisis which may be nothing more than the prelude, the welcoming fanfare to a larger economic catastrophe. Th economy and the social and legal structures which a nation create to put economic theory into practice must exist to serve the people, rather than being a structure, a God which the people must serve, worship and sacrifice for. The neo-liberal experiment cannot solve issues such as environmental degradation and the decline of the west and its catastrophic demographic shifts. Its solution to global warming is a carbon trading scheme, a scheme which is designed to simply create another commodity which can be used to create another asset bubble and traded for profit. A strong nation needs a strong economy, but an economy can only serve its purpose by being a servant to the people, which means that the people must retain mastery over it, an ideal at odds with neo-liberalism, where the people relinquish all control over it.

Beware the Faux Anti-Globalists

by Tom Sinclair

1. What every nationalist politician needs

We nationalists certainly have a radical program – if by radical we mean uprooting the tendencies and habits which have formed in the West over the past thirty years. The chief tendency, which we oppose is, of course, multiculturalism and mass non-white immigration into the West – a development foisted upon the Western nations by our own politicians, and welcomed by our media, intellectuals, economists, trade union and business groups. Disparate nationalist groups, from Britain to Russia to New Zealand to Canada, are all united on one thing: non-white immigration into the West must cease; and the non-white immigrants already here must be encouraged, through state policy, to return to the homelands of their forefathers.

That is, one could say, our key policy: and certainly the one which attracts the attention of the public. The masses are not really interested in, for instance, the BNP or the NPD’s opinions on global warming, industrial relations, or public health care: they want to hear about immigration. They will vote for a nationalist party for its positions on immigration, mostly because no other politician is brave enough to speak out against it, no matter his or private feelings on the issue, and every political tendency across the board – from the mainstream, liberal democratic parties, conservative and social democratic, to the radical Left – are all for multiculturalism and immigration. “Racists” have been purged, even from the conservative parties of the West, long ago. The likes of the BNP and the NPD, then, constitute an alternative to the mainstream political consensus.

It has to be admitted, however, that the policies of nationalists on non-racial topics which have little to do with immigration – e.g., trade union law, interest rates, financial regulation, recycling, old growth forest logging, maternity leave and the like – attract little attention from the public for another reason. That is, those policies are undeveloped – which is a euphemistic way of saying that nationalists don’t have any. There is very little consensus on these areas of policy in the nationalist world when they do come up for discussion.

The danger is that this locks nationalists out of mainstream political debate. Suppose that a representative for an Australian nationalist party were to do an interview on the current affair program The 7.30 Report. Kerry O’Brien, the host of the show, and a notoriously tough interviewer, would hammer that representative, relentlessly, on areas where the nationalists are weak: he would ask, ‘What does your party think of the ACTU’s latest Living Wage claim? Or increased financial regulation in the wake of the recent financial crisis?’. The representative would mumble some clichés about ‘true Australian worker’s socialism’ in response to the first question, and, in response to the second, perhaps blame the recent financial crisis solely on a single special interest group. All the while he would be hoping that O’Brien would turn the line of questioning back to the question of immigration. At home – in the living rooms across the country – the average Australian television viewer would be shaking his head: even though he may agree with that nationalist party about immigration, he can see, straight away, that the party – given its inability to formulate even the most basic positions on current political topics – is, in the jargon of the mainstream media, ‘unelectable’.

Is it so hard? Does a politician need to have a clear, fixed position on everything to be able to negotiate an interview, or hold a press conference? Does he need to be able to recite facts and figures on almost everything, at a moment’s notice? No: all he – and his party – needs are positions on three or four contemporary political issues. In an interview, at a press conference, on the campaign trail, he can adroitly steer the discussion towards one of those key issues, and then expound the party’s position on it. Enoch Powell made a political career on four issues: immigration; Britain’s membership in the EU; the conflict in Northern Ireland; and monetarism. For Pauline Hanson, it was Aboriginal welfare, Asian immigration, protective tariffs for Australian industry and agriculture, and rural and regional unemployment and under-employment (and socialist remedies for solving that problem). In the case of both Hanson and Powell, their ideology covered a broad range of issues. It should be noted that with his discussion of monetarism alone, Powell was involving himself in a discussion of one of the most contentious issues of the day, involving many mainstream, respectable politicians, economists, journalists and academics. He was not simply a ‘Send the Asians and Coloureds home’ one-trick pony.

And this is the main problem: to introduce the nationalist to mainstream debate – to open doors which have been closed to him because his opposition to immigration was not ‘respectable’.

The purpose of this article is to look at a particular issue which is of great relevance to Australia today, and to educate the nationalist reader who has little to no prior acquaintance with it: hopefully, then, a clear position can be formulated in his or her mind on the topic.

2. Chile in the 1970s

The history of Chile in the 1970s is, in itself, intrinsically interesting to the student of politics. Chile, a Latin American country with a predominantly white population, went from a Chavez-style socialist banana republic to a typical Latin American style military dictatorship banana republic in the space of a years – albeit with a difference: Chile, under the military dictatorship, was the first experiment, in the post-war era, in what is now known as neoliberalism. After the military coup in 1973 that deposed the Marxist Allende, the Chilean military junta enjoyed – after imprisoning, exiling or killing thousands of Chilean communists – absolute power. Faced with a desperate economic crisis, the junta took the (uncharacteristic, for a Latin American ‘fascist’ government) the step of implementing structural reforms to the Chilean economy, which included deregulation, privatisation (Chile’s electricity grid was sold to the Australian entrepreneur Alan Bond), the privatisation of superannuation (or social security, to American readers), labour law reform, cutting of tariffs on imports and the like. The junta’s economic policy-makers were known as the ‘Chicago Boys’, having studied economics in the University of Chicago under the economists Milton Friedman and Arnold Harberger. This was the first instance in history of an authoritarian regimé applying neoliberal measures.

The results are controversial: those with inclinations towards neoliberalism use statistics to show that the Chilean experiment was a success – inflation and unemployment fell, economic growth rose, etc. – while the opponents of neoliberalism (a diverse array of Communists, socialists, Keynesian economists) use statistics to show that the Chilean experiment was a failure. What is certain is that Chile broke new ground: Australia, along with many other Western countries, embarked on widespread deregulation, privatisation, cutting of import tariffs, in the 1980s, a decade later (the Chilean privatisation of superannuation preceded the Australian). Furthermore, it is unlikely that the ‘Chicago Boys’ could have carried out their program without the complete control of economic policy given to them by the Chilean military: their policies met with substantial opposition, not only from the regime’s Communist opponents, but from organised labour and big business as well.

Communism is based on myths and personality cults. The case of Allende in Chile is no exception. Allende was, and continues to be, exalted by the radical Left as a superman figure, a sort of Marxist higher man bringing socialism to the masses, wooing them with his oratory, charisma and rare genius. In his personality cult, he is like so many Communist leaders before him: Lenin, Trotsky, Stalin, Mao, Castro, Che, and lesser lights such as East Germany’s Honecker, Romania’s Ceauşescu and Albania’s Hoxha.

The BBC documentary series on Allende and the coup that toppled him – ‘The Other 911’, which is available on YouTube – even evokes, unwittingly, parallels to Hitler and his fall. Allende perishes, by his own hand (blowing his head off with a submachine gun given to him by Fidel Castro), in a fortified presidential palace, besieged by soldiers from the outside, defended by a small, but ideologically determined, praetorian guard of Chilean Communists. The females are evacuated as the palace is besieged (bombed by Chilean air force jets) and Allende, to the last, makes heroic addresses over the radio to the Chilean people, mourning the end of the Chilean socialist dream. The similarities between Allende’s last days, and Hitler’s, are obvious – even if the Left is not willing to acknowledge them.

The circumstances leading up to the Chilean coup, and the aftermath, will not be covered here, interesting as they are. The objective is to look at the main myth about Allende’s Chile: that he had introduced valuable ‘social reforms’, that it was a kind of ‘socialist paradise’. At the time, Allende’s Chile was upheld by the radical Left – like Chavez’ Venezuela now – as a model to the world, as a path, towards ‘democratic socialism’ and ‘development’ worth emulating. In contrast, Pinochet’s Chile, when the ‘Chicago Boys’ ran rampant, was a time of great poverty, misery, inequality, etc. My intention here is to expose the myth: not by measuring statistic against statistic, but by showing how everyday life was, in Allende’s Chile, would be unbearable – in terms of personal freedom, comfort, and the efficiency in the provision of services – even to the most radical of Leftists in the West today.

The question is: why is this of relevance to nationalists in the West?

In the year 2009, Communists have, by and large, infiltrated the environmentalist and anti-globalist movement, and are bending both to Communist purposes. And they are not troubling to define their terms and substantiate their claims. They speak of themselves as anti-capitalist, without defining precisely what capitalism is, or, moreover, what their alternative to capitalism is (at least to the general public – at bottom, they want Soviet-style Communism).

Now, many nationalists are eager to join forces with the anti-globalist movement, or at least, find common ideological ground. Because of their ideological and theoretical vulnerability – in short, their not having a position on these subjects – they can easily be seduced by the arguments of the anti-globalist/anti-capitalist crowd, and end up endorsing a kind of hazy socialism or communism without thinking of the implications of their statements (against greedy bankers, corporations, excessive economic growth and personal consumption, neoliberalism (however neoliberalism is to be defined). So they need to be shown what the consequences are – in a country such as Allende’s Chile, in which the government provisions ‘social justice’ and ‘social reform’, and is run by ‘the workers’. However Communists don’t seem to concern themselves too much in relation to the Ethnic/Racial Heritage of its workers and this is one of the major contrasts between it and Nationalism.

Perhaps the difference between the nationalist and the anti-capitalist/anti-globalist is that the nationalist has only a very vague idea of an alternative to ‘capitalism’ (however capitalism is defined) while the anti-capitalist/anti-globalist (who is, more often than not, a secret Marxist, or a radical environmentalist who wants to take the world back to the pre-industrial age) has a very clear, well-thought out plan. To the Marxist, the ‘anti-capitalist’ world of the future will be a lot like Honecker’s East Germany, or, at the least, Chavez’ Venezuela or Allende’s Chile.

The anarchist is, on the other hand, halfway between the Marxist/environmentalist and the nationalist in terms of vagueness. His idea of the future is one where property is abolished and where businesses are ‘run by the workers’ (syndicalism); or, better still, one where no-one has to work. How people are meant to survive without working – which, in the anarchist doctrine, is considered to be degrading and dehumanising – is not quite explained. All the same, the anarchist does, unlike the nationalist, have a consistent position as to what the alternative to capitalism is. Some Nationalists have flirted with using ideas from Social Credit and we do not discredit the possibility but it has never really been tried and tested too much.

While history has, most definitely, rejected Marxism, it has not rejected socialism. Indeed, socialism has, across the Western world, enjoyed something of a revival during the current recession (socialism in general always does well during a recession). At one point, then, the nationalist – if he wants to stay relevant – will need to come up with an answer to the question: socialism, for or against. Being vague in this area – while being extremely detailed on immigration (or rather, anti-immigration) policy will not do.

3. How it was

So, given the importance of the subject, what was everyday life in Allende’s Chile like? Rather than looking at statistics – which certainly do not give a full picture – we shall examine small bits and pieces, as it were, of Chilean-style socialism in action. (The quotations here are from an account by a Chilean economist, Daniel L. Wisecarver, who is quite biased against socialism, and definitely in favour of neoliberal formulas, but who has some quite hard to come by information).

We shall begin here with a description of the quite bizarre practice of setting ‘fair’ and ‘socially just’ prices by the government in Chile:

By the end of the Allende government, more than 3000 prices were explicitly fixed, primarily by DIRINCO (the Directorate of Industry and Commerce). It is quite clear that the process of price fixing could only be negotiating sessions (when interested firms were allowed to participate) and that the post of price fixer had to be one of the most remunerative employments in all of Chile. The printout lists of fixed prices, including such items as “chalet type” dog houses and woollen gloves for infants, served as inventories of goods that had at one time been available for purchase... [Even after the Junta took power] some specific price fixes were remarkably detailed, particularising the name and type of product, the distributor’s name, and the place sold. For example, in July 1974, maximum prices were set for retail sales of RANN brand detergent, imported by the Center for Purchases of the Ancud Chamber of Commerce; or the retail price of soybean oil from the Netherlands imported by Domingo Coro and Son... [Wisecarver, Daniel L., ‘Economic Regulation and Deregulation in Chile 1973-1983’, in ‘The National Economic Policies of Chile’, ed. Walton, Gary M., Jai Press, 1985, pp. 154-156]

Such a policy had consequences:

One of the most dramatic and visible effects of [Allende’s] price controls and economic policy was the generalised scarcity of most goods in formal markets, the emergence of well-developed black markets, and long queues. In fact, it is now part of Chilean folklore that, upon seeing any queue, people lined up, sometimes for hours, without knowing what was for sale but buying whatever it was in the maximum quantity allowed. [Ibid, p. 154]

Wisecarver gives examples of, of all things, socialist and interventionist policies in buses:

Some of the regulations that existed in 1973 and 1974 were truly spectacular. For example, children could be transported only in yellow buses, so much so that owners of yellow buses were at times able to convince the police to give traffic violation tickets to parents who took more than their own children to school in the family car. Or if any organised group wanted to charter a bus (or drive its own) for a weekend outing to the beach, it was first necessary to get permission from the Sub secretary of Transportation, with at least three days’ anticipation. In fact, no bus could go anywhere, anytime, for any purpose without express authorisation. And one of the many crucial decisions reserved for the Subsecretary of Transportation, one which required careful study and consultations with other ministers, was the color and fabric of the uniforms that bus drivers were to wear in the coming year. [Ibid, p.161]

On a more mundane level,

The authorities fixed the number of buses and the frequency of runs; the frequencies were uniform, regardless of the day of the week or the hour of the day, and were monitored by the police. To help enforce required time schedules, bus drivers were prohibited from taking rest periods in bus terminals... The Ministry of Transportation also set quotas on the number of buses that could be brought into Chile, their make, model, size, country of origin, etc. Most of these restrictions and controls were codified [in a decree]... which also required that the Subsecretary of Transportation ensure that there appear no unfair competition from similar transport services, specifically not from artificial cost reductions. Hence, all bus fares were fixed.

[Ibid, p. 161-162]

Price-setting and regulations gave the government officials in charge enormous privileges, and the right to be inefficient in providing a service:

It is necessary to mention the state’s ex-entry in this sector, ETC (the collective transportation enterprise), a firm which ran annual deficits on the order of US $10-15 million. At the outset of the current government, this public firm possessed approximately 35% of Chile’s buses, its own set of exclusive routs, its own replacement-parts factory, and more than 5000 employees. ETC was well known for its free “social” routes and for having its vehicles broken down in the shop up to half the year. [Wisecarver adds in a footnote] These routes often turned out to exist for the exclusive benefit of a variety of government officials, their employees, and their related social groups. [Ibid, pp. 164, 199]

As for taxis:

The number of autos that could be employed as taxis was strictly controlled by the Subsecretary of Transportation, the Traffic Director, and indirectly by the union of professional taxi drivers. Each municipality was assigned a fixed quota of taxis which were identified with special license plates, and the taxi plates were naturally worth several times the value of the car itself. The monopoly enjoyed by these taxis permitted them to provide poor service (they might agree to take a customer to certain places only if it was convenient). The only “control” exercised over those drivers who were lucky enough to be cabbies took the form of fixing legal taxi rates. [Ibid, p. 164]

Wisecarver gives an account of the practices of Chile’s longshoremen and dock workers, which makes bizarre reading. He first describes the activities of the unions:

In Chilean ports before 1981, there were a total of 77 separate unions up and down the coast, with as many as 17 in any one port. These groups had total monopoly control on moving any cargo within the ports; they determined the number of workers on each crew and fixed their remunerations as a function of the type of cargo. Every worker had his precise job and could and would do nothing more; no one not explicitly named to each task could work. In practice, the system degenerated to such a point that work crews doubled true labor requirements and, of course, the wage bill was correspondingly duplicated [i.e., workers would be paid for two jobs despite only doing one]. One of the major concerns of workers during half of each shift was said to be finding the most comfortable place to sleep. [Ibid, p.173]

Strangely, the Chilean port workers lived in a kind of feudal, hierarchical society, where unions had complete control over the workers’ lives:

The social structure that grew up around the port workers’ monopoly was, if anything, even more remarkable. There were at least five categories of workers:

1. Stevedores – These were the truly high-class workers, the ones with the legal monopoly to work, granted by the possession of an official ID (identity) card issued by the authorities.

2. Supplentes – These were the first-round substitutes for the stevedores, logically but not necessarily the first ones in line to receive the coveted (and lucrative) ID card. The suplentes were the first ones called to work if there were insufficient stevedores.

3. Pincheros – These “helpers” were a large group of lower class (at least in the port hierarchy) workers who might one day hope to be granted stevedore status. Meantime, they waited in the ports for any jobs that might be handed down to them by the higher-ups.

4. Medio Pollos [‘Half chicken’] – These were lower-class pincheros.

5. Cuarto Pollos [‘Quarter chicken’] – Lower-class medio pollos.

For every ship that had to be loaded or unloaded, the stevedores would be called in to determine work crews and costs. Only the stevedores had the legal right to employment, and therefore they were the only ones directly paid. They would then dole out jobs to their pincheros, who in turn would distribute tasks to medio pollos and cuarto pollos. The stevedores collected all the wages and passed them along, after deducting a sort of “commission”, to those below them who had participated in each specific job. At the same time, the union leaders collected a separate round of contributions from all the workers in order to finance the unions’ network of social benefits – housing, schools, health, etc. This network was sufficient to maintain the support of the lower-level workers for the union leaders and hence to maintain the pecking order within the ports. [Ibid, pp. 173-174]

Wisecarver mentions that, under these arrangements, workers were effectively controlled in where they wanted to work and live: ‘Anyone wishing to move and be able to work in a different port had to receive explicit authorisation from the authorities and respective unions’. [Ibid, p.175]

On the topic – of workers being paid for more than they actually worked – Wisecarver writes amusingly:

When the time arrived (1981) to change the legislation and eliminate the monopoly, the card-carrying stevedores reportedly “worked” between 400 and 600 days per year and earned more than $US2000 per month, substantially more than annual per capita income in the entire economy. Such statistics were of great use in stifling potential opposition to the new law among nonparticipants in the ports. [Ibid, p.174]

Finally, we shall look at a topic which has the most relevance to conditions in Australia at the present: Chilean labour law. A kind of guild socialism existed:

Consider the case of “professional colleges”. These colleges were basically highly specialised unions formed to protect the interest of the profession practiced by their members; each College, along with its legal faculties and responsibilities, was created by its own law. Without being a registered, paid-up member in good standing with the relevant college, regardless of professional qualifications, one could not work as a lawyer, public administrator, architect, librarian, accountant, newsman, doctor, nurse, pharmacist, professor, etc. The specific laws gave colleges the right to set fees charged by their members as well as standards for their work, prohibit the public sector from hiring nonregistered professionals, prohibit non-members from offering professional services to the general public, ensure that only dues-paying professional were registered, and so forth. [Ibid, p.186]

In general, the Chilean labor law was based on an ideological worldview akin to that of Julia Gillard, Kevin Rudd and the modern Australian union movement:

Starting with publication of the 1931 Labor Code, legislation governing labor relations blossomed into a network of some 70 fundamental labor laws by the end of 1973. Aside from the numerous statutes granting special privileges, two general types of legislation might be considered. On the one hand, for individual contracts, lawmakers acted as if employees were gullible and naive while employers were shrewd and ruthless. Therefore, in order to protect the former from the latter, it was necessary to legislate hours of work (normal and maximum overtime), wages (minimum at least), work conditions, length of vacations and when they could be taken, and so forth and so on – nothing was left to change or negotiation. [Ibid, p.187]

One consequence of the Chilean system was that unions played an increasingly politicised role – just as they did in Britain and Australia in the 1970s:

Over time the unions began to acquire more and more economic and political power, particularly those that could associate themselves with important, protected industries. As the unions became more extensive, and with state intervention in the economy becoming continually more generalised, any labor problem quickly became a political problem, one that was most readily resolved by granting union demands. Given the ubiquitous state intervention, once the firm or industry had granted union requests, it could turn to the state for a compensating favor of some sort – a price readjustment, higher protective tariffs or tighter import restrictions, a tax exemption, whatever. It was a neatly closed, if totally distorted, system. [Ibid, p.188]

4. Solutions

We have only covered part of Wisecarver’s article: not included are agriculture, railroads, air transport, maritime shipping, electricity, telephones, water, fuel, finance and banking...

To Wisecarver, what matters the most is greater ease, comfort, efficiency and freedom of personal choice in day-to-day living. Wisecarver looks at Chile, sector by sector, and recounts what to him are the happy results of a policy of deregulation. For example, he enthuses that:

Before deregulation the route between Santiago and Valparaiso/Vińa del Mar was served by two firms which were characterised by old, uncomfortable buses and somewhat less than reliable service. By the end of 1982, there were 12 firms covering the same route. Nowadays, at any time of the day, one can, for example, take the subway to the outskirts of Santiago, wait no more than 15 minutes, and get on a new, modern, air-conditioned bus, arriving at one’s destination within two hours The fare was lower in nominal terms than it had been five years earlier. And passengers to the coastal cities and sea resorts were not the only beneficiaries; daily rates for swimming pools in Santiago also fell. [Ibid, p.164]

Less electricity brown-outs, better phone coverage, less theft of cargo at the docks, less wasteful employment of government workers who do little to no work, better customer service in taxis and airlines... The list goes on and on. Life was bad under socialism; after the downfall of socialism, and the rolling-back of many of Allende’s splendid ‘social reforms’ (and the ‘reforms’ by the administrations prior to Allende) life improved – even if it became less ‘socially just’, more ‘inequitable’, more prone to ‘dog-eat-dog competition’ and ‘capitalism’. In other words, Chile approached the standards of ease, comfort, efficiency that we have become accustomed to in the West. Today’s Left, in Australia and elsewhere, could not abide life in Allende’s Chile – or Castro’s Cuba, or Chavez’ Venezuela, or Kim Jong-Il’s North Korea. (And lest one object that such ‘standard of living’ concerns are trivial, it is undoubtable that the rather dismal and grim existence in the Eastern European and Soviet regimes in the 1980s hastened the demise of Communism in that region).

That question – of whether life under Allende-style socialism is better (or worse) than under deregulation – is one we will avoid here. The question which should be asked, and which we rarely hear, is, ‘How on earth do we get deregulation?’. That is, how does a country, politically, go about getting these things?. The surprising answer is: to a large extent, not through liberal democracy.

In Australia, the remuneration of almost every single occupation is fixed by the Australian Industrial Relations Commission (AIRC), which in turns makes it decisions based on claims put forward by Australia’s small, but powerful, trade union movement and the reckonings of a special ‘judiciary’ whose job it is to decide what is a ‘living’ wage, a ‘fair’ wage. Competition is outlawed: one cannot offer to work for less than the specified award rate (that is, the minimum rate for each and every occupation). Under the Liberal government of 1996 to 2007, some competition was introduced: workers were able to negotiate their own agreements, called Australian Workplace Agreements, outside the award system. The agreements were vehemently opposed by the union movement, and one of the first tasks of the Labor government elected in 2007 was to abolish them and tighten up laws against competition in the labour market further.

That is what one expects of the Labor Party, which is a centre-left party completely funded and controlled by trade unions. But the Labor government, once elected, did introduce competition into the wheat export market, in a move which would have delighted Wisecarver. Before 2008, Australian wheat-growers had to sell their wheat through a government board, the Australian Wheat Board (AWB). Because it had the monopoly – it was the only entity which had the legal power to sell – it could charge a ‘fair’ price, a ‘just’ price, for wheat exported overseas. Australian wheat-growers were forbidden to sell wheat at anything less than a price determined by the AWB. Why, given its adherence to deregulation, privatisation, liberalisation, individual choice, etc., did not the Liberal Party abolish the monopoly? The answer was because it was in a political coalition with the National Party, an agrarian socialist party, for its entire time in office. The Labor Party, which was not bound by such an alliance, and therefore not in need of propitiating a small special interest group, had no trouble at all in abolishing the monopoly – despite the vociferous opposition of rural socialists such as the senator Bob Katter. (One beneficial effect of the policy, and one which was intended, has been to open the export market to farmers prepared to sell their wheat at below the ‘socially just’, ‘living’ rate set by the AWB).

And there is the answer: under a representational liberal democracy, which, by design, represents small sectors of the Australian population, and not the nation as a whole, as an entire unit, deregulatory measures cannot be enacted on a large scale without offending some special interest pressure-group which demands that a government-enforced monopoly be upheld as long as possible. Furthermore, a democratically-elected political party often lacks the political power to take a policy of deregulation, liberalisation, etc., to the limit. To be consistent with regard to its stated beliefs, the Liberal Party ought to have abolished the entire award system, and the minimum wage; possibly, it could have done this in 1996 or in 2004, when it won crushing majorities (in 2004 in particular, it attained, for the first time, a majority in the Senate). But it did not. The reason why is that the Liberal Party had to contend with a pluralist liberal democracy. It is no coincidence that the policies of Chile after 1973 were enacted after the suspension of Chile’s liberal democratic constitution and a wide-reaching internal military campaign against the Chilean Left.

Advocates of neoliberalism do not often recognise this: they sneer at ‘big government’ and politicians and statesmen in general, and excoriate the state. They call for a ‘limited government’ which protects individual liberties against ‘tyranny’, that is, socialists in the legislative chambers. How that protection is to be achieved – through the diminution of the functions of government, and the excising of power-politics and national-minded statesmen from government – is never explained.

Some neoliberal theorists do recognise the conflict – between a competitive liberal society, and liberal democracy - presented here. In a pamphlet (‘The Conflict between Democracy and Economic Reform’, Political Notes no. 77, The Libertarian Alliance, 1993), Adriana Lukasova examines three governments which, in her view, successfully enacted neoliberal measures: the Pinochet dictatorship in Chile; the Thatcher government in Britain; the post-war occupation government in Germany in 1948. These governments were authoritarian (the occupation government in Germany was an Allied-installed dictatorship) and imposed their measures against the wishes of pressure groups such as the trade union movement, big business and the Left. Lukasova approvingly quotes the Chilean finance minister of 1981, Rolf Luders:

The Chilean tradition shows that governments endowed with strong authority, which have simultaneously guaranteed the exercise of economic freedom and of private initiative, have presided over the periods of greatest progress in the history of the country. (Lukasova, ‘Conflict-‘, p.2).

The formula is expressed, in some academic writings on the subject, as ‘Strong state, free economy’. Lukasova writes, of Britain in the Thatcher period,

In 1982 police were equipped with weaponry, police vehicles, communications devices, protective body armour and crowd control equipment. A system of national co-ordination was devised. The police National Reporting Centre, based at Scotland Yard, became a permanently available facility – to provide some of the benefits of a national police force without the odium of establishing one. (Ibid).

Again, the terms need to be defined: does a ‘Strong state’ equate a state with a large, well-equipped police force and army, and a secret police with special powers to carry out surveillance and arrest people without due process? France and Germany traditionally have had very powerful state security services: yet the French government is notorious for caving in whenever a large union demonstration against some unpopular ‘free-market reform’ takes place. President Sarkozy was elected as a neoliberal, but, in the end, gave in to the ‘French consensus’ – that is, sectional-group pressure – to abandon his proposals and stay with the same old French socialism and welfare-statism.

The same can be said of the term ‘free market’, or ‘free economy’. How are they free? No-one is free to buy or sell whatever they like and at any price. Otherwise, there would be, considering the large number of deviant consumers for them, a trade in child pornography or heroin.

These are some of the problems with the formula, ‘Strong state, free economy’. A more accurate formulation would be: ‘The state that says no’. That is, a state run by a small group of men and women who stay focused, at all times, on the national interest, and have the political strength to resist the demands of small, but highly vocal, political pressure groups. Such a state can ignore the union movement, and the industrial-relations judiciary, when introducing competition in the labour market; it can ignore the Marxist category of environmentalists and the indigenous rights lobbies in proposing sustainable development of the country’s gas, coal and minerals where it benefits the national (not international) interest; it can ignore the Bob Katter’s when deregulating agriculture; it can ignore General Motors when it asks for a $US70 billion bail-out (wasted on a company which is going bust anyway), it can ignore big business demands to increase the migration program to 300,000 per year, or developers demands to constantly expand cities and strip away every green belt. Such a state is a rare thing indeed, and rarely appears in a liberal democracy.

That state – one that says no - is one, by definition, that should appeal to nationalists. After all, a nationalist is someone who puts the well-being of the nation first and foremost. And surely it is no good for the nation when, for instance, 1.8 million Australians on welfare are unable to obtain work because, under the award system, the minimum wage rates for every occupation are being kept artificially high by a small special-interest minority, and so less jobs are created than would exist under a fully competitive system?

Many politicians confuse the special interest group for the people who make up the nation. The trade union movement, for instance, can mobilise large numbers of activists to demonstrate against an Australian government, in short notice; and, given its wealth, can mount extremely effective public relations campaigns using advertisements and other forms of propaganda and outreach. The politician, on the cusp of putting forward some proposal to reduce union powers to strike, or to bring about competition in one sector of the market, will look at those large masses of people and think, erroneously, ‘The Australian people are against me’. And often the battle can get ugly and involve actual violence, between unionists and ‘scabs’, and unionists and the police – as during the Australian maritime workers’ dispute of 1998, or the coal miners’ strike in Britain in 1984. In the liberal model, the state has the monopoly in coercion: that is, only the state has the legal right to arrest people, fine them, prevent them from entering certain premises, use some form of restraint and violence against lawbreakers. In a country politically dominated by large, violent trade-union movements, those functions are usurped: the state loses its monopoly, and unions can carry out coercion, commit acts of violence, at will. Given the seriousness of such conflicts, the politician can again mistake the actions of a small but powerful and well-organised group for the popular will, and hold back on introducing legislation for fear of starting what seems almost like civil war.

This is a problem in liberal theory: the constitution, the state structure, is there, in the liberal model, to protect individual freedom. What happens, then, if a small, well-organised pressure group use that freedom to push through legislation in parliament that violates that individual freedom – to work at a certain job at a certain rate, or to supply wheat on the international market at a certain price, or to prevent a rural land-owner from chopping down trees on his own property (in order to protect his house against a fire outbreak)? The answer is that freedom needs to be protected against such groups. Which is why a government, run on nationalist principles, needs to rule with a guiding hand, a firm hand.

Not serving the interests of such groups means that one is serving the interests of whole: which is what nationalism is all about. So, paradoxically, nationalists are, in this regard, advocates of a liberal society – perhaps the last defenders of liberalism in a socialist and environmentalist world. Nevertheless, it should also be noted that Nationalist Alternative is very much against unrestricted Free Market Fundamentalism which is Capitalism in its most terrorizing form. Genuine Nationalism is also intrinsically against Globalization too. This is because Nationalism wishes to preserve the identity, culture, and heritage of people and their Nations.