Monday, January 25, 2016

"The acolytes of central planning are losing control, and they are now admitting it."

Davos: The Intensive Care Unit of the New World Order
Gary North

Every January, the richest people in the world get together to meet at Davos, Switzerland, at the World Economic Forum.

Also present are the best and the brightest in the Keynesian community, whose plane fares and hotel rooms are taken care of. These are the hired hands.

Every year, everyone hopes he is going to hear some great speech that will transform his business or his career. Everybody thinks at the end of the sessions that he must have missed the big speech, once again, the same way he missed it last year.

Austrian school economists are not invited to the festivities. That's because they don't think that Keynesian central planning and Keynesian central banking have much of a future. They keep saying so, and this message is not congenial to the World Economic Forum.

This year, the preliminary press releases about some of the major speeches indicate that the New World Order really is bordering on the New World Disorder. The acolytes of central planning are losing control, and they are now admitting it.


The international old boy network is figuring out that they are being replaced by digital networks. They are like the specialist traders in the commodity futures pits, who for over a century screamed and used hand signals to communicate their buy and sell decisions. These people have been replaced by computer networks. The same thing is now happening to the New World Order.

You may think I am exaggerating. So, let me quote from an article from a representative of the New World Order, the Director of the European branch of the Council on Foreign Relations.

The Keynesian model is based on the idea that committees of specialists are in a position to make better decisions than market forces are. Market competition just cannot get the job done, the Keynesians insist. Their problem is this: market competition now is based on computer networks, and the grand designs of the central planners and welfare state advocates are steadily losing ground. This has created great consternation in high places.

For example, labor markets are being revolutionized by computerization and robots which are funded by the very people who are showing up at Davos, and who are getting rich off of this development.

True revolutionary change is a rapid, fluid, and inherently indeterminate process. But there has been no indication so far that transformative economic change will lead to the types of policies -- for example, a minimum basic income, greater investment in public goods, heightened multilateral cooperation, and closer regional integration -- that would promote political stability.

In other words, computerization is creating international economic cooperation. Digital networks are spreading across geographical borders. But, horror of horrors, there is no international agency with sanctions comparable to those possessed by national governments. So, as trade, digital money, information, and almost everything else that makes the world go round is becoming multinational, the central planners are losing control. Central planning has always been limited to national sovereignties, and national sovereignties are losing control over the flow of funds, the flow of goods, and the flow of information.

Simultaneously, in reaction to this, a new domestic nationalism is upset about international trade. It is upset about open borders. So, instead of turning over power, as in the past, the representatives of the voters have decided to reclaim power from the old boy multinational network. The NWO sees this coming.

On the contrary, rather than embrace the new global connectivity, there is a yearning to build fences and walls, resist trade deals, and restore national independence.

So, on the one hand, internationalization is taking place outside the boundaries of Keynesian central planning. It is taking place in tax havens, and this process is accelerating. Keynesianism does not have much ability to allocate assets across national borders. Meanwhile, those forces politically that are gaining strength today are doing so at the expense of the multinational worldview of the kinds of people who show up at Davos.

In short, the New World order is damned if it does, damned if it doesn't. The internationalism of the free market is undermining national control by national political and bureaucratic government planning agencies. Meanwhile, political forces are moving in the direction of undermining the international institutional arrangements that had been the tools of multi-nationalism used by Keynesian international planners and opponents of national sovereignty.

These people do not know how to deal with this twofold problem. To the extent that the economy goes multinational, the New World Order loses power. Why? Because there is no international agency that possesses anything like the ability to impose sanctions across national borders. So, the digital economy is working against them. It is working against central banking, too.

But the politics of nationalism is no longer based on the kinds of chummy connections that have characterized the Council on Foreign Relations and its various clones in other nations. The nationalism that is rising up around the world is not New World Order Keynesian nationalism, but rather an older nationalism that favors national sovereignty, not sweetheart deals across borders that were initiated by government-employed bureaucrats on behalf of multinational conglomerates.


The rhetoric of equality has always been prominent in the NWO. But inequality has been around forever. Economist Vilfredo Pareto discussed it back in 1897. If anything, wealth is getting more unequal than it was when he wrote. The consciences of the Davos crowd are being pricked by the results of the investment strategies of the superrich members of the Davos crowd. They keep getting richer, and inequality keeps increasing.

What's a guilt-ridden multibillionaire to do?

The whining intensifies.

Former German Foreign Minister Joschka Fischer paints a bleak picture. He points to a nationalist backlash in the West -- exemplified by the strength of political leaders such as Donald Trump in the U.S., Hungarian Prime Minister Viktor Orbán, Polish political boss Jaroslaw Kaczynski, and French National Front leader Marine Le Pen. One reason for their surge, he argues, is that "the 'White Man's World' -- a lived reality assumed by its beneficiaries as a matter of course -- is in terminal decline, both globally and in the societies of the West." Today's backward-looking ethno-nationalists defend an identity and a worldview "threatened by immigration, globalization of labor markets, gender parity, and the legal and social emancipation of sexual minorities."

But when you look around at Davos, it's mostly white, and it's mostly male. Oh, woe!

To use Hayek's language, the spontaneous order is getting away from these people. They had thought that the Keynesian manipulation of national economies would work just as well across borders. They promoted managed trade. They promoted central bank hegemony. And now look what it's got them.

And the process of creative destruction is occurring faster than ever. Confronted by the meteoric rise of Uber, for example, traditional taxi drivers "are being asked to adjust in a matter of days, rather than years, leaving democratic systems little time to determine how much compensation they should receive, and how it should be distributed."

The phrase "democratic systems" means Keynesian planning. So many promises, so little time!


As the Internet spreads, and smart phones get cheaper, and Wi-Fi gets wider, the Keynesian hegemony is steadily replaced. There is not a thing any of these people can do about it. They can yell, they can scream, and they can promote this or that nongovernmental organization (NGO) that has no teeth, but there is nothing they can do at this point to reverse the spread of digital communications. They can't control the media any longer. The newspapers are going out of business. Cable television is replacing the TV networks. Matt Drudge has far more influence than The New York Times.

About the only control that they have left is the university system. When your strongest card is a tenured professor, you are not in a strong position. Some 60-year-old geezer with a tweed jacket with leather patches on the elbows, who has not revised his lecture notes since 1988, and who lectures for no more than six classes a week, is not the stuff of world domination.

From their point of view, it's all going to hell in a handbasket. ". . . global multilateral institutions are in jeopardy of being sidelined by a new generation of competing friendship clubs." The horror!

They get richer, but only by surrendering to market forces. They make more money, but they have less control. In the free market social order, the customer is king, not the producer. The producer serves his customers, not the other way around. The free market is not politics. Public servants in politics push people around. Producers in the market order are servants, and if they do not meet customer demand, customers take their business elsewhere. These men resent it, but there is nothing they can do about it. Market forces transfer authority to consumers, and the consumers now buy and sell across borders. Nationalists of all varieties, whether Right-wing, Keynesian, or Left-wing, are fighting a rearguard action.


These people are gathering at Davos to hear the reading of the last will and testament of a system that goes back to the decade before World War I. Their social class has been in the driver's seat for a century. Now, however, Uber is replacing them.

"Uber, Uber, Uber alles!"


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