Economics Isn’t About Money

October 6, 2016

by Jason Ross

Americans are deeply confused about economics, and this must be corrected. Many think economics is about money. It isn't. Others say it is about allocation of resources. Nope. Economics is the study of that most definingly human aspect of the human species: our ability to discover principles of nature and apply them to transform our relationship to nature and the ability of other members of our species to participate in that process.

Lyndon LaRouche has, over the past half-century, presented a science of economics and economic policy-making that has largely flown in the face of the ideas of America's chief policy-makers. During that time, the US economy has changed from one based on infrastructure-investment, science (as in the space program), and manufacturing, to one based increasingly on money itself. This is seen in the 50% growth of the so-called FIRE “industries” (Finance, Insurance, and Real Estate) as a portion of the US economy over the past 50 years, and the 50% collapse in manufacturing over that same time period.

Since the murder of President John F. Kennedy, US economic policy has been an accelerating disaster, bringing us to the present, where, less than a decade after what was considered the greatest financial crisis since the Great Depression, the banking system is in even worse condition (see Wells Fargo and Deutsche Bank) and the physical economy (as measured in manufacturing and the state of our infrastructure) has plummeted still lower.

This system will not self-correct. It must be replaced by a functional system of policies designed to be in coherence with the physical science of economics.

The Science of Economics

Base your understanding of economics on one simple fact: unlike animals, we change our relationship to nature. We discover and use entirely new physical principles (the steam engine, electromagnetism, nuclear science, Einstein's relativity and quantum discoveries) to effect new states of nature via new technologies. In this way, we create entirely new resources. For example, what good was uranium before nuclear science?

At the heart of this process is the act of scientific discovery. This requires a physical standard of living allowing concentrated attention to difficult problems, and it is a process that can be explicitly fostered.

Education, for example, must be based on re-creating creative acts of the past, made by the acknowledged geniuses that brought us to our present knowledge, rather than on unrelenting testing. Imagine if the standard twelve years of school were spent trying to create geniuses, with the opportunity to make and test hypotheses, based on a re-working of the greatest discoveries of the past? And how would our musical culture change if all children participated in choral singing and study of the compositions of J.S. Bach, the creator of well-tempered music?

What could our society accomplish if our efforts were directed, via well-chosen objectives, towards making the needed great scientific breakthroughs of the present, rather than, for example, shuttering our efforts at fusion research?

Starting from the uniqueness of the human individual, we can organize economy towards achieving improvements in our ability to support a growing population, and give that growing population a meaningful, efficient opportunity to participate in that human endeavor of progress.

Implementation Begins with Glass-Steagall

This requires the economic policy of Lyndon LaRouche's "Four Laws to Save the USA Now", which define the crucial points of policy needed for the present. Step one is the reinstatement of Glass-Steagall banking separation, both to avoid the complete disaster of collapse of universal banks, and to set the stage for the necessary role that banks must play.

Banks are not inherently evil! The regulated commercial banking sector that existed from President Franklin Roosevelt's 1933 reforms played an essential, necessary role in the economy, providing loans to allow for expansion of production and infrastructure. Despite the enormous sums provided as bailouts and guarantees to Wall Street, bank lending has decreased since the 2007-2008 financial crisis. Glass-Steagall will ensure that commercial banks once again earn their profit by old-fashioned banking: making loans of otherwise idle capital.

Glass-Steagall’s separation of necessary banking from gambling speculation must be followed by the second and third of those “four laws”: an approach of national banking and federal credit, which are required to be able to fund the necessary recovery measures for the nation, such as low-interest loans for a major upgrade of the nation's infrastructure platform. The American Society of Civil Engineers’ most recent infrastructure report card of 2013 gave the US a grade of D+, saying that $3.6 trillion was needed by 2020 just to bring existing infrastructure up to levels of adequate repair. But we must go far beyond this.

The New Silk Road and a Mission for the US

The frontiers of space and of the atomic nucleus beckon us, with the promise of new discoveries and shockingly powerful sources of power. The moon tempts us with the possibilities for scientific research impossible on earth, such as comparative planetology, easy high-vacuum experimentation, the unique potential for radio astronomy on the moon's radio-quiet far side, and the tantalizing potential of the helium-3 reserves on the moon as a nuclear fusion power source. The breakthroughs waiting to be made in nuclear fusion (and nuclear science more generally) hold the key to the next level of power for the human species, making the use of hydrocarbons for fuel obsolete (not to mention the absurdity of solar power).

Such breakthroughs are the true core of economics: the revolutions in the relationship of the human species to the universe. This, not money, is the true source, and measure, of value.

Make this our priority. Instead of wasting the trillions of dollars that have been sunk in useless, murderous, immoral conflicts in Iraq, Libya, and now Syria, and instead of cowering before the assumed power of financial interests, let us adopt a true mission for our nation, as among our colleague-nations creating a new economic and political outlook under the guise of the New Silk Road. This is the ambitious project led by China (and championed by Lyndon and Helga LaRouche for over two decades), which is sweeping a majority of the people on the planet in an economic direction characterized by infrastructure investment and connectivity.

By building the next platform of infrastructure here in the US, by crossing the Bering Strait and connecting the Americas to Eurasia, and by adopting a vigorous pursuit of space and fusion science, our nation can once again play a meaningful, positive role on the world stage.

Unlike choosing between two appalling alternatives in November, such a demand from the American citizenry holds the potential to change the world.