Discover the fundamental cause of crises and how to end them: a short guide to stable and just society

After my many posts on the subject, I can finally announce that my I finished the book on non-profit society. To get the feeling, what the book looks or feels like, here is the first chapter:

Part 1: Profit of Capital

Chapter 1: Introduction

Built into the foundations of the capitalist system, crises are an inevitable result of its underlying demand to accumulate profit. To prevent crises in the future, profit should be abolished and the world steered towards a non-profit society. However, such a transition can only take place gradually and in conjunction with understanding the deeper reasons behind crises and changes in the system of values. 

The period of the end of the twentieth and early twenty-first century was marked by a pace of change and technological progress that were unparalleled in the entire history of humanity. The first technological advances in prehistoric times aimed at improving the quality of human life. Early men devised different tools to help them hunt and work the fields. They learned to make fire to keep warm and prepare food and invented the wheel to facilitate transportation. Every bit of progress that had been achieved served the purpose of making life better or easier.

What about the technological advances at the turn of the twenty-first century? Is the current progress also intended to make our lives easier? As matters stand today, this seems not to be the case. Most people work just as much, or even more, to earn a livelihood now than they did one hundred years ago. On the other hand, there is not enough work for all and some struggle to make ends meet.

Major technological progress has been achieved in the sphere of communications, which allows us, among others, to follow the daily events in any part of the world. Unfortunately, the news is rarely uplifting. Most media coverage focuses on unemployment, corruption, poverty, hunger, wars, refugees, pollution, global warming, etc. And, of course, there is also weather forecast, which can sometimes also be good.

In light of everything that is happening around us, we have to ask ourselves where the world is heading. One economic crisis is followed by another, a war here is followed by a war there, a significant portion of the population is malnourished, while discontent grows and terrorism proliferates. And even in brief periods—if any—when there happen to be no economic crises and wars, the world is facing the threat of depleting natural resources, pollution, global warming, and ultimately, ecological disaster. In other words, rather than use advanced technologies to tame nature and prevent natural disasters as effectively as possible, humanity mostly exploits them to deplete natural resources, cause global warming, and head towards environmental catastrophe. Such a mindset is best portrayed by Louis XV’s phrase: “After me, let the Deluge come”.

Throughout the entire history of humanity, periods of peace were followed by periods of war, periods of prosperity were followed by periods of poverty, and periods of economic expansion were followed by periods of depression. Albeit marked by democracy and capitalism—the best possible systems according to most—contemporary world, too, has witnessed alternating periods of abundance and crises. However, from time to time, as Yannis Varoufakis writes in his book The Global Minotaur, a big one with a capital C comes along, by which he is primarily referring to the Great Depression of 1929 and the financial and economic crisis of 2008. According to Varoufakis, Crises bring about a major global change, which prompts governments (especially in the US and Europe) to pass various measures and introduce mechanisms to prevent them from occurring in the future. However, despite all the measures adopted after World War II, which put an end to the Great Depression of 1929, a series of crises of varying magnitudes ultimately led up to the Crash of 2008. Governments are once again adopting various measures to overcome the current Crisis and prevent similar Crises in the future.

This raises an array of questions. Is this a natural and hence inevitable course of things? And conversely, if all this could be averted through appropriate measures, the logical question would be: Are governments taking correct steps? Are these steps effective in preventing future crises, wars and ecological disasters?

To be able to take appropriate action, it is first necessary to understand the deeper reasons behind continual crises, depletion of natural resources, global inequality and hunger, and consequently terrorism. Full understanding of these reasons provides the key to taking appropriate measures in addressing the causes rather than consequences, since only such actions will have a long-term effect. The problem, therefore, must be addressed at its roots.

Unfortunately, the vast majority of people are unfamiliar with the root causes of the current situation. It is universally held that the current socio-economic system is a sound one and that its rules are sacred and fixed. What is more, having become ingrained in the collective consciousness of contemporary and especially Western society the opinion above has led to a generally held belief that the existing system, at most, only requires minor corrections. Therefore, since crises cannot be averted, the only thing that we can do is to alleviate their effects. Such is the majority opinion today.

There are certainly individuals who are fully familiar with the root causes of all the problems that plague contemporary world, but their knowledge is far from general consensus. Many members of the global political elite have a clear understanding of the causes as well, but use the current situation to their advantage. Or at least, they believe that they will gain an advantage, led by their short-term thinking epitomised by Louis XV’s phrase: “After me, let the Deluge come”. These representatives of the elite will do anything in their power to prevent the deep-rooted belief from changing and to maintain the status quo in the future.

In the very distant past, crises (scarcity, hunger, disease, etc.) were caused by natural phenomena. Scarcity was usually a consequence of droughts, floods, and other natural disasters or demographic growth. They fuelled tribal conflicts in which stronger tribes took the spoils of war and new territories.

In contemporary world, crises occur for very different reasons. The Crash of 2008 was not caused by a natural disaster. The number of floods, droughts or other natural disasters that year was no greater than in the years preceding it. There was likewise no sudden surge in population growth to jeopardise food security; quite the opposite, every single day the Western world throws away enormous quantities of food. Moreover, there was no sudden change in employment rates or education levels, and there has to date been no shortage of raw materials and energy resources. In short, there was no natural cause for the crisis.

As I will explain in the continuation of the book, the reason why crises continue to plague contemporary world, in which humanity is capable of producing enough to sustain itself, lies at the very core of the existing economic system, i.e., capitalism.

The basic assumption of capitalism is that capital should generate profit. This economic premise is equivalent to mathematical axioms or religious dogmas. In mathematics, an axiom is a proposition whose truth is so evident that it requires no proof. All mathematical theorems can be derived from axioms with the use of formal logic. Different axioms also define different mathematical systems. Let us take, for example, Euclid’s axiom that two parallel lines never intersect. The said axiom distinguishes between what is called Euclidean and non-Euclidean geometry, which differ in many aspects.

With mathematical axioms being selected not to contradict each other, mathematics can be used to describe physical phenomena or material world. Religious dogma is a truth revealed by God, which must not be doubted or explained. Different dogmas form part of different world religions.

The premise that capital should generate profit is more reminiscent of a dogma than an axiom. Economists take it as the sacred truth, which must not be questioned or doubted. According to general consensus, the profit of capital is indispensable, because the system cannot function without it. Without the profit of capital there is no interest in investments; without investments, there is no progress; and without progress, the existing infrastructure starts to crumble, which inevitably leads to recession.

However, the fundamental reason for recurring crises lies precisely in the profit of capital, as well as all the mechanisms that make it possible and all their consequences. As we will see in the continuation of the book, the thesis on the inexhaustible profit of capital does not withstand theoretical analysis. Therefore, mechanisms that ensure it inevitably lead to crises. No matter what measures are taken to maintain the profit of capital, they cannot prevent new crises in the long run. Even if some measures prove effective in averting minor crises, a big one with a capital C is bound to hit sooner than later.

The abolishment of the profit of capital would entail an alteration in the very foundation of the capitalist system, a radical change, a shift towards some other, more advanced socio-economic system. Why do we say socio-economic rather than just economic system? Because contemporary democracy and the capitalist economic system are inextricably entwined. Changes in one affect changes in the other. Capital now has a tremendous influence on decisions passed by democratically elected politicians.

Winston Churchill once said that, although not perfect, democracy is the best form of government. There is, indeed, nothing wrong with the idea of democracy itself, but a great deal can go wrong with many of its by-products. The word democracy comes from the Greek words demos (people) and kratein (to govern), and means “government by the people”. Democracy as we know it today is a far cry from that. With capital governing every aspect of social life, it might as well be called capitocracy.

Socio-economic systems have undergone many changes throughout history. Once a given socio-economic system no longer kept abreast of the developments in technology and social awareness, it gave way to a new one. For the most part, transitions were not easy; quite to the contrary, they could be extremely painful and even bloody. No new socio-economic system has ever proved perfect either. These are the main reasons for our fear of thorough changes or radical overthrows and our insistence on maintaining the existing system, even though it drags us from one crisis to another.

Nevertheless, we should bear in mind that, without a radical systemic change, the world is veering towards a Crisis that will unleash ecological disaster or a global war and destruction, from which it will be impossible to recover.

An abrupt change to the current socio-economic system is neither possible nor reasonable, as it can only be brought about by a violent revolution. In the past, revolutions have failed to deliver the change they had promised, despite perhaps the best intentions of their leaders.

A splendid explanation as to why violent revolutions are ineffective was provided by G. I. Gurdjieff in Beelzebub’s Tales to His Grandson. In the book, published at a time when the Bolshevik Revolution in Russia had not even started, the author concluded that a revolution could in no way bring the anticipated results. Revolutions are violent and require violent people. Once a revolution succeeds, the power is transferred to the same violent people and hence becomes inherently violent itself. Moreover, the new ruling class needs a great deal of time, sometimes several centuries, to learn the ropes of ruling as well as to find how certain measures affect society and through it the ruling class. Revolutionaries who come to power have no experience of government. They usually start by completely dismantling the old system, without discriminating between its good and bad features. History is replete with such examples.

Changes that lead towards a new and stable socio-economic system that would meet the challenges of today’s world should be introduced gradually and with a sound understanding of social and economic processes. That is what this book is about. It has been written in the hope to contribute, if only slightly, to a better comprehension of the complex developments and in this way facilitate changes in the right direction, namely, towards a society that will not face crises, poverty and hunger, except as consequences of natural disasters over which mankind has no control.

The broadest possible understanding of the root causes of crises, inequality, and the depletion of natural resources is a key prerequisite for the introduction of changes that will lead in the right direction. The goal of this book is therefore to provide a comprehensible explanation as to why and how the basic premise of capitalism—i.e., that capital should generate profit—inevitably leads to crises, wars, and ecological disaster.

The ideas here are presented on very simplified, but no less valid or generally applicable, examples. Complex examples often only distort our view. If we look at one tree at a time, we can’t see the forest. So, in order to see the forest, we have to take a step back and look at the full picture.

Let me illustrate this with a simple example. Several marble collectors gather in an empty room to exchange their marbles by trade or some other method. The collectors may play various games where the winner takes all the marbles. They may swap marbles of different colours. They may conceive arbitrary, even incredibly complex rules under which the exchange takes place

However, looking from a distance, we don’t need to know what kind of and how many games are played, under what rules or what values are ascribed to specific marbles in the exchange to arrive at certain independent conclusions. If we know that no one in the room can produce new marbles, we may safely claim that all players end up having the same or a smaller number of marbles than at the beginning of the exchange; smaller only in case they lost or destroyed any. If in the end, one player keeps a greater number of marbles than at the beginning, we may conclude with certainty that some other player has ended up with fewer. This has nothing to do with the rules under which the marbles have been exchanged. Rather, it is a consequence of the simple fact that marbles cannot be created out of thin air.

In a similar vein, the current economic system is governed by a number of highly complicated rules and employs a multitude of financial instruments and derivative financial instruments which completely obscure the full picture. The purpose of this book is neither to expound nor to understand these mechanisms, as some are not even understood by those who devised them. Instead, it proposes to take a look at the problem from a slightly greater distance to reach a few general conclusions by drawing not on these rules but natural laws.

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The rest of the book is available at https://www.smashwords.com/books/view/714355

If you cannot afford to buy it, just let me know and I'll send you a coupon for free download. Or, for the first 22 copies, you can use a coupon code FH49S at checkout to get the copy for free.