A borderline-panic has gripped U.S. markets, which experienced their worst two-day drop since 2008 (roughly 890 points). This may be just a prelude of things to come. Before going on: I sincerely hope this analysis is wrong! It may not be, and if you live in a big city in the U.S., my advice would be to pack up and get out!

In my book Four Cardinal Errors I spoke of the Meltdown of 2008, which ended with the infamous bailout of the very financial institutions whose reckless behavior caused the meltdown in the first place. But I could cite writers the rest of the day — many of them outsiders like myself who see the forest because we aren’t blinded by the trees — who believe the real financial holocaust is still ahead. With its epicenters the bubble economy in China as well as banker-dominated Europe (following the resignation of Alexis Tsipras in Greece) as well as the U.S., this holocaust could be about to begin.

We must revisit first premises in political economy. A philosopher is obligated to do this. Anyone may challenge me who believes any of these theses are wrong. Show me where!

1. Real wealth (as if there is any other kind) must be produced. It cannot be conjured out of thin air by, e.g., a central bank. The latter idea is magical rather than rational thinking. There are premises here which could have been earlier theses, but they go outside political economy. The physical universe is indifferent to our fate. Nor is God going to “drop us a sandwich” from on high. Hence the necessity of human action. Mises had that right. Actions — the conscious employment of specific means to achieve specific ends — are directed at solving problems, the first of which is ensuring our ability to eat and maintain shelter over our heads.

2. People increase their real wealth legitimately by producing more than they consume, within their communities. This involves cooperation as well as competition. Indeed, people must cooperate on many things if they are to live in a community.

3. A sustainable advancing civilization must therefore emphasize production and not just consumption. It must also encourage voluntary cooperation and trust. Voluntary is best, but as Hayek observed in The Constitution of Liberty (1962, ch. 4), coercion is avoidable only to the extent people act responsibly and predictably.

4. A sustainable advancing civilization must be able to pass its sustaining principles on to ensuing generations. This means taking education seriously, encouraging a variety of enterprises and endeavors to further it.

5. One’s moral compass should recognize the fundamental benevolence of production; it should also recognize both that “freedom is not free” and is not an absolute license to do anything one wants, because both ideas and actions have consequences, some of them unintended. Such ideas should be built into all education. And we should be able to revisit our goals and change course if actions to achieve those goals are causing harm we did not foresee. In other words, a moral view of the human world is a necessity, as is flexibility and a certain pragmatism. Morality should recognize the intrinsic value of persons, with all that ensues from this. A person is genetically human, and not just with a right to life but a right to live to the fullest possible without infringing on similar rights of others. To this extent, the libertarians have the right idea. What they get wrong is that people do suffer setbacks not of their own making, or begin with disadvantages not caused by themselves. And they get too old to work, and must be taken care of if not by family than by someone. To this extent, limited welfarism and safety nets are understandable.

6. There is a minority in any population that appears to lack a moral compass, however we understand it. This sociopathic minority adopts a fundamentally criminal mentality that plunders rather than produces.

7. A sizeable fraction of this minority is fascinated with power, and is driven to obtain power … and may well produce for a time (think Rockefeller in the late 1800s), intending to use its wealth not for the benefit of civilization but to buy favors from others, and eventually a political class of surrogate plunderers. This minority has also grown very skilled, almost instinctively, over time, at exploiting every secular materialist and ethical relativist philosophy, and every group-derived source of division and distraction, to sow confusion and disorder wherever possible, pursuing a “divide and conquer” strategy. Issues such as gay marriage, the so-called campus rape culture, and “black lives matter” fall into this category today.

8. Our civilization is failing in large part because we failed to identify, much less understand the mindset, and place checks on this minority … originally the infamous “robber barons” whose minions went on to create the Federal Reserve System in the U.S., followed by European central banks and the Bank for International Settlements in Europe. They understood a remark made by the early John Maynard Keynes that the system would begin the process of consolidating wealth and power in the hands of the few while discouraging saving and other responsible actions on the part of the many, doing so “in a manner that not one person in a million is able to diagnose.” They saw the masses as sheep who responded to conditioning, and designed educational philosophies and systems accordingly. (Think: John Dewey, who was discovered at Rockefeller-endowed University of Chicago and received his initial funding from the Rockefeller Foundation.)

9. It is over a century since the Federal Reserve System was created, and the descendants of this minority now have the financial systems of all the major economies of the world in a stranglehold. They are what I call the superelite (a term I use to avoid confusion with visible national political elites most of whom are bought). They have discouraged production in advanced nations in favor of financialization. They have encouraged those working for lower wages to continue spending as if there is no tomorrow, going into debt to maintain the same standard of living. They have created a single globalized network, whereby if, e.g., China drops into a massive recession, the ensuing economic effects will ripple across the rest of the world. They operate primarily through central banks and the corporations that have grown up around them. Although these institutions are technically private corporations, they do not really produce anything. They do not add value to the world. They merely manipulate paper (or its electronic equivalent). They engage in the magical acts of invention, creating complex instruments such as derivatives the combined paper wealth of which exceeds the real wealth on the planet.

10. It became conventional quite some time ago to blame “capitalism” for this situation … although the merging of private and public we see in the real world (as opposed to the fictitious worlds of ideologues of various stripes) is more characteristic of fascism. Since historically, fascism has always been openly totalitarianism and nationalistic, while the system we see is covertly totalitarian at best and globalist, the terms corporatism or global corporatocracy or technofeudalism are surely better. But clearly, casting this issue as a clash between capitalism and socialism greatly oversimplifies the matter at hand.

11. The proper strategy is to pursue decentralization … a devolving of power away from the center, away from central banks, leviathan corporations, and bloated governments whose bureaucracies enact the will of the superelite and bought-and-paid-for political classes. This strategy emphasizes the small over the large: small businesses, small and highly mobile educational enterprises of a wide variety, etc. This is the only way of ever recovering a world where we produce more than we consume, generate real wealth, and can also be at peace with each other and with the environment as a whole. See Leopold Kohr for some good ideas. His book The Breakdown of Nations, published in 1957 and completely ignored by mainstream academia, should be required reading.

12. The only way to pursue this strategy realistically is through a reawakening of skills-building and critical thought at all levels. The skills must include agricultural (growing things) as well as manufacturing (making things) and technological (coding, etc.). Critical thinking is an absolute must, as a means of achieving sufficient mental independence and grasping the logical structure of one’s surroundings. The result is that one can plan one’s actions rationally (i.e., recognizing that ideas and actions have consequences, some of them unseen). Part of the reason we are in our present predicament is the gutting of critical thinking as part of the gutting of liberal arts learning generally … to create the kind of obedient sheep fit to live in the covert (or inverted – to use Sheldon Wolin’s term) totalitarianism of the globalized order the superelite have been gradually constructing.
This last is the foremost political-economic reality of our time. If it is dismissed mindlessly as a “conspiracy theory” and not recognized and acted upon, none of our problems will be solved. Many people, moreover, will continue to pursue ideological fantasies or create political heroes of the day (Donald Trump is the best present example despite his getting some things right), and our civilization will continue its present decline. Under these terms those not connected to the superelite as functionaries or to the political class as bureaucrats will find themselves living in third world conditions, having to begin again from scratch, and with far fewer resources than are available now! Wouldn’t it be better to address the problems now, before an unprecedented global-financial emergency takes the world to that point?