In my comment on the National Conservative Statement of Principles, I pointed to the economy as the logical focal point for conservatives who want to go from principles to practice. There are many good reasons for this, one being that the world community of socialists has made the economy ground zero for their own ideological expansion.
There is no shortage of examples of how socialism proliferates by means of economic policy; perhaps one of the most striking venues for this new ideological offensive is the rich fauna of international bureaucracies. The International Monetary Fund is engaged in promoting so-called sustainable development goals, and the European Union is deeply committed to ‘inclusive growth’ policies.
The United Nations is no exception. One of its foremost venues for promoting openly leftist, even downright socialist policies, is the UN Conference on Trade and Development. In its latest annual Trade and Development Report, UNCTAD presents a package of policy recommendations to governments around the world which, if implemented, would force free-market capitalism to succumb to socialism in short order.
To be clear, the report does not propose that governments take over private property in any form. It is a common mistake among non-socialists to assume that socialism is about state ownership of corporations. It is equally common to believe that fiscal and monetary policies—the UNCTAD report’s primary reform vehicles—cannot be used for transformative ideological purposes. However, that is exactly what the report proposes.
Socialization of private property applies only to the end stage of socialism, a.k.a., communism. The policies proposed by the UNCTAD report would pave the way for a wide expansion of the socialist ideological domain without ever reaching that goal. It does not need to: the end station of its journey is a point where capitalism and free markets have been reduced to curious anomalies.
Given the nature of the reforms proposed in the UNCTAD report, it is important for conservatives to learn about them, and how to fight back against them. This becomes even more important given that the report never even mentions ideologies. Its path to socialism is laid out quietly and under the guise of a technical vocabulary that is about as ideologically exciting as a concrete wall.
Do not be fooled, though. While the UNCTAD report is not explicit about the transformative consequences of its policy recommendations, it unabashedly agitates for using the economy as a tool for global social engineering. These ambitions are not confined to developing countries: the report goes to great lengths to call for changes to both fiscal and monetary policies in developed nations, precisely for the purpose of allowing a socialist ideological agenda to sprawl.
The report’s agenda is built around three ideologically charged adjectives, which are spelled out in their political end goal: “to put the world economy on a more stable, sustainable, and inclusive growth path” (p. 30):
- Stable economic growth, a promise often made by socialist economists, is said to be attainable through central economic planning;
- Sustainable growth is—to nobody’s surprise—defined by the expanded use of so-called renewable energy sources; and
- Inclusive growth refers to reduced inequality in the distribution of income, consumption, and wealth.
Providing more detail, the UNCTAD report also explains that the world’s current “challenges” are
complicated by the legacy of forty years of predominantly neoliberal economic policies in the main economies of the world [which] have left state capacity and international coordination in poor condition.
The report fails to mention that government has grown as a share of almost every major economy in the world over the past 40 years, a fact that throws the remark about “neoliberal” policies into disrepute.
Then, the report turns to policy recommendations, where the socialist, redistributive ideology takes yet another step forward. First, they propose the containment of inflation without “cutting wages.” This can only happen by means of price controls, which unsurprisingly the report considers to be “paramount” as policy instruments against inflation.
Since the absence of price controls did not cause inflation, their presence will not cure inflation.
The second policy proposal in the report suggests that government should manage economic growth instead of “mismanaging booms and busts.” In other words, the authors of the report believe they can defeat the business cycle.
This passage is particularly worrisome:
Maintaining sustained job creation and industrialization will require governments to have sufficient fiscal space for the necessary investments and ongoing support measures. Liquidity creation should always be allowed for development projects that guarantee, in the medium-long term, higher income and tax revenues.
How, then, do they intend to “guarantee” that investment projects generate “higher income and tax revenues?” By the force of government, of course—or, in their parlance, by “taming financial institutions to make sure they serve the broader social good.” In tandem with this openly ideological statement, they explain:
Industrial policies will also be required to target desired sectors and guide investment, along with better capitalized public banks committed to lengthening the investment horizon of private businesses, including through the productive leveraging of reinvested profits.
In the preceding paragraph, they explain that their policies will require the “rethinking” of the current central-bank independence “from any development and social goals.”
In short, the UNCTAD report suggests a systematic statist encroachment on the free market, the capitalist forces of prosperity, and the monetary and financial institutions of the free-market economy. The boldest statement of this ambition comes in the form of their call to eliminate business cycles, i.e., to end the “mismanaging” of growth periods and recessions.
Already Karl Marx thought that socialism would end the ebb and flow of the economy. He was so convinced that capitalism both caused business cycles and would implode under them, that he deemed socialism to be inevitable.
In the early 20th century, when free-market capitalism had disproven Marxism by simply continuing to generate economic growth and prosperity, other socialists devised a less deterministic path to ideological victory. A number of social scientists, among them British and Swedish economists, developed economic reforms in the 1920s and 1930s that had the ultimate goal of eliminating the business cycles that they saw as characteristic of capitalist economies.
The lead idea in these reforms was to make government such an active player in the economy that despite its free-market capitalist nature, recessions would no longer be a problem. Contributions to this new line of economic theory came from Cambridge economists like John Maynard Keynes, as well as from the economists of the theoretical tradition known as the Stockholm school (not to be confused with the similarly named academic institution). Based on these new theories, politicians all over Europe—and later in America—created government programs that would automatically spend money to counter recessions.
In some cases, the ambition was genuinely to just provide so-called automatic stabilizers for the business cycles, where the time in unemployment would be shortened and the economic pain from a slump was alleviated. In other cases, such as in the Nordic countries, government took on the more ambitious role of trying to eliminate recessions altogether. By controlling up to half of the economy, where spending would continue regardless of the economic conditions of the private sector, the impact of recession would theoretically be mild and limited.
Such lofty ambitions were founded in the writings of some early 20th-century economists who surmised that government could eliminate business cycles entirely. All it needed was a big enough government purse. The problem, though, was that these programs could not be financed with taxes, as that would push the cost of government well above what the taxpaying sector could muster.
Mid-20th century democratic socialists were torn between their ideological desire to show that socialism could end recessions (as if those did not exist in the Soviet empire…), and the apparent consequences of socializing too much of people’s money by means of taxation. They had to slow down or stop the progress toward their ideological end goal.
It was not until the 21st century came about that socialists began theorizing about money printing as a way to fund unending amounts of socialism. The breakthrough came in the form of modern monetary theory, or MMT. It was invented (‘concocted’ would be more appropriate) by a small group of economists at the University of Missouri, Kansas City around the turn of the millennium. I explained this theory back in 2019 (Cayman Financial Review, Vol. 56, pp. 65-66): “Its message is as simplistic as it sounds: governments should let their central banks pick up where taxpayers run out of money.”
When virtually endless money printing causes inflation, MMT proponents simply suggest that government raise taxes and claw back some of the money into government coffers. To date, not a single MMT economist has been able to rationally explain how Venezuela reached 10 million percent inflation by putting MMT to work.
The UNCTAD report does not mention MMT, but it shows all signs of relying on it for its policy recommendations. This is not surprising: the theory is well-entrenched in the United Nations bureaucracy. The UN’s Department for Economic and Social Affairs relied on MMT in its 2019 Global Sustainable Development Report. They explained that based on MMT, the world’s governments could finance any and all investment spending they desired with newly printed cash.
There is more evidence in the UNCTAD report that they rely on MMT in order to implement socialism. The idea to tame banks “to make sure they serve a broader social good” is an only slightly more convoluted reference to endless money printing. By suggesting that banks lend money based on social, i.e., ideological, preferences rather than sound market criteria, the report leaves unanswered the question of how banks are supposed to be capitalized when debtors are no longer selected based on the likelihood of paying back a loan.
Only one answer makes sense: the banks will operate based on a cash pipeline back to the central bank. This is in part how central banks have done business (to use the term loosely) in the past 15 years, when they have been buying government debt with ultra-cheap central-bank credit. The UNCTAD report apparently wants this practice expanded to the private sector as well, and—again—the lending to be based on ideological criteria rather than traditional free-market terms.
When the report says that it wants banks to help lengthen the investment horizon for business investments, it makes the very same point, but from the other side of the transaction. When banks make risk assessments, they weigh the interest rate and other loan conditions against the time it will take for the borrower to pay back the loan. Generally, the longer the term of the loan, the higher the interest rate. The UNCTAD report wants to uncouple these two variables.
If a business can borrow money over a long period of time at little or no interest rate, it can engage in projects that do not deliver a profit. Such projects would have similar goals as those that would be placed on banks: they would be guided by ‘green’ and ‘social’ criteria.
The more a country steers its economy away from doing business on traditional for-profit criteria, the more it needs government planning to function. By the same token, the more government planning replaces the profit motive in business operations, the more government is needed in order to simply keep the economy going. Eventually, as the profit motive is degraded to residual status, government becomes the only pacesetter for all forms of economic activity.
When government makes all the decisions on how we can spend our money, and why, it is of no consequence whether I own or rent my house. For all intents and purposes, free-market capitalism has been replaced as the principled foundation for not only our economy, but our society as a whole. Socialism has triumphed.
Hopefully, conservatives will learn to fight back in the economic arena before we reach this point.
Socialism By Monetary Fiat
In my comment on the National Conservative Statement of Principles, I pointed to the economy as the logical focal point for conservatives who want to go from principles to practice. There are many good reasons for this, one being that the world community of socialists has made the economy ground zero for their own ideological expansion.
There is no shortage of examples of how socialism proliferates by means of economic policy; perhaps one of the most striking venues for this new ideological offensive is the rich fauna of international bureaucracies. The International Monetary Fund is engaged in promoting so-called sustainable development goals, and the European Union is deeply committed to ‘inclusive growth’ policies.
The United Nations is no exception. One of its foremost venues for promoting openly leftist, even downright socialist policies, is the UN Conference on Trade and Development. In its latest annual Trade and Development Report, UNCTAD presents a package of policy recommendations to governments around the world which, if implemented, would force free-market capitalism to succumb to socialism in short order.
To be clear, the report does not propose that governments take over private property in any form. It is a common mistake among non-socialists to assume that socialism is about state ownership of corporations. It is equally common to believe that fiscal and monetary policies—the UNCTAD report’s primary reform vehicles—cannot be used for transformative ideological purposes. However, that is exactly what the report proposes.
Socialization of private property applies only to the end stage of socialism, a.k.a., communism. The policies proposed by the UNCTAD report would pave the way for a wide expansion of the socialist ideological domain without ever reaching that goal. It does not need to: the end station of its journey is a point where capitalism and free markets have been reduced to curious anomalies.
Given the nature of the reforms proposed in the UNCTAD report, it is important for conservatives to learn about them, and how to fight back against them. This becomes even more important given that the report never even mentions ideologies. Its path to socialism is laid out quietly and under the guise of a technical vocabulary that is about as ideologically exciting as a concrete wall.
Do not be fooled, though. While the UNCTAD report is not explicit about the transformative consequences of its policy recommendations, it unabashedly agitates for using the economy as a tool for global social engineering. These ambitions are not confined to developing countries: the report goes to great lengths to call for changes to both fiscal and monetary policies in developed nations, precisely for the purpose of allowing a socialist ideological agenda to sprawl.
The report’s agenda is built around three ideologically charged adjectives, which are spelled out in their political end goal: “to put the world economy on a more stable, sustainable, and inclusive growth path” (p. 30):
Providing more detail, the UNCTAD report also explains that the world’s current “challenges” are
The report fails to mention that government has grown as a share of almost every major economy in the world over the past 40 years, a fact that throws the remark about “neoliberal” policies into disrepute.
Then, the report turns to policy recommendations, where the socialist, redistributive ideology takes yet another step forward. First, they propose the containment of inflation without “cutting wages.” This can only happen by means of price controls, which unsurprisingly the report considers to be “paramount” as policy instruments against inflation.
Since the absence of price controls did not cause inflation, their presence will not cure inflation.
The second policy proposal in the report suggests that government should manage economic growth instead of “mismanaging booms and busts.” In other words, the authors of the report believe they can defeat the business cycle.
This passage is particularly worrisome:
How, then, do they intend to “guarantee” that investment projects generate “higher income and tax revenues?” By the force of government, of course—or, in their parlance, by “taming financial institutions to make sure they serve the broader social good.” In tandem with this openly ideological statement, they explain:
In the preceding paragraph, they explain that their policies will require the “rethinking” of the current central-bank independence “from any development and social goals.”
In short, the UNCTAD report suggests a systematic statist encroachment on the free market, the capitalist forces of prosperity, and the monetary and financial institutions of the free-market economy. The boldest statement of this ambition comes in the form of their call to eliminate business cycles, i.e., to end the “mismanaging” of growth periods and recessions.
Already Karl Marx thought that socialism would end the ebb and flow of the economy. He was so convinced that capitalism both caused business cycles and would implode under them, that he deemed socialism to be inevitable.
In the early 20th century, when free-market capitalism had disproven Marxism by simply continuing to generate economic growth and prosperity, other socialists devised a less deterministic path to ideological victory. A number of social scientists, among them British and Swedish economists, developed economic reforms in the 1920s and 1930s that had the ultimate goal of eliminating the business cycles that they saw as characteristic of capitalist economies.
The lead idea in these reforms was to make government such an active player in the economy that despite its free-market capitalist nature, recessions would no longer be a problem. Contributions to this new line of economic theory came from Cambridge economists like John Maynard Keynes, as well as from the economists of the theoretical tradition known as the Stockholm school (not to be confused with the similarly named academic institution). Based on these new theories, politicians all over Europe—and later in America—created government programs that would automatically spend money to counter recessions.
In some cases, the ambition was genuinely to just provide so-called automatic stabilizers for the business cycles, where the time in unemployment would be shortened and the economic pain from a slump was alleviated. In other cases, such as in the Nordic countries, government took on the more ambitious role of trying to eliminate recessions altogether. By controlling up to half of the economy, where spending would continue regardless of the economic conditions of the private sector, the impact of recession would theoretically be mild and limited.
Such lofty ambitions were founded in the writings of some early 20th-century economists who surmised that government could eliminate business cycles entirely. All it needed was a big enough government purse. The problem, though, was that these programs could not be financed with taxes, as that would push the cost of government well above what the taxpaying sector could muster.
Mid-20th century democratic socialists were torn between their ideological desire to show that socialism could end recessions (as if those did not exist in the Soviet empire…), and the apparent consequences of socializing too much of people’s money by means of taxation. They had to slow down or stop the progress toward their ideological end goal.
It was not until the 21st century came about that socialists began theorizing about money printing as a way to fund unending amounts of socialism. The breakthrough came in the form of modern monetary theory, or MMT. It was invented (‘concocted’ would be more appropriate) by a small group of economists at the University of Missouri, Kansas City around the turn of the millennium. I explained this theory back in 2019 (Cayman Financial Review, Vol. 56, pp. 65-66): “Its message is as simplistic as it sounds: governments should let their central banks pick up where taxpayers run out of money.”
When virtually endless money printing causes inflation, MMT proponents simply suggest that government raise taxes and claw back some of the money into government coffers. To date, not a single MMT economist has been able to rationally explain how Venezuela reached 10 million percent inflation by putting MMT to work.
The UNCTAD report does not mention MMT, but it shows all signs of relying on it for its policy recommendations. This is not surprising: the theory is well-entrenched in the United Nations bureaucracy. The UN’s Department for Economic and Social Affairs relied on MMT in its 2019 Global Sustainable Development Report. They explained that based on MMT, the world’s governments could finance any and all investment spending they desired with newly printed cash.
There is more evidence in the UNCTAD report that they rely on MMT in order to implement socialism. The idea to tame banks “to make sure they serve a broader social good” is an only slightly more convoluted reference to endless money printing. By suggesting that banks lend money based on social, i.e., ideological, preferences rather than sound market criteria, the report leaves unanswered the question of how banks are supposed to be capitalized when debtors are no longer selected based on the likelihood of paying back a loan.
Only one answer makes sense: the banks will operate based on a cash pipeline back to the central bank. This is in part how central banks have done business (to use the term loosely) in the past 15 years, when they have been buying government debt with ultra-cheap central-bank credit. The UNCTAD report apparently wants this practice expanded to the private sector as well, and—again—the lending to be based on ideological criteria rather than traditional free-market terms.
When the report says that it wants banks to help lengthen the investment horizon for business investments, it makes the very same point, but from the other side of the transaction. When banks make risk assessments, they weigh the interest rate and other loan conditions against the time it will take for the borrower to pay back the loan. Generally, the longer the term of the loan, the higher the interest rate. The UNCTAD report wants to uncouple these two variables.
If a business can borrow money over a long period of time at little or no interest rate, it can engage in projects that do not deliver a profit. Such projects would have similar goals as those that would be placed on banks: they would be guided by ‘green’ and ‘social’ criteria.
The more a country steers its economy away from doing business on traditional for-profit criteria, the more it needs government planning to function. By the same token, the more government planning replaces the profit motive in business operations, the more government is needed in order to simply keep the economy going. Eventually, as the profit motive is degraded to residual status, government becomes the only pacesetter for all forms of economic activity.
When government makes all the decisions on how we can spend our money, and why, it is of no consequence whether I own or rent my house. For all intents and purposes, free-market capitalism has been replaced as the principled foundation for not only our economy, but our society as a whole. Socialism has triumphed.
Hopefully, conservatives will learn to fight back in the economic arena before we reach this point.
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