Current Concerns: Professor Wohlmeyer, in the Corona crisis, which has now been going on for more than a year, we are once again confronted with the claim that this pandemic only allows one way forward for our future order of -politics, economy and society. Klaus Schwab, founder and director of the World Economic Forum WEF, has tried to define this one path: in his book “COVID-19: The Great Reset”, together with Thierry Malleret. How do you assess this allegedly no-alternative concept?
Heinrich Wohlmeyer: Klaus Schwab assumes that the fourth industrial revolution will worldwide leave no traditional social stone standing thanks to technical advances in biology (especially genetics), IT (Big data and digitalisation up to Internet of Things [IoT], 3D printing, etc.), physics (up to nanotechnology), transport (e. g., use of drones in the service sector). We would have a window of opportunity that must be used to build a new social order. This would require a technically supported global governance.
Criteria for the assessment of the “Great Reset”
I suggest that we use the three criteria of the deceased social ethicist Johannes Schasching to evaluate the assessments and proposals made in the “Great Reset”:
I would like to add the recommendations of the Nobel Prize winner for neurology John C. Eccles and the Swiss behavioural biologist Hans Zeier from their joint book “Gehirn und Geist. Biologische Erkenntnisse über Vorgeschichte, Wesen und Zukunft des Menschen“ (Brain and Mind. Biological insights into the prehistory, nature and future of man). For a successful shaping of society which is adapted to human nature, they call for manageable social units with direct physical contacts and insightful roles, as well as a technology adapted to this.
Finally, the easily memorable five system principles of the biosphere, which I have introduced into the ecological discussion (key principles for the sustainable shaping of demand covering systems that are adapted to nature and people):
All orientations should be included in the attempt to make an unbiased assessment.
An anonymising global enforced conformity
Can you explain this in more detail, for example with regard to the criterion of human justice?
Since we are designed to live and work in manageable groups, an anonymising global enforced conformity, in which the human being is only a number in the global collective, leads not only to a reduction in individual happiness, but also to an increase in mental illness, which again additionally weakens the immune system.
In his concept, Klaus Schwab favours the expansion of everything that is technically possible. Many of these ideas are based on a mania for feasibility that fundamentally misjudges earthly reality and the human being and is therefore anything but humane.
In addition, much of Schwab and Malleret’s work is based on a “Western view of prosperity”: If the COVID-19 measures would lead to a “rethinking of priorities”, as Schwab and Malleret claim in their book, then one must counter that the great mass of poor and hungry people have no time or opportunity to weigh up priorities. These fellow human beings must think exclusively of survival.
Schwab’s criticism on the national state is no more than a prejudice
And what about social justice?
Schwab is convinced, according to his speech at the Chicago Council of Global Affairs in June 2019: “The fourth industrial revolution will lead to a fusion of our physical, digital and biological identities as part of the ‘Great Reset’.” “Bringing together capitalism and socialism to create a productive and inclusive economic and social model.” This conviction is pulsing through the whole book “The Great Reset”. When on page 107 of his book the “trilemma” of globalisation, democracy and the national state is asserted, in which only two are compatible from the perspective of world welfare, namely globalisation and democracy, this is clearly a technocratic misjudgement. The national states are the cradle of democracies and can interact meaningfully through the international law.
The statement in the book’s conclusions: “The pandemic is a rare but narrow window of opportunity to reimagine and reset our world” is therefore a statement “from above”, and this supports a totalitarian world state – a “supernanny world state” in a social and green security cloak with satisfied unfree.
Thus, the analyses and proposals of Klaus Schwab and Thierry Malleret could be summarised as follows: A renewed soft, globally controlled capitalism “less divided, less polluting, less destructive, more inclusive, more just and fairer” – but with less freedom.
What is needed is a redesign according to the measure of the human being
Today we have decided to talk primarily about alternatives to the “Great Reset”, both in principle and in concrete terms. Let us start with the fundamental principles.
Indeed, the “Great Reset” is not a perspective, and we should not dwell on it too long. The redesign according to the measure of the human being and the ecosystem of the earth does not need a “Great Reset”, it would rather have to decentralise, intelligently network and, above all, give the citizens a voice through direct democracy, which would also give space to the delightful cultural diversity.
Information technology and microelectronics – Seven-league boots to decentralisation
What tasks do we face?
I see three main tasks: our energy system, our way of doing trade and our financial system.
The energy system is currently fossil-based, we carry our money to the oil states, they use our money to buy up businesses in our country, and we lose purchasing power. There is the possibility of building regional energy supply systems. But then you also have to regionalise the demand response systems in general. That is an essential point! I have always told my students: We have developed the seven-league boots of decentralisation: information technology, microelectronics, telecommunications – and instead of for intelligent decentralisation we use them for inappropriate centralisation. Centralisation is always linked to undemocratic measures, because the local citizen is referred to the guidelines from the head office.
I n the trade sector, it is always “prayed” of the economists what David Ricardo said in his time: Production should go to the relatively best and cheapest. But now that we have very different social and ecological standards in world trade – see USA, Europe, China, India and other states – production goes to the absolutely cheapest, not to the relatively cheapest, and the system no longer functions.
We have a monetary dictatorship
On the financial sector: Friedrich August von Hayek talked about the natural interest rate that generates, because when the economy is starting up, the demand for credit increases. This causes the interest rate to rise. This again acts as a brake, and the credits become cheaper, and that again provides an incentive for the economy to start up. But all that no longer exists. We don’t have competition in the monetary system at the moment, but a monetary dictatorship. When I look at Europe, it is a simple disaster. What we are now experiencing in the COVID-19 management is a quite massive public debt. And the credits are again given by the money powers of the world, who are getting even richer. For it must always be repeated: every debt is matched by assets. We have a debt money system. And therefore, we need an orderly world debt cut. These super assets are born out of nothing. We know that money is created out of nothing. Here I would like to go back to my colleague Richard Werner, a financial scientist at De Montfort University in Leicester, who spent ten years in Japan and wrote the best book on the Japanese yen, “Princes of the Yen”. He says: “We have to return to regional money creation so that the expansion of the money supply benefits the community again and we can use it to finance general prosperity and infrastructure!” (cf. Current Concerns No. 8 of 13 April 2021)
We must re-regionalise currencies
This is, I believe, a very clear message that we cannot ignore. We need to re-regionalise the currencies and put them in the hands of the communities so that we can conduct monetary policy in a prosperity-enhancing way. There is an interesting smaller US bank, the Bank of North Dakota. There they have subliminally created a state bank, but they have never become active enough for the Federal Reserve System to take action against them. Now they write quite openly that they can finance the state cheaper, support small local banks and issue cheap loans because they have no interest rate constraint.
We are currently going through a global struggle for a new monetary order
Why is this not implemented everywhere?
We are currently going through a global struggle for a new monetary order. At the negotiations for the Bretton Woods agreement the USA had forced the Dollar as lead currency system, still indirectly gold-backed at first, upon the world. This gold-backing was abolished in 1971. Basically, just by announcing this gold-backing was no longer valid the entire world was defrauded. At present, the only backing for the dollar is provided by the US military. War is waged against anybody who threatens to leave the dollar system so that it keeps functioning for the time being. I say, we are experiencing the agonal state of the late world hegemon who is clinging to his importance of bygone days.
But we cannot simply turn the clock back to the gold standard. The gold standard did work in the previous century because the gold production happened to correspond to the growth of the currency. But if I were to re-introduce gold-backing I would first need to distribute the world gold reserves justly to make sure everybody was able to stabilize their respective currencies. Otherwise, things would turn out so that the owners of the old gold mines or the old reserves would be filthy rich and all others pay for it. The same would happen as when the English government had forced the gold standard on their American colonies, who had just introduced the Colonial Scrips1 – a successful regional currency – which resulted in the collapse of the economy. One has to say it loud and clear: There ain’t enough gold in the world for our current monetary state, even if it were distributed justly. The prize of gold would have to sky-rocket astronomically. Therefore, I think we will be better off if we establish a trustworthy world currency system and the population actually trusts this money. In that case the value is secured. Currencies are based on the trust of their users.
The wars in the Middle East and the one in Libya were all monetary wars for ressources
You are talking about a “struggle for the world monetary order”. Could you explain that further please?
All the wars in the Middle East and the one in Libya were monetary wars for resources. Saddam Hussein had stepped out of line by no longer using the dollar for his petrol deals and accepting Renminbi from the Chinese. That’s why he had to be toppled. The same was true for Gadhafi who aimed for a Afro-Dollar with gold-backing and had entered into negotiations about natural gas with the Russians. That was a capital sin against the system and most notably against the French as well, who were the main protagonists of the war against Libya. Most people are not aware of the fact that the Afro-Franc still exists in the former colonies. When independence was granted to them, three conditions were imposed on them:
Those countries were enslaved financially this way. And as soon as one of their governments had protested against this a “people’s uprising” would break out and be supported by the Foreign Legion so that the government was silenced. Gadhafi had mounted massive resistance, so he had to go and now chaos reigns there. The American interest did play a role, too. The gold-backed Afro-Franc was a challenge for the Dollar as well. Both of them, the Franc and the Dollar, worked hand in hand there.
In geopolitics we have increasing confrontation as well, organized mainly by the USA and NATO, in Europe directed mainly against Russia because they don’t fit into the system either, and in the Fareast against the Chinese. The USA will not win this race unless they turn to violence. Therefore, I am very concerned about a World War might break out unless we radically question and reform our current energy, trade and financial order. We Europeans should tell the Americans: “Look friends, we want to remain your friends, but we will no longer put up with the way you try to abuse us. We will make suggestions instead where we should go from here. You can be a world-class centre of innovation, production and of trade but no world bullying power.” The USA will soon be unable to finance their 800 military bases around the world.
The problem of the “deep state”
Why don’t the USA change their policies?
We have the problem of the “deep state” in the USA, the military-industrial complex, which guides official policies indirectly. Unfortunately, all weapons, once produced, have a tendency to be utilised eventually. Therefore, wars get started in all corners of the world. That is the reason why we need to demand, according to the bible verse: Swords into plough shares! Everybody will find enough potentials for development at home, technologies can be adapted to all specific conditions! Be innovative, use your phantasy and creativity towards the common good instead of arms races. All states with huge armies had poor inhabitants, somewhere the money for the armament needs to come from. We need to educate people about this so that the power of the military-industrial and financial complex will be broken. Interestingly, the former general Dwight Eisenhower warned against it when he left office as president: Get rid of the power which the military-industrial complex gained during the war and uses now to dominate politics.
Make peace with a different monetary order
Could peace be achieved with a different monetary order? How could that work?
I need to get into more details at this point: What we have right now is a monetary system based on debt, the compound interest is its main inherent problem. Mathematical laws of geometric series apply here, most people no longer know the old rule of 70–70 divided by the interest rate gives you after how many years the capital has doubled. With an interest rate of 5% that means, after 14 years your capital has doubled. This is crazy. At the moment we have reduced the interest rate to zero, so that the states may accumulate debt. And I predict, because that’s what has always happened in financial history, that the financial complex will announce a crisis: inflation and danger for the economy need to raise interest in order to slow the economy down. At that point everybody is in high debts and can no longer pay it off, at that point the financial complex poses as the saviour and says: We will buy out all companies and save factories and jobs … and they even get praised for it.
We have an incredible number of concepts for innovative monetary systems. For instance, crypto currencies which are in reality phantasy products and remain valid exactly as long as people believe in their existence. Crypto currencies are an illusion and people who want to invest money and are driven by greed get abused.
But there are concepts for regional currencies as well, and much more. I think there should be a combination: We can organize sustainable time currencies on the regional level in local circuits, for trade beyond the region we need an international monetary treaty which agrees on flexible exchange rates according to the respective values. On the national level we need to bring the authority to create money back to the states. In this regard I support the “full money” concept to make sure it is not the banks who produce the money after all. Getting rid of the compound interest is crucial.
Vollgeld (sovereign money) and separate banking system
The main problem at present is, as I have already explained, the compound interest. The financial wealth, as reflected by the numbers on the bank accounts, rise to the mathematical infinite this way. I think one can agree that there is no compound interest. No law is violated by such an agreement. Every monetary system is man-made and can be developed further according to fixed rules. The banks should provide their traditional services in a “sovereign money” system for an appropriate fee and should be organised according to the separate banking system. For these structural changes we will have to spend a few cents but this would be worth it because it would also set the banks free to once again fulfil their genuine purpose. One banker told me: I used to provide financial advice to entrepreneurs as their house banker, people used to come to me with their visions and now, according to the new guidelines, I am obliged to sell something to them!
Shrink the role of money again
Which role should money play in the future?
I think we should shrink the role of money to once again serve as a trading standard and as a value storage standard without compound interest. Then it can be a useful tool. Money was invented in several steps. Originally some natural produce was used as a standard. That is why money was called “pecunia”2 in the Roman Empire – cattle were the standard. Afterwards coinage was invented in Asia Minor. Gold and silver were scarce resources and therefore could serve as standard. Much later banker’s drafts were invented. Gold and silver coins were deposited with a banker who issued a draft which entitled me to withdraw my coins should I need them. The bankers eventually realised that not all coins were reclaimed at any point in time and they started to issue more drafts than they held as physical gold and silver. That way our current fractioned monetary order came into being which we can get under control again by introducing “sovereign money”, i.e. the amount of circulating money is controlled by the national bank and supervised by an independent currency commission. This concept is already well developed. My colleague Huber has laid out quite nicely how this should work in his book “Moderne Monetarisierung” (Monetary Modernisation). This does not serve the interests of the high finance elites and therefore it is attacked viciously and decried as utopic. But all utopias come true eventually as soon as the old system no longer functions well enough.
Promoting peace with regional and national solutions
Peace will always be promoted mainly by regional and national solutions. A currency is the custom-made suit of each national economy. We did something horrible in Europe. We threw the Southern nations together with the Northern ones into one currency brew. The Southerners used to down-value their national currencies whenever their trade balance would require it and were able to accumulate debts to only such an amount as they could handle. These countries were admitted to the Euro zone. Initially this was a license to unhinged debt accumulation since the Euro community would back it up. But after a while it was announced: “Now we have to pull the emergency brake” and austerity measures were imposed on them. Notably Greece, Italy, Spain. Now we see the consequences concretely.
“External debasement” was replaced by “internal debasement” and people in these countries were impoverished.
How would you assess the financial situation of our states? And what would you suggest?
Considering the current amount of state debts, I am afraid the media are right to discuss some general “deliveraging contribution” because something like that will most likely be unavoidable. Bluntly speaking that means that people are expropriated and new taxes imposed on them. In other words, once again the masses of common people will pay rather than the few on top. I think there are a number of concepts which could be implemented easily.
Pro turnover tax on capital …
One way would be a general turnover tax on capital (Kapitalumsatzsteuer) of, say 0.1%, that’s almost nothing and ranges within the current banking conditions but it would secure about a third of our budgets and we could repay state debt. Taxation of financial transactions is under debate all the time, I would de-mystify the issue and focus on a general turnover tax on capital so that not only certain financial transactions would be taxed, what invariably triggers the argument that such a tax would hamper international trade. A general turnover tax on capital would be easy to collect by retaining 0,1% of every capital transfer, no matter how big or small the turnover is.
The second idea would be an internet tax of one cent per Megabyte. That’s a huge source to repay state debt. All internet giants admit this would be technically easy to implement. There could be individual exemption limits, say for private use of the internet, the health care system, education and basic supply systems could be exempt if necessary.
This would be the second area.
… and a general wealth tax for the super-rich
The third approach which springs to mind immediately but is the hardest to implement would be a general wealth tax to be paid by the super-rich. Assuming a 5% growth rate and a 50% tax on wealth growth this would amount to 2,5% of the original fortune and already enough to pay the debt of the entire world. In other words, solutions are within our grasp but we have to propagate and most importantly: implement them, rather than trying to suck the Little Man dry.
We have to sit down together and everybody may share their ideas.
What needs to be done in order to bring the different approaches about the question of a new monetary order to a good solution?
We have to sit down together and everybody may share their ideas. We have to acknowledge that the goal should be to get together rather than everybody showing off their respective brilliant ideas. Everybody needs to be prepared to lower one’s sight, get involved and accept other ideas. And at the end after a solution has been agreed upon, we say: Now we simulate a reality check and pin down how this would work in real life. We need to get beyond the phantasy threshold, nobody benefits if we keep assuring each other how ideal a world would be in which we don’t need money, everybody gets for free what he or she needs and so on. You can’t nail this pudding to the wall. I am an old practitioner and therefore I would say, once we have come to an agreement, we need to establish audits and supervisory bodies so that we can find out to what degree our concept is viable and fruitful.
A country like Switzerland can serve as a blueprint
A country like Switzerland can serve as a blueprint to a certain extent. Despite all flaws Switzerland is dedicated to the common good because citizens have a say in matters which affect them. I would argue I wish to have a democracy-compliant economy rather than a market-compliant democracy, how Ms Merkel put it. This is in reality the capitulation of democracy. In short: a democracy of the Swiss model with the people’s referendum as a possible emergency brake, decentralisation, participation of the citizens rather than expertocrazy.
Finally, regarding the question: “This is all hot air only, where is your power leverage?” I keep quoting Victor Hugo: “Nothing else in the world…not all the armies…is so powerful as an idea whose time has come.” Abraham Lincoln summed it up nicely: “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.”
Herr Professor Wohlmeyer, thank you very much for the interview. •
1Colonial Scrip (literally voucher of the colonies) was a paper money which was issued by the colonies prior to the revolution of 1775, as opposed to coins. It was a totally different from the continental currency which was issued during the American revolution in-order to finance the war efforts and which was rapidly devalued. Colonial Scrip was not backed by either gold or silver and therefore the colonies were able to control its value. This was a revolutionary economic concept at the time, while the conventional European monetary system required the governments to accumulate debts with the banks and pay interest for them in gold and silver as the only acceptably modes of payment. This is known as the monetary system in which bank notes are “bills of debt”. Colonial Scrip on the other hand were “bills of credit”, issued by the government and backed by the credit of the government so that no interest had to be paid. This made a huge contribution to securing the wealth of the colonies and reduced spending of the colonial governments. The governments charged low interests when lending this paper money to their population. Land was the backing system. The interests reduced the tax burden of the people and contributed to their wealth. This currency was created when a shortage of gold and silver hampered trade and a barter system became prevalent. One after the other all colonies issued their own paper money to stimulate trade. The governments were able to reduce the amount of circulating money by issuing taxes which enabled some colonies to eradicate inflation completely. Each colony had their own currency and some were manged better than others. All these currencies were outlawed by the British parliament in their Currency Act after Benjamin Franklin had explained their advantages to the British Board of Trade. The prohibition of the currencies caused a depression in the colonies which Franklin and many others believed was the main reason for the American revolution.
2 The Latin word “pecunia” for money, property, assets, coin is derived from the Latin word “pecus” for cattle.
cc. Heinrich Wohlmeyer was raised by farmers after his father died before being deported to a concentration camp, his parental home was destroyed by bombs and his mother became ill. He went to the gymnasium (grammar school) “on his own”, studied law, international business law in the USA and England, and agriculture and food technology at the University of Natural Resources and Life Sciences, Vienna. Back in Austria, he volunteered as regional developer and industry manager for the Waldviertel (the northwestern region of the northeast Austrian state of Lower Austria) and became director of the Austrian Agricultural Industry. After “talking himself apart”, he went to university and taught resource economics and environmental management. In all these activities he realised that the hubs of unsustainable development are trade and financial policies that undermine regional economic cycles. “We need regional solutions for the best possible regional prosperity,” he says.
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