||This article appears in the August 14, 2009 issue of Executive Intelligence Review.
(June 17, 2009)
The video from which the following is transcribed is posted at http://www.larouchepac.com/node/10849. Subheads have been added.
Michael Kirsch: In the fight for a new global credit system, which patriots of nations internationally are fighting, along with economist Lyndon LaRouche, to bring about, the most important and challenging question which must be addressed, is a scientific definition of economic value.
This definition of value, rather than the arbitrary, intentionally destructive valuation provided by the bankrupt derivatives markets, must be the guiding exemplar of the Hamiltonian reorganization of the world monetary system into a new global credit system. This definition of value will allow governments the ability to guide economies toward the long-term realization of the goals of the new global credit system.
This scientific definition of economic value is, therefore, in a sense, the most important understanding for you to obtain. For a true notion of value, we must look at the essential characteristic of the human beings whose activity constitutes the economythat is, human creativity.
Looking at minds who have demonstrated creativity in their discoveries, one sees that mankind's process of discovery, is the process of moving to higher and deeper truths concerning the nature of the physical universe around him. And using these concepts of how the universe works to increase his power. That capacity generates greater and greater abilities to look into the universe with the power to control it.
We see this, for instance, in Leibniz's revival of Plato's concept of dynamics, reflected in his Parmenides dialogue, in Leibniz's discovery that the characteristic of changerather than the static, geometric, object-based method of Descartesis the most important element of a process. Leibniz discovered that the invisible principle which guides physical processes, is reflected in certain characteristic relationships, which, once understood, give mankind the power to control the invisible. The power of man to control the invisible, and act upon it, is seen in greater degrees by this study of creativity. This study of creativity determines the way in which physical processes can be perceived and measured, including his own and society's developmentthat is, the economy. Economics is thus a reflection of that power of mind.
In this way, and only this way, objects and materials created in economy are seen in their right light, in contrast to the way the legacy of Adam Smith and Karl Marx has made modern economists think. They say, "There are these objects floating around, transported, and consumed; and if you've got money, you can buy 'em." Then, described by money, these goods become seemingly a consequence of money, created magically by a hidden power in money.
Scientifically, one might say about this view: "Bogus!"
Having cast aside this empirical, Cartesian approach, the relevant causes of the materials created, transported, and consumedthat is, their contextbecomes the investigation by governments, who intend to guide and develop an economy.
'Report on Manufactures'
In 1791, after establishing his unique constitutional credit system, which defined money as only a means of exchange to serve the real, physical economy, Alexander Hamilton addressed Congress in his Report on the Subject of Manufactures. In this report, he enunciated the true, scientific measurement of economic value. Value is determined by whether something contributes to increases in the productive powers of labor. In educating Congress on the fundamental principles of physical economy, at that time, he was also taking up the axioms which prevented Americans from seeing the benefit of promoting manufacturing. Therefore, all the increases in the productive powers of labor, which he presents in that location, are discussed from the standpoint of the positive effect which introducing manufacturing employment, in addition to the already-established farming economy, would have. [His argument goes approximately as follows:]
With manufacturing added to farming, think of the changes which take place, as in the establishment of a division of labor: No more is time wasted, running from the field to the shop, to manufacture one's clothes. All the time spent in moving operations from one to the other, the mental strain on concentration is regained for the purpose of one task, promoting a constant employment of one kind rather than many, yields an increasing degree of skill and learned dexterity not found before, due to the attention put upon one form of employment rather than multiple tasks. By concentrating on one object, a man thinks up new things and makes inventions related to his trade, which he otherwise never could.
And there's much more: Machinery gives an increased ability to do the same action, by using the power of man's "enslaving" nature. The labor force, encumbered with heavy manual labor, can now turn their attention to more skillful work, letting machines do the rest. With the proliferation of manufacturing, what was idle time for many occupations is a thing of the past, as machinery is not constrained by bad weather, or daylight hours. And people who were idle, due to physical or age constraints, can now contribute to the nation with the help of manufactures.
Hamilton's continued addition of the augmentations which occur, begins to unfold as a kaleidoscopic image, and they continue. Think how the infrastructure would be created, which would then increase the productivity of that whole process just described, by transforming the availability of power, water, and other necessities for production, and the ease of transportation of people and goods.
And new talents arise, with a greater scope of industry, allowing each individual to find his proper element. Those who didn't know they had a talent, because they were involved in menial pursuits, suddenly shine forth with ingenuity. New fields for the imagination to devise methods for the abridgment and efficiency of labor are obtained. With more opportunity, each person can find their proper course. All of this affords a more ample and various field for enterprise.
As Hamilton wrote: "To cherish and stimulate the activity of the human mind by multiplying the objects of enterprise is not among the least considerable of expedients, by which the wealth of a nation may be promoted. Even things in themselves not positively advantageous, sometimes become so, by their tendency to provoke exertion. Every new scene which is open to the busy nature of man to rouse and exert itself is the addition of a new energy to the general stock of effort."
A Self-Sustaining Nation
Hamilton understood more than how manufacturing caused these changes, and addressed it in the context of the British Empire's intention to destroy the United States' economy. Much like today's conditions created by globalization, farmers had to move from one good to the next, appeasing the irregular demand of Britain, now investing in a new cultivation, now cutting others because of a loss, or cutting employment because of a failure of a crop. By establishing a steady demand with domestic manufacturing, a profit is enjoyed, which can be turned to the farm, leading to a growing amount and variety of land cultivated.
This creates steady employment on the farm; this creates families that are able to settle down, and set up their own farms or move into manufacturing. With the steady demand of their produce, farmers are able to afford the newest and best manufactured goods produced. Manufactures would be available, not some of the time and in fluctuating quantities, but constantly available from domestic manufactures. These new improvements to the productive process would be even more efficient, leading to ever greater surpluses.
Conceptualize what the effect is upon the agriculturalists, who now, not only have a steady supply of new manufactures to apply to their farms, increasing the value of their property and work, but can afford them cheaply, increasing the rate of change of that process, and the value of their income to be applied to their farm. And that is not all. Turn the kaleidoscope again. New resources are discovered, which transform the ecological boundary society is operating in, transforming man's relationship with the Biosphere: Not only will there be a more flourishing demand for things usually bought, but also a whole new, and growing, demand.
As Hamilton wrote: "The bowels of the Earth, as well as the surface of the Earth, are ransacked for articles, which were before neglected. Animals, plants, minerals, acquire a utility and value which were before, unexplored. Which new employments are now created? What new profits from the farms? What new materials become useful to the manufacturer? What new minerals for new metals in infrastructure, what new kinds of wood, animals, and plants for medicine and food? What changes occur in manufacturing, that demand new farming techniques? What new farming techniques procuring new minerals and produce demand new manufactures? At what rate do the improvements occur in agriculture as a steady demand occurs in manufacturing? How is this rate then changed, with a new technology in manufacturing demanding a new mineral or plants product? Such transformations as these continually redefine the value of an agricultural and manufacturing product, and create new products altogether."
The Science of Dynamics
Hamilton's description of the effects of introducing newer principles is dynamic, the interaction of invisible principles, whose effect is general, not local, not the kinematic Cartesian push and pull of parts of the economy on one another. The economy is guided by the events which imply a new principle being added, a characteristic change in the value of a produced good, with the decrease in cost, as a reflection of the added action of a new principle in machinery or infrastructure. It is thus an invisible action, the change in the productive powers of labor, which defines the ability to create goods and defines their relative value to each other.
To view these relationships government must create, from the standpoint required to pull society out from the depths of its current breakdown crisis, the national plans of governments must incorporate exactly how the changes initiated through mankind's development are going to transform the Biosphere and Noösphere. This requires a more rigorous definition of human creativity, and its effects, necessitating the application of the scientific measurements provided by economist Lyndon LaRouche, in his science of physical economy, which incorporates the discoveries of the Russian scientist Vladimir Vernadsky.
Vernadsky studied how the chemical elements and isotopes changed, when flowing through and incorporated into a living process. Vernadsky investigated this relationship, quantitatively, by the migration of atoms from the Biosphere to the living organism and back again, what he called, "the biogenic migration of atoms." Through what Vernadsky called a "continuously changing, organized state, a dynamic equilibrium," the Biosphere creates fossils of living matter, like coal or iron, the excretions of bodies of formerly living things. Through the dynamic interaction of living and nonliving, Vernadsky therefore investigated the invisible principle of life that bounded and created the Biosphere. In addition to this, Vernadsky defined human society and its products, the Noösphere, which shapes the two lower domains, of the living and non-living.
Economist LaRouche has pointed to the fact, that just as Vernadsky prescribed how to study the continuously changing dynamic equilibrium of the Biosphere, economists today must conceptualize the economy as such a Noösphere, transforming the Biosphere and the non-living. As the principle of life, via living organisms, creates non-living fossils, which are distinct from merely non-living elements, how does the principle of cognition, via the Noösphere, create noëtic fossils, which take the form of living, fossils of the living, or non-living?
Think back to Hamilton's kaleidoscopic image: The Noösphere orders that which it incorporates into increasing the productive powers of labor. The actual relationship of a product or production process, to the economy as a whole, is like the Biosphere's components to each other and non-living domain. Whereas Vernadsky discussed the biogenic migration of atoms in the Biosphere, Lyndon LaRouche has pointed to the necessity to study the cognitive migration of materials in the Noösphere, as a basis for a science of physical economy.
However, there is an incommensurable difference, for, whereas the Biosphere transforms the lower domain by the principle of life, instinctively, mankind does it willfully, through the principle of cognition. This essential nature of man, creativity, is the way in which the Noösphere organizes the flow of both non-living and organic materials which it uses, and discharges, transforming them by that process.
Only this approach will allow sovereign governments in the new credit system, to define the true notion of economic value, upon which the survival of the planet depends. Otherwise, in the midst of the disintegration of the world monetary system, the alternative to this approach is the Obama Administration's Nazi health-care policy, the final consequence of monetarism, where not only is there a market value placed on all the objects in the economy, but human lives themselves, as if each pound of flesh could be so priced.