It is alleged that when Albert Einstein was asked to name the greatest invention in human history, he gave the following reply: "Compound interest." On page 1,664 of Italian economist Vilfredo Pareto's masterwork, The Mind and Society, we read: "A centime placed on compound interest at the rate of 4 per cent at the time of the birth of Christ would yield by the year 1900 a fabulous amount in francs...." The exact number would be 23,085 followed by 26 zeros. In Pareto's day the planet earth would have to be made of solid gold in order to make up 3 percent of the sum.
After nineteen centuries of "progress" why isn't the human race enjoying a decent retirement? Well, the answer is simple. While mankind has enjoyed a few centuries of progress here and there, we have also seen centuries without progress: centuries of loss and reversal, like the so-called "dark ages." What we may conclude, says Pareto, is that wealth creation is regularly interrupted by contrary events. According to Pareto, "History is replete with ... numberless causes for the destruction of wealth. Some of them bear upon total wealth: wars, revolutions, epidemics, plundering and burnings, wastage of all sorts. Others bear upon the distribution of wealth ... and transfers of wealth resulting from force or from prodigalities.
Today the U.S. Federal government is trying to recover from an economic downturn through a calculated program of prodigalities. Such a program, which proposes to spend $819 billion to "stimulate" the U.S. economy, was approved by the House of Representatives on Wednesday. The vote was 244 in favor, and 188 against. This event signifies humanity's readiness to destroy wealth, even when trying to preserve it. Because men are creatures of irrational sentiment, once the sentiments necessary to wealth creation have run their course, sentiments of wealth destruction take over.
We know from experience that socialism leads to stagnation. But this knowledge has no effect on today's policy-makers. They rush headlong toward a Keynesian "solution." And socialism, once more, becomes attractive because capitalism has apparently failed. We want to avoid another Great Depression, but you cannot have great prosperity in the world unless you are willing to brave sudden economic downturns. In order to grow, you must invest; in order to invest, you must risk; and risk signifies occasional losses. And now that we are suffering loss, the majority turns its back on the engine of wealth creation.
More than 100 years ago Gustave Le Bon wrote The Psychology of Socialism (Psychologie du Socialisme). He said that socialism was a religion. "No apostle has ever doubted the future of his faith," began Le Bon, "and the socialists are persuaded of the approaching triumph of theirs. Such a victory implies of necessity the destruction of the present society, and its reconstruction on other bases." If we look at civilization closely, we find it to be a "tissue of ideas" and customs determined by heredity. "No society is firmly held together unless this moral heritage is solidly established," warned Le Bon. And today we find that American society has abandoned its moral heritage - thanks to the cultural influence of the socialists. In the battle between socialist ideas and market freedom, the socialist have defeated their competition - in universities and Hollywood, in publishing houses and major media. "The modern bourgeoisie are no longer sure of their rights," wrote Le Bon. "Or rather they are not sure of anything. They listen to everything and tremble before the most pitiable windbags."
The capitalist system cannot defend itself against its critics. The system is not a "dictatorship of the bourgeoisie," as Marx alleged. Instead, it is a distracted uncle who naively trusts that the best ideas will triumph. What we have seen, instead, is the progressive corruption of our terminology; the abandonment of our folkways; a failure to transmit the heritage of our forefathers to the next generation; the triumph of ideals diametrically opposed to those of our nation's Founders. When the government's policies lead us from disaster to disaster, and the people are suffering, the outcome will devolve into an ideological battle between differing brands of nonsense.
What nonsense is likely to triumph? We don't know the answer, as yet, because everything depends on the leaders that emerge as the crisis develops. Negative emotions, like envy and ethnic intolerance, are likely candidates. We must hope and pray they will not be exploited by political opportunists or demagogues. The danger is greatest when the people lose their patience. But first, many will lose their jobs, their life savings, and their future prospects.
This country needs a patient and tolerant spirit. We need unity and caution, if only to preserve those institutions which stand between our existence and the abyss. We must not forget that America's nuclear arsenal upholds global order. The nuclear missiles of Russia and China are aimed at us, even now, because these countries want to form a new world order - in which they dominate. If the United States loses its nuclear deterrent as the result of internal disorders, then Russia and China will be tempted to carry out their destructive plans. In that event, a compound negative interest will be applied to the population and wealth of the entire world - and a new Dark Age will be born.
Decades ago, Le Bon gave us a warning: "The hour is approaching when the social edifice will suffer the most redoubtable assaults that have ever been made on it. The new barbarians are threatening not only the possessers of wealth, but also our very civilization...."
