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Fifty years ago, President Richard Nixon ended the gold standard so that the market value of a dollar was no longer tied to a fixed price for gold, but only to whatever price the market was willing to pay.  Since then, the dollar was only a fiat currency, having only the government’s order that it could be used as legal tender to support its value and subject to government decisions as to how many dollars would be in circulation.

According to one commentator:

With inflation on the rise and a gold run looming, Nixon’s administration coordinated a plan for bold action.  From August 13 to 15, 1971, Nixon and fifteen advisers, including Federal Reserve Chairman Arthur Burns, Treasury Secretary John Connally and Undersecretary for International Monetary Affairs Paul Volcker (later Federal Reserve Chairman), met at the presidential retreat at Camp David and created a new economic plan.  On the evening of August 15, 1971, Nixon addressed the nation on a new economic policy that not only was intended to correct the balance of payments, but also stave off inflation and lower the unemployment rate.

The first order was for the gold window to be closed.  Foreign governments could no longer exchange their dollars for gold; in effect, the international monetary system turned into a fiat one.  A few months later, the Smithsonian agreement attempted to maintain pegged exchange rates, but the Bretton Woods system of fixed exchange rates for currencies ended soon thereafter. The second order was for a 90-day freeze on wages and prices to check inflation.  This marked the first time the government enacted wage and price controls outside of wartime.  It was an attempt to bring down inflation without increasing the unemployment rate or slowing the economy.  In addition, an import surcharge was set at 10 percent to ensure that American products would not be at a disadvantage because of exchange rates.

Shortly after the plan was implemented, the growth of employment and production in the U.S. increased.  Inflation was practically halted during the 90-day wage-price freeze, but would soon reappear as the monetary momentum in support of inflation had already begun.  Nixon’s new economic policy represented a coordinated attack on the simultaneous problems of unemployment, inflation and disequilibrium in the balance of payments.

Since then, the federal government – Congress, President, Treasury and the Federal Reserve – have flooded our economy with trillions of dollars.  To whose benefit?

Consider these facts:

Currency in circulation per person has ballooned:

The assets held by the Federal Reserve, a mark of the amount of liquidity the government has provided to the private sector, have ballooned, as well:

The amount of money provided to the economy by the Federal Reserve, measured as M2, increased, as well, after 1980:

The spending of the federal government not covered by revenues (deficits) have also hit new highs.  Federal government debt is money added to the economy through expenditures:

Who has benefited most from having access to all this money created by the government?  Mostly those who own financial assets.  Consider the rising value of the stock market.  Those who have benefitted from rising prices for financial assets are those who were able to invest in stocks, bonds, options, etc.:

Government creation of liquidity has helped float the top 10% and especially the top 1% of Americans to possession of more and more wealth:

Since 1971, incomes for the top 5% and 20% of Americans have grown much more than the earnings for all the other families:

The global growth of central bank assets has similarly contributed to a floating of the boats of the wealthy around the world:

George Orwell’s morality tale Animal Farm was published 75 years ago in August.  His disgust at the ethics of autocratic rule is as relevant today as it was when he wrote to expose Joseph Stalin’s police state.

As in the first Star Wars movie, also a morality tale about good and evil, about speaking truth to power, about standing up when the odds are long against you, Orwell brings right into our minds stark awareness of the “dark side of the force” in the character of Darth Vader.

In these stories, we can’t run away from evil.  And in life, we seemingly never run out of abusive, evil people – in culture, organizations, businesses, politics and government.

I like to think that in this way too are the Caux Round Table principles for moral capitalism and moral government – “morality tales” about right and wrong, narratives, if you will, speaking truth to power.

Another point made by Orwell in that fictional narrative of animals rebelling against humans, setting up a collective farm under their management and then the ruling class – the pigs – coming to live as their human enemies use to, is the evil that language can do.  We, especially intellectuals, too often forget that using language has its ethical obligations too.  So, who, these days of disinformation, misinformation, gaslighting, ad hominem marginalization and career cancellation of others and more, teaches the ethics of using language?

What I remember from Animal Farm is the perverted repurposing of the ideal that “all animals are equal” into “all animals are equal, but some animals are more equal than others.”

In modern totalitarian democracies, all persons are equal under the constitution but, in practice, some persons are far more equal than others.

Now, in Afghanistan, we will see whether this ancient working of darkness in the human heart will assert itself once again.

Those with power, the elites, again and again, pose as one thing and rule as another.  They are imposters, acting upon a stage before a servile audience, mouthing a fantasy discourse to legitimate their socially psychotic needs for power and relentless desires to exploit for themselves and their families the good things of this world.

Here, for those who have not read Animal Farm or did so long ago that, like me, the details have slipped your mind, is the synopsis from Wikipedia:

The poorly-run Manor Farm near Willingdon, England, is ripened for rebellion from its animal populace by neglect at the hands of the irresponsible and alcoholic farmer, Mr. Jones.  One night, the exalted boar, Old Major, holds a conference, at which he calls for the overthrow of humans and teaches the animals a revolutionary song called “Beasts of England.”  When Old Major dies, two young pigs, Snowball and Napoleon, assume command and stage a revolt, driving Mr. Jones off the farm and renaming the property “Animal Farm.”  They adopt the Seven Commandments of Animalism, the most important of which is, “All animals are equal.”  The decree is painted in large letters on one side of the barn.

The original commandments are:

-All animals are equal.

Later, Napoleon and his pigs secretly revise some commandments to clear themselves of accusations of law-breaking.

-No animal shall sleep in a bed with sheets.

-No animal shall kill any other animal without cause.

Snowball teaches the animals to read and write, while Napoleon educates young puppies on these principles of Animalism.

Eventually, these moral standards are replaced with the maxims, “All animals are equal, but some animals are more equal than others” and “Four legs good, two legs better,” as the pigs become more human

To commemorate the start of Animal Farm, Snowball raises a green flag with a white hoof and horn.  Food is plentiful and the farm runs smoothly.  The pigs elevate themselves to positions of leadership and set aside special food items, ostensibly for their personal health.

Following an unsuccessful attempt by Mr. Jones and his associates to retake the farm (later dubbed the “Battle of the Cowshed”), Snowball announces his plans to modernize the farm by building a windmill.  Napoleon disputes this idea and matters come to a head, which culminate in Napoleon’s dogs chasing Snowball away and Napoleon declaring himself supreme commander.

Napoleon enacts changes to the governance structure of the farm, replacing meetings with a committee of pigs who will run the farm.  Through a young porker named Squealer, Napoleon claims credit for the windmill idea, claiming that Snowball was only trying to win animals to his side.

Mr. Frederick, a neighboring farmer, attacks the farm, using blasting powder to blow up the restored windmill.  Although the animals win the battle, they do so at great cost, as many, including Boxer the workhorse, are wounded.  Although he recovers from this, Boxer eventually collapses while working on the windmill (being almost 12 years old at that point).  He is taken away in a knacker’s (British for roadkill collector) van and a donkey called Benjamin alerts the animals of this, but Squealer quickly waves off their alarm by persuading the animals that the van had been purchased from the knacker by an animal hospital and that the previous owner’s signboard had not been repainted.  Squealer subsequently reports Boxer’s death and honors him with a festival the following day.  However, Napoleon had in fact engineered the sale of Boxer to the knacker, allowing him and his inner circle to acquire money to buy whisky for themselves.

Years pass, the windmill is rebuilt and another windmill is constructed, which makes the farm a good amount of income.  However, the ideals that Snowball discussed, including stalls with electric lighting, heating and running water, are forgotten, with Napoleon advocating that the happiest animals live simple lives.

Snowball has been forgotten, alongside Boxer, with “the exception of the few who knew him.” Many of the animals who participated in the rebellion are dead or old.  Mr. Jones is also dead, saying he “died in an inebriates’ home in another part of the country.”

Napoleon holds a dinner party for the pigs and local farmers, with whom he celebrates a new alliance.  He abolishes the practice of the revolutionary traditions and restores the name “The Manor Farm.”  The men and pigs start playing cards, flattering and praising each other, while cheating at the game.  Both Napoleon and Mr. Pilkington, one of the farmers, play an Ace of Spades at the same time and both sides begin fighting loudly over who cheated first.  When the animals outside look at the pigs and men, they can no longer distinguish between the two.

Hector Garcia has sent in some thoughtful comments which helpfully expand, I think, the questions posed in the essays in the July issue of Pegasus.

I am grateful to Hector for taking time to write up his concerns and insights and I want to share them with you right away after receiving them.

Hector has written Clash or Complement of Cultures?: Peace & Productivity in the New Global Reality (Rowman & Littlefield).

He was Executive Director of the Minnesota Council on Latino Affairs, a state agency which advises the executive and legislative branches on the Minnesota Latino community and which also serves as a bridge of communication and cooperation between public/private/nonprofit sectors and Latinos in Minnesota.  He was Vice President for International and Domestic Emerging Markets at Wells Fargo Bank.  He assisted in the formation and growth of the Mexican chapters for Initiatives of Change (formerly Moral Re-Armament, a global peacebuilding network) and the Caux Round Table.  His local community service has included being a board member for Twin Cities Public Television and Catholic Charities.

You can find July Pegasus here.

Many of us have not heard of the Atlantic Charter, agreed to in August 1941 by Prime Minister Winston Churchill and President Franklin Roosevelt.  Most who have most likely have rather forgotten it.

The terms of the charter set forth the principles of an alliance of the U.K. and the U.S. in world affairs to act as stewards of a better life for all humanity.  First, they had to deal with dark powers, such as Adolf Hitler’s Reich.

At the end of World War II, the vision of the Atlantic Charter was incorporated into the Charter of the United Nations, the formation of NATO, the undertaking of the Cold War, and after 1989, the building of a just global order for all peoples.

The Atlantic Charter succinctly states the principles of “globalism,” which internationalism has been challenged by populist nationalisms as the normative high ground.

But the moral principles affirming the goals of the Atlantic Charter also, in time, came to infuse the Caux Round Table principles of moral capitalism and moral government – individuals are sovereign, moral agents, power is to be used responsibly, with due care, for the dignity and interests of others and public power is expressly to be used as a trust to secure general well-being.

Here is the text that Churchill and Roosevelt put before the world community:

Atlantic Charter
August 14, 1941

The President of the United States of America and the Prime Minister, Mr. Churchill, representing His Majesty’s Government in the United Kingdom, being met together, deem it right to make known certain common principles in the national policies of their respective countries on which they base their hopes for a better future for the world.

First, their countries seek no aggrandizement, territorial or other;

Second, they desire to see no territorial changes that do not accord with the freely expressed wishes of the peoples concerned;

Third, they respect the right of all peoples to choose the form of government under which they will live; and they wish to see sovereign rights and self-government restored to those who have been forcibly deprived of them;

Fourth, they will endeavor, with due respect for their existing obligations, to further the enjoyment by all States, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity;

Fifth, they desire to bring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labor standards, economic advancement and social security;

Sixth, after the final destruction of the Nazi tyranny, they hope to see established a peace which will afford to all nations the means of dwelling in safety within their own boundaries and which will afford assurance that all the men in all lands may live out their lives in freedom from fear and want;

Seventh, such a peace should enable all men to traverse the high seas and oceans without hindrance;

Eighth, they believe that all of the nations of the world, for realistic as well as spiritual reasons must come to the abandonment of the use of force.  Since no future peace can be maintained if land, sea or air armaments continue to be employed by nations which threaten, or may threaten, aggression outside of their frontiers, they believe, pending the establishment of a wider and permanent system of general security, that the disarmament of such nations is essential.  They will likewise aid and encourage all other practicable measure which will lighten for peace-loving peoples the crushing burden of armaments.

Franklin D. Roosevelt
Winston S. Churchill

Now, reading this brought to mind a blues song by Josh White, written first in 1941.  He sang this for President Roosevelt and at the 3:15 minute mark, referred to the Atlantic Charter as calling for an end to racial segregation in the U.S. and as affirming the equality of all people.  My dad used to play this for us in the 1950s.  It is called the “Free and Equal Blues.”

You can listen to it here.

Events in Afghanistan and Kabul have put before us this question: where are the leaders?

When writing my book Moral Capitalism, I was confronted with a similar question – what to do about ethical ideals?  Admire them?  Debate them?  Or implement them?

Then, our colleague Professor Kenneth Goodpaster at the University of St. Thomas used to say that practical morality was moving from “aspiration to action.”

Executing such movement is the work of leaders – wherever they might be in an organization’s hierarchy of roles and positions.

I thought it timely to once again reflect on leadership.  Where does it come from within us?  How can we become leaders?  Does leadership, with its access to courage and self-confidence, come from values?

Thus, I am sending you the chapter on principled business leadership from my book, which you can read here.

You may also order the book from Amazon here.

Over the weekend, as the elected secular government of Afghanistan met its death, my staff asked what, if anything, the Caux Round Table’s ethical principles implied for a conflict of moral visions like that in Afghanistan between the Taliban’s Sunni fundamentalism vindicating the plan of a God for human perfection and the faiths of other Afghans, which were at odds with such regimentation of belief and how one ought to live. The Afghan conflict, as in most conflicts where one side insists on an appeal to heaven rather than to some mere human tribunal for vindication of its righteousness, was one of open war, in this case, an insurgency.

Overlooked by the Americans, their NATO partners and most of their Afghan counterparts was the basic law of insurgency, as pithily stated by the Great Helmsman Mao Zedong: “Guerillas are fish who swim in the sea of the people.” To end an insurgency, you either have to kill all the insurgents or dry up the sea. It turns out that, like fish in the sea, insurgents breed quickly, easily replacing those who are pulled from the waters. But if the sea evaporates, the fish will die off.

So, to prevent an insurgency like the Taliban from imposing its will on a nation, the sea, that is, the people, must be organized to turn against the fish and deny them a supportive environment. The people must drive out the insurgents from each and every local community. This is done by giving the people rights of self-government, self-development and self-defense.

The effort must be decentralized, flexible, participatory and, above all, rest on a moral value that the people honor and respect.

The Caux Round Table Principles for Moral Government point every government in just that direction. So, those principles were, after all, relevant to a country like Afghanistan going through violent trials and tribulations.

The fundamental principle for moral government is that public power is held in trust for the community. Thus, the government, at every level, from national leaders and central bureaucracies, down to village councils, must be a trustee of the common good. Government office is not for personal aggrandizement or exploitation. Government is to serve those who are to benefit from its powers and authority, not rule them as submissive menials and craven subjects.

This directive points government towards decentralization, providing opportunities for its smallest collectives and never forgetting the aspirations of individuals. Power should flow downwards to embrace the people; never concentrated at some single centralized point of sovereignty.

Public power brings responsibility; power is a necessary moral circumstance in that it binds the actions of one to the welfare of others. The state is the servant and agent of higher ends; it is subordinate to society. Public power is to be exercised within a framework of moral responsibility for the welfare of others. Governments that abuse their trust shall lose their authority and may be removed from office.

Thus, standards for performance evaluation, promotion, hiring and training must privilege these behaviors. Since “Holders of public office are accountable for their conduct while in office, they are subject to removal for malfeasance, misfeasance or abuse of office.”

Next, a government seeking to defeat an insurgency must use discourse ethics, not the law of the gun. “Public power, however allocated by constitutions, referendums or laws, shall rest its legitimacy in processes of communication and discourse among autonomous moral agents who constitute the community to be served by the government. Free and open discourse, embracing independent media, shall not be curtailed, except to protect legitimate expectations of personal privacy, sustain the confidentiality needed for the proper separation of powers or for the most dire of reasons relating to national security.

The government must engage the people at large with reason, not with coercion.

Thirdly, a government must take action to protect and promote the integrity, dignity and self-respect of its members in their capacity as citizens and, therefore, avoid all measures, oppressive and other, whose tendency is to transform the citizen into a subject.

Fourth, public office is not to be used for personal advantage, financial gain or as a prerogative manipulated by arbitrary, personal desire. Corruption – financial, political and moral – is inconsistent with stewardship of public interests. Only the rule of law is consistent with a principled approach to use of public power. Thus, the government must invest in a professional judiciary, train lawyers, have inspectorates and discipline its officials.

The political process, which produced government leaders, must be similarly disciplined to avoid cronyism and the rent-seeking which funds such cabals and factions.

Fifth, the civic order, through its instrumentalities, shall provide for the security of life, liberty and property for its citizens in order to insure domestic tranquility.

The civic order shall defend its sovereign integrity, its territory and its capacity to pursue its own ends to the maximum degree of its own choice and discretion within the framework of international law and principles of natural justice. This ethical principle justified the use of force against the Taliban.

Sixth, the state shall nurture and support all those social institutions most conducive to the free self-development and self-regard of the individual citizen. Public authority shall seek to avoid or to ameliorate conditions of life and work which deprive the individual citizen of dignity and self-regard or which permit powerful citizens to exploit the weak. The Afghan government and Afghan civil society, with assistance and advice from foreign friends, did quite successfully meet this obligation in towns and cities, but less so in rural areas. However, some 2,000 community development councils were organized and funded across the country.

But the development effort was not turned over to local governments, nor was it integrated with local self-government or military and police operations designed to defend local communities 24/7.

In my study of Afghanistan for my 2017 book on the use of associative power in defeating insurgencies, I found that the various efforts of the U.S., its NATO allies and Afghan partners did not 1) sufficiently decentralize power to involve the people in their communities; 2) did not provide a fundamental moral basis, say the Qur’anic concept of justice, applicable to all Afghans, which gave reason to oppose any Taliban dictatorship; 3) did not sufficiently minimize cronyism and rent-seeking; and 4) did not sufficiently hold its officials accountable as trustees of the public good.

These failures, in my judgment, permitted the Taliban to swim pretty easily in the sea of the people for two decades (not to mention their safe havens in Pakistan), bringing to naught all the sacrifices and good efforts to deliver on many of the ethical standards of moral government advocated by the Caux Round Table.

One senses that in our world order today, something is shifting.  The joists are loosening and the roof is leaking.

The openness under the rule of law, which gave order to our post-World War II international system and hopes for resilient and flourishing open societies thriving under human rights ideals, seems to be fading as both an ideal and a reality.  New paradigms for national cultures and politics are being pressed, which are less reassuring than before, less optimistic than we need to be and more cynical about human nature.

In reacting to the anxieties, I have read noting this shift in conditions, I recalled the proposals of Hegel for using the mind to find conceptions, notions, conceits, (Begriff) which allow us to align with absolute essence.

So many of the arguments and debates happening before our eyes today Invoke Hegelian Begriffs that we might want to take a new look at Hegel.

After re-reading Hegel’s Phenomenology of Spirit, I wrote down some concerns as to his dominant influence over our modern civilization and its disaffections.

You can find my short essay here.

Please let me know if you think I have missed the mark.