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Departments Economics Special Report

88 Editorial 4 Capital gains tax cut is a Justice, not vengeance. parasites' paradise The proposed 50% cut in the U. S. capital gains tax rate will primarily Photo and graphic credits: Cover, benefit those who make over pages 25,38, 64-67, EIRNS /Stuart $200,000 per year. Lewis. Page 13, EIRNS /David Ramonet. Page 21 , EIRNS /Michael 6 Oligarchs dominate Italian Leppig. Pages 26,36, EIRNS I government Virginia Baier. Page 35, Harper and Row. Pages 42 (left) , 44, Will Poland once again Nicholas Goodrick-Clarke, The 7 cave in to false ideas? Occult Roots of Nazism, New York: 20 Phil Gramm's Poland is a target for the "Mexico New York University Press, 1992. 'Conservative Revolution treatment," as President Lech Page 42 (right) , U. S. Army. in .f\merica' Walesa plays the role of Cervantes' LyridonH. LaRouche, Jr. analyzes Sancho Panza. the Jacobin seizure of power by a popplist mob, determined to Why Polevanov was fired 9 obliterate the U. S. Constitution The fight over privatization in during the first 100 days of the Russia. 1000h Congress.

Currency Rates 10 34 Von Hayek hails the satanist Mandeville 11 Will trade war help pick China's leader? 37 His British lordship spills the beans Draft emergency law for 12 A profile of Lord William Rees­ revival of the national Mogg. economy of Mexico From EIR' s Spanish-language 38 Kissinger's alliance with Special Report on the Mexican debt the British bomb. 41 Wby we must call Newt 17 Gold Gi,grich 'a fascist' South Africa probes Geneva banks. The historical roots of the Conservative Revolution. 18 Business Briefs 46 The legacy of Friedrich von Ha�ek: Fascism didn't die with Hitler

50 Strtltegic Map MOllt Pelerin Society'S fascist international . Volume 22, NumberB, February17, 1995

International National

52 Mont Pelerin 'body­ 74 Wehrkunde marks deep 80 Virginia AS$embly slaps snatchers' are split between U.S. and down 'Conservative brainwashing your British Revolution' congressman The war in Bosnia was the subject The rejection o� Virginia Gov. Dossiers on the Heritage of most heated interchanges at the George Allen's vicious austerity Foundation, Reason Foundation, 32 nd annual Wehrkunde budget may be the beginning of a Cato Institute, Progress and Conference in Munich. trend, as it dawns on voters that the Freedom Foundation, American politicians they elected in Legislative Exchange Council, 76 British try to sink Peru­ November are turning their budget­ National Taxpayers Union. Ecuador peace cutting axes against them. The diplomacy surrounding the 64 The Mont Pelerin conflict between Peru and Ecuador 82 Espy special prosecutor 'enforcers' inside the U.S. has become a form of surrogate puts President Clinton in Congress warfare between the Clinton his sights Profiles of some of the most administration and the British. important congressional spokesmen 84 Congressional Closeup for the Conservative Revolution: 77 Mexico: Zedillo takes the Phil Gramm, Newt Gingrich, gloves offagainst 86 National News Richard Armey, Bill Archer, Zapatistas Alfonse D'Amato, John Kasich. Arrest warrants are out for the top six leaders of the Zapatista narco­ 69 They've taken out a terrorist insurgency. contract on you! 78 International Intelligence 70 'Neo-Confucianism,' Leibniz, and the fight against the Enlightenment. �TIillEconoIDics

Capitalgai ns tax cut is a parasites' paradise by Richard Freeman

, At the heart of House Speaker Newt Gingrich's (R -Ga.) Con­ then record profits through tHe instruments' sale. These are tract with America, is the proposal for a 50% cut in the capital capital gains profits. This is part and parcel of the gigantic gains tax rate, and indexation of capital gains to inflation. worldwide financial bubble. ! The combined effects of the proposed tax cuts would initially The capital gains tax rate cut, proposed under the Con­ hand $180 billion to $210 billion in after-taxprofits to specu­ tract with America, has two o�] jectives. First, it is to increase lative parasites-"privateers"-who bankrolled Gingrich the size of, and give six mopths or more new life to, the and other Conservative Revolution Jacobins into Congress. financial bubbles in stocks, d4:rivatives, and real estate. The The proposal is grand larceny brazenly executed in broad historical record shows that e�ch time a capital gains tax cut daylight and covered up with the thread-bare cloth of "tax has been enacted during the la$t 20 years, speculativeactivity reform." has thrived. Second, it lowerslthe tax rate that the speculative Lyndon LaRouche, in his Jan. 18 speech to the Schiller parasite pays on his ill-gotten gain, which, meanwhile, has Institute's Martin Luther King Conference, stated: "The 'pri­ been enlarged through the eff�cts of the capital gains tax cut. vateers' ... [are] going to steal everything. And they're So the speculator pays less trufon a much bigger take. As Al going to steal and loot the nation through an instrument called Capone would say, "Nice wotk, if you can get it." capital gains. You pay more taxes, you get less, and you pay As for its effect on societY, as the capital gains tax cut­ off the pirates, the parasites who make no contribution, who aided speculative bubble grolws, it sucks more wealth out survive on lucky money which they get by running a crooked of the physical economy and strangles it. More farms and wheel called the financial speculative market-[such as] Or­ factories close down; more workers are laid off. This con­ ange County-through capital gains." tracts the tax revenue base of the U.S. government, because Capital gains are gains realized as a result ofthe apprecia­ even if lowering the capital gaiins tax brought in more capital tion of an asset, whether that asset be stocks and real estate­ gains tax revenue-it does jU$t the opposite-the effect that which are the two biggest forms of capital gains-ora piece the cuts in the capital gains tax. has on the economy is greater. of antique furniture, an art work, etc . For example, if one bought an apartment building for $50 million, and sold it two How the capital gains tax cut works years later for $150 million, then $100 million is one's capital The Contract with Americ/l proposalfor capital gains tax gain, even if the upkeep and repair of the apartment building cuts is summarized in a Jan. ' 5 document, "Description of has not been maintained and the building, in real physical Provisions in the Contract wi$ America within the Jurisdic­ terms, is really worth less than it was two years ago. The tion of the Committee on Ways and Means." It states: "The object of the speculative economic process that has sub­ Contract with America contaiins three capital gains incen­ merged America since the 1963 assassination of President tives: 1) a 50% capital gains deduction, 2) indexation of the John Kennedy, has been to rig an appreciation in the market basis of capital assets to eliminate inflationary gains, and 3) price of paper financial instruments or pieces of land, and a provision to allow homeowpers who sell their homes at a

4 Economics ElK February 17, 1995 loss to deduct that capital loss." Point one, regardless of $100,000 to $200,000 in income, an4 65.3% of the total when it passes, would be retroactive to Jan. 1, 1995. dollar amount of capital gains are earn¢d by those who earn The current capital gains tax rate is 28%, and is applicable $200,000 or more . Thus, two-thirds of all capital gains are to all the capital gains that an individual or corporation realiz­ earned by those with $200,000 or more in income. This es in the course of a year. For example, let us say that Mr. minuscule group represents less than 1 % of all Americans Boesky realizes a $2 million capital gain. Under current law, who filetax returns. They are the primq beneficiaries. Boesky's capital gains tax would be his $2 million capital • As for the claim that cutting the iCapital gains tax will gain times the current 28% capital gains tax rate, or help people sell their homes, the truth i$ that capital gains on $560,000. This would leave him an after-taxprofit of $1.440 the sale of a principal residence can bei deferred indefinitely million. Under the proposed new law, Boesky would deduct if the taxpayer purchases a replacemenl residence of greater one-half the $2 million capital gain (or $1 million), which or equal value, which happens 90% of the time. According would not be subject to tax. Let us also assume that Mr. to one source, one-third of capital gains is realized in the Boesky is in the highest personal tax bracket, which is cur­ stock market, and an additional 45% is realized either from rently 39.5%. Under the proposed change, he would pay tax commercial real estate, or housing that is not one's primary on the remaining half of his capital gain times his current residence, but held as an investment. for the last three de­ personal income tax rate. This would mean $1 million times cades, the stock and real estate markets have had almost no 39.5%. His capital gains tax would be $395,000, leaving connection to real economic activity, but have been hotbeds him an after-tax profitof $1.605 million. He would earn an of speculation. Thus, 80% of capital gains derive from specu­ extra $265,000in after-tax profit. lative activity. However, historically, the way the capital gains tax works , by intention, is that it simultaneously swells the spec­ Priming the speculative pump. ulative markets to new heights. So, under the Contract with In 1978, the capital gains tax rate was 49%. In that year, America, Boesky could realize 1.5 times (or more) as much Rep. William Steiger (R-Wisc.) introduced legislation which capital gains as he currently does. Let us assume that under became law which reducedthe capital gains tax rate to 28%. the Contract with America, Boesky realizes $3 million in That law took effect in 1979. Then,: in 1981, one of the capital gains, as opposed to the $2 million that he currently provisions of the Kemp-Roth Tax Act reduced the capital does. As a result, his capital gains taxes would be $594,500 gains tax further,to 20%. In 1986, the Tax Reform Act raised but his after-tax profits would rise to $2.4 million-nearly the capital gains tax rate back up to 28%. twice current levels. Between 1978 and 1986, the dQuble-dose of capital Indexation of capital gains to inflation, under the Contract gains tax rate cuts-in combination with the 1982 deregula­ with America proposal, would add a whole new element of tion of the U. S. banking system, and Ithen Federal Reserve financial scam, because it indexes the speculator's assets Board Chairman Paul Volcker's s�y-high interest rate against the inflationrise , but the speculator can borrow mon­ regime-fueled a further speculativ¢ boom in America. ey which is not indexed. Indexation would drastically lower Let us look at what happened in the capitalization of the the amount of tax the speculator pays, lowering the tax reve­ New York Stock Exchange (NYSE). The capitalization ' nue the U. S. governmentcollects , and further increasing the is the total number of shares times the stock price of speculator's after-tax profits. each of those shares. During 1978-86, the capitalization of the NYSE soared Lies and more lies from $823 billion to $2,199 billion. This represented an in­ In pushing the capital gains tax cut, Gingrich, his con­ crease of 2.67 times in just eight years, or a compounded rate gressional cohorts, and think-tanks such as the Heritage of growth of approximately 30% peri year. The real estate Foundation and National Taxpayers Union, blather that the market also boomed. The parasites sponsoring the current capital gains tax cut is a pro-business tax cut, which will capital gains tax rate cut intend to re-create such a boom, stimulate business formation and help the average taxpayer intending to give six months of new lif¢ to the currentcancer­ pay a lower tax. Often, for dramatic effect, they say that the ous bubble which is strangling the ph)'!sicaleconomy . proposal will help the farmer sell his farm, or the poor widow A study by the Joint Committee on. Taxation of the U.S. sell her house, which they could not do if they faced high Congress, calculates that ifthe Contraotwith America capital capital gains taxes. How does this colorful palaver stack up gains tax cut version passes, it will inc.-ease realized personal against the truth? capital gains by 70%. But even with that increase, the U.S. • Only 8.5% of all taxpayers pay capital gains taxes, government will lose $208 billion in capital gains tax reve­ according to the U.S. Treasury Department. That means, 9 nues between fiscal years 1995 and 2004. Entitlements and out of 10 taxpayers-the average working man-realize no infrastructure will be cut to make up for the lost taxes. The capital gains whatsoever. Moreover, 13.8% of the total dollar money equivalent will be handed overlto the parasites whose amount of capital gains are earned by those who earn non-productive activity is destroying America.

EIR February 17, 1995 Economics 5 in addition to his other revenues, is enjoying his Banca d'ltalia pension which he got afterju st 15 years of employ­ ment, amounting to $10,000 � month.

Puppets and puppeteer$ Oligarchs dominate No surprise, therefore, tqat the technocrat whom Dini appointed as financeminist er,) Augusto Fantozzi, developed Italian government his expertise as a years-long tax adviser to the (Venetian) Benetton financial group. In Italy, the economics portfolio by Claudio Celani is split into three ministries: Treasury (gives out the money); Budget (planning), and Finance (enforces taxes). So, Mr. . Fantozzi, who has been advising his rich customers on how The new Italian government led by Lamberto Dini is de­ to pay less taxes, now has the task of enforcing an "equal" scribed by media as a technocratic cabinet free from "party round of sacrifices on the Italian population. influence";apart from virtual reality, it turnsout to be mostly More directly representatirve of the oligarchical party is influenced by a very definite party: the oligarchical party. Dini's Foreign Minister' Susanna Agnelli, almost a blueblood Starting with Dini himself, a product of Countess Donatella herself. Sister to FlAT owner Gianni Agnelli, the foreign Pecci Blunt's Roman salon, behind the technocratic image minister is married into the Raittazzi oligarchical family and, of his "party-less" ministers and state secretaries, emerges like her two brothers Gianni and Umberto, is one of the few the dominating presence of Prince Philip's Club of the Isles Italian members of Prince Philip's 1001Club . The Agnelli and 1001 Club. family is totally integrated in�o the London-centered inter­ national oligarchy. Not accidentally, Agnelli' s first action Dini: Up the social ladder in office was a visit to British Foreign Minister Douglas Dini is a simple servant of the international oligarchy. Hurd. Son of a Florentine fruit-monger, he made his way up inside While it is possible that she will not profile herself as the Italian banking world, to become executive director of too pro-British, at least publicly, Agnelli's intentions are the International MonetaryFund in 1970. In 1974, Dini nego­ indicated by the person she appointed as Italian representa­ tiated the first IMF loan for Italy, whose conditionalities are tive in the group preparing th� next European Union Treaty, responsible for Italy's tum away from a growth policy into a which is supposed to update criteria for European monetary post-industrial, debt-ridden economy. From 1975 to 1983, and political integration. LivioCaputo, Agnelli's choice, is a Dini oversaw the IMF Africa program, which turned the member of the Milan-based Center of Studies of Geopolitics, continent into a net capital exporter with catastrophic conse­ Strategic Security, and Ethno�Nationalism (CSGSSE) . This quences for its economy and a genocidal effect on its popu­ center is led by Carlo Maria i Santoro, another member of lation. the Dini government. In Countess Pecci Blunt's salon, Dini was selected as Santoro is deputy mini stet for defense. In an interview husband to Donatella Zincone, the heiress of an Italian busi­ with the magazine L'ltalia, S�ntoro stated: "The concept of nessman who transferred his activities to Costa Rica in the Fortress Europe (Festung Europa) created by Haushofer and 1970s. Mrs. Dini-Zincone's Gruppo Zeta is so influential in Hitler is a formula based on an idea of Europe which I the Central American country today that she is called "The consider very timely, as offensive-defensive. I explain: The Queen of Costa Rica." Gruppo Zeta's secret: cheap labor in German unificationin 1990 ha$ made possible the unification Costa Rica's tax havens, created by the local government of western Europe and has reconfirmed the prominent role just for Mrs. Dini-Zincone. of Germany as defensive first line of Europe against the Thus, we have the peculiar case of the prime minister of East and maybe also against the Far West, the United States. a country who has announced an austerity program with $10- Here we are inside a Festung Buropa, almost without realiz­ 15 billion in tax and budget cuts, who at the same time is ing it." raising his own private fortune overseas, by not paying taxes! Santoro draws a Limes (4atin for border, but also im­ So much for a "technocrat" who is supposed to be immune plying the Roman walls to keep out "undesirables") between to political "corruption." Dini, who was voted in by a left­ Europe, including non-Slavic easterncountrie s, and Russia; dominated coalition in the Parliament, has also announced a he draws the same Limes between Europe and the United radical pension reform, to shift from a public system to an States, "as the American continent can never be essentially increasingly private one, through the introduction of pension European." By denying common European and American funds. The aim is to drastically decrease state entitlements roots, Santoro denies the Christian roots of western civiliza­ for pensions, and pension levels overall. Also, the minimum tion as a whole. That is the b�ic oligarchical way of think­ retirement age will be shiftedupwards . Meanwhile Mr. Dini, ing, which invented geopolitias as an instrument to manipu-

6 Economics EIR February 17, 1995 late nations against each other.

'Mario of England' Let us end our short tour of the gallery of horrors with Dini's deputy minister for foreign trade, banker Mario D 'Ur­ so. Since Dini abolished the Foreign Trade Ministry and put Poland once it under the Industry Ministry, D'Urso will probably end up Will again by having the same powers as a minister. D'Urso is nick­ cave in to ideas? named "Mario of England" for his close relationships to the false Windsor family. A friend of the British Queen's sister Mar­ by Anna Kaczor garet, he recently beat up a paparazzo who snapped a photo of D'Urso with the Duchess of Kent. According to EIR 's book Dope, Inc., banker D'Urso is It is quite possible Cervantes himself would agree that the tied to networks accused of drug-money recycling. A mem­ Poles have a true Sancho Panza for a President. He has been ber of Kissinger Associates, he is also Italy's representative promised delicious food by his advisers trained in the London for Shearson Lehman investment house. D'Urso played a and Harvard schools of economics, if he fights wholehearted­ prominent role in the merger and acquisition merry-go­ ly against imaginary windmills, now in the form of budgetary around that brought the old-line German-Jewish Wall Street problems, now tax es, now nominations, and reforms. He houses Kuhn Loeb, Lehman Brothers, and Shearson Hayden has combatted with true zeal; unforrunately, he has never Stone under the American Express umbrella at the outset checked what the promised goodies look like, and if he ever of the 1980s. D'Urso came to Shearson Lehman American gets them, he will realize that they belong to virtual reality­ Express through the old Kuhn Loeb firm, whose international just like the hot speculative money which is forming an ever department he directed before it merged with Lehman. Cur­ more enormous bubble over our heads. rently he's the New York chief of Jefferson Insurance Co. , After the blowup of the debt bomb in Mexico, which was the joint arm of the Venetian insurance giants Assicurazioni the symptom of the coming crash of the global financial Generali and Riunione Adriatica di Sicurta, the central clear­ system, Poland, one of the "emerging markets" in line for ing-houses for the ancient Venetian fondi.The board of Assi­ the Mexico treatment, is being pushed into a state of chaos curazioni Generali reads like the"Wh o's Who" of the Central with the help of President Lech "Sancho" Walesa. It seems European oligarchy. It is a typical expression of the Wind­ that the panic among international financial institutions sors' Club of the Isles. caused by the Mexican crisis resulted in a frenzy to loot Last September, D'Urso organized an Italian trip for his whatever is leftof the productive ecortomythrough a process boss Henry Kissinger. Fat Henry lectured a group of bankers of so-called privatization, which is.a part of free market and businessmen including Luigi Spaventa, a senator in the reforms in the post-communist couJlltries. Walesa, a self­ leftist bloc and D'Urso's partner in the speculative venture proclaimed supporter of those reforms, serves the interna­ Finanza & Futuro, belonging to Carlo De Benedetti (another tional looters' interests quite well by.helping them to elimi­ characterorbiting around the Generali pole). Finanza & Futu­ nate any potential resistance to the process of dismantling of ro is the third biggest Italian fund investing in financialderiv­ the Polish economy. In a dramatic move on Feb. 4, he refused atives. Among the other guests at the meeting with Kissinger, to sign a state budget for 1995, which he claims gives him a were banker Mario Sarcinelli (Banca Nazionale del Lavoro), way to dissolve the Parliament. publisher Carlo Caracciolo (of the princely Caracciolo family It became obvious almost immedlately that the real issue intermarried with the Agnellis), and businessman Antonio is not the budget (which was "approved" by International D' Amico, a member of Prince Philip's 1001 Club. At that Monetary Fund (IMF) Managing Director Michel Camdes­ meeting, Kissinger dared to give an interview on Aldo Moro. sus during his December visit to Poland, which should have Moro was the Christian Democratic leader who was killed satisfiedWalesa) , but rather the fighttto accelerate free-mar­ by the Red Brigades in 1978, concretizing earlier threats to ket reforms by forcing Prime Minister Waldemar Pawlak out Moro from Kissinger himself. Kissinger boasted: "Aldo of office, thus reducing the influence of the Polish Peasant Moro did not understand what foreign policy is." Party (PSL) in the government.That iswhat finallyhappened D'Urso is chairman of Italy Funds, a New York invest­ on Feb. 7, when the two ruling parties agreed to remove ment fund dealing only whith Italian equities. The annual Pawlak and replace him with Jozef Oleksy of the SLD, cur­ reports of Italy Funds boast that the company has always rently the Speaker of the Parliament. Oleksy was a minister performed better than the Italian Stock Exchange, i.e., it has in the last communist government headed by Mieczyslaw regularly drawn profitsout of the country. In Dini' s reversed­ Rakowski, who already in 1988 discussed shock therapy for qualificationscabinet, the best place for a flight-capitalentre­ Poland with internationalspeculator George Soros. preneur is, of course, the Foreign Trade Ministry. Until Feb. 8, the government consisted of members of

EIR February 17, 1995 Economics 7 two coalition parties: the PSL, which has been trying to Attacks on 'anti-reror.. rs ' protect the domestic market by reintroducing some tariffs on Already in December, Walesa expressed the need for a agricultural goods and blocking privatization of the most new prime minister, because !pawlak had "lost his depth." important Polish industries, and the post-communist Demo­ Walesa suggested that Aleksaitder Kwasniewski, the leader cratic Left Alliance (SLD), which supports free-market re­ of the SLD, could take the p�st. In early February, a pro­ forms, as typifiedby Finance Minister Kolodko, former con­ free market Warsaw daily, G&zeta Wyborcza, claimed that sultant to the IMF in Poland. Pawlak's SLD coalition partners have concluded that "the When Kolodko was nominated at the beginning of 1994, Pawlak era is over" and have begun urging their colleagues the Morgan Stanley brokerage house declared that his nomi­ in the PSL to remove their leader. nation was a good sign. On May 30, 1994 , the Polish daily The conflict between the coalition parties worsened in Rzeczpospolita published Kolodko' s program for the Polish November, when the fight arpund privatization led to the economy, which "envisions a process of deregulation, decen­ ouster of the PSL chairman o� the parliamentary committee tralization, and lessening the participation of the state in for ownership transformations, Bogdan Pek, who opposed economic life." the present form of privatization in the context of the scandal Kolodko's idea for fightingunemployment, for example, around the Bank Slaski selloff� The Economic Committee of is to shorten the 'Work-day and cut wages, to give jobs to the cabinet is urging the privatiization of Polish refineries and more people; he plans to solve the Polish debt problem by the lifting of gasoline price co�trols in the fall of 1995. The vast privatization: Private banks will be able to buy special PSL and Pawlak, who has been viciously attacked by pro­ public debt Treasury bonds which then may be exchanged free-market press, seem to pr$ent an obstacle for such pol- for elements of the privatized property. In an interview in ICies. I Rzeczpospolita on May 23, 1994, when asked whether it was In the eyes of some trade u�ionists from"Sol idarity '80," true that for such a program to yield considerable profits, there is clear collaboration betvfeenthe post-communist SLD it must involve large and attractive companies-refineries, and the Freedom Union (FU), ia post-Solidarity party which telecommunications, insurance, airlines-he said: "That is started shock therapy in 1990 .d, after the "lost" election of right. In Argentina, 20% of the debt-$ lO billion-was fall 1993, holds 74 seats in the !parliament. Except for prom­ liquidated in this way. I can see no reason why we should not ises to provide more "safety n�t" for the neediest, the SLD try this in Poland. Also here we must run forward and resist promotes a policy essentially I the same as in the 1990-93 this pseudo-capitalist blah blah blah that we will sell Poland period, when the FU was in poJwer. out and give it away for half price. This is just not true." The free-market faction ini Poland is getting inspiration According to some reports, by the end of 1998, there from the outside, from people stichas Soros,who established will be no more state-owned enterprises (there are still about his Stefan Batory Foundation in Poland in 1988. According 5,300of them). to the foundation's November 1994 bulletin, a number of parliamentarians from the Freedom Union are on the council Foreign companies violate the law of the foundation: Bronislaw Oeremek (chairman, Foreign Privatization has not had a good impact on the economy. Affairs Commitee), Bogdan Bprusewicz, Olga Krzyzanow­ Controllersof the Polish Supreme Chamber of Control (NIK) ska (vice speaker of the Parliament), and former Prime Min­ stated in September that foreign capital often violates the ister Hanna Suchocka. The Warsaw office of the Freedom law while investing in Poland. The NIK report said that the Union is just one floor above the headquarters of the Batory activity of companies with foreign capital does not satisfacto­ Foundation. rily influence either the development of production for ex­ When Soros deployed Harvard economist Jeffrey Sachs port, or the implementation of modem technologies and cre­ to impose shock therapy on POland, the Polish government ation of new jobs. Foreign partners delayed making their got one more foreign adviser,iE.S. Savas, who sits on the contributions; i.e., they did not provide machines and equip­ board of the Reason Foundatipn with a number of people ment as well as modem technology. who are members of the Mon. Pelerin Society (see Special The situation will become even worse in 1995, because Report, this issue). The acting head of the President's Chan­ starting in January, three-quarters of Polish foreign trade cellory, Janusz Ziolkowski, �s a free-market economist were bound by the new terms of foreign commerce with the trained in the London School of Economics, and in the past European Union. Polish industrial goods exports to the 15 worked for the United Nations and Unesco. EU countries are no longer be subject to any restrictions. At Despite all the heated debate, nobody has dared to say the same time, Poland is obliged to lower import taxes and that "the emperor has no clothes" or to focus discussion tariffs for comsumer goods by 20% each year. This will around the real issue, which �s one more surrender of the definitely weaken Polish industry even further, since the Polish nation to false ideas-this time the idea of a free­ Darwinian-style fight formarkets can hardly end with a Pol­ market Eden, pushed on Poland by the IMF and the World ish victory . Bank.

8 Economics EIR February 17, 1995 WhyPolevanov fired was A behind-the-scenes report about thejight over privatization in RUssia, by Roman Bessonov, who writesJromst. Petersburg. i

Vladimir Polevanov, formerly head of the Amur regional return the nominal price of the checks which were given to administration, had been Russian Minister of State Property citizens as their share in the state enterprises that were sold for only two months. During this period he gave only two to private investors. The transformation of propertyrelations press conferences, and only in one of them did he use the has not influencedthe efficiencyof production. word "nationalization," but the attack on him from the liberal Hopes and calculations concerningbenefit for the federal mass media was furious. and municipal budgets proved inconsistent. Only 2.8 trillion He was suspected of "placing a bomb under privatiza­ rubles were realized from privatization for budgets at all tion," as well as of being incompetent and ignorant. That was levels (1.8 trillion rubles of this sum came from Moscow, despite the fact that he emphasized that he was not going to where its own, much more beneficial;variant of privatization stop the privatization process, and also despite the fact that he is being conducted, and only 52 billipn rubles in St. Peters­ was not the firstto speak of nationalization, either. Aleksandr burg), the total being equal to the benefits fromprivatization Livshits, the President's economic adviser, had pronounced in the relatively small economy of Hungary.This sum could this "terrible" word even before him, but was never attacked not support the financial system or llrevent the collapse of by the liberals. economy. De-monopolization "by all means" led to the dis­ So, what was Polevanov's fault? The answer became ruption of economic connections. The amount of foreign more or less clear only when his letter to Prime Minister investments decreased from $2.921 billion in 1993 to $768 Viktor Chernomyrdin, dated Jan. 18, was published in sever­ million for the firstnine months of 1994. al media outlets. The text ofthe letter made clear that Poleva­ nov had managed to collect a great deal of information on Crime flourishes the numerous privatization affairs, and these facts mostly The most prominent results of the Chubais privatization characterized the state bureaucracy involved in sharing was the total criminalization of propertyrelatio ns, flourishing property. of bribery, and easy criminal purch�sing of the controlling In his letter to the prime minister, Polevanov named all shares of stock of not just enterprises but entire branches of the tasks and functions of privatization, as they were formu­ industry by various foreign companies. lated in the 1992 Privatization Law: 1) generation of a wide In cases of the purchase of gigantic shares, the source of class of private proprietors, capable of establishing a socially income was never declared. It is hard to explain how a single oriented market economy; 2) increasing efficiencyof produc­ Vassily Timofeyev from Tyumen region managed to buy 210 tion; 3) development of social care and social infrastructure million shares of stocks of Gazprom Co. , paying 2.1 billion on the basis of benefit gained fromprivatization; 4) stabiliza­ rubles, and what enabled Kaha Benprivate property into private property free of charge. Mr. Polevanov proprietors is very small, and enterprises are managed by a quotes the British "Independent Strategy" agency that ad­ limited cast of administrators . No real dividends can be paid: vises businessmen not to miss theirichance, stating that the Only 136 of 646 check investment funds (CIFs) managed to whole stock of Russia's state entetprises was sold for $5

EIR February 17, 1995 Economics 9 billion, while its real worth is not less than $300-400billion . The 500 biggest enterprises, actually worth about $200 billion, were sold for $7.2 billion. For example, the Moscow urr auto plant ZIL, worth $1 billion, was sold for $4 million. C ency Rates The buildings ofthe State Institute of Education for Managers The dollar in deutsche.arks and Specialists in Chemical industry, worth $100 million, New York late afternoonfixing were sold for 8 million rubles. The North Shipping Company was evaluated at $3 million, the Novorossiysk port at $22.5 1.80 million. And there are thousands of such examples. 1.70 Colonialism and greed 1.60 The higher officialsof Chubais' s ministry used to say that � rumors of "Russia being sold," widespread by the opposition, I.SO just reflected that they were unaware of the real situation. ! But when huge pieces of industries are easily bought by 1.40 I foreign companies, and the enterprises lose the ability to 12121 12128 1/4 IIll 1Il8 211 218 produce competitive machinery, losing their access to the world market, it's nothing but pure colonization. And this The dollar in yen New York late afternoonfixing has already happened in the whole aluminum industry, its

enterprises bought, 30% stock or more, by V. S., Irish, and ! 130 Israeli companies. This has happened to the Mil Helicopter

Plant, 28% of its stock bought by Boeing. And to "Electrosi­ 120 la," one of the most equipped and technologically developed St. Petersburg machine-building enterprises, 19% of its stock 118 I bought by the British "Madima." ! 100 - .�. The officials of the ministry might feel just a little bit - anxious for the fate of the economy, directly influencing the standard of living. But they are more interested in their own 90 standard of living than that of their fellow citizens. That's 12121 12128 114 1Il1 1118 211 218 why they get so furious when Polevanov honestly describes The British pound in doUars the real situation. Because if the privatization policy really New York late afternoonfixing I changes, and its second stage is started only afterthe grossest violations are possibly corrected, as Polevanov suggests 1.80 i should be done, the most influental liberals may lose much too much. For instance, Deputy Minister Pyotr Mostovoi 1.70 may lose his "Lenzoloto" (Lena Gold) company together 1.60 with his V .S. partner from "Star." And former Prime Minis­ - I"- � ...... ter Yegor Gaidar himself, the perfervid apostle of privatiza­ I.SO tion and shock therapy, may lose his share in the newly made ! gigantic joint stock corporation, together with D. Cohan from 1.40 I the V.S. Pioneer Group, Inc. 12121 12128 114 IIll i 1118 1125 211 218 That is the real reason why the liberals used everything Swiss possible to compromise Polevanov, threatening him and in­ The dollar in francsI New York late afternoonfixing sulting him. Not only him, but also Oleg Soskovets, who is making some real attempts to stop the looting of the econo­ 1.60 my , and was recommended by Polevanov to take charge of

the ministry afterhe left. 1.50 But anyhow, Polevanov's letter was read in hundreds

of analytical centers and millions of homes, and the state 1.40 I leadership, sooner or later, will have to do something about these problems. The country is terribly devastated, but not 1.30 � everything is lost yet. And the fact that Polevanov now works I as a deputy chief of the Control Department proves that Mr. 1.20 Chubais has not yet won the struggle. 12121 12128 1/4 1111 1/18 1125 211 2/8

10 Economics EIR February 17, 1995 Some of these experts believe, as the New York Times has implied, that Chinese President Jiang Zemin and U.S. President Bill Clinton should share the blame for the souring of the Sino-U.S. relationship. Cli�on, they say, misled Jiang to believe that Washington wbuld overlook the IPR trade war help and the human rights issues for the sake of the "strategic Will engagement" with China. As for the!technocrat Jiang, after pick China's leader? talking with him, "you don't walk away with the feeling that he's a deep, thoughtful kind of guy," the Wall Street Journal commented. A rumor repQrted in the New York by Cho Wen-pin Times says that even Deng, who threlW all his weight behind Jiang for the past few years, is unhappy about the way Jiang To protect Madonna, Hollywood, Microsoft, and other stumbles in handling foreign affairs: "Third Wave" products, U.S. Trade Representative Mickey To be sure, London's news media are also voicing opin­ Kantor on Feb. 4 hit China with 100% tariffs on a list of ions over China's leadership transition, because they see­ goods worth $1.08 billion. Not only did China respond with as an indication that Beijing is changing the guard-that tariffs on a list of U. S. -made goods, but Foreign Trade Minis­ compared to what Deng did to the British government on ter Wu Yi, in a note of defiance, said that China can simply the Hongkong issue, current leaderSi are more cautious and tum elsewhere to meet its importneeds . less responsive to issues such as the balance of trade, the Yet, there were casualties before the two sides had even environment, human rights, the Spratly Islands, nuclearpro­ exchanged fire. In January , China openly announced that it liferation, and Taiwan's independence. had executed some of the 2,665 people convicted ofintellec­ Thus, some Anglo-Americans, lIed by House Speaker tual property piracy since 1991. Beijing, in answer to the Newt Gingrich (R-Ga.) and company, .are pressing ahead pressure of the American interests groups demanding protec­ on these issues in order to squeeze Seijing. tion of Intellectual Property Rights (IPR), had again violated human rights protected by the U.S. Constitution, and human China paying 'too high a prite' life highly valued by all Americans who roared in protest But neither China nor the rest of world would benefit, against the bloody crackdown in Tiananmen Square in 1989. if Beijing's new leader comes to power when the country's But, oddly enough, even the most active rights groups failed sovereignty is under fire. Already in Beijing, senior poli­ to point a finger at Beijing on this matter. cymakers tied to the military are saying that "China may be The question is, with Sino-U.S. trade war and human paying too high a price for Washington's favor," and an rights rhetoric at fever pitch, whether the roller-coaster ride extreme-nationalist faction among junior officers, many of of relations will eventually push some leaders in Beijing over whom became politically active in the Red Guards, is the edge. gaining influence in China's domestic and international af­ fairs . Beyond the trade war New U.S.-China talks in the wdrks may avert this trade In late January, the Pentagon declassified a report, enti­ war for the moment, but some people in London and Wash­ tled "China in the Near Term," which was drafted by a ington will keep provoking other flashpoints until they see select team about four months ago. One reason for the delay a new leader in Beijing whose face they will back for "man in its release, is because the report estimates only a 50- of the year" in either Time magazine or the London Financial 50 chance for China to survive disintegration after Deng Times. Xiaoping's death-a prediction which, if it came true, could When two of the world's largest countries go toe-to­ lead to diplomatic and political regrets. Besides, the Clinton toe, a miscalculation by hotheads could send the politics of administration wants to conceal its preference in Beijing's reprisal over the brink, and throw the world into a new Cold coming leadership struggle, which seems imminent. Dr. War. The real danger is that there is·no margin for a misstep Ronald Morse, organizer of this study (who once said that in the case of a China' where the: new leader is seeking the Japanese invasion had helped Mao Zedong gain power), external crises to line up its people behind the regime, while stated that he expects a new Beijing leader to surface within in the United States the Conservative Revolutionaries are six months whose name no one will have even heard of. trying to bring Beijing to its kneesl In fact, there are quite a few people in the United States According to Dr. Morse, who has experience working who clearly want to pick a Chinese leader who will orient for the Pentagon, the United States is indeed preparing for in their favor. And this trade war against China certainly political and economic warfare with China. But if China casts a vote concerning the new host of Zhongnanhai, or dares to strike the United States With its ICBMs, "we are even of the White House. able to tum China into a nuclear wasteland," warns Morse.

EIR February 17, 1995 Economics 11 Draft emergency laW"fo r revival of the national economy of Me o xic The fo llowing proposed legislation was published as part of This law provides the legal foundation for mobilizing the the January 1995 Spanish-language EIR Sp ecial Report on resources for growth and development existing within our the Mexico peso crisis, entitled "Mexico: The Debt Bomb own country, to generate a rapidincrease in the useful physi­ Explodes; Who Will Be Next?" which is circulating through­ cal output of the economy "nd to reverse the intolerable out 1bero-America. collapse in living standards from which the majority of our population now suffers. It furthermore mandates the govern­ Preamble ment to take action, in concert with other governments, to In recent months we have witnessed a dramatic deteriora­ create a new framework within which trade and cooperation tion of the world economic situation. Not only our own coun­ among nations can be develobed on a stable and equitable try, but nearly every nation on this planet findsitself today in basis. i profound crisis. Unemployment, collapsing living standards, and growing scarcity of the basic means of human subsis­ Statement of purpose tence are destroying the social fabric, inflamingregional cri­ 1. In order to provide for tlile speedy recovery andrecon­ ses, and aggravating the danger of general war. The financial struction of the national economy, in order to ensure its system of the United States is disintegrating, and the entire healthy functioning in the future and to lay the basis for fabric of international financial institutions and arrange­ more equitable relations witH other nations, the laws and ments, which depended upon the stability of that system, is regulations governingthe Natinatural law . up a plan for currency reform, according to which, within a To this purpose we hereby enact this "Emergency Law specified period, the existing currency will be withdrawn for Revival of the National Economy." The law sets down from circulation and replaced by new currency notes in accor­ basic guidelines for immediate government action as well as dance with an orderly procedure. for future legislation concerning the detailed elaboration of 6. Said procedure shall include a provision under which measures outlined here . holdings, larger than a specified per capita amount, will be

12 Economics EIR February 17, 1995 The Mexico peso crisis marked a new phase in the disi1tegration of the inte'lnationaljinancial sYS{(fm , a speculative bubble fu eled by institutions like ,he Mexican stock mar et, shown here. exchanged for new currency notes only upon documentation credit for specific categories of produ tive investment. This of their lawful origin. shall occur through the circulation of new issues of currency 7. If existing gold supplies are not found sufficient to notes in the form of credit granted ty the National Bank back the new currency at a rate of 10-15% of value, the directly and through participation in I ans by private institu­ finance minister shall draw up a plan for acquiring needed tions. supplies, as far as possible on the basis of domestic produc­ 12. The minister of finance shall be empowered, upon tion. Until such time as a sufficient gold reserve exists, the approval by Parliament, to issue specifiedadditional amounts value of the new currency shall be guaranteed by a basket of new currency notes, to be deposited in the National Bank of other, domestically produced commodities whose price­ and employed solely for the purpose bf extending credit to range shall be insured by government intervention. Market­ productive activities in the economy . With the exception of basket pegging of the currency shall be maintained also after replacement of notes retired from cir9Iulation, new currency the introduction of the gold reserve. notes shall be placed into circulation oply through the credit­ 8. The time and exact conditions for the currency transi­ issuing activities of the National Bank!. tion shall be set at the discretion of the government in accor­ 13. New currency issues shall be introduced into circula­ dance with this and forthcoming legislation. tion in the form of credit exclusivel� in the following four 9. It is recognized that under present conditions, strict ways: a) credit granted by the National Bank for state invest- I currency controls are necessary in order to curb speculation ments; b) credit granted by the National Bank to private and capital flight and defend the integrity of the national enterprises; c) participation of the Nallional Bank in loans by currency. private banks; d) National Bank discoLnting of notes, drafts, and bills of exchange arising from the production of tangible Reform of the National Bank wealth and capital improvements. l 10. The National Bank is mandated to pursue a general 14. In each case, the issuance and use of such credit shall policy of fostering increases in the productive powers of be strictly confined to the following ategories: purchase of the nation's labor force through scientific and technological raw and intermediate materials and capital goods, construc­ progress; of promoting independent family farming and the tion of facilities, and employment of labor to produce or formation and development of modern small and medium­ transport manufactured goods, agricultural commodities, sized enterprises in industry, as well as capital improvements and construction materials, and to work mines; to build man­ in industry and mining generally; and of providing credit for ufacturing, transportation, and mining facilities or dwellings; urgent improvements in housing, physical infrastructure, and to produce and deliver energy in all forms; and to provide educational, research, and health facilities. public utilities for communications. Such definitions shall 11. The National Bank shall be empowered to generate not include notes, drafts, bills, or 10 ns issued or drawn for

EIR February 1 7 , 1995 Economics 13 the purpose of conducting business except in the area so more, large-scale investments in modernizationof the coun­ defined, or for trading stocks, bonds, or other investment try's basic infrastructure pr

14 Economics EIR February 17, 1995 out in parallel and in coordination with the establishment of to ensure a parity price to competing �omestic producers of an integrated, continent-wide infrastructure network. acceptable quality. 27 . Accordingly, the commission shall assist the govern­ ment in internationalconsultations and negotiations concern­ Tax policy ing the planning, financing, and division of labor for a conti­ 34. It is recognized that the proper functionof a tax system nent-wide infrastructure network. is not only to generate necessary revenllefor the government, but also to encourage those categories of activities which ben­ Parity prices, commerce, and tariffs efitthe national well-being, while tending to discourage those 28. Apart from declared national emergencies, govern­ which are demonstrably harmful to the. same. It is further rec­ ment intervention into the free exchange of goods and servic­ ognized that the most effective method for increasing tax reve­ es shall be limited to the minimum necessary to maintain nues is to foster the increase of capital�intensive, technologi­ good order, to prevent gross excesses in the form of specula­ cally progressive employment of tbe workforce, which tion, exploitation, and usury, and to ensure an overall pro­ augment the net physical output produ�ed per capita, generat­ ductive orientation of the economy. ing growing rates of real income of the population and of enter­ 29. It is recognized that the hoarding and withdrawal of prises from which tax revenues are derived. goods from the market, for the purpose of obtaining exorbi­ 35. Accordingly, tax advantages .should be granted for tant prices for their sale, or to gain power over persons and income and profits which are reinve!sted in the indicated, events, represents a gross form of speculation which shall be productive manner; while relatively high taxes shall be im­ severely penalized by the state. posed on speculative and purely parasiticalforms of incomes, 30. It is further recognized that any large-scale trade in such as those gained from mere resale of nominal assets essential goods such as food, raw and processed materials, (paper holdings) without physical improvements. and basic equipment, at prices significantly below the costs 36. The government shall conduct a review of tax laws of production, represents a gross excess which cannot be and procedures with the view toward bringing them into tolerated either in domestic commerce or in commerce with efficientagreement with the principlel' summarized above. other nations. Accordingly, the state is obligated to inter­ vene, as necessary, to ensure that producers do not receive External debt less than a certain percentage, to be fixedat not less than 90%, 37. All agreements and understanpings with the Interna­ of the parity price for acceptable qualities of such essential tional Monetary Fund and other foreign institutions, private goods. and otherwise, which grant to such institutions the right to 31. The parity price is determined as follows: The aver­ impose "conditionalities" and to exerqise supervisorycontrol age costs of production of the given commodity shall be over the national economy, are hereby: declared to be contrary estimated from a survey of enterprises producing that com­ to the principle of national sovereigntYland to be null and void. modity, leaving aside both the most backward 30%, and the 38. It is recognized that economic recovery has priority upper, most productive 30% of the enterprises. The calcula­ over debt service, and that no country or institution has a tion shall be based upon a fair and decent wage level, corres­ right to demand from a debtor country a level of payments ponding to levels of household and other consumption con­ which leads to falling living standar�s, unemployment, and sistent with the requirements of a progressive increase in loss of essential social services. This means that an immedi­ qualification level and productivity of the workforce, regard­ ate debt moratorium must be put iIlito effect on the entire less of whether such wages are actually paid at the time of foreign debt and certain categories Of domestic debt. This the survey. The parity price shall be calculated by adding to moratorium will be maintained untU such time as: a) the the cost of production, so determined, a margin for capital legitimacy of the original debt is established (see Paragraph improvements in production, consistent with a minimum rate 40 below); and b) the renewal and servicing of legitimate of increase of productivity for the given sector as judged in debt can be undertaken without endangering the general re­ terms of the needs of the economy as a whole. covery and development goals outlined herein. It is recog­ 32. It is recognized that at the present state of develop­ nized that in many cases this will require debt moratoria for ment of the national economy, a completely free exchange periods of up to 20-30 years. Interim satisfaction of legiti­ of goods with the world market would lead to intolerable mate creditors will be offered only as outlined in Paragraph destructionof domestic producers and impoverishment of the 41 below. majority of the population. On the basis of the historical 39. It is also recognized that the, practice of liquidating examples of the United States, Japan, Germany, and other national assets such as land, mineItal resources, or state­ countries, we affirm the right to impose protective duties as owned companies in the domain of Qasic industry and infra­ an instrument of national economic development. structure, for the purpose of paying lor securing existing or 33. In general, tariffs for imported commodities in the future foreign loans, is contrary to the principle of national category of basic goods, shall be set no higher than necessary sovereignty and is to be strictly forbi�den.

EIR February 17, 1995 Economics 15 40. It is furthennore recognized that certain categories ment shall work to establish � suitable multilateral gold re­ of nominal debt were contracted and inflated by unlawful, serve-based financialinstituticlm, possibly as an outgrowthof unfair, or usurious practices. The government shall appoint the clearinghouse described 'n Paragraph 43, whose chief an independent body of experts to make a detennination functions shall be (i) to expedite the clearingof trade imbal­ between legitimate and illegitimate portionsof debt. It is also ances; (ii) to rediscount bills M trade and specificcategories I recognized that certain categories of originally legitimate of bonds, including bonds i�sued in connection with debt debt have in fact been fully repaid, yet remain on the books consolidation of debtor nations, for approved categories of through usurious and other bookkeeping manipulation. Such credit to hard-commodity tra�e and productive investment; de facto repayment will also be considered by the appointed and (iii) to cooperate with the ll'lationalBa nk in the generation body of experts in its detenninationof legitimate and illegiti­ of credit for international prqjects, above all in the area of mate debt. basic economic infrastructure I 41. The government shall affinnits commitment to honor 46. It is recognized that � number of nations, including all legitimate debt obligations, in a manner consistent with some of the most powerful, m�y be strongly opposedto such the principle of equity as well as the vital interests of the steps. The government shall l10t be deterred by such initial nation . The government shall therefore seek to negotiate the opposition, but shall instead $eek agreement between those conversion of legitimate debt into long-tenn obligations at governments which recognizd the essential policy principles low interest rates, preferably through an arrangement under embodied in this law, and wh�ch in particularare committed which such obligations would be made discountable to the to (i) recovery from the econJmic crisis based on revival of holder for specificcategories of productive investments bene­ the national economies, (ii) lqw interest rates for productive fittingboth debtor and creditor nations (Paragraph 45). Con­ investments, and (iii) achievin� a stable value of their curren­ tact and coordination will be actively sought with other na­ cies, linked to production of $gible wealth. tions adopting policies similar to those contained herein, for 47. Parallel with effortsto lexpand bartertrade and estab­ the purpose of strengthening the government's negotiating lish a gold standard for trade relations among an emerging position vis-a-vis its creditor banks and the international fi­ community of interest among nations, the government shall lI nancial institutions. pursue cooperation on the development of a continental infra­ structure network. The latter s�all emphasize constructionof International cooperation trunk lines for high-speed rall transport of passengers and 42. It is recognized that no acceptable solution to the freight; modem multi-mode ttcmsfer facilities between rail, world economic crisis is possible within the framework of road, water, and air transport; !cooperation of energy genera­ presently dominant financialand trade institutions, including tion and distribution; and imptovements in water infrastruc- the International Monetary Fund, the World Bank, and the ture and communications. I General Agreement on Tariffs and Trade. The government I is therefore mandated to take action, in concert with other Bibliography governments, to bring into existence an alternative frame­ 1. The Science of Chri�tian Economy, by Lyndon work, within which the world economy might be revived, LaRouche, 1991, available in �everal languages. and trade and cooperation among nations developed on a 2. So You Wish to LearnAl l about Economics? a textbook stable and equitable basis. by Lyndon LaRouche, avail�le in English, French, Ger­ 43 . The government shall immediately enter into negotia­ man, Spanish, Russian, and oCher languages. tions with all interested nations, to expand the number and 3. "Why Credit Can Be G¢atly Expanded Without Add­ scale of mutually beneficialbarter agreements on a systemat­ ing to Inflation," by Lyndon If.aRouche, published 1980 by ic basis. The governmentshall work for the establishment of the National Democratic Policy Committee. Gennantransla­ a suitable clearinghouse institution to expedite bilateral and tion in the book Kreditschopju ltgohne Inflation, Campaigner multilateral barter agreements between cooperating nations. 1981. In some instances it will be both desirable and possible to 4. The Independent Democrats' 1984 Platform, con­ establish regional common market-type relations, which can taining a detailed descriptionOf LaRouche's plan for reorga­ play an important role in meeting national import require­ nization of the U.S. financial lsystem and government eco­ ments of essential goods. nomic policy. 44. The government shall work toward the reintroduc­ 5. Interview with Lyndon [LaRouche, published in Ger­ tion, at the earliest suitable point, of a gold-reserve standard man in EIR study "Der Osten !Buropas in den 90erJahren ," for international trade, by means of which a system of stable December 1991. currency values will be established as the foundation for 6. "Draft Federal Reserve Nationalization Act of 1992," long-tenn investments and a greatly expanded level of trade. quoted and explained in EIR, March 6, 1992, p. 4, 45 . In the context of establishing a gold standard for "LaRouche Campaign SpecHlies How to Nationalize the economic relations among agreeable nations, the govern- Fed."

16 Economics EIR February 17, 1995 by Roger Moore Gold

South Africa probes Geneva banks The Banque Multi Commerciale (BMC), the secoJtldbank in the South For the second time in two months, Union Bancaire Privee turns African investigation, also has its gold up in a major organized-crime case. lining. The admimstrative president of BMC is Roger BUdin, who happens to be the secretary ofthe Geneva branch outh Africa's police have joined help explain why UBP again comes up of London lUXUry goods and jewelry thoseS of the United States and Israel when law enforcement tries to control producer Asprey PIc. A matter to be in putting an investigative spotlight on the frenzy of speculation-driven investigated is Asprey's business in the increasingly notorious Geneva­ thieves. the Persian Gulf sheikhdoms, particu­ based Union Bancaire Privee (UBP) of UBP's De Picciotto ison the board larly Dubai, a major gold-trading cen­ Edgar de Picciotto. South African of Soros's Quantum Fund. A June ter and base of operations for gold prosecutors have documented that the 1993 Forbes magazine article, on ex­ smuggling into India. proceeds of a large-scale gold theftand panding gold jewelry sales, comments BMC's vice presidentGabriel Saf­ money-laundering ring were kept in on "the recent stampede by George die, like Edmond Safra, is ofBrazilian the UBP and the Banque Multi Com­ Soros, Sir James Goldsmith, and other nationality and also spends his time in merciale, the small Geneva subsidiary shrewd investors into the gold mar­ New York City. Gabriel's brother, Al­ of Banque Nationale de Paris (BNP) ket." South African police firstnoticed bert Safdie, shares a corporate seat at that seems to specialize in exotic in 1992 that something was driving up Swiss Banque Pallas with French dealings. the price of black market gold. banker Pierre Moussa. Moussa According to information from the Gold is highly regulated in South walked offwith the Geneva assets of Johannesburg prosecutors, in the most Africa, where unregistered possession France's Paribas Bank in the early recent year of activity, the ring was in­ of gold is a presumption of illegal ac­ 1980s, when the French government volved in the theftof 8.5 tons of gold quisition. Hence the black market nationalized many banks. Moussa was (of 16 tons reported stolen that year) price for gold is below the legal price, backed in this by � Swiss shell compa­ which was coated with silver and ille­ a discount for the risks involved. ny, Pargesa, run by Gerald Eskenazi, gally exported for resmelting and sale Somebody was moving gold out of the the man who brought us the felonious in London and Geneva. The proceeds market (out of South Africa) in such a "junk bond king" Michael Milken amounted to upwards of $200 million, volume as to pull up the black market through his controlling interest in which was deposited in the two Gene­ price to the legal price. Drexel BurnhamLambert! va banks for redistribution to the con­ Gold, like diamonds, has always There is cleady a lot of hot money spirators. The theft/money-laundering been useful to internationalsmuggling at risk in the South African investiga­ pipeline had been operating for up to and narcotics rings . Silver-coated gold tion into the deposits at UBP and eight to ten years, and thus represented bars have turnedup on the U. S. East BMC. Unlike the Miami indictments, perhaps a billion dollars of flight Coast as smuggled means of payment where UBP claimed it was a victim of capital. for drug rings. It is thus no surprise that those indicted, in the South Africa In the December 1994 Miami in­ a Miami Customs investigation into case, UBP and BMC are jointly ap­ dictment of three UBP account officers narcotics money-laundering crosses pealing to block Swiss legal assistance on charges of narcotics money laun­ paths with a South African investiga­ cooperation with the South African dering, it came out that bank officer tion into gold theftleading to the door police. Their strategy is to make the JeanJacques Handali traveled repeat­ of the same bank in Geneva, UBP. Swiss banking community nervous edly to Florida to organize a flow of UBP is the result of De Picciotto' s that the South Africa charges of theft money into several hot investment absorption of the Edmond Safra-creat­ and money laundering of criminal pro­ funds, one of which was Soros Fund ed Trade Development Bank in 1990. ceeds, which mj!rit legal assistance, Management. Hungarian-American Safra's New York Republic National are a matter of flightcapital which is speculator George Soros, although not Bank is a major gold trading bank. In not prosecutable under Swiss law, and officiallymentioned by South African 1993 it joined the exclusive five-mem­ thus do not merit legal assistance in investigators, has played a prominent ber London Gold Fixing club, pre­ gi ving bank account information to the role in the last three years' goings-on sided over by N .M. Rothschild, which South Africans. Much is at stake in in the world's gold markets; this might sets the price of gold twice a day. these criss-crossing investigations.

EIR February 17, 1995 Economics 17 BusinessBrief s

Ukraine "by no means accurate," Hu said. In fact, they ti me from$ erlin to Warsaw by two hours. In are derivedfrom figures of21 years ago, when the year2 000, thi s route is supposed to be up Invest in production, grain production was267 million tons. Now, to Europeai standards. professor demands grain productionis at460 million tons. The net • On �e Russian side, the highway from growth rate of grain production is abo ve world Belarus to Moscow will be the first pri ori ty, average, and should exceed Brown's predic­ and will need investments of about $478 mil­ Prof. V. Chernyak, a doc tor of economic sci­ tions. lion in the nextfive years. The overall invest­ ences, oppo sed the monetarist "reform" poli­ Hu said that although China will still have ments just fur the modemization of highways cies which UkrainianPresident Leonid Kuch­ a grain deficit by20 20, it will not be of a level andrailrou�salong theBerlintoMoscowcor­ rna has adopted, in the Dec. 27, 199 4 to create the "global scarcity" that Bro wn fore­ ridor are eSPmated by the German Transport newspape r Biznes. "Duringperiods of social casts. China will be importing 10-30 million Ministry at "bout $12 billion. cataclysm," i. e. , the transition to a market tons per year over the coming 15 years, economy, stimulation in investment and pro­ arnountingonly to 3-1 0% of world pr oduction, duction is needed, he said. he said. Chern yak criticized Kuchma for talking Hu traced the credence given to Bro wn's Health aboutthe need for "new social sacrifices" when "careless" analysis back to U.S. Secretary of the popUlation has been "practically exhaust­ State Dean Acheson, who claimed 45 years a tive from the ed." He said that Ukraine's farmers must be ago that China's population of 500 million mv supported, pointing out that in the Uni ted would force it to become dependent on U. S. start, q ys new study States, the market economy is "moreregulated flour. Yet, 45 years later, China is feeding a sr and less liberalizedthan the modelbeing pr0- populationfo ur times that of the United States, The human :immuno-deficiency viru s (HIV), posed for Ukraine by western monetarist ad­ on agrain croprougblycomparable to the Unit­ which cause s AIDS, starts fighting the im­ visers. " ed States, with half the arable land. mune system fromthe very onset of infection, If the monetarist model is carried out, he according tq areportreleasedin lateJanuary by warned,science, education, culture, and pub­ John Coffi n, a professorof molecular biology lic health services will continue to decline, and microbiplogy at TuftsUniversity medical "along with prodding the country toward the school in B ston, and a Tufts research team. path of deindustrialization and the fringes of Infrastructure f "It seems real disease caused by HIV oc­ scientific- technical pro gress. Much of what is thf curs during :the period when almost nothing being offere d as reforms will lead to a further Russian minister boosts seems to be happening," Coffi n wrote in the decline of production." i Berlin-Moscow corridor journ al ScieflCe . Chernyak said that the average wage is AIDS doo s not suddenly occur after years 40% of the subsistence level. He called for Within a few years, the Berl in-to-Moscow of uneven�1 mv infection, he said. Instead, stimulation of production through "easy credit transportation corridor, which will include the disease .s the result of years and years of and state support for priority investment pro­ bothroa d and rail systems, could undergo "an accumulated damage to theimmune system. grams." even larger extension," uptoSamara or Y ekat­ The cliJlical study corroborates studies erinburg, Russian Transport Minister Vitali conducted by a biological taskforc e set up by Yefimov said, the German engineers weekly Lyndon Laij.ouche in the mid- 19 80s, andthe VDI-Nachrichten reported in January. Devel­ research of Or. Mark Whiteside, that AIDS Agriculture opment of the corridor is "an important eco­ onset is relatj!dto the status of the infected per­ nomic and social program for Europe," he son's immline system. Hence, persons in China exposes fraud of said. The first stepsin the building of the corri­ underdevelOpedcountries, theirimm une sys­ dor include: tems alreadt wracked by protein deficiency, Brown starvation scenario • Bel arus wil l invest about$8 8 millionin chronic malaria, and other diseases and para­ rail and highway modemization, to increase sites, die far more quickly than those in the Chi nese Academy of Science researcher Dr. the spe ed on its 600-kilometer rail line up to developed sector. Africans infected usually Hu Angang exposedas "l udicrous" the incom­ 160kID per hour (kph). Negotiations with the die within &: 12 months of infection. petenceof the latest" alarmist" fear-mongering Europe an Bank for Reconstruction and Devel­ It also bQlsters the assessment that routine by Lester Bro wn of the WorldwatchInstitute, opment on the financing of both projects have public healtb measures would go farto protect who claimed that Chinese food demands will started. the general Population fromHIV. soon overwhelm world grain production, in an • Poland will extend highway A2 at a rate Coffi n said that the gradual damage does interv iew in the Jan. 30 Beijing Review. It is of about 100kID per year, and plans to secure not show up easily in blood tests that count T­ necessary to refute Brown, Hu said, because private financing . The German and the Polish cells because,even though billions of them are such arguments are being used to conjure up railway agencies have agreed to have a killed everyday, the body is able for yearsto the "China threat" in world politics. 160 kph rail route (E20) up to Warsaw op­ replace them at the sarne rate. 'The virus is Bro wn's figure s on food production are erating by 199 8. This will decreas e the travel like a fore st ;fire. The fire is burning slowly,

18 Economics EIR February 17, 1995 Brtlffly

• DEUTSCIlEBANK will need to give a capital iIifusion of about $315 million to KlOckner Humboldt and at anygiven time, only a certain numberof eliminated from the industry. Today, one­ Deutz, the Germanengine and indus­ trees areon fire. But eventually the firespreads third of all Germancars and half of all German trial plant manufacturer which is fac­ faster than new trees [the T-cells] can grow." trucks are entirely produced outside of the ing losses of �out $75 million for country. 1994, in orderto enable the firm to Further, Siemens-KWU will cut another survive its debt problems. The bank 2,200jobs this year (about 10% of its work­ is the firm's main shareholder. Nuclear Energy force), especiallyin its energy productionsec­ tion. In 1994, KWU shut down of one of its • THE CAIRO SUMMIT of Isra­ Germany, Russia set nuclearfuel element factories (a reprocessing el, Egypt, Jordan, and the Palestin­ and enrichment complex) in Hanau, and its on plutonium ians agreed on feb. 2 to press on with deal photo-voltaic section lost money . In fiscalyear plans for a development bank for the 1993-94 (which endedSept. 30, 1994), KWU Mideast. Also; on Jan. 31 in Gaza, Germany and Russiahave apparentlyconclud­ decreased investments by 46% and expendi­ donors agreed to speed up disburse­ ed adeal in which Russian weapons-grade plu­ tures for researchand development by 10%. ment of funds to the Palestinians. A New orders for its nuclearsection fell by more tonium will beprocessed in the new mixed ox­ World Bank officialsaid the Palestin­ than ide (MOX) factory of Siemens in Hanau, 15%. ians should receive $500-600million Germany, into new nuclearfuel elements , the The head ofThyssen Stahl AG, Heinz Kri­ this year; last year they received $228 German weekly Der Sp iegel reported in late wet, announced that 8,000 more jobs will be million. January. The fuel elements (about5% plutoni­ cut in the yearahead . um, and the rest uranium-238) would be sold • CHINA'S Heilongjiangprovince to South Korea or Taiwan. . will open 15 cities along the Heilong­ EIR was told by Siemens that the German jiang and Songhuajiang rivers, to in­ Foreign Ministry has ordered a study by Ger­ crease transport to Vladivostok in man and Russian nuclear experts in order to United States Russia, in order to increase trade, identify technical solutions for the huge China Daily reportedon Jan. 27. amounts of Russian plutonium. Infrastructure has not The constructionof the new Hanau MOX improved, contractors say • RUSSIAN coal miners in the facility will befinished in abouttwo years.Last Rostov-on-Don region began an "in­ year, Siemens decided to shut down its old definite" strike on Feb. 1, after re­ MOX facility and its uranium fuelelement fa­ The United States' " 'grades' for the different peated pleas for back wages went cility in Hanau, putting almost 1,000nuclear categories of infrastructuredo not seem to have unanswered �y the government. technicians out of work. improved over the past seven years and may Miners are demanding that disinvest­ actually have declined," the Associated Gen­ ment in the coal industry (a demand eral Contractors ofAmer ica, a trade associa­ of the Internatiional Monetary Fund) tion representing over 30,000 construction be halted. Employment contractors, reported on Jan. 19. The conclu­ sion was contained in a "progressreport" dis­ • LORD DENIS HEALEY, the German 'upswing' met tributed by the AGe at the Economic Policy former British Chancellor of the Ex­ Institute's National Conference on Infrastruc­ chequer, who warned in 1994 of the with more layoffs ture Investment. danger posed by derivatives, said that According to the AGe report, "55.7% of "an economist could be defined as Another 120,000job cuts were announced in U . S. major roadways are now in poorto fair someone who �new 69 ways of mak­ Germany at the end of January, amid a so­ condition andin need ofirnmediaterepair. An­ ing love but didn't have any girl­ called "upswing." The board of Deutsche nual expenditures are falling $9 billion short friends," in a radio talk on Jan. 22, Bahn AG approved a strategy paper which of theamount neededto maintain currentcon­ the London Sunday Times reported. calls for the elimination of 90,000 out of ditions." 307,000jobs by the end of 1997, in order to The 1988 infrastructuregrades were: high­ • BOEING. the U.S. aerospace "increase productivity." The number of ap­ ways, C+; mass transit, C-; aviation, B-; firm, will lay cilff7, 000 workers in its ' prenticeships at the firmwill also becut drasti­ water resources, B; water supply, B - ; waste­ commercial j¢tliner manufacturing cally. water, C; solid waste, C-; hazardous waste, operations, tile Feb. 3 Wall Street OnJan. 31,the Germanauto-makers asso­ D. Journal reported. Company officials ciation manager Achim Diekmannannounced According to the AGe, all these categories were caught Qff-guard by the large in Frankfurt that job cuts in the industry have probably become worse. TheAGe noted number of aircraft order cancella­ (20,000 in 1994) will continue in 1995. The that capital investment required to meet clean tions or delay �n deliveries scheduled "cost cutting" is all but finished,he said. Since water standards has leaped 67%, from $76.2 for 1996-97. mid- 1991, morethan 150,000jobs have been billion in 1988, to $127.1 billion.

EIR February 17, 1995 Economics 19 TIillSpecialRep ort

Phil Gramm's 'ConselVative Revolution in America' by Lyndon H. LaRouche, Jr.

Apart from the England of the London press's Lord William Rees-Mogg and Clinton-hater Ambrose Evans-Pritchard, much of the world at large has been dismayed to learn, that during the "mid-term" U. S. f�deral elections of November 1994, the Republican Party carried both houses of th� U.S. Congress. That fear is rooted in the view, that if one were to believe the headlines in the largest-circulation U.S. and international electronic and print media, r the nightly "Bush-league" variety of U.S. "talk -show" hosts, both houses of the U.S. Congress, especially the House of Representatives, are now under the control of a sheeted populist mob determined to obliterate the U.S. Constitution during the first 100 days of this present session. House Speaker Newt Gingrich (R-Ga.) should not object to such a widespread popular opinion of his "Contract with America" instkgency. In an orgy of radical demagoguery at the recent meeting of the Republican National Committee, it was Gingrich himself who identified his faction within the party as like a Jacobin mob reenacting the French Revolution of 1789-93. 1 The situation is dangerous. Some among the fact�on of Gingrich and Sen. Phil Gramm (R-Tex.) are fully as bad as the news reports suggest. As this report documents the proof, we must regard that movemctnt itself as an authentically fascist one, descended, via the Mont Pelerin Society, from the european fascists of the 1920s and 1930s. However, although that program is potentially aivery dangerous threat to the U.S. Constitution (and about 80% of the population), a balanced view of the

danger it represents for the medium term is that given in a recent National Press Club address by Sen. Edward Kennedy (D-Mass.)} Kennedy reported: (1) that

1. Jan. 20, 1995 address of House Speaker Newt Gingrich to 1/he Republican National Committee in Washington (see box , p. 22). 2. Jan. 11, 1995 at the National Press Club. For a report on the �ddress, see "Newt's Power Rangers Start to Stumble," EIR. Jan. 20. 1995 . p. 48.

Special Report 20 EIR February 17, 1995 there was a very low tum-out of voters for that election; (2) baugh's admirers in the U.S.A.? How was it organized? Who that the "Republican majority" in the Congress was created organized it? What, exactly, are the. philosophical and other by less than one-quarter of the U.S. voters; (3) that the Re­ connections between these hyperv¢ntilating neo-conserva­ publicans deserved less credit for winning the majority than tives of today and Hitler's Nazis? Who are the controllers those among the Democratic Party candidates and party offi­ and money-bags behind this new Jacobin insurgency? Where cials who did so much to lose the election; and, (4) that a does this social phenomenon fitwithln the legacies of europe­ return to (e.g., Franklin Roosevelt-era) Democratic Party an and world history? constituency political campaigning would tum back this Con­ servative Revolution during the 1996 primaries and general How this report was composed election. Later, President Bill Clinton's address to the Demo­ The preliminary matter to be set1!ledin the reader's mind, cratic Party's National Committee offered an outlook concur­ is whether Rush Limbaugh's "Contract with America" fol­ ring substantially with Senator Kennedy's rePort. 3 lowing4 is, or is not properly and strictlyto be termed "fas­ EIR's special task force on the Conservative Revolution cist" in the same sense that Adolf fiitler's Nazis or Benito has a comparable opinion: The sickness of a Congress mo­ Mussolini's followers represent a fascist type. If the answer mentarily dominated by such a radical minority of congres­ is "Yes," that settles the issue of lal>elling. Yet, even if the sional insurgents could be fatal for the United States, if not rubric "fascist" were deemed not smctly appropriate, then treated properly; fortunately, the infection is curable, if the the investigation should nonetheles� continue to search in the citizenry reacts properly, and in time. same directions for an alternativedescription . Wanted, is a precise, rigorous, and compact analysis The proof goes as follows. By the standard of Packard's of what this "neo-conservative" wrecking crew represents, old slogan, "Ask The Man Who Owns One," Limbaugh's where it comes from, and how it can be stopped. For that followers have an explicitly fascist pedigree. As we have purpose, this report has been composed. said here , the "neo-conservatism" permeating the "Contract This is a political-intelligence study, which identifiesthe with America" is a creation of the Mont Pelerin Society, following included categories of relevant facts. How did the heritage of the Conservative Revolution from the 1920s and 4. Remember that the freshly hyperventilated batch of Newt Gingrich's 1930s happen to be implanted among Rush "Bozo" Lim- congressional freshmen literally followed the Bush league's "Goebbels," Rush Limbaugh, up the streets of Washingt\Jn, from the Heritage Founda­ 3. Jan. 21, 1995. tion's brainwashing center, to the Longworth Building on Capitol Hill.

EIR February 17, 1995 Special Report 21 the Mont Pelerin Society control over them implies? Any public description of a person or movement as fascist in content, incurs the difficultyfor the layman, that, with few Newt'sJacobin battle-cry exceptions, the academically generally accepted sources on On Jan. 20, 1995, Speaker of the House Newt Gingrich the inner nature of fascism fall into three classes. One class delivered a blood-curdling call to arms before the Re­ is made up of tendentious frauds concocted predominantly publican National Committee in Washington, D.C. in by socialist, communist, o� freudian-marxist6 ideologues. which he explicitly equated himself with Robespierre A second, is composed of documentary studies devoted to and Danton: protecting various of the hi�h-Ievel persons and agencies "We need to understand that the scale of revolution which brought Hitler to power: including such complicit fig­ that we need is so great and it is so dramatically differ­ ures as the Bavarian royal farbilyand related elements of the ent. ...This is a real revolution. In real revolutions, Thule Society, Hjalmar Schacht, Rockefeller's and Royal the defeated faction doesn't tend to convert. It tends Dutch Shell's Auschwitz-creator August von Knierem, cir­ to go down fighting.... I mean, if you look at the cles around the British monarchy, and President George Bourbons, in France, they didn't rush in and say, 'Oh, Bush's father, Prescott Bush,7 1t is fairly said that these pre­ please, can Ijoin the revolution?' They remained Bour­ serve the Nuremberg Trial hoaxes describable as "Hitler­ bons. In fact most of them learned nothing and forgot as-a-Ione-assassin" mythologies. The third, factually more nothing, and 50 years later were still locked into a useful sources of insight are provided by Germanveterans of world that was dead .. ..I am a genuine revolutionary; Nazism, both former Nazis sitch asMohler, or his opponents they [the Democrats] are the genuine reactionaries; from among veterans of that Germananti -Nazi Resistance so we are going to change their world and they will do oftenbetrayed to Himmler b)!Britain 's Vansittartet al. 8 anything to stop us, they will use any tool, there is no This author, over much 0Ifthe past five decades, and his grotesquerie, no distortion, no dishonesty, too great associates, during the recent quarter-century, have virtually for them to come after us. . . . The future ofthe human exhausted study of the three types of available scholarly and race for at least a century rests on our shoulders. If we related sources on the subject of 1920-1930s fascist move­ fail ...then Bosnia and Rwanda, Haiti and Somalia ments. On the basis of that collaborative experience, the are the harbingers of a dark and bloody planet." author can say with authority � that, even when they are accu­ rate in what they document as fact, those sources share the fatal scholarly error of fallacy of composition. It is said fairly, that the common fundamental error of itself a relic of the generic fascist movements of the 1920s virtually all published texts on the subject of fascism, is that and 1930s, as fascism is identifiedby Prof. Armin Mohler's they suggest the apocryphal case of the ichthyologist who standard reference on that subject, Die Konservative Revolu­ presented a general theory of the behavior of fish without tion in Deutschland, 1918-1932 .5 Our report documents: that once considering the role of water. They are chiefly efforts program's neo-conservative following was organized, top­ to explain away decisive developments within modem histo­ down, by the bloated network of indoctrinating and funding ry by resort to fictional sociological or psychoanalytical organizations constructed under the overall coordination of "spin": a "virtual reality" within which astounding historical the branch of British intelligence services which created events occur, but without ever engaging any historicalprinci­ Friedrich von Hayek's Mont Pelerin Society and deployed it ple. The specialist must study such secondary sources, but, against the United States. iftaken by themselves for forming the opinion of the layman, If one sees, that a branch of the fascist Conservative Revolution, the Mont Pelerin Society, assembled and pack­ 6. Such as the hoaxes of putatively anti-fascist Hannah Arendt, she the aged Limbaugh's neo-conservatives, that shows the deploy­ intimate admirer of Nazi ideologue and nietzschean "liberation theologist" Martin Heidegger. ment of assets by a fascist movement, but does not yet prove , 7. See Webster G. Tarpley and Anton Chaitkin, George Bush: The that those assets themselves are also fascists in their own Unauthorized Biography, pp. 26-61. (Washington, D.C.: E1R , 1992). inclinations. ("Could they not be misguided dupes, in­ 8. The presently available docum�nt shows that the policyof betraying stead?") Amid today's public controversies over labelling, is the Gennan Resistance to Himmler was also that of British Prime Minister the content of these neo-conservative followers as fascist as Winston Churchill, who was "rabidly geopolitical" on the point of pro­ tracting the mutual slaughter of GeflDllIls and Russians for as long as possi­ ble. This is also the avowed basis for the Gennany policy of Margaret 5. Annin Mohler, Die Konservative Revolution in Deutschland, Thatcher's and John Major's govenlments since the dogma of reunified 1918-1932, 3rd edition (Darmstadt: 1994). The Siemens Foundation's Gennany as a "Fourth Reich" was firi;t publicly uttered by the fascist Mrs. Mohler wrote the first edition of this (1949) as a doctoral dissertation under Thatcher's Conor Cruise O'Brien and Minister Nicholas Ridley during late the postwar patronage of existentialist Professor Karl Jaspers . 1989.

22 Special Report EIR February 17, 1995 most of those sources are even worse than useless. We devote the remainder of this opening section to a top­ down summary of the issues posed by the "conservative" movement which has often appeared in the guise of fascist The Tamers' 'ThifdWave ' movements during the past hundred-odd years. Thus, we In 1994, Alvin and Heidi Toffier wrote a book for define the functional necessity of identifying Baroness Mar­ Newt Gingrich's Progress and Flreedom Foundation garet Thatcher and her U.S. co-thinkers around Sen. Phil elaborating themes first struck in their 1980 book The Gramm plainly, and publicly as fascists. Third Wave (Bantam Books, New York, 1980). The P&FF book featured a Forward by Newt Gingrich and 'From the top down' was titled Creating a New Civilization: The Politics of This report features the inclusion of crucial references to the Third Wave (Progress and Freedom Foundation, an article written recently by a leading British conservative Washington! Atlanta, 1994). ideologue, Lord William Rees-Mogg. 9 Among his other cre­ Earlier books written by Alvin or Alvin and Heidi dentials, Rees-Mogg is a patron of the American Spectator, Toffier include, in order of publication: The Culture and a leading figure of that Conservative Revolution cur­ Consumers, Future Shock, The tEco-Spasm Report, rently represented within the U.S .A., by Baroness Margaret The Third Wave, Previews and Pr�mises, The Adaptive Thatcher, Sen. Phil Gramm, Alvin and Heidi Toffier, and Corporation, Powershift, and War and Anti-War. Newt Gingrich. The importance of citing his piece, is that he says most of the same things which Toffier andGingrich are saying in the name of the "Third Wave," but Rees-Mogg presents it straightforwardly, without the gobbledygook and of military and other administrative: functionaries fairly de­ sheer fustian with which Toffier lavishly decorates his own scribed collectively as lackeys of the ruling oligarchy. copiously shallow intellect. 10 Rees-Mogg plainly admits that The earliest evidence presently known, of the idea that those "Third Wave" beliefs which he shares so enthusiastical­ this subjugation of the lower 95% must not persist indefi­ ly with Gingrich and Toffier, are , by his clear description, a nitely, is found about 3,000 years ago, in the first book of II form of reactionary neo-feudalism. Moses: the notion of man-man and woman-as created in Taking this portion of modem history from the top down, the image of God. 13 On this text of Moses, Philo of Alexan­ as all competent political-intelligence studies must do, the dria emphasizes that that quality of the mortal person which nub of the matter is the following. is in the image of God, is nothing' other than a quality of For all of history prior to A.D. 1400, in every culture, in intellect lacking in the beasts, a creative quality of the indi­ every society, a proverbial 95% of the total population lived vidual person's intellect, typified, in the usages of modem in a cruelstate more or less comparableto serfdom, slavery, civilization, by a platonic notion of valid fundamental dis­ or worse. All of these cultures failed, terminating in a self­ covery of scientificprinc iple. 14 induced collapse of a "dynastic cycle." It was the common Later, steps toward realization of such an uplifting of the feature of all of those earlier cultures of whose social organi­ people as a whole appeared within Classical Greece. This zation we have documentary or inferential archeological appeared first within the city-statesiof Ionia, continued and knowledge, from any part of the planet, 12 that they were advanced to a higher level by Solon'is constitutional reforms, usually ruled capriciously, in the fashion suggested by the and was refined to a great degree tby Plato's Academy of fabled gods of Olympus, by sets of oligarchical families. Athens. Yet, in contrast to Solon'� constitutional reforms These ruling families were assisted in their overlordship by against oligarchical usury, the more general condition of a relatively privileged minority of the population, a stratum mankind throughout the planet then was typified by one of the most significant ancient forerunners of modem fascism, the (literally) communist oligarcny of lycurgan Sparta's 9. See Lord William Rees-Mogg, "It's the elite who matter; in future , Britain must concentrate on educating the top 5%, on whose success we "Rees-Mogg conservatives."15 Th� idea that the individual shall all depend," in Jan . 4, 1995 London Times. 10. See box , this page, for a list of Toffler's relevant works. 13. Genesis, 1:27-30. 11. All-Thatcher, Gramm, the Tofflers, and Gingrich-would be on 14. Philo ("Judaeus") of Alexandria (20 B.C.-A.D. 50), "On The Ac­ the wrong side in the U. S. War of Independence and War of 1812; they were count of the World's Creation Given by Mpses," in Philo: Vol. I, trans. not there , of course, but their tradition was. It is arguable that this accounts by F.H. Colson and G.H. Whithaker, LO!!b Classical Library No. 226 for Rees-Mogg's ability to say clearly what Toffler emits in such cultish (Cambridge, Mass.: Harvard University Press, 1981.) opacity; British Lord Rees-Mogg has plainly no obligation to evade being 15. The spectacle of Sparta's helots (slav�s) being tormented, even killed exposed as something much less than a U.S. patriot. for sport, by adolescent youth from the familIes of the communist oligarchy, 12. See charts and tables on demographics accompanying this opening rightly calls to mind the conduct of the N�zi agencies running the slave­ section of the report. labor operations at privatized prison work-c*mps such as Auschwitz.

EIR February 17, 1995 Special Report 23 person can create knowledge was demonstrated to be intelli­ 1848-49, 16 the oligarchical coml>ination of royal, aristocrat­ gible by Plato's Academy at Athens; but, despite Moses and ic, and financiercircles formin� the implicit feudal courtof Plato, oligarchical forms of society persisted in the Mediter­ the Anglo-Dutch monarchy, h* assumed Venice's earlier ranean region through and beyond the rise of imperial Rome. leading place within feudal conS¢rvatismglobal ly. 17 Christianity, as through the exemplary evangelism of the This venetian model of pro-feudal reaction was the form Apostles John and Paul, extended the principle of the individ­ of so-called conservatism expre$sed initially as the venetian ual person created in the image of God to the gentiles, to opposition to the Council ofFlortnce. In England, especially all people. Although this Christian expression of Moses' since Paolo Sarpi' s venetian �eover of the Dutch and principle was recognized as essential to Christian belief by English monarchies around the tIlrnof the seventeenth centu­ Christian fathers such as Augustinus, european feudalism ry, this is the tradition of British Liberalism and eighteenth­ failed to mobilize itself to end the oppression of the 95%. century radical empiricism. Shel�urneand Bentham best typ­ The principle, that every person is made in the image of God, ify this venetian heritage. In Frajnce, during the seventeenth was not introduced efficiently into the practice of statecraft and eighteenth centuries, this pro-feudal conservatism was until the mid-fifteenth-century Council of Florence and the typified by the Fronde, and by Qle Fronde's continuation as subsequent establishment of the firstmodem nation-state, the the pro-feudal Physiocrats. commonwealth of France's King Louis XI. In the leading historical eve�s of the eighteenth century, The notion of commonwealth introduced by Louis XI to as Lord Shelburne instructedhis �ackey Adam Smith in 1763, France, is the beginning of the existence of the modem form that reactionary impulse of the! British monarchy was the of nation-state. France's brilliant success under the first 20 motive for London's efforts to spppress technological prog­ years of that commonwealth catalyzed the attempted imita­ ress and self-government in Eng'and's north american colo­ tion of this among the friends of Oratorians such as Erasmus nies. 18 This was the motive of Shelburne's head of the British c;>f Rotterdam in Henry VII's England, in the Spain of Queen foreign service, Jeremy Benth�, in backing Benjamin Isabella, and elsewhere. Franklin's adversary, the Duke �f Orleans ("Philippe Egali­ Thus began that long, and embattled struggle for libera­ te"), setting off the French revolution of 1789, and in Ben­ tion of nations from rule by parasitical oligarchies, which tham's 1789-93 training and dire¢tion of Jacobin Terrorlead­ motivated the U.S. War of Independence against the British ers Danton, Marat, et al. 19 monarchy of Shelburne, David Hume, Adam Smith, Jeremy ,, Bentham, and King George III. It is the anti-Locke, Christian 16. "Lord Palmerston'sMulticultural uman Zoo, EIR , Nov. 16, 1994. 17. principle characteristic of the Brotherhood of the Common This oligarchical court of the An$lo-Dutch� monarchy is symbolized by a famous bucolic portrayal of the Pri*=e of Wales, Britain's future King Life, of the Council of Florence, and of Louis Xl's France as Edward VII, as ''The Lord of the Isles." the reference is to an international a commonwealth, which inspired the leaders of 10 of the oligarchical set sometimes identified as dte Club of the Isles, or referred to original 13 English colonies in North America. It is this as "the 5,000," which runs Britain. Onel must grasp the essential fact, that principle which permeates the 1776 U.S. Declaration of In­ the British monarchy is not a home-grovyn, autochthonous secretion of the dependence and the Preamble to the U.S. Federal Constitu­ indigenous populations of the British IsIFs, but an alien visitor (analogous to "body-snatchers from outer space") w.o has settled upon the premises as tion of 1787-89. It is that principle, as embedded in that its own feudal domain. This is true not oqIy of the presently ruling familyof latter Constitution, which Speaker Gingrich's "Contract with the Welf Queen, but of much of the rest bf the oligarchy, too, the financial America" is efficiently intended to destroy. nobility most notably. It was solely as a result of those reforms launched from 18. William Fitzmaurice Petty, Second Earl of Shelburne, grandson of within westernEurope during the middle of that century, that the founder of the Bank of England, him�lf controllerof the financesof the British East India Company through Banngs bank, one-time prime minister populations from virtually all nations, in virtually all parts of of England, paymaster for most of th� Parliament of William Pitt the the planet, have gained a more or less significant degree of Younger, and of King George III, too. (the British Welf family's fabulous true freedom, relative to all earlier existence of mankind. international wealth held privately was a development of the later nineteenth Yet, as we have just emphasized, this struggle for freedom century.) Adam Smith, Jeremy Bentham, Edward Gibbon, Thomas Mal­ has been an embattled effort , typified by the British monar­ thus, et al. were typical among promin�t Shelburne lackeys. The record shows Smith entering directly into She burne'S service no later than the chy's continued efforts to destroy our liberties, from 1763 l occasion, in 1763 , when Shelburne instrUcted him on a project to strip the through and beyond the assassination of the patriotic Presi­ American colonies of local autonomies �d wreck the economy of France. dent William McKinley and the consequent, bloody acces­ The included results of that were Smith'� 1776 Wealth of Nations, whose sion of London's darling, Teddy Roosevelt. anti-Colbertist,"free trade" policycopiedifrom the writings of the Physiocrat Since Venice, in A.D. 1440, launched its first attack Dr. Quesnay, was imposed as a treaty "coitditionality"of peace withFrance, leading directly to the 1789 bankruptcy offrance and the French Revolution. upon the Council of Florence, and Louis Xl's France later, 19. Shelburne arranged the creatiorl of a new British Foreign (i.e., there has been a continuing, reactionary effort of the europe­ intelligence) Service in 1782, securing thl! appointmentof his lackey Jeremy an oligarchy, to tum back the clock of history to feudalism. Bentham as its head. Bentham person�lly trained the Jacobin terrorists Since Palmerston' s unleashing of his Mazzini revolutions of Danton and Marat at his "safe house" ip London, and dispatched them,

24 Special Report . EIR February 17, 1995 The same feudal-reactionary impulse is the essential fea­ ture of the infamous Holy Alliance of Clement Prince Metter­ nich, that deadly adversary of both the United States and the 20 Friedrich Schiller tradition in Germany. This was the intent of the collaboration between those brutal conservatives Met­ ternich and Lord Castlereagh: to stamp out the existence of the United States and its influence. This was the intent of the 1861-63 alliance of Britain, Napoleon Ill's France, and Spain against the United States, the same alliance whose naval and other military forces implanted the Nazi-like occupation regime of the Hapsburg Maximilian and his Carlotta upon Mexico in that same period. That has been the purpose governing London's use of Jacobins, of Giuseppe Mazzini's Young Europe and Young America radicals, of the circles of the 1880s right-wing putschist Gen. Georges Boulanger and the anti-semites be­ hind the Dreyfus affair in France, and, later, the fascist rab­ ble-the Conservative Revolution--ofthe present century: to destroy the existence and very idea of a modem state premised upon the Christian principle of Louis Xl's com­ monwealth and the Preamble of our own Federal Consti­ 21 tution. It is the conservatives' use of mob tactics, in their attempt to destroy the U.S. Constitution, especially the "general wel­ fare clause" of its Preamble, which prompted Speaker Gin­ grich implicitly to portray himself, in a momentary outburst of demagoguery, as the "Robespierre" of the present -day "Conservative Revolution" in America, and which marks Bush-league talk-show host Rush Limbaugh as the "wannabe Rush Limbaugh, the "wannabe Danton" of the new fa scist movement. under his continuing control , to unleash the accelerated Jacobin Terror in 22 Paris. The later Lord Palmerston was a Bentham trainee, such that the Danton" of a new fascist movement. Examine the deeper tradition of Bentham's long reign at the British Foreign Service has been principle involved in this conflictbetween the opposing forc­ continued through the reign of King Edward VII, down to the present day. es of Solon and Lycurgus, and also between Moses and the 20. At the Carlsbad Conference of 1819, the Holy Alliance's Metternich devil's own oligarchical heritage. Examine this as a matter directed the issuance of the infamous Carlsbad Decree, under whose provis­ ions the writings of Germany's most famous and influential poet and drama­ of fully intelligible scientificprin ciple. tist of the century, Friedrich Schiller (1759-1 805), were banned. (Schiller remained far more influential than his sometime collaborator, Goethe, until From the standpoint of science past the 1859 Schiller centennial.) This decree coincided with the rise to the If presented with verses 26-30 of the first Chapter of post of influential "state philosopher" of Metternich's scalawag, the former Genesis, the likely initial reaction by today's student, or ultra-Jacobin and conservative G.W.F. Hegel (see EIR Feature, Feb. 10, 1995). Notably, it had been Schiller's immediate circle of friends, including adult, would be to characterize the notion of "man in the such notables as Wilhelm von Humboldt and von Wolzogen, who played image of God" as a belief one might adopt or reject, as if the crucial leading part in freeing Europe from the Emperor Napoleon's acceptance or rejection of this passage from the Bible were a tyranny; they had brought Germany thus, in 1813-14, to the verge ofconsti­ matter of blind faith , either way. Few of these would have tutional unification, but for the work of the feudalist, Holy Alliance reaction­ read the famous commentaries by Philo of Alexandria, nor aries Capodistria, Metternich, and Castlereagh, et aI., at the Congress of Vienna. That Holy Alliance, and its CarlSbad Decree are, after the Jacobin would they be familiar with the background of knowledge Terror in France, the principal watershed from which the modern (fascist) Conservative Revolution flows intothe present century's history. 22. Some wits might be tempted by this report to think of Speaker 21. These views of fascist forerunners Metternich and Castlereagh are Gingrich's blow-dried hair-do as, thematically, a kind of phrygian cap. It is ideas which have been devoutly admired for more than 40 years in both the a good giggle; but, remember the Christian principle of redemption; some word and practice of former U.S. Secretary of State Henry A. Kissinger. scold to satisfy their pathetic desire for a victim, but persons of good will See Henry A. Kissinger, A World Restored: Metternich, CastJereagh and chide, even harshly, out of desire for the sinner's redemption. One may the Problems of Peace 1812-1822. Houghton Mifflin Co. Sentry Edition, hope that Mr. Gingrich is astute enough to see the folly of Alvin Toffler's Boston: 1954. picaresquely feudalist pretensions.

EIR February 17, 1995 Special Report 25 against which the Greek-speaking Philo read Moses' text: This subject matter goes to the Vleryfoundations upon which the relevant way in which Plato's socratic dialogues prove the existence of civilized political life depends, to those the certainty of the existence of God. Out of their ignorance, premises which prompt us to view any attempted revival of such students, or adults, would probably argue to the effect, the political philosophy of the fascist Conservative Revolu­ that since none of us has seen God, how could anyone prove tion from the pre- 1946 period in terms of reference to the that the individual person is in the image of God?23 heathen abominations practiced by Hitler's Nazi regime. Not only does a rigorously scientific proof exist in this One must not mitigate that justifiedsense of horrorwhich matter, but this proof is central to understanding adequately August von Knierem's slave-labor prison work-camp at the roots and practical implications of Baroness Margaret Auschwitz evokes in any civilizcilper son. Yet, without relin­ Thatcher's adherence to a fascist world-outlook and practice. quishing that horror in any degree, one should also recognize that these practices were no worse on principle than the char­ 23. Such a sceptic exhibits nothing as much as his own ignorance of acteristics of ancient society, that such abominations were scientific method. Since no one had seen directly the curvature of Earth prior the commonplace, regular or epi$odic practice, against entire to modern post- I945 aerospace development, how did ancient scientists peoples as well as individual persons, by typical cultures of from Plato's Academy at Athens, such as Eratosthenes, prior to 200 B.C., measure the curvature of the Earth to within an approximately 50-mile error the ages prior to Christianity. in estimating Earth's polar diameter? Human knowledge is not based upon True, we must grant that the Nazi regime was by no an individual's personal sense-experience; it is based upon demonstrating means the most evil institution which has plagued history. the physical efficiencyof valid acts of discovery of higher principle, passed The British Empire committed IJtore genocide than Hitler's down, as reproducible intellectual experiences of individual minds, over regime, and the British monarch continues to do so in Afri­ successive generations. Until modern times, man never saw the curvature � of the Earth, but only the shadows of that curvature, as in lunar eclipses, and ca, for example, today. If both Hitler and the British Empire by comparing the angle, relative to a plumb-bob, at which a star is seen at were evil, the Roman Empire was no better, perhaps worse; different locations on a meridian. Thus, in his Repubtic, Plato employs the the Aztecs, for example, were iarguably much worse than metaphor of shadows which firelight might cast upon the wall of a cave, to either. The unfathomable sensei of abomination which we point out the foolishness of the philosophical materialist's, or empiricist's should share, arises from the f�ct that Hitler's regime oc­ superstitious, blind faith in sense-certainty. It is the manifest efficiency of those creative-intellectual principles, not our sense-experiences as such, curred in our time, not in som� ancient, illiterate heathen which is the means by which Plato's socratic method affords afully int elligi­ culture, but in a european cult�re, and a european nation ble certainty of the existence of the God of Moses. which had achieved the relatively highest Judeo-Christian

26 Special Report EIR February 17, 1995 standard of science and Classical art. theological proof itself here,25 but rather limit discussion to To comprehend fully the enormity of Auschwitz, we the scientifictruthf ulness of that Mosaic distinction, that the must put to one side the fraudulent myth used as part of the demographic evidence demonstrates chiefly two things of Nuremberg Trials' cover-up of the higher-level perpetrators. direct bearing upon the "undead" 1918-45 Conservative Rev­ It was not just some dirty Adolf Hitler that did this, not olution's "Contract with America": that each individual per­ just some band of bully-boy street-gangsters uniformed in son has an efficient faculty of creative intellect not existent swastika brassards. Auschwitz was a privatized, slave-labor in any animal species, and that the fostering of this faculty, prison work-camp, established and supervised throughout through Classical forms of compulsory universal education the war in corporate interest by August von Knierem, a high and other nurture of its development and expression, is the official of the I.G. Farben trust, an attorney by profession, sole means by which humanity may ascend once more, up who was a member of an international cartel including the from the neo-conservative's descent toward brutish barba­ Anglo-Dutch Royal Dutch Shell and the U.S. Rockefeller's rism, to return to aciviliz ed state of affairs. StandardOil . The Nuremberg Trials exculpated Royal Dutch 26 Shell and Rockefeller partner von Knierem, just as the firm The demographic evidence of Averell Harriman and its Chief Executive Officer,Prescott The nub of the proof that the Conservative Revolution Bush, or their highest-level British partners, were never effi­ always was, and is fascist, is the contrast, as measured in ciently called to account politically for their part in bringing demographics, between modem europeanciviliza tion and all Adolf Hitler's Nazis to power. It is only when one reflects the earlier forms of culture which ha�e existed on this planet. upon the latter type of usually, politely unmentioned relevant What marks these movements as fas�ist, is their commitment facts, that Auschwitz then makes the appropriately educative to tum back the clockof progress, to create some disgusting, impact upon one's conscience. romanticist or other modem parody of european feudalism, With that horror of Auschwitz freshly revived in one's Aztec barbarism, or other earlier form of culture. The refer­ mind, then read the prescriptions which Lord William Rees­ enced fascist's utopian "manifesto" recently published by Mogg supplies in his recently published, neo-feudalist mani­ Lord Rees-Mogg, plainly states its intent to eliminate univer­ festo. Ask yourself, then, where is the stunning sense of sal literacy from the proverbial 95% of the world's popula­ abomination, of ultimate horror you ought to have experi­ tion, to create a global neo-feudal society in which "informa­ enced in examining the practical consequences of Rees­ tion" pushes aside a modem agriculture and industry based Mogg's, or Alvin Toffler's utopian paeans to the so-called upon scientific and technological progress. "Third Wave"? The proof that this very proposalto tum back the clockis What has numbed your sense of morality toward the pres­ the common root of the metternicbian anti-commonwealth ent, that you do not react to Rees-Mogg's bestiality with the movement and its fascist offspring, js the crucial issue under­ same quality of emotion you sensed when you were struck lying the definitionof fascism, and theassi gning of the rubric by the impact of Auschwitz? It is against such an historical "fascist" to the Mont Pelerin Society's international neo- I backdrop, that the practical significance of man in the image conservative network. The crux of tttatproof, as summarized of God impacts the conscience. Against this backdrop, one here, is that human progress is the lruit of the quality identi- can recognize more readily, that this Judeo-Christian princi­ ple, of the individual person in the image of God, is the influentialtheologians in the recenthistory of the phenomenology of religion key to the perpetuation of a civilized form of human life, a was the Nazi ideologue, an apostle of Friedrich "I am the Antichrist" Nietz­ principle we put aside only at the greatest peril to ourselves sche, the Professor MartinHeidegger of Freiburg whose doctinesshaped the and our posterity. U.S. Occupation Frankfurt School-linked allencies' dictates to the postwar German Catholic theologians, and who wa$ also most influential, through Yet, it would be a comparable blunder to delude oneself Tiibingen University and Karl Rahner, in spreading the terrorist acid of by the phenomenologist'S sentiment, that the belief that hu­ existentialist "Liberation Theology" throughout corrupted portions of the man life is sacred, is a kind of lockean social contract, merely Catholic Church today. a pragmatic matter of convenience. 24 We shall not restate the 25. See the author's treatment, in sundry published locations, of the theological proof supplied by Plato. Conveniently, in Lyndon H. LaRouche, 24. The term pragmatic is employed here in the sense of Husserl' s Jr. , "How Bertrand Russell Became An Evil Man," Fidelio, Fall 1994; damnable phenomenology oj religion, or the comparable dogma of Harvard passim. A relevant part of the argument presentedhere, immediately below, Professor William James's Varieties of Religious Experience. There are is also elaborated in conception in that location. those ministers, priests, or rabbis, who do not necessarily believe in the 26. It should be noted here , for the advantage of that reader who was existence of God, but who take the clerical profession very seriously, in not familiar with the author's professional work earlier, that the author's their own way . They believe that acceptance of certain religious doctrines is contribution to science, and all of his impprtant professional work since, necessary, even if they were not true, for reason of the benefits derived from involves an initial 1948-52 refutation of �e absurdity of the dogmas of believingthem: of presumed benefitto either the believer's mental state, or to "information theory" of Norbert Wiener anciI the "systems analysis" of John the society,or both. In brief, the famous French positivist sort of aphorism: If Von Neumann. This demographic treatm�t of the principles of physical God did not exist, it would be necessary to invent Him . Respecting such economy reflects the principal content of those original discoveries, and of pragmatic beliefs, consider the fact, that one of the most celebrated and the author's subsequent life-long applicatiop of them.

EIR February 17, 1995 Special Report 27 TABLE 1 Development of human population

Life expectancy World at birth Population density population (years) (per km2) Comments (millions)

Primate Comparison ! Gorilla 1/km2 I .07 Chimpanzee 3-4/km2 i 1+ :

! MaD I ! Australopithecines 14-1 5 1/ 10 km2 68% die by age 14 ! .07-1 B.C . 4,000,000-1 ,000,000 I Homo Erectus I 14-15 ! I 1.7 B.C . 900,000-400,000 I Paleolithic (hunter-gatherers) 18-20+ 1/ 10 km2 55% die by age 14; average age 2� B.C . 100,000-15,000 : Mesolithic (proto-agricultural) I 20-27 I 4 B.C . 15,000-5,000 Neolithic, B. C. 10,000-3,000 25 1lkm2 "Agricultural revolution" 10 I I I Bronze Age 28 10/km2 50% die by age 14 50 I B.C . 3,000-1,000 Village dry-farming, Baluchistan, 5, 00 B.C .: 9.61/km2 Development of cities: Sumer, 200� B.C.: 19.16/km2 Early Bronze Age: Aegean, 3,000 Bl c.: 7.5-13.8/km2 Late Bronze Age: Aegean, 1,000 12.4-31.3/km2 Shang Dynasty China, 1000 B.C.: 5�*; m2: Iron Age, 1,000- 28 50 B.C . I I I Mediterranean Classical 25-28 15+lkm 2 Classical Greece, Peloponnese: 351/tm2 100-190 Period Roman Empire: , B.C . SOO-A.D. 500 Greece: 11lkm2 Italy: 2 km2 Asia: 30/km2 Egypt: 79/km2 * Han Dynasty China, B.C . 200-A.D. 2 0: 19.27 Shanxi: 28/km2 Shaanxi 24/km2 Henan: 97/km2 * ShandoJ� g: 118/km2* • Irrigated river-valley intensive agriculturel

European Medieval Period 30+ 20+lkm 2 40% die by age 14 220-360 A.D . 800-1300 Italy, 1200: 24lkm2 Italy, 1 0: 34lkm2 Tuscany, 1340: 85/km2 Brabant� 1374: 35/km2 Europe, 17th Century 32-36 Italy, 1650: 37/km2 France, 11650: 38/km2 545 Belgium, 1650: 50/km� I

I Europe, 18th Century 34-38 30+/km 2 "Industrial Revolution" 720 I Italy, 1750: 50/km2 France, 1750: 44/km2 I Belgium, 1750: 108/km2 I Massachusetts, 1840 41 Life expectancies: "Industrialized," �ght; United Kingdom, 1861 43 90+lkm 2 "Non-industrialized," left 1 1,200 Guatemala, 1893 24 European Russia, 1896 32 ! Czechoslovakia, 1900 40 Japan, 1899 44 United States, 1900 48 i Sweden, 1903 53 I France, 1946 62 India, 1950 41 2,500 Sweden, 1960 73 I I 1970 1975 ! 3,900 United States 71 26/km2

West Germany 70 248/km2 ! 73 Japan 297/km2 ! China 59 180lkm 2 I India 48 183/km2 Belgium 333lkm 2

! TABLE 2 Sampling of medieval levels of population (millions)

Beginning 1st 2nd 3rd 4th 5th 6th Name century cent. cent. cent. cent. eent. cent.

Modern Europe 15th 60 81 100 120 180 390

Charlemagne's Europe 10th 9 9.5 11 16 24 16 Caliphate 9th 22 23 28 26 28 21 China: 1'ang and Sung dynasties 9th 56 60 66 105 115 86

The three systemsshown here, befo re the development of modernEurope beginning in the 1400s, each terminates in catastrophe. The second, loosely identified as that of Charlemagne's Europe, ended with the fo urteenth·centuryplague known as the Black Death. The Caliphate and the identifiedChinese dynasties ended with the scourge of the thirteenth century,the Mongol inva�ions. The chart shows that where modern Europe has produced an increasing rate of increase in its population growth, the other regin1es were bound by the apparent cycle of the oligarchical system.

fied by Moses and Philo, that the individual person has a rates among the various age-strata pf the family household quality identifiedby "man in the image of God." That crucial generally. Part of the increase of pppulation is a combined element of the proof has been supplied in a number of earlier result of lowered mortality-rates f�r infants and children: published locations. 27 Its point is restated here with aid of the more persons born live to child-r�aring age. The general accompanying charts and graphics. reason, is the new role assumed by t1he modem, post-feudal, Were man not absolutely apart from, and above the lower commonwealth form of nation-state} combined with the role animal species, then, as both World Wide Fund for Nature's of that state in fo stering the genera ion and use of scientific 28 � H.R.H. Prince Philip and the behaviorists repeatedly insist, and technological progress. ; humanity would have a range of potential relative popula­ Admittedly, the economic and r lated demographic ben­ 29 � tion-density comparable to that of a species of higher ape . efits of this revolution were concentrated in western Europe Given the conditions of this planet during the recent 2 million and the Americas, and later, Meiji Restoration Japan. Yet, years, the living population of the human species would have the demographic record shows that·i virtually all parts of the at no time, up through the present day, exceeded several planet have received ultimately sign ficanttechnical benefits, million persons (see box, p. 30, and Table 1). Even prior to if often distorted ones (see Figur1t 2) , from the spread of A.D. 1400 , the population had reached levels of several modem european culture through y�ristian evangelists, and hundred million (see Table 2). As a direct consequence of even, ironically, predatory COloniZ ion. 30 the european changes radiating worldwide from the fifteenth­ There are principally three facto s underlying this revolu­ century Golden Renaissance, the world's population has in­ tionary, upward change in the hum n condition: creased at hyperbolic rates of growth during the recent 550 (I) First, the adoption of the pf 'nciple of the common­ years (see Figure 1). wealth , firstintr oduced to th� practice of statecraftby The past 550 years' revolutionary shift upward in our France's Louis XI. As the eneral welfare clause in planet's potential relative population-density, has been a co­ the Preamble to the U.S. F�deral. Constitution sum­ feature of upward shifts in the demographic characteristics marizes Louis Xl's commqnwealth principle: "We, of households. Improved sanitation and other developments the people of the United S ates, in Order to form a fostered by the influenceof modem european science-driven more perfect Union, establi�h� Justice, ensure domes­ economic development, have lowered estimable mortality- tic Tranquility , provide for the common defense, pro­ mote the general Welfare, nd secure the Blessings

27. Currently available in print , the fo llowing are notable . On �i LaRouche's original contribution to economic science , see Lyndon H. 30. These benefits are clearest in the ou!growths of the early sixteenth- LaRouche , Jr. "On LaRouche's Discovery ," Fidelio, Spring 1994; Lyndon century work of the Spanish, Portuguese, an� German missionaries in Mexi­ H. LaRouche Jr. , The Science of Christian Economy (Washington , D.C.: co and other localities of Ibero-America. lhe seventeenth and eighteenth Schiller Institute, 1991); translated into several languages, including Ger­ centuries degeneration of Spain and PortliJlal , and the later, nineteenth­ man , Russian, Ukrainian, Armenian, is the introductory textbook on the century , British virtual takeover of ibero-Anjerica, under Jeremy Bentham's application of the science of physical economy , So, You Wish to Learn All policy , aborted a development there whidh could have been as fruitful About Economics? (New York: New Benjamin Franklin House, 1984). economically as that which occurred Where e Americans did throw out the 28. "The Coming Fall of the House of Windsor," EIR Special Report, British monarchy: the United States. Othe ise, generally, the message to November 1994. some so-called "indigenous" people of the� mericas, Africa, or Asia, that 29. See Lyndon H. LaRouche , Jr. , So, You Wish To Learn All About they are , as persons "in the image of God," is itself a wonderful, implicitly Economics, op . cit .. passim . revolutionary gift. I

EIR February 17, 1995 Special Report 29 The second feature varies, tremendously, depending on whether the infant falls intq the slave/toiler classes, in which case life expectancy can1be 17 or lower, or the class Demographicprofile of administrators and cult-priests, who could expect to typical of ancient societies live into their 50s and 60s. The two identified charaCteristics shape the demo­ graphic pyramid of such societies, in that the female pro­ Percent of portion of the total population 4efinesa bounding limit for population that portion of the female population which is of child­ Males 56% bearing age, and thus, given f$irly standard assumptions Females 43% of intervals between births, of �hat the birth rate bounds Ages Under 18-22 50% for such a society ought to be. 1 The second characteristic Ages Under 14 33% permits construction of actuar\.al life tables from which Life Expectancy 28 years can be calculated, with a given �ife expectancy, how many of those born in any year will survive to any particular Birth rates 1)6.2% age. With a life expectancy of �8 years, 25% of births will 2) 5.4% not survive to age five. The earliest surviving such table 3) 4.8% was calculated by the Roman lpian, in the first century Death rate 3.5-6.5% A.D., to work out annuity valuVFs. Net rate of increase 2% The birth rates shown in the table are those produced by varying the typical male-to�female ratio. Rate 1) was Demographic features of ancient societies, e.g., the Ro­ produced by assuming that thel male-to-female ratio is at man Empire and other such abominations, and including parity of 1: 1. Rate 2) assumef. the typical ratio of 130 pre-Golden Renaissance European societies, are charac­ males for every 100 females, ,in which case rather less terized by two features: 1) the prevalence of males in than 17% of females will be in theirchild-bearing years at the male-to-female ratio, typically 130: 100, and 2) a life any one time. And Rate 3) a$sumes that only 30% of ! expectancy at birth of around 28 years . females are married, in which case those in their child­ The firstfeature recurs as a ratio whether under Roman bearing years will fall to about 15 % of the total population. conditions, or in the Europe depicted in the Polyptique de The results are adjusted to assuqJ.ea 10% rate of infertility. St. Irminon (the proto-census conducted during the reign The base for death rates is ¢;alculated by dividing ex­ of Charlemagne), and in twelfth- and thirteenth-century pectation oflife (28 years) into 100 (percent of total popu­ Britain and France. The ratio ought to be compared with lation) and net increase, by subtracting death rates from that which prevails at birth, normally 103-105 males for birth rates. Under the best of �ssumptions and circum­ every 100 females. Sacrifice, infanticide, and exposure of stances, any such society would rarely do better than infant females are to be counted among the reasons. "breakeven" demographically . .LChris White

of Liberty to ourselves and our Posterity, do ordain generation and practical �ssimilation of valid, revolu­ and establish this Constitution for the United States tionary discoveries of principles, including science of America" (emphasis added) . and the technologies derived from scientificprogr ess. (2) The adoption, by Louis Xl's France of the introduc­ To trace out the demograpHic changes, such as shifts in tion of firststeps toward a universal, classical-human­ composition ofthe labor-force, which are associated with the ist form of general secondary education explicitly net upward progress of economic characteristics of european modelled upon the work of and assisted by that Broth­ culture during the pre-New-Age,interval l440-1963, we must erhood of the Common Life which produced from interpolate a brief clarification: on the subject of the term boys of such relatively poor families geniuses such "creative. " as Cardinal Nicolaus of Cusa and Erasmus of Rot­ What is 'creativity'? terdam. ; (3) The use ofthis promotion of classical-humanist forms For the purpose of understaI).ding this revolution in state­ of secondary education oftalented boys from relative­ craft, separating medieval from modem european civiliza­ ly low-income families as the social foundation for tion, one must use the precisely platonic conception of the fostering in the nation and its population high rates of term "creative" employed by such authors of the Golden

30 Special Report EIR February 17, 1995 700 FIGURE 1 Growth of European population, population-density, and life-expectancyat birth� estimated for 100,000 B.C.-A.D. 1975 600 Alone among all other species, man s numerical increase is a fu nction of increasing masteryover nature-increase of potential population-density---as reflected historically in the increase of actual population-density. In transforminghis co�itions of exis­ tence, man transfo rms himself. The transformationof the species itselfis reflected in the increase of estimated liJtA-expectan- 500 cy over mankinds historical span. Such changes are primarily located in, and have acceleratedover, the last six-hundred years of man s multi-thousand-year existence. Institutionalization of the conception of man as the living image o/God the Creator during the Golden Renaissance, through the Renaissance creation of the sovereign nation-state, is the 400 conceptual origin of the latter expansion of the potential which uniquely makes man what he is.

All charts are based on standard estimates compiled by existing schools of demography. None claim any 300 more precision than the indicative; however, the scaling flattens out what might otherwise be locally, or even temporally, significant variation. reducing all thereby to the set of changes which is significant, independant of the quality of estimates and scaling of the graphs. Sources: For population and population-density, Colin McEvedy and Richard Jones, Atlas of World Population 200 History; for life-expectancy, various studies in historical demography. Note breaks and changes in scales. 100 Population * (Millions) 10 0 8 * 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 to 6 Paleolithic I Nooli." 0 0 0 0 0 0 0 0 0 0 0 to 0 to to 0 to 0 to "- C\I d C\I

Renaissance as Nicolaus of Cusa. To understand the proper some among those axioms and pO$tulates must be replaced meaning of the popularly misused term "creative," and to to bring the system of logic into corformity with reality. This understand what is properly signifiedby "classical humanist" replacement is the type of a valid fundamental discovery of education, a few remarks on euclidean geometry provide the principle in, for example, physic ail science.32 A valid such most efficientpedagogy . 31 replacement is termed a new hypothesis, In formal logic, such as the methods of Aristotle or Eu­ A succession of such hypotheses, as in the progression clid's Elements, the proof of a theorem is its lack of inconsis­ from euclidean to higher geometIjies, defines a method of tency with each and all of the set of axioms and postulates discovery shown to be effective in ordering valid discoveries which underlie that theorem-lattice as an open-ended entire­ in (for example) physics. This is t�rmed, in the language of ty . In Plato's method, such an underlying set of axioms and Plato, an higher hypothesis; in Riemann's discovery, this postulates is identified as an hypothesis. If, then, we are definesa definite"curvature" of physical space-time, in con- confronted with a proposition which is true in nature, but inconsistent with an existing choice of axioms and postulates, I 32. See Lyndon H. LaRouche, Jr. , on �iemann's 1853-54 revolution in mathematical physics: "The Fraud of Algebraic Causality ," Fidelio, Winter 31. See "How Bertrand Russell Became An Evil Man," loco cit. 1994.

EIR February 17, 1995 Special Report 31 FIGURE 2 World population, 400 B.C.-A.D. 1975 (millions)

!I"] U.S.A. D Europe • Indian Peninsula Q;I China IIIIlIIi Other

1,500

1,000

Ye ar

,, trast to the zero-curvature space-time of a Galileo, Bacon, ing of the term "creative. 35 Descartes, Newton, or Euler, etc. On the related matter of the �assical-humanist secondary By their nature, such discoveries can not be represented education established by the work of the Brotherhoodof the in advance by any formal-logical method of deduction/induc­ Common Life: classical Greek mathematics, especially the tion. From a formal standpoint, each involves a change in work of Plato's Academy at Althens, through Archimedes axiom, such that no deductive consistency �xists linking the and Eratosthenes, is filled with dxamples of original creative old geometry (for example) to the new. On this, Riemann discoveries of the indicated type. In a classical-humanist concludes, as the last statement in his habilitation disserta­ mode of education, the textboolc: method of teaching is not tion: "This leads us [from mathematics-LHL] into the do­ permitted;rather, the student m t relive each of a succession main of another science, into the domain of physics, which of mental acts of original, gen)Jinely� creative discoveries, the nature of today's occasion does not permit us to enter.'.33 either by reference to the text in �hich the orginal discoverer In any attempt at formal-logical representation, as Kurt describes the problem and its s9lution, or some reasonable

GOdel 's famous proof reaffirms this, 34 the upward transition, surrogatefor such an original so�e. Instead of merelylearn­ from the lower hypothesis, to the better one, appears from the ing, as a human trained seal might learnto secure a passing vantage-point of any formal logic in general, or mathematical score on a multiple-choice questionnaire, the student relives formalism in particular, as an unsolvable paradox, an un­ creative moments from the lives of the most notable and bridgable discontinuity, a singularity. The real solution, as represented by a successful generation of a new hypothesis, 35. to replace the defective old one, typifies the only strict mean- This is the same problem presanted as an ontological paradox by Plato's Parmenides. It is relevant to th¢ transparency of the line argument being echoed here , that the author first �scovered the significance of "cre­ 33. Bernhard Riemann, Uber die Hypothesen, welche der Geometrie ative discovery" as of the form of a fotmal-logic discontinuity during his zu Grande Degen: in Bernhard Riemann's Gesammelte Mathematlsche later adolescence, in defending the Go�ed Leibniz of the Monadology Werke, Heinrich Weber, ed. , p. 286. (New York: Dover Publications, and Theodicy against the defective central attack on Leibniz in Immanuel Inc. , 1953.) Kant's Critique of Pure Reason. This jwas later the central feature of his 34. Kurt GOdel, "On formally undecidable propositions of Principia attacks upon the axiomatic fallacies of ij,th Norbert Wiener's "information Mathematics and related Systems I," (193 1), in Kurt Giidel CoUected theory" and John Von Neumann's "systdms analysis." The author's original Works, Vol . I, Solomon Peferman , editor-in-chief (New York: Oxford discoveries in the science of physical edonomy were derived directly from ! University Press, 1986). the earlier insight into Kant's fallacy.

32 Special Report EIR February 17, 1995 valuable creative intellects of the past. In this way, classical­ TABLE 3 humanist education cultivates the exercise and development The U.S. record: market ba�ets, labor of the student's own creative faculty. productivity, and populatio� density This same method applies not only to mathematics and I physics matters, but also to the great Classical modes of 1840 1880 1920 1960 poetry, tragedy, music, and plastic art-forms. Additionally, Persons fed per farmer 4 5.6 8.3 25.8 the student studies history from the vantage-point of this Man-hours to produce 2.3 t.52 0.9 0.12 principle of transmittable acts of genuine discovery as the 1 bushel of wheat characteristic distinction setting mankind apart from, and I Farm labor as percent 63% S1% 26% 8.5% above the beasts. of labor force "Chaos theory" is a form of pseudo-scientific quackery , Cropland per farmer 0.085 0.085 0.151 0.266 which can lead to no accomplishment but the generation of , (kms sq) chaos. Only the nourishment of those creative powers of the Urban population, 11% 28% 51% 70% individual intellect which defineevery person as in the image percent total of God, can lift mankind from worse to better conditions of population productivity and life. Manufacturing workers, 14% 1:9% 27% 25% I percent of labor force The measurable form of creativity Horsepower per 0.86 2.08 7.2 9.56 The benefitsto society from assimilating creative discov­ household eries of an individual person into improvements in productive (excluding motor and other practices can be measured in demographic terms: vehicles) improvements in the quality of life of the family household, Railroads, km per 0.9 19 52.6 45.4 coupled with increases of the measurable potential relative ! 1,OOO km2 population-density of the society as a whole. It is a relatively simple matter to measure the increase in life-expectancy, and expectancy of a functional quality of health, according to age, within the household. One measures household consumption in terms of the composition of employment of thd labor-force. The ability technological level of productive potential, and recognizes to provide a more abundant supply �f foodstuffs and agricul­ the dependency upon improvements of this on increasing the tural fiber with a smaller percentil¢ of the labor-force em­ school-leaving age-level toward an asymptotic upper limit of ployed in rural occupations, is accQmpanied by a growth of biological maturity, at about 25 years, and in the cultural relative size and per-capitaproductiwity of urban labor, while conditions of household and local community life. One rec­ the labor required to producea relative abundance of house­ ognizes that a relatively lowered life-expectancy means a hold's requirements shrinks relativ¢ to a growth of the per­ lowering of existing levels of potential productivity of the centile and per-capitaproductivity f those employed in pro­ population, and therefore a lowered potential population­ duction of producer's goods. With this increase of capital­ density for the society. One recognizes that the demographic intensity of agricultural and urban production, there is a re­ "triangle" for the typical family must not be relatively invert­ quired increase of the number of �ilowatt-hours equivalent ed, such that there are not sufficientchildren to replace losses of usable power available to societyjper-capita and per square of the size of the adult population, without incurring the kilometer, and a similarly greater need for water in a usable doom of that society through "demographic aging." form. The percentile of total outIlmt for improvements in One measures productivity ofthe labor-force in per-capi­ basic economic infrastructure incr�ases generally. Employ­ ta units of the total labor-force, in the comparable units of ment in the production of scientifi4 and technological prog­ consumption ("market baskets") of the households, and in ress, as distinct from productionof goods, grows as a percen­ the input and output per square kilometer of land-area used. tile of the total labor-force. One recognizes that the only elements of the market-basket It is a relatively simple matter, conceptually, to measure which are relevant to these measures of productivity are phys­ the progress of european civilizat�on, during the past 550 ical output, and only three categories of professional and years (until approximately 1964-171) in those terms (see related services: education, health care, and development of Table 3). These relatively rudimentary statistical compari­ scientific and related progress: any other elements of con­ sons assist us to see the absolute difference between life on sumption, such as administration, are either non-productive this planet before A.D. 1440, and under the impact of the "overhead," if necessary , or simply outright waste. Golden Renaissance after that-until 1964-7 1, when the The progress in standard of living and productivity of downward tum toward "post-ind4strial utopia" was intro­ populations is measurable, thus, in terms of shifts in the duced as policy of the United St�es, and other nations, a

EIR February 17, 1995 Special Report 33 time when the earlier commitment to improve the conditions of life of "Third World" nations was reversed. These improvements during Europe's A.D. 1440-1971 Von Hayek hails interval, are the result of the three factors cited: (1) The the satanistMandeville introduction of the modem nation-state, the commonwealth form, affording the persons within the 95% stratum to rise, if but gradually, above the misery to which they had been In 1966, Friedrich von Hayek wrote an essay entitled "Dr. subjected until then, since the origins of the human species; Bernard Mandeville," in which he praised the eighteenth­ (2) The introduction of general education, led by emphasis century English satanist as one of the great founding phi­ upon the classical-humanist mode of secondary education; losophers of modem British liberalism and of his own (3) The systematic fostering, by the state and by acquired Austrian School. Von Hayek's embrace of the little­ custom, of the generation and assimilation of scientific and known English psychologist ,and crank philosopher is ex­ technological progress. traordinarily revealing. This progress, which the gnomish mind of Alvin Toffler Bernardde Mandeville (1670-1733) was a founder of rejects as "Second Wave," is the means by which the level the notorious Hell Fire Clubs, a satanic cult that exerted of humanity sustained on this planet was lifted from several extraordinary influence over a succession of early eigh­ hundred million, to more than 5 billion, with an existing teenth-century British governments, and whose policies technological potential to sustain over 25 billion by 1968 were roundly attacked by Dr. Benjamin Franklin and other U.S. "middle class" standards. What occurs should this be leading figures of the AmeriQan Republic. ended? What shall the victims of Toffler's "Third Wave" eat? The best-known published work of Mandeville, a Software?Under the terms of Rees-Mogg' s utopian manifes­ lengthy poem followed by a series of essays, "The Fable to , or, the same thing, Toffler's "Third Wave," the level of of the Bees: Private Vices, Public Benefits," could be potentialrelative population-density of this planet would sink labeled the founding docum¢nt of the Libertarian move­ rapidly to no more than several hundred million, perhaps ment. Mandeville argued th�t man is inherently evil and within approximately two generations marked by brutal col­ consumed by his uncontrollable personal passions: greed, lapse of the scale of the population through chieflythe instru­ lust, rage, violence. However, Mandeville argued, since mentalities of global famine and epidemic. this is man's true, inviolable nature, the best society is Under the "Third Wave" conditions imposed upon society that which is least intrusive� which makes no effort to under the titles of "information theory" and "systems analy­ impose any form of natural law . For Mandeville, the idea sis," we have already passed the point of net physical-eco­ that man was created in the iliving image of God is not nomic contraction per capita and per square kilometer. The only untrue; it is the seed of destruction. budgetary knife is being applied with increasing savagery, to Mandeville's commitment to the idea of man's inher­ eliminate provisions for prolonging the lives of the elderly, ent evil was spelled out in "The Fable of the Bees": of the sick, of the welfare population, of masses of unwanted aliens, and, prospectively, of anyone owning something or occupyingspace which the greedy in power wish to seize from those with less power. Just as the New Age's neglect of the Toffler,warrants the feel of utteringthe word "Fascist!" Yet, urban areas has turned major, growing tracts of once-proud although there is no intelligible basis for employing anything cities into murderous jungles out of the film "Clockwork Or­ but that term to identify the policies of the organizations gath­ ange," so our society slides toward Hell. Respect forhuman ered, like nursing piglets, around the dugs ofthe Mont Pelerin life on principle, is already vanishing from entire areas of pub­ Society sow, it is yet another matter to attribute to a follower lic policy in which it had once reigned. This trend is today's of such policies a specifically fascist intent. new conservativism; sometimes, this diabolical mood has the Whether Toffler wishes to consider himself a fascist by temerity to call itself "Christian." that specific choice of name, we may leave to someone else to address. We limit ourselves to the more modest question: Adam Smith and fascism Does he intend to be what history recognizes as a fascist? The When a man such as Lord William Rees-Mogg proposes answer to that question is more easily accessed by turning to to tum back the clock, such that 95% of the population of all a page from the demigod of the Mont Pelerin Society, Adam nations, including his own British Isles and the United States, Smith. Consider and examine a passage quoted earlier in a are relegated to a parody of serfs under feudalism, or some­ 1980 book this author produced in collaboration with the de­ thing worse, a sensible person's thoughts tum to memory of parted David P. Goldman: The Ugly Truth About Milton the horror which Auschwitz evokes from any moral person. Friedman. Lord Rees-Mogg is clearly not a moral person. This revulsion First, recall the quotations On the jacket of that book. one must feel on reading Rees-Mogg's manifesto, or Alvin William F. Buckley, Jr. said, "It is possible that Milton

34 Special Report EIR February 17, 1995 Thus every Part was full of Vice, Yet the whole Mass a Paradise Flatter'd in Peace, and fear'd in Wars They were th ' Esteem of Foreigners, And lavish of the Wealth and Lives The Ballance of all other Hives. Such were the Blessings of that State; Their Crimes conspired to make ' em Great; And Vertue, who from Politicks Had learn'da thousand Cunning Tricks,

Was, by their happy Influence, !' Made friends with Vice: And ever since The Worst of all the Multitude Did Something for the common Good.

In the accompanying essay, "An Enquiry Into the Ori­ gin of Moral Value," Mandeville was even more explicit: "One of the greatest Reasons why so few People un­ derstand themselves, is, that most Writers are always teaching Men what they should be, and hardly ever trouble their heads with telling them what they really are .... I Friedrich von Hayek, fo under of the MontPelerin Society. believe Man ...to be a Compound of various Passions, that all of them, as they are provoked and come upper­ most, govern him by turns, whether he will or no . To Adam Smith, Jeremy Bentham, and all the subsequent shew, that these Qualifications, which we all pretend to charlatan philosophers and economists of the British East be asham'd of, are the great support of a flourishing Soci­ India Company. It was the revolt against this evil that ety, has been the subject of the foregoing Poem." was the essential, self-conscious feature of the American He continued: "All untaught Animals are only Sollici­ Revolution and the nation-state concept imbedded in the tous of pleasing themselves, and naturally fo llow the best Declaration of Independence and the U ,S, Constitution. of their own Inclinations, without considering the good or And it was these satanic views that formed the basis harm that from their being pleased will accrue to others ." of von Hayek's Conservati ve Revolution. This is the view that was adopted by David Hume, -Jeffr ey Steinberg

Friedman's policies suffer from the overriding disqualifica­ that of originality. He isquoting himself from his 1759 The tion that theysimply cannot get a sufficientexer cise in demo­ Theory of the Moral Sentiments, which is not plagiarism,of cratic situations." Whereas, Arthur Laffer, of "Laffer Curve" course; but, his idea of "free trade" is copied from a French fame, said: "You want to prove that Milton Friedman is author from whose works Smith obtained the germ of most a fasc ist? It's easy. Quote him." Milton Friedman himself of his ideas concerning political-economy, Physiocrat Dr. confessed, in his Studies in the Quantity Theory of Money: Fran�ois Quesnay. 36 The key to the fascist mentality within "The object of such controls (on wages, prices, and credit) is the restriction of spending on the part of individuals .... 36. After lackey Adam Smith had received instructions from Shelburne, Such a policy, if rigorously enforced, should restrain a rise he passed some years in France, introducing himself to anti-Colbertistvarie­ in the price level. This policy appears to have been successful ties of economic doctrines. The backbone of Smith's Wealth of Nations is supplied by cribs from Quesnay, and from the famous Physiocrat and fervent in Nazi Germany." free-trader A.M. Turgot's 1766 Rellexions sur la formation et la distribu­ Whence do Professor Friedman and his fellow-bandits tion des richesses. An earlier, British source for the moral philosophy which of the Mont Pelerin Society derive the authority for their Smith embodies in his defense of the notion of an "Invisible Hand," is the cheerfully reckless indifference to elementary considerations notorious 1714 piece of Bernard Mandeville, The Fable of the Bees: Pri­ of public morality? They take as their authority Adam vate Vices, Publick Benefits. The principal influence upon British late­ eighteenth-century moral philosophy and economics was the famous vene: Smith's notion of "free trade," the notion of the "Invisible tian economist Giammaria Ortes 1713-90), who, among other things, was Hand," as depicted in Smith's anti-American tract, his the author of the 1790 Venice work Rillessione sulla popolazione delle Wealth of Nations. Smith is guilty of many crimes, but not nazioni per rapporto all'economia nazionale, whose english translation

EIR February 17, 1995 Special Report 35 Milton Friedman and the Mont Pelerinites generally is readily adduced from the following, most revealing passage in Smith's 1759 work, as we cited it in 1980:

"The administration of the great system of the universe . . . the care of the universal happiness of all rational and sensible beings, is the business of God and not of man. To man is allotted a much humbler department, but one much more suitable to the weakness of his powers, and to the narrowness of his comprehension; the care of his own happiness, of that of his family, his �. friends, his country.. ..But though we are endowed with a very strong desire of those ends, it has been intrusted to the slow and uncertain determinations of our reason to find out the proper means of bringing them about. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst, the passion which unites the two sexes, the love of pleasure, and the dread of pain , prompt us to apply those means fo r their own sakes, and without any con­ sideration of their tendency to those beneficent ends which the great Director of nature intended to produce , by them, 37(emphasis added).

The evil intrinsically embedded in the teachings of those who follow Adam Smith, is the presumption of following blindly some dogma which we have adopted on grounds of the pleasure we assume it affords to us, without considering the ultimate physical consequences of what we do or omit to The Privateers do under governanceof that persuasion. Today's derivatives trader, for example, duped by Adam Smith's teaching, be­ lieves that the increase of mere financial aggregates is proof the "Third Wave" of their own d,lusions, and reject therefore that wealth is being increased, even when it is apparent to all questions, all facts which pertainto such "Second Wave" him in New York City, that the poor are becoming poorer, beliefs and practices as eating lUld producing. Thus, the fi­ U.S. agricultural and industrial output less, the tax-revenue nancial and monetary process have become functionally de­ base shrinking, and so on. He excuses himself, much as coupled from the real economy; thus, the "Third Wave" men­ Adam Smith does, from assuming responsibility for the ulti­ talities are decoupled from reali1lY. mate consequences of those policies which he chooses to It is the wont to punish reallty for failing to conform to support, and those he also refuses to support. Therein lies his the pleasure-seeking of such del�sions as Adam Smith's "free ordinary immorality. trade" dogma, or the "Third Wave" of Toffleret aI., which So, from his lecture platform, Alvin Tofflerputs off any is the key to the fascist mentality:, the fascist quality of inten­ questioning to the effect, "How shall people get bread?" with tion: "Reality is denying what � dearest beliefs tell me it is his standard reply, "That question is Second Wave thinking. " my right to have; therefore, I shall teach reality a painful He says, implicitly, "Let them eat software." Just as today's lesson. I shall punish reality." Thatterrorist mentality is the International Monetary Fund and kindred policies are effec­ intent of the fascist mentality. tively decoupled from the physical realities of production, Toffler is but an ideologue, ill fool. It is the more clear­ eating, and health care, so Toffler and his like live only in headed Lord William Rees-Mogg who typifies the evil ones who use the Tofflers of this world, and others, as their mere was plagiarized by Thomas Malthus for his 1798 An Essay On Population. tools. Think of Rees-Mogg cal¢ulating his intent to throw The "hedonistic calculus," as developed by Ortes and Voltaire's Pierre­ 95% of the survivors of this ge�ration's troubles back into Louis Maupertuis, was the basis for Jeremy Bentham's An Introduction to a state of illiteracy and virtual Serfdom or worse. Think of the Principles of Morals andLegislation (1789). 37. Cited from Lyndon H. LaRouche, Jr. and David P. Goldman. The what this means, if it is actually Jlttempted. Think of Ausch­ Ugly Truth About Milton Friedman, p. 107. (New York: New Benjamin witz. Yes, the Mont Pelerin Society is fascist in the ultimate Franklin House, 1980). sense of that term.

36 Special Report EIR February 17, 1995 British oligarchy has been to create a crescendo of scandals in Profile: Lord William Rees-Mogg the British press that will spill over into the United States. Thus, on Aug. 1, 1994, Rees-Mogg wrote in the London Times that Clinton will never be able to shake offthe "mud, money, and blood" from his days as Arkansas governor. Rees-Mogg's article was entitled "Big Trouble Begins in His British lordship Little Rock," and his lordship wrote that Washington is filled with gossip about a "mysterious inner secret which the White spills the beans House is desperate to conceal." Tbis "secret" is Arkansas by Scott Thompson itself, an American state which he likens to Italy's Palermo, the center of bloody mafia activities. On Oct. 31, 1994, Rees- Mogg fecklessly opined that the Lord William Rees-Mogg, who was created Baron of Hinton gun attack on the White House by Francisco Duran is a Blewitt in the County of Avon in 1988, is a principal spokes­ "Tremor of Doom in the Disunited States." man for the British monarchy and its elite Club of the Isles Then, in a Dec. 5, 1994 article for the London Times, he apparatus. A Peer for life, Rees-Mogg has since the 1950s promoted would-be Clinton assassiu.Larry Nichols, afterEIR been entrusted with a leading role in the chief British propa­ had exposed Nichols from a videotape of Nichols on May ganda organs: the Financial Times, the Times, and the British 11, 1994 waving a pistol and threatening President Clinton Broadcasting Corp. Oddly enough, this pin-striped aristocrat during a rally in Boulder, Coloradoi (see EIR , Dec. 2, 1994). also has sunk very deep roots into populist networks in the On March 13, 1994 in the Sunday Telegraph, Evans-Pritch­ United States, through his partnership with James Dale Da­ ard had built up loose-cannon Nicjhols as a hostile witness vidson of the National Taxpayers Union. The two have au­ in Whitewatergate against President Clinton. Rees-Mogg's thored and distributed numerous propaganda tracts on behalf article continued this theme after Nichols's death threat to of the Conservative Revolution. the President had been exposed, caning Nichols a "definitely In a commentary in the London Times on Jan. 5, Lord unfriendly witness." Rees-Mogg "spilled the beans" on the Conservative Revolu­ "Can Clinton survive?" his lordship asked. He conclud­ tion's true agenda, writing that upwards of 95% of the ed: "As the momentum builds, it seiems unlikely that Clinton world's population will be thrown on the scrapheap with can be renominated, let alone reelected; he is not even certain the advent of the Information Revolution. That 95% of the to reach the end of his term of office unindicted." population will barely survive as uneducated, brutish serfs, Rees-Mogg's articles demonstrate that the Club of the in bondage to the remaining 5%, who will form a new feu­ Isles will do anything to eliminatt President Clinton, ush­ dalist elite. Rees-Mogg has gone so far as to project a one­ ering in the short-term expedient of House Speaker Newt man world dictatorship, where all dissidents will be "loboto­ Gingrich to dominate and dismantle Washington. mized" or killed. On Nov. 21, 1994, Rees-Mogg, writing in the Times, Writing off95 % of the human race insisted that "the right-wing Republican victory in America Rees-Mogg's latest forecast, inihis book The Great Reck­ is sure of a popular echo in Britain." He wrote: "The new oning: How the World Will Change in the Depression o/ the tone of American Republican politics is certain to be heard 1990s, is that a period of econoru.ic collapse and violence in Britain, if only because the congressional campaign which will usher in a new feudalism and slavery in the formof the Newt Gingrich masterminded was so successful. In politics, Information Revolution. He is bold-faced in his assertions there is no substitute for victory. . . . In America, real social that only 5% of the population at best will be necessary as forces have produced the Republican mid-term victory .... the Age of the Renaissance ends and the Information Age A similar . . . conservatism in Britain would go beyond begins. His Jan. 5 commentary in the London Times was Thatcherism. . . . The Americans who voted the Republi­ titled "It's the Elite Who Matter4-In Future Britain Must cans into control of the House of Representatives, believe in Concentrate on Educating the Top 5%, on Whose Success the Gingrich program. The ten bills to be tabled [introduced] We Shall All Depend." In it, he wfote: in the first 100 days of the new Congress reflect what this "In some ways, Britain is bettdr placed to competein the public wants. " information age than it was in the mass production age which When it comes to "winning elections," he concluded, "it is closing. The information age will be driven by communica­ is Newt Gingrich who can do the job." tions and services, including financial services ....As an Like the lesser ranking figuresBritish Secret Intelligence exporter of financial services, Britain is fully competitive Service asset Ambrose Evans-Pritchard and Sir P�regrine with the United States and Japan, aside from the scale of Worsthorne, Rees-Mogg has long been fostering the their domestic capital formation, and more competitive with Whitewater plot against President Clinton. The task set by the Germany ....

EIR February 17, 1995 Special Report 37 "The next century-like the 19th-will probably be the According to Rees-Mogg, the "welfare state" was never age of the professions, with an emphasis on rare skills, and more than a shakedown of the middle class by the underclass Britain is still a professional and relatively elitist country. using the threat of violence. As he wrote in a chapter of The What has been considered our cultural backwardness may Great Reckoning titled "Drugs, Delusions, and the Imperial prove an advantage .. ..Br itain's national interest is that the Culture of the Slums": rest of the world should do its business in and through our 'The culture of the slums has become an imperial culture . country, but we should also be able to do our own business . . . The underclass has gone frbm a tiny subculture in inner on the same terms. . . . cities during the 1960s to become a dominant culture in many "There are fascinating implications here for educational urban areas today. The rapid �rowth of the underclass has policy, and they are highly unfashionable. The 20th-century meant a dramatic increase in violence, drug addiction, and view has been that the economics of mass production re­ social disintegration among blacks ." quired mass education, perceived as the universal provision As we shall see, although ReeS-Mogg is a student of of modern educational skills. The 21st century will require the "raw power" of violence, tieI is also a British bullyboy greater emphasis on the higher skills of the ablest students . determined to suppress what lie chooses to call "the un­ . . . In international competition, perhaps 5% of the popula­ derclass." tion will produce 80% of the national income, and the em­ ployment of the 95% will depend on the success of the fe w . 'Blood in the Streets' . . . Britain has educated for Empire, has educated for factor­ Lord Rees-Mogg's first bOOK with James Dale Davidson, ies, and now must educate for knowledge and communica­ appearing in 1987, Blood in th� Streets: Investment Profits tions" (emphasis added). in a World Gone Mad, got its ti�le from Baron Nathan Roth­ This is one of the central features of House Speaker Gin­ schild's maxim, "The time to b y is when blood is running grich's adoption of Alvin Tomer's "Third Wave"-actualJy in the streets." This refers to Barbn Rothschild's coup, when, fe udalist-doctrine. As with the helot slaves of Sparta, the after helping depress the Briti�h stock market, he made a lives of this underclass will be valueless. fortune by cleverly obtaining th� first knowledge that Napo-

Doing away with the 'welfare state' Rees-Mogg spelled out his murderous program for the United States further, in a subsection of his book The Great Reckoning, which he co-authored with National Taxpayers Union founder and chairman James Dale Davidson in 1991, Kissinger's -.....f.a.-.... .a.'-"'-' titled "Farewell to the Welfare State." He wrote: with theBri ...... ,.a..a. "Even more astonishing, given current expectations, the need to narrow a gaping deficit will result in government spending being slashed. Although few will be convinced by Ironically, the Ameri­ the arguments we spelled out earlier about the need to curtail can populists who so ad­ income redistribution and reduce pauperism, circumstances mire Lord Rees-Mogg, will force the hand of authorities. Programs will be cut sharp­ and are aiding and abet­ ly or even abolished .. .. ting the British assault "Public schools will be largely privatized by the year on the White House, 2000 . The fall of real estate prices will remove the financial tend to strongly dislike advantage that contributed to support public schools by many his ' lordship's transat­ upper-middle-class families. . .. Falling property prices lantic co-thinker Henry make private schools and public school choice more attrac­ Kissinger. They think of tive .... With educational results steadily deteriorating, Kissinger as a Rockefel­ public schools are unlikely to survive the trauma of depres­ ler stooge and a "liber­ sion in their current, costly form .. ..There will be a tremen­ al." But the fact is, ....."", .lJI5�' and Rees-Mogg are two dous growth in private educational services, including for­ sides of the same British Both hate the republican profit and non-profitschools .. .. rnf',TJ('>ln Constitution. As Kis­ "Therefore , it is more likely than most people now imag­ singer has averred, he was a British agent-of-in- ine that public schools in the United States will more or less fluence, pursuing the pOI.lClC�,S of the arch-Conservative disappear in the coming decade. Educational entrepreneurs Revolutionary , Prince von Metternich. will enjoy a rare opportunity to compete in providing effec­ Kissinger revealed his agentry on May 10, tive elementary and secondary education to children whose 1982 in a speech at the Institute for International parents will be able to spend vouchers."

38 Special Report EIR February 17, 1995 leon had been defeated at Waterloo. tremendous. The terrible machine, floatinggracefully on the Rees-Mogg analyzes all situations according to a method waters-a beautiful white devil-wreathed itself in smoke. he calls "Megapolitics," which is "the comparison of raw The river slopes of the Kerreri Hills� crowded with advancing power." He has divided the 2,000 years since the death of thousands, sprang up into clouds lof dust and splinters of Christ into four cycles of 500 years each, at the end of which rock. The charging Dervishes sank down in tangled heaps. the balance of "raw power" has shifted. This is one reason . . . The infantry fired steadily and �tolidly, without hurryor why he projects the end of the 500-year Age of the Renais­ excitement, for the enemy were fin' away and the officers sance cycle of history, which he otherwise refers to as the careful. Besides, the soldiers were jnterested in the work and "Gunpowder Revolution." For Rees-Mogg, "the state of na­ took great pains. But presently the mere physical act became ture" upon which Megapolitics is based is equivalent with tedious. . . . And all the time out oOithe plain on the other side the Enlightenment philosophers' view that "the ultimate law bullets were shearing through flesh,ismashing and splintering is the law of the jungle. The law of the desert. The law of the bone; blood spouted from terrible wounds; valiant men were dark alley in the inner city. It is the law that says that what is struggling on through a hell of wbistling metal, exploding yours by right and justice is yours only so long as you--or shells, and spurting dust-suffering, despairing, dying." someone�an protect it." Applauding the bullyboy nature of the British Empire, is Information Revolution means slavery his descriptive account from Winston Churchill of the battle The next cycle of history, according to Rees-Mogg, as of Omdurman in 1898. At that battle, recounted in Blood in Gingrich's guru Alvin Toffler is quick to affirm, will be the Streets, the British reduced 40,000Dervishes to bleeding one where man will create machines capable of Artificial "tangled heaps" by firing on them from the safety of their Intelligence, causing an InformationRevolution. It is impos­ ships. As Churchill relished the massacre: sible, as Lyndon LaRouche has demonstrated, for a machine "At the critical moment the gun boat arrived on the scene to think. Despite the impossibility of his utopian scheme, and began suddenly to blaze and flame from Maxim guns, highlights of Rees-Mogg's "New Age" science fiction from quick-firing guns and rifles. The range was short; the effect The Great Reckoning are worth noting, for policy reasons

Affairs (Chatham House), titled "Reflectionson a Partner­ course, resisted these American pressures." ship: British and American Attitudes to Postwar Foreign Kissinger rejected Roosevelt's belief in the self-deter­ Policy." In that speech on the bicentennial of the Office mination of the colonies of the European powers, criticiz­ of Foreign Secretary, Kissinger admitted: ing President Eisenhower's unwillingness to side with the "Our postwar diplomatic history is littered with An­ British after they had fomented the crisis at Suez. One of glo-American 'arrangements' and 'understandings,' the major points of Kissinger's ChllthamHouse speech­ sometimes on crucial issues, never put into formal docu­ which was delivered at the time of Britain's Malvinas War ments ....In my White House reincarnationthen , I kept against Argentina-is that America must never again be the British Foreign Office better informed and more close­ allowed to abandon a European adventure in the Third ly engaged than I did the American State Department. World . . . . It was symptomatic." Kissinger's treasonous alliande with the British has In the same speech, Kissinger made clear his prefer­ its root at Harvard University, where Kissinger was an ence for Sir Winston Churchill's nineteenth-century colo­ assistant to British Round Table operativeand Secret In­ nial methods, over the policies of President Franklin Dela­ telligence Service asset William 1Yandell Elliott. Under no Roosevelt, who had stated his intention to roll back Elliott's tutelage he wrote a thesis on Mettemich, which neo-colonialism, founding nations on the model of the was published in 1954. A World :Restored: Metternich, American Revolution. Stated Kissinger at Chatham Castlereagh and the Problems ofiPeace 1812-1822 is a House, after reviewing Churchill's drive for America to venomous attack upon the Ameriqan republican "revolu­ use its postwar nuclear monopoly for a "finalsettlement" tionary" tradition that Kissinger fOUnd so objectionable in with the Soviet Union: Franklin D. Roosevelt. "Americans from Franklin Roosevelt onward believed Replacing republicanism is "slability," in Kissinger's that the United States, with its 'revolutionary' heritage, world view; replacing human freedom, in the sense meant was the natural ally of peoples strugglingagainst colonial­ by the Preamble to the U.S. Constitution, is oligarchical ism; we could win the allegiance of these new nations power, and replacing the self-determination of nations by opposing and occasionally undermining our European is the "balance of power," which Kissinger states that allies in areas of their colonial dominance. Churchill, of Castlereagh advocated and Prince Mettemich legitimized.

EIR February 17, 1995 Special Report 39 that underlie the Conservative Revolution: contested as a Tory candidate in Chester-Ie-Street County "Like all true revolutions, the Information Revolution is Durham by-election in 1956 and again unsuccessfully in also a revolution of power. Miniaturized technologies minia­ the general election of 1959 .• He was vice chairman of the turize institutions. In time, the microchip will destroy the Conservative Party's National Advisory Committee on Polit­ nation-state. It will give small groups and even individuals ical Education from 1961 to 1963. He was a very close the capacity to employ violence in ways that could overturn friend and adviser of Margaret Thatcher when she was prime governments and destroy large organizations. . . . minister, and she rewarded him by placing his name on the "Over the longer term, the megapolitical impact of micro­ Civil List for a Knighthood in 1981. technologies will be devolutionary in the extreme. . . . So the Rees-Mogg has been a di�ctor of numerous companies. Information Revolution will overturn the modem economy Since 1981, he has been a director of the General Electric whose borders are policed by the gun. Co., in which Queen Elizabeth has a large holding, and "Advances in miniaturization and computer technology whose former chairman, Lord Peter Rupert Carrington, was not only imply the replacement of raw materials with infor­ a co-founder and British controller of Kissinger Associates, mation, they also promise in time to give humans control of Inc. GEC was a cash cow for'the Conservative Party during nature at the molecular level. . . . As specific genes that Thatcher's years as prime minister. Since 1988, Rees-Mogg control human development are identified ...genetic engi­ has been a director of J. Rothschild Holdings, which is the neering on this scale also allows the development of new and holding company for the junk bond buyout and derivatives more deadly biological weapons .. .. speculation of Baron Jacob Rothschild. "Molecular computers would make possible theconstruc­ It may therefore not be surprising that Baron Roth­ tion of numerically controlled assemblers for manipulating schild's cousin and oft-time business partner, Sir James matterat the atomic level-what is known as nanotechnolo­ Goldsmith, financedRees-Mogg 's unsuccessful legal efforts gy. . . . Invisible machines programmed through Artificial to block the Maastricht Treatyfrombeing adopted in Britain Intelligence could literally force anyone to behave any way in 1993. Even more importantly, Jimmy Goldsmith and theultimate programmer wished .. ..You could have robots Rees-Mogg pledged to block former European Commission with human characteristics collecting garbage. Or humans President Jacques Delors from implementing his "White with robot characteristics. They could be programmed to Paper" for European high-speed rail and other infrastructure love garbage and derive great happiness from dusting antique development. The Delors plan reflectedthe "Productive Tri­ window sills ....Slavery could return.... Slaves will be angle" proposal for Eurasian il!ltegration put forward in 1989 anyone without control of nanotechnology, and they will do by Lyndon LaRouche. Goldsmith and Rees-Mogg pledged anything that might have been asked by Aladdin when he in June 1994 to form an alliance of environmentalists and rubbed his lamp." bankers that would stop subsiliies of energy and infrastruc­ This is the fate that Lord Rees-Mogg envisions for the ture projects. vast majority, with the Information Revolution: a return to That is the same argument advanced in the Green Scis­ "electronic feudalism" and "slavery." sors report issued by the NTU's James Dale Davidson (see dossier elsewhere in this package), whose outfit itself has Rees-Mogg: 'not a good Christian' gone increasingly green. Davidson, an American, attended Who is William Rees-Mogg, anyway? First, he is a Pembroke College, Oxford. He and Rees-Mogg not only traitorto his Welsh Catholic roots and to the Christian values co-authored Blood in the Streets and The Great Reckoning, that the family of his deceased wife Gillian tried to instill but they also co-edit a newsletter called Strategic Investment, in him. In his first semi-autobiographical book of 1977, which peddles "investment opportunities" based on the im­ titled An Humbler Heaven, The Beginnings of Hope, he pending crash, while trashing !feal solutions like the Delors admits with typical British understatement that he is "not a plan and such high-tech infrastructure programs as Tennes­ good Christian." Born on July 14, 1928 in Temple Cloud, see's Clinch River fast breeder puclear reactor, which David­ Somerset, he attended Charterhouse public school, then Bal­ son's NTU helped scuttle. liol College, Oxford. He was president of the Oxford Union Strategic Investment claims to have a network of intelli­ in 1951. After working at the Financial Times from 1952- gence sources that makes it an '�investor's CIA." The month­ 60, he got a job with the London Sunday Times in 1960 ly newsletter has been churning out a steady stream of "Get and worked his way up. From 1967-81, he was editor of Clinton" propaganda for the past year, even though David­ the Times, and he has been a columnist with that newspaper son advertises himself as a foqner friend and adviser to the since 1992. Among his jobs in the interim period was vice­ President. Davidson is also a principal of Strategic Advisors chairman of the Board of Governors ofthe British Broadcast­ Corp., which is tied in with: a network of onshore and ing Corp. (1981-86), and vice-chairman, Board of Standards offshore money management finnsthat are preparing to cash Council (1988-93). in on the coming financial coUapse by buying cheap when He has long been a Conservative Party member, having there is "blood in the streets."

40 Special Report EIR February 17, 1995 Roots of the Conservative Revolution

Why must call we Newt Gingrich 'a fascist' by Michael J. Minnicino

There is an old saying that "history is written by the winning with their attacks upon individual human rights and the philo­ side." A supreme example of that truism is the analysis of sophical core of our own indusuy-based republic-is the the rise of fascism in the 1920s and '30s. Thousands of pages one warnedof by LaRouche. Callipg these men and women have been expended over the last 70 years, purporting that "fascists," must not be thought to lJiesome exaggerated pejo­ Nazism was an outgrowth of anti-Semitism, of anti-trade rative; it is the technically correct term. unionism, or of the racial characteristics of the Germans Over the last 30 years, LaRouche's analysis has been themselves. Almost all of this scholarship has been a coverup confirmed, and enriched in its detail, by several historical of the essential nature and sponsorship of the movement that studies. One of these is Armin Mbhler's The Conservative murdered millions. Revolution, a book originally publi�hed in 1949, never trans­ In the mid- 1960s, Lyndon LaRouche publicized his lated from German, and only discovered by the LaRouche unique analysis of fascism. Rejecting the "common knowl­ movement in the 1980s. Mohler was a Swiss who volun­ edge" views, LaRouche identifiedthat fascism started as the teered for the foreign division ofthe Nazi SS; afterthe war he concatenation of several radical movements-left and right, rose to head the Siemens Foundatibn, a major philanthropic populist and aristocratic, workerist and anti-industrial agrari­ institution in Germany. Mohler's purpose was to explain an-all linked by a violent hatred of the modem nation-state, Nazism as the most successful product of a much broader and a complete disregard for the sanctity of the human rights and longer-term cultural development. He does this task with of the individual. Thirty years ago, LaRouche warned that some insight, but it is an insight: fed by the fervor of the there could easily be new "Nazis without swastikas": that apologist: Mohler wants to show that what he calls "the Con­ radical ecologists and New Left popUlists could combine with servative Revolution"-purged of the unfortunate excesses "post-industrial age" budget-cutters of the nominal Right to interposed by the Nazis-remains a valid goal. Indeed, create a movement for Nazi economic structures without the Mohler's book, now in a recent fOllirthediti on, is still read as outward manifestations of anti-Semitism or jackboot mili­ a textbook in some circles. His description of the ideologies tarism. of the first "Conservative Revolution" so well fits certain It is illustrative, that the very first attacks on LaRouche recent pronouncements in America, that Newt Gingrich, organized by the Anti-Defamation League of the B 'nai B'rith Rush Limbaugh, Ollie North, and their co-thinkers can, with consistently highlighted his anti-fascist thesis; a LaRouche equal precision, be called either Cbnservative Revolutionar­ article from the late 1970s titled "Nazis without Swastikas" ies, or fascists. was (and still is) repeatedly misquoted to allege that LaRouche, because he maintained that anti-Semitism is not The 'Third Reich' and the �Third Wave' the cause of Nazism, must really be "soft"on fascism. Simi­ One hundred years ago, it wa$ widely believed that Eu­ larly, various varieties of Old Left and New Leftgroups­ rope and America were on the verg¢ of a radical transition to a which historically have called anybody who disagreed with new era. At that time, there were hundreds of groups publicly them, "fascists"-were enraged that LaRouche could identi­ committed to what was generally called "the New Age revo­ fy their own economic theories with those of Nazi Economics lution." In fact, the leading English-language journalof these Minister Hj almar Schacht. The violence of these attacks de­ ideas was titled New Age. It is ah1ll0st humorous to note that rives in part from the fact that LaRouche had fundamentally today's "New Age"-which put$ such a great store in its exposed the fraudulent history that these groups have used hyper-modernism-is an exact replica of the first "New for years to recruit and raise funds . Age": As today, the revolutionaries of a century ago included The real history of fascism makes it clear that the "revolu­ a broad range of leftists and rightists, anti-Semitic racial tion" signalled by the rise of Newt Gingrich and his allies- nationalists and "new world orderi" internationalists, occult-

EIR February 17, 1995 Special Report 41 Throughout the twentieth century, the Conservative Revolution has been trying to devolve society back . Before World War J, AdolfHitler was an avid reader of Os tara, the journal of the anti-Semitic, neojeudalist Order of the New lIemplars (left) . Twentyyears later, Hitler became the shining knight of the new medieval oligarchy .

ists and nominal Christians, plus a good number of prac­ When the Nazis later proclaimed their own Third Reich, the titioners of new psychologies whose psycho-babble would reference was lost on no one. put Shirley Maclaine or Arianna Huffingtonto shame. These groups also shared a hatred of the intellectual and All of these groups had their roots firmly in the earlier moral self-sufficiency of the intlividual-the idea of man in Romantic movement which had been sponsored by Britain, the image of the living God- I hich had characterized west­ as a philosophical counterweight to the effects of the Ameri­ erncivili zation since the time of the Renaissance, and which can Revolution. All ofthese groups maintained that the mod- was elevated to public law in t e U.S. Constitution. Rather, . em nation-state based upon scientific and technological prog­ they claimed, the individual deri� ves identity by submerging ress-the model uniquely exemplified by the American him- or herself in the higher spirituality represented (de­ Republic up through the Civil War-had become spiritually pending upon one's specificor ientation)! by the race, by the obsolete. One very influential version of this thesis was the international working class, or by the secret occult knowl­ idea that westernsoci ety had to replace the nation-state with a edge of the chosen few adepts, letc . One striking characteris­ supranational "Third Empire"-the first and second empires tic of this shared ideology was �n intense public nostalgia for being Rome and Byzantium. Like Alvin Tomer's Third the medieval period, the time before the development of Wave nonsense of today, the Third Empire thesis claimed nation-states, when 95% of th population lived in virtual that while people had been brought closer together by modem slavery, and society was held together by the unquestioned technology, society had, for the same reason, lost its spiritual authority of the church in its alliance with the knightly oligar­ unity, which had to be regained. chy. On this point, these groups were following the lead of This idea was first popularized by Dmitri Merezhkovsky, Friedrich Nietzsche, the insane �hilosopher of the end of the a mystical Russian who became an influential writer in Ger­ nineteenth century, whom Mojer correctly identifiesas the many; Sigmund Freud's slanderous "psychoanalysis" of Le­ godfather of the Conservative �evolution. onardo da Vinci, for instance, is based on a Merezhkovsky Nietzsche's goal was to create what he called "inverted study of that artist. Mei'ezhkovsky thought that the capital of Platonism": to tum back the course of philosophy since the the New Age "Third Empire" would be Moscow. Merezh­ time of Plato and Socrates, and return to a more primordial kovsky's close friend, the Anthroposophist Moeller van den form of mental life characteri�ed by the irrationalism and Bruck, thought the headquarters should be in Germany, and ecstatic orgies of the ancient c It of Dionysus. In this way, wrote a book on that subject, Das Dritte Reich ("The Third said Nietzsche, man reestablishes his lost unity with nature, Reich"-the German translation of "The Third Empire"). abandons the useless overlays bf Judeo-Christian morality,

42 Special Report EIR February 17, 1995 and creates anew his moral values based on his own individu­ came quite popular after his deathi q 1900.One of the princi­ al "will to power." Nietzsche made it very clear that the pal groups involved in this revival i Germanywas the Order �,. model for his "will to power" was the bloody tyranny of the of the New Templars, founded by rg Lanz von Liebenfels. medieval aristocracy. In his 1887 Genealogy of Morals, he The ONT was modelled on the nights of the Temple, a asks: "What is the real etymological significancefor 'good' chivalric order of noblemen founde in the twelfth centuryby coined in various languages?" He answers that "the good" the Cistercian monk Bernardof Cia· aux, as an international originally meant "the noble," or the "aristocratic"; on the crusading army of monk-knights c . mmitted to the massacre other hand, he claimed, our words for "bad" originally meant of Muslims and other "enemies of!the Faith." Weaving to­ "common, plebeian, simple." What we really mean by "the gether Bernard's mystical writings �ith occultAryan racism, . good," concluded Nietzsche, are the values ofthe old knight­ von Liebenfels created an organiz�ion committed to a Ger­ ly oligarchs-the illiterate, armored thugs who were trained many to be ruled by a new racial apstocracy. The first time only for violence and instant gratification of their needs­ that the swastika flag flew over Ge.jmany was in 1907, when before they were beaten down by Christian morality. These it was hoisted over a Bavarian castle which von Liebenfels oligarchical values, he says, are the truly free ones: "The had purchased as the headquarter� of his order. The ONT knightly-aristocratic value judgments presupposed a power­ recruited several notables, including the Swedish dramatist ful physicality, a flourishing, abundant, even overflowing August Strindberg, and a largenu mber of Germannoblemen, health, together with that which serves to preserve it: war, including its primary funder, Prinpe Hans-Heinrich XV of adventure, hunting, dancing, war games, and in general all Pless. Von Liebenfels himself clajmed to be of an ancient that involve vigorous, free, joyful activity ....For funda­ family of German knights, but wa$ really born AdolfLanz , mentally, it is the same active force that is at work on a of solidly middle-class parents. Before World War I, when grander scale in those artists of violence and organizers who Adolf Hitler was a starving artist living in flop-houses, one build states ... namely, the instinct fo r freedom (in my of his few possessions was a complete set of Ostara, the language, the will to power)" (emphasis in original). journalof the Order of the New Templars. It is a tragic sign of our times that we are now in the second decade of a major revival of the ideas of Nietzsche on 'The same side of the barrieades' American and European campuses; a month-long Nietzsche It must not be thought that the Conservative Revolution's symposium was just held at a university in Maryland, for medieval revivalism was limited to rightists and renegade instance. The Nietzsche revivalists say that Nietzsche is mis­ Christians. It was also shared by people like Georg Lukacs, understood, and try to prove that, although Nietzsche became the Hungarian Bolshevik who later became head of cultural a hero to the Nazis, the philosopher himself would never warfare for the Communist Intetnational and one of the have supported Hitler. They usually point to the most often­ founders of the so-called Frankfurt School of neo-Marxists. quoted section of Nietzsche's work, also from Genealogy of In Lukacs's view, the success of Bolshevism in the West Morals: "I employed the word 'state': It is obvious what is depended on the subversion of the philosophical core of west­ meant-some pack of blond beasts of prey, a conqueror- and ern Judeo-Christian civilization; to accomplish this, Marx­ master-race which, organized for war and with the ability to ism must be made to "possess the! religious powerwhich is organize, unhesitatingly lays its terrible claws upon a popu­ capable of fillingthe entire soul," and become, said Lukacs, lace perhaps tremendously superior in numbers but still form­ "the most unrelenting and rigorous synthesis since medieval less and nomad. This is, after all, how the state began on Christianity. " It should be obvious that Lukacs and his atheist earth." The apologists claim that, when Nietzsche is talking friends were not talking about real Christianity, but were here about "blond beasts" and the "master-race," he is not simply trying to adapt the unfortuJ!late, authoritarian aspects thinking of Nazi Stormtroopers; Nietzsche's other statements of the Christianity of the period of the Inquisition into a new, denouncing Aryanism and German nationalism, plus the con­ corrosive ideology; in this, they were harking back to the textual evidence of his extravagantly polemical German, they proto-socialist ideas of the nineteenth-centurypositivists like suggest, show that he is actually talking about "lions." And, J.S. Mill and August Comte, who triedto institute a dictatori­ oddly enough, the apologists are right here. Nietzsche is al new world order based on what:was then called "Catholi­ talking about lions-and that is the point! Nietzsche thought cism without Christianity. " that his new oligarchy should be as "free" as a noble lion, Thus, by the time of World War I, it was impossible to instinctually tearing the throat out of some plebeian prey on analyze the Conservative Revolution by using the common­ the African veldt. place categories of "left" or "right." We get a flavor of the Thus, it becomes clear that, while Hitler liked to present situation by looking at the case of Lukacs's friend Paul EmsL himself as the heir of Nietzsche, the better claim to that title Like Benito Mussolini, Ernststarted his career as a fire-brand is held by today's Prince Philip of England and his anti­ Marxist, and was a correspondentof Friedrich Engels in the human followers in the World Wide Fund for Nature. 1880s. He became famous at the tlJrnof the centuryas a poet Nietzsche's longing for a revived feudal oligarchy be- and writer of several plays with medieval themes, and came

EIR February 17, 1995 Special Report 43 Revolution hodge-podge, defymg category. Heinrich Himm­ ler was a member of several <>n's Lord William Rees­ and chief seducer was the Conservative Revolution's resident Mogg. But, most people at the tiqte simply convinced them­ philosopher, Martin Heidegger. In the 1920s, Heidegger an­ selves that Hitler's statements 'fere exaggerations to get nounced an intellectual revolution to complete Nietzsche's votes and pacify the radicals in hiis own party. If you know task ofdestroying the last vestiges of"Platonic metaphysics," anything about the Third Reich, it is what the Nazis did in in Heidegger's words. The influenceof Plato and Socrates­ 1943-g10bal war, genocide, am� Europe turned into a free­ the source of the Renaissance, of the Christianity of Au­ trade zone of looting and slavery. But, the horrors of 1943 gustine and the Judaism of Philo-was the real problem, said were the necessary productof thelNazi "ConservativeRevo­ Heidegger; it meant the growth of science and the complica­ lution" of 1933. Those earlier measures are not so well re­ tion of life, such that man could no longer live an "authentic" membered, but they were quite pOpular at the time, and they existence. By the end of the 1920s, Heidegger had become ring a chilling resonance with ce�inpolicies being discussed the most influential intellectual in Germany, and it was "po­ today. litically correct"on German campuses to parrot his denuncia­ Among the first items on ithe Nazi agenda, was a tion of republican Germany as a decadent nation which had thoroughgoing legal reform to elld the Weimar Republic's lost its values. alleged "welfare socialism" and its "softness on crime." When Heidegger himself joined the Nazi Party in 1933 The death penalty was mandated for a wide range of and replaced the liberal rector ofFreiburg University who had offenses, while a vastly expanded police force rounded refused to implement Nazi decrees, it was an unmistakable up gypsies, trade union leaders, �d other "trouble-makers" message to Germany's students and intellectuals that they without proper "Aryan values."· Vigilantism was officially should suppress their disgust at Hitler's anti-Semitism and encouraged, primarily against J�ws; the government justi­ war-mongering, and support his movement as the firstphase fied this, by claiming that the J�s were criminal parasites of the much-needed spiritual revival of Germany. A good who were responsible for the rCitten shape of local econo­ appreciation of Heidegger' s effect is an anecdote from Georg mies. Soon, the Nuremberg Laws mandated a racially Picht, afterthe war a Lutheran theologian, who studied with pure Aryan Reich, and the Jew& were classified, in effect, Heidegger in 1933: "In the fall of 1933, I walked down the as "illegal immigrants"-even �f their families had lived Kaiserstrasse with two members of Heidegger's seminar­ in Germany for centuries-whQ could no longer be given on the right a beanpole of an SS man; on the leftan SA man; legal rights. Ultimately, the Jews were arrested en masse. I, a civilian, in the middle. Naturally we discussed politics. Such a large portion of the pop�lation ended up in prison, I said something about one of the most recent atrocities. The that the regime started a program to put prisoners to SS man thereupon shouted so loud that people on the other work, and hired them out as s4tve labor to several major side of the street turned around: 'There is one thing that is, private firms. of course, obvious to us all. Now, in the first phase of the Early in the regime, Hitler :also authorized a program revolution, we are ruled by a gang of criminals.' That was code-named T-4, which legaliz¢d euthanasia for "lives not not uncharacteristic of the mood of that part of the student worthy to be lived," in the offici�ljargon . The retarded, the body who, under Heidegger's influence, was obsessed with congenitally and terminallyill w�re killed by lethal injection, the idea that the true revolution had to come from the uni­ and, as the number of victims �w, in gas chambers. Large versity. " numbers of homeless, includingrwhole families, were certi­ The philosophical blindness which Heidegger caused fied as "congenitally anti-social," and murdered. It must be among German intellectuals can be seen in another, more remembered that, while the Naz.s were discreetabout T -4, it poignant, story from Picht about Felix Jacoby, a leading was not a secret program; it wlls, in fact, publicized as a professor of classics and a follower of Heidegger. In 1933, welfare refo rm and cost-cutting measure. Jacoby was to give a lecture on the Roman poet Horace. He It was these early Nazi poliqies on immigration reform, began with the following words: "As a Jew, I am in a difficult on prison reform, and on health and welfare reform which, situation. But, as a historian, I have learned not to consider around 1941, coalesced into the death-camp system which historical events from a personal perspective. I have voted worked millions to death, and g�ssed and cremated theaddi­ for Adolf Hitler since 1927, and consider myself lucky to be tional millions who, because of 1!heirage , health, or religion, able to give a lecture on [the Roman Emperor] Augustus's were to be discarded as "useless ,eaters ." poet in the year of the national uprising. For Augustus is the But, there were pitifully few people who had the brains only figure in world history who can be compared to Adolf to forecast that later nightmare, in 1933-andthere were few Hitler." who had the courage to believe .hem.

EIR February 17, 1995 Special Report 45 The legacy of Friedrichvo n Hayek: Fascism didn't die with Hitler by Richard Freeman and Jeffrey Steinberg

In the summer 1994 edition of the Heritage Foundation's could hardly have penned an apologia for Adolf Hitler and PolicyReview, a group of leading American conservatives, National Socialism. Instead, he t�ok a sophisticated detour including Sen. Phil Gramm (R-Tex.), Rep. Dick Armey (R­ to arrive at the same end. Von H�yek denounced National Tex.), and free-market economist Milton Friedman, were Socialism as a classic expression i of statist, totalitarian so­ asked to contribute essays commemorating the 50th anniver­ cialism, and then advanced the phony argument that any sary of Friedrich von Hayek's book The Road to Serfdom. form of dirigist government invqlvement in the economy That 1944 book, written before the guns ofWorld War II had strangled freedom, crushed the freie market, and led inevita­ been silenced, could very well be described as the Mein bly to Hitlerian totalitarianism. Kampf of the postwar revival of the "Conservative Revo­ Von Hayek counted Friedricp List, Germany's great lution." "American System" economist, an� the Weimar-era German Representative Armey, among the "Hayekians" invited political figure Walter Rathenau a, part of the same "social­ to comment, was the most fanatical about the jacobin nature ist" camp as Hitler. He pilloried Uist as the principal author of their efforts: of the "German thesis" that "free �ade was a policy dictated "Liberation is at hand. For all the gloom of the Clinton solely by, and appropriate only to, the special interests of term, we must remember that a paradigm-shattering revolu­ England in the nineteenth century." tion has just taken place. In the signal events of the 1980s­ He wrote about Rathenau, wh�se assassination in 1923 from the collapse of communism to the Reagan economic was an essential step toward the I Nazi Party accession to boom to the rise of the computer-the idea of economic power: "Ideas very similar to thesel[anti-individualism] were freedomhas been overwhelmingly vindicated. The intellec­ current in the offices of the Genqan raw-material dictator, tual foundation of statism has turnedto dust. This revolution Walter Rathenau, who, although he would have shuddered has been so sudden and sweeping that few in Washington had he realized the consequences �f his totalitarian econom­ have yet grasped its full meaning ....But when the true ics, yet deserves a considerable �lace in any fuller history significance of the 1980s freedom revolution sinks in, poli­ of the growth of Nazi ideas." tics, culture-indeed, the entire human outlook-will Moreover, the radical alte�atives that von Hayek change ....Once this shift takes place-by 1996, I pre­ posed-strict monetarism, near-tofal deregulation, and Pan­ dict-we will be able to advance a true Hayekian agenda, European federalism-were all ex�ressions of the same feu­ including a flat tax, radical spending cuts, the end of the dalist outlook that produced Hitler's National Socialism and public school monopoly, a free market health-care system, the thousand other varieties of Conservative Revolutionism and the elimination of the family-destroying welfare dole. after World War I. Unlike 1944, history is now on the side of freedom." The Road to Serfdom, while ostensibly a polemic against Also during the summer of 1994, another, more secre­ statist totalitarianism, proposed a !feudal model for society tive, commemorative event for von Hayek's Road to Serf­ that would mean a return to feu�al serfdom for the vast dom took place in Cannes, France. This was the annual majority of human beings: "We sh"l not rebuild civilization gathering of the Mont Pelerin Society, the institution found­ on the large scale," von Hayek wr�te. "It is no accident that ed by von Hayek in 1947 to advance his particular brand on the whole there was more beauty and decency to be found of Conservative Revolution and launch the radical insurgen­ in the life of the small peoples, and that among the large cy that has now overrunthe corridors of power in Washing­ ones there was more happiness an� content in proportion as ton and a number of other capitals around the globe. they had avoided the deadly blig� of centralization." Writing The Road to Serfdom in London in 1944 (he Many of the earliest and most �evoted followers of von held the Tooke Chair in economics at the British Fabian Hayek's new "anti-socialist" crus�e were themselves lead­ Society-founded London School of Economics), von Hayek ing sponsors and players in the Conservative Revolution in

46 Special Report �IR February 17, 1995 Germany, Austria, and Great Britain. For example, von Road to Serfdom. Burckhardt vyas the inspiration for von Hayek's Mont Pelerin Society counted among its founding Hayek, and the mentor of oth�r leading Austrian School members Max von Thurn und Taxis, the head of the old figures, as well as of Nazi prej:ursor Friedrich Nietzsche Venetian oligarchic family that was transplanted to Bavaria. and Nazi ideologue Martin Hei4egger. The Thurn und Taxis family was prominent in the occult Afterattending the von Mise� seminarsin the mid-1920s, Thule Society that fostered Hitler's rise to power, and mem­ von Hayek became the first �tor of the AustrianInstitute bers of the family ran the Allgemeine SS out of their Regens­ for Business Cycle Research. W�sley Clair Mitchell, during burg, Bavaria castle. the same period, founded a parallel institution in the United In his keynote speech at the Mont Pelerin Society meet­ States-the National Bureau of! Economic Research. Both ing in 1980 in Palo Alto, California, Max von Thurn bra­ institutes peddled the quack not�n that economic blowouts zenly praised the "underground economy" as the perfect are inevitable, and should be en40uraged through draconian "Hayekian" system-<:omplete with its narcotics trafficking, austerity and the shutoff of credi•. Thus, the Austrian School unchecked violent crime, and tax evasion. pioneered the "shock therapy" lpolicies that have brought economic ruin to many nation� of the developing sector, The ' Austrian School' and more recently has done so to the nations of the former

Friedrich von Hayek was born in Vienna in 1899. After Warsaw Pact. i obtaining a doctorate in political science fromthe University Mitchell would later train Milton Friedman. In 1950, of Vienna and spending 1923-24 in New York City, von von Hayek would move to Chi4:ago and join Mitchell and Hayek returnedto Vienna to participate in the private semi­ Friedman to build the so-calle4 Chicago School, based at nars given by Austrian School ideologue Ludwig von Mises. the University of Chicago, as the North American outpost The Austrian School had been founded by Carl Menger for the Vienna apparatus. (1840- 1921), a retainer of the Hapsburg and Wittelsbach In 1931, von Hayek accepted an invitation to come to royal houses of Austria and Bavaria, who was a fanatical London to deliver a series of le4tures at the London School opponent of Prussia's industrialization policies, which were of Economics, where he eventually accepted a full-time explicitly modeled on Alexander Hamilton's "American teaching position, and also became affiliatedwith the British System of Political Economy." Menger was the first of the Fabian Society. In 1939, he initiated an organization that Austrian free-market economists to equate these American would soon evolve into the Mont Pelerin Society. The earlier System ideas with state socialism, lumping Friedrich List group, the Society for the Renovation of Liberalism, in­ together with Saint Simon, Hegel, and Marx. cluded Frank Knight and Hen.-y Simons, both of whom Menger trained a generation of Austrian School econo­ trained Friedman at the Universi� of Chicago; the American mists, including Eugen von Boehm-Bawerk, Ludwig von Fabian socialist Walter Lipp�; Viennese Aristotelian Mises, and Friedrich von Hayek. Before his brief New York Society leader Karl Popper; Ludtwigvon Mises; and Sir John City venture, von Hayek attended the Boehm-Bawerk semi­ Clapham, a senior official of the Bank of England, who nars in Vienna-along with future Bolshevik leader Nikolai from 1940-46 was the president l.lfthe British Royal Society, Bukharin. This convergence of radical free-market and Bol­ the British monarchy's preemiQent center for cultural war­ shevik personalities under the Vienna School tutelage is not fare against the ideas of the RejIlaissance. as strange as it might seem on first reflection. Boehm's It was this group of people �with the exception of Frank insistence on the inevitability of the collapse of capitalism Knight, who had died) that gath�red-at von Hayek's initia­ due to "overproduction" caused by the reinvestment of profit tive-at Mont Pelerin, Switzer1tand in April 1947 to form into new infrastructure, research and development, and other the Mont Pelerin Society. Amopg the other founders of the capital improvements through the mechanism of credit, was society were Archduke Otto vQn Hapsburg, the heir to the stolen directly from Karl Marx. And Boehm fully subscribed Austro-Hungarian throne, and �ax von Thurn und Taxis. to the idea of the superiority of the pre-capitalist feudal guild The explicit purpose of the sOCiety was to implement the society over the modem industrial state, a theme Bukharin new global feudal order spelle� out in von Hayek's Road would elaborate in his 1914 work, The Economic Theory to Serfdom . of the Leisure Class. The most important sister organization to the Mont Peler­ Another seminal figure in the formation of the Austrian in Society from the very outset; was the already-established School's radical anti-capitalist ideology, the "individualist Pan-European Union. Leading Mont Pelerin figures, includ­ philosopher" Jacob Burckhardt, openly attacked the fif­ ing Otto von Hapsburg and W�ter Lippmann, were pivotal teenth-century Golden Renaissance as one of the worst in the Pan-Europa movement; tHe concept of a pan-European events in history. For Burckhardt, the pre-Renaissance feu­ federation was a cornerstone <>If von Hayek's The Road to dal alliance between the oligarchy and the church represent­ Serfdom, which argued for thel replacement of the nation­ ed the high point of civilization. It was a theme that von state with a "benign" feudalist �ystem, ultimately linked to Hayek would take up more than half a century later in The a world federalist institution blj.sed on the proposals of the

ElK February 17, 1995 Special Report 47 evil Lord Bertrand Russell (whom von Hayek praised as In 1943, Coudenhove-Kalergi wrote Crusade fo r Pan­ one of the leading practitioners of nineteenth-century British Europe: Autobiography of a M4n and a Movement to set liberalism). the stage, for the postwar revivaJ of his vision of a feudal Count Richard Coudenhove-Kalergi, the founder of the Europe-regardless of the outco�e of the war. Even at this Pan-European Union, was a descendant of an 800-year-old late date, Coudenhove-Kalergi n�ted with pride, "Haushof­ family. The Kalergi branch had ruled the island of Crete er, Schacht, and Funk did and probably still do everything and forged the thirteenth-century treaty that brought Crete to convince Hitler of the necessi� of creating some kind of under Venetian control. The family eventually migrated to European federation under Germ� hegemony." At the same England as part of the "Venetian Party" colonization and time, Pan-Europa enjoyed the active backing of Winston takeover of the British Isles. However, as late as the tum Churchill, Columbia University president and Frankfurt of the twentieth century, the Kalergi family maintained a School patron Nicholas Murray autler, Otto von Hapsburg, salon in Venice which provided refuge to such degenerate and Walter Lippmann. figures as the composer Richard Wagner. In 1923, Count Coudenhove-Kalergi launched the Pan­ The Mont Pelerin Society ! Europa Union, an organization that won the immediate sup­ From the very outset, the Mont Pelerin Society was port of the very people who would install Hitler in power. conceived as an insurgent movem�nt committed to the imple­ The firstperson to join the PEU was Hjalmar Schacht, later mentation of the "Hayekian" vchion of the Conservative Hitler's economics minister and the author of Hitler's slave­ Revolution. Ever since 1947, the group has held an annual labor programs. Other Nazi and Fascist luminaries were conference, attended by membei"$ and prospective recruits. supporters or members of the PEU, including Walter Funk, Membership is restricted to apPrPximately 500. By invita- I Schacht's handpicked successor as economics minister; tion only, it follows several ye� of screening and guest Prof. Karl Haushofer, the head of the Geopolitical Institute attendance to at least two of tHe annual gatherings. The in Munich and a leading ideologue of the Nazi Party; and society does not publish a mem�rship list; all its publica­ Benito Mussolini. tions are for internal distribution IOnly, and the proceedings

of the event was the launching Iof a drive to privatize education and bring to an end th� public school system The Mont Pelerin worldwide. (National Review, A�riI 2, 1982) Society ata glance 1982: Meeting at the Interco$tinental Hotel in West Berlin pushed expansion of the Hbngkong model of Free Enterprise Zones. (National Revi�w, Nov. 12, 1982) John Chamberlain's articles in the National Review offer 1983: WesternHemisp here R�gional Meeting in Van­ a highly partisan look inside the annual meetings of the couver, British Columbia took up need for the privatiza­ Mont Pelerin Society. Nevertheless, a picture emerges of tion of all federal government-ow.ed and -managed land. the secretive group's agenda. Here are highlights of some The U.S. government would eamlover $1 trillion by sell­ recent sessions, according to Chamberlain's published ac­ ing off all remaining public land td groups like the Nation­ counts. al Wildlife Federation, Sierra CI�b, and Audubon Soci­ 1980: Meeting of 600 members and guests in Palo ety. (National Review, Oct. 28, 1�83) Alto, California on the eve of Ronald Reagan's victory in 1984:Fortieth anniversary ofivon Hayek's The Road the U. S. presidential elections. Discussion focused on the to Serfdom was commemorated aa the Mont Pelerin Soci­ role of the underground economy. Antonio Martino and ety meeting in Cambridge, England. Antonio Martino Max von Thurnund Taxis provided detailed and laudatory returnedto the need to propagandize for the underground reports on the thriving black market economy in Europe economy, arguing that the "off the books" economy is the and lbero-America, calling for integration of the under­ only means to ensure freedom. (National Review, Jan. ground and above-ground economies. (National Review, 11, 1985) Nov. 28, 1980) 1986: St. Vincent, Italy in the :Alps was the site of the 1981: Regional meeting at Viiiadel Mar, Chile, her­ Mont Pelerin meeting, convened 110 accelerate the expan­ alding the Pinochetjunta's "economic miracle," under the sion of new front groups worldwicte. Institute of Econom­ direction of the "Chicago Boys. " Praise for Gen. Augusto ics Affairs reported that the underground economy now Pinochet's 25% budget cuts and privatization of state­ accounts for 15-20% of Britain's GNP. Reviewed global owned industry and other facilities. Another major theme privatization patterns. (National �eview, Feb. 13, 1987)

48 Special Report f;IR February 17, 1995 of the annual meetings are only distributed to the attendees. On New Year's Day 1980, !von Hayek wrote back to EIR has been able to obtain a handful of society documents, Fisher: "I entirely agree with yC!>u that the time has come including proceedings of the 1980 session in Palo Alto, and when it has become desirable �d almost a duty to extend a 1994 letter of greetings to attendees of the annual meeting the network of institutes of the tqnd of the London Institute in Cannes, France. of Economic Affairs. Though it took some time for its Despite this veil of secrecy, the activities of the Mont influence to become noticeable, it has by now far exceeded Pelerin Society can be tracked. A handful of journalists my most optimistic hopes.. ..What I argued 30 years ago, are members , and one National Review contributer, John that we can beat the Socialist trepd only if we can persuade Chamberlain, has published a brief summary of the annual the intellectuals, the makers of opinion, seems to me more meetings since 1980 in the pages of that magazine. A partial than amply confirmed. Whethe� we can still win the race list of members has been reconstructed by EIR investigators against the expanding Socialist t�de depends on whether we through biographical research on the leading personalities can spread the insights, which pIlovemuch more acceptable at the Heritage Foundation, the Reason Foundation, the Cato to the young if rightly expoun�ed than I had hoped, fast Institute, and other leading U.S. conservative think-tanks­ and wide enough ....The futll¢ of civilization may really all of which are dominated by Mont Pelerin members. depend on whether we can catc" the ear of a large enough Despite propaganda to the contrary, the postwar Conser­ part of the upcoming generation iOfintellectuals all over the vative Revolution has been run by the oligarchy from the world fast enough. And I am mote convinced than ever that top down. The Mont Pelerin Society has spawned a global the method practiced by the IIfA is the only one which network of small, tax-exempt think-tanks that have targeted promises any real results ....iT his ought to be used to susceptible politicians for indoctrination. create similar institutes all over t1te world and you have now One of the key figures in this effort has been Antony acquired the special skill of do�ng it. It would be money Fisher. Born in London in 1915, educated at Eton and Cam­ well spent if large sums could � made available for such bridge, Fisher was elected to the Mont Pelerin Society in a concerted effort." i 1954. The following year, he founded the Institute of Eco­ On Feb. 20, 1980, Margaret Thatcher added her endorse­ nomic Affairs in London, as the first explicit front group ment to the project in a letter �o Fisher; and on May 8, for Mont Pelerin. OtherlEA founders included von Hayek, Milton Friedman threw his supWrt behind the international then at the University of Chicago; Ralph Harris, a leader of effort: "Any extension of instit�es of this kind around the the British Eugenics Society (which had earlier helped draft world is certainly something ar4ently to be desired." Hitler's race laws); Keith Joseph, and Allan Walters . In To carry out this global effort, Fisher launched the Atlas 1979, when Margaret Thatcher came to power, she signalled Economic Research Foundation:in 1981. Originally based her debt of gratitude to the lEA apparatus by appointing in San Francisco, Atlas is now h�adquartered on the campus Ralph Harris a Peer for life (Lord Harris of High Cross), of George Mason University in f).irfax, Virginia nearWash­ and by knighting Antony Fisher and Allan Walters. Walters ington, D.C. In a strategy pape� written in February 1985, was moved into 10 Downing Street as Thatcher's resident Fisher wrote of the need to tran�form the "extremist" anti­ economic adviser. government, radical free-marketp olicies of the Mont Pelerin Fisher had already furthered the Mont Pelerin subversion Society apparatus into the "new orthodoxy," through the by establishing the Fraser Institute in Vancouver, Canada launching of hundreds of small �ink-tanks on every conti­ in 1974, the Manhattan Institute in New York City in 1977, nent. "To inform the public, it: is necessary to avoid any and the Pacific Institute for Public Policy Research in San suggestion of vested interest, orl intent to indoctrinate. . . . Francisco in 1978. By 1978, the Mont Pelerin Society had Furthermore, increasing numbets of academic experts feel also taken over the small Coors family think-tank, the Heri­ free to criticize government wher their research is not spon­ tage Foundation, in Washington, D.C., and launched an sored by government grants." ambitious overhaul of that outfit in anticipation of the 1980 Today, there are 108 lEA affiliated think-tanks, in 38 presidential bid of Ronald Reagan. Sir Keith Joseph, one countries, including 12 lbero-Ajrnerican countries, Russia, of the Tory politicians most thoroughly indoctrinated in the Belarus, Lithuania, and Poland� and in the drug centers of "Hayekian Revolution," led the British takeover of Heritage, the Bahamas and Hongkong. � England alone, there are along with Fabian Society ideologue Stuart Butler. eight lEA-affiliated institutes, .ncluding the Adam Smith Institute and the David Hume In$titute. In the UnitedStat es, Launching a new fascist international at last count, there were 41, with such names as the Acton

Following the election of Margaret Thatcher in Britain, Institute, the Andrew Jackson I Institute, the John Locke Fisher contacted von Hayek, Milton Friedman, and other Foundation, and Toward Tradi.ion. In Auburn, Alabama, leading Mont Pelerin figures and spelled out an ambitious there is a Von Mises Institute, rultd plans are now under way expansion effort: in effect, the launching of a new fascist to establish a Von Hayek Univ�rsity in the Miami, Florida international. area.

EIR February 17, 1995 Special Report 49 Strategic Map

Mont PelerinSociety 's fascist international The Conservative Revolution of the 1980s and 1990s is as murderous as the earlier, cruder Hitlerian form . But the jack­ booted Nazis of the 1930s have been supplanted by a world­ wide army of quack economists, libertarian ideologues and cost-cutting accountants who carry out an even more wide­ spread genocide with their pencils and calculators than Hitler ever dreamed of. On every continent, the Conservative Revo­ lution has created outposts where their credentialed mass­ murderers crank out an annual quota of pamphlets, books, and journals, all advocating the same policies that spell death and suffering for the vast majority of humanity. Shown here are some of the Mont Pelerin Society front groups established through the Atlas Economic Research Foundation of Sir Antony Fisher. This is by no means a comprehensive map ofthe think-tanks and research institutes spawned by the Mont Pelerin Society. The information is based on an Atlas Economic Research Foundation list pub­ lished on Oct. 24, 1994. 1. England: Institute of Economic Affairs, Atlas Economic Research Foundation, Adam Smith Institute, in London. 2. Scotland: Adam Smith Institute in Edinburgh. 3. Washington area: Cato Institute, Competi­ tive Enterprise Institute, Future of Freedom Foundation (Fairfax, Virginia), Locke Institute (Fairfax), Atlas Econom­ 11. Guatemala: Center for Economic-Social ic Research Foundation (Fairfax). Studies, CIEN, in Guatemala City r Bahamas : Foundation for Economic Freedom. 4. New York City: Manhattan Institute. 12. 13. Venezuela: Center for Education and Diffu­ 5. Boston: Pioneer Institute. sion of Economic Science (Cedice) in Caracas. Michigan : Acton Institute in Grand Rapids. 6. 14. Colombia: Institute of Political Science in 7. British Columbia: Fraser Institute in Van- Bogota. couver. 15. Ecuador: IEEP in Quito. 8. San Francisco : Bionomics Institute (San Ra­ 16. Peru: Institute for Liberty and Democracy, Ama­ fael, Calif.), PacificResearch Institute. Gi, CITEL in Lima. 9. Dallas : National Center for Policy Analysis. 17. Chile : Center for Public Studies; Liberty and De­ velopment Institute in Santiago. 10. Mexico : Center for Studies in Economics and Education (CEEE) in Monterrey. 18. Argentina: CEPP A, Carlos Pellegrini Founda-

50 Special Report EIR February 17, 1995 \. o� ,..

'0 ) tion; Concordance Foundation; Republic Foundation; Insti­ 25. Bangladesh: Making Our Economy Right. tute for Contemporary Studies; Institute of Studies of Social Theory and Applied Public Policies, all in Buenos Aires. 26. Moscow: Institute for Study of Russian Econo­ my, Referendum. 19. Uruguay : CERES in Montevideo. 27. Belarus : IIEPS in Minsk. Brazil : Liberal Institute of Parana, in Porto 20. Bulgaria: Free Initi tive Foundation in Sofia. Alegre. 28. � 29. Poland: Adam Smith Research Center in 21. Brazil : Liberal Institute of Siio Paulo. Warsaw. 22. Brazil : Liberal lnstitute of Rio de Janiero. 30. Czech Republiq : Civic Institute, Liberalni Institut in Prague. 23. Australia: Center for Independent Studies in New South Wales. Austria: Karl MengClr Institute in Vienna. 31. I 24. Hongkong: Hongkong Center for Economic 32. Ghana: Institute of Economic Affairs-Ghana, in Research. Christianborg Accra.

EIR February 17, 1995 Special Report 51 Mont Pelerin 'body-snatchers' are brainwashing your congressman

In the 1950s, Hollywood cranked out a horror film classic, of the group who dared to question the von Hayek radicals' "The Invasion of the Body-Snatchers ," about alien invaders recipe for the 104th Congress. • who took over the planet Earth by turningpeople into glazed­ And to make sure that the br nwashing "took," all the eyed zombies. Last autumn, a team of "Conservative Revolu­ participants were handed The New, Member's Guide to the tionists" from the Heritage Foundation, joined by talk show Issues, a binder full of sound byte-sized "policy guidelines," host Rush Limbaugh, closeted the newly elected Republican followed by a list of "experts" to be consulted on everytwist members of Congress for several days of "orientation" in and tum of policy. Baltimore, Maryland, to prepare them to implement their The "experts" were all drawn rrom a collection of think own "conservative" brand of mass execution, the Contract tanks that are all products of tht Mont Pelerin Society's with America. By the time the Heritage team finished their postwar insurgency. It is this crow4 of"Hayekian revolution­ work, many of the freshman lawmakers looked more like the ists"-not the constituency-elected congressmen and con­ "pod people" from the Hollywood horror flick than the hu­ gresswomen-who are slated to m�e the crucialpolicy deci- man beings who had been voted into office just a few weeks sions. . earlier. Here are profiles of some of the leading Mont Pelerin The Heritage Foundation "experts" used techniques that Society front outfits that are behiM this latest assault upon had been perfected in the Pyongyang POW camps of the America. The dossiers were prepared by Leo F. Scanlon, Korean War, using repetitive chants, slogans, and attack Jeffrey Steinberg, ScottThom pso*, Charles Tuttle, and An­ group "therapy" to break down the resistance of any members thony Wikrent.

tute for Strategic Studies, London. Mont Pelerin Society. Philadelphia Society. Member, board of trusteesof the Man­ hattan Institute, 1977-, Rockford Institute, Lehrman Insti­ tute, Roe Foundation. Midge Deeter. Executive director, Committee for a Free World, 1980-90. Distinguished fetlow, Institute on Religion The Heri�e Foundation and Public Life, 1991-. Wife of Norman Podhoretz, who edits Commentary. Former meml'kr of Young People's So- I cialist League (YPSL). 214 Massachusetts Ave. NE, Washington, D.C. 20002 Robert H. Kieble. Member, Mont Pelerin Society, Phil­ Phone (202) 546-4400 adelphia Society. Thomas L. Rhodes. President, National Review. Key personnel The Hon. Frank Shakespeare. Held various posts Richard Mellon Scaife. Vice chairman of the board. with CBS, including executive vice president. Director,

Major funder of Heritage Foundation and other Conservative United States Information Agency p 1969-73. President RKO Revolution institutions through his role as chairman of the General, Inc., 1975-85. U.S. ambassador to the Holy See, Allegheny Foundation, Carthage Foundation, and Sara Mel­ 1987-89. Chairman, Heritage Fo�ndation, 1975-85; direc­ lon Scaife Foundation, as well as other trusts. Publisher and tor, 1989-. Chairman, Radio Fnie Europe/Radio Liberty, owner, Tribune-Review Publishing Co. , Inc., Greensburg, Inc., 1976-85. Director, Lynde �nd Harry Bradley Foun­ Pennsylvania. dation. Edwin J. Feulner. President of Heritage Foundation, The Hon. William E. Simon. U.S. Treasurysecretary , 1977 -. Chairman of Institute for European Defense and Stra­ 1974-77, when he enforced the P1ilase I-III wage-price con­ tegic Studies, London, 1979-. Member, International Insti- trols and decoupling of the dollar fromgold . Senior positions

52 Special Report EIR February 17, 1995 in various investment houses. President, John M. Olin Foun­ ranged from Robert Moss, who tbrmerly edited The Econo­ dation. Member, board of overseers, Hoover Institution on mist Foreign Reports, to Stephen Haseler, one of the first War, Revolution, and Peace. Member, executive committee, Heritage Fellows and a leader of the British Fabian Society, Bretton Woods Committee. Director, Kissinger Associates, to Stuart Butler, who was initially:a policy analyst at Heritage Inc. Founder, honorary chairman, Institute for Educational and is today vice president and director of Domestic Policy Affairs. Studies. Butler, too, had been a memberof the BritishFabian The Hon. Jay Van Andel. Co-founder, chairman, Am­ Society. way Corp. Board of directors chairman, Jamestown Founda­ Many of these new personnel :Were associated either with tion. Knighted Grand Officerof Orange-Nassau, the Nether­ the monetarist Mont Pelerin Soci�y or the InternationalInsti- lands . tute for Strategic Studies. i Joseph Coors. Former chief executive officer, Adolph Stuart Butler has stated that h¢ is in the United States "to Coors Brewing Co. inculcate America with British ideas." This is certainly the Dr. Stuart M. Butler. Vice president and director, Do­ case for the issues textbook prepned by Butler for the Heri­ mestic Policy Studies. Ph.D., St. Andrews University. tage Foundation brainwashing se�sions with new Republican Member, British Fabian Society. members of Congress, titled Tht New Members' Guide to Richard V. Allen. Distinguished fellow. Chairman, the Issues. Butler has previouslt drafted reports on "Free Asian Studies Advisory Council. President, Richard V. Al­ Enterprise Zones" and on "Dein�strializationof the United len Co. Former Assistant to the President for National Securi­ States." Butler has coupled his vi,iew of free enterprisezones ty Affairs, Reagan administration. Heritage claims that he with the leftist battlecry of "local" or "community control." initiated the North American Free Trade Agreement Butler has been increasingly an �dvocate of deindustrializa­ (NAFTA). tion since at least 1977, when he �aid in a speech: Dr. William Bennett. Distinguished fellow, Cultural "First, the Marxists are right:IIndustry has been rational­ Policy Studies. Senior editor, National Review. U.S. secre­ izing. Large-scale organization h�s won out over small-scale. tary of education, 1985-88. National Drug Control Policy There have been massive increl!,ses in productivity----even Director, 1989-90. in slow-developing, low-productivity Britain. If we'd been Peter Ferrara. Senior fellow. Cato Institute adjunct effi cient, it would all doubtless have been much worse" (em­ scholar. phasis added). Jack Kemp. Distinguished fellow. Founder and co-di­ In place of heavy industry,: Butler proposed the fol­ rector with William Bennett of Empower America. Former lowing: U.S. secretary of housing and urban development. Former "Look at the classifiedads in ,""ondon's Time Out. You'll member, U.S. House of Representatives. finda rich and even bizarre colledtion of enterprises, ranging Edwin Meese III. Ronald Reagan Fellow in Public Poli­ from ear piercing to unisex saun. to air freight, fromwhole cy. Visiting distinguished fellow, the Hoover Institution. food shops to a College of Acupuncture Clinic to Krishna­ U.S. attorney general, 1985-88. Counsellor to President murti Videotapes. They may sound funny, but it may sound Reagan, 1981-85. less funny in 1977 if they prove t� be the growth industries." Kenneth Wright Clarkson. Adjunct scholar. Member, This destruction ofa Hamiltobian dirigist policy to foster Mont Pelerin Society, Philadelphia Society. heavy industry and general scientific and technological prog­ Donald J. Devine. Adjunct scholar. Member, Mont Pel­ ress is the goal of nearly all H�ritage Foundation policies erin Society, Philadelphia Society. today. William Herbert Peterson. Adjunct scholar. Member, Mont Pelerin Society. Funding Dov Solomon Zakheim. Adjunct scholar. Member, In­ Foundations: Lynde and HrujryBradley , Carthage, Cas­ ternational Institute for Strategic Studies, Royal Institute for tle Rock, Shelby Cullom Davis, Qrover Hermann, M.J. Mur­ International Affairs (Chatham House). dock, Samuel Roberts Noble, Jqhn M. Olin, Henry Salva­ tori, Sarah Scaife, Scaife Family, Starr, Jay and Betty Van History Andel, Aequus Institute, JM, Hetrick, and General Electric. Founded in 1973 with the financial assistance of Joseph Corporate: Amway, Farish and Farish, Readers Digest, Coors, Heritage was transformed during a 1976-77 personnel SmithKline Beecham, Shell Oili Union Pacific, Coors, Eli shakeup into what one Heritage staff member called "an Lilly, GM, Archer Daniels Midllmd, Amoco, Ashland Oil, outpost for British intelligence in the United States." Alcoa. i Under Edwin J. Feulner, who was named president after the shakeup that shoved Coors aside, many British citizens Policies linked to the royal household and its intelligence apparatus Heritage publishes frequent policy papers spelling out a were placed in key policy positions at Heritage. They have detailed legislative agenda. The 'most recent document, is-

EIR February 17, 1995 Special Report 53 Club of the Isles European oligarchy I Lord William Rees-Mogg iI MONT PELERIN SOCIETY THE HERITAGE FOUND�TION Dr. Edwin J. Feulner, Jr. (Treasurer) Richard Mellon Scaife (vice ch"irman of Dr. Robert H. Krieble ____ the board) ...------1 Dr. Gordon Tullock ____----:-- ___ Dr. Edwin J. Feulner, Jr. (presi i ent) Dr. William H. Peterson --=:::--- Dr. Robert H. Krieble (trustee) � ...------1 Dr. James Clayborn LaForce Jr� t:-- Dr. Gordon Tullock (adjunct sc�olar) Daniel Oliver i ---- Dr. William H. Peterson (adjun¢t scholar) MartinAnderson � Dr. Julian L. Simon (adjunct sc�olar) Thomas Gale Moore ....------\ � : -...... Dr. James Clayborn LaForce, Jr. ----t-----1r---, ....------1 Henry G. Manne � Peter J. Ferrara (senior fellow) ! James M, Buchanan (past president) I ---- Daniel Oliver (senior fellow) 1 Milton Friedman Dr. StuartM. Butler (vice presi ent) � Edwin H. Crane II William E. Simon (trustee) i Charles Koch JeffreyA. Eisenach Paul Craig Roberts III Pedro Schwartz (adjunct scholar) Dr. Julian L. Simon (frequent guest) � James T. Bennett (adjunct SCh ar) Leland B. Yeager Kenneth Clarkson (adjunct sch lar) James T. Bennett � Donald Devine (adjunct schola� ) Kenneth Clarkson � '\\ Walter E. Williams (distinguish,d scholar) Donald Devine .� , Richard W. Rahn Richard Stroup I\' William E. Simon (frequent guest) CATO INSTITU : E Walter E. Williams (frequent guest) Edwin H. Crane (president John Baden (frequent guest) � Charles G. Koch (co-found r) Te rry L. Anderson (frequent guest) 1\Peter J. Ferrara (staff) -i'------f-l Edith Efron (frequent guest) � Paul Craig Roberts III (fellol.v)� If i / James M. Buchanan (seniqr fellow) W !/./ Dr. Julian L. Simon (adjunct scholar) -I-- Richard J. Dennis (directo REASON FOUNDATION r) � I'� Frank Bond (director) I Dr. Stuart M. Butler (advisory board) , r0 David H. Koch (director) : William E. Simon (advisory board) V.I � Alvin Rabushka (adjunct hOlar) Paul Craig RobertsIII (advisory board) / � John Baden (adjunct schol r) James M. Buchanan (advisory board) I'V W0/1 Richard A. Epstein (adjun� scholar) Henry G. Manne (advisory board) Stephen H. Hanke (adjUn SChOlar) Thomas Gale Moore (adviSOryboard) � V'lj / Sam Peltzman (adjunct sc olar) MartinAnderson (advisory board) � II W Pedro Schwartz (adjunct �holar) Daniel Oliver (advisory board) rIII Leland B. Yeager (adjunct holar) Dr. Julian L. Simon (advisoryboard) IVI Richard W. Rahn (adjunct ChOlar) Richard J. Dennis (trustee) �r; Richard Stroup (adjunct sc olar) Frank Bond (trustee) /, Walter E. Williams (adjunct� scholar) David H. Koch (trustee) -; Te rryL. Anderson (adjUn chOlar) Dr. James Clayborn laForce � David I. Meiselman (adjun scholar) Jerry L. Jordan (advisory board) ct1 Robert W. Poole, Jr. (president) ------I'--...... i Walter E. Williams (trustee) John Baden (advisoryboard) -...... ------+------1--' Richard A. Epstein (advisoryboard) � Stephen H. Hanke (advisoryboard) PROGRESS & FR� DOM Sam Peltzman (advisoryboard) FOUNDATIO" Edith Efron (advisory board) Jeffrey A. Eisenach (presicj3nt) William P. Roesing (vice prj3sident) (Seagrams) NATIONAL TAXPAYERS UNION rtI William C. Myers (senior f�lIow) ....�_ ...... --- .. James Dale Davidson (president) James M. Buchanan (director) -----", I NATIONAL TAXPAYERS UNION FOUNDATION AMERICAN LEGIS TIVE James Dale Davidson (chairman) EXCHANGE COU�CIL Walter E. Williams (advisory board) � Marie Chelli (Seagrams) 1-1 ---+--.. RobertW. Poole, Jr. (advisory board) Louis E. Curto (Shell Oil cd.) JerryL. Jordan (advisory board) Chuck Hardwick (Pfizer, Inc.) Allan H. Meltzer (advsory board) (Scaife Foundation) Tina A. Walls (Phillip Morri� Dr. Gordon Tullock (advisory board) Les Goldberg (American Express)' Dr. Anna J. Schwartz (advisory board) William C. Myers Alvin Rabushka (advisory board) i David I. Meiselman (advisoryboard) i sued for a training seminar for newly elected members of Richard A. Epstein. Advisoty. Cato Institute, adjunct Congress, The New Members' Guide to the Issues, advo­ scholar. Author, Cases and Mat�rials in Torts, 1990; Tak­ cates: balanced budget amendment, radical reduction of capi­ ings: Private Property and the P'pwer of Eminent Domain, tal gains tax, defense cutbacks based on an isolationist for­ 1985. Editor, Journal Legal Stu(lies, 1981-91. Journal of eign policy, and super-majority to pass any new tax Law and Economics 1991-. Editorial board, Yale Law increases-all key elements in the GOP's "Contract with Journal. America." Heritage openly peddles the Conservative Revo­ Stephen H. Hanke. Cato Institute, adjunct scholar. Her­ lution, as evidenced by a recent policy report titled Continu­ itage Foundation, adjunct scholar. Economics professor, ing the Conservative Revolution, authored by Stuart Butler. Johns Hopkins University. : Gilbert Harman. Co-director. Cognitive Sciences Lab 1986-; chair, Cognitive Studies Program 1992-. Philosophy professor, Princeton University, �963-. Author, Skepticism and Defenition of Knowledge, 19�. Jerry L. Jordan. Advisory I See National Taxpayers Union. J. Clayborn LaForce, Jr. Member, Mont Pelerin Soci­ ety, Economic History Association. Board of directors, Na­ tional Bureau for Economic Re�earch 1975-88, Rockwell International, Eli Lilly & Co., Sh�arson V .I.P. SeparateAc­ ReasonFoundation count. Board , Lynde and Harry aradley Foundation. Board of overseers, Hoover Institute, �979-. Member, National Council on Humanities at Nation," Endowment for the Hu­ 3415 S. Sepulveda Blvd. , Suite 400, Los Angeles, CA 90034 manities, 198 1-88. Adjunct scho4rr, HeritageFoundation . (310) 391-2245 Henry G. Manne. Member, Mont Pelerin Society. Dean, professor, chairman of L*, and Economics Center, Key personnel George Mason University 1986-. Director, Economic Insti­ Robert W. Poole, Jr. President, Trustee. Member, tutes for Federal Judges 1976-891. Author, Insider Trading Young Americans for Freedom. Former head, Radicals for and the Stock Market, 1966. EditCi)r(w ith James Dorn), Eco­ Capitalism. Advisory board, National Taxpayers Union nomic Liberties and the Judicia�, 1987. Adjunct scholar, Foundation. Leadership, Libertarian Party. Cato Institute. . ! Frank Bond. Trustee; see Cato Institute. Thomas Gale Moore. Memtkr, Mont Pelerin Society, Richard J. Dennis. Trustee; see Cato Institute. American Economics AssociatioIi, Southern EconomicsAs­ David H. Koch. Trustee; see Cato Institute. sociation, WesternEconomics AS$ociation. Adjunct scholar, Richard Fink. Trustee. Vice president, Koch Industries. Cato Institute 1982-. Member, C�uncil of Economic Advis­ Board, Claude R. Lambe Charitable Foundation. Board, ers, 1985-89. Charles G. Koch Charitable Foundation. Board , David H. Daniel Oliver. Member, MorltPelerin Society. Heritage Koch Charitable Foundation. Chairman, Humane Studies Foundation, senior fellow. Distijnguished fellow, Citizens Foundation. for a Sound Economy Foundatio�, 1991-93. General coun­ Walter E. Williams. Trustee. See National Taxpayers sel, U.S. Departmentof Educatiqn, 198 1-83, U.S. Agricul­ Union. ture Department 1983-86. Chairman, Federal Trade Com­ William R. Allen. Advisory. Vice president, Institute mission 1986-89. Counsel, Administrative Conference U.S. for Contemporary Studies 1986-90. President, International 1983-89. Institute of Economic Research 1974-86. Sam Peltzman. Cato Institut�, adjunct scholar. Director, Martin Anderson. Advisory member. Mont Pelerin So­ Center for Study of the Economy d the State 1992-. Senior ciety, American Economic Society. staff economist, Presidents Cou�ilF of Economic Advisers, John Baden. Advisory. Cato Institute, adjunct scholar. 1970-71. Editor, Journal of Law land Economics. Member, Foundation for Research on Economics and the Environ­ American E�onomics Association. ment. Frequent guest at Mont Pelerin Society meetings. Alvin Rabushka. Cato InstitPte adjunct scholar. Advi­ James M. Buchanan. Advisory member. See National sory board, National Taxpayers 1iJnion Foundation, Hoover Taxpayers Union. Institute. Stuart Butler. Advisory Board; see Heritage Foun­ Paul Craig Roberts III. Me�ber, Mont Pelerin Society, dation. drafted original Kemp-Roth Bill �976. Assistant secretaryof Edith Efron. Advisory. University of Rochester. Fre­ treasury for economic policy 1981-82. William E. Simon quent guest at Mont Pelerin Society meetings. professor of political economy G¢orgetown University Cen-

EIR February 17, 1995 Special· Report 55 TA BLE 1 Funding for the think-tanks of the Conservative Revolution � ! S! 'ii ::I ::I ::I 2 2! Iii) :t::� :t:: Ii e::I Jl 10 • 10 • S e ='0 j .8 .s .s "::I " U.. u ::I all e e 2>- :t:: � § e 2� {!.. e 0 e � ,2.!i! 10 =- .2 e -! [ ... rlli� & )1 ii . o · e '':is .s E0.2e Ole E! � S::I r if i � .c� ie 1:j� I -::Il:�ej l� I Ef j2!�co e• ii'O .. §0 : Source of funds I�W .. :,£ UW 8.fi :I ... :!.f in.sWF � z o.. Z:IOl e 0..8' 1...... II: e a� II S II H jj 'J'"'' �h!user-Busch $ J <. :t'\'\: 1 �Rg:�. 1 w. Bechtel Corp. ;lS��r:

. . . .•. ._,,, . J"Pl"l W<&�l""lli= " �zIB' Chevron gorp:, $ ",zIB';Wi;i :Y:Ltf' >'�l1!lfN l'"''_'' ' J','Ml¥]] E &Co. $ $ H�my $ . · . '� ',J. '·.· llA ... .Y j', Exxon�ore� $ ! "' l;Ai l: :Lti i� General . Electric Foundation (1 ) $ $ $,,,,,,,,, . ·won'». .' ,l&"'iL\'\L':':·, ',·PN ' Mobil Oil Corp. $ $ !'l

Pfizer, Inc. $ $ ',·"' ;C.A. . ; .... "'�"dii:b I s Petroleurn !!p, $ % l� � $ Shell Oil Co. $ $ $ J

Smith Kline Beecham $ $ $

Unocal Corp. $

Armstrong Foundation . $ $ $ bl.,"", .- 1 i•• JIIII •• . 1Rmp.I'Il _I)!I'n l_'.'S'...... tl' ... t1\ �{, "'�="'"' $ $ $ $ r·1fr,,,,,

Malcolm Forbes Foundation �.. Ee_1 ._&:1i Grover Hermann Foundation $ $ .. ! ',J ."""., '&; David Koch Foundation $ $ $ ... ! 1.¥A :.1"', !:hl�!!P"M ....." •.' .""...... �olJn,ciation $ .�. $ $ J $ J .. $, . ", JM Foundation $ $ $ $ $ $ .J l'4"1::&%N"'�tLd! Pioneer Institute $

Sarah SCaife Foundation 1 $ $ $ $ $ $ $ $

Richardson Foundation $ $ $. $ �]r:n!� . ,, . ,&. ]""!'","""l l" ,- ...... Van Andel Foundation $ $

Notes: (1) General Electric Capital Corp.; (2) Koch Industries Inc.

The dollar signs signify thata corporation orfo undation has provided funds to that think-tank or institution ometime during the 1991-93 period, according to corporate reportsand tax records which areavailable at the Foundation Center in Wa sh 'ngton, D. C.

56 SpecialReport EIR February 17. 1995 ter for Strategic and International Studies 1982-. Chainnan, services, Reason's main influence,has beenin "transfonning Institute of Political Economy 1985-. Distiguished fellow, government"through facilitating 'lpartnerships" with thepri­ Cato Institute. vate sector. Reason has worked qlosely with the mayors of Emanuel S. Savas. Director, Privatization Research Or­ Indianapolis and Philadelphia, an!! governors of Massachu­ ganization 1986-. Assistant secretary for policy research and setts and Texas, in effortsto privalize public services. development, HUD, 1981-83. Adviser on privatization for The privatization of infrastructure-roads, bridges, air­ governmentof Poland 1990-. Author, Privatizing the Public ports, water and waste-disposalsystems-has been a primary Sector, 1982; Moscow's City Government, 1985. Editorial focus. The mayor of Los Angeles advocates the Reason board, Urban Affa irs Quarterly, Privatization Report, Priva­ Foundation's policy on privatizingthe city's airport, as well tization Watch . as trash collection. Reason wants the air trafficcontrol system Julian Simon. Advisory. Heritage Foundation, adjunct privatized, and recently the head of the Federal Highway scholar. Cato Institute, adjunct scholar. Frequent guest at Administration used Reason policy to promote privatizing Mont Pelerin Society meetings. portions of the interstate highwaYisystem. William E. Simon. Advisory. See Heritage Foundation. The foundation is heavily involved in educational struc­ turing. Poole, as early as 1971, wrote position papers pro­ History moting vouchers as the most politically feasible way to The Reason Foundation was founded in 1978 in Califor­ "break the state's education monqpoly." The contracting out nia, devoting itself to advancing the ideals of a free society of services-including teachers�is prominent among their based on private property, individual liberty , and free mar­ plans. kets, all within the British Liberal framework. Its flagship Reason also promotes deregulation and legalization of publication, Reason magazine, had been started as a libertari­ drugs. It works closely with the prp-legalizationmovement 's an newsletter within collegiate networks in 1968. CEO Rob­ Drug Policy Foundation, and toqk to the airwaves recently ert Poole contributed to and later bought the publication with upon then-Surgeon General JOyf::elyn Elders's suggestion a group of investors in 1970. Poole began working in libertar­ that drug legalization be "studied;" ian politics earlier in college, through his involvement with Reason also promotes "free market" solutions to the"en­ William F. Buckley's Young Americans for Freedom and as vironmental crisis." head of Radicals for Capitalism. Poole worked up to leader­ ship ranks of the LibertarianParty , which had been abundant- 1y financedby the Koch family interests. Reason Foundation efforts stress opposition to all fonns The progress & of government "intervention" into the economy. Reason's Freer/om Foundation policy emphasis: privatization of infrastructure and promo­ � tion of drug legalization. Reason established its Privatization Center in 1992, tout­ Progress and Freedom ed as the nation's foremost privatization infonnation source Foundation for public officials throughout the country.

Funding 1250 H Street NW, Suite 550, W�shington, D.C. 20005 Foundations: Annstrong, Lynde and Harry Bradley, (202) 484-2312 Capital Fund (Milken), Malcolm Forbes, Grover Hennann, JM, Charles G. Koch, David H. Koch, Liberty, Lilly Endow­ Key personnel , ment, Philip M. McKenna, Milken Family, Pacific Research Rep. Newt Gingrich. The Republican congressman Institute, Pioneer Research Institute, Roe, Sarah Scaife, from Georgia, currentlySpeaker pf the House, was the intel­

Smith Richardson, Van Andel, Winchester, John M. Olin, lectual founder of the ProgressI and Freedom Foundation Claude R. Lambe. (P&FF), drawing from key personnel from his political ac­ Corporate: Amoco, Annheuser-Busch, ARCO, Bechtel, tion committee, GOPAC. (See profile, page 65). Bristol-Myers Squibb, Chevron, Coca-Cola, Exxon, Ford Alvin Tomer. Not fonnallyan officia l of the foundation, Motor, General Electric, Mobil, Morgan Stanley, Pfizer, Toffler did co-author its major p�licy document, "A Magna Philip Morris, Phillips Petroleum, Shell Oil, Skadden Arps Carta for the Knowledge Age." For more than 20 years, Slate Meagher & Flom, Unocal, Watson Land. Toffler, apop cult futurist, was a mentor and "guru"to Gin­ grich. He was involved in the M�ist movement and report­ Policy edly was an active member of iii Trotskyist organization in In an economy where stagnating tax revenues and 1950s. Writer for the New RepUblic, 1957. Later hired by strained budgets are not able to cope with increased needs for Fortune. Author of Future Shock" 1970, followed by Mega-

EIR February 17, 1995 Special Report 57 trends, The Third Wave, and War and Anti-War in the 21 st tially published by Ted Turner, : owner of the Cable News Century. Taught at the New School for Social Research. Network and a leading New Ageipropagandist. Popularizer of the fraudulent idea that civilization has moved More recently, P&FF publ�shed Cyberspace and the beyond the industrial age to a post-industrial "information American Dream: A Magna CQ1tta jo r the Knowledge Age, society," free of government regulation and large industrial aggressively peddling the repladement of modem industry corporations. with information-based society. the document was authored Dr. Jeffrey Eisenach. President. Director, the Heritage by Keyworth, the Tofflers, and George Gilder, a director of Foundation. Former staff researcher, American Enterprise the Mont Pelerin Society-founded Manhattan Policy Institute Institute and the Hudson Institute. Former senior economist, and a contributor to National Re"Uew. Federal Trade Commission and the Office of Management P&FF markets a college-level "American history" course and Budget. President of GOPAC before taking control of by Gingrich titled "Renewing American Civilization," which P&FF. peddles a twisted version of Am�rican history based on the George A. Keyworth. Chairman of the board. Former writings of British East India Company propagandist Adam science adviser to President Ronald Reagan and director of Smith, the Tofflers, and other futurists like Peter Drucker. the physics division of Los Alamos National Laboratory. P&FF has recently come under scrutiny due to large infusions Arianna Huffington. Pop cult feminist and New Age of funds from corporate sponsors anxious to get backing from author. Wife of former Californiacongressman and recently Speaker of the House Gingrich. In a recent Washington Post defeated GOP U.S. Senate candidate Michael Huffington. interview, foundation President Eisenach admitted that funds Frank J. Hanna III. Chief executive officer of HBR are pouring in and that the group plans to move into new Capital merchant banking fund. Former corporate lawyer. offices and greatly expand its operations. James C. Miller III. Counselor for Citizens for a Sound Economy and the Tax Foundation. Fellow, Center for the Funding Study of Public Choice, George Mason University. Senior AT&T, the Lynde & Harry : Bradley Foundation, Cox fellow, Hoover Institute. Former director, Office ofManage­ Cable Communications, Federal :Express, Forbes, Inc., GE ment and Budget (1985-88). Defeated by Oliver North in Foundation, Golden Rule Insurance Company, IBM Corp., 1994 for GOP nomination for U. S. Senate from Virginia. Claude R. Lambe Charitable Trust, Lockheed Aeronautical William P. Roesing. Vice president for public policy of Systems, NorthwesternNational Life, the Randolph Founda­ Joseph E. Seagram & Sons. tion, Joseph E. Seagram & Sonsj Inc., Siemens Corp., Sol­ William C. Myers. Corporate secretary and director of vay Pharmaceuticals, Southern¢ alifornia Edison, John W. operations for P&FF. Former vice president of American Uhlmann Foundation, Windwa� Foundation, BellSouth, Legislative Exchange Council. Earlier director of Free Con­ W.H. Brady Foundation, the

58 Special Report ! EIR February 17, 1995 of the leading representatives of the liquor interests (Sea­ grams, Hiram Walker, Distill� Spirits Council), tobacco industry (Philip Morris, R.J. ReY lOlds), and gambling inter­ ests (Promus, Argosy Gaming �!Company, Maximus, Del Webb Corp.), the major law fihns associated with those enterprises, the prison privati�ationlconvict labor lobby (Corrections Corporation of America, private bail bonding associations), insurance corporations, a segment of the ener­ AmericanLegisla tive gy industry (particularly the British-dominated firms such as Shell and ARCO), Walmart, Amway, a large number of Exchange Council Fortune 500 companies, and ani array of national industry lobbying organizations. A major role in ALEC funding is 910 17th St. NW, Fifth Floor, Washington, D.C. 20006 played by the Koch family. (202) 466-3800 Policies Key personnel ALEC is the prime source of an effort to destroy the Board of directors is comprised of elected state and local government created under the articles of the Constitution of officials. Current members: national chairman, Sen. Ray the United States, and replace itiwith elements drawn from Powers, Colorado; first vice chairman, Rep. Dale Van the Articles of Confederation and the Constitution of the Vyven, Ohio; second vice chairman, Sen. Joseph Manchin Confederate States. III, West Virginia; treasurer, Rep. Bonnie Sue Cooper, Mis­ In December 1994, at an orie�tationconference for new­ souri; secretary, Sen. Brad Gorham, Rhode Island; immedi­ ly elected state legislators in Was1tington, D.C., ALEC feted ate past chairman, Rep. Harold J. Brubaker, North Carolina; Walter Williams, a Hayekian ecopomics professor at George ex offi cio members, Allan E. Auger, Coors Brewing Co.; Mason University, who urged the audience to organize a Samuel A. Brunelli, executive director. new "secession." He noted th. this proposal elicits the Private Enterprise Board: chairman, Allan E. Auger, objection, that the Civil War wa$ a bloody failure to do just Coors Brewing Co.; first vice chairman, Tina A. Walls, that. "But that was the second attempt," he said. "Who Philip Morris, Inc.; second vice chairman, Alan Bronson knows what will happen the thiI!d time?" Smith, Nationwide Insurance Companies; secretary, Edward An address to the same conf¢ence by Rep. Harold Bru­ D. Failor, Iowans for Tax Relief; immediate past chairman, baker of North Carolina, the imI1lediate past national chair­ Ronald F. Scheberle, GTE Corporation. man of ALEC, is typical of the lies and Confederate propa­ Other board members: Marie Chelli, Joseph E. Seagram ganda which interweave Ame�an Legislative Exchange & Sons, Inc.; Louie Curto, Shell Oil Company; Les Gold­ Council literature. Brubaker waS sounding the theme that berg, American Express Co.; Roger L. Mozingo, R.J. Rey­ the only legitimate government ts that government created nolds Tobacco Company; Daniel J. Zaloudek, Koch Indus­ by state legislatures, and therefore, state legislatures should tries. see themselves as sovereign and superior to the federal gov­ ernment. History "Indeed," he said, "it is th� states that created every Founded in 1973 to recruit state and local elected officials government in the nation. And the states themselves are the and promising future candidates to radical free market out­ creation of the people. . . . CQnstitutionally, the United look. Functions as a grassroots arm of major Washington, States and its entire federal structUreare the creationof state D.C. think-tanks including Heritage Foundation, Cato Insti­ legislatures. " tute, Reason Foundation (all share personnel and funding For 20 years the American Le�islative Exchange Council sources, especially from the Koch family), National Taxpay­ and its allied National Taxpayer/> Union (NTU) have been ers Union, Gun Owners of America, U.S. English, and the spreading the call for a constitutional convention (an effort Christian Coalition. which came dangerously close toi success during the Reagan Sources familiar with ALEC activities report that in re­ presidency), for the explicit purpose of undermining the cent years, the group has de facto merged with Rev. Paul general welfare and equal justice clauses of theConstitution . Weyrich's Free Congress Committee and also enjoys very The latest permutation is the catIlpaign to "revive the Tenth close grassroots ties to the Christian Coalition and key per­ Amendment" which is all the rage among populists and their sonnel from the now-defunct Moral Majority. radio talk show hosts. Like the �"unfunded mandates" and "balanced budget" issues, this latest fad is the carefully Funding cultivated work of ALEC and !the collection of thieves, ALEC is funded primarily by the corporate contributions mobsters, and multinational c&1els which are funding the

ElK February 17, 1995 Special Report 59 populist movement. ALEC proposes that states create a Constitutional De­ fense Council, funded by the state treasury, and other NATIONAL UNION sources, to organize challenges to "the Authority granted �• �AYERS to , or assumed by, the federal government" and to conduct "any other activity that is deemed appropriate by the Coun­ cil." At the December conference in Washington, Larry Pratt of the ALEC-affiliatedGun Owners of America, openly NationalTaxpa yers Union, called for the creation of state militias which should be NTU Foundation prepared to do battle with the Army of the United States. Pratt is associated with Ambrose Evans-Pritchard, and his zombie Larry Nichols, who has made violent threats against 325 Pennsylvania Ave. SE, Washtngton, D.C. 20003 President Clinton. (202) 543-1300 I The pet peeve of American Legislative Exchange Coun­ cil Executive Director Sam Brunelli is the fact that public Key personnel employees, on average, still enjoy wages and benefits only James Dale Davidson. Chairman. Educated at Universi­ somewhat below the 1960s standard. Brunelli wishes to ty of Maryland, B.A., and PembrQke College, Oxford. Prin­ crush this in order to bring them into the Dickensian world cipal of Strategic Advisors Corp., !Baltimore, "an asset man­ of part-time employment, minimum wages, and "death care" agement group for wealthy indivi�als. " Chairman of Agora administered by the health maintenance organizations Publishing, Baltimore. Partner in $arwood Association (real (HMOs) that the corporations he speaks for have created estate partnership). Partner in Brai� Damage (real estate part­ for the rest of the working population. nership). Director, Pembroke Coll¢ge Foundation. Member, Brunelli and the American Legislative Exchange Council United Oxford-Cambridge Club. former chairman of Hul­ would accomplish this by "privatizing" various public ser­ bert Financial Digest. Author of 1jheEccentric Guide ro the vices. This effort has been promoted among state and local United States, 1977; The Squeezef 1980; The Plague o/ the governments for years, and has never caught fire , much Black Death: How to Survive the ¢oming Depression, 1993; to ALEC's chagrin. The American Legislative Exchange co-author with Lord William �s-Mogg, Blood in the Council points to the reason this is so: The savings promised Streets, 1987, and The Great Recf40ning, 1992. by the privateers rarely materialize, and when they do, they Gregory Barnhill. Director. �anaging director for in­ are based on cutting the benefits and health care packages ternational sales, Alex. Brown � Sons, oldest investment of the "privatized" workforce. bank in the United States, Baltimqre. ALEC produces model legislation urging state govern­ William Bonner. Director. Publisher of Agora, Inc., ments to revolt against the "unfunded mandates" of the Baltimore. i federal government. According to studies which underlie Mark Hulbert. Director. Pre$ident and publisher, Hul­ the legislation, there is no reliable, quantifiable, definition bert Financial Digest. Columnist forFor bes. of what "unfunded mandates" are or what they cost---except Curtin Winsor. Director. Director, Riggs Investment for Medicaid, which is the most visible entitlement program, Management Corp. and represents the lion's share of the "unfunded mandates" Jerry L. Jordan. Advisory �oard. President, Federal that are targeted for cuts. Reserve Bank of Cleveland. Advi$ory Board, Reason Foun­ The American Legislative Exchange Council is closely dation. Cato Institute adjunct scqolar. Member, American tied to the corporations and institutions that are attempting Bankers Association Economic A

60 Special Report �IR February 17, 1995 mos Club. Member, Philadelphia Society (vice-president, approached Davidson about a res�lution for a constitutional 1981-83). convention to adopt a balanced Qudget amendment, which Prof. David Meiselman. Advsory Board. Virginia Poly­ Clark had just shepherded througlj.the Maryland legislature. technic Institute. Special unit on derivatives. The NTU adopted the balanced !budget amendment as its Robert W. Poole, Jr. Advisory Board. President and number-one priority, and by 197� had obtained the support trustee, Reason Foundation. Member, Young Americans for of 30 state legislatures. The NTU blames "several far-right Freedom. Former head, Radicals for Capitalism. and extremist groups" for joining �ith the AFL-CIO in 1987 Dr. Alvin Rabushka. Advisory Board. Hoover In­ to persuade some state legislature� to rescind their call for a stitute. constitutional convention. Dr. Anna J. Schwartz. Advisory Board . National Bu­ reau for Economic Research. Co-author with Milton Fried­ Funding man, A MonetaryHistory of the United States. The combined financial statement of the NTU and the Prof. Gordon Tullock. Advisory Board. Professor of NTU Foundation for 1993 states that total funding amounted economics, George Mason University's Center for the Study to $5.1 million; of this, $2.7 million came from dues and of Public Choice. Member, Mont Pelerin Society. Author, contributions, and $2.2 million came from new member with James M. Buchanan, The Calculus of Consent: Logical dues. The balance came from other types of income, includ- Foundations of Constitutional Democracy, 1962. Tullock ing publication sales. I "has always been a central figure in the effort to revitalize A 1989 booklet celebrating tIte 20th anniversary of the old-style political anarchism as a new brand of libertar­ founding of the NTU extends "special thanks" to, among ianism." others: K. Tucker Anderson, Lquise Clark, Sol Erdman, Walter E. Williams. Advisory Board . Trustee, Reason Richard Headlee, Michael Keiser,i Charles Koch, E.A. Mor­ Foundation. Heritage Foundation distinguished scholar. ris , Joyce Pillsbury, Robert Wilson, and Templeton Funds Cato Institute adjunct scholar. John M. Olin distinguished Management. professor of economics. Board chairman, Center for Market Processes, George Mason University. Member, Virginia Policies Gov. George Allen's commission for states rights. Fill-in The NTU proclaims that its number-one goal since 1975 talk show host for Rush Limbaugh. has been a balanced budget amendptentto the U. S. Constitu­ Paul S. Hewitt. Vice president for research. Founder and tion. The group claims credit for Ihelping pass the Gramm­ former president, Citizens for Generational Equity. Adjunct Rudman-Hollings Deficit Reduction Act of 1982, and for fellow, Hudson Institute. helping initiate the drive to have �tate legislatures call for a Neil Howe. Chief economist. Former director of re­ U.S. constitutional convention tq enact a balanced budget search, Citizens for Generational Equity. Former managing amendment. editor, the American Sp ectator. Co-author with Peter G. Pe­ Before the collapse of the Soviet Union, the NTU repeat­ terson of On Borrowed Time: How the Growth of Entitlement edly called for reducing U. S. spen�ing in defense of its Euro­ Spending Threatens America Future, 1990. pean and Asian allies, and for cptting "generous military James M. Buchanan. Advisory member, Mont Pelerin pensions." Society, president 1984-86. Member, American Economics In the early 1990s, the NTU campaigned to eliminate Association. Executive committee, American Academy for the social safety net under Ameriq:a's elderly, including the Arts and Sciences. Nobel Prize in economics, 1986. Found­ release of a 1993 publication by st�ffer Paul Hewitt, claiming er, Center for Study of Public Choice, George Mason Univer­ that the agenda of the American Association of Retired Per­ sity, 1969. Editor, with R. Tollison, The Theory of Public sons would "bankrupt America." : Choice, 1972; Freedom in Constitutional Contract, 1978; The NTU claims to be agains� wasteful spending, but it Liberty Market and State, 1985; Economics and Ethics of appears that any government spe�ding on the development Constitutional Order, 1991. of new technologies is "wasteful" to the group. The NTU brags that it led in eliminating fupding for: the Supersonic History Transport; the Clinch River Bree4er Reactor; the Synthetic According to the group's literature, 22-year-old Univer­ Fuels Corp.;the Superconducting Super Collider, the Ad­ sity of Maryland graduate student James Dale Davidson vanced Metal Nuclear Reactor, ;and the Advanced Solid founded the National Taxpayers Union in 1969, after becom­ Rocket Motor. ing disenchanted with the Richard Nixon for President cam­ On Jan. 31, 1995, the Natiopal Taxpayers Union an­ paign, on which he had worked as a volunteer. Davidson nounced that it had formed a coalitiion with the Friendsof the claims he wanted to establish a group that would end wasteful Earth, to campaign against funding for: the National Ignition governmentspending . Facility at Lawrence Livermore N�tional Laboratory; the Gas In 1975, James Clark, then a Maryland state senator, Turbine-Modular Helium ReactoI1; the development of Ad-

EIR February 17, 1995 Special Report 61 vanced Light Water Reactors; the Yucca Mountain High­ mane Studies (1986-87). Level Nuclear WasteRepository; the Tokamak fusion reactor Doug Bandow. Senior fellow� 1984-. Senior policyana­ at Princeton University; the Atomic Vapor Laser Isotope lyst, Reagan for President Committee 1979-80; Office of Separator; the Advanced Neutron Source at Oak Ridge, Ten­ President Elect 1980-81. Special assistant to the President nessee; the Clean Coal program; $450 million in other coal for policy development at Whit� House, 1981-82. Editor, research and development programs; the Rural Electrifica­ Inquiry magazine, 1982-84. Editor, Protecting the Environ- tion Administration; the Bonneville Power Administration; ment, 1986. I various dams, water projects, and hydroelectric projects, not Stephen Moore. Director, fiscal policy studies. Co-au­ just in the United States, but around the world; various irriga­ thor, "Contract with America." �isiting fellow, Joint Eco­ tion projects, including the Coastal Flood Insurance reform; nomic Committee, 1994. Research coordinator, National the Natural Disaster Protection Fund Proposal; the Army Commission on Privatization, 19$7. Special consultant, Na­ Corps of Engineers Inland Waterways Operations and Man­ tional Economic Commission, 1988. Former Grover Her­ agement Budget; and the Corps of Engineers Civil Works mann fellow in budgetary affaif/l at Heritage Foundation. program. Co-author, with Heritage's Stuatt Butler, Privatization: A Strategyfo r Taming the Federal Bluiget;Slashing the Deficit: A Blueprint fo r a Balanced Budg�t by 1993; DoomsdayDe­ layed: America's Surprisingly 1Jright Natural Resource Future. HNST1TUTE Paul Craig Roberts. Distinguished fellow. Member, GUO Mont Pelerin Society. See Reaso� Foundation. Cato Institute James M. Buchanan. Disti�guished fellow. Member, Mont Pelerin Society. See Reaso� Foundation. P.J. O'Rourke. Mencken �esearch Fellow. Editorial 1000 Massachusetts Ave. N.W. Washington, D.C. 20001 board, American Spectator. Fo�er editor, National Lam­ (202) 842-0200 poon. Writer, current chief fo�ign affairs desk, Rolling Stone. I Key personnel John A. Baden. Adjunct sdholar. See Reason Foun- Edward H. Crane. President and CEO. Member, Mont dation. i Pelerin Society. Member, national advisory board, National Ronald A. Bailey. Adjunct sFholar. New River Media. Organization for the Reform of Marijuana Laws. Board of Contributingeditor, Reason mag4zine. directors, Institute for Research on the Economics of Taxa­ Richard Epstein. Adjunct sj::holar. See Reason Foun- tion and Americansto Limit Congressional Terms. Member, dation. I National Taxpayers Legal Fund (board of directors 1978- Steve H. Hanke. Adjunct scholar. See Reason Foun- 82). National chairman, Libertarian Party (1974-77). Best of dation. ! friends with Bell Curve author Charles Murray . Jerry L. Jordan. Adjunct s�holar. See Reason Foun­ Wnliam A. Niskanen. Chairman. Member, Public dation. Choice Society, Western Economic Association, American Don Lavoie. Adjunct scholat. Comparative economics Economic Association, Council of Economic Advisers professor at Center for Market Processes, George Mason (1981-85). Founder, National Tax Limitation Committee. University. . Staff economist, RAND Corp. (1957-62). Staff director, De­ Henry G. Manne. Adjunct s4holar. Member, Mont Pel­ partment of Defense (1962-64). Division director, Institute erin Society. See Reason Foundaiion. for Defense Analysis (1964-70). Assistant director, Officeof David I. Meiselman. Adjun�t scholar. Professor, Vir­ Management and Budget (1970-72). ginia Polytechnic Institute and �tate University. Advisory David Boaz. Executive vice president. Research direc­ board, National Taxpayers Union Foundation. tor, Clark for President Committee (1980). Executive direc­ Thomas Gale Moore. Adjunct scholar. Member, Mont tor, Council for a Competitive Economy (1978-80). Execu­ Pelerin Society. See Reason FOUl.dation. tive director, Young Americans Foundation (1975-76). Gerald P. O'Driscoll, Jr •.Federal Reserve Bank of Board of directors, Center for Independent Thought. Author, Dallas. i The Crisis in Drug Prohibition, 1990; Liberating Schools: Sam Peltzman. Adjunct scbolar. See Reason Foun­ Education in the Inner Cities, 1991. dation. James A. Dom. Vice president for academic affairs. Alvin Rabushka. Adjunct scholar. Hoover Institute. Editor, Cato Journal. Research fellow, Institute for Humane NTU Foundation advisory board.' Studies, George Mason University. Member, White House Pedro Schwartz. Adjunct Scholar. Iberagentes, S.A. Commission on Presidential Scholars (1984-90). Public Adjunct scholar, Heritage Found_tion. Choice Society. Hayek Fund grantee at the Institute for Hu- Julian L. Simon. Adjunct scl1olar.Ad junct scholar,Her-

62 Special Report !EIR February 17, 1995 i itage Foundation. See Reason Foundation. History Richard Stroup. Member, Mont Pelerin Society. Senior Cato was founded in Californiain 1977 as the think-tank associate, Political Economy Research Center 1980-. Profes­ of the Libertarian Party. LibertarianParty national chairman sor, Montana State University. Director, Interior Department Ed Crane joined up with Charle$ de Ganahl Koch, heir to Officeof Policy Analysis, 1982-84. Member, American Eco­ Koch Industries, a huge oil, gas, and petrochemical fortune nomics Association, WesternEconomics Association (exec­ and the second biggest privately held corporationin the Unit­ utive committee, 1985-88), Philadelphia Society, Public ed States, to found the Cato Institute, as a tax-exempt organi­ Choice Society. zation. Cato moved to W ashing�on in 1981, to become a Thomas Szasz. Adjunct scholar. State University of leading "conservative" voice promoting extreme austerity, New York, Health Science Center, Syracuse, 1956-. Con­ homosexual rights, drug legalizat�on, and sharply restricted tributing editor, Reason magazine. Staff,Institute of Psycho­ U. S. foreign policy. analysis, 1951-56. Author, Pain and Pleasure, 1957; Law, Libertyand Psychiatry, 1963; Our Right to Drugs: The Case Funding fo r a Free Market, 1992. Contributing editor, Libertarian Foundations: American Petroleum Institute, Armstrong, Review. Alfred R. Lindesmith award for writing, Drug Poli­ Lynde and Harry Bradley, Capit� Fund (Michael Milken), cy Foundation, 1991. Named Humanist of the Year, Ameri­ Earhart, Grover Hermann, Willia� and FloraHewlett, J.M. can Humanist Association, 1973. Mayer & Morris Kaplan, David �. Koch, Vernon K. Krie­ Norman B. Ture. Adjunct scholar. President, Institute ble, Claude R. Lambe (Koch), Roe, Sarah Scaife, Soros­ for Research on the Economics of Taxation, 1983-. Staff, Hungary. Treasury Department, 1951-55; Joint Economic Committee, Corporations: Ameritech, Amoco, ARCO, Chase Man­ 1955-61; National Bureau of Economic Research, 1961-68; hattan Bank, Chicago Mercantile Exchange, Citicorp/Citi- Planning Research Corp., 1968-71. Undersecretary for eco­ bank, Coca-Cola, Emerson EleCtric, , Enron, Exxon, Federal nomic affairs, Treasury Department, 1981-82. Heritage Express, Golden Rule Insurance, Koch Industries, Pfizer, Foundation, adjunct scholar. Philip Morris, Procter & Gamble. Prudential Securities, Jo­ Walter E. Williams. Adjunct scholar. Heritage Founda­ seph A. Seagram & Sons, Shell Oil, Sun Refining& Market­ tion, distinguished scholar. See Reason Foundation. ing, Tenneco Gas, Transco Gas, Upjohn. Leland B. Yeager. Member, Mont Pelerin Society, Roy­ al Economic Society, American Finance Association. De­ Policies partment chairman, University of Virginia. Radical shrinking of the fed ral government, shutting K. Tucker Anderson. Funder. Director, Cumberland down all Executive branch agen,9ies except State, Justice, Associates (key financialbacker to 1994 Newt Gingrich elec­ and a miniaturized Defense Dep�ment, with all other gov­ tion campaign). Funder, National Taxpayers Union (NTU). ernmentpowers relegated to the st�tes. Advocates druglegal­ Frank Bond. Funder. Founder, Holiday Health Spas. ization and "gay rights." Head, the Foundation at Timonium, Maryland. Trustee, Rea­ Cato's newly released Handb{)okfor Congress calls for son Foundation. six-year congressional term limits, takes the federal govern­ Richard Dennis. Funder, director. Trustee, Reason ment totally out of welfare and education. Foundation. President, Dennis Trading Group. President, Cato radical austerity program would shut down agricul­ Chicago Resource Center. Funder, board member, Drug Pol­ tural subsidies, food stamps, Heap Start programs, low-in­ icy Foundation. come housing assistance, elementary and secondary educa­ David H. Koch. Funder. Trustee, Reason Foundation. tion grants, wastewater treatment grants, and the space Executive vice-president, Koch Industries. Head, David H. station, along with 100 other agen4ies and programs. Federal Koch Charitable Foundation. Chairman, Citizens for a Sound lands, supposedly valued at $10()billion , would be sold. Economy Foundation. Fred C. Koch Charitable Foundation. Radical tax reform proposal woulp replace income tax with Vice presidential candidate, Libertarian Party, 1980. sales tax and eliminate capital gaifls taxes altogether. Major Charles G. Koch. Funder. President, Koch Industries. boondoggle for real estate and sto¢k speculators. Head, Charles G. Koch Charitable Foundation; Claude R. Social Security reforms top it� domestic agenda, with a Lambe Charitable Foundation; Humane Studies Foundation; proposed increase in the retirement age to 70. Workers under Fred C. Koch Charitable Foundation; KochPac, contributing 50 would be allowed to shift some of their Social Security $145 ,000 to 1994 election campaigns. Director, Institute for payroll taxes into individual investment accounts-i.e., pri­ Humane Studies, George Mason University. Funder, NTU. vatized funds. Cato would elimina�e all bilateral and multilat­ Cato has received $21 million of Koch money over the years. eral foreign aid. Following the lea� of the Mont PelerinSoci­ Howard S. Rich. Funder. President, U.S. Term Limits. ety, Cato even calls for shuttin� down the International Funder, NTU . Chairman, Laissez Faire Books . Monetary Fund and World Bank. ;t..ll U.S. militarytechnolo­ Michael Keiser. Funder. Funder, NTU . gy projects would be ended and the military budget shrunk Robert Wilson. Funder. Funder, NTU. to $204 billion by 2000.

EIR February 17, 1995 Special Report 63 The Mont Pelerin'e nforcers' inside theU. S. Congress One of the reasons that the Mont Pelerin apparatchiks at the lutionists-true "Hayekians"-in some of the most impor­ Heritage Foundation and related institutions were so anxious tant House and Senate leaderSht posts to ride herd over the to closet the congressional freshmen for several days of fragile GOP majority. "tough love" orientation/behavior modification, is that many On Capitol Hill today, as in azi Germany in the 1930s, of the new legislators are not necessarily prepared to tell their the Conservative Revolution is a� top-down affair. The fate of constituents to roll over and die, just because that's what's the l04th Congress will largely be determined by the extent to written in the Contract with America. which the Mont Pelerin apparatu I is able to enforce discipline. To break any tendencies toward genuine constituency Here are profiles ofthe some the hard-core stooges of the politics, the Conservative Revolution faction inside the GOP Mont Pelerin crowd who are the would-be enforcers. The hierarchy has managed to install a team of free-market revo- dossiers were prepared by Markl sonnenblick.

introduction to a book of Gramm's philosophical utterances. The book was published by t�e Fisher Institute, a Dallas offshoot of the Mont Pelerin S ciety, of which Gramm has Phil Gramm been an active member. In 1983, Gramm came out of the Sen. Phil Gramm (R-Tex.) closet as a Bush-league Republ�can; the Republicans helped rants and raves against gov­ him get into the Senate on their ticket. ernment spending in the Gramm "is not very well thI ught of in the Senate, even name of "the people who do among Republicans themselves," according to Marilyn the work, pay the taxes, and Quayle. He is considered greedy, transparently ambitious, pull the wagon." Yet, he re­ demagogic, deceitful, and ignbrant. The Dallas Morning ceives more money from News uses the term "Grammstanding," to mean taking credit vested interests (financiers, for something you voted agai st. Senate Majority Leader health industry, oil) than Robert Dole (R-Kan.) recently blocked Gramm from a seat any other Republican. For on the Finance Committee, whi9h would have helped Gramm services rendered, he has raise millions for his presidential war chest by writing tax amassed $5 million for his loopholes for privatizers. 1996 presidential campaign, to be announced on Feb. 24 . Gramm is consistently two-fI aced on the question of tax- I Gramm is the Senate's most ardent Conservative Revolu­ es. He backed a tax hike shortly before his reelection in 1990. tionary. "I want to make sure we've changed government "The reason, some cynics said, was that he did not want to forever," he says. "If I don't do it, it may not get done." be associated with any chaos that1 might be caused by shutting Gramm's solution to welfare , is to pay wages below the down the government due to th· sequestration provisions of I , poverty level. He told USA Today on Dec. 1, 1994: "Even if his own Gramm-Rudman law, the Almanac of American the best job was for $3 an hour, I'd be willing for them to Politics commented. take it. There's dignity in any job." When the savings and loans went broke, Banking Com­ Democrats sent Gramm to the House in 1978. He spied on mittee member Gramm won ditions in which the taxpay­ Democratic strategy sessions and later schemed with Budget ers paid for the bad loans onCO Il he S&L books, while their Director David Stockman to pass Reagan's disastrous 1981 billions in good assets were giv n away at bargain-basement I tax and spending cuts. That and the Gramm-Rudman "bal­ prices to big banks, including NCNB (now NationsBank). anced-budget" act, which he co-authored, ended up doubling NCNB contributed $18,000 to Gramm through 1992. The the national debt; the resulting added interest costs today moribund First City Bancorp ga e him $52,403 and got pro­ account for all of the annual federal deficit. It also bankrupted tection while it sheltered its goqd assets before it went bank­ the states by dumping responsibility on them for hundreds of rupt and left the Federal Deposit Insurance Corp. with its billions of dollars of unfunded mandates. worthless ones. In 1982, Vice President George Bush wrote an adulatory Gramm has been the largestI recipient of contributions

64 Special Report EIR February 17, 1995 from commercial banks and S&Ls, and the largest Republican Gingrich made his big leap to leadership for his attack on beneficiary of securities and investment brokers , lawyers, and House Speaker Jim Wright (D-Tex.). His December 1987 lobbyists. That doesn't include questionable gifts, such as a complaint to the ethics committee over a $12,000 payment Texan who owned three failed savings banks picking up half Wright had received for a book deal led to a fishing expedition the cost of completing Gramm's vacation house. Gramm had and Wright's resignation in June 1989. To the dismay of most enacted an amendment to keep such insolvent thrifts operating senior Republicans, Gingrich won a 1989 House Republican and had asked regulators for special treatment. election for their number two spot (minoritywhip) by an 87- Gramm's wife, Wendy Lee Gramm, is also an avid back­ 85 vote. His leadership was consolidated in late 1992 when er of free trade economics. She made possible the cancerous three of his fe llow Conservative Revolutionaries won lower­ growth of the financial derivatives bubble, with the help of level leadership posts. Gramm, D' Amato, and Bush, during her chairmanship of In 1989, Gingrich got away scot-free on a similar book the Commodity Futures Trading Commission in the Bush deal and other questionable income streams. In December administration. She not only fought off pressures after the 1994, he signed a contract with Rupert Murdoch for a $4.5 1987 stock market crash for more regulation of programmed million advance on a book; the fate of Australian Murdoch's trading and financial derivatives, but won derivatives brokers U.S. TV empire hangs on government decisions. Gingrich almost total deregulation and exemption from oversight. gave up the advance, but reportedly stands to gain that Where some oversight remained, she defended brokers' re­ amount and more in royalties. duction of margin requirements to 15%. In 1992, the senator Mr. "Balanced Budget" wrote 22 overdraftson the House mobilized farm-state senators to prevent her from being bank, while riding in a government-funded, chauffeured Lin­ stripped of authority over stock market futures. coln and voting for higher pay for congressmen-that almost cost him reelection in 1990. His "philosophical principles" never interfered when it came to "big government" spending big bucks in his district. The Speaker has shown by example how to transform Newt Gingrich government into private enterprise. Entrepreneurs make tax­ The $5.,000 replica of a deductible contributions to his nest of funding conduits, and flesh-eating Tyrannosaurus seem to get the opportunity to "participate" in government Rex's skull that the Smith­ decisions affecting their interests. sonian Institution is mold­ Newt's biggest sponsors are anxious to get government ing for House Speaker off their backs. EIR will soon profilethe rich gang of cultists, Newt Gingrich's (R-Ga.) vulture capitalists, "roach-motel" insurance companies, office, is suggestive of the Dope, Inc.-linked money-bags, and leveraged-buyout kings way Gingrich's mind works. who contribute to Gingrich's $15 million GOPAC slush fund. Gingrich married his high-school math teacher, who paid his way through college and grad school, only to file divorce papers on her while she was hospitalized RichardAnn ey with cancer. He explained, "Jackie isn't young young enough The "Contract with or pretty enough to be the wife of the President of the United America" was written by States." He balanced his budget by not paying contracted House Majority Leader alimony and child support, forcing his wife to beg and to Richard Armey's (R-Tex.) sue him. Yet the Christian Coalition pledged to Gingrich a staff-Larry Hunter, of the million dollars and a million prayers to help pass his balanced Joint Economic Commit­ budget amendment. tee, and Steve Moore, who A consistent element in his record is his chameleon-like was on loan from the Cato politics. A supposed "conservative," Gingrich drew much of Institute. Armey is the pur­ his support for his 1978 election victory from environmental­ est Adam Smith and ists. Who's Who lists his membership in the Georgia Conser­ Friedrich von Hayek ideo­ vancy and the Sierra Club. In 1990 , he helped pass the Clean logue among the privateers Air Act, which has burdened the economy with hundreds of in Congress. He worships at the altar of free trade. He is a billions of dollars in inflationary costs. Gingrich co-spon­ "Distinguished Fellow of the Fisher Institute," named for sored the Endangered Species Act, which has been used to Antony Fisher of the Mont Pelerin Society. Armey predicts shut down the productive economy, with confessed child­ that "by 1996 . . . we will then be able to advance to a true molester Rep. Gerry Studds (D-Mass.). Hayekian agenda."

EIR February 17, 1995 Special Report 65 Anney is so vulgar and aggressively obnoxious that even longer advocates phasing out S ial Security, as he did in House Speaker Newt Gingrich (R-G a.) keeps a safe distance. 1984, but calls for chiseling out of their cost-of- "If you like peace more than freedom, you lose," is his motto. living increases by fudging Anney makes calculated demonstrations of his "conserva­ He also wants to scrap what tive" credentials by grandstanding against pornography and During his 1994 fightfor ,",uu.uu" ,", homosexuals. On Jan. 27 , he caused a flap by speaking of on Tariffs and Trade free-trade Barney Frank (D-Mass.), his erstwhile partner in looting fanner protection programs, as "Barney fag ." On the Education and Labor Committee he made meet­ ings last five times longer than necessary . Hillary Clinton called him the "Dr. Kevorkian of health care refonn ." He replied with insults and later described President Clinton to Democrats as "your President." "The politics of confronta­ tion works and the politics of appeasement fails," Anney tence ...wit h ...'c reative asserted last year. "What are we going to do-bargain with rewards immorality and 'nc4::>mlpetelllce them?" visible hand of governmentand WUIII"'""" A disgruntled college professor, Anney preached the petence by the 'invisible foot.' "miracle of the market" cult of economist George Gilder until Anney's 1995 tax plan making all interest, divi- the Mont Pelerinites ran him for Congress in 1982. He lost dends, and capital gains tax and taxing all earned in- by 350 votes, but won in 1984 on Reagan's coattails. When comes over $35,000 for a fam of four with a flat rate of first elected, he slept on a cot in the House gym. When 17%. A Treasury study found this plan would increase evicted from there, he slept on a couch in his office. taxes for families earning $100,000 by an average At first, Anney gave boring renditions of Mont Pelerin of $1,700, while reducing for families earning over doctrine and introduced ideological amendments which went $200,000 by $56,000 each. The o'()�,p.rn,mpnt would lose $220 nowhere . Later, he stuck closer to populism. He learned to billion each year. Anney says government would lose embellish every sentence with a four-letter word: "pork." only $40 billion, but that disabl the government's ability ,,,. "Pork ...pork ...pork ," he squeals, while eating from to spend is precisely his An""" ,, the trough: Anney received $5,000 from Chase Manhattan while on the Banking Committee in 1991-92, part of over $65 ,000 he received from the financial community. Only about 5% of his contributions came from individuals not part of some defined lobby. Anney didn't let his anti-government ideology interfere Alfonse D' Amato (R­ with his support for funding projects near his district, such N . Y .) chairing the Senate as the Supercollider. Banking Committee is like He established himself as a "budget commando" through the fox guarding the hen­ his mid- 1980s crusade to close military bases, something house. For example, in desired by "thebig weapons contractors who contribute heavi­ 1985, many savings and ly to his campaigns. In 1988, Anney pushed through his loan associations were in proposal that all base-closing decisions were to be made by bad shape. D' Amato led an independent commission. This established the "fast track" the fight in the Securities precedent for neutralizing constituency pressures. He re­ subcommittee of the Bank­ flects, "As the success of the base-closing process demon­ ing Committee, which he strates, it's easier for members to cast a vote for procedural chaired, to allow desperate refonns that lead to tough cuts than to vote for the cuts S&L managers to jump into speculation on high-risk themselves. " ventures sold by junk bond led by Michael Milken's Drexel Burnham Lambert. At same time, he was ac­ Better they don't know cepting campaign contributions over $200,000from Drex­ That's why he is fighting to pass a balanced budget el and nearly a million more by Drexel from financier amendment, while hiding its effectsfrom the American peo­ contacts. When the S&Ls "V.lJ�I,J"<:'U, U.S. taxpayers were ple. He explained on Jan. 8: "The fact of the matter is, once forced to pick up a $500 billion members of Congress know exactly, chapter and verse, the After receiving below- loans for his cam- pain that the government must live with in order to get a paigns and his private business ventures from the Bank of balanced government, their knees will buckle." Anney New York, he put his name on brief supporting the bank's claims that "entitlement spending is partisan pork." He no lawsuit to prohibit restrictions interstate banking, through

66 Special Report EIR February 17, 1995 which the big New York banks hoped to feast on the carcasses ies in that he shares little of their ideological baggage. While of the S&Ls and local banks. performing theatrics on the Senate floor against "pork," he In 1981, D' Amato used his subcommittee chair to make boasts of bringing home the bacon to New York State. E.F. Hutton executive John Shad, who had just become a D' Amato plays to every degraded prejudice of "the D' Amato financial angel, chairman of the Securities and Ex­ middle class," while he does Wall Street's bidding. For ex­ change Commission. Shad continued financing D'Amato . In ample, he has a bill to "help small business" by allowing 1986, Ivan Boesky was caught using "insider information" small business loans to be packaged into securities and deriv­ from Drexel BurnhamLambert to cheat other investors. Pub­ atives. D' Amato is the main obstacle to any safeguards for the lic watchdog Shad helped Boesky save much of his illegally nation's banking system, pension funds, and other investors. obtained fortune, then resigned from the SEC, only to tum Willie Sutton once explained that he robbed banks "be­ up in March 1989 as chairman ofthe soon-to-be-indicted firm cause that's where the money is." The same idea oozes out of of Drexel BurnhamLambert ! D' Amato's November 1994 explanation for why the Federal By 1986, D'Amato's list of major contributors looked Aviation Administration should be given to the money-mar­ like a "Who's Who" of Wall Street. E.F. Hutton, Dillon ket "privateers": "I think we can privatize it. We should begin Reed, First Boston Corp. , L.F. Rothschild, Salomon Broth­ to get out of this business and let the private sector come in. ers , and Shearson Lehman were among his backers, and We should not be running multibillions of dollars in this kind David Rockefeller was a big fundraiser. of enterprise. We don't do a good job of it." His funders did D'Amato is also a point man for the London oligarchy's a good job crashing banks and stock markets in the 1980s. assault on the presidency. Ironically, the unproven allega­ Their "magic of the marketplace" should not be allowed to tions against Clinton in the so-called Whitewater affair look do the same with commercial aircraft. piddling next to D' Amato's sleaze. Count on D' Amato, how­ ever, to use innuendo, intimidation, and trial by histrionics. D'Amato 's mentor was the sadistic homosexual Roy Cohn, former iegal counsel to Sen. Joe McCarthy. Cohn, chief fixer for Jewish- and Italian-name mafias, installed his law partner John Kasich to run D'Amato's Senate office from the start. D'Amato's "In the 1980s, Republicans anti-crime program has been to crack down on prosecutors still believed in govern­ and judges who were trying to jail Gambino, Lucchese, and ment. Now they don't," ac­ other organized crime-family mobsters. cording to House Budget Former U.S. Attorney Rudolph Giuliani (now Republi­ Committee Chairman John can mayor of New York City) revealed in 1989 that D' Ama­ Kasich (R-Ohio), who was to , in a blatant violation of a Senate rule prohibiting members first elected to Congress in from interfering in ongoing litigation, repeatedly intervened 1982. Rep. John Linder (R­ to protect mafiosi. In 1985, D' Amato had begged him to Ga.) commented, "Newt reconsider prosecuting Gambino family godfather Paul on a personal level is very Castellano for murder. In another case in which D' Amato fond of John Kasich. He was pleading for the mafia,a $175,000payoff went to Cohn's likes the passion, the en­ law firm. Other of his cronies have included race-riot inciter thusiasm he brings." Kasich's role as ringmaster in Newt Al Sharpton, Howard Stem, and William "I smoke pot 12 Gingrich's budget-balancing circus is to "deconstruct" the miles offshore" Buckley. constitutional responsibilities of government, by turningthe budget process into theater of the absurd. 'I didn't know' On Jan. 10, Kasich brought into the Budget Committee A book, Senator Pothole, documents dozens of cases in chambers a 15-man jacobin mob dressed in T-shirts and which D' Amato received payoffs in exchange for political shooting nerf-balls while the halls rocked with the lyrics of influence. In one case, his lobbyist brother, Armand, was "We're Gonna Boogaloo Until We Puke," "I Feel Good," convicted of using D' Amato's office and signature to get a and "Woolly Bully." Those present played budget-balancing $100 million contract for his client, Unisys. D' Amato said "games" such as "Mind Dumpster," "Pass the Buck," and a he "didn't know ." In another, D'Amato forced the Pentagon dice game called "666." After similar sessions with students, to give Wedtech a $55 million contract after the firm had Teamsters, and businessmen, Kasich called a press confer­ illegally contributed $30,000 to his campaign. Again, ence to welcome 62 pieces of "new thinking" thus induced. D' Amato "didn't know." He repeatedly escaped expUlsion The Wall Street Journalcomme nted, "If Newt Gingrich and from the Senate or criminal indictment thanks to a combina­ other GOP leaders were really listening to America, they tion of good luck, plausible explanations, and backers who would rent out soldiers as nightclub bouncers, paint the put fear into the hearts of senators and judges. Washington Monument pink until Congress balanced the D'Amato differs from other Conservative Revolutionar- budget, and charter Air Force One for bachelor parties."

EIR February 17, 1995 Special Report 67 Other ideas are to allow corporations to advertise on stamps, Houston "silk-stocking" district hich had been designed for tum the White House into a bread-and-breakfast, and hold a Bush. Archer serviced Houston's oil and gas billionaires and "National Garage Sale" to sell off government land, build­ soon inherited Bush's seat on w! ys and Means. ings, and other assets. "Archer is the oil industry' unyielding voice on Ways Kasich now has the spotlight he was denied a few years and Means," Politics in AmericJ observes. He fought tooth ago, when he was not allowed on stage with the satanic and nail against windfall profits �axes on the oil majors. His Grateful Dead rock group during a performance. first big success came in 1978, when he got the House to Kasich won his wings as a "deficit hawk" in the mid- reduce taxable capital gains by the1 amount of inflation. That 1980s, when he worked with Democrats to get House Majori­ became law in 1981. ty Leader Richard Armey's (R-Tex.) Defense Base Closure When, in 1985-86, Presidept Reagan sought to lower bill approved by the Armed Services Committee. For the first personal income tax rates, Bush quiet1 ly, and Archer publicly, time, Congress handed over to an "independent commission" opposed him; the Bushmen did dot want big business to pick (which was advised by the Gorbachov Foundation) the power up the tab. to decide which facilities would be closed. Archer became the ranking Republican on Ways and In 1992, the privateers pushed aside a senior Republican Means in 1988. The next year, ush, now President, wanted who still believed that a governmentrole is necessary in order to cut capital gains taxes; Arc�nI er got a cut passed in the to protect the general welfare , to make Kasich the ranking House, but it was blocked in the Senate. In 1990, Bush member of the Budget Committee. In 1993, Kasich relent­ wanted to raise taxes on middle-income taxpayers; again, lessly attacked President Clinton's budget. He worked with Archer supported him. In 199 , Archer added several tax Tim Penny (D-Minn.) for vicious cuts in Medicare , veterans breaks for the oil industry, wh'le winning repeal of cata­ benefits, and cost-of-Iiving adjustments for federal employ­ strophic health insurance for th elderly. Almost half of the ees. Gingrich is now counting on personable John to rally contributions to his campaign und come from insurance enough Democratic votes to override Clinton vetoes. company executives. He received only $3,567 in 1991-92 In 1993, Kasich concocted an "alternative budget." He from small contributors. bragged, "This GOP budget achieved the same amount of Archer's current proposed taxI program includes: deficit reduction promised by President Clinton's budget. 1) profits from sales of stoc 's and other assets would be taxed at half the rate of a fami1Y' s earned income; But unlike the President's plan, the Republican budget l achieved all its savings through spending restraint." Time 2) Social Security payments would start at age 67 and magazine commented on Kasich' s proposal's "blue-smoke­ would no longer have a cost-of-riving adjustment to account and-mirrors problem" that Kasich gave tax breaks to the for inflation, while speculators Jould be able to deduct infla­ rich, while shunting the costs of building sewage plants and tion from their taxable profits; prisons onto the states, and the costs of medical prescriptions 3) "We need to tear the incoTeI tax out by its roots, throw onto Medicare recipients. And, after five years, he would it out by the side of the road and go on to s methi g better," l . ? � have bigger deficitsthan Clinton's budget. he declared on Jan. 3l. That somethmg IS a national con­ sumption-i.e., sales-tax. In Archer's utopia, what the rich now pay in taxes they woultll reinvest in the speculative bubble, while monstrous cuts wbuld be made in living stan­ Bill dards of the poor and middle clJss, and in the government's Archer ability to invest. Archer says a flat taxis not radical enough. As the new chairman of the While Archer, like Bush, 'fasts a right-to-life profile, tax-writing House Ways that does not stop him from sup�orting policies which would and Means Committee, shorten the lives of impoverishe

EIR February 17, 1995 Special Report 69 iiI •

Appendix

'Neo-Confucianism,' Leibniz� and the the fightagai nst Enlightenment by Michael Billington

The preceding Special Report has shown how the Conserva­ developing a metaphysics which! answered many questions tive Revolution grew out of the assault upon the Renaissance, left open by Confucius and Meriius, while countering the during the seventeenth-century Enlightenment in Europe. gnostic and empiricist metaphysics of the Taoists, and the Venetian and British operatives spawned opposition to the mysticism of the Chan (Zen) Bu4dhists. Wang Yang-ming, Renaissance and the Platonic tradition, as represented by, three centuries later, finding thef4ndamental ideas and meth­ especially, Johannes Kepler and Gottfried Leibniz. Thefol­ od of Chu Hsi incomprehensible, and after more than 20 lowing essay, part of a broader study on the use and misuse years as a Taoist, developed an amalgam of Taoist metaphys­ of developments in China by several leading figures in the ics and Confucian rites, pervertihg the Confucian tradition Enlightenment, demonstrates that the principled issues that and fostering an acceptance of an immoral syncretic mix of dominated the development of China in the last millennium, Confucianism, Taoism, and Ch� Buddhism. This, we will are identical to those which are central to the mortal conflict see, is the ideology embraced b� the Enlightenment figures between oligarchism and republicanism in the West. in Europe.

To understand how the practitioners of the Enlightenment Chu Hsi used China in their battle to destroy the influenceof Leibniz Chu Hsi took the fundamental concept of Confucianism, and the Platonic Christian tradition, it is necessary to investi­ jen (humanness, or humanity), �nd developed it in a way gate the foremost philosophical battle which defined the which is usefully compared to tb.e concept of agape in the course of history in China-the parallel in Chinese culture New Testament. He complained that the term had been used to the conflict in the West between those advocating the to represent love, which was noti wrong in itself, but which worldview of Plato on the one hand and the Aristotelians on missed the essence of the concep� intended by Confucius and the other. This fundamental conflict can be traced back in Mencius. In an essay called "Tr4atise on Jen," Chu argued Chinese antiquity to the same general era as that of Plato, thatjen is the "principle of love, the source of love, and that with Confucius and Mencius confronting the Taoists and the love can never exhaust jen." Reflecting the Christian notion Legalists. But in modem times the conflict is most often of agape as the Holy Spirit, which connects all things in the presented in the opposing ideas of Chu Hsi (1130-1200) and unity of God, Chu Hsi wrote, �'Jen cannot be interpreted Wang Yang-ming (1472-1 529). Chu and Wang are popularly purely from the point of view pf function, but one must described as the leaders of two different schools within the understand the principle that jen !has the ability to function. same general philosophical category known as "Neo-Confu­ One should not regard the original substance of jen as one cianism" in the West, just as Plato and Aristotle are often thing and its function as another. The meaning of jen must deceptively linked together as co-thinkers in something be found in one idea and one printiple. Only then can we talk called "Greek thought." Although Wang Y ang-ming and his on a high level about a principle!that penetrates everything. followers, even today, attempt to portray Chu and Wang's Otherwise it will be the so-calleq vague thusness and stupid thought as compatible, with minor differences on secondary Buddha nature." What distinguishes this higher notion of issues, they are in fact the antagonists of opposite, irreconcil­ love is that it is an active principle of change in the universe able conceptions of man and his or her role in the universe. rather than a Buddhist or Taoist feeling-state which submerg­ Chu Hsi revived the teachings of Confucius and Mencius es the individual in a universal "� is one" soup of undifferen­ from antiquity, whose ideas had been diluted and formalized, tiated substance. Specifically, Ohu says that "The mind of or outright discarded, over the centuries by the influences Heaven to produce things is jen. In man's endowment, he of Taoism, Buddhism, and the Legalist form of political receives this mind fromHeaven ,�and thus he can produce." despotism. Chu led a Confucian Renaissance, in part by Itis this jen, subsuming the other fundamental Confucian

70 Special Report EIR February 17, 1995 • virtues which are man's inborn gift from Heaven (righteous­ ness, propriety, and wisdom), which defines man as funda­ mentally good, as Mencius, especially, insisted. Chu Hsi, aware that this was often misinterpreted, wrote: "Love is not jen; the principle of love is jen . The mind is not jen, the character of the mind is jen ." This was particularly aimed at a contemporary of Chu Hsi (Lu Hsiang-shan, the forerunner of Wang Yang-ming's ideas), who argued that the mind itself wasjen, meaning that the mind alone was adequate to achieve sagehood, without any notion ofjen permeating all the things in the universe, or any need to investigate those things. Wang Yang-ming was to argue later that the mind was able to know good from evil naturally, without the need to study or investigate the laws of the unive�se, as if by intuition. This he called "innate knowledge (liang chih), which he consid­ ered to be his major contribution to human knowledge. ,Chu Hsi had identifiedthe problem with this concept long before Wang Yang-ming articulated it, arguing that it was the capac­ ity of the mind to love, to study, to investigate , and to create which was the gift of Heaven, not a set of formal criteria inherently in the mind for making judgments. Chu wrote in regard to his contemporary Lu and (implicitly) Wang: "Their defect lies in completely discarding study and devoting them­ selves solely to practice ....They even want people to be alert and intuit their original mind. This is their great defect." Although both Chu Hsi and Wang Yang-ming are identifiedas While Chu repudiated the atheistic view ofthe Buddhists "Neo-Confucians." Confucius (shown here) and Mencius were as distantfrom the latter as Plato wasfrom Aristotle . and Taoists that all things are made of a single substance, he believed that all things are created by the same Creator and reflect the universal principle of that Creator. This principle is Li, is conscious and intelligent, but, "it does not deliberate he called, simply, Principle (Li). The Universal Principle he as in the case of man." The question of man's free will is equated with God, the Lord-on-High, the Supreme Ultimate, located within the perfect will of God. while he defined the nature of every created thing as its Chu Hsi combines a negative and a positive theology in individual principle (Ii), which partakes of the pure goodness explaining the nature of God, the Universal Li. In equating and complete wholeness of Universal Principle. Man, alone, Li with the Supreme Ultimate and the Ultimate of Non-being , is created with the perfection of form which allows for the Chu argues that "it occupies no position, has no shape or conscious investigation of the Principle of things, for the appearance ....It is prior to physical things, and yet has participation with the mind of Heaven in the production and never ceased to be after these things came to be. It is outside creation of the universe. yin and yang and yet operates within them, it permeates all Li is the Principle which underlies the lawsofthe universe, form and is everywhere contained, and yet did not have in a concept of Natural Law which locates man's capacity to the beginning any sound, smell, shadow, or resonance that know and participate in the unfolding development of the myr­ could have been ascribed to it." (Note that yin and yang iad things and events in the universe. Showing the Platonic/ to the Taoists represented the fundamental duality of the Christian nature of Chu' s conception of the relationship be­ universe, whereas Chu Hsi reduced them to being nothing tween God (Universal Li) and created things (individual Ii' s), more than the existence of opposites inherent in all created he emphasized repeatedly that: "Li is One, but its manifesta­ things: positive/negative, light/dark, etc., all subsumed in tions are many." Leibniz, upon studying Chu Hsi's ideas, rec­ the unity of the real world defined byLi.) ognized in the concept of the Li a notion very close to his own Chu Hsi chose a passage from the Confucian classic concept of the "monad" as the primitive substance of all things work, "The Doctrine of the Mean," with his own specific in the universe, each .different, without parts , extension or interpretation, in order to identify the foundation of the peace divisibility . About the Universal Li, Leibniz wrote: "Can we and well-being of society as the act of the individual mind to not say that the Li of the Chinese is the sovereign substance "extend knowledge to the utmost, which lies in fully investi­ which we revere under the name of God?" Chu Hsi distin­ gating the Principle in things." By making this invisible Prin­ guished the Universal Li from the Ii of the created things, in­ ciple, Li, which has no shape or other sensory aspects, the cluding that of man, by the fact that the mind of Heaven, which subject of investigation in the development of human knowl-

EIR February 17, 1995 Special Report 71 edge, Chu Hsi laid the groundwork for a truly modem sci­ edge." Thus, what Chu Hsi ascribed only to God, namely, ence, in a manner similar to that of Nicolaus of Cusa in the the capacity to act intelligently without deliberation, Wang West in the fifteenthcentury . Rather than empiricist methods Yang-ming ascribes to all mankind. Like the innate moral of merely recording sensory data and deducing linear conse­ intuition of Descartes , and the categories of a priori judgment quences of such appearances of things , Chu Hsi set the course in Kant, Wang Yang-ming replates the intelligibility of the for the investigation of the lawful causal relations in the laws of the universe and of the creative process with pure developing universe, the investigation of Natural Law. instinct, or at best a form of conscience. Wang argues that if one's intentions are sincere, then the innate knowledge will Wang Yang-ming correctly guide one to the correct action. In fact, he specifi­ But the Mongul hordes swept across China in the decades cally replaces Chu Hsi' s scientific:investigation with sincere immediately following Chu Hsi's death in 1200,depopulat­ intentions: "The work of seeking sincerity of intention is the ing China and destroyingits Renaissance. The revival of the same as the investigation of things. " Confuciantradit ion, and of Chu Hsi' s teachings in particular, This essentially atheistic rejection of any universal princi­ under the Ming Dynasty that overthrew the collapsed Mongul ple in favor of a dependence on conscienceor intuition identi­ rule in 1388, contributedto the promise of a renewed Renais­ fiesthe total breakdown of the concept of man in the living sance in China. But by the l430s there was a reversal of the image of God. Each individual is reduced to his own physical policies of development and global exploration of the early being, like any beast, confrontingthe world on the basis of a Ming leaders, and the dynasty entered a sustained periodof Hobbesian "each against all," lacking any universal criterion decay and collapse. or measure for determining whetliteron e's conscience or "in­ In the late fifteenth century, Wang Yang-ming emerged nate knowledge," or any idea whatsoever, conforms with as the firstof a series of philosophers who became known as Natural Law. This is the subject of LaRouche's discovery in the School of Mind, as opposed to Chu Hsi's School of the science of physical economyi, and his notion of relative Principle. Historian Julia Ching, in her glowing biography potentialpopulati on-density. of Wang Yang-ming, accurately compares him and his fol­ It is lawful that, just as Descartes and Kant led to the lowers over the following century: to Descartes, Kant, overt fascism of Nietzsche and Heidegger, so Wang Yang­ Hegel, Nietzsche and, especially, Heidegger. ming's school generated the anarchy of the sixteenth and Wang dates his own development from a failed experi­ seventeenth centuries in China (such as that of Li Chih, a ment that he and a friend carried out in 1492. Wishing to Nietzsche-like figure of the late sixteenth century) which discover what Chu Hsi meant by his concept of Li, the young brought down the Ming Dynasty. men decided to investigate the principle of something to the It was precisely this question of the inadequacy of "fol­ utmost, as Chu had suggested. They chose some bamboo in lowing one's conscience" witho�t any concept of a universal the garden of Wang's father. Like the people in Plato's cave, principle to inform the conscience, that Pope John Paul II theysat and stared at the bamboo for days on end, failing to addressed in his Encyclical Veritatis Splendor in 1993. In understand that Chu Hsi had demonstrated that the physical this regard, it is worth quoting at length fromone chapter of appearance of the bamboo was merely a shadow of its true the pope's recent book Crossing the Threshold of Hope, for nature, its Li. They gave up without having discovered any­ two reasons: First, he looks at the Enlightenment in a way thing except that they were both getting sick. which demonstrates the close parallel to the ChuIW ang con­ Wang turnedto Taoism and Chan Buddhism, and, after flict in China; and, second, it shows in sharp contrast the many years, reflectingback on the experiment in his father's difference between the pope's views and those of Julia garden, he made the "discovery" that: ''There is no object, Ching, who is collaborating with the schismatic Hans Kung no event, no moral principle (Li), no righteousness and no in operations against China. Both Kung and Ching are nomi­ good that lies outside of the mind. To insist on seeking the nal Catholics, while fullyembracing the same ideologues of supreme good in every event and object is to separate what the Enlightenment here attacked by the pope. is one into two." It is from this sudden enlightenment that The pope in chapter 8 of his new book, looks at Descartes, Wang developed his notion of liang chih mentioned above, who, he writes, "marks the beginning of a new era in the which can be translated either as "innate knowledge" or history of European thought, who . . . inaugurated the great "Knowledge of the good." In place of Chu Hsi's emphasis anthropocentric shift in philosophy. 'I think, therefore I on extending knowledge through the investigation of the am,'. . . is the motto of modem tationalism. All the rational­ principle in things, Wang Yang-ming wrote: "Extension of ism of the last centuries-as much in its Anglo-Saxon expres­ knowledge is not what later scholars understood as enriching sion as in its continental expression in Kantianism, Hegelian­ and widening knowledge. It means simply extending my ism, and the German philosophy of the nineteenth and innate knowledge to the utmost. . . . The sense of right and twentieth centuries up to Husserl and Heidegger-can be wrong requires no deliberation to know and does not depend considered a continuation and an expansion of Cartesian po­ on leaming to function. That is why it is called innate knowl- sitions ....[Descartes] distanc¢d us from the philosophy of

72 Special Report EIR February 17, 1995 I existence, and also from the traditional approaches of St. Yao and Shun, the semi-mythical emperorsof thethird millen- Thomas which led to God who is autonomous existence .. .. nium B.C., when he claimed (COllltrary to the historical re­ By making subjective consciousness absolute, Descartes cords as written by Confucius), "there was no pursuit after moved instead toward pure consciousness of the Absolute, the knowledge of seeing and heating to confuse them, no which is pure thought. Such an absolute is not autonomous memorization and recitation to hmder them, no writing of existence, but rather autonomous thought. Only that which flowerycomposition to indulge in, and no chasing after suc­ corresponds to Human thought makes sense. The objective cess and profit." This is the model of Oriental Despotism so truth ofthis thought is not as important as the fact that some­ desired by the Venetian designers of the Enlightenment. thing exists in human consciousness. " This passage could be Although the characterizationlof China as the modelof transposed virtually word for word, substituting Wang Yang­ "Enlightened Despotism" is a fal* construct, based on the ming and his followers for Descartes, Kant, Hegel, and Hei­ worst tendencies in Chinese historyl and society, it is neverthe­ degger, and substituting Chu Hsi for St. Thomas Aquinas. less the case that Chu Hsi and his school, who created the Wang's liang chih. like Descartes' "I think, therefore I am," Confucian Renaissance during the Sung Dynasty, never pro­ replaces the Absolute, the Supreme Ultimate, the Universal posed or discussed any notion of the concept of the modem Li. of Chu Hsi, with the totally subjective Absolute of the nation-state. Nicolaus of Cusa's building on the concept of mind. Wang Yang-ming even writes: "The mind is Li. Is Natural Law developed by St. Augustine and St. Thomas, there any affair in the world which is outside the mind? Is posed the necessity of establishingi governmentson the basis there any virtue which is outside the mind?" of the consent of a free and informed citizenry, drawing on Pope John Paul II continues that Descartes created the the divine spark of reason in Man to derive laws, and for the climate in which, within 150 years, "all that was fundamen­ peopleto participate in the process of empowering or remov­ tally Christian in the tradition of European thought had al­ ing governmentsaccording to their adherence to Natural Law. ready been pushed aside. This was the time of the Enlighten­ As LaRouche said recently in regara to the Augustinian notion ment in France, when pure rationalism held sway. The of natural law before the time of C\Jsa, it remained "contem­ French Revolution during the Reign of Terror , knocked down plati ve," never becoming adopted asthe basis of political soci­ the altars dedicated to Christ, tossed crucifixes into the ety. This could also be applied to Chu Hsi and the leaders of streets, introduced the cult of the goddess of Reason." the Confucian Renaissance. Chu ffi;iadvocated the extension The Holy Father should have added that these practitioners of education to all children, and e�n wrote children's books of the Enlightenment also beheaded Lavoisier, declaring that toward that purpose, while he alsolsponsored booksand edu­ the Revolution had no need for science. The "Reason" wor­ cational programs on agricultural t¢chnology for farmers; but shipped by the Enlightenment was not the Divine Spark he never proposed the kind of nati�n-state which was neces­ which guided Cusa, Kepler, and Leibniz in the creation of saryfor these educational initiati'les to succeed against the modem science, but the empiricist, subjective logic of Aris­ policiesof those who believed it setvedtheir purposes to keep totle which can be used to justify anything at all, no matter the masses in a state of ignorance.! how evil or destructive. The Mongul invasion crushed any potential for further Wang Yang-ming also attacked the "scholars of these later development. Subsequently, despite the initial promiseof the days," as he referred to Chu Hsi and his supporters, on the Ming Dynasty, as the dynasty declined, Wang Yang-ming issue of Taoism and Chan Buddhism. While insisting in his and his followers destroyed the concept of Natural Law alto­ later life that he was not only a Confucian but the true philo­ gether in a manner similar to wha. William Wertz describes sophical descendant of Confucius and Mencius, he nonethe­ in the works of Grotius and Pufend(>rf,who "divorced natural less wrote: "The practices of the two teachings [Chan Bud­ law from moral theology" (see "Man Measures His Intellect dhism and Taoism] can all be my practices ....But certain Through the Power of His Works,'1 Fidelio. Winter 1995). In scholars of these later ages have not understood the complete­ the Chinese case, Natural Law wasreplaced (at best) by the ness of the teachings of the Sages. For this reason, they have Rites, by custom, which, as impottant as such questions are distinguished themselves from the two teachings as though for a society, must be recognized as derived from Natural there exist two views of truth." This has, through the ages, Law, not as Natural Law itself. GiJvingthe Rites the force of served those who advocate the Taoist gnostic camp but who, Natural Law creates the potential for those Rites to become for political reasons, need to pay lip service to Confucianism. the means of distortion and oppresSion, rather than the means This is most evident in reviewing the current "New Confu­ for celebrating and learning about �e underlying truthsat the cianism" movement. In this regard it is not surprising that source of the Rites. Set free fromit� moorings in the Absolute, Wang Yang -ming believed in what is now called "appropriate in Universal Truth, custom is rendered subject to the vagaries technology" for the peasant masses, whose lives, he insisted, of individual intention. As with I'!Tietzsche and as Li Chih, should remain the same generation after generation, unfet­ such "freedom" fromthe Absolute opensthe door to arbitrari­ tered by knowledge of the laws of the physical universe or by ly changing or outright discarding the Rites, the customs, and or economic development. Wang praised the golden age of creating anarchy and fascism.

EIR February 17, 1995 Special Report 73 �TIillInternationai

Wehrkunde marks deep split between u.s. and British

by Rainer Apel

The 32nd Munich Conference on Security, the annual gather­ At Wehrkunde conferences o� the past, most Americans ing of senior westerndefense experts and politicians popular­ sided with British-led attacks on tJte Germans as an allegedly ly known as the "Wehrkunde Conference," on Feb. 3-5, "unreliable" NATO alliance partner. This time, however, featured the most direct clashes ever between Americans nearly all Americans who had ¢ome to Munich used dis­ and British. Taking differences over Bosnia as the bone of cussion periods between the mainispeeches to take the British contention, the clashes illustrated in a drastic way, on the to task for their disastrous role ih the Balkans. The perfor­ one hand, how deep the split between the Clinton administra­ mance of the British in Bosnia wits taken as a point of refer­ tion and Britain's ruling elites has grown since the President ence, but it was evident that a much deeper conflict over a proclaimed the end of the special Anglo-American relation­ number of strategic interests between the United States and ship, during his European tour in July 1994. On the other Britain was being addressed-illustrated by the fact that hand, the new type of close bilateral cooperation between Democrats and Republicans alike joined the attacks on Lon­ Americans and Germans that has been established between don's policies. PresidentClinton and Chancellor Helmut Kohl and which is forming the core of the envisioned restructured transatlantic Serbia should become a t$"get alliance, became visible in the way the agenda of the event U.S. Sen. William Cohen (l�.-Me.) began the attacks, was arranged. calling for an abrupt change of!the western alliance's ap­ Following the keynote address by German Defense Min­ proach toward Bosnia, and for Ian end to the "dual key" ister Volker Riihe, the firstday of the conference featured a situation which (upon an Anglo-Ii'rench initiative at the U.N. report by Jiirgen Schrempp, chairman of the German aero­ Security Council mainly) kept NjATO blue helmets hostage space industrial group DASA, about the role of the western to the indifference or even pro-Slerbian views of the United industries in future efforts to build peace-between East and Nations. Cohen explicitly welcOlbedthe replacement of Brit­ West, as well as North and South. The third maiq speaker ish Gen. Sir Michael Rose as cqmmander of the Unprofor was French Foreign Minister Alain Juppe; this signaled that blue helmet force in Bosnia as sQrnethingthat has been long through its alliance with Germany in European affairs, overdue and which should be fdllowed by the "immediate France is being coopted into the U.S.-German design. The resignation" of U.N. special Balbms envoy Yakushi Akashi. fourth main speaker was Sergei Yushenkov, chairman of Cohen said that in order to enfor�e the NATO-led Unprofor the Russian State Duma defense policy commission and an mandate in the Balkans, retaliation against future Serbian outspoken critic of Yeltsin' s Chechnyan intervention­ violations of cease-fire agreemdnts and continued aggres­ which indicates that the more reasonable currents in Russian sions against the Bosnian enclaives as well as against the politics are oriented toward this new framework of interna­ blue helmet forces, should be carried out also against select tional security policy. The concluding second day of the military-relevant targets in Serbia itself, if it seemed appro­ conference was shaped by an address by U.S. Defense Secre­ priate. tary William J. Perry. Among the main speakers, none was This met angry protest from the British militaryand dip­ from the United Kingdom. lomats present. Defense Secretary Malcolm Rifkind shot

74 International EIR February 17, 1995 back by telling the United States that their criticism would awareness of London's games with Paris. The "entente" is ! be more acceptable to London had the Americans stationed not an accomplished fact, but it is being undermined by ground forces in Bosnia, as did Britain. U. S. Defense Secre­ continuing British-French frictions. tary William Perry insisted in his speech, however, that the With Clinton's backing, the Germangovernment of Kohl paralysis of NATO by Anglo-French Unprofor tactics at Bi­ is assigned the role of a mediator among Americans, British, hac had taught "negative lessons from Bosnia." Countering and French, for the new type of transatlantic partnership the British propaganda about the "positive" results of their being formed. A government leakto the press after the Wehr­ blue helmet mission in Bosnia, Perry said that "here, Bihac kunde meeting-the day before Chancellor Kohl's departure stands as a powerful cautionary tale. The U.N. was unable for Washington on Feb. 8 for tall�s with Clinton-revealed to stop the fighting in Bihac-indeed, for many weeks it that on Bosnia, the Germans are aware of the "nuances" was unable even to resupply the beleaguered Bangladeshi between their own and the British views, but are firmly on Unprofor battalion in the region. And NATO was not asked the American side. to act because the U.N. feared that air strikes would invite Germany is also becoming a mediator concerningRu ssia. retaliation against its soldiers on the ground." Instead of the discredited Russian Federation Defense Minis­ "While the dual key arrangement with the U.N. was cre­ ter Pavel Grachov, who was disinVited fromWehrkunde by ated for understandable political reasons," Perry said, "a German Defense Minister Volker Riihe, one of Grachov's heavy price in NATO's credibility has been paid for violating most outspoken critics on the Checbnya war,Sergei Yushen­ the basic military tenet of unifiedcommand and control." kov, the chairman of the State Duma committee commission The American charges culminated in a statement by for­ on defense policy, was invited to a!idressthe Munich gather­ mer Assistant Defense Secretary Richard Perle, who said that ing. This invitation, Yushenkov said in his Feb. 4 speech, the Americans were fed up with being lectured by the British was a crucial sign of westernsupp cllrtto Russia's opposition. and French about what they should think about the Balkans. On Feb. 8, Sergei Kovalyov, anotlterleading Russian oppo­ He said that, with an intensity not seen since the big transat­ sition figure, was received in Bon ..by Kohl's Minister of the lantic controversies over the "Euro-missiles" in the early Chancellery, Friedrich Bohl, and Foreign Minister Klaus 1980s, the British and French kept knocking on doors in Kinkel. Washington in an effortto tell the Americans about "princi­ The German government has informed President Boris ples" that they themselves were not upholding in the Balkans. Yeltsin and the Russian government that, unlike the British This had to stop, Perle said, because the United States was and other westerngovernments , th¢ Germans willnot support committed to liftingthe arms embargo against the Bosnians, economic sanctions against MOSCOiW, but that it insists, along to striking against the Serbs, and to protecting the planned with the Clinton administration, tltat economic cooperation pullout of the European blue helmets from Bosnia and Croa­ as well as the development of we$tern relations with Russia tia. Urging a drastic shift of NATO's policy toward Bosnia, proceed in a general environment of respect for human rights. Perle called on alliance members to follow the example of Yushenkov in his speech at the Wehrkunde conference said Turkey, which had already committed itself to training Bos­ the same, and he explicitly thankied the Germans for their nian soldiers to use western military technologies which support to the democratic forces ofihis country. He also listed would be given to them after the arms embargo is lifted. the United States and Germany as the states in the West with which Russia has developed the closest relations and British outside the mainstream confidence. This chilly wind, shocking as it certainly was for the In his Wehrkunde speech Fc.'Ib. 4, Jiirgen Schrempp, British, didn't come as a total surprise. Indeed, Rifkind's chairman of the German Aerospac� Group, called for a joint speech pledged Britain's commitment to cooperate with the "Conflict Prevention Initiative" (CPI) of leading industrial Americans and Germans in their joint initiative for trans­ firms of the West to build relations with the East through forming NATO, after the end of the Cold War and German joint great projects of infrastructure development. He said reunification, into a new, broader "transatlantic partnership" high-speed train lines and energy cooperation projects are that included economic aspects as well. In sum, London crucial for modernizing the eastern economies because only wants to jump on the bandwagon that is presently driven by in this way could one defuse sociaitpolitical conflicts, which, the Clinton-Kohl alliance. he said, have proven to be the prime source of most military This does not signal the end of British sabotage, nor of conflicts. British participants at the Wehrkunde event con­ recent efforts by London to flirt the French into a kind of tested this notion, pointing to the �alkans as allegedly prov­ new "Entente Cordiale" outside of NATO. The very warm ing that ethnic tensions were behipd this "civil war." Since reception that France's Foreign Minister Alain Juppe got Clinton signaled to Kohl in Berlil1 last July that he has de­ from the Germans at the Wehrkunde event-this at a crucial signed a special, leading role and 'responsibility of the Ger­ moment when he became very angry at mocking British re­ mans for the economic developmept in the former East bloc, marks about European policies and the format of present-day including Russia, the British view .s, once again, outside the politicians of France--demonstrated, however, a German mainstream of the new transatlantilcrelation s.

EIR February 17. 1995 International 75 handling the conflict. It is being loudly voiced by Britain's diplomatic assets and pro-British media on the continent. One of these, Argentina's Forei$n Minister Guido Di Tella, British to sink sat out the 1982 Malvinas War b�tween his country and Great try Britain, in London! Not accidentally, many of these parrot Peru-Ecuador peace the demand that Ibero-Americals armed forces be disman­ tled, and accuse Peruvian President Fujimori of having em­ by Cynthia R. Rush barked on a "militaristic adventure" to further his own elec­ toral aims. The United States has made Iclear that it intends to keep At the last minute, on Feb. 5, when Peru and Ecuador were working through the Rio ProtocOl. State Department spokes­ close to signing the cease-fire accord worked out in six days man Christine Shelly underscored this on Feb. 7, as did of negotiations in Brasilia, Ecuador's deputy foreign minister Assistant Secretary of State for Inter-American Affairs Alex­ suddenly announced that his governmentneeded "more time" ander Watson, who represents tl)e United States in the guar­ to study it. This brought to a stunning end, six days of talks antor group. Watson noted that I while the situation may be in the Brazilian capital, from Jan. 30 to Feb. 5, where repre­ difficultfor the Ecuadorans, the!United States was awaiting sentatives of the two governments were meeting with diplo­ their response to the cease-fire proposal put forward by the mats from the four guarantor nations belonging to the Rio de Peruvian and Ecuadorean depuo/ foreign ministers and the Janeiro Protocol group-Argentina, Chile, Brazil. and the four guarantor representatives at �rasilia. "I'm confident that United States-in an attempt to halt the armed conflictwhich with some imagination they can'find a way" to accept it, he has raged between Ecuador and Peru since Jan. 26. said. The ongoing conflict is � "tragedy" for the region, Both countries' armed forces have been clashing in the Watson added. i border region over claims stemming from the war they fought Thus far, Ecuador has actejd the saboteur's part. The in 1942 and the treaty signed at the time by Peru , Ecuador, Quito regime contends (as do thF British) that the OAS and and the four guarantors. Ecuador alleges that Peru "stole" the U.N. should mediate the conJlict. President Duran called one-half of its territory in 1942 and rejects the Rio Protocol's up Secretary of State Warren Ct:\ristopheron Feb. 6 to com­ demarcation of the border, which it claims it originally ap­ plain that the United States was �aking Peru's side, allegedly proved "under duress. " because Watson had previously served as the U. S. ambassa­ After talks broke down, the Rio Protocol guarantors an­ dor in Lima. Heinz Moeller, the president of Ecuador's Con­ nounced they would keep up their efforts to solve the conflict gress, who came to Washingtoq to meet with State Depart­ and expressed optimism that an accord could be reached. ment and other Clinton administration officials, fretted to the Since then, intense fighting has continued in the mountain­ British press service Reuters, "The guarantors totally favor ous, rugged border region. Peruvian President Alberto Fuji­ Peru ...[they] back what is a� old, irrational, unjust and mori pledges that Peru will fully abide by the Rio Protocol, absurd Peruvian aspiration. . .!. I am frustrated with the and that his government's goal is not to move into Ecuadore­ attitude of the State Departme� representative [Watson] ." an territory, but to retake positions seized by Ecuadorean Ecuador has the ability to hold its military positions "for a troops on Peruvian soil. As of Feb. 7, Fujimori announced very long time," he threatened. I that his troops were close to recovering Tiwinza, the last Reuters has also run reports pf Ecuador-U.S. confronta­ Ecuadorean post inside Peru. tion, citing an anonymous Ecua�orean official charging that "we are under threats of internationalisolation from the Unit­ Need for 'imagination' ed States, unless we sign the Rio Protocol proposal" for a The import of the diplomatic attempts to settle the armed cease-fire. Later the Duran governmentissu ed a denial of the conflictgoes well beyond the two Andean neighbors. Diplo­ report. macy has become a form of surrogate warfare in which the As soon as the Brasilia tallks were suspended, Duran Clinton administration is countering Britain's strategic de­ undertook his own tour of three of the guarantor nations. He signs for the region, much as it is doing in the war in Bosnia. announced a counter-proposal for a cease-fire which reduced As a signator of a valid internationaltreaty , the United States the five mile-wide demilitarized zone in the proposal to a is also bound to abide by the Rio Protocol's terms, or else half-mile zone. Reportedly, Eduador also wanted to keep jeopardize its standing as a superpower whose word can be its military posts inside the diSputed area. Peru's Foreign trusted. Minister Efrain Goldenberg reje�ted the plan as "completely The contrary, British view is that such supranational bod­ impertinent." The cease-fire wOJikedout in Brasilia called for ies as the Organization of American States (OAS) or the a total demilitarization of the �heater of conflict, and for United Nations Security Council (which did a great job pro­ setting up an observer mission iby the guarantor nations to longing the war in the Balkans) are the proper forums for assist in enforcing the cease-fire:terms.

76 International EIR February 17, 1995 "pushed the troubled state of Chi"as back to the brink of Mexico war.. ..Throwing caution to the 'find ...Zedillo 's move appeared to end hopes of a peaceful end to the Maya Indian rebellion. " A spokesman for "Comandante'� Samuel Ruiz, the bishop of San Crist6bal de las Casas who acted on behalf of the Zedillo takes theglove s Zapatistas in his role as "mediator," lamented, "This is very, very serious. This is pointing to � solution of war, and it off against Zapatistas breaks the process of dialogue that was under way. " by Hugo L6pez Ochoa and Cynthia Rush The issue is sovereignty I During a Feb. 5 gathering in Q4eretaro to commemorate In a nationwide television address on the evening of Feb. 9, the promulgation of Mexico's 1917 Constitution, President Mexican President Ernesto Zedillo announced that he had Zedillo had warnedthat he intended to take action against the instructed his Attorney General to issue arrest warrants for EZLN, as the situation in Chiapas became more untenable. the top six leaders of the Zapatista National Liberation Army He surprised his listeners when he said that while he intended (EZLN), the narco-terrorist insurgency which has operated in to pursue dialogue and negotiation �ith the insurgents, if that the southeastern state of Chiapas since Jan. 1, 1994. Among strategy yielded no results, "I sh l proceed to convene an those sought for arrest are Rafael Sebastian Guillen Vicen­ extraordinary session of the Congrtss� to . . . determine the te-the EZLN's "subcommander Marcos" who has become most appropriate alternatives to gU/n"antee a definitive solu­ an international media star in his role as the insurgents' tion to the conflict." In his Feb. 19 speech, the President spokesman. announced that he will convene a stkc' ial session of Congress Underscoring that the government's action was coherent to determine the next steps to take. me also offered an amnes­ with "its constitutional duty to protect the safety of all Mexi­ ty to any EZLN members who w�re prepared to surrender cans and preserve social peace," the President documented and cooperate. I that the EZLN had taken advantage of proposed peace talks Undoubtedly a factor in Zedillors decision was the rebel­ to prepare for war and reported that the Attorney General's lion led by powerful factions of the ruling Institutional Revo­ office had discovered Zapatista weapons caches in Mexico lutionary Party (PRl) in recent wcreks against the govern­ City on Feb . 8 which included high-powered weapons, hand ment's failure to act aggressively �ainst the Zapatistas and grenades, mortars , and explosives. their backers. The center of that re�llion was in the state of The EZLN is a criminal enterprise, Zedillo said, a fact Tabasco, where tens of thousands of PRI members spontane­ which was also borne out in a Channel 13 television report ously protested plans to force thd resignation of the PRl Feb. 10 showing Zapatista leaders torturing a municipal pres­ governors of Tabasco and Chiapas l Roberto Madrazo Pinta­ ident in Chiapas. There have been numerous cases, docu­ do and Eduardo Robledo Rinc6n re pectively, and hand their mented by authorities, of the EZLN's barbaric torture of posts over to the PRD as part of a p ict to "strengthen democ­ Chiapan leaders who oppose it. As the Mexican President racy." If either of these oil-produci$g and neighboring states emphasized, the evidence discovered proves that the EZLN in Mexico's southeast were to fall i�to the hands of the PRO, "is neither popular, nor indigenous, nor Chiapan ...It was the EZLN's electoral arm, this wohld have effectively split preparing new and greater acts of violence, not only in Chia­ Mexico at the Tehuantepec Isthmus! one of the British oligar­ pas, but elsewhere in the country. " The Zapatistas, he report­ chy's long-held strategic goals. ed, actually grew out of an armed guerrilla group, the Nation­ The situation in Chiapas is so t4nse that Zedillo's Feb. 5 al Liberation Forces, created in 1969 for the purpose of taking warning tothe EZLN immediately �rovoked an avalanche of power via armed struggle. The AttorneyGeneral 's officehas statements from PRl congressman� church spokesmen, and already arrested two groups of Zapatistas in Mexico City and others urging the Congress to immfdiately approve military another in Veracruz, the President added. action against the EZLN. One advocate of action is Jorge Zedillo's bold action, which includes changes among the Constantino Kanter, a leader of the Belisario Dominguez nation's top military leadership and probable troop deploy­ organization of rural property owntrs in Comitlin, Chiapas. ment to take back EZLN territory in Chiapas, has predictably In early February, he warned that i� the governmentfailed to provoked hysteria among those British-backed groups which act, cattlemen and producers wo�ld defend themselves­ have egged on the actions of the ELZN and its support appara­ something which has already start� to occur. Kanter issued tus, including the Revolutionary Democratic Party (PRD) led this warningprior to Feb. 5. On Fltb. 6, Zapatista assassins by Cuauhtemoc Cardenas, to dismember Mexico physically kidnapped his cousin, Gustavo Mldrr Kanter, and tortured and hand over its remains to internationalusurers . The British and murdered him. His body was found in a shallow grave wire service Reuters shrieked Feb. 10 that Zedillo has with one leg mutilated. :

EIR February 17, 1995 International 77 International Intelligence

tries to revive ed later. freighterin Isophisticated seacraft, has also U.S. The Santo Domingo daily El Nuevo Di­ prepared �ush points along the Panama Bosnia-Croatia alliance ario, reporting on the MSIA statement on Canal rout�, as well as along its alternate Feb. 2, observed that the MSIA "says that routes. G�npeace has deployed its Rain­ bow Warriqr U. S. Defense Secretary William Perry and the conflict between Ecuador and Peru is to the Caribbean on a 12-na­ Assistant Secretary of State Richard Hol­ part of a plot to prevent several countries in tion tour de�igned to rouse hysteria regard­ brooke were slated to meet with both Bosni­ the region from seeking the alternative of ing the Plut nium shipment. deciding on a moratorium on the foreign j an and Croatian officials on Feb. 5 at the i Wehrkunde conference in Munich, to at­ debt." The paper quoted the Dominican-Peru­ orm Palestinian tempt to reaffirmthe "Washington Accords" F � which established a federation between vian Association, of which Melendez is a member, which criticized Peru's Ambassa­ state ndw : Jewish leader Croatia and Bosnia last spring. i "If the federation falls apart, it's going dor to Santo Domingo, "Horacio Sevilla, whom they accused of fanning the flames Henry Sie�an, former executive director to be extraordinarily difficultto get anything of the Ame*an Jewish Congress and now a Washing­ and of working for interests fromoutside the else moving," Holbrooke told the fellow at th Council on Foreign Relations, ton Post. region. Among other reasons they said that � the conflict was caused by the failure of the wrote that qte only way to save the Middle Meanwhile, U.N. pretenses that the Be- freetrade model. 'The Dominican-Peruvian East peace process is to form a Palestinian 19rade Serbian regime was no longer supply­ New York Association calls on Peruvians and Ecua­ state now. Ih a commentary in the ing the Bosnian Serbs were shattered near Times, dorans to use all peaceful means to solve Sieaman argued that the Gaza-Jeri­ the easternBosnia enclave of Srebrenicaon cho accord �inges on "Yasser Arafat's abili­ the evening of Feb. 3. the conflict, which was provoked from the outside, and to neutralize the war-mongers ty to keep der in the territories which in "Dutch U.N. soldiers reported seeing 15 tum depen s on the prospect of of Palestin­ to 20 helicopters flyingin formation towards in each country, who are not defending the true interests of our people, but those of the ian stateh£ .... If the Palestinians are the west fromthe direction of [Serbia]," Un­ international financial oligarchy.' " persuaded *at there is no chance of achiev­ profor spokesman Paul Risley said, ac­ ing their n�ional aspirations-an indepen­ cording to Reuter. "The fact that U. N. ob­ dent state, *ot autonomy under Israeli mili­ servers on the Serbian side were denied tary control�they will reject Mr. Arafat as access to airport radar facilities [to check] Japanese officialsfe ar a traitor." the helicopters indicates to us that they origi­ terrorattack on ship The cOlhmentary asserts the futility of nated in the F.R.Y. [Federal Republic of military an� security solutions to the prob­ Yugoslavia] ," he said. lem of secu�ty .It calls on Israeli Prime Min­ The sortie was the largest in the six Top Japanese officials fear that terrorist ister Yitzh* Rabin to begin discussions on months since Serbia promised to cut off aid groups will take advantage of Greenpeace' s definingth territOrial limits of a state in the Pacific Crans, to the Bosnian Serb military. campaign against the vessel negotiation while beginning the process of to undertake "direct actions" targeting the uprooting s� ttlements now. freighter, which is carrying plutonium Dominican media play up waste material from France to Japan. iI Greenpeace, the operational arm of Politic41troubles critic of border war Prince Philip's World Wide Fund for Na­ ture, has mounted a global campaign against grow f4r'Pavel Grachov Schiller Institute spokesman in the Domini­ Japan's nuclear industry and its breeder re­ I can Republic Jorge Melendez was inter­ actor, which uses plutonium as a fuel On Feb. 3 the liberal Russian daily Sevod­ viewed on Feb. 2 on the "Sintesis" program source. The plutonium is the by-product of nya charge that Russian Defense Minister on Dominican TV. Melendez read the state­ uranium used in Japan's nuclear power Pavel Gral ov had gone into the hospital ment on the Peru-Ecuador conflict of the plants. The spent nuclear fuel is shipped to to avoid a pew corruption scandal. It said Thero-American Solidarity Movement France and Great Britain, where it is sepa­ Grachov �as suffering from "trench dis­ (MSIA) which was quoted last week in EIR , rated from the uranium waste and encased ease," or cpwardice, not over the Army's and said that the fightis the result of manipu­ in glass, and shippedback to Japan. mishaps in IChechnya, but over the discov­ lations by British-run interests. This month, the PacificCrane will leave ery of an updeclared bank account in Ger­ This problem was supposedly solved 50 Cherbourg, France, and travel to Japan, go­ many full or money which belonged in Rus­ years ago with the Rio Protocol, he ex­ ing throughthe Panama Canal with the next sian state c�ffers . plained. But the geopoliticians always leave shipment. Sevodnj.a journalistSergei Pakhromen­ some little aspect unresolved, to be exploit- Greenpeace, which plans to tail the ko cited "!various unrelated sources" re-

78 International EIR February 17, 1995 • ERITREAN President Isaias Afwerki thinks that war with Sudan is a definite i><>ssibility, according to a broadcast of London-based MBC Television in Arabic Jan. 29. porting that President Boris Yeltsin had con­ Maastricht Treaty before it would sign on. fronted Grachov during a Russian Security Major is credited with designing the pro­ • MAINLAND CHINA talks with Council meeting on Jan. 25, with an embar­ vision. Taiwan over lishing disputes ended rassing document. The document showed Former Foreign Secretary Lord Geof­ aftersix days on Jan. 27, without pro­ that when the Soviet Army was withdrawing frey Howe---credited with pulling the rug ducing any written accords, because from eastern Europe, Ministry of Defense out from under Maggie Thatcher's leader­ they could nQt reach agreement on officials opened a $20 million account at ship because she was hostile to closer Euro­ what are "territorial waters." The Deutsche Bank in Berlin, to siphon offthe pean integration---charged Major with ' breakdown was unexpected, since proceeds from the sale of military equip­ "selling out to anti-Europeans in Britain's the two side� have reached agree­ ment. Grachov was further accused of hav­ divided, ruling Conservative Party," Reu­ ments on two bther issues. ing presided over widespread corruption ters reported. Howe represents the faction among Army officers leaving Germany in in the Conservative Party around Foreign • THE IRISH governmenton Feb. summer 1994. He allegedly accepted a Mer­ Minister Douglas Hurd, which, ever since 5 released five more IRA prisoners cedes car bought from a fund that was ear­ President Clinton renounced the "special re­ held in Irish jails. Prime Minister marked for housing returning Russian sol­ lationship" with Britain in favor of closer John Bruton called on London to re­ diers. ties to Germany, has worried that Britain ciprocate: "I would like to see the European papers reported Feb . 4 that will lose its influencein European decisions. British governp1entlooking at its pol­ Grachov will probably be ousted soon. One icy and follow:ingsuit . It would build possible replacement could be Col. -Gen. confidence if abandonment of vio­ Mikhail Ko1esnikov, the chief of the Gener­ lence brought; a reward for families a
Staff. The London Times reported that Pope callsfo r peace separated frocitheir loved ones." Kolesnikov presided over a meeting of the collegium of the Ministry of Defense on talks in Sierra Leone • THE GAI�'IBIA'S military lead­ Feb. 3, in Grachov's absence. On Feb. 1, John Paul II called for peace er, Captain Xahya Jarnmeh, an­ talks in SierraLeone and voiced his concern nounced a haVdover to civilian rule about the fate of seven nuns kidnapped on by July 1996 on Feb. 2-two years Jan . 25 by rebels of Foday Sankoh' s Revo­ earlier than planned-and appealed Britain's Major between lutionary United Front, who, it is being said to the international community to re­ a rock and a hard place in news reports, launched their revolt from sume aid. Liberia in 1991. Ever since British Prime Minister Major ex­ The U.N. High Commissioner for Refu­ • SIR MICIjIAELROSE, the for­ pelled nine Conservative Party members gees said that 24,000ref ugees have fledover mer U.N. Prptection Forces com­ from the party in December, creating a mi­ the border into Guinea. mander in Bo$nia, bridled on Feb. 2 nority government,he has narrowly escaped Nigerian Ambassador to the United Na­ in Washingtod when a reporterasked at least two no-confidencevot es. The tight­ tions Ibrahim Gambari described the situa­ if the British I government had sent rope he is walking on has the "Euro-skep­ tion in Sierra Leone as alarming, and noted him to the U. S,. to persuadeCongress tics" on one side and the pro-European en­ that the thousands of refugees and the gener­ not to lift the �s embargo against thusiasts on the other. al chaos would further destabilize Liberia, Bosnia. "Bein� a running dog of the The Conservative Party Euro-skeptics, where talks broke down again at the end of British governmentwhen I am actu­ who oppose Britain's involvement in the January. ally in the Unhed Nations, is some­ European Union or any kind of West Euro­ U.N. Secretary General Boutros Bou­ thing I haven!t been accused of be­ pean integration, attending the World Eco­ tros-Ghali appointed an Ethiopian diplomat, fore ." He said �e had, however, been nomic Forum in Davos, Switzerland in late Berhanu Dinka, to "help" settle the "civil accused of bei�gRussia n-controlled. January, denounced any effort to create a war" in the West African country. single European currency by 1997-a pro­ The Sierra Leone rebel leader, Foday • KENYA reported Feb. 4 on the posal by Jacques Santer, the new European Sankoh, was reportedFeb . 1 to have asked existence of Communist-led guerrilla Commission president. if the Red Cross could negotiate a cease­ movement, wq.ichis seeking to over­ British Employment Secretary Michael fire in the four-year-old civil war. The rebel throw the g ' ernment of President Portillo declared, "We cannot be led into a movement has made little attempt in the last Daniel arap oi. A statement from political union that we do not wish to see," two years to communicate. There has been the presidenc� said the guerrillas according to Reuters on Feb. 1. Fearing too speculation that the rebel leader is dead and have training amps in a neighboring much Euro-centered control over policy, that the alleged rebels are merely govern­ country. Britain negotiated an "opt out" clause to the ment soldiers turnedinto bandits.

EIR February 17, 1995 International 79 �TIillNati onal

Virginia Assembly slaps down 'Conservative Revolution'

by Marianna Wertz

A popular backlash is beginning to pick up speed against Governors Allen and Whitman are the two leading the budget-cutting and tax-reduction policies which the spokesmen for the Conservati"Je Revolution among the na­ "Contractwith America" insurgents are trying to impose on tion's governors. Allen is hea4 of the National Republican the 1995-96 federal and state budgets all over the United Governors Association, and Whitman was chosen by the States. The most advanced case is the Commonwealth of Republican Party, because of h�r budget-cutting prowess, to Virginia, where Republican Gov. George Allen, who took deliver the Republican reply tq President Clinton's Jan. 24 office in January 1994 on a platform of budget austerity and State of the Union address, a rate privilege for a governor. tax cuts, has just been handed the most sweeping rejection of a gubernatorial budget in the state's history. What made 'Thursday night massacre' the slap sting even more, was that the Democratic majority Gov. George Allen raged that the Feb. 2 defeat of virtual­ in the state legislature was joined by a sizeable number of ly his entire $403 million bu

80 National EIR February 17, 1995 legislature run by Democrats. Indeed, the General Assembly universities remain mired near the bottom in public support virtually rolled over and played dead in front of Allen's Pro­ when compared to other states. " posal X steamroller. Education and human services Were key considerations Then came November and the Conservative Revolution for those Republican legislators who voted against their own victory in the U.S. Congress. Allen, heady with the power governor. In the Senate alone, Republicans introduced he thought was his, and touted in the press as a likely vice­ $202.5 million in budget amendments, out of $578.6 million presidential candidate, outlined a budget that cut deeply into submitted by the entire Senate, agai�st Allen's budget. And every social service: agriculture extension, education, police it was a Republican, Sen. Malfourd, W. Trumbo, who sub­ protection, mental health, senior care, health care, welfare, mitted the amendment that probably hurt Allen, personally, to name just the most prominent. He motivated his proposals the most. Trumbo's amendment proposed to strip $2.6 mil­ with ideological pabulum about "less government," invoking lion in increases from the office bUdgets of Allen's own Thomas Jefferson and "states' rights" in speeches skirted on cabinet secretaries, the only increase proposed in the entire the edge of outright calls for secession. He combined the cuts Allen budget, which had drawn nearly universal scorn forits with a proposed $149 million income tax and business tax hypocrisy. cut, and publicly dared the state's General Assembly, every member of whom is up for reelection in November 1995, to Opposition's Achilles' heel vote against it. The Achilles' heel of this oppo$ition-the lack of any What Allen and his advisers didn't count on was the real economic policy alternativeto t� Conservative Revolu­ effect of reality on Virginia's population-and the effect of tion-is well illustrated in the batt�e over funding for the angry Virginians on their elected representatives. What they thousands of new prison beds reqUiired by the passage of got was a torrent of protest, registered at public hearings Proposal X, which ended parole in V;irginia effective Jan. 1, statewide which were called by the legislature in January . 1995. While the legislature stood fast against large-scale Since nobody expected much opposition to the supposed­ public funding for the 21 new prisons Allen's plan called for, ly popular Allen and his budget, these hearings were never they agreed to building 1 ,500 "pri�te prison" beds in the stage-managed. As a result, in a series of fiveheari ngs, more state, because these don't require up. front public funds. So­ than 2,000 normal citizens stood up to say, in effect, "I don't called private prisons are constructedfbysuch private contrac­ want a tax cut if it means you're going to deny my child a tors as Corrections Corp. of Amem:a, which recoup their decent education and my parents their health." Many even costs by charging the state per diem for the prisoners they said, "I don't want more prisons if you're going to destroy ultimately house. I our youth before they even get a chance in life." At the final It is just such "private prisons" �hat economist Lyndon hearing, held Jan. 16 in the state capital of Richmond just LaRouche has identified as the beginning of Nazi-style con­ after the legislature opened its 46-day session, more than 500 centration camps ip America. Govtlmor Allen's plan calls citizens turned out. The political shock wave rolled through for a minimum of 10,000 private prison beds in Virginia, and the legislature, lending courage to those who had previously he has invited private companies to view Virginia's bur­ cowered in fear of their political lives . geoning prison population as a "good investment." But no­ body in the Assembly spoke out against this. Education cuts key The fact that "free-enterprise" guru Lady Margaret Allen's proposed $47.4 million in cuts to higher educa­ Thatcher, former British Prime Mini$ter and now Chancellor tion (in a state whose funding level already ranks 43rd in the of William and Mary College in Virginia, was welcomed nation), was probably the straw that broke the camel's back, with a standing ovation to address, a joint session of the since it turned key Republicans in the business community Virginia General Assembly on Fe�. 3-the day after the against the governor's budget. To top offdays of testimony "Thursday Night Massacre"-is further evidence of the by leading businessmen opposing Allen's budget, three for­ weakness of this victory. The "Iron f..-ady" was the first for­ mer Virginia governors, including Mills Godwin, Jr. , known eigner to make such an address sinctlWinston Churchill did as the "guru" of the conservative movement in Virginia, so in 1946 (see p. 86). wrote Allen an open letter, which was read aloud during So the battle, even in Virginia, i�just beginning. Gover­ House and Senate floor sessions Feb. 1, the day beforeboth nor Allen can veto the entire legislative budget in an April bodies' finance panels considered the Allen proposals. In veto session, which would create an unprecedented political their letter, the former governors (Democrat-turned-Republi­ cauldron in the state. On top of tha�, the impending global can Godwin, Republican Linwood Holton, and Democrat financial blowout will wreak havoc with the best-laid plans, Gerald L. Baliles) called on Allen to "make critical new unless the citizens of Virginia, New Jersey, and everywhere investments in Virginia's future ...by reaffirming public there is opposition to the Conservati'1eRevolution 's agenda, support for our unique system of higher education ....The are prepared to fightfor the kind of economic reorganization economic progress we need will not happen if Virginia's policies which LaRouche and EIR halve outlined.

EIR February 17, 1995 National 81 Espy specialpr osecutor puts: President Clinton in his sights i by Edward Spannaus

President Clinton is now a target of not just one, but two dirtiest career prosecutors in the Justice Department, who special prosecutors. While independent counsel Kenneth has long been suspected of having Mossad ties. He is a 21- Starr is officially charged with probing "Whitewater" and year Justice Department veter�, who has been in superviso­ related matters, another special prosecutor investigating for­ ry positions in the Criminal Division since 1987. A press mer Secretary of Agriculture Mike Espy, Donald C. Smaltz, release issued by Smaltz's officeon Feb. 6 notes that Oreen­ has gone well beyond his original authority into an investiga­ berg's duties included overseeling prosecutions in areas of tion which also encompasses the President. foreign corrupt practices, faileq S&Ls, defense procurement Smaltz betrayed his intentions when he announced on fraud, and "matters of national security." For ten years, says Feb. 6 that a high-level Departmentof Justice (DOJ) official, Smaltz, Greenberg was an AsSistant U.S. Attorney in the Theodore Greenberg, has been named "Special Counsel" to Eastern District of Virginia (.i\lexandria), "where he had Smaltz to assist in Smaltz's investigation offormer Secretary primary responsibility for complex white collar crime prose­ of Agriculture Espy. Smaltz's statement says that Greenberg, cutions and matters of nationaJ, security." now chief of the Justice Department's money-laundering sec­ Greenberg was involved in every case coming through tion, "has been detailed to the investigation" at Smaltz's the federal court in Alexandria involving the CIA or the request, and "will take a significantrole in the investigation" intelligence community, incluCting the Wilson-Terpil case, of Espy "and related matters." the Dale Duncan/Yellow Fruitcase (involving Armyspecial It is most extraordinary for a high-ranking DOJ officialto operations personnel), and numerous others. His role was be assigned to work for an independent counsel. Independent to protect certain elements of!the intelligence community, counsels generally draw their prosecution staff from private while going after various "rogpe" elements in the CIA and attorneys or low-level federal prosecutors-although the military. I Whitewater special prosecutor Kenneth Starr has also There are also two documented instances of Ted Green­ brought a number of DOJ prosecutors onto his task force. berg's involvement in the fr�eup of Lyndon LaRouche in The latest escalation in the Espy inquiry has to be seen in Alexandia. It was Greenberg! who made the first contact the context described by William Rees-Mogg in the London with the Pentagon to arrang� for two truckloads of files Times on Feb. 6, when he gloated about six different inquir­ which were seized from associates of LaRouche on Oct. 6- ies, "each of which could be fatal against the President." 7, 1986, to be taken to a militahrfa cility. This was arranged Rees-Mogg (see p. 37) writes that "President Clinton is through the secret ''focal point" channel in the Joint Chiefs trapped by a process of inquiry from which he would be of Staff, traditionally the CIA ct:>mmunicationschannel with­ unlikely to escape even if he were wholly innocent of any in the military . wrongdoing." That, of course, is the whole idea. Greenberg was also con*lted during the involuntary The assault flaunted by Rees-Mogg includes the investi­ bankruptcy used in 1987 to illegally shut down threepublish­ gations by Starr and Smaltz, those by the Senate and House ing companies identified witll LaRouche. Assistant U.S. Banking committees, and the Paula Jones sexual harassment Attorney David Schiller testi$ed that he consulted Green­ lawsuit. The sixth is apparently the series of investigations berg, because of Greenberg's ¢xperience in the CIA-linked being conducted by the news media into various Arkansas Bishop Baldwin Rewald banl4ruptcy case. Greenberg con­ scandals, including the Mena drug-running story and a long gratulated Schiller on his "intovative" approach, and told list of alleged assassinations. Schiller he wanted to stay in touch concerningthe LaRouche case. I The Ted Greenberg file The recent appointment of Greenberg to participate in The objective-trapping President Clinton "even if he the Smaltz witch-hunt is the best evidence that Smaltz has were wholly innocent"-<:omes into sharper focus if we set his sights much higher than merely looking into free trace the profile of Smaltz's aide Greenberg, one of the football tickets given to Espy:

82 National EIR February r7 , 1995 I Smaltz's 'witch-hunt' strumental in having former Whitewater special prosecutor Although Smaltz was originally appointed to investigate Robert Fiske fired and replaced by! Bush-leaguer Kenneth allegations that Espy had received illegal gifts (travel, foot­ Starr. Faircloth is now griping beqlUse representatives of ball tickets, etc.) from the Arkansas-based poultry processing Tyson Foods, Inc. have been coming to Capitol Hill and giant Tyson Foods, Inc., and other food processors regulated meeting with congressional offices to expose Smaltz's activ­ by the Agriculture Department, Smaltz quickly expanded ities. his investigation into Tyson's dealings with Bill Clinton, An aide to Faircloth recently told the Washington Times including allegations of money-laundering and of cash deliv­ that Archie Schaffer, Tyson' s direct�r of media, public, and eries to Clinton while he was governorof Arkansas. governmental affairs, had presented i"a detailed criticism of In December 1994, Smaltz was quoted as saying that the independent counsel and the imlestigation of Tyson. It there was "a ring of truth" to allegations made by a former floored us." But Schaffer said that "1 did not ask them to do Tyson's pilot who claimed that he carried envelopes of 100- anything for us, whatever. I was simply there to make them dollar bills to Little Rock which were delivered to Clinton. aware of what we see as a witch-hunt." About the same time, the New York Post reported that Smaltz Smaltz was appointed as an independentcounsel on Sept. "is being bombarded with allegations ranging from influence 9, 1994 by the same three-judge panel which appointedSt arr. peddling to drug trafficking." There's not much doubt where This panel includes Judge David Seutelle, a North Carolina the "bombarding" was coming from. The Tyson-drug allega­ crony of both Faircloth and Helms. I tions were firstraised last October by Ambrose Evans-Pritch­ Faircloth is also leading the char$e against anothercabi­ ard in the London Sunday Telegraph, in a piece called "Bill net member, Commerce Secretary �on Brown. According Clinton and the Chicken Man," in which Pritchard wrote that to information publicized by Faircl�th's office, the Justice "there may be another aspect to this scandal which has been Department has begun a preliminrury review to determine overlooked by the American press." Pritchard cited a former whether still another independent coUnsel should be appoint­ state trooper who allegedly told him that Tyson smuggled ed to investigate Brown. This in resPQnse to allegations made cocaine "stuffed inside chickens." in a Jan. 23 letter from Faircloth and '! 3 other senators to the In an attempt to curtail Smaltz's free-wheeling probe, Attorney General, charging that Brown failed to disclose his motions were filed in court on Feb. 8 challenging his wide­ finances involving a former business:partner. ranging subpoenas and the scope of his investigation. Sepa­ rate sealed motions were filedby attorneys for Tyson Foods The Starr chamber and by attorneys for a former Tyson's corporate pilot, seek­ Starr, meanwhile, is also stepping up his pressure on ing to quash a subpoena for grand jury testimony and chal­ President Clinton. He has recently ad�ed four more attorneys lenging what Tyson's lawyers call a "witch-hunt" being con­ to his staff, so that he now has 20 lawyers on his "Get Clin­ ducted by Smaltz. ton" task force, plus more than 25i FBI agents and other In a front-page story on Feb. 9, the Washington Post investigators. reported that former Tyson employees say they've been Starr is known to be putting massive pressure on one of questioned about whether chairman Don Tyson sent cash to President and Mrs. Clinton's formeriWhitewater partners to Clinton, about the death of Tyson's brother in 1986, about force her to plead guilty and testify against the Clintons. drug use and drug trafficking, and whether company repre­ Susan McDougal, former wife of James McDougal, was sentatives ever bribed Mexican officials. "Several witnesses called in to meet with prosecutors in Little Rock on Feb. 8, said they were asked few, if any, questions about Espy when and was threatened with indictment itL she did not cooperate. called before a grand jury," said the Post. After the meeting, one of her attorneys said, "Mrs. McDou­ Smaltz and his team have been sUbpoenaing numerous gal is not interested in pleading guiltY!lo any felony or misde­ former Tyson pilots and employees. It is believed that Smaltz meanor counts. She has done nothi�g wrong." In addition is using a list of 2,200Tyson workers who have filedperson­ to being the Clintons' partners in Whitewater Development al injury claims against Tyson, hoping to find disgruntled Corp., the McDougals owned an Arkansas savings and loan, employees who will give evidence against the company, Madison Guaranty, that collapsed in 1989. which can then be used to build a case against President The prosecutors met with Susan McDougal after issuing Clinton. a new round of subpoenas, including �everal to currentWhite House aides, demanding that they turnover any documents Spun out of Faircloth pertaining to Whitewater or to Jim �nd Susan McDougal. Next to the role of the British press-especially the Sun­ Among the subpoenaed aides was Path Thomasson, director day Telegraph and the London Times-probably the next of the White House office of administfation, according to one dirtiest public role in Whitewater is being played by Sen. of her lawyers, Tim Dudley of Littl9 Rock. Dudley said he Lauch Faircloth (R-N.C.). It was Faircloth who, along with received the subpoena on Feb. 7 froll).an FBI agent who told his fellow North Carolina Senator Jesse Helms (R), was in- him, "I've been serving subpoenas al� day."

EIR February 17, 1995 National 83 by William Jones Congressional Closeup

ingrich launches uents. Domenici didn't want to use the Citin ' Washington Post com­ attackG on NASA word "cut" with regard to the pro­ ments th: t "many Wall Street analysts House Speaker Newt Gingrich (R­ grams targeted. "Most of the pro­ praise th , course of Fed policy," Dor­ Ga.) attacked the National Aeronau­ grams you talk about in terms of gan said:: "Of course they praise the tics and Space Administration, saying cuts-Medicare, Medicaid, wel­ Fed polic�. Who do you think the Feds that NASA should have been disband­ fare-we're not talking about less are worlQng for? It is not Main Street, ed after the Apollo program ended in spending every year. We're talking it is not ithe family farmer, not the the 1970s, in a lecture on Feb. 4 at about slowing the growth in spending rancher, �ot the working person out Reinhardt College in Waleska, Ga. in virtually all of these entitlement there ...; . We know who their con­ "The governmentcan do basic re­ programs," he said. stituency is . . . but it is differentfrom search and development or the gov­ our constitue1 ncy, and that is the di­ ernment can come out here and set lemma. " i He characterized the Fed as up the Apollo project," Gingrich said. a "dinos,ur which reform has got to "Remember, NASA was brand new. begin to .ouch." They built it up, they did it, and if organ proposes reform they'd disbanded it at that point, I ofD Federal Reserve think they'd have been better off. You On Feb. 2, the day Federal Reserve build a project team, you get the job Chairman Alan Greenspan raised in­ done, and then you close it and start a terest rates for the seventh time in a udic ary panel okays new project. If you keep people there, year, Byron Dorgan (D-N.D.) called Janti-cr lme block grants they become obsolescent; they be­ on Congress to reform the Fed. The Hoqise Judiciary Committee on come bureaucratic." He did not say The Fed is a secretive operation, Feb. 2 approved, on a near party-line what he thought should be done with Dorgan said, unveiling a chart with vote, a ptogram which would provide NASA now . pictures of the members of the Fed local g0 rnments with $10 billion in board. Some of these people are cho­ block ;t.ts. The legislation would sen by the President and approved by effective y dismantle the crime bill the Senate, while others are chosen by ,which \\jas passed by Congress last the local Federal Reserve banks and year andisigned into law by the Presi­ eficit hawks zero represent the interests of private dent. �at bill provided funds for Din on entitlements . banks. 100,0001police o(ficers, specialized On ABC's "This Week with David Dorgan outlined four provisions drug cqurts, and prevention pro­ Brinkley" on Feb . 5, Senate Budget for reform. First, that "nobody ought grams. 1jhe new bill would leave it up Committee Chairman Pete Domenici to vote on monetary policy . . . in any to the iqdividual states and the local (R-N.M.) and House Budget Com­ room, locked or unlocked, unless they governrqents as to how they would mittee Chairman John Kasich (R­ are accountable to the American peo­ spend th money. Ohio) agreed that the budget which ple," and since the regional Fed presi­ This ri is a significant step toward the President was to present the fol­ dents who sit on the Federal Open the def�deralization of the United lowing day was soft on entitlements. Market Committee are accountable to States, propagated by the conserva­ "The bottom line is they refused to no one but private bankers, "no re­ tive R�ublicans' "Contract with deal with entitlements," Kasich said, gional Fed Bank president ought to Americ�. " This was admitted by "and we are going to have to, if we are have a vote on that committee." House ludiciary Committee Chair­ going to get to zero over seven years Second, Dorgan called for imme­ man HeQry Hyde (R-Ill.). "It's the de­ in terms of a balanced budget." diate disclosure of Fed decisions as fining is�ue between the parties," he "This budget clearly lacks cour­ they are made. Third, the budget of said, "whether we're going to have age," complained Domenici. the Federal Reserve Board should be local or federal control. " Kasich admitted that "there's go­ published as part of the budget of the SUPPorters of the new bill believe ing to be a lot of screaming and yelling United States. And finally, the Fed that local and state governments will and complaining and crying" as a re­ board should meet regularly with the be less likely to fund the preventive sult of the GOP proposals, which they Executive branch, especially the trea­ measure$ in last year's crime bill, still have not revealed, but claimed sury secretary, so that monetary poli­ which they castigated as "pork." They that these would primarily be coming cy and fiscal policy can be coordi­ instead want stronger punitive mea­ from "lobbyists" rather than constit- nated. sures, i*cluding introduction of evi-

84 National EIR February 17, 1995 dence based on an illegal search, if tricity is necessarily expensive," he with Africa. This is the richest and that search were done in "good faith." said. But "successful work abroad, most underpopul�ted continent in the The Republican proposals would particularly in France and Japan, world." In fact, he said, there's so expand the number of crimes subject proves the contrary." The real prob­ much work that needs to be done to the death penalty, lengthen prison lem, he explained, was the demand there, "you might see another wave of terms for "violent crimes," and short­ for risk-free technology. immigration froni Holland to Africa." circuit the habeas corpus process, set­ Republicans have long targeted I ting more stringent limits on such pro­ the DOE for extinction, because it has cedures for death row inmates. The been turned into an anti-technology legislation calling for mandatory "vic­ haven since it superseded the Atomic tim restitution," i.e., the criminal Energy Commission; but Teller of­ yrd flails alanced making good whatever the "victim" fered instead that its activity should be Bbudget amenclment� had suffered as a result of the crime, reoriented. Sen. Robert Byr� (D-W.V.) contin­ passed the House on Feb. 7 in a 43 1- Teller also criticized the amount ued his assault o� the balanced budget o vote. of time and money being put into nu­ amendment, whi¢h he scored as un­ clear and chemical "cleanup." He said constitutional and a fraud, in floor that a "science-centered program to comments on Febj. 9. Byrd demanded, investigate the actual consequences of "How will you know if this amend­ low-level radiation exposures should ment will be goodfor the nation if you be instituted to give any subsequent do not know wh� cuts will be made, eller: develop cleanup program a rational basis." how much each Istate, each county, high-temperatureT reactors each municipality across the land will Nuclear physicist Edward Teller pro­ have to absorb a� a result of the cuts, posed to shiftthe emphasis of the De­ how much your state taxes will rise as partment of Energy (DOE) "to obvi­ a result of federali cuts?" ously safe reactors," in a House Byrd said th�t if defense, Social Appropriations Energy and Water cConnell's planned cuts Security, and intfrest on the federal subcommittee hearing on Jan. 31 on inM Africa aid draw fire debt were exempted from cuts, as has the future of the department. These On Feb. 3, the Constituency for Afri­ been proposed, the remaining budget should be based on modifications to ca, chaired by former U.N. Ambassa­ (Medicare, state and local grants, and General Atomics' high-temperature dor Andrew Young and seconded by the rest of the tbderal government) gas-cooled reactor, he said. If placed Rep. Robert Payne (D-N.J.), an­ would have to be! cut 30% in order to 300 feet underground and with auto­ nounced the formation of a coalition balance the budgtt by the year 2002. mated controls, these reactors would to fight for the preservation and "No one can hO estly come to this bI shut down automatically and require expansion of U.S. foreign aid pro­ floor . .. and �ell the people of no "human access." Accidents like grams for Africa. "We're here to call America that th�y will escape real Three Mile Island and Chernobyl attention to the fact that there is an pain under the axriendment." would be avoided. Africa policy" from the Clinton ad­ Appearing on NBC's "Meet the Teller said that placing reactors ministration, Young said. "We want Press" on Feb. 5. Byrd attacked the underground would make them prolif­ the Congress not to lose sight of that economic consequences of the eration-proof, because it would be vir­ fact. " amendment: "As to its being bad eco­ tually impossible for anyone to get Young criticized Sen. Mitch nomic policy, it would severely dam­ into them. "Thus, Third World coun­ McConnell (R-Ky.), who has intro­ age the nation's ability to develop a tries can be given such reactors for duced a bill to drastically cut foreign sane, sensible fis¢al policy. It would their legitimate energy needs, even if aid for Africa on the basis that "Afri­ cripple effortsto stabilizethe business their political stability is not com­ can leaders steal the aid." "McCon­ cycle, in that it would create a severe pletely assured," he said. nell's reasons are ten years old," said fiscal drag on thd economy at a time Teller bemoaned the fact that the Young. "Aid was stolen when Africa when the econOlpy may already be DOE has practically stopped all devel­ was a pawn in the Cold War." weak. It would haptper the capacity of opment and research on nuclear reac­ Young called U.S. foreign aid to the nation to mal4e long-term invest­ tors for electricity production. "It is Africa a good investment: "Every­ ments in physicaJ and human infra­ mistakenly stated that nuclear elec- body profits by a strong relationship structure. "

EIR February 17, 1995 National 85 NationalNews

artists Helen Dilworth (soprano), Elvira General Accounting Office exposed en­ • Green (mezzosoprano), Richard Riley (ten­ trenched ab�ses by the Florida-based Hu­ or), and Aaron Gooding (bass), with piano mana Medi4al Plan, Medicare's largest Thatcher to legislature: accompanists Dr. William Duncan Allen HMO contractor. GAO found that Humana 'I am a Virginian' and Sylvia Olden Lee. HMO plans had a corporate philosophy of In addition to organizing attendance "aggressive land manipUlative marketing ''I'm a Virginian" Baroness Margaret from over 36 churches in the Los Angeles practices," in which sales agents manipulat­ Thatcher told fawning legislators in Rich­ area, the institute received such a warm re­ ed potential !'tAedicare clients into signing. mond on Feb. 3, according to the Washing­ sponse from the Korean community that the Humana �lso denied payment of emer­ ton Post. Thatcher had been invited to ad­ Los Angeles Seoul Chorale asked to partici­ gency care obtained outside the plan's ser­ dress a joint session of the legislature (only pate. Host Dennis Speed introduced the vice area, tben denied clients the right to the second British subject to do so) in her group: "Some people claim that there is a appeal, forcilng them to pay huge medical capacity as chancellor of the College of Wil­ conflict between the Koreans and the Afro­ bills themsel�es or go to court. To increase liam and Mary (the first British subject to American community. This is only true in profits, the HlMO's physicians avoided criti­ hold that post in the 300-odd years of its the minds of the demented; in fact, the Los cal diagnostic tests or ignored test results existence) . Angeles Seoul Chorale, whom you are that would indicate costly treatment. Thatcher, whose ll-year survival as about to hear, requested to be part of this prime minister of Britain earned her the program tonight. They requested to be able name the "Iron Lady," lavished praise on to come to sing for you." This got a tremen­ her own Thatcher Revolution in "free-mar­ dous applause. ket capitalism" as "economic democracy. It In earlier remarks opening the concert, Virgini. AG continues limits the power of governmentby maximiz­ Speed had referenced Martin Luther King's ing the power of the people. " conscious decision to drink from the cup of misconciluct vs. Billington Gethsemane: "This idea is what gives us the "As chancellor of the College of Wil­ In papers filpd with the Supreme Court of liam and Mary," she said to a standing ova­ strength that is represented by music that Virginia, pdiitical prisoner and LaRouche elevates the soul. The spirituals come from tion, "I already feel at least an adopted associate Mif::hael Billington denounced the daughter of the state of Virginia. But when this kind of heroism, not from oppression, continued mJsconduct of the AttorneyGen­ but from the fight against oppression, and I consider all that this place has given to eral of Virginia. The papers were filed in democracy, I am moved to say that in spirit: the principle that all men are created in the response to the AG' s motion to dismiss Bill­ I am a Virginian." image of God." Speed invited the audience ington's petition for a writ of habeas corpus. Democrats and Republicans fell over to join with the Schiller Institute to demon­ Billington witssentenced to 77 yearsin 1990 strate that "we will not be sucked into the themselves trying to outdo each other in in a political trial that made a mockery df mud of hatred." demonstrations of Anglophilia: Senate Ma­ justice and is drawing shock and disbelief jority Leader Hunter B. Andrews (D) shout­ internatioml�ly. ed, "England forever!" Andrews is known In his orj.ginal petition, filed in October for quoting Oliver Cromwell and Charles I 1994, Billin�ton had charged that he is be­ in Senate floordebate s. Gov. George Allen ing illegally: incarcerated because his con­ (R) made his feelings known by inviting the Gingrich on Medicare: viction resulted fromthe treacherous actions baroness to a private luncheon, from which 'Let them use HMOs' of his trial c(mnsel, the late Brian Gettings, Lt . Gov. Don Beyer, a Democrat, was ex­ and from pItosecutorial misconduct by the cluded. While Newt Gingrich told the American Virginia At�orney General's office. Bill­ Hospital Association on Jan. 30 that he ington charged the AG with use of perjured wants to "rethink" the Medicare program in testimony, Withholding exculpatory evi­ order to offer "greater choices for senior dence, brainwashing witnesses, black bag citizens," top on his list of choices was jobs, and fr�ud. Schiller concerts hail health maintenance organizations (HMOs). In respo�se, the AG ignored the detailed African-American month In fact, Medicare offers the 37 million elder­ charges pre�nted in his over l00-page peti­ ly and disabled citizens to whom it provides tion, saying �at Billington's petition should More than 400 people attended a concert services the choice of using HMOs, man­ be dismissed because Gettings was now featuring Classical European and American aged care, or traditional fee-for-service dead and co�ld not be called as a witness to Negro spiritual music on Feb. 3 in San Fran­ plans. By 1995, Medicare beneficiaries en­ explain his actions. Gettings died on Jan. 4, cisco and 850 in Torrance, California on rolled in HMOs increased to 2,339,592, 1995 after Ii long bout with cancer. Ac­ Feb. 5. The concerts, sponsored by the while those enrolled in all pre-paid Medi­ cording to an affidavit of Frank Dunham, Schiller Institute, were billed as "A Musical care health care plans jumped to 3,114,566, Gettings's former partner, in December Celebration of African-American History a 26% increase over 1994. 1994, Gettings had agreed to help the Com­ Month," and featured African-American In 1991, a study by the congressional monwealth • defend itself against Bill-

86 National EIR February 17, 1995 • • CALIFOJlt,NIA Gov. Pete Wil­ son (R) said Ian. 29 that he would like to see a constitutional amend­ ington's habeas petition. But, according to been part of the drafting of a document that • ment prohibidng so-called "unfund­ the same affidavit,Gettings died before giv­ was historical in nature ." The committee that ed mandates." Abolishing unfunded ing a statement. Dunham's affidavit was Clark heads reviewed the LaRouche case last mandates has populist appeal with filedwith the AG's response. September, and stated: "We ...have come the "Contract with America" crowd, Billington charged that the AG is respon­ to the conclusion that there has been a gross, because the fl1ancial burden of un­ sible for any prejudice caused by delay, since even conspiratorial, misuse ofprosecutorial fundedmandates oftenfalls on states, the AG was fullyaware of Gettings 's illness and investigative powers by officials and localities, or individuals. and waited more than two months before agents of the U.S. government. The com­ I even attempting to get a statement fromhim: mon purpose and concerted action of the con­ • THE �TI-DEFAMATION "In short, respondent, with knowledge of spirators was to secure criminal convictions League's Jan\lary newsletter, ADL Mr. Gettings' impending demise, simply of Lyndon LaRouche and his associates to on the Frontline, reported that the stalled until, according to him, Gettings was destroy their political movement. " ADL held a b�akfast for ADL Hon­ Clark continued: "Obviously, the Presi­ too ill to provide any information." orary Nation� Commissioner Alan dent enjoys the executive clemency powers, Gerry for his c/ltalyticrole in creating the powers to pardon, and could certainly do the League's · William and Naomi so for LaRouche and his associates, some of Gorowitz Instltute on Terrorism and whom are still in custody. The Congress has Extremism. The keynote speakerwas oversight responsibility for the Department D.C. in 'worst crisis former Direc1lor of Central Intelli­ of Justice, and can certainly work through gence R. Jamds Woolsey. since 1873,' says Barry their various committees to tryto investigate : Washington, D.C. Mayor Marion Barry re­ and give fuller airing to what actually oc­ • DERIVATIVES FALWUT: curred in the investigation and prosecution leased a new audit of the District's finances, Cuyahoga ¢ounty (Cleveland), of LaRouche and his associates." projecting a $722 million budget shortfall in Ohio, has hadito slash $14.5 million a $3.2 billion budget for the nation's capital. out of its $124 million general fund He said the city faces its worst financial cri­ budget in the �ake of the collapse of sis since 1873. In 1873, the year D.C. its "safe" investments in financial de­ "home rule" was lost in the last century, the rivatives last year. Hardest hit are United States simultaneously plunged into Envoy Gallucci defends agencies carint for foster childrenand what was then its greatest crisis and depres­ North Korea agreement the elderly, indluding $3.2 million cut sion. That crisis was brought on by the at­ fromfoster care and$1. 5 million from tack of the Drexel-Morgan (British-Austri­ Ambassador at Large Robert Gallucci en­ the county nur$ing home. In addition, an) banking house against the pro­ tered into a spirited defense of the Clinton a $26 million planned subsidy to the nationalist Jay Cooke bank. Cooke went administration's framework agreement with county health �d hospital system for bankrupt, credit disappeared, and the rail­ North Korea, on Feb. 1 at a symposium the poor called MetroHealth is being road construction Cooke and his allies were sponsored by the Council on Foreign Rela­ cut by. more tijrnhalf. � sponsoring was suspended. tions. Gallucci was faced by a mostly hostile \ In a related development, the Board of panel of questioners, led by Bush National • HENRY KISSINGER pontifi­ Education, by a vote of 9-1, agreed to the Security Adviser Brent Scowcroft and for­ cated to the S�:nate Armed Services proposal of School Superintendent Franklin mer Nuclear Regulatory Commission mem­ Committee o� Feb. 2, at the invita­ L. Smith to eliminate seven teaching days ber Victor Galinsky. tion of its cijlirman, Strom Thur­ from the end of the school year. The board Galinsky, in his opening remarks, com­ mond (R-S.C�), who solicited the also agreed to eliminate 300 teaching jobs plained that, as time passes, the United British agentLof-inftuence's com­ and 180 officejobs . States loses leverage over North Korean ment on "the foundations of Ameri­ compliance, that North Korea's facilities re­ can national *urity strategy as the main a latent threat, and that the light water committee prepares to examine U.S. reactors to be provided under the agreement military plannrg and budgeting." are the poorest way of generating electricity Attorney repeats call in North Korea. In response, Gallucci as­ • THE PHIiADELPHIA orches­ to exonerate LaRouche serted that, if implemented, the agreement tra will perfoqn all nine Beethoven completely removes the North Korean nu­ symphonies nqxt year in honor of his Months after reviewing the volumes of evi­ clear program and the leverage remains, be­ 225th birthday,. It will also hold a se­ dence in the Lyndon LaRouche case, Cali­ cause neither critical reactor components ries of worksh�ps and classes in high forniatrial attorneyCurtis Clark, who chairs nor fuel will be delivered until North Korea schools and c�lleges throughout the an independentcommittee ofjurists and pub­ complies with the safeguards of the U.N. area, according to conductor Wolf­ lic officials, recently told an interviewer for International Atomic Energy Agency as gang Swallisc�. EIR Audio Reports, "We all felt that we had provided for in the framework agreement.

EIR February 17, 1995 National 87 Editorial

Justlce, not vengeance

The Declaration of lndependence and the U.S. Consti­ some praying over this." tution assert the supremacy of natural law-the self­ When justice is flouted in this way by the courts, evidence that all men are created equal with God-given people believe it is acceptabl� to take whatever they fundamental rights to life , liberty, and the pursuit of think is justice into their own h�nds, even to meting out happiness. This same principle was upheld in the Nur­ the death penalty . We have seeQ several tragic instances emberg Trials after World War II where following the of this, such as the recent shootings at abortion clinics, orders of a superior or adhering to established proce­ or potentially tragic incidents Where people have shot dures could not be offered as a justificationfor commit­ into the White House. I ting an atrocity . Admittedly some of the shQOters have clearly been Thus positive law , the rules and procedures in a law demented (as in the case of the clinic killings and per­ court, must bend before the imperatives of God's law . haps some of the recent attacIq;on the White House), In these terms, there are circumstances of just war, or but that is not the whole story. elR has documented the legitimate self-defense, in which an individual may direct involvement of British �cret intelligence in the take the life of another. Vengeance is never such a assassinations of American �esidents Lincoln and circumstance. Kennedy and the attacks on ftesident Clinton. Thus, (While capital punishment has been justifiedon the America's historic enemy, the European oligarchy, has basis that it deters murder, experience does not prove worked to create the climate of disorder. The violence this to be the case.) emerging from the ranks of the environmentalist move­ Recently there has been a growing spirit of blind ment has similar roots . While iterrorist groups such as vengeance, evidenced in the popular outcry for ex­ Earth First! formally keep thbir distance from more tending capital punishment to cover more crimes, and respectable environmentalistsJ they are paid by chan­ in the growing climate of acceptability for vigilante nels set up by Prince Philip's World Wide Fund for justice. To propitiate this mood, politicians vie to pass Nature . more and more draconian crime bills, and the courts In the December issue of the Earth First! Journal, ride roughshod over the rights of the accused. A terrible Mike Roselle, who heads the oup, called for an esca­ instance of this occurred in the Commonwealth of Vir­ lation of terror. "We don't carew who is in power in ginia on Jan. 24, when a man was executed despite the Washington," he wrote, "fori whoever stands on the fact that the judge asked to stay the execution expressed walls of Babylon will be a tar�et for our arrows. When the belief in court that the man had not received a fair we raze the citadel, it will �atter not who holds the trial. keys to the corporate washroom, or who has reserved On Jan. 23, a last-minute appeal by death row in­ parking at National Airport, [because we will be out mate Dana Ray Edmonds was rejected by U. S. District trashing their limos and doing donuts on the greens of Judge James C. Turk. At issue was the fact that Ed­ their racist country clubs. What we want is nothing I monds's attorney also represented a chief witness short of a revolution." against him at the time of his trial. Turk ruled that he Martin Luther King was well aware of the danger did not have the authority to stay the execution for of raising the threshold for v�olence when he led the procedural reasons. Thus he allowed positive law­ civil rights movement of the 1960s. His movement rules and procedures-to supersede natural law. No succeeded because it was buht upon the principle of doubt he was also influenced by the popular clamor agape, God's love for man, which cherishes the sancti­ since, just two days before , he had said, "It's not right ty of all human life, and offers compassion in place of to put someone to death who didn't have effective coun­ vengeance. Until this princip� rules in public life, the sel by saying it's procedurally barred. I've got to do future of the republic is in grave jeopardy.

88 National EIR February 17, 1995 SEE LAROUCHE ON CAB L E TV

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