A tenner on the street

Money for Nothing

Cheap promises

‘Stop whining. Everyone should be rich. Vote for the Tegenpartij (Opposition Party), together for ourselves.’ It was the motto of the fictional Opposition Party, run by two shady characters of the second-car-saleman type, Jacobse and Van Es. The creators of the fiction, Van Kooten and De Bie, intended to mock populist politicians and their promises. An opinion poll revealed that the party could have won a few seats in parliament in 1981, had it not been a prank. But why can’t everyone be rich? Perhaps it is because poor people don’t have enough money. It can’t be that simple, or can it? Some think it is. So, why not hand out money for free? It is a scheme known as Universal Basic Income (UBI).

Perhaps machines and computers will soon do all the work. And if we lose our economic purpose, how can we remain alive? The wealthy, who own most capital, have no reason to let us live. We must distribute that money more fairly, the proponents of a UBI argue, by taxing the rich to pay the poor. Until now, these schemes have never worked as intended, with the wealthy evading taxes and the middle class paying for social benefits. Yet, that can change once we live in a global society where tax evasion is impossible. Some countries have a dole for those who don’t work. And if there are no jobs, everyone may have to go on the dole. That could end the relationship between humans and work that has existed since time immemorial. And so, it is a profoundly disturbing idea.

Proponents of UBI argue that handing out money can improve people’s lives. Research has shown that not having to worry about making ends meet greatly improves the quality of your life. However, many working poor struggle to make ends meet, and if you erode the benefits of working by handing out money to the lazy, you demoralise them from doing useful work. Without an incentive, many, if not most, wouldn’t contribute to society and definitely not take up unattractive jobs. On top of that, many people can’t make ends meet because of lifestyles that people in wealthy countries consider normal, but that are, in historical terms, outliers and, above all, untenable. So, ideally, we work less, but also have less, while those who do useful work are rewarded for it. We somehow have to figure out an economic system that produces enough, but not too much.

You may think that a UBI is a crazy scheme, most notably, the idea that you don’t have to work for a living. Yet, what we are doing now is also insane. We are engaged in a rat race to transform energy and resources into waste and pollution to make the rich richer and create technologies that will terminate humankind. We would be better off if most people in advanced economies stopped doing their jobs. And we are handing out money for free to the rich. At present, we have helicopter money. Central banks hand out money to the wealthiest in the hope that it will eventually trickle down to the working class and the poor. And that is necessary because we pay interest to the rich. So, if governments stop going into debt and central banks stop printing money, the usury scheme collapses.

Game of Monopoly

To illustrate the point, we can look at the game of Monopoly. The game is a model of capitalism, a simplification highlighting specific aspects of the system, not reality itself, but it highlights why capitalism fails. If you have played the game more than once, you may have noticed it usually goes like this. Initially, players purchase streets and generate capital by constructing houses and hotels. You can get rich by making the right investment choices. You also need luck and to be at the right place at the right moment. The game ends when nearly all players are bankrupt, except one. At that point, there are more houses and hotels than players, so a lot of wealth, but few can afford it. The merit of the model is that it explains why billionaires get richer while many others can’t afford the rent.

Monopoly comes with a UBI. Every time you finish a round, you receive a fixed sum. It keeps the game going. Otherwise, players would soon run out of cash. If the game ends, the players can wipe out all the houses and hotels and start anew. In the real world, it would be akin to collapsing the economy, which is a highly inefficient way of reducing wealth inequality. The alternative is to tax the rich and distribute that money to the poor. Capital income makes wealth accumulate in the hands of a few. Without it, there is less need for redistributing income. Had there been no houses and hotels, the game could continue indefinitely, even without handing out money every round. Returns on capital are the source of the trouble, but without capital, there would be no homes.

Likely, the game could continue without losers if you could build only one house on every street. That would be enough, as you wouldn’t have to sleep rough. Having just enough capital helps to alleviate the issue. Most billionaires today have become rich by providing services we do not need, not by farming or building homes. If the streets are evenly divided, you do not need to hand out money to keep the game going. In the real world, some people save their money, while others waste it, and some are lucky while others are not. Economic forces must run their course to build capital. Yet, you need mechanisms to balance it out. And interest on capital is the dole for the rich. The justification for it was that capital must be allowed to grow. Only, we now have too much capital.

Bullshit jobs

For most of history, most people worked an average of a few hours per day, but they were dirt poor. The Industrial Revolution changed that. Factory owners wanted labourers to work long hours in regular schedules to increase production. That is still how the economy operates today, even though we now produce far more than we need with only a fraction of the workforce, so we must entertain the remainder by wasting energy and resources on non-essential activities. In ‘advanced’ economies, less than a third of the workforce may do things that we need. The remaining jobs are pointless bullshit jobs. These occupations range from trading securities to taking orders at a fast-food restaurant. Once resources are gone and the Earth has become a wasteland, these jobs will be gone.

Working is doing something useful for others or society. While performing our jobs, we consume energy and resources. Therefore, if our jobs aren’t essential, they aren’t work but entertainment. We drive our cars to heated or air-conditioned offices. We work hard, so we believe we deserve a holiday and consume energy and resources for relaxation. If we eliminate all the pointless jobs, we can divide the remaining work, relax more, and thus avoid wasting energy and resources on holidays. The anthropologist David Graeber estimated that at least one-third of all jobs are pointless.1 It is much more than that.

So, which jobs can we do without? Graeber mentions a receptionist at a publisher in the Netherlands. She had nothing to do except for taking up an occasional telephone call. Another employee could have done that alongside other tasks. But without a receptionist, no one would take the publisher seriously. And so, the publisher needed a receptionist. It made economic sense. Still, we can do without the publisher and over 99.99% of the books ever published. Graeber has vastly underestimated the inefficiency of the modern economy in terms of the energy and resources it consumes relative to our needs.

In our economic system, a job has economic value when someone is willing to pay for it. I could hire you to dress as a rabbit and hop on the street. Perhaps that brings a few smiles to a few faces, so who is to tell this job is pointless? Okay, the cost of making the rabbit suit could have saved a few children from starvation, but that has less economic value because these children had no money. And that is precisely the problem. Think of consultants, managers, salespeople, lawyers, and financial advisors.

They don’t produce anything we can eat or use to keep us warm. A small percentage of what they waste on frivolous consumption could feed those who still go hungry. These highly peculiar views stem from a belief that money is the supreme measure of value and that we must engage in a rat race to produce and consume as many non-essential items as possible to prevent businesses from becoming unprofitable, as that would lead to economic collapse. And so, they keep telling us, like Jacobse and Van Es, that if we work harder and waste more energy and resources on senseless production and consumption, allowing capital owners to make more money, everyone will end up rich.

Making it work

Doing a job is about making yourself valuable to others, not about doing what you like. Essential jobs are often unattractive and uninspiring. In wealthy countries, most notably those with social benefits, immigrants do most of the unattractive jobs, also because the pay is low. These include vital jobs, such as harvesting crops. Meanwhile, the indigenous population went on to create value by performing redundant activities in the bullshit economy. The production of essentials, such as commodity goods like farm products, suffers from intense competition, so that jobs in these sectors are often hard work for low wages. Breaking up markets and producing for local consumption could change that. If one thing can help to make that happen, it is high transport costs.

Since time immemorial, humans have lived in groups. Most contributed to the group. That was how they survived. If we plan to survive, it must be rewarding to do essential jobs like harvesting crops and building homes. In ‘advanced’ economies, most people entertain themselves in the bullshit economy, transforming energy and resources into garbage and pollution, while not producing anything we need. That is worse than being on the dole if you look at the bigger picture and make the survival of humankind our primary directive. And so, we need to take the redundant labour off the market. It may well be that the economy reorganises itself, so there may be more people to do tasks like caring for the elderly, education, cleaning up the planet, and policing. Yet it is also likely that many remain on welfare. At the very least, the universal basic income should include food, clean drinking water, shelter and basic medical assistance.

An alternative to a UBI is an income guarantee. Why hand out money to people who have enough? And there should be an incentive to work. The income guarantee can include a work requirement, such as doing community service. Existing welfare schemes often make it financially unattractive to take on a low-paying job. A simple example can explain what an income guarantee scheme might look like. Assume there is an income guarantee of €800 per month and a 50% income tax.

gross incometaxnet income
€ 0+ € 800€ 800
€ 1000+ € 300€ 1300
€ 2000– € 200€ 1800
€ 3000– € 700€ 2300
€ 5000– € 1700€ 3300

The income guarantee gets settled with the income tax, so you receive assistance when your income is low. You may not receive money, but you may receive food or shelter. If your gross income is €2,000, you pay €200 in taxes, and your net income is €1,800. There is an incentive to work as you gain financially from doing a job. The income guarantee can replace existing welfare schemes, reducing red tape.

Welfare schemes require funding. To finance the scheme, you need more people making €3,000 or more than people making €1,000 or less. And so, the income guarantee can’t be fixed, and it may not be sufficient to live off if not all essential job positions are fulfilled. Even then, an income guarantee can improve workers’ bargaining position, as it can allow workers to work fewer hours, removing labour from the market, resulting in higher pay that attracts more workers, most notably if the guarantee is insufficient to live on.

Denmark has an income guarantee, combined with a duty to seek employment. It helps to make the Danish labour market flexible. Corporations can adapt their workforce to market requirements. Employment security, education and the income guarantee compensate for the lack of job security.2 Denmark is, in many ways, an ideal society, with a functional social contract and a competent government. That doesn’t come out of nowhere. Such a society requires particular cultural values, such as a sense of duty, that make people seek employment, and if necessary, education to fit into a new job.

This scheme is far from ideal. It will bring new problems, some of which we may not be able to fix. Yet the way the economy is organised at present is suicidal. There is no alternative. We must find something better. Faced with the high efficiency of the production of essentials and the vast overproduction and marketing of non-essentials, and the impossibility of directing the superfluous workforce to produce essentials at short notice, there appears to be no choice but to take a daring step and seriously consider handing out essentials for free, which we already do, so that the change is likely less than we imagine. From there, we may start building the economy of the future.

Latest revision: 5 May 2026

Other images: Monopoly game.

1. Bullshit Jobs. David Graeber (2018). Simon & Schuster.
2. Danish Employment Policy. Jan Hendeliowitz. Employment Region Copenhagen & Zealand, The Danish National Labour Market Authority (2008). https://www.oecd.org/employment/leed/40575308.pdf

A tenner on the street

A tenner on the street

No such thing as a free lunch

Here comes another joke about economists. Suppose you just have found a tenner on the street. You are very excited about your windfall and tell the next person you meet about your find. You say, ‘I just found a tenner on the street.’ Now, this individual happens to be an economist. And he replies, ‘That is impossible. If there really was a tenner on the street, someone would have picked it up already.’

Economists also say, ‘There is no such thing as a free lunch.’ Some people get a free lunch, but someone else has to pay for it. If you find a tenner, someone else paid for it. If there is money for free, people will take it and let others pay for it. Economists call it arbitrage. It is also what trade is about. Traders try to make money by finding money for free, but in doing so, they work and take risks.

Economics assumes humans are rational in economic matters and do not leave tenners on the street. We make the best of our money by choosing the right products. And we make as much as we can with our abilities. If we get cash for free, many would not work or only do jobs they like to do. And even though we often are not rational, it explains much of our behaviour, most notably what happens in markets. If there is a tenner on the street, it will not be there for long.

If gold costs € 50 per gramme in France and € 40 in Germany, traders can make money by buying gold in Germany and selling it in France. The demand for gold in Germany will rise, as will the supply in France. The law of supply and demand says that the price goes up when demand increases and goes down when supply increases, so the price in Germany and France will be the same.

Economists call it arbitrage. Smuggling comes from the same principle. Cigarettes are more expensive in the United Kingdom than on the European continent. You can make money smuggling cigarettes into the United Kingdom and selling them there illegally. The price difference promotes smuggling. The difference between arbitrage and smuggling is that arbitrage is legal.

Markets without morals

Even though most individuals have moral values, markets do not have them. There are always people willing to market a harmful product. Their excuse often is that if they do not, someone else will. Laws can illicit smuggling and black markets. It helps if laws and enforcement are the same everywhere. Still, supply always equals demand at a specific price. So, if you outlaw harmful substances or practices, say alcohol, prostitution, cocaine, gambling, or cigarettes, you promote crime and violence because criminals make more money.

And so, the War on Drugs is a failure, like the prohibition in the United States in the 1920s. If selling cocaine is legal, the price difference between Colombia and the United States would be close to the production and transport costs. In that case, a gramme of cocaine might cost $ 5 in Colombia and $ 6 in the United States. But if it is illegal, and governments enforce the law, a gramme of cocaine might cost $ 10 n Colombia and $ 100 in the United States, and criminals make lots of money in the trade.

As crime-related violence engulfs more and more countries, gangs of criminals undermine governments and societies by giving poor people an income, bribing officials and hiring hitmen to eliminate those who stand in their way. Seeing it as an economic problem might help to find solutions, for instance, undermining the criminal business model by letting governments supply harmful substances and gambling and regulating prostitution. If governments keep repressing the drug trade, they make the criminal enterprise unprofitable by bringing their cost above the price for which governments sell.

It brings moral dilemmas, but unlike criminals, governments do not do marketing, for instance, by giving drugs to children to turn them into addicts. Governments have no profit motive, which allows governments to help drug addicts and give them treatments. But this does not stop the fentanyl crisis in the United States. This drug is too cheap and too deadly. Only unconventional measures like taking all the addicts off the streets and locking them up might end the suffering. To solve this issue, we might need to be as committed as the Taliban and accept the human cost. The human cost will be higher if we are lax. If an addict dies because of these measures, this person would have died anyway, and the gain is in the people we save.

Trust but verify

Similar issues arise when governments tax, punish criminals, give subsidies or provide social benefits. If that elicits the desired behaviour, that is good, but that does not always happen. Businesses shift their profits to tax havens. Wealthy individuals do the same with their assets. If there are social benefits, people who do not like to work or dislike their job try to get on the dole. Many people need those benefits, but fraud undermines their legitimacy.

Reasonable people are willing to pay taxes for people who need help but not for fraudsters. Tax and welfare fraud may get understated or overstated for political reasons. If you can commit fraud and gain financially, some will do it. And if they get away with it, more will do it. That undermines trust. Regulations need enforcement. For instance, not enforcing building regulations allows contractors to make money using inferior materials. And that happens with devastating consequences.

When private contractors perform public tasks, and the government pays for them, there is an opportunity for fraud. In the Netherlands, the government decentralised several forms of social work to the municipalities. Since then, criminals and fraudsters have set up businesses in those areas. The choice is either for governments to do these tasks themselves or to work with reliable suppliers by vetting them, perhaps even licencing them, and monitoring their performance.

Trade as finding tenners

Trade is like looking for tenners on the street and keeping them, even if you know the previous owner. You might call it pickpocketing. The difference is not always clear. Hermes, the Greek god who was the protector of the merchants, was also the refuge of the thieves. Popular culture views traders with suspicion. Value is subjective. If you bought an item for € 50 but could have bought it elsewhere for € 40, did the seller dupe you, was the item worth € 50, or were you stupid?

And we cannot do without trade. Few people have the time to go to all the producers for the things they need, nor have these producers the time to handle each individual that needs their product. If you had looked around, you might have found the same item for sale for € 40, but perhaps, you were too busy and happy to get the item instantly without looking around. Trade performs the following functions:

  • Goods are made in one place and used somewhere else. Trade bridges distance.
  • Goods are produced first and consumed later. Trade bridges time.
  • Goods usually are made in large batches and used in smaller ones. Trade matches volumes.

Crucial to trade is information. A trader must know what is on offer for what price and where, and for what price it might sell when and where. Gathering that information costs time and effort. If you trade potatoes, you buy them in large quantities from farmers during the harvest and sell them in smaller quantities to greengrocers throughout the year. You must offer an attractive price to the farmers and the greengrocers. Otherwise, they will go elsewhere. And your business must make a profit. Otherwise, you might as well have stayed in bed to watch television.

Financial markets

A tenner dwells more likely on streets where others do not look. Wall Street firms hire the brightest minds on the planet to find these places. For instance, Apple stock may be for sale for € 150 in Australia while it is doing € 151 in Germany. If you want to pick up that euro, you must be there and act quicker than everyone else. Wall Street firms thus invest in the fastest computers and networks.

So if a tenner falls out of your pocket on the stock market, Wall Street firms have already picked it up before it hits the street. They may soon apply artificial intelligence to look inside your pocket and fetch the tenner before it falls. So if you are willing to sell your stock for € 150 and someone else is willing to pay € 151, Wall Street banks may snatch the securities you offer for € 150 and sell it to the other for € 151.

If the interest rate in one country is lower than in another, you can profit by borrowing money in the first country and lending it out in the other. It can be attractive to borrow yen at 1% to buy dollars to lend them at 5% and pocket the difference. Economists call this a carry trade. You might expect that, like the price of gold, interest rates would converge because the yen interest rate would rise because of the borrowing in yen, while the dollar interest rate would fall because of the lending in dollars.

That did not happen. The central bank sets the interest rate and can create money. The Japanese central bank kept lending yen at 1% and buying dollars because the Japanese government did not like the yen to rise. That could hurt their exports. If the US central bank held the interest rate at 5%, and the Japanese central bank prevented the yen from rising, that meant lots of free money for banks. The Japanese paid for it. They could have bought more with their money if it had been worth more.

One of the most troubling issues with trade, markets and capitalism, is that value is subjective and often depends on irrational emotions. The market value of an empty Gucci bag is higher than that of a shopping bag filled with potatoes. And even though we cannot establish objective value, we need food more than designer bags. The appreciation of subjective value is what makes the current economic system suicidal. A happy shopper today can be a dead one tomorrow.

Lately, I found a tenner on the street. Economists can be wrong. Well, indeed.

Latest revision: 19 August 2023

Featured image: A tenner on the street. Free Shutterstock image from Blackday.

Doughnut economic model

A model for the economy

Doughnut

Our greatest challenge at present is dealing with the limits of the planet. The second greatest challenge is to provide for an acceptable standard of living for everyone. The third may be reducing differences in income and power. To a large extent these are economic questions. The order is important. For instance, what’s the point of achieving a higher standard of living when our planet is destroyed in the process? And it may be good to reduce differences in income and power but not if everyone ends up poorer.

New technologies can make these goals easier to attain. Information technology and the Internet made it possible for people everywhere around the globe to connect and to work together. This created jobs for millions of people in countries like India and China and it provided them with a better standard of living. Imagine nuclear fusion becoming available and energy becoming really cheap. That could halt climate change and make our lives easier. But we don’t know what kinds of technology there will be in the future.

The challenges we face are of an economic nature so a model of the economy can be helpful. Economics is about deciding for what we use the limited means we have and for whom. The distinction between economics and politics is not always clear because economic choices are often of a political nature. Even when you believe that everything should be left to markets then this is a political opinion.

The economist Kate Raworth came up with the idea of doughnut economy. It can be used to assess the performance of an economy by the extent to which the needs of people are met without overshooting Earth’s limits.1 Assessing is not the real challenge here. Making it work is. Raworth did some suggestions but this model outlines a comprehensive global solution.

Much of economics is drawn from experience. Often from experience supposed economic laws were formulated. The supposed laws don’t always work so we need imagination too. Experience may be a good guide to predict human behaviour and it can help us to see how far we can make our imagination become reality.

We can’t continue to live like we do. New technologies alone will probably not save us. The changes we need most likely are a shock for most people, except the poorest. On the bright side there is the 20/80 rule. It states that if you set your priorities right, you can achieve 80% of what’s possible with 20% of the effort needed to achieve the 100%. So if we stop the 20% most resource consuming and polluting non-essential activities then we might achieve 80% of what we can possibly achieve. That may be enough so life may still be acceptable in the future.

This plan contains ideas that ignore political borders like combining environmentalism with supply-side economics. This is a comprehensive solution. People may take their pickings based on their political views but you can’t cherry pick and expect it to work. This plan doesn’t include specific proposals like building windmills nor does it dwell on sustainable development goals. It is an economic model only.

This model gives a general outline as to how to deal with the challenges using underlying economic mechanisms. Many issues have to be resolved along the way, for instance mitigating the consequences for those who suffer the most. In short the model is:

  • The limits of our planet should dictate economics. That is just plain survival. Everything else should be of a secondary nature.
  • Ending poverty should be the second goal in economic thinking. That is our moral obligation. All other goals come after that.
  • People organise themselves in different ways. Organisational flexibility is the feature that made humans so successful as a species.
  • Setting these limits will bring severe dislocations in the economy that have to be addressed in the short term as well in the longer term.
  • Money is power. Ignoring money and the profit motive won’t produce acceptable outcomes. Still, it may be possible to reduce the power associated with money.
  • The economy has a short-term bias. An important reason is interest. Negative interest rates can lengthen the time horizon of investment decisions.
  • Capital represents wealth. Capital can help to make the economy sustainable and to end poverty. Destroying capital usually is not a wise course of action.
  • It is probably easier to build the required capital via investment than via taxation as most people love to invest but hate to pay taxes.
  • It may be better not to tax capital but to tax conspicuous consumption of the wealthy instead and to ban harmful activities if that is feasible.

Caring for our planet should be central in economic thinking. In traditional economics the consequences for the planet are delegated to a marginal role. The approach so far has been that products and services can have hidden costs like the usage of scarce resources and pollution. The proposed solution is that bureaucrats calculate these costs and tax harmful products to the point that their price reflects their true cost.

The government is supposed to use the proceeds from these taxes to repair the damage done, which often doesn’t happen. Still these taxes increase the price of harmful products so people can afford fewer of them. That may help but it is a proverbial drop-in-the-bucket. Economic growth is exponential so measures to reduce resource consumption or pollution are overtaken by the growth of production and consumption.

It is hard to calculate the true cost of products and services. Another problem is that green solutions use scarce resources too. To build a windmill energy is needed, which often comes from non-renewable resources like fossil fuels. Subsidising these solutions can be inefficient. A better way out may be setting hard limits on resource consumption and pollution. That could allocate resources more efficiently and set higher rewards on solutions that really contribute to a sustainable future.

Ending poverty is not always an explicitly stated goal of economics but economics is about making the best use of limited resources. Economic thinking can help to reduce poverty. Capitalism can create wealth efficiently but doesn’t distribute it equally. An important obstacle is interest rates being limited to the downside. Negative interest rates can help to reduce poverty but poor people are often poor for other reasons too, for instance a lack of opportunities or their own behaviour.

Human organisation

The political economy describes how humans organise themselves. Humans are social animals that can cooperate on a large scale in a flexible way. It made humans the dominant species on the planet. There are three major forms of human organisation:

  • communities
  • markets
  • governments

Traditionally humans lived in communities and villages where people help each other. They contributed to their community and expected their community to care for them. Money hardly played a role and trade with the outside world was often barter. People were born into a community and it was difficult to leave. Communities are still important in modern societies but leaving is easier. Many communities are communities of choice that you can join and leave as you like. These are often based on shared interests, for instance a soccer club or a message board on the Internet.2

Markets can distribute goods and services efficiently. This is what is meant by the invisible hand. If people work in their own self-interest, this can benefit society because products and services are made according to the desires of individuals. The theory of supply and demand explains how that is achieved. This is done with the use of money in market transactions. In many instances markets fail to bring desirable outcomes. Markets are flexible but they do not think ahead so they do not take into account the limits of the planet.

Governments set the rules in societies and enforce them, often with the consent of the citizens. They provide public services that markets do not provide efficiently or in an acceptable manner. The organising agent is money too, in this case via taxes and government expenditures on public services. Governments can think ahead but they are less flexible. The limits of the planet aren’t flexible either so it may be a task for governments to enforce them.

Dealing with the consequences

The flexibility of the ways in which we humans organise ourselves allows us to set limits on a global scale and let governments, businesses and communities all over the world deal with them and reorganise themselves accordingly. These limits must be set from the top down like a dictate because the size of the planet can’t be changed. Being too flexible on this issue can be a greater mistake than not being flexible enough.

This requires a global authority. If adequate measures are taken, severe dislocations in the economy can be expected. For instance, if recreational air travel is to be ended, that will affect poor countries depending on tourism. The same is true for people working for businesses that use scarce resources produce non-essential goods and services. Millions of people will lose their jobs and their means of existence.

In the short run they have to be helped out with food and money. In the longer term people, communities, businesses and countries must adapt to the new reality. Multinational corporations may have to relocate jobs to areas that have little to offer to international markets. Ideally everyone has a useful role in society and feels secure but the economy requires a flexible labour market.

Money makes the world go round

Humans have social needs and varying motivations but most people are motivated by money, at least to some extent. Even when people are not motivated by money, those who are often determine what happens. That is because money represents power. Reforming the economy based on ideals and moral values will have little effect if money and financial markets are ignored. We need the goods and services money can buy.

People can be motivated by their jobs but most people work to make a living. Money plays an important role in this process. If you are not rewarded for doing your job well that can demoralise you, most notably if others receive the same reward for doing a poor job. A great experiment called the Soviet Union has proven that beyond reasonable doubt. Markets can help to eliminate businesses that are useless or inefficient.

Sadly the amount of money individuals acquire doesn’t always represent their merits for other people and society. The politically connected can enrich themselves at the expense of taxpayers. Business owners can exploit labourers and enrich themselves by moving jobs to low wage countries. And criminals can become very rich too.

Rich people can buy the respect and cooperation of others. They can make others do what they want them to do. This comes with social status. People like you when you are rich because they hope to benefit from your spending. Social status also comes from the products you can afford. Differences in power and social status can lead to social instability, most notably when many are poor and the rich didn’t deserve their wealth.

It is easier to finance a great endeavours like making the economy sustainable and ending poverty from investments than from taxation because nobody wants to pay taxes but everybody is happy to invest. People may work hard to build some capital for themselves through savings and investment but they won’t work so hard to pay taxes.

This was the secret of the success of the European empires that conquered the world. England, France, Spain and the Netherlands were much poorer and smaller than China, India or the Ottoman Empire, but they didn’t finance their conquests with taxation, but with investment capita. European conquerors took loans from banks and investors to buy ships, cannons, and to pay soldiers. Profits from the new trade routes and colonies enabled them to repay the loans and build trust so they could receive more credit next time.2

Reducing the power associated with money is possible. For instance, if there is a tax on currency, interest rates can go below zero, and owners of money can’t demand interest when there is a capital surplus and positive interest rates aren’t beneficial to the economy. Redistributing wealth via wealth taxes may reduce differences in wealth and power but it can also lead to capital destruction via higher interest rates.

Capitalists save and invest while ordinary people borrow and spend. Wealth taxes divert money from investment to consumption so interest rates may rise and the effect may be a reduction of capital rather than more tax income. And it is consumption that harms the planet. Wealth taxes can be useful but they aren’t part of the solution. It may be better to reduce the consumption of the wealthy instead as they often consume the most.

This would reduce the privileges attached to wealth as it reduces the options for the wealthy to use their riches. At the same time it allows capital to be allocated via markets so that efficiency considerations apply. Hence, more investment capital may become available and the excess may be transferred to governments, people and businesses via negative interest rates.

In other words, it may be smarter to ‘milk the capital of the rich’ by giving the rich fewer options to spend their wealth than to tax their wealth. In this way their capital may grow to the possible maximum and interest rates go lower to the benefit of everyone.

In the neo-liberal era government spending was constrained by interest payments. The public sector was neglected. The price paid was often poor health care, bad roads or an overstretched police force. Once interest rates are negative, we may enter an era of abundance, and interest payments may be added to government budgets. This is to be expected when resources are diverted away from the consumption of the rich.

I want it all, I want it all, I want it all, and I want it now.

– Queen, I want it all

Short-term bias

These words of Queen express the mindset behind an economic system that encourages people to buy as much stuff as possible. More is preferred to less and now is preferred to tomorrow. If we stop buying stuff, or even when we buy less, businesses go bankrupt, people become unemployed, debts can’t be repaid and money becomes worthless. And so there is a quest for economic growth that’s killing us.

Economics teaches that our needs and wants exceed the available goods and services and that we always want more. This is called scarcity. Economics also teaches us that we want stuff sooner rather than later. This is called time preference. And so we must be encouraged to save for the investments needed to make more stuff by promising us more stuff in the future. And so there must be interest, economics teaches us.

To be fair, economics goes beyond this simple caricature, but the short-term bias caused by the belief in scarcity, time preference and positive interest rates, is still everywhere in economic thinking, and also in our thinking because we are influenced by economics. The existence of negative interest rates signals that the basic assumptions underlying economics may not be correct. People keep on saving without the promise of more stuff in the future. And that is a good sign.

Our way of living has to change in a fundamental way. We need to recycle more, buy second hand stuff and forego frivolous consumption. In the future employment may come from addressing needs in society. For instance, former salespeople may care for the elderly. There is an abundance of capital, and if those who have enough constrain their desires, even more capital can be available to meet the challenges humanity is facing.

To make that happen we need new ideas about wealth and poverty. It may be wiser to see wealth as the amount of time we can to sustain our current standard of living. For instance, someone who owns € 50,000 in assets and needs € 10,000 per year to live off may be wealthier than someone who owns € 100,000 and needs € 50,000 per year. This also applies to humanity. The resources of the planet can be considered as our assets. On the basis of this measure we are becoming poorer by the day.

Interest rates are important here. They affect the time horizon of investment decisions. That is because of discounting. When investment decisions are made, this usually comes down to discounting the future income stream from the investment against the interest rate. Higher interest rates promote shorter time-horizons. This can be illustrated with an example from the Strohalm Foundation:

Suppose that a cheap house will last 33 years and costs € 200,000 to build. The yearly cost of the house will be € 6,060 (€ 200,000 divided by 33). A more expensive house costs € 400,000 but will last a hundred years. It will cost only € 4,000 per year. For € 2,060 per year less, you can build a house that lasts three times as long.

After applying for a mortgage the calculation changes. If the interest rate is 10%, the expensive house will not only cost € 4,000 per year in write-offs, but during the first year there will be an additional interest charge of € 40,000 (10% of € 400,000).

The long-lasting house now costs € 44,000 in the first year. The cheaper house now appears less expensive again. There is a yearly write off of € 6,060 but during the first year there is only € 20,000 in interest charges. Total costs for the first year are only € 26,060. Interest charges make the less durable house cheaper.3

In reality things are not that simple. The building materials of the cheap house might be recycled to build a new house. And technology changes. If cars had been built to last 100 years, most old cars would still be around. This could be a problem as old cars are more polluting and use more fuel. Nevertheless, the example shows that long-term investments can be more attractive when interest rates are lower.

The interest rate is not the cause but the consequence of the time horizons of individual borrowers and lenders in financial markets, which are people, businesses and governments. The economy doesn’t magically become sustainable because interest rates are low. Interest rates are low for a reason. If we don’t buy things we don’t need, interest rates go down. The time horizon of the economy lengthens because our economic time horizon lengthens.

Capital and wealth

The painful reality of what our wealth really is has such dramatic consequences for the economy that it is hard to foresee what a future sustainable society might look like. But capital will still represent wealth in the future. The traditional definition of capital is buildings, machines, technology and knowledge to make the products and services we use. This definition ignores the planet and that is not helping us to survive.

Only if we think of the planet Earth as our main capital and believe that we have to keep that capital in tact and that we have to sustain ourselves from the interest of this capital then economics can help us to survive. We must reduce our consumption to the point that the planet can regenerate itself. A true capitalist doesn’t consumes his or her capital either. He or she lives of the interest and saves whatever he or she can for the future.

Traditional capital can help with that. For instance, internet and video conferencing allow us to meet other people without travel. If most traffic is to disappear that would greatly reduce resource consumption and pollution but that may only happen if travel is restricted. Knowledge to make artificial meat from plants can reduce the need for fertilisers and pesticides. If we don’t have to feed livestock any more, lower yields in agriculture are acceptable. This can help to make agriculture in harmony with nature.

We may need more traditional capital in order to sustain ourselves within the limits of the planet even though much of our existing capital may prove to be worthless. For instance, if research is done to make artificial meat taste better then people will find it easier to switch. In that case factory farms may become redundant. We may need massive investments in renewable energy and recycling as well as pollution reduction. If we set limits on our resource consumption and pollution then the capital that can make us live within these limits can be profitable.

As capital represents wealth, lower interest rates can increase wealth. That is because investments must at least generate returns equal to the interest rate. If returns are lower then it makes no sense to invest as it would be better to put the money in a bank account. Hence, with lower interest rates more investments are profitable and more capital can exist. It may explain why wealthy countries often have the lowest interest rates.

The requirement of making at least the interest rate in the market has enormous consequences. A corporation that makes a product people like can go bankrupt when potential customers don’t have enough money and the corporation can’t make enough profit. In other words, if an investment in this corporation yields less than the interest rate in the market, it must fail. That’s why corporations don’t make products for poor people. There is no profit in that. Some economists think this is healthy and natural.

In a similar vein a coal fired power plant that returns 6% is considered efficient and useful while a windmill that makes 2% is seen as inefficient and wasteful at an interest rate of 4%. This logic can be suicidal because of climate change. Something is terribly wrong with this. But if investments don’t make the interest rate in the market, no-one would make them voluntarily. Nowadays windmills and solar energy are profitable because the technology has improved and interest rates have fallen.

In a market economy capital exists for profit. Capital can exist for other motives too. A community can make an encyclopedia or a software product freely available on the Internet. A government can build a road or operate a library or a hospital. But history has demonstrated that people are motivated by money and profit and that a market economy is an effective way to build capital. In order to live within the limits of the planet and to end poverty, markets may need more guidance from governments.

With lower interest rates it may be possible to make investments in ending poverty and making societies sustainable profitable so that people will make these investments voluntarily. Perhaps it is better to make a distinction between what should be done, for instance making the economy sustainable and ending poverty, and what can be done, which depends amongst others, on the interest rate. At an interest rate of 0% the windmill could be profitable and fossil fuels can be phased out. That’s why lower interest rates can be beneficial.

Indeed, there are other measures for usefulness than profitability. Perhaps the requirement to make a specific interest rate may not seem particularly useful to humankind but it can help to allocate capital more efficiently. Hence, for the benefit of humankind capital markets must continue to exist and interest rates may need to be as low as possible to generate the investment capital needed for making the economy sustainable and ending poverty.

Governments should guide this process by defining what is legal and what is not. The investment options for capitalists depend on the products and services that are legal. As the number of options are reduced, for instance by banning resource consuming non-essential consumption, the remaining alternatives can become more attractive, most notably when the excess of investment capital drives interest rates lower so that sustainable production processes with low returns become feasible.

If there is a market

Banning harmful products can elicit black markets, most notably when these products are addictive or save you from a lot of trouble or hard work and if you can use them without being noticed. It would be hard to stop the use of alcohol and drugs because people will use these products anyway. It may be easier to limit air travel as it will be difficult to fly a plane without being noticed.

Black markets and fraud are likely to arise if limits are set on the extraction of resources like fossil fuels and basic materials. The price of these resources could rise and it could be lucrative to extract more than is allowed. It might a good idea to look for places where effective control can be established. That may be on the demand side by banning or limiting certain activities or on the supply side by monitoring production.

Distortions in the markets for resources can produce losses or profits. Governments may need to take ownership of resources and compensate the owners. A government can then contract a miner to mine resources based on quota under specific regulations, and the miners can then be paid for extracting the resources. If markets become distorted by forward-looking planning then governments must intervene.

Perhaps different arrangements are possible. When interest rates are negative then future income discounted against the interest rate will have a higher net present value so it can make economic sense to keep resources in the ground.

Global competition drives down prices and it allows developing nations to build their economies too. Free trade can benefit humankind because it allows people and countries to specialise in what they do best so more and better products can be made at lower prices. Regulations aim to increase the quality of products by setting minimum standards. Regulations can favour large scale operations if they require large investments.

If the economy is to become sustainable the energy cost of producing items as well as the cost of transport may change and affect the scale of production. Regulations can stand in the way of scaling down and localising production but in many cases regulations, for instance regulations about food safety, exist for good reason. Investments to make production processes sustainable may be costly and may also favour economies of scale.

Confidence in money and trust in the financial system

Confidence is key in the capitalist economy because credit is based on confidence. The availability of investment capital comes from confidence in financial system and the economy. Actions that erode trust affect the available credit. Bank failures shatter confidence and stop the circulation of money. The Great Depression really took off after banks went bankrupt. The financial crisis of 2008 escalated once Lehman Brothers was allowed to go bankrupt.

To ensure that businesses can prosper credit must be available. A lack of trust in financial markets results in a destruction of capital. It is not a coincidence that economic crises are often preceded by a financial crisis. That’s why governments and central banks stand behind the financial system and support it at all cost. That’s why we seem to be hostage of the financial system. It doesn’t have to be that way.

Interest on money and debts makes the financial system unstable and prone to crisis because incomes fluctuate while interest payments are fixed. And because there is currency at an interest rate of zero, investors can flee to the safety of currency at no cost whenever there is some trouble. But interest rates are poised to go negative. This may be the opportunity to make the financial system more robust by charging a holding fee on currency and banning positive interest rates on money and debts.

Trust in the financial system and debts is reflected in the interest rate. If the interest rate is negative then investors prefer a certain loss to other investment alternatives. That might happen because of confidence in the currency as a store of value, for instance when inflation is non-existent. It is imperative that governments promote confidence in their currencies by limiting their primary deficits to the point that they are paid from the interest received on their debts.

Interest is the price paid for distrust so governments must be reliable and transparent to inspire confidence in financial markets. If a government is not honest to its creditors then the interest paid on its debts can rise. People like entitlements and do not like taxes so citizens may elect politicians who promise more entitlements or lower taxes. The interest rate on government debt can therefore also reflect the confidence of creditors in the citizens of a country.

A robust financial system that inspires confidence can meet the challenges that lie ahead as they will on the one hand require an unprecedented amount of capital in form of knowledge, new products and new ways of producing and distributing them, while on the other hand there will be severe shock and dislocations in the economy that only a robust financial system can withstand.

A holding fee on currency can ensure liquidity in financial markets so that the economy will not fall apart in times of economic stress. The situation in Wörgl demonstrated that even a deep depression can soon end with negative interest rates. The transformation to a sustainable economy requires an unprecedented amount of low yielding capital that may only be made profitable when interest rates are negative.

Investment guidance policies

For markets to do their job properly, capitalists should deploy their capital in the way they see fit within the options that are available. Additional measures may be needed to guide investments into desired directions like developing countries, recycling, and affordable housing. Wealthy individuals should realise they have a moral duty to make their capital contribute positively to society and the well-being of others. And even if the wealthy do not live up to their moral obligations, the laws and the financial system must channel their efforts in the right direction.

Financing the challenges of the future by investors may work better than financing them from taxes. Investors tend to chose the options that generate the most profits. In doing so they may be able to realise these goals more efficiently and generate more investment capital for the purpose. Favouring desired investments, for instance by excluding them from a wealth tax, can be a way to make them more attractive.

Products should cause as little harm as possible to the planet. Nature should be able to regenerate itself and undo the harm done. To make that possible, corporations should be responsible for the lifecycle of their products. Even when they work with contractors, the responsibility should remain with the corporation that markets a product.

During the neoliberal area businesses were often allowed to regulate themselves. This is didn’t work out well as businesses can gain an advantage from evading responsibilities in the form of reduced costs and higher profits. Governments have a responsibility to make and enforce the law. That may not be enough so journalists and activists have a duty to press businesses into sticking to the rules and governments into enforcing them.

Summary

This is an economic model meant to identify the economics to make the economy sustainable and to end poverty. There will probably be consequences that aren’t fair and they should be addressed where possible. Capital represents wealth. To make the economy sustainable we need a different view on wealth as it not being the amount of assets you currently have but the time your assets can support your lifestyle.

The planet should be seen as our main capital, not the buildings, machines, technology and knowledge to make the products and services we use. If we use more than nature can replenish, we use more than the interest of our main capital, and we become poorer as a consequence, even when the interest rate on traditional capital is positive.

To make the economy sustainable and to end poverty while maintaining an acceptable standard of living requires an unprecedented amount of traditional capital. The effort can better be financed from investments than taxes. Lower interest rates can make investments in making the economy sustainable and ending poverty more attractive.

Limiting our production and consumption will depress interest rates. Low interest rates require trust in the financial system and currencies. The financial system is based on debt, hence the integrity of debtors. A maximum interest rate of zero can improve the quality of debts. A holding fee on currency can ensure liquidity in financial markets.

Instead of spending on frivolous consumption everyone who can afford it should become a capitalist and invest in his or her own future. That can help to make the economy sustainable and to end poverty. Governments can support this process by legislation that bans harmful products and supports investments in areas that are beneficial.

Featured image: Doughnut economic model. Kate Raworth (2017). . CC-SA 4.0. Wikimedia Commons.

1. Doughnut economics: seven ways to think like a 21st century economist. Kate Raworth (2017). Vermont: White River Junction.
2. Political economy. Wikipedia. [link]
3. Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.

German picture of 1493 depicting human sacrifice by Jews

The Jewish Question

Experiment with tolerance

The Jews have lived as a minority in the lands of others for centuries, often separately in dedicated quarters as second-rate citizens. From time to time, they had to flee murderous mobs, and if fortune smiled upon them, they only lost their belongings. Because of their imagined special relationship with that supposed dude in the sky who created everything, the Jews have chosen not to integrate into their host societies and accept their religions, which, according to their scriptures, were heresies. And so, the Jews became a separate community, more loyal to each other than to others. As a result, Jewish existence became an experiment in diversity and tolerance, which had once flourished in the multicultural Roman Empire, as even the Gauls could keep their druids. Yet, it came under pressure with the rise of the uncompromising monotheistic religions, Christianity and Islam. It makes Jewish history a learning experience for the issues plaguing multicultural societies today.

The issue of what to do with the Jews became known as the Jewish Question. Several thinkers, including Martin Luther and Karl Marx, couldn’t resist the urge to express their views on the Jews, which generally were unfavourable. Voltaire, a European Enlightenment philosopher, wrote very nasty things about them. He was a smart fellow, so why would he? Is it just ill-informed hatred? And Adolf Hitler sought a definitive solution by exterminating the Jews, in what became the Holocaust. Being creative thinkers, the Jews also came up with a solution under the influence of nationalism: a country of their own. The myth of Zionism claims that an invisible dude floating in the sky had promised them a land, Israel. The founder of Zionism, Theodor Herzl, wrote, ‘The Jewish Question persists wherever Jews live in appreciable numbers. Wherever it does not exist, it is brought in together with Jewish immigrants. We are naturally drawn into those places where we are not persecuted, and our appearance there gives rise to persecution.’

Herzl never asked himself what role the Jews themselves played in the problem. That was the task of the anti-Semites. The Jewish Question has proved impossible to resolve over the past 2,000 years, despite the smartest minds working very hard on it. The same issues plague multicultural societies today, so we should take the problems arising from differing habits and beliefs very seriously. They cause harm. Jews did usury, and Christian did pogroms. As money is today’s religion, we learned that usury is good, but it is among the greatest evils. And we have trouble dealing with our differences. We are constantly scheming, and most of our communication is gossip. In folklore, conspiracy theories circulate blaming the Jews for all kinds of stuff, ranging from spreading diseases, sacrificing children in their rituals, and conspiring to dominate the world. This tradition continues into the present, partly because the facts make some of these conspiracy theories seem plausible. A few examples are:

  • Those who oppose the current financial system and don’t understand finance may blame the Jews for it, as the Jews have been moneylenders for centuries.
  • Zionist Jews have taken a slice of Arab land that is now Israel, so a lot of Arabs hate Jews. The fight gets exported to other places where Jews and Arabs live.
  • You may hear that Jews determine what you hear on the radio and see on television because they control the media. So, do they? Inquiring minds want to know.
  • Perhaps you have read that Jews cause wars and revolutions, sometimes with the help of the secretive Freemasons and the elusive Illuminati.
  • There is a worldwide trade in illegally harvested organs. Jews are also involved. It is not only Jews, but anti-Semites don’t care about the others.
  • Perhaps we can’t trust Jews because they are more loyal to Israel than the country they live in. But what about migrants from other countries?
  • The United States has a corrupt and dysfunctional political system. The Jews used it to their advantage. So, follow the money trail.
  • The same goes for poor-quality Hollywood movies. Those sneaky bastards spread LGBTQ+ propaganda to destroy traditional Christian families by making people gay.
  • We can blame the Jews for other things too, of course, not the ‘good Jews’, only the ‘evil Jews’, but it is hard to tell the difference. They are the perfect scapegoat.

These conspiracy theories are not entirely untrue. Denying or repressing the truth doesn’t help in the long run. The truth can set us free if we let go of hatred and resolve these issues. Otherwise, you can kiss progress goodbye, and the worst side of human nature will once again rear its ugly head as it did during the Holocaust. There is a relationship between ethnicity and conduct that goes via culture. Cultures emerge out of history and circumstances. You can’t blame someone for being raised in a particular tradition, but our traditions harm others when we live together. That is not only true for Jews. Just think of the damage whites have caused all over the globe. There is ethnicity-related organised crime, like the Italian mafia. In the United States, blacks do more violent crimes than other ethnic groups. Non-Western immigrants in Europe are also increasingly posing problems. So, if bigots allege that Jews do this or that, look at the facts. Maybe some of it is true.

There has been a longstanding Christian history of intolerance towards the Jews. Only, Christians were far more intolerant towards all other religions, including diverging versions of Christianity, which were heresies that had to be eradicated, until Protestants proved impossible to exterminate. Christians only tolerated the Jews, first because the Pope said so and later because they proved helpful for trade, tax collecting and moneylending, which Christians found morally reprehensible activities and didn’t wish to do themselves. Muslims were even more tolerant. Apart from Jews, they also tolerated Christians. Okay, they had to be submissive and pay special taxes to their Islamic overlords. Yet, despite all that tolerance, Christianity and Islam were the most intolerant religions. It proved crucial to their success. Today, Christians and Muslims together make up half the world’s population.

As a result of the spectacular success of their fairy tale collection, the Jews often found themselves in the crosshairs. Still, their plight was not much unlike that of other minorities that didn’t integrate into society. Humans strive for conformity and employ exclusion and violence to that end. And being beaten up is the least you can expect from peasants if you look peculiar, smell differently, and have strange ways. That is why Jews preferred to live in cities, where they mingled with others who wore extraordinary outfits and followed peculiar customs. It is human nature to be xenophobic, but we can get accustomed to differences. And you had to in cities. And you had to in cities. Otherwise, you would spend much of your time harassing strange-looking people, and get beaten up also, for there are more strange-looking people in the city than on the countryside.

Short primer on Jewish history

Reading the Bible might give you a wrong impression of Jewish history. It is a collection of myths mingled with facts. And it gives the Jewish perspective. A historian would present a very different narrative. Between 1200 BC and 900 BC, a few small nation-states emerged in Canaan, which is the area now covered by Israel and Palestine. Among them were Israel and Judah. These small states emerged because Egyptian power waned and the Egyptian vacated the area. In the Bible, you read that Moses led the Jews out of Egypt with the help of an intimidating cloud named God. There was a liberation from Egypt, but the Biblical account is greatly embellished. It took a few centuries for new, powerful states to emerge and overrun these small states. Israel fell into Assyrian hands in 720 BC. Judah was destroyed in 587 BC by the Babylonians, who had taken over the Assyrian Empire.

These small kingdoms had a national deity for fortune and protection. Their kings adopted a deity to promote a sense of a nation and to assert their authority. Yahweh was the deity of Judah and probably also of Israel. At first, Yahweh’s worship may not have differed much from the worship of other national deities, such as Chemosh, the god of Moab. When the Assyrians and Babylonians destroyed Israel and Judah, their inhabitants faced an identity crisis. The Babylonians took many Jews into exile in Babylonia while others remained. Jewish priests then compiled the Tanakh (Old Testament) from existing documents and circulating stories to define a sense of national identity around their deity, Yahweh, in the absence of a king or territory. In this way, the Jews became a people without a land. Their promised land, Israel, remained central to their religion.

Around 450 BC, the exiled Jews could return to Canaan. From 164 BC onwards, there was an independent Jewish state for 100 years until the Romans conquered it. At the time of Jesus, tensions were growing between the Jews and their Roman overlords. It led to uprisings between 66 AD and 136 AD. During these revolts, the Romans destroyed the Jewish temple. Over time, the majority of the area’s inhabitants became Christians and later Muslims. Jews remained in scattered communities around the Mediterranean. This is called the diaspora.

In ancient societies, only the elites received an education. The Jews introduced mass education for their people. Their scriptures became the pillar of their national education system. Divine knowledge, rules, and regulations became public. The value of education thus became embedded in Jewish culture. Nations came and went, but the Jews survived. Being a people without a land, and basing their identity entirely on religion and traditions, was a successful long-term survival strategy for the Jews. They have been around for more than 2,500 years, and without a homeland for nearly 2,000 of those years. It is also why not all Jews support the Zionist project of the state of Israel. A Jewish state might endanger the Jewish nation and identity if the Jews fail to defend their land.

The Jewish religion became the basis for Christianity and Islam, both of which regard Judaism as a legitimate religion, even though less advanced. Christians and Muslims allowed Jews to live in their lands, albeit as secondary citizens. In the Middle Ages, Jews built up a trade network in Europe and the Middle East. They had freedom and influence within Christian and Islamic lands. Jewish merchants had a chameleon-like ability to fit into spaces that were either ruled by Muslims or Christians. For centuries, the Jews faced few restrictions and held positions of power in Spain and Portugal. That changed later on, most notably after the Jews were expelled from Spain.1

Living together was not always easy. Christians have blamed the Jews for killing Jesus. The Jewish high priests had accused Jesus of blasphemy as he had claimed to be the Son of God. The Jews believed that God had no son, and calling yourself the Son of God in a literal sense, which Jesus did, was most blasphemous indeed. Jesus apparently did some magic to back up that claim. Yet, not everyone was convinced. According to the Gospel, the Jewish high priests and a Jewish mob demanded the crucifixion of Jesus. That supposedly made the Jews forever responsible for the death of Jesus. It was a justification for Christian anti-Semitism. The Gospel, which means good news, by the way, goes into the particulars as to why that is so (Matthew 27:24-25),

When Pilate saw that he was getting nowhere, but that instead an uproar was starting, he took water and washed his hands in front of the crowd. ‘I am innocent of this man’s blood,’ he said. ‘It is your responsibility!’ All the people answered, ‘His blood is on us and on our children!’

That was not good news for the Jews. And there was more bad news. From time to time, rumours spread that Jews abducted Christian boys for their secret rituals. It is known as the blood libel. When a boy had disappeared, it was an excellent occasion to murder some Jews. There was no basis for these beliefs, but few people knew about the Jewish religion and its practices, except that they wore funny suits and hats. And because of their ritual hygiene, the Black Death didn’t affect Jews as much as Christians. As a result, rumours spread that Jews spread the disease, leading to more evictions and murders.

Now look at the issue from the perspective of a medieval peasant. He didn’t know the cause of Black Death, for no one knew it was germs feasting on fleas feasting on rats, and Jews seemed not to catch the disease. Fearing they were behind it was rational. The information he had suggested that it might be true, and it was a matter of life and death, so it was better to be safe than sorry. Medieval people also burned witches at the stake when the harvest failed. If, due to a lack of knowledge, witchcraft seemed a cause of harvest failure, your survival might depend on burning witches. As Americans say, ‘Shoot first, ask questions later.’ That is how you survive. And if you wish to get rid of people you don’t like, and Jews were not well-liked, you can spread these rumours, and others will do the dirty work for you.

Some Jews had considerable influence, but as a group they had a low standing in popular culture. They worked in tax collecting, trade and finance, activities that were seen as reprehensible, as trade and finance often coincide with questionable ethics. Some languages have words or sayings that point to the issue. The English language has the term Jewish stock take, referring to a shopkeeper destroying his shop in a self-lit fire to claim insurance. The Dutch language has the word ‘jodenbod’, which means ‘Jew’s bid’, to indicate bids below a reasonable price that people in a desperate position might have to accept. And these stereotypes didn’t merely pop out of nowhere.

After the French Revolution of 1789, Jews in Western Europe received citizenship. In Eastern Europe, where they were somewhat less enlightened because they hadn’t fought hard enough over religious trivialities, and most notably in Russia, they continued to face pogroms, which were riots that included robbery, destruction of property and sometimes killings. Around 1870, the first Jewish settlers entered Palestine. In 1896, Theodor Herzl published The Jewish State, claiming that the solution to the Jewish Question was a Jewish state. It marked the beginning of modern Zionism.

In 1873, the Vienna stock market crashed. A lingering slump followed, lasting until 1896. It was the first global economic crisis, known as the Great Depression. Compounding the woes was the expansion of the railroad network, which opened European markets to cheap grain from the United States and Russia, leading to a collapse in agricultural prices and a wave of bankruptcies in the Great Agricultural Crisis. Land prices dropped. Also, my great-great-grandfather was duped. He was a farmer who had bought land before the slump. The price of land would not return to its old level during his lifetime. This story still circulated within my family, illustrating the severity of the hardship.

The repercussions are not to be underestimated. Anti-Semitism rose in Germany, Austria and France. People blamed Jewish bankers. The unsettling events also set investigative minds to work to uncover why they happened, as would happen again during the Great Depression of the 1930s. The epicentre of the crisis was Austria, which helped give rise to the Austrian School of Economics and its theories on credit cycles. Yet, the primary cause of financial crises is usury, or lending at interest. Many people saw usury as a scam, making them blame the banks and the Jews. It was also the time when Silvio Gesell lived. He experienced the misery first-hand as a German businessman. It prompted him to investigate the underlying causes and, later, to write The Natural Economic Order. That Hitler came from Austria is not merely an accident but also a cultural-historical phenomenon. As was the Miracle of Wörgl occurring there. German-speaking people were very much aware of usury and its consequences.

In France, anti-Semitism led to the conviction of Captain Alfred Dreyfus, the only Jewish member of the French general staff, of spying for Germany. He was innocent and was rehabilitated a decade later, following vigorous protests. During World War I, many Jews fought for their nation-states, also in Germany. Yet after the war, a myth emerged in Germany, suggesting Germany had lost the war because of leftists, anti-monarchists and a Jewish conspiracy. That was most ironic. The international Jewry was inclined towards Germany because it fought the Russian Empire, which had the most anti-Semitic government at the time. And it was Germany that helped spark the Bolshevik Revolution, seeking to undermine the Russian war effort by sending exiled radicals into the country and financing their activities. The Nazis later blamed the Jews for what Germany did.

Jewish state

As the international Jewish community mostly favoured the Germans during World War I, the British offered them Palestine to establish a national home for the Jews in a bid to get them on the Allied side. The Balfour Declaration was part of a letter from the United Kingdom’s Foreign Secretary Arthur Balfour to Lord Rothschild, a leader of the British Jewish community who came from a prominent banking family that was once among the richest and most powerful. In conspiracy theories, they still are, and control the fate of nations. Shortly after the start of World War I, a Zionist British Cabinet member, Herbert Samuel, wrote a memorandum proposing to back the Zionist cause to enlist the support of Jews in the war. The Arabs living in Palestine had no say in this matter, which soon led to tensions and Arab resistance, which the British repressed. Between 1920 and 1940, 300,000 Jews migrated to Palestine. The Arabs revolted between 1936 and 1939. The British subsequently restricted Jewish immigration.

After World War II, large numbers of Jews entered Palestine illegally, many of them Holocaust survivors. The Holocaust became a trauma in the collective memory of the Jews. Nearly six million of them died in concentration camps and mass executions. It gave credibility to the Zionists, who believed that the Jews could only be safe once they had a country of their own. The atrocities the Jews had suffered from raised support for the Zionist cause in the West, most notably in the United States, which favoured the illegal immigrants who soon caused mayhem and attacked the occupiers and the indigenous population. The Zionists’ guerrilla war against the British comprised 70 terrorist attacks between 1937 and 1948, including the King David Hotel bombing that killed 91 people and the devastating bomb attack on the British police headquarters in Haifa.

In 1947, the United Nations planned to divide Palestine between the Jews and the Arabs. The plan allotted 62% of the land to the Jewish state despite the Palestinian Arab population numbering twice the Jewish population. The Zionists accepted it as it was a favourable deal for them. The Arabs rejected it because, in addition to forming a two-thirds majority, they owned a majority of the land. The Arabs were also unwilling to accept a division and sought Arab rule over Palestine.

After Israel declared independence in 1948, a civil war broke out. The neighbouring Arab countries attacked Israel, but the Zionists were prepared and well-trained, and the Arabs lost. Around 700,000 Arab Palestinians, or 80% of the population, fled or were expelled from their homes. The Palestinians call it ‘The Catastrophe’. The Catastrophe greatly influenced Palestinian culture and helped to create the Palestinian identity. Before that, they were merely Arabs. The Catastrophe means displacement, dispossession, statelessness and fracturing of Palestinian society, much like the Jewish diaspora.

During the Six-Day War of 1967, Israel conquered the remaining Palestinian territories. Israel started this war after Egypt blocked Israeli shipping through the Egyptian-controlled Strait of Tiran and brought military forces close to the Israeli border. An Israeli surprise attack caught the Egyptian forces off-guard, causing Egypt to lose nearly all its military aeroplanes. Jordan and Syria came to Egypt’s aid but were also defeated. Whether this pre-emptive war prevented an Egyptian attack on Israel remains a matter of debate.

Israel captured and occupied the Golan Heights from Syria, the West Bank from Jordan, the Gaza Strip and the Sinai Peninsula from Egypt. Around 300,000 Palestinians and 100,000 Syrians fled or were expelled from the West Bank and the Golan Heights. The remainder came to live under Israeli occupation. Zionist settlers began colonising the remaining parts of Palestine, most notably the West Bank. In 1973, Egypt and Syria launched a surprise attack against Israel with the support of other Arab nations in the Yom Kippur War. After initial Arab successes, Israel repelled the attack.

Israel achieved peace with Egypt and Jordan, but the Israeli-Palestinian conflict remains unresolved. Palestinian resistance came in the form of terrorist attacks such as blowing up buses filled with civilians in a bid to kill as many Jews as possible. At the same time, Jewish settlers kept grabbing the land of the Palestinians, often with violence. And both believed they had God on their side, so that their cause was just, whatever evil they perpetrated. Since 7 October 2023, after a terrorist attack by Hamas that killed over 1,000 Israelis, the hope for peace seems gone. Hamas gets its arse kicked. The Palestinians have yet to learn the hard lesson the Jews learned 20 centuries ago when the Romans routed them. You don’t have God on your side when you fight a vastly superior opponent. And Israel is not a colony in the traditional sense, so the Jews will fight to the death for their homeland. Now, let’s hope that there will be peace in Israel and Palestine, and that future generations can leave this bitter conflict behind.

Conspiracy theories

Anti-Semitic conspiracy theories range from crazy allegations to assertions backed by well-documented research, like the investigation into the Israel lobby by John Mearsheimer and Stephen Walt. The stranglehold of Jewish interest groups is not a conspiracy theory, but a well-documented fact. There is a large grey area in between. It has long been a minefield because of the Holocaust and the wrath of the Israel Lobby. No sensible person would like to see pogroms, while few politicians opposing the Israel Lobby could stay in office. The Jews are a small group with an enormous clout and impact on world history. It fuels speculation. Is there a scheme behind it? Before going into that, there are a few general explanations for the remarkable successes of the Jews. These are:

  • Education. The Jews invented mass education twenty-five centuries ago (it took twenty-four centuries for Western Europe to follow suit).
  • Jews often went into occupations like trade and finance, which can make you wealthy and give you a position of power as you let others work for you.
  • For centuries, the Jews lived under marginal and uncertain conditions. It required resourcefulness that became part of Jewish culture.
  • The Jews are God’s chosen people. That was not always a blessing for the Jews themselves, nor did being chosen seem to be a blessing for Jesus.

Anti-Semitism has done tremendous harm as it led to the Holocaust. Yet, the anti-Semitic conspiracy theories aren’t entirely incorrect. When the CEO of the ADL, Jonathan Greenblatt, complained that the Christian identity movement is an anti-Semitic, racist, and poisonous ideology, he had a point. But then again, the Jewish lobby proved the point of the anti-Semites, as they have the MAGA politicians in their pocket, and even control the political branch of the Christian identity movement. That is how far things have gotten and why many people hate Jews, not only in the United States. A 2026 UNESCO report claims that three-quarters of European teachers have witnessed anti-Semitic incidents ranging from wearing Nazi symbols or Holocaust denial to physical violence.3 That also has to do with the migration of Muslims to Europe and the Israeli-Palestinian conflict.

Things are escalating. Jews aren’t safe in more and more places. So it is better to view these conspiracy theories more objectively as hypotheses that might be supported by evidence, while recognising that they are part of a wider problem of tribalism and cultural differences. That requires emotional distance, as the truth can be painful for those involved in these conflicts. Still, if we can manage that, we might get closer to their resolution.

An American joke goes like this: ‘Why does Israel not become a state of the United States? Well, if Israel does, it will have only two Senators.’ Israel has had the United States’ unconditional support for decades. Whatever Israel did, such as taking Palestinian land or attacking its Arab neighbours, it had US support. Senators and members of Congress who held different views faced the powerful Israel Lobby. The lobby would fund their opponents’ campaign, thereby ensuring their defeat. Campaign financing corrupts US politics, and the Jewish lobby is a major player in the corruption game. The survival of the Jewish state was at stake. A book claims there is a secret Jewish plot to gain world domination.

The Protocols of the Elders of Zion is a work of fiction made up by the Russian secret service’s Paris branch around 1900. The Russian regime was hostile towards Jews. In 1917, the communists toppled it, and there were many Jews in the communist movement. A few radicals taking over such a large country? It can’t be a coincidence. Indeed, Germany had a hand in it. Since then, more people began to take the Protocols seriously because humans are religious creatures who need myths to believe in. The Protocols claim the Jews form a secret cult conspiring to gain world dominance using all kinds of spectacular schemes hidden from the public eye. The absence of evidence proved the secrecy and brilliance of their planning. Adolf Hitler and the automaker Henry Ford believed it, as did many others. Yet, if you look at the world today, the work looks prophetic. That is the irony of history or God’s plan.

The main themes of the Protocols and related conspiracy theories are control of world finance, organisation of radical movements and interference with diplomacy to cause wars that kill non-Jews. There are racist, political and religious aspects to these claims. You can read ‘evil Jews’ between the lines. Anti-Semites use so-called whistle words such as ‘our overlords’ or ‘lizard people’. That was also because automated message board moderation tools were taking out negative comments mentioning the word Jews. Not everyone gets it, and humans are fairy-tale-believing creatures, so more and more people now think that reptilians run the world. Jewish advocacy groups pointed out the racism, bigotry and false claims. It didn’t help. The Protocols are a model of reality that offers a particular explanation for phenomena such as Jewish influence and involvement in finance. It seems to explain much, also because reality resembles the fiction.

The political scientists John J. Mearsheimer and Stephen M. Walt investigated the Israel Lobby’s activities and concluded that if you criticise Israel in the United States, you will be branded an anti-Semite, which means that you are a racist Jew-hater. Major newspapers subsequently published editorials calling their research anti-Semitic, thereby proving their point because they backed their claims with evidence. AIPAC is the most prominent organisation in the Israel Lobby. Mearsheimer and Walt concluded,

AIPAC’s success is due to its ability to reward legislators and congressional candidates who support its agenda, and to punish those who challenge it. AIPAC makes sure that its friends get strong financial support from the myriad pro-Israel PACs. Those seen as hostile to Israel, on the other hand, can be sure that AIPAC will direct campaign contributions to their political opponents. The bottom line is that AIPAC, which is a de facto agent for a foreign government, has a stranglehold on the U.S. Congress. Open debate about U.S. policy towards Israel does not occur there.2

Stranglehold is considered a whistle word as it implies that evil Jews run US politics, which supposedly is an anti-Semitic conspiracy theory. Still, it is a well-documented conclusion, for you can’t get far in US politics without the approval of the Israel Lobby. And so, the anti-Semitism argument increasingly fails to convince. It has long been forbidden to say the truth in the open, so that it festered below the surface. The same is true for other issues plaguing multicultural societies. These feelings are understandable, but the alternative is worse. Political correctness has sought to keep the troubles at bay, but in doing so, it hasn’t solved the underlying problem of our believing different myths, which puts us in conflict. A multicultural society may work if the state is strong and respected by everyone, and if we are all tolerant or believe the same myths. And it requires a fair social contract. These are fairy-tale-like conditions.

If you think of the consequences of anti-Semitism in the past or that millions of Jews face displacement if Israel collapses, it is understandable why Jewish interest groups go to great lengths to keep American support. Equally understandable is that many Palestinians hate the Jews so much that they want to kill them because they have taken their land. The Jews occupy their country. And so, the alternative to the myth of multiculturalism is tribal warfare, and the situation in Israel and Palestine perfectly illustrates that alternative. The only solution is a final solution. That is what Hamas and the Israeli government might agree on. It is only that, for multiculturalism to succeed, we must all identify as one people.

Suppressing the truth may work for a while, but it can become a self-defeating strategy if problems go unaddressed and escalate. People may get angrier and succumb to increasingly extreme fantasies. MAGA is a good example of the level of delusion people can reach. And the crazies aren’t entirely wrong. Millions of immigrants entered the United States unchecked, so half the Americans were willing to accept any lie to stop this. And think of the possibility that Epstein was a Mossad agent. It remains unproven but, given the evidence at hand, is a realistic possibility. Dealing with the truth is like opening a can of worms. The obsession with Jews that many have distracts from other lobbies operating in the corrupted US political system, some of them representing foreign national interests. Still, few lobbies attract as much attention as the Israel Lobby. So why is the Israel Lobby so powerful, visible and aggressive? There are some possible answers:

  • The Israel Lobby has long had broad popular support. Anti-Semitism led to the Holocaust, so the Israel Lobby could easily gain sympathy.
  • Jews feel insecure. The Holocaust is their collective trauma. Criticism of Israel provokes the fear that the legitimacy of the Jewish state is at stake.
  • Israel ignores international law by colonising Palestinian land. The unconditional support of the United States helps Israel to do that.
  • You can’t reason with fanatical opponents like Hamas, Hezbollah and Islamic Jihad who will not stop until either they or Israel has been fully annihilated.
  • And finally, the elites run the political system, and about half of the wealthiest Americans are Jewish, while Jews make up 2% of the population.

The Israel Lobby is the most visible in the United States but has significant clout elsewhere. The rationale for fighting anti-Semitism is the Holocaust. The Woke, also known as the Frankfurt School, copied these same tactics. In his book Critique of Pure Tolerance, Herbert Marcuse argued that freedom of speech limits freedom. He proposed a so-called liberating tolerance. It is intolerance of right-wing movements and tolerance of left-wing movements. To them, radical left-wing propaganda was acceptable while radical right-wing propaganda was not. The Frankfurt School originated in Germany and was obsessed with preventing the resurgence of Nazism, which explains its particular view of free speech. The group has had a significant influence, as it brought us political correctness, and it is more commonly known as cultural Marxism.

Trade and usury

The Jew as usurer is a well-known theme in anti-Semitic folklore. Jews traditionally often worked in trade and finance. In the Middle Ages, Jews were forbidden to perform honourable crafts or own land and were pushed further into activities Christians deemed reprehensible. The most successful merchants are the greedy ones. A most nefarious practice was money lending at interest, or making money without working for it. It creates a money shortage, leading to deflationary collapses in which usurers can buy up at fire-sale prices, thereby further enriching themselves at the expense of the poor. Merchants make money without working by making others work for them. Worse yet, they make people compete, which has led to an explosion in wealth but has also pushed humanity into an innovation death spiral that is now nearing its final phase.

The Roman Catholic Church forbade Christians to charge interest to fellow Christians. The Bible says, ‘You shall not charge interest on loans to your brother.’ (Deuteronomy 23:19) Christians and Jews didn’t see each other as brothers, so that Jews could lend money at interest to Christians. Jews never had a monopoly on trade and banking, and Christian bankers invented schemes to circumvent the anti-usury laws by relabelling interest as administrative fees, or they came up with other gimmicks, yet Jews being involved in these activities goes a long way in explaining the sentiments against them. Today, the long-term consequences of interest charges and trade are poorly understood, but they are the main drivers of the efficiency and innovation drive that drives our collective suicide.

It is not that the Jews didn’t know. Rabbis wrote commentaries on usury in their scriptures. One explains that interest works like a snake’s bite. Initially, it appears insignificant, but it will eventually take the person’s life. Interest eventually consumes the borrower, leaving him no way out of his ever-increasing debts. The lender appears to be increasing his wealth through interest. However, like cancer, interest eventually consumes him also. The economy will ultimately collapse due to wealth inequality, with borrowers unable to repay their debts. Modern finance, despite its seeming advanced, is merely an extend-and-pretend fantasy to keep the Ponzi scheme of usury going. And it has worked so far because economic growth and inflation helped to keep the debt load manageable.

Interest is most vicious but largely imperceptible, as it works over the long term across several human lifespans, so once you have seen the truth, you are among the few and already on your way to the grave. At the same time, the next generation of uninformed suckers swarm the streets. The accumulation of capital into the hands of a few brings down individuals, businesses, nations, and ultimately, entire civilisations. In the Middle Ages, everyone knew that usury was evil. Interest rates were high, sometimes as much as 20% to 30% annually. The misery it caused was plain for everyone to see. Yet, for lenders, the risks were also high, so at 10% interest, their business would have been loss-making. These rates were a ‘fair’ market price, yet a societal curse. Persecuting Jews was also profitable for their debtors. In 1290, King Edward I expelled the Jews from England, confiscated their assets, and defaulted on the loans he had received from them.

Large-scale borrowing can’t occur without debt markets and interest. There would have been no capitalism without interest on debts. In the 16th century, interest rates fell to around 10% annually as financial markets became more developed and efficient, thereby reducing lending risk. As interest rates fell and because of the Protestant Reformation, religious objections to interest waned. Interest became an essential part of the capitalist economy, and Western culture largely remained ignorant of the problematic nature of interest charges. Once Christians could charge interest on fellow Christians, the Jewish role in money lending reduced, but it remained significant, and it affected Jewish culture. In his work On the Jewish Question, Karl Marx wrote,

Let us not look for the secret of the Jew in his religion, but let us look for the secret of his religion in the real Jew. What is the secular basis of Judaism? Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly God? Money. […] The Jew has emancipated himself in a Jewish manner, not only because he has acquired financial power, but also because, through him and also apart from him, money has become a world power and the practical Jewish spirit has become the practical spirit of the Christian nations. […] Money is the jealous god of Israel, in face of which no other god may exist. Money degrades all the gods of man – and turns them into commodities[…] The bill of exchange is the real god of the Jew. His god is only an illusory bill of exchange[…] The chimerical nationality of the Jew is the nationality of the merchant, of the man of money in general.4

Several commentators have rushed to denounce the work as a classic example of anti-Semitic propaganda. And the anti-Semites, who see Marxism as a Jewish conspiracy, pretend it doesn’t exist. Karl Marx came from a non-religious Jewish family that had adopted Protestant Christianity. It gave Marx an inside view of the ways of non-religious Jews. And he didn’t base his observation merely on personal experience. He cited the work of others who investigated the matter when it was not politically incorrect to do so. He quotes Bruno Bauer, who has also shared his thoughts on the Jewish Question,

The Jew, who in Vienna, for example, is only tolerated, determines the fate of the whole Empire by his financial power. The Jew, who may have no rights in the smallest German state, decides the fate of Europe. While corporations and guilds refuse to admit Jews, or have not yet adopted a favourable attitude towards them, the audacity of industry mocks at the obstinacy of the material institutions.

So, when the Vienna stock market collapsed, many blamed the Jews. Marx’s language feels rather disagreeable in this post-Holocaust world, as he speaks of ‘the Jew’. Had he instead spoken of ‘the German’, no one today would have minded. And if you read carefully, it is admiration rather than hatred. Marx intended his writing as cultural criticism, so that everyone, Jews and Christians alike, could benefit. Marx argued that the money religion corrupts us. The Jews have to deal with their cultural heritage, which also affects Christians, as ’emancipation from huckstering and money, consequently from practical, real Judaism, would be the self-emancipation of our time.’

Silvio Gesell, who came up with the holding fee on money, became a fierce opponent of Nazism and condemned scapegoating the Jews. Gesell believed that hatred would divert attention from genuine economic issues, which he sought to address through land reform and a holding fee on money. Yet, in his work The Natural Economic Order, Gesell uses the phrase ‘Jewish stockbrokers with the keen intellects of their race’ and calls the Jewish pawnbroker ‘the money usurer’ as opposed to the German landowner who was the ‘land usurer.’5 So, an intelligent man with business experience, who opposed blaming Jews, nonetheless used the stereotype because it reflected reality.

Jews still play a prominent role in the financial sector in the United States. Several heads of the Federal Reserve, Alan Greenspan, Ben Bernanke, and Janet Yellen, were Jewish. Financial services made about 25% of corporate profits between 2000 and 2020. Bribes, dubbed campaign financing, play a central role in US politics and ensure favourable regulations for the financial industry. Receiving 25% of the money made in the economy without producing anything and bribing politicians to secure favourable regulations demonstrate the parasitism in finance. Ordinary people struggle to make ends meet, but the top 1% is doing well. Nearly half of the richest Americans are Jewish, despite them making up 2% of the US population. It is not an accident. After the Soviet Union collapsed, there was a scramble for the state’s assets. Many of the oligarchs who came out on top in that dubious process were also Jewish.

Media and public opinion

In 2012, six corporations owned 90% of the mainstream media in the United States. Most had Jewish CEOs and owners. Journalists are also often Jewish. How much that affects their reporting remains to be seen. In 2008, Philip Weiss remarked that in a few months, several serious people suggested that Jews predominate in the American media. For instance, at a forum at the Nixon Center, the former high-ranking government official Dov Zackheim said, ‘Jews don’t dominate the policy-making process, but the media is a different story.’ Based on his personal experience, Weiss claimed that most newspaper editors were Jewish.6

Does it matter? Weiss thinks so if the reporting concerns the Israeli-Palestinian conflict. He cites a few Jewish journalists who admitted to having a bias.6 Yet, J.J. Goldberg wrote in The Forward that, although Jews hold many prominent positions in the US media, they do not prioritise Jewish concerns and that Jewish Americans generally perceive the media as anti-Israel.7 During the Gaza War, the New York Times instructed its journalists covering Israel’s war on Gaza to limit the use of terms like ‘genocide’ or ‘refugee camp’ and avoid using the phrase ‘occupied territory’ when referring to the West Bank.8 The New York Times also featured an article about how extremist settlers took over Israel.9 So, whether the New York Times is biased is a matter of debate, but it is not uncritical of Israel, and also honest journalists can have biases.

And what about Jews dominating Hollywood, which is another Jewish stereotype? Joel Stein of the Los Angeles Times mocked the efforts of the Anti-Defamation League (ADL), which is another part of the Israel Lobby, to re-educate the American public:

I have never been so upset by a poll in my life. Only 22% of Americans now believe ‘the movie and television industries are pretty much run by Jews,’ down from nearly 50% in 1965. The Anti-Defamation League, which released the poll results last month, sees in these numbers a victory against stereotyping. Actually, it just shows how dumb America has gotten. Jews totally run Hollywood.10

Anti-Israel messages on the Internet proved more difficult to handle, as political correctness has given way to rudeness in a bid to safeguard the freedom of opinion. Israel has countered the issue by paying students for posting pro-Israel messages on social media.11 It was part of a public relations effort named ‘hasbara’ that some call propaganda.

The Israel lobby further tried to steer the academic debates. In 2007, about 300 academics called for academic freedom from political pressure, most notably from groups portraying themselves as defenders of Israel. In 2009, sociology professor William Robinson sent an email to students in which he compared the Israeli occupation of Gaza with the Nazi-controlled Warsaw Ghetto during World War II. The ADL then campaigned to discipline him for violating the faculty code of conduct, so the academic variant of a spanking.

Linguistics professor Noam Chomsky, a left-wing political activist who is highly critical of US and Israeli policies, claimed that the ADL had a 150-page dossier on him. Chomsky had defended the right to deny the Holocaust as freedom of speech. The ADL called him a Holocaust denier, describing him as ‘a dupe of overweening intellectual pride who is incapable of distinguishing between totalitarian and democratic societies and between oppressors and victims.’ The ADL collected information to use against him. Chomsky said an ADL insider sent him a copy of the file. It included conversations, correspondence and other materials. Chomsky added it read like an FBI file. He further noted,

It’s hard to nail this down in a court of law, but it’s clear they essentially have spies in classrooms who take notes and send them to the ADL and other organisations. The groups then compile dossiers they can use to condemn, attack or remove faculty members. They’re like J. Edgar Hoover’s files. It’s kind of gutter stuff.12

It was not an isolated incident, as Jews seemed to have established an intelligence and surveillance network in the United States. In 1993, the police department raided the San Francisco ADL’s Northern California office. It kept files on more than 600 predominantly leftist civic organisations and over 10,000 individuals. The police estimated the ADL had illegally obtained 75% of that information. The police investigation uncovered information about the ADL’s spying operations.13 The ADL went after Americans who oppose Israel’s oppression of Palestinians.14 District Attorney Arlo Smith dropped the case. It was not the only intelligence operation of a regional ADL branch.

For much of its history, the ADL has operated as a foreign intelligence organisation in the United States. The organisation’s spymaster, Irwin Suall, ran a nationwide network of agents and informants from the ADL’s New York City headquarters. Suall employed covert operatives in the field. One was Roy Bullock, who ran the operation in Northern California. According to a secret 1993 FBI memorandum, the San Francisco Police Department received information from a reliable source that two Israeli generals were about to travel to Washington, DC, to press for an end to the FBI’s investigations.

Wars and revolutions

During the French Revolution, the revolutionaries decided that Catholics, Protestants and Jews would all become full members of society. In 1797 and 1798, a French Jesuit and a Scottish physicist published two remarkably similar books claiming secret societies were undermining the social order and had started the French Revolution. Both named the Freemasons and the Illuminati as the main culprits. The Freemasons promoted a secular state, thus a separation of Church and State. Some of their members played prominent roles in the American and French Revolutions. Jews also came into the crosshairs as they benefited. It marked the beginning of the conspiracy theories as we know them today. Much of contemporary conspiracy thinking still centres around secretive groups and Jews.

Another conspiracy theory is that the Jews started the 1917 Russian Communist Revolution. Anti-communists brought that up during the ensuing civil war to exploit existing anti-Jewish sentiments. There indeed were a significant number of Jewish Communist Party leaders during the revolution. The anti-Semitism of the imperial Russian government may have induced them to join radical political movements. Yet, it doesn’t explain why so many Jews joined radical movements in other countries. Milton Friedman found that Jews wrote a significant part of the revolutionary anti-capitalist literature and disproportionately filled the ranks of communist parties in several countries.15 And anti-Semitism did not disappear in the Soviet Union. In 1948, Stalin started a campaign against the so-called rootless cosmopolitans, a whistle word for Jewish intellectuals.

Friedman gave two reasons as to why that might be so. First, the left promised Jews equal citizenship, while the Christian right did not. Second, the stereotype of Jews being profiteers and usurers persuaded them to show themselves and others that they are not selfish and heartless but public-spirited and idealistic.11 A third reason, which Friedman didn’t mention, was that many intellectuals were Jewish, causing them to make an outsized contribution to both socialist and capitalist thinking. For conspiracy theorists, it was proof that the Jews control both sides, thus the capitalists as well as the communists.

From 1968 onwards, the left in the West gradually alienated itself from its traditional worker base in favour of disadvantaged groups like ethnic minorities, women, and LGBTQ people. The Marxist Frankfurt School played a significant role in this development. The Cultural Marxism conspiracy theory alleges that the Marxists of the Frankfurt School undermine Western civilisation with civil rights movements, feminism, multiculturalism, and LGBTQ propaganda, causing a breakdown of traditional Christian values. Several prominent thinkers of the Frankfurt School were Jewish, so some stress that fact to illustrate the Jews who are behind the so-called destruction of Christianity rather than the spread of rational thinking.

From 1968 onwards, the left in the West gradually alienated itself from its traditional worker base in favour of disadvantaged groups like ethnic minorities, women, and LGBTQ people. The Marxist Frankfurt School played a central role in this. The Cultural Marxism conspiracy theory alleges that the Marxists of the Frankfurt School undermine Western civilisation with civil rights movements, feminism, multiculturalism, and LGBTQ propaganda, causing a breakdown of traditional Christian values. Several prominent thinkers of the Frankfurt School were Jewish. That led some to believe that the Jews are behind the increase in atheism and more people turning queer.

Several wars are, to a significant extent, the outcome of neoconservative ideology, built on Samuel Huntington’s The Clash of Civilisations. Huntington wrote that Western nations would lose their dominance if they failed to recognise the irreconcilable nature of cultural tensions. Huntington claimed that Islam posed a fundamental problem to the West.16 He argued that the West should adapt to a new era where it is no longer dominant. The neoconservatives viewed it differently. Leo Strauss, who was Jewish and the founder of American neoconservatism, proposed a restoration of the vital ideas underpinning Western civilisation, such as classical Greek philosophy and the Judaeo-Christian heritage, and promoted faith in the West’s moral purpose.

They were conservatives who believed in the Hegelian dialectic and hoped to bring about progress through war and revolution, which places them in the tradition of the Bolsheviks and Lenin, who overthrew the Russian government. It is a reason why the neoconservatives pressed for war to bring liberal democracy to Iraq. The underlying problem was the unresolved Hegelian dialectical conflict between the West and Islam, and they reasoned that Western values are superior, and that the Iraqis would accept them. Several neoconservatives were Jewish, which promoted speculation that Israel’s security was their main concern. That might be so, but the efforts of the non-Jewish Vice-President Dick Cheney, a political asset of the oil industry, were more decisive.

Allegiance

Jewish loyalty is another issue that attracts attention. Every minority in a foreign country faces the question of allegiance. It isn’t a big issue when the minority and the host country don’t have a conflict of interest, or when the minority has little influence. Jews have significant clout in the United States and elsewhere. In his book By Way of Deception, Victor Ostrovsky, a former operative for the Israeli intelligence service Mossad, claimed that this service recruits helpers among the Jews outside Israel for its operations.17 Other secret services also enlist compatriots for espionage abroad, so it is not a particularly Jewish thing to do, but the Mossad is legendary for its daring operations on foreign soil. Yet, Russia and Iran have engaged in similar activities like murdering opponents abroad.

One of the most well-known ‘helpers’ was Jonathan Pollard. As a young Navy intelligence analyst, he claimed that the United States withheld information from its close ally, Israel. And so, he took it upon himself to correct this injustice, at a profit to compensate for the inconvenience that comes with treason. He sold classified US documents to Israel. Sensitive documents stolen by Pollard ended up in the hands of the Soviet Union, putting the lives of US intelligence assets at risk. A few other cases of Israeli espionage in the United States came to public knowledge, such as the arrests of former AIPAC officials Steve Rosen and Keith Weissman.

A noteworthy incident is the Israeli attack on the spy ship USS Liberty during the 1967 Six-Day War, which killed 34 Americans and wounded 170. The assault consisted of an air attack followed by a sea attack with gunboats. The official story is that Israeli forces mistakenly identified it as an enemy vessel. US Ambassador to Lebanon, Dwight Porter, recounted a conversation between an Israeli pilot and the Israel Air Force war room picked up by an NSA aircraft and inadvertently cabled to CIA offices around the world, which gives a different narrative:

Israeli pilot to war room: This is an American ship. Do you still want us to attack?
War room to Israeli pilot: Yes, follow orders.
Israeli pilot to war room: But sir, it’s an American ship – I can see the flag!
War room to Israeli pilot: Never mind; hit it.

Earlier that day, Israeli reconnaissance planes had already identified the ship as an NSA intelligence vessel. The presumed exchange between the pilot and the war room raises questions. What reasons could the Israelis have had? Why would they risk angering their ally, the United States? The journalist Peter Hounam claimed that President Johnson, fearing he would lose the election, sought a pretext to let the United States join the war on the Israeli side and had asked the Israelis to stage a false flag attack. That would also have been in Israel’s interest. It makes sense, but there is no proof that this is the truth.

The highly intriguing coincidences surrounding the terrorist attacks of 11 September 2001 have kept conspiracy theorists on edge. They were indeed of the kind that only a vast plot could accomplish. One that has received special attention is that a New York housewife had spotted five Israelis filming the attacks on the World Trade Center from a rooftop just after the first strike had hit the Twin Towers. The Israelis appeared full of joy. The police arrested them with $4700 in cash, foreign passports and a pair of box cutters of the type used by the hijackers. Two were Mossad agents. The FBI claimed they believed they were spying on Islamic extremist networks.18

Well, were they? The FBI interrogated them for weeks and concluded that there was no evidence they had foreknowledge of the attacks. But the Israelis were uncooperative, so it was impossible to extract much information from them. Later, some of them discussed the events on an Israeli talk show. One said, ‘We come from a country that experiences terror daily. Our purpose was to document the event.’18 The evidence suggests the Israelis knew more, likely some specifics of the attack plan. An Israeli official told the Associated Press, ‘Everybody knew about a heightened alert and knew that bin Laden was preparing a big attack.’ He said the Israelis had passed on this information to Washington and denied Israel had concrete intelligence that could have prevented the attacks.19

The Mossad is known for its daring operations. In the aftermath of the Hamas terrorist attacks of 7 October 2023, Israel scored some remarkable successes against Hezbollah and Iran with the help of its secret services. Mossad agents had duped Hezbollah into buying thousands of explosive pagers and walkie-talkies. When Israel attacked Iran in 2025, it killed senior commanders and nuclear scientists and disarmed Iran’s air defences. Commando forces operated in Tehran and across the country, while Iran’s security and intelligence agencies remained unaware. Mossad teams targeted air defence missiles, ballistic missiles, and missile launchers. Israel had already assassinated several Iranian nuclear scientists and acquired Iranian nuclear information.20

Influence on the United States government

An evangelical Christian desire to return the Jews to the Holy Land has promoted the Zionist cause in the United States, as they believe it to be a prerequisite for the Second Coming of Jesus. Consequently, there is strong support for Israel amongst Evangelical Christians and Republicans. Jewish Americans often back Democratic candidates, so Democrats pay close attention to their Jewish voters. This ensured support for Israel in both political parties. US politicians need donations to fund their campaigns, making them open to bribes by corporations and wealthy individuals. Jews generously donate to political campaigns. In 2006, 60% of the Democratic Party’s fundraising and 25% of the Republican Party’s fundraising came from Jewish-funded Political Action Committees.

Several Jewish Americans achieved influential positions in the United States government. Some were also Israeli citizens. In 1994, the Israeli paper Ma’ariv wrote that the Clinton Administration had allowed more Jews in sensitive positions than any government before. The article noted their achievements had brought them there. The Jewish component of the Democratic government was significant, but there were also Jews heading for top positions in the Republican Party, for example, Paul Wolfowitz.21

Wolfowitz was one of the neoconservatives, a political movement whose ideology played a significant role in American policies after 11 September 2001. In 2000, he was one of the supporters of the Project for the New American Century (PNAC), which promoted the removal of Saddam Hussein. After 11 September 2001, the PNAC pushed for an attack on Iraq. The security of Israel played a role in the considerations of the neoconservatives, but there is little evidence that protecting Israel was a principal reason for starting the Iraq war.

Mearsheimer and Walt wrote that pro-Israel figures have established a commanding presence at the American Enterprise Institute, the Center for Security Policy, the Foreign Policy Research Institute, the Heritage Foundation, the Hudson Institute, the Institute for Foreign Policy Analysis, and the Jewish Institute for National Security Affairs and that these think tanks are all decidedly pro-Israel.2

In most cases, the US supported the position of Israel, but there are a few instances in which the US government did not. The Eisenhower administration forced Israel to withdraw from the Sinai after the Suez Crisis. The administration of Bush Sr. delayed support to Israel because of the settlements in the Palestinian territories. The Israeli government and the Obama administration differed on the settlement issue and how to deal with Iran, and the Israel Lobby organised resistance against the US government. Still, the degree to which US administrations have done Israel’s bidding is remarkable. US Representative Thomas Massie revealed that every Republican in Congress has an AIPAC babysitter. The money of the Israel Lobby helped to end his political career in the most overspent GOP primary campaign ever.

Irony of history

The Jews are well-organised. The situation as it is today makes even the most bizarre conspiracy theories as laid out in the Protocols of the Elders of Zion appear convincing. Had these Protocols been for real, the situation today may not have been much different. And so, Manny Friedman wrote in the Times of Israel,

We have, for example, AIPAC, which was essentially constructed just to drive agenda in Washington DC. And it succeeds admirably. And we brag about it. Again, it’s just what we do. But the funny part is when any anti-Semite or anti-Israel person starts to spout stuff like, ‘The Jews control the media!’ and ‘The Jews control Washington!’ Suddenly we’re up in arms. We create huge campaigns to take these people down. We do what we can to put them out of work.22

The Jewish lobby organisation AIPAC drives the agenda in Washington DC, the guy wrote. They take down their political opponents. Massie was just one in a long list. He goes on,

And let’s not forget AIPAC, every anti-Semite’s favourite punching bag. We’re talking an organisation that’s practically the equivalent of the Elders of Zion. I’ll never forget when I was involved in Israeli advocacy in college and being at one of the many AIPAC conventions. A man literally stood in front of us and told us that their whole goal was to only work with top-50 school graduate students because they would eventually be the people making changes in the government.22

He wrote that AIPAC is the equivalent of the Elders of Zion, because its operations resemble those described in the Protocols. Fact checkers have a hard time explaining that the Protocols are a fantasy when the facts, so how Jews operate, suggest otherwise. The Protocols were likely drawn up using existing stereotypes. As stereotypes are often grounded in reality, this outcome is less surprising than it might seem at first glance. Then Friedman draws the following conclusion,

The truth is, the anti-Semites got it right. We Jews have something planted in each one of us that makes us completely different from every group in the world. We’re talking about a group of people that just got put in death camps, endured pogroms, their whole families decimated. And then they came to America, the one place that ever really let them have as much power as they wanted, and suddenly they’re taking over. Please don’t tell me that any other group in the world has ever done that. Only the Jews. And we’ve done it before. That’s why the Jews were enslaved in Egypt. We were too successful. Go look at the Torah — it’s right there. And we did it in Germany too.22

In other words, Adolf Hitler was right when he feared that the Jews would take over Germany, and Henry Ford wasn’t crazy either. It is only that hatred isn’t the solution. Some German Jews had amassed fortunes. Otherwise, the Nazis couldn’t have robbed them of all these precious artworks. After the collapse of the Soviet Union, a group of oligarchs grabbed much of Russia’s wealth. About 25% of the Russian oligarchs are Jewish, while Jews make up 1% of the Russian population. It is a pattern. Friedman could say it because he is a Jew. But if you are not, you will be branded an anti-Semite.

In other words, Adolf Hitler had good grounds to fear that the Jews would take over Germany, and Henry Ford wasn’t crazy either. It is only that hatred isn’t the solution. Some German Jews had amassed fortunes. Otherwise, the Nazis couldn’t have robbed them of all these precious artworks. After the collapse of the Soviet Union, a group of oligarchs grabbed much of Russia’s wealth. About 25% of the Russian oligarchs are Jewish, while Jews make up 1% of the Russian population. It is a pattern. Friedman could say it because he is a Jew. But if you are not, you will be branded an anti-Semite.

Whenever the upper class of society coincides with an ethnic minority, trouble is brewing. Hatred among the general population might manifest as racism. In the past, the Jews often lived at the margin and had to be resourceful to survive. These skills became part of Jewish culture, so Jews often came out on top when no one stopped them. And due to trade and usury, wealth concentrated in the hands of a few, and traders and usurers were often Jewish. It is an example of cultural differences causing harm. White nationalists have appropriated the discussion, so it has become a poisoned debate, for the problem of multiculturalism includes white culture as well. Anti-Semitism and its causes are an example of behavioural differences between cultural groups causing trouble. Culture is key to the solution. And the basis of our cultures is the fairy tales we believe in.

Latest revision: 25 October 2026

Featured image: German picture of 1493 depicting human sacrifice by Jews.

1. Jewish Merchants in the Age of the Crusades. Alexandra Bramsen (2019).
2. The Israel Lobby and U.S. Foreign Policy. John J. Mearsheimer and Stephen M. Walt (2006). London Review of Books.
3. UNESCO survey finds antisemitism present in three quarters of EU classrooms. UNESCO (2026).
4. On the Jewish Question. Karl Marx (1844).
5. The Natural Economic Order. Silvio Gesell (1918).
6. Do Jews Dominate in American Media? And So What If We Do? Philip Weiss (2008). Mondoweiss.net. [link]
7. Jewish power: inside the American Jewish establishment. Goldberg J.J. (1997). Basic Books. pp. 280–281.
8. Leaked NYT Gaza memo tells journalists to avoid words ‘genocide,’ ‘ethnic cleansing,’ and ‘occupied territory.’ Jeremy Scahill, Ryan Grim. The Intercept (2024).
9. The Unpunished: How Extremists Took Over Israel. Ronen Bergman and Mark Mazzetti (2024). New York Times.
10. Who runs Hollywood? C’mon. Joel Stein (2008). Los Angeles Times. [link]
11. Israel to pay students to defend it online. USA Today (2013). [link]
12. Israel lobby descends on UC Santa Barbara. Committee To Defend Academic Freedom at UCSB. [link]
13. ADL Spies. Jeffrey Blankfort (2013). Counterpunch.
14. The Anti-Defamation League: Israel’s Attack Dog in the US. James Bamford (2024). The Nation.
15. Capitalism and the Jews. Milton Friedman (1988). Foundation For Economic Education. [link]
16. The Clash of Civilisations. Samuel P. Huntington (1996). Simon & Schuster.
17. By Way of Deception: The Making and Unmaking of a Mossad Officer. Victor Ostrovsky (1990). St. Martin’s Press.
18. Five Israelis were seen filming as jetliners ploughed into the Twin Towers on September 11, 2001. The Scotland Herald (2003). [link]
19. Context of ‘August 23, 2001: Mossad Reportedly Gives CIA List of Terrorist Living in US; at Least Four 9/11 Hijackers Named’. Cooperativeresearch.org.
20. Israel’s unprecedented attack shows Iran has become a ‘playground’ for the Mossad. Tamar Michaelis, Oren Liebermann and Jeremy Diamond (2025). CNN.
21. The Jews Who Run Clinton’s Court. Avinoam Bar-Yosef (1994). Maariv.
22. Jews DO control the media. Manny Friedman (2012). Times of Israel. [link]

Liberal democracy

A definition

Democracies are often called liberal democracies. So what is a liberal democracy and why might it be the best way of government? There are no easy answers to these questions nor is there agreement on these matters. Liberalism emphasises the value of individuals while democracy is rule by majority. These two principles can be at odds.

Liberal democracies have elections between multiple political parties, a separation of powers into different branches of government, the rule of law in everyday life, an open society, a market economy with private property, the protection of human rights, civil rights, civil liberties and political freedoms for everyone.1

Liberals believe that individuals and social groups have conflicts of interest. The social order must deal with these conflicts and resolve them in a peaceful manner. To achieve such a feat, all parties must be reasonable and there should be a balance of powers. No party should be able to force its will upon others.2 It is an important reason why liberals stress the importance of individual rights.

Democracy means that government decisions require the consent of the majority of the citizens. In most cases the citizens elect a parliament that does the decision making for them. Sometimes citizens can vote for individual proposals in referendums. In reality many democratic countries aren’t fully democratic because not all government decisions are supported by a majority of the citizens.

Principles

Liberal democracy is based on a social contract, which is an agreement amongst the members of society to cooperate for mutual benefits. For instance, labourers may accept capitalism if they get a share of prosperity. That deal turned out to be more attractive than state ownership of the means of production.

Liberalism has two principles that can be at odds, namely non-interference with people’s lives and realising everyone’s potential. In this vein there are two branches of liberalism:

  • Economic liberalism promotes freedom of the markets as well as free trade and claims that the state should be of minimal size and not interfere with people’s lives.
  • Social liberalism claims that the state should help to realise the potential of people by promoting their freedom to make choices, which includes ending poverty.

Each liberal democracy more or less embraces these values. Liberal democracies come with a market economy and respect for the rights of individual citizens. Governments interfere with the lives of people and try to promote their happiness and to realise their potential. The conflicting nature of both principles makes liberal democracies differ with regard to freedom of markets and government interference.

In the United States liberalism has a different meaning. There it is another word for social liberalism or democratic socialism. In Europe the definition of liberalism is broader and this is also the definition used here. In the 17th century liberal ideas began to emerge in what is called the European Enlightenment. Around the year 1700 the philosopher John Locke came up with the following basic principles for a liberal state:

  • a social contract in which citizens accept the authority of the state in exchange for the protection of their rights and property and maintaining the social order;
  • consent of the governed, which means that state power is only justified when the people agree;
  • separation of church and state, which means that the state doesn’t favour a specific religion and does not require a religious justification.3

Is it the best form of government?

Liberal democracy is part of the European cultural heritage. Proponents claim that it is the best form of government. These universalist claims are sometimes contested on the ground that they are a form of western cultural imperialism. Another argument is that there is no guarantee that liberal democracy leads to better decisions. From a religious perspective people argue that our Creator may prefer a different kind of social order and government, possibly even a theocracy.

The argument in favour of the universalist claims is that liberal democracy emerged out of a historical process that took centuries in which rational arguments played a decisive role. The European Enlightenment challenged existing practices in government on the basis of reason. Ideas that emerged out of the European Enlightenment were tried out in different ways and refined further. Europeans also invested heavily in educating their citizens. This produced a culture of reason and compromise as well as a massive body of practical experience and best practises.

There is also no guarantee that other forms of government lead to better decisions. In an open society better information can be available so well-educated citizens in a culture of reason and compromise may make better decisions. There are a few democracies that live up to these expectations so it can work out that way. And we may not be able to determine what kind of order God desires. If our Creator is all-powerful then the emergence and spread of liberal democracy may not be God’s plan.

One of the biggest problems facing liberal democracy is high expectations. Liberal democracy itself does not guarantee a reliable government that is both efficient and effective nor does it ensure a flourishing economy. This has led to disappointments. A failed and corrupt government can’t simply be turned into a success by allowing elections. Liberal democracy works best with a well-educated population in a culture of reason and compromise that doesn’t allow for corruption and abuse of power.

On the moral front there are a few issues too. Liberal democracy promises equal treatment for all people. In reality people aren’t treated equal nor do they have equal opportunities. There is discrimination based on ethnicity, gender or sexual preferences. And poor people have fewer opportunities than rich people. Still, the goal of equal treatment and equal opportunities can be something to strive for. It may be better to aim for such goals and fail from time to time than not having these goals at all.

If liberalism promotes tolerance then how to deal to intolerant people? Should their intolerance be tolerated? If people do not accept liberal values, should they be educated or should these values be imposed? And are free markets the best way of organising the economy or is government involvement advised? If the economy is served by stability, should dissent that causes instability be suppressed? An excessive or unnecessary use of force can undermine the foundation of liberal democracy as liberal democracy is based on reason and convincing people by argument. And indeed it is possible that liberal democracy can be overturned.

History

The preconditions for liberalism had already emerged in Western Europe during the Middle Ages. There was a larger degree of individualism than elsewhere. Liberalism itself emerged during the sixteenth century. At the time Europe was ravaged by devastating religious wars. After several decades of warfare Europeans grew tired of the conflict and began to tolerate religious differences. Some catholic countries accepted protestant minorities while many protestant countries accepted catholic minorities. Germany was almost equally divided. At the time Germany consisted of small states that had either protestant or catholic rulers.

This religious tolerance was at first more or less an uneasy truce. No party had been able to gain the upper hand. Religious minorities at first didn’t receive equal rights. They were only tolerated. Over time the case for religious tolerance became more widely accepted. It was based on two major arguments.

  • The argument of ignorance which states that only God knows who is on the right path and who is doomed so humans shouldn’t judge others.
  • The argument of perversity which states that cruelty is at odds with Christian values and that religious persecution strengthens the resolve of the persecuted.1

The concept of tolerance expanded into a general concern for the rights of individual citizens. In the 17th century liberal ideas were spreading. The Glorious Revolution of 1688 in England limited the power of the king. The rights of individuals were written down in the Bill of Rights. Parliament became the most powerful political institution based on the principle of consent of the governed. The 1776 Declaration of Independence of the United States was based on liberal principles too. It states that all men are created equal and have certain unalienable rights like life, liberty, and the pursuit of happiness.2

The founding fathers of the United States were also early liberals. The United States Constitution reflects this view. The aim of the United States Constitution is, amongst others, to safeguard the rights of individuals against the state. A large group of Americans believe that individual rights should prevail against democratically elected governments. The widespread support for gun ownership in the United States comes from a distrust of the state as a protector of life, liberty and possessions.

Democracy had not been a seriously considered since classical antiquity. It was believed that democracies are inherently unstable and chaotic due to the changing whims of the people.1 The violence during the French Revolution supported these views. It began as a popular uprising incited by liberal ideas but it soon turned into chaos and bloodshed. Order was restored by a despot ruler named Napoleon Bonaparte who did much to spread liberal reforms throughout Europe by ending the feudal system, emancipating religious minorities and imposing a liberal code of law. The spread of liberal ideas proved to be lasting and democracy was to follow a century later.

The Industrial Revolution started a period of accelerated and constant change that was disastrous for many who found themselves on the losing side. The ruling class changed. Nobility was replaced by a new elite of business people. The position of craftsmen was undermined by factories. And workers in factories laboured under miserable conditions for low wages. There were three major ways of confronting these changes:

  • Conservatives tried to hold on the old order of community, religion and nobility.
  • Socialists tried to overturn the elite of business people by giving power to workers.
  • Liberals tried to manage the change, thereby implicitly supporting the order in which business people were the ruling class.

Liberalism often coincides with the interests of business people. They have possessions and some are rich. They feared that the poor might vote for handing over their possessions to the poor. Socialism became the embodiment of this fear. Liberals were at first inclined to limit the right to vote to people who pay taxes because this excluded poor people from voting. When the threat of socialism became subdued and socialists were willing to compromise, liberals came to accept democracy based on the principle of one person one vote.

In the 19th century European countries held vast colonial empires. These colonies were kept for profit. It was generally believed that the people in these colonies had to be educated before they would be able to govern themselves. The colonial era helped to modernise these countries and most Europeans at the time believed that the oppression and the economic exploitation were justified on these grounds. There were only a few dissenters, for instance the Dutch writer Multatuli.

Liberal democracy faced a few major crises like World War I, the Great Depression and World War II. World War I demonstrated that liberal democracy and free trade weren’t a guarantee for peace and stability. The Great Depression once again challenged liberal democracy as the Soviet Union remained unaffected while Nazi Germany was able to recover and achieve full employment while other countries were still struggling. And during World War II Nazi Germany overran most democratic countries in Europe.

After World War II the European colonies became independent. The Soviet Union came to dominate Eastern Europe and China became a communist country. The United States became the protector of liberal democracy but also a number of dictatorships. This era is called the Cold War and it lasted until the Soviet Union dismantled itself after allowing the peoples of Eastern Europe to make their own choices. Major challengers of liberal democracy nowadays are the one-party system in China and political Islam.

The citizens of Hong Kong and Taiwan don’t like to lose their freedoms. Chinese too probably prefer freedom if they have a choice. And the Islamic State has shown Muslims all around the globe that political Islam can easily turn into a reign of terror. The foundations of liberal democracy may be strong, but a collapse of the global economy may turn be a more serious threat to liberal democracy than the alternatives. Reason can easily disappear once people become fearful of the future.

Reasons for success and limitations

The success of liberal democracy is therefore not a historical necessity. Liberal democracy might never have been invented or dictatorships could have gained the upper hand. That didn’t happen. Communist and fascist dictatorships came and went. Perhaps liberal democracy is a temporary phenomenon but we can’t know that now. Only the future can tell. There are a number of causes that might explain the strength of liberal democracy.

  • Liberal democracy is based on the consent of the governed so it is has the consent of the governed by default while other forms of government do not.
  • Science greatly contributes to the success of states and science is best served with an open debate that liberal democracy provides.
  • The economy greatly contributes to the success of states and the economy is best served with individual rights that liberal democracy provides.

A despot ruler or a ruling party in a one-party system might have the consent of its subjects, but if not, only force remains for the ruler or the party to maintain power. Liberal democracies usually resolve such issues peacefully through elections, making liberal democracy more stable by default. Intellectual freedom is helpful to science while economic freedom is helpful for the economy, so liberal democracy can be a potent force. Only when leadership is required, liberal democracy might not always be adequate.

Liberalism has no higher moral value than the individual, which is peculiar because the individual human is an insignificant part of this universe. And individualism may be at odds with human nature as humans are social animals. Humans are not atomic beings that choose to cooperate for mutual benefit like liberalism supposes. Cooperation is part of human nature and not a choice individuals deliberately make.

It is the success in cooperation that makes a society win out. Liberalism gives a framework for living together in peace as long as all major parties are reasonable and willing to compromise. This makes larger scale cooperation possible and that can make a society successful. For instance, the United States integrated people from different cultural backgrounds, which contributed to the success of the United States as a nation.

It is said that history is written by the victors. Strength may be the reason why liberal democracy prevailed. Liberal philosophers have tried to provide a moral justification for liberal democracy or they may have opposed it or they may have tried to improve it. Liberal democracy emerged out of thought and action, experiment and failure, and it was a process that took centuries. Philosophers like Locke contributed to its success as they set out the goals people could strife for.

Apart from individualism, liberal societies lack a higher purpose. From a scientific viewpoint there is no higher purpose to this universe. The moral codes humans live by are not more than an agreement. Only when this universe is created for a purpose there is a reason for our existence. But moral individualism can be dangerous. The challenges humanity is currently facing, most notably living within the limits of this planet, most likely requires making individuals subject to a higher causes like the survival of humanity and caring for the planet.

1. Liberal democracy. Wikipedia.
2. Liberalism: The Life of an Idea. Edmund Fawcett (2015). Princeton University Press.
3. History of liberalism. Wikipedia.