The quality of your life and the quality of life for succeeding generations is sustained by economic growth and technological change which is accompanied by “Creative Destruction.” Please note that this article and message is not intended to argue spiritual dynamics and God’s will in regard to provisions. On the same hand, divine provision may indeed be activated or obstructed by man’s choices of institutions or the types of government he creates and embraces. Creative Destruction replaces the old with the new. New technologies attract new resources from the old ones. New companies take business away from the established ones. New technologies make existing skills and machinery obsolete. The process of economic growth and the inclusive institutions on which it is based create winners as well as losers in the economic marketplace which equates to my and your lifestyle. Again, this article is not so much about faith but more to do with the environments we choose to create as creative beings. The fear of Creative Destruction is the root of opposition to inclusive ideals (capital or market based ideologies). These fears of destruction soon turn or manifest as extraction based ideals (heavy state involvement and taxation ideologies) in the political sector. Inclusive institutions and societies promote incentives to continually progress in ideas and these ideas are protected by the values of private property, the rule of law, patents, and freedom of exchange.
Extraction based institutions will always move toward taxing the masses to preserve outdated economic systems and failed political ideologies. “Systems” are not mysterious entities but simply the people that operate behind them and sustain them. Thus, it is the existing political, academic and economic elite that resist any challenge to their political and economic monopoly of influence which equates to power. I recognize the fear of Creative Destruction in both liberal and conservative camps. Actually, I recognize this to the same degree on the far right or within the conservative agenda. A good example is the resistance to wind, solar, and other alternative energy sources which are subtly but aggressively hindered by the various special interest and lobbies in Washington. Protectionism and resistance to change for the preservation of institutional power and economic resources will soon come to a defining point in America as I hope to clearly define in this article. Encouraging productivity of a nation’s citizens as well as allowing people, financial sectors, and companies to fail must be embraced if the United States is to be sustained as we know it. I realize this is a hard pill for many to swallow. However, history has proven that sustained growth and quality life hinges upon the acceptance of Creative Destruction which gives way to new life and eventual new and better living standards.
This article is lengthy and is required as such to clearly define our past, present and probable future political and economic state if the current trends continue. I will attempt to lay foundational and historical examples that will provide a picture of roads once traveled to economic and political collapse and how America has detoured from its founding direction to venture down roads which have previously and will continue to be proven hazardous. Why should you be interested as a Christian in this article? The answer is simple. Although we may be heavenly minded and aliens in a foreign land which is wonderful and true – we must also be truthful with ourselves and accept the value of what we know as living standards, sanitation, quality of life, health, and the future state of our offspring or next generations. To deny these aspects of “life” is denial of reality. In other words, why do we hope and save for our children to go to college or to be educated? Do we actually desire a “harder” or more labor intensive life for our children and grandchildren? Of course not, but these options do not happen on their own – they happen according to the institutions we set up, support and choose to sustain. Hyper-spiritual and prophetic jargon without practical understanding and application is next to useless in my humble opinion. With that said, it is only by the political and economic systems we choose as citizens of a particular society or country which defines our quality of life. I don’t know about you, but I enjoy the current freedoms and liberty that I have been blessed with at this time in history. I could have been born at many other tragic times and places far more difficult. Another purpose of this article is to educate the believer to understand the signs of the time and to raise a standard in repairing the breaches and erosion of individual freedoms that are growing ever wider. The prophetic application is of prime and serious importance. I ask that you “read between the lines” with spiritual eyes and recognize the historical parallels and how the system and persona of antichrist will manifest. Please do not negate the historical accounts that are provided as of no interest or relevance. Trust me, it is not a matter of “will” history repeat itself. It is “when” and when it does, it will be far worse than what the annals of man and previous history have left us.
I’ve seen the future!
Political and economic institutional systems, ideologies and differences have played a critical role in explaining social growth and the quality of life throughout written history. But if most countries and societies in history are indeed based on extractive political and economic institutions, does this imply that economic growth never takes place? Obviously not. Extractive institutions by their very logic must create wealth so that it can be extracted! A ruler monopolizing political power and in control of a centralized state can introduce some degree of law and order along with a system of rules to stimulate a form or shade of economic activity. But growth under extractive (heavy state taxation) institutions differs in nature by growth brought forth by inclusive (heavy personal incentive) institutions. Most importantly, extractive ideologies will not reflect sustained growth that requires technological change but rather growth based on existing technologies.
The economic trajectory of the Soviet Union provides a vivid illustration of how the authority and incentives provided by the state can spearhead rapid economic growth under extractive institutions and how this type of ideological growth ultimately comes to an end and eventually collapses with certainty 100% of the time. At the end of the The First World War, the victorious and defeated powers met in the Great Palace of Versailles outside Paris to decide on the blueprint or layout of the peace plan. Prominent among the attendees was Woodrow Wilson, president of the U.S. Noticeable was the absence of any representation from Russia. As a backdrop, the old Czarist regime had been overthrown by the Bolsheviks in October, 1917. A civil war then raged between the Reds (Bolsheviks) and the Whites (Czarists sympathizers). The English, French, and Americans sent an expeditionary force to fight against the Bolsheviks. The mission was led by a young diplomat named William Bullet and the intellectual – journalist, Lincoln Steffens who were sent to Moscow to meet with Lenin in trying to understand the intentions of the Bolsheviks and how to come to terms with them. Historical documents clearly paint Steffens as an iconoclast journalist who had persistently and consistently denounced the evils of capitalism in the U.S. He had actually been in Russia at the time of the revolution and his presence was to make the mission look credible and not hostile. The two men returned with a written offer from Lenin and about what it would take achieve peace with a newly created Soviet Union.
Steffens was giddy and overcome by what he saw as the great potential of the Soviet hard socialist ideology and its regime. Soviet Russia he recalled in his 1931 autobiography was a “…revolutionary government with an evolutionary plan…” The Soviet plan was not to end the evils of poverty, riches, privileged tyranny and war by direct action, but to recognize and remove their root causes. The problem with this mindset will be exposed as I continue. Simply speaking, cause and effect can serve various systems by how it is viewed to fit a particular agenda The Soviets had set up a dictatorship which was supported by a small trained minority to make and maintain for a few generations a scientific rearrangement of economic forces which would result in the great social and communal economic system where nobody would be without and nobody would take advantage of the common man. This sounds good on the surface and when Steffens returned from his diplomatic mission, he went to see his old friend the sculptor Joe Davidson and found him making a portrait bust of a wealthy financier of that time. So, you been over in Russia, the financier remarked sitting in the portrait chair. Steffens replied: “I have been over into the future and it works.” He would perfect this adage to a quote that would go down in history – “I’ve seen the future and it works.”
Right up until the early 1980’s, many westerners and American academics were still “seeing the future” in the Soviet Union and they kept on believing that extractive or collective / socialist based ideologies was truly working. In a sense it was working or least it did for a certain amount of time. Lenin had died in 1924 and by 1927 Josef Stalin had consolidated his grip and control over the country. He purged and eliminated his opponents and launched to rapidly industrialize the country to catch up with the west. He accomplished this task by energizing the state planning committee (Gos-plan) which was founded in 1921. Gos-plan wrote the first 5 year plan which ran between 1928 and 1933. Economic growth “Stalin style” was simple – Develop and coerce industry by government command which is similar to the democratic party ideology in today’s America and obtain the necessary resources for this by taxing at very high rates. The Communist state did not have an effective tax system, so instead, Stalin collectivized agriculture which was the fattest cow to slaughter. This process entailed the abolition of private property rights to land and the herding of all people in the countryside into giant collective farms run by the Communist party to support its agenda. Note: All political agendas must be funded in some way and most are usually unbeknown to the general public. Thus the American debt problem we are experiencing today. Would you, as an American tax payer purposefully desire trillions of dollars of foreign debt? Why is America in such dire financial straights? Was it based on “your” blessing? Maybe, it’s time to wake up before its too late.
The government take over of the countryside which America will also soon experience made it much easier for Stalin to grab agricultural output and feed all of the people who were building an manning the new factories. The consequences of this for the rural folks were calamitous. The collective farms completely lacked incentives for people to work hard or efficiently and production fell sharply. So much of what was produced was extracted that there was not enough to eat and people began to starve to death. At the end of the day, history would document that 6 million people died of famine while hundreds of thousands of others were murdered or banished to Siberia during the forced collectivization. Neither the newly created industry nor the collectivized farms were economically efficient in the sense that they used the best resources that the Soviet Union possessed. It sounds like a recipe for economic disaster and stagnation, if not outright collapse. Although, the Soviet Union grew very rapidly, the reason for its eventual collapse is not difficult to understand if we follow history and economic common sense. Allowing people to make their own decisions via open markets is the best way for a society to efficiently use its natural and human resources. When the state or a narrow political elite controls all of these resources, neither the right incentives will be created nor will there be a proper allocation of the skills and talents of its population. The compounding effect is societal apathy and state dependency.
With this said, in some circumstances, the productivity of labor and capital may be much higher in one economic sector or activity such as heavy commercial and military industry as reflected in the Soviet Union. So much so, that even a top to bottom system under extractive institutions that allocates resources toward that particular sector can generate growth. For instance, extractive institutions during the colonial period in the Caribbean islands could generate relatively high levels of wealth because the controlling elite allocated resources (slaves, factories, ships, etc) for the production of sugar which was a commodity coveted around the world. The production of sugar which was reliant upon slaves was certainly not efficient and there was also a lack of technological change or creative destruction in these societies. But this did not prevent the companies and interested elite from achieving some amount of growth under an extractive political system. The situation was similar in the Soviet Union with industry playing the role of sugar in the Caribbean. Industrial growth in the Soviet Union was further facilitated or forced to grow because its technology was so backward in comparison to what was reflected and available in U.S. and western Europe. Large economic gains and targets could only be reached by allocating resources to the industrial sector even if all of this was done inefficiently and by force. As of 1928 most Russians lived in the countryside and technology used by peasants was primitive and there was no real incentive to be productive. This makes sense since the vestiges of Russian feudalism was only eradicated before the First World War. Thus, there was a large and unrealized economic potential from reallocating this labor from agriculture to industry. We have witnessed the same in the U.S. but the means have been subtle and blind to the undiscerning. The U.S agriculture environment has been suckled under the bosom of the government in the form of subsidies, land conglomerates which boarder on monopolies, and the absurdity of futures markets. America’s agriculture is already in the palm of the government whether farmers want to believe it or not. This will present awesome challenges as the days unfold.
Stalinist inspired and socialist based industrialization was one brutal way of unlocking this potential of human capital. Stalin moved these very poorly used resources into industry where they could be employed more productively even if the industry itself was very inefficiently organized in regard to what could have been achieved. In fact, between 1928 and 1960, Soviet national income grew at 6% per year which is probably the most rapid spurt of economic growth in history up until that time. This large economic growth was not created by technological change but by reallocating labor (human capital) and by capital accumulation due to the creation of new tools and factories. Political and economic growth was so rapid that it baited and hooked several generations of westerners and not just Lincoln Steffens. The collective economic utopia of the Soviet Union took in members of U.S. CIA and even took in the Soviet Union’s own leaders such as Nikita Khrushchev who famously in a speech before the UN in 1956 stated that “…we will bury you, the west…” As late as 1977 a leading academic text book by a leading English economist, argued that Soviet style economic principles were “superior to capitalist ones in regard to economic growth, providing employment, and price stability as well as producing people with altruistic motivation.” It seemed that in the minds of many academic elites and economic gurus that poor ole capitalism did better only at providing political and individual freedoms.
The most widely used university textbook in economics written by Nobel Prize winner, Paul Samuelson, repeatedly predicted the eventual economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that “Soviet national income would overtake that of the US possibly by 1984 but probably by 1987.” In the 1980 edition, there was little change in the content analysis though the two dates of takeover were pushed back to 2002 and 2012. (Note: these are interesting dates in human history which reflect dark spiritual forces at work in attempting to take legal spiritual actions upon the words of mankind in causing great harm. Our words and acceptance provide spiritual portals for darkness to pass through). Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained or lasting way. By the 1970’s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two primary reasons: 1) The lack of economic societal incentives. 2) Resistance by the economic establishment or those in existing political power to be creatively destroyed. These primary reasons are the catalyst that pulls inclusive or pluralistic systems toward extractive systems.
Once all of the available efficiently used resources had been reallocated to industry, there were few economic gains left to be realized. It was at this time that the economic system of Soviet socialism hit a roadblock due to the lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace based technology. As a result, they managed to put the first dog and the first man in space. They also left the world the AK-47 as one of their legacies for those alive as well as six feet under! Stalinist socialism wanted to reward people and groups who were politically loyal and punish those who were not. (The same criteria is in full effect in China, Socialist Latin America, and even in America today). Gos-plan would fail to be a worthy economic plan, but it did produce information for Stalin so he could greater monitor his friends, enemies, and political agenda. Gos-plan would require numerous hidden revisions due to failed economics and incentives which were kept secret and unseen to rest of the world.
Typically, a centralized state company would have to meet output targets set under the plan and from the 1930’s, workers were now paid bonuses if the output levels were attained. These could actually be quite high and as much as 35% of the monthly wage for management or senior engineers. But paying such bonuses also created all sorts of disincentives to technological change. For one thing, innovation which took resources away from current production risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive to never expand output since this only meant to produce more in the future since future targets would be ratcheted upward. Underachievement was always the best way to meet targets and get the bonus in a socialist or collective environment. Likewise, we see the gradual development of this manifestation in unionized labor in the US. The U.S. Automobile industry from the 1960’s thru the early 1980’s reflected inferior quality and production. The fact that bonuses were paid monthly also kept everybody focused on the present while innovation is about making sacrifices today in order to have more tomorrow.
Even when bonuses were effective in changing behavior, they often created other problems. Central (governmental) planning is just not good at replacing the “invisible hands of the market” which is you and me as everyday citizens. By the 1940’s, the leaders of the Soviet Union were well aware of these economically perverse incentives – even though many blind economists and academics in the west were still raptured by the great communal-social experiment. The Soviet leaders acted internally as if they were due to technical problems which could be fixed. But a core economic issue was never considered in that the system of prices used to calculate profits was completely unconnected to the values of new innovation or technology. Unlike in a market or inclusive economy, prices in the Soviet Union were set by the government and bore little relation to actual value. The bottom line is that as long as economic power rested within the Communist party or socialist ideologies, it was impossible to fundamentally change the basic incentives that people faced – bonuses or no bonuses. Since its inception, the Communist party had not just used carrots, but also sticks, big sticks, to get its way. Is America being lured by the carrots of state bread, state health, state housing, and state run security to be later beaten by the big sticks of extractive political power? The answer is yes and we are already experiencing the weight of it in foreign debt which will soon bare down much harder upon the next generation.
15 million Russian people would end up being sent to prison for labor violations not in line to meet required output for the economy to stay afloat. 250,000 would end up being shot. In any given year, there would be one million adults in Socialist prisons due to economics. This does not include the 2.5 million people that Stalin alone exiled to the gulags in Siberia. But yet, none of these threats, inhuman treatment, and murders worked. Though you can move someone to a factory, you can force people to think and have good ideas by threatening to shoot them. Coercion like this might have generated a high output of sugar in Barbados, Cuba, or Jamaica. But it could not compensate for the lack of incentives in a modern industrial economy. The fact that truly effective incentives could not be introduced in a centrally planned economy was not due to technical mistakes in the design of the bonus schemes. It was intrinsic to the whole method by which extractive growth had been achieved. It had been done by government command which could solve some economic problems, but stimulating sustained economic growth required that individuals used their talents and ideas and this could never be done in a Communist, Marxist, or Socialist style economic system. The rulers of the Soviet Union would have had to abandoned extractive economic institutions for innovation to stimulate growth. But such a move would have jeopardized their political power. It is clear that when Mikhail Gorbachev moved away from extractive institutions after 1987, the power of the Communist Party crumbled and with it the Soviet Union.
The Soviet Union was able to generate fast growth even under extractive institutions because the Bolsheviks built a powerful centralized state and used it to allocate resources toward particular industry. But in all instances, the growth under these extractive institutions did not reflect the feature of technological change and thus could not be sustained. Economic growth first slowed down and then it totally collapsed. This type of deceptive growth illustrates how extractive institutions when cloaked in political deception can produce a period of economic growth which is nothing but an economic mirage. Throughout history, most societies have been ruled by extractive institutions and those who have managed to extend some form of control over a country have been able to generate some form of limited growth. Although, not one and I repeat, not one of these countries throughout all history have been able to sustain societal growth and has eventually suffered collapse in a relatively short amount of time.
As I have previously stated, the growth generated by extractive institutions is very different in nature from growth generated in inclusive institutions. Most important, extraction based systems are not sustainable and lasting. By their very nature, extractive institutions cannot embrace Creative Destruction and generate at best, only a limited amount of technological progress. (Again, technological progress is what has brought us the quality, wealth, and healthiness of life we enjoy today. Try going without electric, running water, heat, air conditioning, transportation options, etc and enter back into subsistence living). The growth that extractive political and economic generate will only last for so long. The Soviet experience gives a vivid illustration of this limit. Soviet Russia generated rapid growth as it caught up with some of the advanced technologies in the world and thus resources were allocated out of a highly inefficient agricultural sector and into industry. But ultimately, the lack of incentives faced in every sector from agriculture to industry could not stimulate technological progress. This took place in only a few pockets where resources were being poured in and innovation was strongly rewarded because of its role in competition with the west. Soviet growth, although initially rapid, was bound to be relatively short lived and it was already running out of steam by the 1970s.
Lack of Creative Destruction and innovation is not the only reason why there are severe limits to growth under extractive institutions. The historical evidence of the early South American city states such as the Mayan and Aztec along with modern South American socialism (in our own hemisphere) illustrates a more close to home and ultimate end result. As extractive institutions create significant gains for the elite, we must understand that there will also be strong incentive for others to fight to replace the current elite. Political infighting and instability are inherent features of extractive institutions. They not only create further inefficiencies, but also often reverse political cohesion. Oftentimes, we see the total breakdown of law and order such as in Mexico which is directly on our southern boarder. Should we be concerned about this or should we turn a blind eye? Could it be that open boarders in contemporary society also opens a current democratic country up to ideological infection? The conclusion is yes as we experience far left influences from Mexico and South America. Islamic ideologies are permeating much of western Europe political thought along with much of Africa and Indonesia.
Though inherently limited, growth under extractive (heavy taxation) institutions may appear spectacular when in its initial motion. Many in the Soviet Union and many more in the western world were awe-struck by Soviet growth in the 1920’s, 1930’s, 1940’s, 1950’s, 1960’s and even as late as the 1970’s in the same way that they are now mesmerized by the breakneck pace of economic growth in China today. However, China, under the rule of the Communist party is another example of a society experiencing growth under extractive institutions that similarly will not generate sustained growth unless it undergoes many fundamental political transformations toward inclusive political institutions.
Please afford me your time as I provide another historical example which will clearly define America’s prophetic future. I would like to introduce you to the founding of the first contemporary and true inclusive society which was birthed in Venice. Its awesome beginnings, potential, and the reasons of its tragic and ultimate collapse are telling of American’s future. But first, allow me share a bit about about Rome which provided the societal DNA for Venice and how it likewise relates to America. (Note: many wonder why America is not mentioned in biblical scripture. Actually, it is. The institutional and unregenerate DNA of our country, regional societies, and culture are European. The values of Plato and the writings of Sophocles provided the mortar for the European culture we reside in. I realize that many different countries and cultures have added to the richness and value of America. However, the spoken language of America is European. The writing and alphabet structure is European. Our educational system and its very ideals are European. Even countries in South America and within our own hemisphere will criticize us in a European understanding or concept of morality. In other words, America’s biblical future is still umbilical corded or connected to the DNA of Europe which birthed her. America’s biblical destiny resides in the fate of Europe unless the umbilical cords which induced greed, a lying tongue, deception, slavery, the subjugation indigenous peoples, and religious atrocities are severed through genuine repentance. We must understand that the child (America) is still being fed by her mother (Europe) and what is ingested in Europe in regard to political and economic institutions has later shown its genetic footprint in the U.S.
Fortunately, America’s founding fathers were profoundly influenced by the past. The study of historical antiquity created a base for the Declaration of Independence and the U.S. Constitution. It also provided a model for how democratic or republican governments had worked or not worked in the past. What I find extraordinary, is that the founders believed that no society (country) was immune or exempt from the process of historical decay which leads us to an awesome question: What about America and where does it fit in the future? How many prophetically minded people are really prepared to answer this with accuracy and spirit led anointing? Will America pass away as all other great societies have? If the Lord tarries, will teachers one day teach about the rise and fall of America as we have Rome?
Well, no one wants to admit this for America as they didn’t in the time of the Roman Empire. The same mind-set permeated Rome and her emperors declared that Rome was “aeternus” (Eternal) and would last forever. But we know that this is not true and Rome eventually fell. Again, we are led to another question: Why did Rome fall? Many have been conditioned (especially in the church) to believe that it was based on immorality and that moral decay ate like a societal cancer within Rome to its demise. If this were true, then there would not be a country or society standing today! Rome was blindsided and America will likewise be blindsided if we fail to recognize the historical parallels and heed to the genuine prophetic voice. I will expound on America’s future and choices at the end of this message.
Rome, like America started humbly as a small society and eventually grew along the banks of the Tiber River into culture that promoted freedom and individual rights. However, Rome would soon surrender many of its freedoms when it desired to become a superpower. Rome and the United States are the only true superpowers in my opinion that have existed since the time of Christ in regard to domination of culture, literacy, democracy, military power, etc. However, for Rome to be superpower, it forfeited many of its societal freedoms to the emperor – “CAESAR” and Caesar is the epitome of extractive political, economic and social ideology.
The Caesar’s, particularly Augustus and Julius made Rome a superpower by conquering lands to and fro in all directions just as a America did. Rome would soon be a multicultural superpower that would need to develop a form of government that would hold the empire together while still being palatable for diverse cultures just as a America has. The stroke of Augustus’ brilliance was in adopting the Greek republican system of representation to accommodate a perception of freedom and prosperity just as America has. However, it wasn’t long before seats in the Roman Senate were being bought and sold to highest bidder just as America has. This naturally created inequality of representation in many areas of the empire and most importantly – affecting strategic policies just as is in this hour. In other words, the folks who had the real power of political influence did not reflect the voice of the majority or its constituency just as it is in this hour. The corruption in the government went unaddressed as long as the people of the empire had state supplied bread from North African tributes, entertainment to escape into, and the coliseums to partake in vicarious victories just like America. The parallels between Rome and the United States at this time history are stark if we’re honest with ourselves.
It wasn’t long before the time of Christ that the Roman people lost all form of confidence in their corrupt government. At this time in history…They just wanted peace! So they slowly forfeited their liberties for national security and gave more and more powers to those who would now become more like dictators than an arbiter of freedom. The Roman people were willing to give up their liberties to become a superpower or a new order and have a sense of security just like America. The tape player of these dynamics was pressed to fast-forward in 9-11-2002.
Going as far back to the Middle Ages, Venice was possibly the wealthiest place in the world with the most advanced sets of inclusive economic institutions underpinned by political inclusiveness and pluralism. It gained its independence in AD 810 at what turns out to be a fortunate time in history. The European economy was recovering from the time it suffered during the collapse of Roman Empire. European kings such as Charlemagne were reconstituting strong central political power. (Note: We must understand that strong political institutions and democratic centralized decision making is necessary for stable political and economic societies. Just try getting something as simple as pot holes on a highway repaired without political institutions after a winter thaw to prevent the thousands of probable broken axles, bent rims, and flat tires) This new political leadership led to stability, greater security, and an expansion of trade which Venice was in a unique position to take advantage of. The parallels of political leadership. stability, greater security, and the expansion of free trade in U.S. after the American Revolution with the underpinning of the Constitution is very similar at both nation’s inception.
Venice was a nation of seafarers geographically located right in the middle of the Mediterranean. From the east came spices, silks, Byzantine goods, and slaves. (Note: All forms of slavery or forced labor always leads to extractive ideologies, lack of incentives and eventual collapse as I referenced earlier). Nonetheless, Venice became very prosperous. By 1050 when Venice had already been expanding economically for at least a century, it had a population of 45,000 and this increased by more than 50% to 70,000 by 1200. By 1330 the population had again increased by another 50% to 110,000. Venice was at this time in history as large as Paris and several times the size of London. It is interesting that the rate of population growth in the infant U.S. reflects numbers similar to Venice. We can only hope that the multitude of other similarities that I will continue to expound will not define America’s future. However, if the fork in the road that America has recently chose travel is not reversed – I’m afraid that we will face the same and ultimate conclusion as Venice.
One of the key bases for the initial economic expansion of Venice was a series of contractual innovations making economic institutions much more inclusive and pluralistic. The most famous was the “commenda” which was a revolutionary and a early type of joint stock company which formed for the duration of a trading mission. A commenda involved two partners – a stationary one who stayed in Venice and one who traveled. The sedentary partner put capital into the venture while the traveling partner accompanied the cargo. Typically, the sedentary partner put in the majority of the capital whereas, younger or less established entrepreneurs who did not posses wealth themselves could then enter into the trading business by traveling with the merchandise. This was a key economic channel and primary means for upward social mobility (inclusiveness). Any losses that may have been incurred within the voyage were simply insured by the amount of capital the partners put in. If the voyage made money, profits were based on two types of commenda contracts. If the commenda was unilateral – then the sedentary or stationary merchant provided 100% of the capital and received 75% of the profits. If it was bilateral – the sedentary merchant provided 67% of the capital and received 50% of the profits. This seems novice or elementary, but we must realize at this time in history, this form of opportunity was revolutionary. The erosion of these precepts and opportunities is the meat of this article and how it will relate to America’s certain future unless recent political and economic decisions or ideals are reversed
When studying official and historical documents, one sees how powerful a force and means the commenda was in promoting and encouraging upward social opportunities. These documents are full of new names of people who had previously not been among the Venetian elite or establishment. In government documents of AD 960, 971, and 982 – the new names in commenda contracts comprise 69%, 81% and 65% respectively of those recorded and preserved. Economic inclusiveness, pluralism and the rise of new families through trade, forced the political system to become even more open. The “Doge” who was essentially a governor who governed Venice was selected for life by the General Assembly. Though intended as a general gathering of all citizens – the General Assembly was dominated by a core group of powerful Venetian families. Although the Doge was very powerful, his power was gradually reduced over time and by changes in political institutions. After 1031, the doge was elected along with a new Ducal Council whose job it was to insure that the doge did not acquire absolute power.
The first Doge of Venice (D. Fabianico) that was bridled by the council was a wealthy silk merchant from a family that had not previously held high office. This institutional change was followed by huge expansion of Venetian mercantile and naval power. Once again, this is exactly how early America unfolded in dealing with the same type of trade piracy in the Mediterranean. In 1082, Venice was granted extensive trade privileges in Constantinople and a Venetian population center was formed in that city. It soon housed 10,000 Venetian citizens. Here we see inclusive economic and political institutions beginning to work together in tandem. The economic expansion of Venice which created more pressure for political change exploded after changes in political and economic institutions which followed the murder of the doge in 1171.
The creation of a Great Council would evolve as an innovation to be the ultimate source of political power in Venice from this point on. The council was made up of office holders of the Venetian state such as judges and was dominated by aristocrats (modern day professional politicians) In addition to these office holders, each year a hundred new members were nominated to the council by a nominating committee whose four members were chosen by lot from the existing council. (A good parallel are the various chairs and subcommittees in the U.S. political system). The council also subsequently chose the members for two sub-councils (the Senate and the Council of Forty) which had various legislative and executive tasks. The Great Council also chose the Ducal Council which was expanded from 2 to 6 members. (We can make a association with the current vice president, and speakers of the House and Senate reflected in the American political structure). The next innovation was the creation of yet another a council – chosen by the great Council by lot to nominate the Doge. Though the choice had to ratified by the General Assembly since they only nominated one person, this essentially gave the choice of doge to the council. The third innovation was that an new doge had to swear an oath of office that circumscribed ducal power. (Similar to the U.S. Executive Branch of government).
Over time, these constraints were continually expanded, so that subsequent doges had to obey magistrates (e.g. U.S. Supreme Court) and then have all of their decisions approved by the ducal council. The Ducal Council also took on the role of ensuring that the doge obeyed all decisions of the Great Council. These political reforms led to further evolutions of institutional innovations such as nationalized law, the institution of independent magistrates, courts, courts of appeals, and new private contract and bankruptcy laws. These new Venetian economic institutions promoted and allowed the formation of new legal business forms and new types of business contracts. This led to rapid financial innovation and we see the beginnings of modern banking around this time in Venice. The dynamic of moving Venice toward fully inclusive and capital based institutions looked unstoppable. But there was an type or underlying tension in all of this progress. Economic growth supported by the inclusive Venetian institutions was accompanied by the tension of creative destruction. Each new wave of enterprising young men who became wealthy via the commenda or other similar economic institutions tended to reduce the profits and economic status of the established elites. These newcomers and upstarts did not just reduce their profits, they also challenged their political power. Thus, there was always a temptation if they could get away with it – for the existing elites sitting in the Great Council to close down the commenda system and inclusive environment to these new entrepreneurial minded people.
At the Great Council’s inception, membership was determined each year. As stated earlier, at the end of the year four electors were randomly chosen to nominate a hundred members for the next year who were automatically selected. On October 3, 1286 a proposal was made to the Great Council that the rules be amended so that so that nominations had to be confirmed by majority in the Council of Forty which was tightly controlled by elite and establishment based families. This would have given the established elite veto power over new nominations to the council…Something they had previously not had. The proposal would end up being defeated. On October 5, 1286 another proposal was put forth with political coercion and this time it passed. From then on, there was to be automatic confirmation of an individual if his fathers and grandfathers had served on the council. If not, confirmation was required by the Ducal Council. On October 17th another change in the rules was passed stipulating that appointment to the Great Council must be approved by the Council of Forty, the Doge, and the Ducal Council. (At this point, an Antichrist type or system of political manipulation and movement comes into view. The same methodical political motions moved the Nazis into power in Germany).
The political and economical debates and constitutional amendments of 1286 essentially instituted the start of closure for Venice. In February, 1297, it was decided that if you had been a member of the Great Council in the previous 4 years – you received automatic nomination and approval. New nominations had to now be approved by the Council of Forty but with but with only 12 votes. (Notice that the organization was titled the “Council of Forty.” Again, this has strong antichrist overtones for the spiritual and prophetically discerning) After September 11, 1298, current members and their families no longer needed confirmation. The Great Council was now effectively sealed to outsiders and the initial incumbents had become a hereditary aristocracy. The seal on this came in 1315 with the “Gold Book” (The antithesis of the Book of Life) which was an official registry of the Venetian elite and nobility. Those outside of this elite nobility did not let their powers erode without a struggle which is representative of America’s current social, economic, and political state. Political tensions mounted steadily in Venice between 1297 and 1315 and the Great Council partially responded by making itself bigger in the attempt to co-op its most vocal opponents and it grew from 450 to 1500. However, the expansion was a smokescreen and was complimented by social repression. A police force was introduced for the first time in 1310 and there was a steady growth in domestic coercion – undoubtedly as a means to consolidate the new political order.
Having instituted a great political consolidation, the Great Council now moved to institute a great economic consolidation (representative of the mark of man). The switch toward extractive political institutions was now being followed by a move toward extractive economic institutions. Most important, they banned the use of commenda contracts, one of the great institutional innovations that had made Venice prosperous. This shouldn’t be a surprise – the commenda benefited new merchants and now the established elite were strongly attempting to exclude them. This was just one step toward more extractive economic institutions. Another step in motion came when starting in 1314, the Venetian state began to take over a nationalized trade. It organized state galleys to engage in trade and from 1324 on, began to charge individuals high levels of taxes if they wanted to engage in international trade. Long distance trade became the preserve of the political establishment and those who supported their economic agenda. This was the beginning of the end of Venetian prosperity.
With the main lines of business monopolized by the increasing narrow elite and establishment, the decline was now underway. Just a hand full of generations previous, Venice seemed like it was on the brink of becoming the worlds first inclusive society. However, it fell to a common denominator. Political and economic institutions became more extractive and Venice began to experience economic decline . By 1500 the population had shrunk to 100,000. Between 1650 and 1800 when the population of Europe rapidly expanded, that of Venice contracted. Today, the only economy Venice has apart from a bit of fishing is tourism. Instead of pioneering trade routes and economic institutions, Venetians make pizza and ice cream and blow colored glass for multitudes of foreigners. The tourist come today to gaze upon the palace of the Great Council and the Doge. They come to marvel at the Lions of St. Marks Cathedral which were actually looted from Byzantium when Venice ruled the Mediterranean as an economic and political powerhouse . Sadly, Venice would travel the road from economic powerhouse to museum.
In 1583 William Lee (1563 – 1614) returned from his studies at the university of Cambridge to become a local priest in Calverton, Nottinghamshire. Queen Elizabeth I had recently issued an edict that all people under her rule should wear a knitted cap. Lee would record that knitters were the only means of producing such garments and that it took so long to finish the article. “I began to think…I watched my mother and my sister sitting in the evening twilight plying their needles. If garments were made by two needles and one line of thread, why not several needles to take up the thread?” This momentous thought was the beginning of the mechanization of textile production. Lee became obsessed of creating a machine that would free people from endless hand-knitting. It should also be noted that the woman whom he was courting at the time showed more interest in knitting than in him!
Finally in 1589, his stocking frame knitting machine was ready. He traveled to London with excitement to seek an interview with Elizabeth I to show her how useful the machine would be and to ask her for a patent to prevent other people from copying the design. He rented a building to set the machine up and with the help of his local member of Parliament, the men met up with a lord in Elizabeth’s Privy Council to arrange the meeting. However, Elizabeth’s reaction was devastating for Lee. She refused to grant Lee a patent and commented that “thou aimest high master Lee. Consider thou what the invention could do my poor subjects. It would assuredly bring to them ruin by depriving them of employment thus making them beggars,” Lee was deeply disappointed and moved to France to try his luck there. When he failed there as well, he returned to England where he asked James I (1603 – 1625) who was now on the throne for a patent. Likewise, James I refused on the same political and economic ideological grounds.
Both monarchs feared that the mechanization of stocking production would be politically destabilizing. This “change” would throw people out of work, create unemployment, political instability and most importantly – threaten royal power. The stocking frame was an innovation that promised huge productivity increases. But it also promised creative destruction. The reaction to Lee’s brilliant invention illustrates a key prophetic revelation: The fear of “Creative Destruction.” It is this fear that explains why there was no increase in living standards between the Neolithic and Industrial revolution. Technological innovation makes human societies prosperous but also involves the replacement of the old with the new (This is applicable to both the natural and spiritual institutions we currently experience). This also includes the destruction of the economic privileges and political power of certain people. For sustained economic growth we need new technologies, new ways of doing things and more often than not – it will arrive from newcomers such as the 20 year old William Lee. It may make society prosperous but the process of creative destruction that it initiates threatens the livelihood of those who work with old technologies or ways of conducting business such as the hand knitters who would have found themselves unemployed by Lee’s technology.
More important, major innovation such as Lee’s stocking frame machine also threatened to reshape political power. Ultimately, it was not concern about the fate of those who would become unemployed as a result of Lee’s machine that led Elizabeth I and James I to oppose his patent. It was the gripping fear that they would become political losers and dethroned. Their reasoning and concerns of those displaced by the invention would create political instability and threaten their own power. It is this warped reasoning that has propelled such issues such as abortion, welfare, pork spending and gay rights to forefront of American political life. It’s possible for some to by-pass the fate and impact of the hand knitters, but the elite and those with political influence present a far stronger barrier to societal innovation. The fact that they have much to loose from creative destruction means not only will they not be the one’s introducing new technology or innovations, but that they will often resist and attempt to stop such innovations due to their own special interest. We must ask ourselves, Why is “special interest” and the “lobby” so prevalent in contemporary society? The bottom line is that all societies need newcomers to introduce the most radical innovations and these newcomers and the creative destruction they wreak must also overcome several sources and fronts of resistance including that from powerful rulers, legislators, elites and clergy.
The Prophetic Application – Have You Seen The Future?
Much of the world’s population such as the Middle East, South America, Russia and China have chosen strong authoritarian rulers and extraction based institutions over democracy, plurality and inclusive institutions. This historical and political familiarity will facilitate an antichrist type system on a global level rather easily since most of world population is already in its grip. Again, If democracy is so highly sought after and a universal longing – why are so many countries in South America (our own hemisphere) moving toward despotism and under the power of this spiritual entity?
There is absolutely no history of democracy in the Middle East, except and ironically, modern Israel. Since the drafting of the Balfour Treaty (the re-establishment of Israel as a nation) the tape player of history has been pushed to fast-forward. Prior to the treaty, mankind was still waging war on horseback (as late as WWI) and did not possess the ability to destroy itself. Communications were limited and still delivered by beast or foot as it had been all through history. The sign of the times and the alignment of nations under the influence of extractive spiritual principalities is at hand.
There has never been a democracy in China. There isn’t even an ideogram that even vaguely expresses democratic freedom. The ancient Egyptian language did not possess a single word or symbol for ‘freedom.” Mesopotamia (current Iraq), Babylonia, and all other Middle East civilizations throughout history have always reflected absolute despotism and extractive behaviors.
Under the guise of Middle Eastern democracy, a strong military man in all Middle Eastern countries will eventually take over as a pattern in the midst of the initial chaos under the precept of seeking freedom and seeking individual liberties. Within a year or two, a religious leader will arise due to the fact that the only freedom that will be recognized at this time in history for these countries will be freedom from foreign influence. The hatred toward America will grow ever stronger. The Middle East, the site of the great battle in the plains, is bound by ancient spiritual strongholds and America’s youthful attempts by the hand of carnal man to instill democracy will result in tragic failure and will become increasingly dangerous for us economically, emotionally, and physically. Like Rome, our attention and drawing of resources to the Middle East will leave our backside exposed to a great army from the north.
This will be the church’s greatest hour as petroleum prices will eventually sky-rocket as the by-product of this great spiritual battle. The cost of energy will eventually inflict transportation and logistical problems in the world’s marketplace for every product that we have become reliant upon due to the protection of current technology and fear of creative destruction. Currency will be of little value as products of what we perceive as necessity will not be available unless our national debt is aggressively addressed. If money is printed to make-up the cost, hyper-inflation which is even more catastrophic will bankrupt and erode much of what we know as western capitalism. It is within this hour that the “state” will step in to save the day and the peace of your “soul!”
The societal erosion will be exacerbated if denial of the historical value and authority of the U.S. Constitution and its prophetic wisdom continues to be raped. America has chosen to forfeit her individual freedoms and like Rome, she has methodically embraced state dependency in the guise of national goodness and security. Societal anger will quickly give way to desperation and the potential for many believers to fall away at this hour will be great. We must strengthen the brethren today to be prepared for tomorrow. Remember, in the midst of tribulation our witness and testimony will be the catalyst of a tremendous harvest of souls. Our creativity, inventiveness and economic vision which are being refined in prophetic gatherings around the world will play an awesome role in establishing the Kingdom of God upon the earth in strategic power. It is at this point, that the true body of Jesus Christ will bring love and comfort to those who are without and extracted dry.
Natural and spiritual entrepreneurship is being imparted in this hour and within these writings and gatherings. The impartation through divine economic connections will produce answers and practical solutions in bringing great hope to humanity. Supernatural ideas and creativity are being birthed and imparted by the Spirit to intersect heaven and earth. It is meant for us TODAY as businesses, entrepreneurs and individuals will be rightly connected and postured to be a tremendous blessing going forward.
I will close by stating that America’s primary virtue has been sacrifice and politics in America has demanded more sacrifices at every physical and natural disaster. We’ve sacrificed justice to the “alter of mercy” and happiness to the “alter of duty.” Likewise, we’ve convinced ourselves that we have nothing to fear from the world around us. Yet, our sacrificial alters have only kindled the fire of hatred in those whom we have sacrificed for which are usually politically and economically extractive nations.
The American taxpayer is currently at the time of this article giving as a free gift or ‘handout’, (20) F16 fighter jets to what is essentially the Muslim Brotherhood in Egypt who has historically and openly condemned our freedoms of expression and liberties…Even though we owe trillions in foreign debt and are cutting our own military – self defense. I wonder at times if we have lost our collective minds, our moral compass, and the social inheritance we are leaving our children. It seems that so few care or are even concerned what their elected officials are preparing, doing and promoting as “your” voice.
We must face the facts that much of the unstable world today is the by-product of America’s unwise sacrifices – yet we continue to feed and be bitten. The consequences of our false sacrifices outside of God’s purposes were simply unseen and not discernible to the spiritually naive and blind. The truth is that when America needs the sacrifice to be returned…It will not be found.
Handouts which are not fully funded must be stopped at all levels if the pursuit of happiness is to be offered as our legacy to future generations. Handouts at the local level, handouts at the corporate level, handouts at the political level as entitlements, handouts to nations who openly condemn us, and handouts to those who are not willing to be productive citizens. All nations must begin to balance their budgets and partake in “wise” loans which are essential for economic growth. These financial disciplines will require a tremendous sacrifice from an entire generation on a global level. This will be painful because of the fiscal mess humanity has put itself in due to greed and status. However, the legacy we have the opportunity pass on could be one of the hallmarks and bright spots in the history of humanity. Shouldn’t it be expected by the next generations anyway?