Economic Error #3: Scarcity Is the Result of Greedy Bankers.

Gary North

Ellen Brown has adopted the oldest and most erroneous socialist argument: scarcity as the product of human institutions.

She writes that people are greedy. So, what else is new? She writes that bankers are greedy. My, oh my: what a revelation! She writes that a reform of money will eliminate scarcity.

The Bible says that scarcity comes from God's curse on Adam for his sin (Genesis 3:17-19). The economist says that scarcity is the product of a fundamental limit on the environment. The Darwinist says the same thing. But Ellen Brown breaks with all this. She favorably quotes a man named Bernard Lietaer. He is not an economist.

[G]reed and competition are not a result of immutable human temperament. . . . [G]reed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using. . . .[W]e can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive. [Web of Debt, p. 31]

This sounds borderline nuts. We are asked to believe there is enough food to feed everyone, but not enough money. We are asked to believe that if some African politicians print up pieces of paper with politicians' pictures on them, no one in Africa will ever need to starve. There is all that food out there, somewhere; all that the people of Africa need to do is get some pieces of official government paper.

I hate to mince words. This view of scarcity is the official socialist Party Line. It has been for two centuries. Let's boil it down into one sentence: There is such a thing as a free lunch if government structures the economy correctly. The socialists said that socialist central planning will eliminate scarcity. Ellen Brown thinks that officially certified pieces of paper will do it. I find it easier to believe the socialists.

As I say, it sounds borderline nuts. But if you read the whole article, you see that it clearly crosses the border. Here is what she failed to quote from what Lietaer wrote. You can get some idea of what Ellen Brown regards as reliable economics.

The question I have been asking is very simple: What are the shadows of the Great Mother archetype? I'm proposing that these shadows are greed and fear of scarcity. So it should come as no surprise that in Victorian times -- at the apex of the repression of the Great Mother -- a Scottish schoolmaster named Adam Smith noticed a lot of greed and scarcity around him and assumed that was how all "civilized" societies worked. Smith, as you know, created modern economics, which can be defined as a way of allocating scarce resources through the mechanism of individual, personal greed.

SARAH : Wow! So if greed and scarcity are the shadows, what does the Great Mother archetype herself represent in terms of economics?

BERNARD : Let's first distinguish between the Goddess, who represented all aspects of the Divine, and the Great Mother, who specifically symbolizes planet Earth -- fertility, nature, the flow of abundance in all aspects of life. Someone who has assimilated the Great Mother archetype trusts in the abundance of the universe. It's when you lack trust that you want a big bank account. The first guy who accumulated a lot of stuff as protection against future uncertainty automatically had to start defending his pile against everybody else's envy and needs. If a society is afraid of scarcity, it will actually create an environment in which it manifests well-grounded reasons to live in fear of scarcity. It is a self-fulfilling prophecy!

Also, we have been living for a long time under the belief that we need to create scarcity to create value. Although that is valid in some material domains, we extrapolate it to other domains where it may not be valid. For example, there's nothing to prevent us from freely distributing information. The marginal cost of information today is practically nil. Nevertheless, we invent copyrights and patents in an attempt to keep it scarce.

SARAH : So fear of scarcity creates greed and hoarding, which in turn creates the scarcity that was feared. Whereas cultures that embody the Great Mother are based on abundance and generosity. Those ideas are implicit in the way you've defined community, are they not?

This is not economics. The is New Age touchy-feelie mysticism. You can read the entire article here.

Ellen Brown relies on Lietaer's weird distinction between patriarchal and matriarchal economic systems. She quotes his book, The Mystery of Money, to begin Chapter 5: "From Matriarchies of Abundance to Patriarchies of Debt." In a long essay, "An Integral View on Money and Financial Crashes," Lietaer writes this:

2. The more hyper-rational a market, the more likely it is to get caught in a mania.

Mythologically, as shown in the Bacchae, it is the Apollonian ruler, not those who embrace the "messiness" of the Dionysian space, who end up being dismembered. In other words, the more we defend ourselves against the Dionysian uncertainty, the more likely that we attract his "madness." This could explain why the most sophisticated markets are the ones who get caught in manias. It is because of their very sophistication that the illusion of control is most prevailing. The more tools we accumulate to ensure a permanent Apollonian certainty, the more likely it is that we will attract a Dionysian outburst.

If you think this sounds nutty, I'm with you.

Ellen Brown builds her entire theory of economics on this man's work. Anyone who thinks she has based her analysis on economics really is naive. The World Wide Web lets us follow her footnotes. That is what I am doing, article by article in this department on her theoretical errors.

It gets worse. Much worse. Stay with me.

For a detailed critique of Ellen Brown's economics, go here:

http://www.garynorth.com/public/department141.cfm