History

The 50 Steps of Crisis Eras

January 10th, 2013 // 9:23 am @ Oliver DeMille

Note to the Reader: I offered this list three years ago in early 2010, and since then the steps of crisis have advanced. I felt it was time to review and see where we are right now. Today I added a few words of commentary that update things since 2010—these are at the very end of this list. If you want, feel free to skip to the end and read the last paragraph before reading the list. It is amazing how closely we are following this!  —Oliver

Part I: The 50 Steps of Crisis Eras

The steps below come in the following general order during the 20-25 years of Crisis Eras in history. This pattern repeats itself every 80 years or so, with the last crisis era occurring between 1922-1945. Within the phases, steps can come in any order. Our current crisis era began on September 11, 2001.

PHASE I

The Pre-Crisis Era (Usually 7-12 Years before the Crisis)

1. Foreign war (e.g. French and Indian, Mexican-American, WWI, Gulf War)

2. Major economic boom (e.g. the roaring twenties, the dot.com nineties boom)

3. Declining morals (both sexual and charitable)

4. Escapist entertainment (novels, the Charleston, the sitcom, etc.)

5. Salesman values are the norm: tolerance, niceness, wealth, etc.

6. Two-party conflict

7. Big institutions lose popular support (e.g. British Parliament 1780s, Congress 1860s, Presidency 1920s, courts 1990s).

PHASE II

The Catalyst and Its Aftermath

8. Major catalyst event changes everything (e.g. Boston tea party, Election of Lincoln, 1929 stock market crash, 9/11).

9. Society gears up for crisis, but nothing happens yet.

10. Return to seeming normalcy, but growing fear and mistrust.

11. Gold (and in modern times steel and oil) prices soar.

12. Realist entertainment

13. Growing racial and religious intolerance

14. Business failures and buy outs

15. Increased regulation of business

16. Many foreign conflicts

17. Many government scandals

18. Widely increased stress and health problems across the nation

19. Economic downturn — looks bad but bounces back for a while

20. Entrepreneurial values begin spreading: ingenuity, self-reliance, confidence

PHASE III

The Escalating Crisis (Steps 21-28 can occur in any order and at any point before step 35, but they do occur at some point during crisis eras.)

21. Big crisis event! (war, pandemic, natural disaster, depression, etc.)

22. All society’s problems suddenly combined into 1 big problem!

23. It feels like our civilization itself is at stake (it is!)

24. Statesmen either choose pessimism, fear, worry about the future, or they choose optimism and planning for after the crisis.

25. Major economic downturn, often at depression levels.

26. Major war begins.

27. One political party takes charge (for next decade or more).

28. Leaders either hunker down and try to survive the crisis, or they study hard, research deep, start or build businesses to fund freedom, and figure out answers for when the crisis is over.

29. Emphasis off rights and on duties (draft, tax hikes, censorship of media, etc.)

30. Customized becomes Mass (fewer brands at store, one or two office pay-scales and benefits package, etc.)

31. Leaders either focus on self survival or they write, teach, publish and spread ideas of freedom for after the crisis.

32. Warrior values dominate society: courage, strength, resiliency.

33. Every family sacrifices greatly.

34. Religious observance soars.

PHASE IV

The Turnaround (This is where things take a shift toward positive!)

35. Health increases, stress and anxiety decrease.

36. Greatness returns, because there is no other choice: greatness in homes, communities, nations, business, politics.

37. Leaders either trust that the government will just handle things after the crisis or they continue studying, teaching, writing and spreading the ideas that need to be adopted when the crisis ends.

38. The splintering, complexity and cynicism of the past 40 years turns to cooperation, spirituality and optimism. Happiness increases. (e.g. the number of  people who considered themselves very happy decreased 60% from 1957 to 2007. 60%!).

39. Crisis ends! Everyone celebrates.

40. Masses go home, ignore societal progress and get back to life.

PHASE V

The Post-Crisis Era—Major Changes (Typically 0-12 Years After Crisis)

41. Leaders establish a new set of economic rules (with a mixture of regulation and free enterprise and a bias toward one of these).

42. Leaders establish a new culture (with government, corporations or family as the central institution).

43. Leaders establish a new social contract (with a mixture of government and private institutions such as schools, health care, insurance, technology, arts, etc.).

44. Leaders establish a new society (with decisions on the accepted mixtures of morals, pleasures and duties).

45. Leaders establish a new ideal view of rights (with mixtures of inalienable, civil and human rights).

46. Leaders establish a new definition of family.

47. Leaders define a new class (or classless) system.

48. Leaders establish new boundaries, allies and treaties.

49. Leaders establish new constitutional models and legal codes to embody steps 41-48 above.

[These choices can go very good for freedom, prosperity and happiness, or very poorly for these. It is up to the citizens and statesmen who influence and impact these decisions. While the decisions are made during the early post-crisis era, the leaders are prepared and the ideas promoted during the 20-25 year period of crisis.]

What’s next? Well, it could go either of two ways:

50a. If leaders are effective in their studying, learning and spreading freedom and free enterprise ideas during the crisis era, the society adopts free enterprise, family-centered culture. moral-based society, inalienable and equal civil and human rights, strong family values, no class or caste system, and a freedom-based form of constitution.

50b. If leaders aren’t effective in their studying, learning and spreading the principles of freedom during the crisis era and early post-crisis era, society adopts lots of regulation, governmental and corporate controls over the people, pleasure-based society, a loss of rights, aristocratic class systems and laws, and a force-based government.

Part II: Comments by Oliver DeMille

March, 2010

Almost a decade ago, 9/11 created event 8, and we watched events 9-13 occur during the Bush Administration. Then, since the major economic crisis and the election of President Obama we have watched events 14-18 occur.

This is happening very quickly. With the Health Care law, we will likely see 14-18 accelerate in the next couple of years before we have a chance to reverse things in a presidential election. The election will probably determine whether or not we progress quickly or slowly toward major crises.

January, 2013

We have witnessed a significant increase of events 14-18 since March 2010, and after the midterm elections of 2010 and huge gains by Republicans in the House of Representatives, we saw event 19 occur. In fact, it was strong enough that the nation re-elected President Obama in 2012.

After the election, we began witnessing event 20, partly as numerous businesses shut down to use resources in other ways or restructured in the face of increasing regulations, and also as a number of entrepreneurs saw the decline of free enterprise and got even more serious about growing their businesses—regardless of what government does.

We will see event 20 increase in 2013, and events 21-25 sometime very soon—likely before the 2016 election. Whether 21 or 25 will come first remains to be seen.

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Façade Society, Façade Politics

July 31st, 2012 // 9:15 am @ Oliver DeMille

John Adams on How to Fix Washington D.C. in 1791 and 2012

“Odd, that so many should favor frames that seemed to be trying to outdo the art they held.”

 ~Brandon Sanderson, The Alloy of Law

In the old American West, a façade town featured two- and sometimes three-story buildings lining Main Street, so visitors to the town would be impressed with how up-and-coming the community must be.

But when a person walked around to the side and back of the buildings, it turns out they’d find mostly one-story structures—sometimes little better than shacks or huts.

A few were even a façade built on the front of a rickety lean-to.

Some were respectable buildings, but they were usually made of adobe or pine rather than the fine hardwood edifices promised by their Main Street facades.

And, as I mentioned, they were only one story tall despite their appearance from the front.

Indeed, the only purpose of the two- or three-story façade was to impress.

In modern times, the idea that perception is reality has reached the level of myth.

It is taught in various circles as unquestioned truth, parroted in movies and television programs as a lasting principle, and often used to scold would-be individualists into working harder to conform and fit in.

“We must impress others to get ahead in the world,” the common wisdom seems to assure us.

C.S. Lewis lambasted this view in his classic, “The Inner Ring.”

If you spend your life trying to impress and fit in, as almost everyone does, he warned, you’ll waste a lot of time and energy and miss many of the important things that really matter in life.

Moreover, he predicted, you’ll fail to appeal to the only real society of substance, the other people who ignore trying to impress and fit in and instead set about doing good things in the world without worrying what others think.

He called this group the true inner ring, whose motto was something along the lines of “perception is merely perception—truth, reality, integrity and quality are what matter.”

John Adams wrote about this topic in his little-known and seldom-read classic, Discourses on Davila, which may be his best book next to Defence of the Constitutions of the United States (in fact, he referred to Davila as the fourth volume of Defence).

He said that nearly every person is plagued by a debilitating desire to be esteemed by others, to impress and fit in, to be admired, and that this is the basis of many human flaws including jealousy, envy, ambition, vanity, hatred, revenge, pride, and most human pain.

These are Adams’ specific words.

Adams said this desire for admiration is as real as hunger, and the cause of more suffering, anxiety, stress and disappointment than famine.

In contrast, the really good things in life, including virtue, nobility, honor, loyalty, wisdom, service, strength and so on, may or may not increase the admiration of others, but are often valued only to the extent that they do.

Sadly, many people seek these things only if, and the degree that, they increase admiration from others.

Far too many things are sought by mankind only because they attract “attention, consideration, and congratulations…” Adams said.

Likewise, too many good and important things are not pursued by many people because they do nothing to boost one’s status or station.

By the way, the point of Adams’ book on Davila is to show that because of basic human nature—built  on this inner drive of nearly all men and women to rise in station, and not just to rise, but to rise above other people—there will always be conflicts in human societies and institutions.

His solution was to create separate branches of power, and to set up the government so these branches could check and balance each other in a way that no one government entity could become too powerful.

The result, he said, would be that the people in the nation would be able to live free of overreaching government.

In the process of making this argument he spends a great deal of time showing that this drive to fit in, impress, and in fact outdo other people (by being more impressive and fitting in better than them), was a serious obstacle to human happiness in families, schools, business and all facets of society.

When people become more knowledgeable and learned, for example, they tend to engage in more, not less, conflict with other learned persons.

He was not talking of debate, but of serious conflict.

Thus our schools and great universities, which could be the salvation of society in many ways, are distracted from their potential because their leading inhabitants are constantly striving for Reputation, Notoriety, and Celebration.

These three words are those used by Adams, which he capitalized for emphasis in his book.

Likewise, Adams laments, our branches of government are unable to truly lead because those who should be our best hope for great progress immediately, upon being elected or appointed to office, set out to compete with all other officials for more Fame, Glory, Reputation and Credit.

Again, these are Adams’ words.

Voters send representatives, presidents and others to do their will, to improve things, but the real work of most man and women lifted to leadership is to win this contest with each other.

“Improve the Nation, or Impress the Nation. That is the question.”

And the drive to impress nearly always wins the day.

Adams wrote of humanity’s so-called honors in withering terms:

“What is it that bewitches mankind to marks and signs? A ribbon? a garter? a star? a golden key? a marshall’s staff? or a white hickory stick?”

He is mocking us now.

“Though there is in such frivolities as these neither profit nor pleasure, nor anything amiable, estimable, or respectable, yet experience teaches us, in every country of the world, they attract the attention of mankind more than…learning, virtue, or religion.”

Furthermore, Adams continues, they are sought by the poor, who believe such honors will lift them to equal status with the rich, and they are sought by the rich, who believe that without these symbols they will be lowered to the status of the poor.

This is the great challenge of human progress—we ignore our great potential to focus on silly attempts to impress.

We do it as children, as youth, as adults, and in old age.

The solution, in the case of academia, is to closely avoid putting scholars or administrators in charge of education, but leave oversight to the parents.

For government, the fix is to allow the people to frequently replace their officials at the election booth—to remove them as soon as they forget to do what the people sent them for.

Adams points out that ribbons, medals, titles, and other symbols of man’s honor, including the white hickory sticks of certain secret societies, aren’t of much use in real life.

Though if you are freezing the hickory stick can at least be ignited and bring some warmth.

But these ornaments are nevertheless widely sought because they are symbols of acceptance, fitting in, and impressing others.

Such symbols show that, in fact, the Status Motive is even stronger in humanity than the Profit Motive.

Indeed, giving war heroes and others who accomplish great acts of heroism large sums of money, cars, vacations or estates would be seen as crass by most modern eyes.

Yet these are exactly what many of the ancients gave their champions and heroes, though chariots and carriages were more in vogue than cars.

We give symbols for the highest achievements, precisely because their lack of monetary value communicates just how highly we esteem them—far above money.

For Adams, the honors and symbols are frivolities only because we seek the honors and symbols rather than the actions for which they are awarded.

This is deep insight into human nature, because for true heroes the ribbons and medals mean much less than simply knowing what they did.

It is wonderful to honor heroic acts that truly merit our admiration and thanks, but too often, as Adams puts it, the “great majority trouble themselves little about merit, but apply themselves to seek for honor…”

This is a serious indictment.

He further says that most people try to gain such honors not by going out and serving in ways that merit them.

Such service would be too difficult, or dangerous, or risky.

Besides, just meriting great honors doesn’t ensure that one will receive them.

After all, perception is reality.

So many people decide that a much better course is to ensure the world’s admiration the old-fashioned way, by directly seeking prestige and hiring publicists, PR firms, and commissioning scholarly studies.

Adams says it this way:

“…by displaying their taste and address, their wealth and magnificence, their ancient parchments, pictures, and statues, and the virtues of their ancestors; and if these fail, as they seldom have done, they have recourse to artifice, dissimulation, hypocrisy, flattery, empiricism…”

But this is more than an interesting philosophical discussion about human nature.

It actually cuts to the very heart of reality.

Because of our thirst for honors, and because façade honors are easier to obtain, all our manmade institutions eventually fail.

Adams mourns that government cannot solve the problems of humanity, nor will institutions of commerce and business.

Families and churches come the closest, but even here we spend the generations warring about whether husband or wife should be the head, how long fathers should maintain dominance over their sons, and whether newly married couples now report to paternal or maternal grandfathers.

Likewise, too many churches in history took up arms against unbelievers, and various religions and secular groups resort to violence when they fail to convince in other ways.

Indeed, as soon as men create institutions of any kind, they usually begin to war—within the institution and/or with other institutions.

The solutions, the real fixes to our challenges, Adams teaches, will not come from manmade institutions.

We should set up the best institutions possible, but we can’t rely on them for everything because man’s hunger for approval and applause is always at work undermining progress.

Adams quotes the English poets to make his point:

“The love of praise, howe’er conceal’d by art,
Reigns, more or less, and glows, in every human heart;”
—Edward Young

“All our power is sick.”
—William Shakespeare

All our power is sick. If so, how can mankind progress?

It turns out there is a solution, and Adams is excited to share it.

In the cases of family, church, relationships and business, one should simply dedicate one’s life and efforts to truly serving in genuine, if challenging, ways that really make a positive difference.

This was also recommended by C.S. Lewis, who said to ignore trying to impress and instead set out to genuinely serve.

Both Adams and Lewis note that such service is only authentic when we give up concern about getting the credit.

But Adams wants our political leaders to do the same.

He sees real government leadership as deep, committed service, devoid of seeking credit or reward.

He doubts that many will truly forget their drive to impress and seek only to frankly serve, but he holds out hope that a few will rise to such heights of true leadership.

The best honors for such exceptionally great leaders aren’t the praise or baubles of men but the highest of all tributes—emulation.

And in this Adams gives us mankind’s solution to its biggest challenges.

Specifically, while mankind limits itself from great achievements to fight the petty battles of impressing others, becoming more impressive than others, fitting in, and fitting in better than others, the solution is to emulate those who do it better.

Parents who emulate great parents are the hope of the world, as are great teachers, inventors, artists, statesmen, entrepreneurs and others who emulate the greats.

Emulation includes improving upon the best of the past, and as generations of parents and other leaders emulate the best and improve upon it, the world drastically improves.

This, as Adams puts it, is a desire not to impress and fit in, “but to excel,” and “it is so natural a movement of the human heart that, wherever men are to be found … we see its effects.”

Moreover, Adams assures us, it blesses communities and society as much as it helps individuals succeed.

For those who are religious, nothing is more effective than trying to emulate the Son of God, the great prophets, Buddha, and other examples of charity, service and wisdom.

We fall short in many ways, but in trying to answer the question, “What Would Jesus Do?,” as the modern saying goes, we reach for our very best.

Our greatest heroes, regardless of our views on religion, should be the great men and women of history whose sacrifice and greatness makes them most worthy of emulation.

Emulation is as strong an emotion as seeking admiration, and in fact most children learn emulation first.

Which brings us to the topic of this article—How to fix Washington and put America back on track as a standard for freedom, opportunity and goodness in the world.

According to John Adams (and C.S. Lewis, Alexander Solzhenitsyn, and many others), the answer is not to turn to leadership from our big institutions, even if they have as much power as the White House, Congress, Wall Street, Hollywood, Silicon Valley, the Federal Reserve or even the Supreme Court and Madison Avenue.

The solution lies in leadership, but not from the top down.

We will not get back on track as a society until we lead from below, until we become a society of leaders, and the right kind of emulation is our most powerful means of lasting influence and change.

Who you and I choose to emulate—really, truly, deeply, fully—will determine the future.

It is the most powerful symbol, because who we want to be like on the greatest days of our lives will color the rest of time on earth.

But it is much more than a symbol.

Too much of modern life is merely a façade.

Too many of our institutions are hollow shells of what we need them to be—and of what they claim to be.

Too often we choose the path of prestige over the path of quality.

Too frequently we listen to the credible rather than the wise.

Too many of our hours and days are spent on the things that are least important.

It was Nietzsche, I think, who said that modernism began when we started substituting the morning paper for our morning prayers.

Allan Bloom called this the closing of the American mind.

Adams told us that such things are hollow, but in the Information Age the voice of understanding is too frequently drowned out by the roar of the crowd.

In all this, however, there is an anchor.

Who we decide to emulate, and how faithfully we do so, will make the future.

And that goes for Washington as well.

***********************************

Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.

He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

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Covenant Government and the Sacred Trust of Freedom

July 10th, 2012 // 9:45 am @ Oliver DeMille

A friend recently told me that he considers family relationships much more important than politics.

He said marriage is a sacred, covenant relationship, and as such it is a higher priority than civil government.

I had two responses to this thought: First, I totally agree.

I think our families are a sacred trust and take a higher priority than pretty much anything—except our personal relationship with, and allegiance to, God.

Second, I wonder if our modern understanding of government has devolved so far from the time of the American founding that we don’t consider government a covenant or holding political office a sacred trust.

In fairness to my friend, he is a lover of freedom who cares deeply about our nation and the decline of liberty.

He is among the most dedicated students of freedom I know.

Lecturing him on anything related to freedom would certainly be preaching to the choir, and he certainly sees political leadership as a sacred trust.

But his words made me think.

Ideal government is a covenant, and was understood as such by the Israelites because of the teachings of Moses.

It was passed down over the generations and eventually became known as “The Divine Right of Kings”.

John Locke’s political treatises addressed the reality that such a divine right of any legitimate king was long lost by the time of the British monarchs.

The American founders discussed this concept at length, and the words “covenant,” “sacred,” and “trust” were widely used in connection with government.

A search for “covenant politics” in various founding writings and modern political journals will yield many interesting articles.

The word “covenant” is still used in our time—based on the legal tradition of Blackstone –in  nearly every state and province of the United States and Canada in the common CC&Rs (Covenants, Conditions and Restrictions).

In Anglo-Franco-American law, a “covenant” was originally a specific kind of contract where both parties promise to do something for the other, and the contract is binding on both parties, even if one of the parties fails to perform or defaults.

Thus, there are fundamentally two kinds of contracts in law: Absolute and Conditional.

Conditional arrangements make up over 99% of contracts, where if the other side defaults the contract is void for both parties.

But the oaths of government officials are of the Absolute variety.

The founders made government service a covenant, rather than a simple contractual, arrangement.

Regardless of whether or not the people fulfill their duties, government officials are expected to do theirs—as expressed in their oaths of office.

The law also differentiates between “express” and “implied” covenants—“express” being those that are clearly written out, and “implied” being those that should be assumed by any reasonable standard of duty.

Jefferson used this concept when he sent American troops to protect U.S. citizens against the Barbary Coast pirates without any Congressional declaration of war.

He openly admitted that he had no “express” constitutional authority to take the action, but that the responsibility of presidency gave him an implied duty to protect those he served.

He followed the same line of reasoning when he signed the Louisiana Purchase.

The difference between him and some modern presidents who have taken seemingly similar actions is that he openly admitted that he had no authority, but had acted solely on his sense of duty, and he would not have blamed Congress for impeaching him as a legitimate response.

He acted according to what he considered his implied covenant duty and was willing to accept the consequences for exceeding his constitutional authority.

This clearly established the importance of covenant in governance.

Washington, Adams, Jefferson and Madison all followed the same course at different times when the chief executive had a duty to protect the national security of the U.S., and the Doctrine of National Preservation was a duty to which they were willing to sacrifice themselves on behalf of the nation.

In these cases Congress refused to exercise their check, impeachment, because they believed the leader had lived up to his Constitutional Oath to guard and “protect the Constitution of the United States against all enemies foreign and domestic.”

The law, again based on Blackstone and English legal tradition, also differentiates between “inherent” and “collateral” covenants.

An “inherent” covenant is the cause of any and all fiduciary responsibilities –meaning, a responsibility that a person takes upon himself automatically by entering into a covenant relationship.

In contrast, “collateral” covenants must be clearly stipulated and understood by all parties involved.

There is a lot more of this, but I won’t bore you with all the details, like: Joint versus Several covenants, Principal versus Auxiliary covenants, Continuing versus Dated covenants, Full versus Partial covenants, Restrictive versus Universal covenants, Usual versus Special covenants, and about 10 others that are foundational in Anglo-Franco-American legal traditions.

One that I should mention is Transitive versus Intransitive covenants.

“Transitive” consists of those which pass the duty on to the covenanter’s agents, successors, and in some cases, posterity.

This is important because it shows why some people might argue that the governance covenant may be as important as the marriage covenant.

Obviously, a covenant is a covenant, a supreme promise, so ranking them by importance is a bit ridiculous.

That said, the marriage covenant is intransitive, meaning that my spouse and I are both bound by it, but when I die, my children don’t become her spouse.

If I held a hereditary government position, such as the anointed kings of old, however, upon my death my oath and covenant of good governance would pass with full responsibilities and duties to my heirs.

Government is a covenant, or at least good, free government is.

Under the U.S. constitutional model, positions requiring an oath are transitive; for example, when a president dies or becomes incapacitated, the responsibilities inherent in the oath of vice-president devolve all presidential duties upon him.

He must receive his full authority by collateral covenant and take an official oath; but if there is a gap between when the president dies and when the oath is taken, he has the full responsibility of the office by covenant.

(Note: Responsibilities, but not authority.)

Again, this is repeated in most military and other government positions that require an oath of office.

There are really only 3 types of government:

 1) government by fiat, where the strongest take power by force and rule by might;

 2) government by contract, where the government serves as a mercenary, responding to the highest bidder in order to obtain a profit for government officials;

 and 3) government by covenant, where the constituents delegate authority tied to responsibility and the leaders put their responsibilities above their authority.

 I believe that the marriage covenant is the most important agreement in all of society, second only to our promises to God.

And, in fact, the marriage covenant often included promises to a spouse, society and God.

Marriage has huge ramifications on all facets of society, including law and politics but extending much further.

But let’s not forget that good government is also a covenant.

It isn’t a mere contract, where if the people shirk their duties the officials may simply ignore the Constitution, or where if the officials are corrupt the people can just give up and let freedom wane.

We all have a responsibility to maintain freedom, and this obligation is transitive, meaning that it is our solemn duty to pass on as much, or more, freedom to our posterity as we inherited from our ancestors.

This is, in fact, a sacred trust.

Perhaps Calvin Coolidge said it best when he declared, as the President of the United States, that, “The protection of rights is righteous.”

If this is true, and it is, what would we call the act of destroying rights or of allowing them to be lost through distraction or neglect?

Such questions are extremely relevant right now in modern America.

***********************************

Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.

He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through Leadership Education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

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Capitalism vs. Free Enterprise

October 10th, 2011 // 11:18 am @ Oliver DeMille

The New Culture War

During the Cold War, people came to equate the three ideas of democracy, capitalism and free enterprise.

This made sense at some level, since the whole world seemed inescapably divided into authoritarian, totalitarian, socialist and communist nations on the one hand and democratic, capitalistic and free enterprise nations on the other.

In the decades since the Berlin Wall fell, as CNN’s Fareed Zakaria has pointed out, there has been a growing divide between the nations emphasizing democracy and those focused on capitalism.

The differences between these two groups are both interesting and significant to world events.

But an even more nuanced and impactful division is the difference between capitalism and free enterprise.

I wrote about this in my book FreedomShift, but it is a point of great magnitude in our current society and bears repeating.

Unfortunately, very few people have considered the differences.

Most still equate capitalism and free enterprise, even in the post-Cold War era.

This is a weighty mistake with a high potential for negative ramifications in the 21^st Century.

A simple defining of terms points out the crucial importance of the distinction between these two brands of economics.

To summarize: capitalism gives special government-supported benefits to capital and those with capital (wealthy individuals, families and business entities).

This is the opposite of socialism, which promotes special government-supported benefits to those without capital—the proletariat, as Karl Marx put it.

In contrast to both capitalism and socialism, free enterprise establishes good laws and government policies that treat the rich, middle and poor the same.

Some people may believe that this is the system we live under in the United States today—that the law treats all the same.

Such an assumption is incorrect.

The U.S. commercial code has numerous laws which are written specifically to treat people differently based on their wealth.

For example, it is illegal for those with less than a certain amount of wealth to be offered many of the best investment opportunities.

Only those with a high net worth (the levels and amounts are set by law) are able to invest in such offerings.

This naturally benefits the wealthy to the detriment of wage earners.

This system is called capitalism, and it is a bad system—better than socialism or communism, to be sure, but not nearly as good as free enterprise.

In a free enterprise system, the law would allow all people to take part in any investments.

The law would be the same for all.

If this seems abstract, try starting a business in your local area.

In fact, start two.

Let the local zoning commissions, city council and other regulating agencies know that you are starting a business, that it will employ you and nine employees, and then keep track of what fees you must pay and how many hoops you must jump through.

Have your agent announce to the same agencies that a separate company, a big corporation, is bringing in a large enterprise that will employ 4,000 people (or, in a more urban setting, 24,000 people)—all of whom will pay taxes to the local area and bring growth and prestige.

Then simply sit back and watch how the two businesses are treated.

In most places in the United States, one will face an amazing amount of red tape, meetings, filings and obstacles—the other will likely be courted and given waivers, tax breaks, benefits and publicity.

Add up the cost to government of each, and two things will likely surprise you: 1) how much you will have to spend to set up a small business, and 2) how much the government will be willing to spend to court the large business.

Of course, I don’t really suggest that anyone announce such a fake business.

But imagine, theoretically, what would happen if you did.

Our current mentality in government is to treat big business better than small business.

This is the natural model in a capitalist system.

Capital gets special benefits.

In free enterprise, in contrast, the costs and obstacles would be identical for the two businesses.

In free enterprise, the operative words are “free” and “enterprise.”

Note that American business and ownership stayed mostly small—with most people owning family farms or small businesses—until the 1960s.

It was debt (often promoted by government) which wiped out the farming culture that dominated the South and Midwest, and the rise of big corporations over family-owned businesses came after the U.S. commercial code was changed by law to a capitalist rather than a free enterprise model.

If we altered today’s laws at all levels so that government entities treated all businesses and citizens the same, regardless of their level of capital, the natural result would be the spread of more small businesses.

Note that nearly all major growth in America’s economy since 1985 has come from small business.

Today, small businesses are struggling under a veritable “mountain” of regulatory red tape—the result is economic downturn.

And, while some in government hold an anti-business attitude, even many of those ostensibly promoting pro-business policies are more aligned with Wall Street corporations than the needs of small business.

Capitalism, sometimes called “Corporatism”, is not the same thing as free enterprise.

Both are certainly preferable to socialism or communism, but free enterprise is considerably more conducive to freedom and widespread prosperity than capitalism.

History has proven the following: 1) Under capitalism, the divide between rich and poor naturally increases; 2) In a free enterprise system, the prosperity, freedom and dignity of nearly everyone in the society inevitably rises.

Alexander Solzhenitsyn pointed out that while modern American capitalism was clearly better than Russia’s twentieth-century communism or Europe’s contemporary attempts at socialism, the U.S. implementation of capitalism left much to be desired.

For example, he noted, under American capitalism the question of, “is it right?” became less important to many people and companies than, “is it legal?”

Likewise, the culture of capitalism frequently asks, “is it profitable?” before (or instead of) asking, “is it good?”

American capitalism, Solzhenitsyn said, created a nation more materialistic than spiritual, more interested in superficial success than genuine human progress.

Note that Solzhenitsyn was adamantly anti-communist and anti-socialist.

But he also found capitalism lacking.

In every particular, however, Solzhenitsyn’s criticisms of capitalism don’t apply to the free enterprise model of economics. When the law treats all people and businesses the same—regardless of their size, connections, power or wealth—an interesting consequence occurs.

Put succinctly:

• In socialism the government ignores, downplays and literally abuses prosperity and freedom to the point that both are lost for nearly everyone.

• Under capitalism, the laws promote the wealth and license of a few above the freedom and prosperity of all, with the cultural result of valuing attainment of wealth above almost everything—including virtue, compassion, and the liberty of all.

• In free enterprise, the laws treat everyone the same, thereby incentivizing freedom, prosperity and enterprise (as long as such enterprise doesn’t violate the inalienable rights of others). The application of this model is rare in human history, but the results when it has been applied are nothing less than spectacular (see Ancient Israel, Athens, the vales period of Switzerland, the Saracens, the Anglo-Saxons, and the United States—which by 1944 had 6% of the world’s population and produced over half of its goods and services).

The lesson?

Freedom works.

Enterprise works.

And the outcome when the two are combined is breathtaking.

We are capable of so much more than we’ve accomplished so far, and free enterprise is the most powerful economic system yet to be tried by mankind.

Isn’t it time for an end to the outdated debate about socialism versus capitalism and a national return to the free enterprise system which made America great?

During its first century-and-a-half of application, free enterprise brought us major wealth, a standard of living for most citizens that rivals or surpasses the lifestyles of history’s royals, world power, major technological and medical advancements, and the end of slavery.

It also brought the repudiation of racism, male dominance, religious persecution and a host of other ills that have existed for millennia.

With all these areas of progress, imagine what we could do if we re-adopted the free enterprise values and culture in our time.

Laws that give special benefits to wealth and capital while withholding such opportunities from the rest can never bring the progress, advances, freedom and prosperity that free enterprise will.

It’s time for a change, and the first step is for all of us to start using the phrase “free enterprise” a lot more.

We need to study it, think about it, discuss and debate its various applications, and make it a household topic rather than an obscure economic reference.

The future of America is inextricably linked with the future of free enterprise.

We will sink or swim exactly as it does, whether we realize it or not.

Isn’t it time to admit this reality and make it the leading topic in our national dialogue?

***********************************

Oliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Business &Community &Culture &Current Events &Economics &Entrepreneurship &Featured &Government &History

On Reason, II

September 26th, 2011 // 3:51 am @ Oliver DeMille

Aquinas held that angels are intellectual beings because they know all things, while men are merely rational beings because they know little and therefore must figure things out.

Descartes and Locke differentiate between intuition and reason by arguing that intuition can be believed without demonstration while reason requires that we demonstrate every step of our thinking.

Since each person must reason out each answer on his own to really use reason, the fact that others have outlined their thinking at every step makes reason easier to follow and to expand upon than intuition. Also, the argument goes, reason can be used to analyze and test intuition, while the opposite is seldom true.

The Bible discounted this view, comparing the rationalist “goats” with the more obedient and intuitive “sheep.” In much of Western culture, the term “sheep” became a negative name given to those who refuse to think things through.

Religious icon Aquinas, who certainly cannot be accused of not thinking things through,[i] argued that those who trust God’s full knowledge more than man’s limited knowledge are in fact more rational than those who believe in man’s abilities.

Ultimately, Aristotle taught, all demonstration rests on certain indemonstrable truths. Human rationalism can extend our understanding, as can science, but it cannot prove or disprove every detail.

However, rationalism is based on the assumption that there are truths in the universe, and that the use of our minds can help us learn these truths. In fact, modernism is based on this same concept.

For example, if there are no universal truths then math, logic and the scientific method are all flawed and useless. All of these depend on the ability to discover and detect truths that are out there.

Reason is the most democratic thinking method to date because it holds that each individual person can use it without depending on experts or elites.

In fact, it is how the regular people can analyze and test the words and assurances of the experts and elites. The other major methods of arriving at truth—from science, math and logic to theology, aestheticism and credentialism—depend on the assurances of experts.

Jefferson goes as far as saying that the people are bound by duty to use reason as they oversee government. The committee of founders which approved The Declaration of Independence agreed with this assessment.

A free people is a deep-thinking, well-read, independent-thinking people.

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