'How Russia was surprised'(Lyndon Larouche)...

HOW RUSSIA WAS SURPRISED
by Lyndon H. LaRouche, Jr.
December 27, 2008

The following report is focused upon the indicated situation in U.S.A.-Russia relations; but, the subject, nonetheless, is that immediate fate of humanity as a whole, whose favorable outcome will depend significantly on Russia’s participation in its urgently needed, but corrected view of the present global situation. If the world is to avoid a presently threatened dive into a prolonged, planet-wide, “new dark age” of all humanity, four leading nations–the U.S.A., Russia, China, and India--must act soon, in concert, to bring into being a new, global system of virtually all nations into a system of anti-imperialist cooperation among sovereign nation-states. Russia’s playing its part in this four-power initiative, is of crucial importance for the nations as a whole. In this report, the emphasis upon Russia, is made accordingly.


ADAM SMITH & KARL MARX

Since late into 2007 and early 2008, it appeared, more and more, that, despite my widely circulated, internationally, and solidly validated July 25, 2007 forecast of the immediate onset of a global financial-monetary breakdown crisis, a significant part of Russia’s present leadership had, so far, apparently, lacked a competent grasp of what has been, in fact, the accelerating, general breakdown-crisis of the present world monetary-financial system. This has been a crisis which not only had broken out three days after my own, July 25, 2007 international web-cast forecast of this historical development, but, this has been the most characteristic feature of the world’s leading economic development, that on a world-wide scale, during the entire period since July 28, 2007. The apparent delusion on the part of some elements in Russia’s leading circles, was shown in the form of certain groundless assurances that Russia’s income from proceeds of sales of energy and other raw materials sales to foreign nations, would insulate Russia from the waves of global financial crisis already hitting the U.S.A. and others.



Despite the fraudulent attempts by certain foolish leaders of the U.S.A. and other nations, to describe the presently global financial panic as the onset of a mere “crisis of sub-prime mortgages,” what actually occurred at the close of July 2007, was that the inherently hyper-inflationary, “geometrical” self-expansion of the nominal quadrillions of U.S.A. dollars-equivalent of those purely fictitious financial assets called “financial derivatives,” had reached a point at which the ratio of self-inflation of purely nominal, speculative financial derivatives, which were being counted as the financial claims of the world’s monetary-financial, derivatives-based system, had reached a level of rate of self-expansion at which a breakdown-crisis of the entire world’s presently existing financial-monetary system had become inevitable. The sheer lunacy of the “bail-out” actions by the U.S. President and deranged leaders of the U.S. Congress, since that time, is now driving the ratio of outstanding claims to real assets toward a hyper-inflationary vanishing point.



The nearest approximation of an earlier precedent for a similar form of international break-down crisis, is to be found in Europe’s Fourteenth-Century, genocidal collapse into a great new dark age, during which the population of Europe had collapsed by approximately one-third.



In such a situation as this present crisis, the choices are, either to terminate the entire present, world-wide system through reorganization in general bankruptcy, or, by failing to do that, bring on a prolonged, planet-wide “new dark age” among all peoples and their nations. That change in the world-wide system is your only choice. Reject that change, and your nation, and your family are doomed, absolutely without optional choices. Do not even talk about “reforms;” either you kill the present world system, and replace it with a new system, top-down, as if in a single largely world-wide breath, or you personally, and your nation, are finished as of now. The count-down is now.



Already, the controllers of the world financial market, as merely typified by a greedily stupid U.S. Bush Administration and present crop of a small kernel of triumphalist, and often lying leaders of the U.S. Congress, instead of permitting the adopting of my proposed July 2007 reforms, which would have saved civilization, had chosen to resort to accelerate the rate of hyper-inflation of financial claims, while looting the physical asset-basis of the real economies.



Obviously, nothing less than the sudden, sweeping termination of the present system, is what is required. The current attempts, world-wide, to “bail out” the system, could have been attempted only by pathetic fools, or monstrous criminals.



Unfortunately, Russia’s government, rather than heeding my globally circulated warning, allowed itself to be misled into pretending that it would not be hit massively by what were, in fact, the inevitable spill-over of this crisis into Russia’s own economy. That spill-over has now struck Russia, hard. Freedom may include the freedom to make mistakes, as Russia has done in this matter recently. Unfortunately, that is also the freedom to suffer the consequences of those mistakes, including, in the extreme case, the freedom to commit national suicide.



In part, the failure of Russia’s leadership, so far, to correct its own mistaken disregard of my fully confirmed forecast, has become an increasingly visible source of a disorientation, perhaps supplied, in part, by certain ostensibly British assets known to me as being from outside Russia itself. This “assisted disorientation” is what has been recently suffered by some leading parts of Russia’s institutions. This error in Russia’s estimation of the current world situation, is not only an embarrassment and threat to the interests of Russia itself; a certain stubborn refusal to face this reality in some notable Russia circles, is an added source of danger, not only to Russia, but to the entire planet.



So, over the course of 2007-2008, the economic policy of Russia’s leadership appeared to be floundering, with some sharp zig-zags, as these two years wore on. Under conditions in which the avoidance of a planet-wide new dark age, comparable to, but worse than that of the mid-Fourteenth-Century “New Dark Age” of Europe is imperative, Russia’s recently floundering economic policies and perspectives, are as much a menace, chain-reaction-style, to worsening the situation of the world as a whole, as to Russia itself.



Russia’s apparent refusal to recognize, in time, that its recent role has turned out to have been blind faith in a vastly overpriced market for its raw materials in energy supplies, misled Russian leaders into the view that its temporary margin of profit from exports was permanent. This illusion contributed to luring Russia into its present crisis. The solid evidence in the matter, is that Russia was misled into acting as if it did not need to put the priority on investing in vigorous expansion of its industrial and related output.



Similar misjudgments by most nations other than Russia, have become the Achilles’ heel of what had become the already crisis-stricken world economy as a whole, including, of course, what nearly eight years of a virtually clinically insane President George W. Bush, Jr. Administration had done, in wrecking not only the U.S.A., itself, but other nations duped into compliance with insane policies similar to those designed by London, but adopted by the Bush Administration.



The question, “What happens next to the market-price of those raw materials?” is worse than merely a diversion from the facts of the matter. The issue on which attentions must be focused, is the identity of those mechanisms which were employed to mislead Russia’s government into a wholly unjustified confidence in what appeared, temporarily, to be its advantageous economic situation. However, let the blame for that lie where it should; the crucial issue for Russia’s and other relevant decision-makers from around the world, now, is that continued absence of an urgently needed competence, a lack, of competent decisions, which is to be recognized from the way Russia had permitted bad advisors to mislead it into a misguided strategic economic estimation for as long as that has gone on recently.



Now, the really serious question which must be posed, and answered, is: What therefore, is my advice to the incoming U.S. Administration of U.S. President Barack Obama on a U.S. policy toward Russia? How should President-elect Obama shape his policy toward Russia at a time that Russia is floundering in ways which its government was clearly unable to foresee, and, still, so far, seems to fail to comprehend? How must our U.S.A.’s necessary partner, Russia, be rescued from this situation?



What, for example, must U.S. President-elect Obama be told?



I. THE LEGACY OF KARL MARX

President-elect Obama must be assured, that, despite those U.S. right-wing associations which changed their names and street addresses, when what had been the shamelessly pro-Hitler fascist associations of the pre-December 7, 1941 time, had (expediently, and only temporarily) changed their political street-clothes, but not their underwear, they are no longer in control of U.S. national policy-shaping.



In the meantime, today, Russia is no longer communist. Nonetheless, to treat the subject of Russia’s economic policy, still today, it remains essential to take not only the subject of Karl Marx as an economist into account, in the fashion I do that here; but, it is also necessary to consider the continuing effects of some of the still widely extant mythology on both the subject of Marx as a figure of the greater part of a century and half of recent modern history, and, also, both his direct, and indirect influence on thinking, even today, on the subject of the political-economy of the world at large. Now, speaking practically, Marxism is dead, but, the wolves of Wall Street and London are not; but, since historians and others must, still, from time to time, pay courtesy visits to Marx’s political grave, the question sometimes posed to those visitors by the presently menacing world crisis-situation, is, will that grave also be, soon, their own?



All the while, Karl Marx’s doctrines on economy were never actually scientific in and of themselves. They were a subordinate element within an international system of post-February 1763, imperialist, Anglo-Dutch Liberalism in the Paolo Sarpi tradition, an element which included the two principal varieties of British imperialist varieties of leading dogma respecting economy, the so-called “capitalist” version on the one side of British ideology, and the “socialist” version of the same British ideology on the other side. All sets of players were obliged to deal and take cards at the same table of a globally reigning modern Liberalism. Excepting the American System of political-economy, excepting the President Franklin Roosevelt interval most notably, all leading features of the 1890-2008 world economy have been an assembling of the two, competing, types of players at the same Anglo-Dutch Liberal table. Those among you today who are wiser than most, might wish to identify it as Satan’s table.



We all played according to the rules prevailing during that time. I also played at that table, personally, although being, nonetheless, a follower, in matters of economic policy-objectives, of Benjamin Franklin, Alexander Hamilton, Henry C. Carey, President Abraham Lincoln, and President Franklin Roosevelt. I played at that table, and presented forecasts in that light, not because I believed in the prevailing doctrine of practice, but, because that was the only table at which the world game of economy was actually being played by virtually all of the world’s leading players, at the time.



Nonetheless, during the relevant decades of the post-World War II interval, I forecast the behavior of governments, and more, on the basis of knowing not only the physical reality of that situation, but, also knowing (sometimes better than they did themselves) the rules by which the leading players were acting, whether they were fully conscious of those rules of the game at that time, or not. Over the 1956-2008 interval, each of my forecasts have been proven to have been of the best quality from any leading source at that time. Now, that game is over, probably forever; the game, and, also its rules, have now been changed, forever.



So, while that dirty old game had been in the process of coming to its present end, the recent approximate decade of a collapse of the former Soviet Union and its Russia sequel, up to the election of Russia’s President Vladimir Putin, had come and passed. A new quality of developments in Russia has emerged to push the subject of Karl Marx (but, hopefully, not the much-needed Academy of Sciences) to the side-lines; Russia’s government has found itself menaced, most immediately, by its own adoption of the misguided presumption that Russia would escape the great part of that economic depression which seemed to them, mistakenly, to radiate from the members of the trans-Atlantic economy. Reality has now soon confronted Russia’s leaders with the ugly truth, that it was not the U.S.A.’s economy which was doomed, but the world system on which Russia also depended absolutely.



Thus, now, Russia’s economy itself is menaced by the effects of its own misguided over-confidence in the mis-advised, sometimes mystical presumption that there were factors, apart from the mystical powers of some ancient wind-god, which would enable Russia to avoid anything worse than a passing experience of discomforts caused by the terrible crisis seen to be, chiefly, hitting the U.S. economy and related trans-Atlantic communities.



The `Seven Years War’ Factor

The formal blunder in that over-confidence which was expressed by leading Russian circles, was the Russian government’s radical mis-judgment of my warning of a new global economic breakdown-crisis of the present world monetary system, a crisis against which I had warned in what I have already referenced here, as my three-hour, July 25, 2007 international webcast. This webcast delivered a warning which has been consistently validated by relevant evidence, that it had been an already ongoing set of developments, which was to have erupted three days following my July 25, 2007 forecast. Whereas, I had forewarned, that the expected immediate crisis in the real-estate mortgage-market would be a systemic mode of a general breakdown of the quadrillions-dollar mass of speculative financial-derivatives dominating the world economy as a whole, the wishful believers and outright idiots of the world, wished to delude themselves with the consoling thought that this might be considered as merely “a sub-prime mortgage-crisis.” Since then, everything which has developed in international financial and related markets, has actually proceeded, contrary to that silly “sub-prime crisis” fairy tale, and in accord with both my estimated form and time-table of the process of collapse of the global system as a whole.



The best comparison to be made, against a background within the bounds of modern European history since the general, medieval breakdown-crisis of economy during Europe’s Fourteenth Century, is to compare and contrast this presently onrushing, global breakdown-crisis with that of 1923 Weimar Germany. The two cases, that of 1923, and since July 28, 2007, have obvious similarities, but there are even more crucial differences.



The essential difference between the presently onrushing, global breakdown-crisis and that of 1923 Weimar Germany, is that Germany’s 1923 crisis was tailor-made by, and managed by the Versailles Treaty powers, from the top, chiefly by that British monarchy which had been, in fact, the sole original author of World War I, on down. This Weimar inflation was imposed by London and its allies, to such an effect that Germany was a captive of this externally managed form of the geopolitically motivated, induced crisis within the virtual gladiatorial arena contained, essentially, within Germany’s national borders. Now, today, a different, but somewhat similar form of world-wide breakdown-crisis has occurred, but one beyond all national borders. Consequently, the evolution of sundry aspects of the ongoing crisis, is alternating between deflationary trends in markets for consumable goods, on the one side, and continuing hyper-inflationary trends in the quadrillions-dollar-plus financial-derivative bubble, on the other.



Essentially, the bubble is neither inflationary nor deflationary, but, rather, both, simultaneously. It is a global breakdown-crisis of the present world-wide system as a whole, including all parts of the world, including all of Russia and China. The world is hovering, in fact, on the crumbling brink of a new, planetary dark age of all humanity. This crisis is not an artificially managed one, not essentially inside a single national economy, as Weimar Germany’s 1923 hyper-inflation had been. This is a systemic crisis produced by the foolish complicity, over more than forty years, 1968-2008, especially the recent thirty-five years, of all of the leading nations of the world. There are available remedies for this crisis, which could be adopted, even at this presently advanced stage of the global breakdown in progress, but the existence of any remedy requires a drastic change in the world’s economic system, a change from any monetary system, including Marxist varieties, to a fixed-exchange-rate credit-system based on precisely that model which U.S. President Franklin Roosevelt had actually specified during the 1944 Bretton Woods monetary conference. Any Keynesian type of reform now, under present crisis conditions, for example, would be a disease worse than the existing illness. All compromises with Keynesianism, such as that adopted internationally under the influence of the U.S. Truman Administration, are now categorically disallowed, as being futile efforts to revive a world which had ceased to exist.



Marx’s Role

To grasp the reality of the present world situation, it is indispensable that we put to one side most of the customary academic and comparable presumptions respecting Marx’s role in history. Some of these assumptions were practically reasonable, but disputed ones, at relevant past times. Other popular assumptions were never true, although widely believed. Now, a change in all the rules of the global game has come about. Now, the present, new world conditions, are in the process of acting against anyone foolish enough to continue to play by anyone’s formerly assumed set of global economic rules.



To appreciate the included factors which have led the world into its present disaster, it is necessary to say, that, despite Karl Marx’s emotionally charged outburst of praise for the swindling hoaxster Adam Smith, we must concede that Marx was not as dumb in matters of a science of economy as he often made himself appear to be. Nonetheless, Marx never represented anything resembling an actually scientific quality of competence in the field of political-economy; Marxism never actually worked, and never could have worked; it often happened to be the case, that the anti-Marxists were dumber than the Marxists.



Looking to that past state of affairs, we should say that, although some professedly Marxian economists have shown scientific capabilities, the credit to them belongs, as in the case of Rosa Luxemburg, to their preferring to look at the subjects of Marx’s categories from the standpoint of ancient through modern European history and modern science, rather than, as ideologues, to the writings by Karl Marx.1 The notion that there was some “science” behind Marx’s views on economy, was never justified; Marx as an economist was, essentially, simply, as he himself insisted, a student of that British East India Company’s Haileybury School, which expressed the axiomatic presumptions of the likes of Adam Smith, Jeremy Bentham, Thomas Malthus, and David Ricardo. Nonetheless, under the circumstances of the aftermath of London’s orchestration of the so-called Revolution of 1848, the movement which had been organized to become the outgrowth of the work of Lord Shelburne’s Foreign Office’s creature Jeremy Bentham, and which had been organized by Bentham’s protégé and his successor Lord Palmerston, this arrangement had remained an historic factor in shaping the leading policies of a globally extended European history of that time , a general situation which persisted until past the 1989-1991 collapse of the Soviet Union.



The Bismarck Thesis

It had been foreseen, and later reported, by then former German Chancellor Otto von Bismarck, that Britain’s plan for what became the 1890-1914 plan for the outbreak of World War I, would actually begin with the ouster, by the British, of Bismarck.2 Bismarck’s ouster had been followed, thus, by the assassination of France’s President Sadi Carnot (as also the subsequent, strategically crucial assassination of U.S. President William McKinley), and would be a re-enactment of that same imperial policy of Lord Shelburne’s British East India Company which had established that private Anglo-Dutch Liberal Company, at Paris, in February 1763, as a so-called “British Empire.” This was an empire which was crafted, in fact, by Lord Shelburne, to be in the intended, pantheonic likeness of that of the Roman Emperor Julian the Apostate.



It was never an empire of the British people. Britain as such is merely a kingdom, not an empire. The empire, like that of ancient Rome, Byzantium, or the medieval Venetian financier oligarchy, is the empire of a “slime-mold like” form of global financier oligarchy, the polyglot empire of a cabal of financier-oligarchical, family-financier interests. The intention of the present Anglo-Dutch Liberal form of empire, crafted under leadership of Paolo Sarpi, was always to create a malthusian-like system of what is called “globalization” today-- a new, blob-like, global empire in the image of the Biblical “Tower of Babel.”



Given the general ignorance of history prevalent among the world’s so-called leading academic historians of today, the following, interpolated description of the strategic setting of 1890-2008 world history, is indispensable for anyone who could wish to be considered a competent strategist for the circumstances now faced by the world at large.



With the death of Lord Palmerston, and the ensuing affair of the Paris Commune, Karl Marx was dumped by the British Foreign Office, by Mazzini, and by the notable German and other socialists of that time as well. Nothing done by Marx himself had much of anything to do with the later prompting of his fame’s later revival. Then, later, in the tradition of the practices of the Roman Empire’s Julian the Apostate, the name of Karl Marx was restored, posthumously, to the pagan religious pantheon representing the polyglot--or, “poly-clot”--known as the British Empire.



The post-1890 circumstance under which the forces associated with Prince of Wales Edward Albert’s scheme for imperial warfare, orchestrated what became a so-called “World War I,” had been the circumstances which London recognized as the effect of the victory of President Abraham Lincoln’s United States over those schemes intended to destroy the U.S.A., schemes which had been originally launched by the newly created British Foreign Office of 1782, and developed, first, on behalf of Lord Shelburne under the direction of the Secret Committee of Shelburne’s creature Jeremy Bentham, and, then, Bentham’s trainee and successor Lord Palmerston.3



President Abraham Lincoln’s defeat of the British Foreign Office efforts, under, successively, Bentham and Palmerston, to break up the United States, resulted not only in the immediate British-directed assassination of President Lincoln at that time, but the launching of a entirely new kind of British effort to bring about the destruction of the U.S.A. What the British empire saw as the new danger which the U.S.A. represented to the Anglo-Dutch imperial forces, was a threat typified by such “geopolitical” developments as the U.S. transcontinental railway system, that as an expression of the emergence of the U.S.A. as had been intended under then Secretary of State John Quincy Adams, intended to be a transcontinental republic defined between Canadian and Mexican borders and the Atlantic and Pacific Oceans. The Meiji Restoration in Japan was a direct expression of this, as were the reforms of the late 1870s, led by Chancellor Bismarck in Germany, similar developments associated with the work of Mendeleyev in Russia, and post-Napoleon III France.



In that setting, with the discrediting and death of Palmerston, Karl Marx seemed, for a time, almost to vanish from the scene.



However, in such matters, be forewarned, that it can be said, that if, tomorrow morning, some half-witted ideologue invents a new religion, or, the same thing, causes the revival of an old one from decades or more of obscurity, as Paolo Sarpi quickened a dead, medieval, William of Ockham, the predictable academic response would probably be a new version of British-style political-economy, and, then, should a large number of persons then profess themselves its true believers, an enormous effort would doubtlessly be expended in producing a new school of published commentary on the subject of that belief and its social implications for both psychiatry, academic social theory, sexual behavior, and political campaigns generally. Indeed, most of the specialties for which higher academic degrees have been awarded in recent decades, have been of approximately that quality of origin, and dubious competence.



Just so, as I have noted above, after the death of Palmerston and the affair of the Paris Commune, Karl Marx had been essentially dumped by Lord Palmerston’s successors, as also by Marx’s own sometime sponsor, and later Fabian Society notable, Frederick Engels.4 However, some years later, years after the death of a Karl Marx who had faded into virtual irrelevance over much of the 1880s, Britain’s Frederick Engels acted to revive the name and influence of Karl Marx, this time under the sponsorship of what became the rabidly pro-imperialist, and pro-fascist British Fabian Society, of which Engels had emerged as a leading figure during the early 1890s.5



The Revival of a Dead Karl Marx

What had happened to bring about this change in British revival of the theme of Karl Marx, was chiefly the ouster of Germany's Chancellor Bismarck, on the urging of a Prince of Wales (“Uncle”) Edward Albert, a Prince who saw Bismarck, correctly, as the major impediment to the Prince of Wales' determination to organize a new "Seven Years War," as between Germany and Russia, on the Eurasian continent. Have no toleration for the usual classroom and related press babble on the subject of the leading national and international conflicts of the 1890-2008 interval to date, neither on the subject of the wars and leading assassinations of the 1890-1945 interval, nor the build-up toward a new imitation of the new "Seven Years War" paradigm of 1945-2008.



The truth of the matter of Europe-centered world history since the 1763 Peace of Paris, is most readily located in the symptomatic fact, that Karl Marx was in fact, an asset of Jeremy Bentham’s Foreign Office protégé, the Lord Palmerston who, in fact, owned the very much confused Karl Marx as an asset of both the Young America and Young Europe associations.6 Lord Palmerston’s wholly owned agent Giuseppe Mazzini, the head of the Palmerston-directed Young Europe, was the Palmerston agent who, with the British Museum’s David Urquhart, typified those persons who directly controlled Karl Marx during the entire period of Marx’s stay in London up to, and past the point of Palmerston’s death.



For example, although, on certain notable occasions, both prior to Marx’s sojourn in London, and later, he had shown some interest in work of the world’s leading economists of that time, Friedrich List and Henry C. Carey, Britain’s Frederick Engels intervened quickly, on both occasions, to wave Marx off from such studies. I have never found any serious attention to the work of competent economists by Marx; all his “heroes” in this field were representatives of products of the Venetian school descended from modern Liberalism’s founder Paolo Sarpi, such as the followers of Giovanni Botero,7 the Cartesian Abbe Antonio Conti, William Petty, and Giammaria Ortes, in addition to representatives of the Haileybury School headed by Adam Smith, and Jeremy Bentham.



The significance of the revived promotion of Marx’s name is located in the process, directed from London, by Prince of Wales Edward Albert, for clearing the way for “A New Seven Years War” on the European continent, through a series of measures. These measures included, notably, the ouster of Germany’s Chancellor Bismarck, the assassination of France’s President Sadi Carnot, the Dreyfus case, the British launching of Japan into a 1895-1945 series of wars against China, the related. 1905 Russo-Japan war, and, most crucial of all, the London-steered assassination of U.S. President William McKinley.



That McKinley assassination had the crucial function of shifting control of the foreign policy of the U.S. Presidency from the U.S. traditional orientation of friendship toward both Bismarck’s Germany and Russia, by putting the U.S. Presidency in the hands of a dutiful nephew of a treasonous British intelligence asset and Confederate spy, Theodore Roosevelt, and, a bit later, a fervent champion of the treasonous Ku Klux Klan, London’s asset Woodrow Wilson. It was only with the election of President Franklin Roosevelt, that the U.S. Presidency fell again into the steady hands of a true U.S. patriot, just as the death of Franklin Roosevelt had put the Presidency back into the hands of what I quickly came to regard as a virtual traitor, a Wall Street tool and pro-British imperialist, Churchill accomplice, Harry S Truman.



Such are the practices of ebb and resurgence of religions and kindred social theories under the reigns of empires



The exact-same set of geopolitical issues and games are the substance of the conflict expressed by the world-wide crisis of the present instance. However, as I show below, the old game is now ending. Economics as a subject by that name which has been taught in earlier centuries, has now come to its end of the line. Economics as being, now, essentially an expression of a properly defined physical science, must now replace what had been the earlier habits of government and other economic practice until now. The new form will retain the essential features of what the U.S. Federal Constitution had prescribed, minus the corruption typified by the Anglo-Dutch Liberal practices of usury.



The time has come to bury Julian the Apostate, permanently. It is time to empty that rubbish bin of their minds which the credulous of our times have come to mis-name “history.”