follow-up to Wolfensohn speech


Jan Slakov

Dear Renaissance Netowrk,     Nov. 15

Paul Swann compiled several commentaries and postings into three messages to
follow up on the "Wolfensohn in Sheep's Clothing" posting (sent to the RN
list on Oct. 27).

I can send all 3 postings to people who request it, but will edit the 3 down
into just one for now.
all the best, Jan
Date: Fri, 6 Nov 1998 10:32:39 +0000
From: Paul Swann <•••@••.•••>
Subject: Re: Wolfensohn in sheep's clothing - responses [1/3]

My recent comments in reply to James Wolfensohn's speech provoked some
thoughtful responses, some of which I feel may be worth sharing in the
interests of stimulating further discussion.

I've also received permission to circulate:

(i) an excellent  briefing paper entitled "The Debt-Money System: Its Role
in Social, Economic and Environmental Breakdown", printed in the Sept-Oct
1998 issue of The Social Crediter

(ii) an interesting proposal for a Global Economic Reform Campaign (or
GERC...which I think might change to GERM, for Movement!).

These will follow shortly...please distribute as appropriate.

The GERC steering committee are based in Scotland and are willing to liase
with and support others interested in establishing local groups.

If there's sufficient interest  perhaps we could look into setting up an
Internet GERC/GERM group on a dedicated list.

Regards to all,



Firstly, Bob Olsen <•••@••.•••> contributed the following parable
from Gurdjieff, which he found in Colin Wilson's "The Outsider":

 There is an Eastern tale that speaks of a very rich magician who had a
 great many sheep.  But, at the same time this magician was very mean.
 He did not want to hire shepherds, nor did he want to erect a fence
 about the pasture where the sheep were grazing.

 The sheep consequently often wandered into the forest, fell into
 ravines and so on, and above all, they ran away, for they knew that
 the magician wanted their flesh and their skins, and this they did not

 At last the magician found a remedy.  He hypnotized his sheep and
 suggested to them, first of all, that they were immortal and that no
 harm was done to them when they were skinned; that on the contrary, it
 would be very good for them and even pleasant; secondly he suggested
 that the magician was a good master who loved his flock so much that
 he was ready to do anything in the world for them; and in the third
 place, he suggested that if anything at all were going to happen to
 them, it was not going to happen just then, at any rate, not that day,
 and therefore they had no need to think about it.

 Further, the magician suggested to his sheep that they were not sheep
 at all; to some of them he suggested that they were lions, to some
 that they were eagles, to some that they were men, to others that they
 were magicians.

 After this all his cares and worries about the sheep came to an end.
 They never ran away again, but quietly awaited the time when the
 magician would require their flesh and skins.


Mike Nickerson <•••@••.•••> wrote:

The problem of an economic system which has to grow to remain
healthy is central to the long-term well-being of humans.  I was attracted
to your mention of this in your recent critique of James Wolfensohn's

Why the system has to grow is a question that has perplexed me for
some time.  A few answers have come to my attention which help illuminate
the problem.  I share my account of them here.  Any additions or comments
would be welcome...

There is at least one problem with our financial system which has
to be resolved.  As presently organized it requires perpetual expansion.
The section on Environmental Concerns in Measuring Well-Being (see: has already
described how perpetual expansion is causing critical problems on our
finite planet.  The complications arising from the financial system's
'need' to expand are capable of derailing most efforts to secure the future.

The recession of the early 1990's highlighted this issue.
Recession means the economy is not growing.  It is not shrinking, its just
holding steady.  Since the economy had been growing for some years previous
to the 1990's, the point at which we were stuck was the greatest volume of
goods and services ever produced.

How could this enormous level of production result in hard times?

A few partial answers are presented below.  Some of them may just
be different perspectives of the same problem.  More insight and detail
would be appreciated.  Some leading questions follow these points.

1) One cause cited for the need to grow is about confidence.  If the
statistics don't show growth, people become nervous and start saving
instead of buying.  The resulting drop in demand further depreciates the
market and with it people's confidence.  The feedback loop is depressing.

2) Another reason is related to the money supply.  The money available
for circulation is brought into existence through loans.  If someone is
approved for a $100,000 loan, they are given a credit enabling them to
spend that much money, launching it into circulation.

The hitch is that the bank wants $110,000 back when all is returned
with interest.  The extra $10,000 must be extracted from money put in
circulation by other loans.  Without new loans and investment (growth) to
replenish the money supply, paying money into interest on loans would
contract the money supply.  With less money around for people to pay each
other, economic activity would shrink.

3) The third explanation suggests that growth is necessary to
compensate for profits.  The total price of all goods and services combined
is the sum of wages plus profits.  (This assumes that material costs are
the wages and profits from other enterprises and that rent costs and taxes
are profits on assets.)  Since the owners of large enterprises tend already
to be consuming as much as they want, profits go mostly into savings, or
new investment rather than paying for the goods and services in the market.

The wage portion of the total costs is the only part available to
pay for the goods and services produced.  Since the total price of the
goods and services available is more than the wages paid, they cannot all
be bought unless additional money is put into circulation through new
investment (growth).  Without this growth the goods and services produced
could not all be bought, production would drop reducing the wages paid and
subsequently the money available to purchase the next round of goods and
services.  Enter the downward spiral.

4) Another possible cause for why recession means hard times seems to
be that the really big money is well invested.  It will receive its 5% or
10% interest no matter what.  If the economy is not growing, that increase
has to come from the shares previously used by other people.

5) One further cause of hard times in recession is population growth.
If the number of people sharing an economy grows and the economy stays the
same size, there is less available per person.  While this is not a sole
cause of the problem, it is sometimes used to deflect scrutiny from other
causes.  It is important to recognize population growth as an aggravating
factor wherever human impacts are felt, but it is equally or more important
to look at other factors.  The evidence shows that populations stop growing
when local economics are managed in a way that provides people with basic

Because of the tendency for money to make more money, wealth is
increasingly concentrating in the hands of the already wealthy.  Over the
centuries, to generate new wealth for those without, we have expanded our
economic activities into new frontiers.  As we close the millennium,
however, new frontiers are hard to find.  The few that remain are
considered essential for the preservation of biological diversity.  To
address the problems of poverty in a world already full of humans requires
reassessing the fundamental systems that have enabled us to grow to this
enormous size.

Why does the system have to grow?

How else might money come into circulation?

If other ways of maintaining purchasing power were instituted, how could we
avoid accelerated draw down of resource supplies and pollution?

How might we identify when the economy is big enough?

What can be done for people with vast fortunes who always want more?


"The twentieth century has been characterized by three developments of
great political importance: the growth of democracy; the growth of
corporate power; and the growth of propaganda as a means of protecting
corporate power against democracy."

                                        Alex Carey
Mike Nickerson
Sustainability Project - Inviting Debate
P.O. Box 374, Merrickville, Ontario
K0G 1N0
(613) 269-3500
e-mail:  •••@••.•••

Boudewijn Wegerif <•••@••.•••>, October 29, 1998

In his October 6 annual Address to the Board of Governors of the World
Bank, the President of the Bank, James D. Wolfensohn, used the word
'debt' once only, and that with reference to a poor father in Jakarta,
"paying a money lender three times in interest what he can make that
day" and so "falling deeper and deeper into debt." Could this be

Having just read psychotherapist Scott Peck's book The People of The
Lie, Wolfensohn's Address seemed to me to be steeped in the Language of
the Lie. Perhaps that is a little hard. Undoubtedly Wolfensohn (the son
of the wolf) has goodwill towards the 'sheep' - the poor of the world.
He is not rooted in the lie, like some of the people Scott Peck
describes. However, he is not rooted in the truth either - the hard
truth that must now inform our decision making with regard to monetary

Wolfensohn has confused sentimentality for love; and whereas love faces
up to what may be regarded as the 'impossible' steps that have to be
taken, now, for fundamental reform, sentimentality seeks to avoid them.


quoting Wolfensohn:
"Mr. Chairman, we must address this human pain. We must go beyond
financial stabilization. We must address the issues of long-term
equitable growth, on which prosperity and human progress depend. We must
focus on the institutional and structural changes needed for recovery
and sustainable development. We must focus on the social issues."

Indeed, yes.

But then there is a turning away from the primary need to act out of
love. Instead, the need to be realistic takes precedence. We get a
switch of values, and the Lie comes in.

"We must do all this," said Wolfensohn, "Because if we do not have the
capacity to deal with social emergencies, if we do not have longer term
plans for solid institutions, if we do not have greater equity and
social justice, there will be no political stability. And without
political stability, no amount of money put together in financial
packages will give us financial stability.  And so in response to the
current crisis, we at the Bank have been focusing on putting in place
the short- and the long-term measures for sustained recovery".


Sustain, sustainable, sustainability - such sustaining words appear
eight times; and the word development 37 times in Wolfensohn's Address.
It is as if the World Bank really, really, really now is for sustainable
recovery and development. But how can this be in a world still ruled by

As is now generally known, even at the World Bank, all new money comes
into the economy as debt, and since 1975/80 the compound interest
written into that debt has caused it to rise steeply, exponentially to
non-sustainable levels.

With world debt spiralling out of control, more and more economic
activity is being directed to servicing it. This is known and not faced
up to. There is denial.

Mammon, through the banking system is committed. It 'owns' debts of
getting on to three times the world's gross product (compared to one
year in the 1950s) and it wants its interest payments. It needs and
wants the big money-spinning financial services and industries, right
into the end of the world, if not by nuclear or bio-genetic accident,
then by environmental catastrophe.

To keep the debt on the books and earning money for its owners, there
has to be at least the pretence that it can be repaid. So there is a
terrible compulsion to go on producing and marketing the unfriendly to
earth motor cars, oil products, chemicals, and so forth, which are
destroying the earth - all centred on the now destablised money market,
which is turning more and more of us into People of the Lie - by which
Wolfensohn, for example, can talk about sustainable recovery while
priming the debt flow.


Herman E. Daly, author of For the Common Good, writes in his next book,
Beyond Growth, about his work in the early 90s for the Environment
Department of the World Bank. "Environmental deterioration was held to
be mainly a consequence of poverty, and the solution proposed was the
same as the World Bank's solution to other economic problems, namely
more growth. And this meant not only growth in the South, but also in
the North, for how else could the South grow if it could not export to
Northern markets and receive foreign investments from the North? And how
could the North provide foreign investment and larger markets for the
South if it in turn did not grow?"

Daly comments: "It is interesting that such a huge issue should be at
stake in a simple picture. Once you draw the boundary of the environment
around the economy, you have said that the economy cannot expand
forever, that as some point quantitative growth must give way to
qualitative development as the path of progress. I believe we are at
that point today. But the World Bank cannot say that - at least not yet.
It cannot acknowledge limits to growth because growth is seen as the
solution to poverty."

And fair enough, How will we lift poor people out of poverty without

"The answer is painfully simple", writes Daly: "by population control, by
redistribution of wealth and income, and by technical improvements in
resource productivity. In sum, not by growth but by development.
However, in most circles population control and redistribution are
considered politically impossible. Increasing resource productivity is
considered a good idea until it conflicts with labour and capital
productivityî - i.e. in today's reality, debt enslavement. Then, îthe
temptation to denial becomes politically overwhelming."


"Although the World Bank was on record as officially favouring
sustainable development the attempts of the environmental resistance
group (within the World Bank) to give the concept a clear definition
were vigorously contested," writes Herman Daly. "The Party Line was that
sustainable development was like pornography - we'll know it when we see
it but it is too difficult to define. Our simple definition -
development without growth beyond environmentally carrying capacity,
where development means qualitative improvement and development means
quantitative increase - just confirmed the orthodox economists' worst
fears about the subversive nature of the idea, and reinforced their
resolve to keep it vague.

Also, in denial, "the relatively clear notion of the environmentally
sustainability of the economic subsystem was buried under 'helpful'
extensions like social sustainability, political sustainability,
financial sustainability, cultural sustainability, and so on and on. We
expected any day to hear about ísustainable sustainability."


"We see, Mr. Chairman, that in a global economy, it is the totality of
change in a country that matters. Development is not just about
adjustment. Development is not just about sound budgets and fiscal
management. Development is not just about education and health.
Development is not just about technocratic fixes. Development is about
getting the macroeconomics right - yes; but it is also about building
the roads, empowering the people, writing the laws, recognizing the
women, eliminating the corruption, educating the girls, building the
banking systems, protecting the environment, inoculating the children.

"Yes, we must come in quickly in crisis countries to make sure that
social, institutional, and policy reform can take immediate root and are
integral parts of the overall program - that the responses to the crisis
enhance long-term recovery."


"Mr. Chairman, we have learned that while the establishment of
appropriate macroeconomic plans with effective fiscal and monetary
policies is essential in every respect, financial plans alone are not
sufficient. We have learned, Mr. Chairman, that there is a need for
balance. We must consider the financial, the institutional, and the
social, together. We must learn to have a debate where mathematics will
not dominate humanity, where the need for often drastic change can be
balanced with protecting the interests of the poor. Only then will we
arrive at solutions that are sustainable. Only then will we bring the
international financial community and local citizens with us.

But Mr. Chairman, we cannot pretend that all is
well. We cannot close our eyes to the fact that the crisis has exposed
weaknesses and vulnerabilities that we must address. We must be bold but
we must also be realistic. We will not devise a new architecture in two
days, or even two weeks. But neither can we afford a lost decade like
the one that afflicted Latin America in the aftermath of its crisis in
the early 1980s. Too much is at stake, too many people's lives..."


"Now is our chance to launch a global debate on the architecture - yes -
but also on the foundations of development. Now is our chance to show
that we can take a broader and more balanced view. Now is our chance to
recognize that there is a silent crisis looming on the horizon..

"This is not just a dream - this is our responsibility."


It was Paul Swann, of the London Human Rights Forum, who drew my
attention to President of the World Bank, Wolfensohn's Address to the
Board of Governors.

Wolfensohn's Address, he wrote, "is reminiscent of a wolf dressed up in
sheep's clothing trying to talk his dinner into climbing into the
pot. The global elite are evidently learning to speak the right language,
and Wolfensohn's fine words could hardly have been more skilfully
designed to lull the unsuspecting flock into trusting their dubious
intentions. As long as the people and nations of the world are subjected
to a debt-based monetary system, we will remain enslaved to the power
elite who control the system. Beyond the rhetoric and hubris, his
solutions are no more than a set of re-vamped rules for more of the same
old game, lining the pockets of the elite at everyone else's expense.

"Genuine repentance among the ranks of the de facto leadership of our
global economy is to be welcomed. But fine words are cheap and the
sincerity and intent of Wolfensohn's declaration must be demonstrated in
practical action.

And I entirely agree with Paul, "The first step is to acknowledge that
usury, the creation of money out of debt, and the mindset of continual
growth are the root causes of the global economic crisis."

The Christian Council for Monetary Justice (CCMJ) makes the same point
in its report on what happened at the Lambeth Bishops Conference of the
Anglican Church.

The hope was that the Bishops were going to say something meaningful
about debt. "Everything looked set. The Anglican Church, with a deep
compassion for the oppressed, equipped with its wealth of wisdom and a
growing awareness of monetary reform and the relevance of the Christian
teaching on usury - surely, with the Grace of God for guidance, Lambeth
was going to say something meaningful.The result was abysmal.

"How can we hope to remedy the fact that the Third World (in my terms,
the South) has "developed into debt", when all nations are in the same
position," the Archbishop of Cape Town and Peter Selby asked, in effect,
in their speeches at the start of the Conference.

So the start was promising. The CCMJ comments: "Attention was closing in
on the financial system." However, "Then there was silence. Other issues
were debated and instead of publishing a resolution on Third World debt,
the matter was left. And whilst the other issues were discussed, enter
stage left, James Wolfensohn of the World Bank. Wolfensohn publicly
rebuked the Lambeth Bishops for their criticisms of the World Bank,
claiming that the World Bank was ídoing many of the things the Church
wishes to do and should be doing itself".

The following day, the British newspaper, the Guardian, courageously
published a letter that observed:

Dear Sir,
It seems that the arrogance of the World Bank is undiminished. The
Christian Church has not, to my knowledge, any desire to create credit,
act as part of the global money supply and bankroll the developing
nations into unrepayable debt. Nor has the Church any desire
subsequently to exert quasi-political control over developing nations,
obliging them to conform to the Westís narrow notion of 'sound

But this was a small voice of protest. Meanwhile, the Bishops fell in
line, for the wolf not the shepherd, one might say. And we need to be
really sad about that. As the CCMJ writes: "The plain fact is, the
Christian Church was on the brink of making statements that would have
challenged, not just the very nature of Third World debt, but cast doubt
on the underlying structure of the entire global financial system.

"Third World debt is the most glaring example of the inadequacy of a
wholly unjust financial system, based on fractional reserve banking. The
Third World is not in debt to the wealthy countries... The debts are
owed to banks and other lending institutions - precisely the same
institutions that also hold colossal debts over the wealthy nations
through their bonded national debts.

"If we look at the balance of trade - ie the exchange of goods and
services over the years - this again emphasises that the Third World
owes nothing to the richer nations. They owe us nothing.

"So why are they in debt? For precisely the same reason that the other
nations of the world are massively in debt. (The US national debt of 5
trillion dollars stands out). It is because banks create money by
lending to borrowers, and because the banking sector operates a virtual
monolopoly in this area. The conclusion is simple: If we rely upon debt
to create and circulate money, we cannot express great surprise when
debt becomes a problem!"

Yet: When the Lambeth Statement on debt was eventually released, it
contained nothing about the relationship between the generation of debt
and the supply of money, and the comparison between Third World debt
(2.2 trillion dollars) and the debts of the other nations of the world
was omitted. The word 'banking' is not even mentioned. So far as the
bishops of the Anglican Church round the world are concerned, the
appearance is that they have not even begun to understand, let alone act
on debt.

It really seems that James Wolfensohn has the field to himself, for the
World Bank and indirectly the IMF. Are we all to follow his denials into
the Lie, like sheep?

Where is the Shepherd? Through whom does the Shepherd speak?