SCHILLER INSTITUTE POLICY PROPOSAL
The LaRouche Plan for a New International Economic Architecture
26 April 2022
EIRNS—The following policy proposal was researched and written by an Executive Intelligence task force of Claudio Celani, Richard Freeman, Paul Gallagher, Marcia Merry Baker, Dennis Small and Karel Vereycken.
The programmatic solution to today’s crisis was set forth in its essentials in 2014 by Lyndon LaRouche in his “Four New Laws.”
I. Summary of the Action Plan
The developments of 2022 to date have made it abundantly clear that Lyndon LaRouche’s forecasts over the last half-century, about the unavoidable breakdown crisis of the post-Bretton Woods floating exchange-rate financial system, were shockingly accurate. World production of physical economic essentials is plummeting; hyperinflation of financial aggregates has unleashed soaring prices of consumer and producer goods, making them unattainable for a good part of Mankind; trade warfare under the guise of sanctions has erupted worldwide; and pandemics of old and new diseases have already taken the lives, directly and indirectly, of some 18 million people. World famine is pending.
Political leaders and the mass media in the West pathetically blame Vladimir Putin for all of this—and more. But the actual, underlying cause is the decades-long plunge in the “potential relative population density” of Mankind as a whole—LaRouche’s metric of the power of a society to reproduce itself at ever-rising levels of well-being, science and classical culture for a growing population—a collapse which is the result of the austerity policies imposed over a half-century by the City of London and Wall Street.
The mechanism through which this policy is being carried to its “final solution” today is a radical decoupling of the world economy into two bitterly antagonistic blocs—a militarized NATO-dollar bloc, and the Belt and Road bloc—both of which are meant to be plunged into an inferno of depopulation and war, very possibly including thermonuclear war.
It is particularly telling and terrible that what had been the burgeoning Belt and Road rail links extending from China, through Russia, and into Europe have been almost totally disrupted by the ongoing sanctions and war.
It is now time for Lyndon LaRouche’s programmatic solution to this crisis to also become abundantly clear, and acted upon, across the planet—while there is still time to do so. Against London’s Malthusian decoupling of the world’s physical economy, the nations of the world must instead be recoupled around a program of economic growth and security for each and all, a new international architecture of security and development.
The essentials of that programmatic policy were laid out by LaRouche in his 2014 Four New Laws, which are as applicable today as when they were first designed eight years ago. Under today’s circumstances of overt “total war” being waged by the financial establishment against Russia (and soon China)—which includes all the essential characteristics of strategic carpet bombing of enemy territory—an immediate Action Plan centered on those Four Laws is required:
Russia-India-China (RIC) Physical Economy, Select Parameters
1) Physical economy: Russia has already adopted war-economy measures to defend its basic national capacity and guarantee self-sufficiency in key economic essentials. However, the “Strategic Triangle” of Russia, India and China will be even more effective at meeting the essential physical-economic needs of their combined population, which is 38% of the world total, if they work together. That RIC combination—which was the original core of what later became the BRICS—produces 43% of the world’s wheat, 23% of its natural gas, 66% of its steel, and prodigious quantities of critical minerals. It also has world class capabilities in nuclear energy, rail and other infrastructure construction, space science, and other advanced technologies (see Table 1). [Box: LaRouche’s ‘Four New Laws’]
Despite shortcomings in certain economic sectors (machine tools and other capital goods, pharmaceuticals, aircraft, etc.) the RICs are strongly positioned, in terms of physical economy, to establish a “regional bloc which operates either outside, or in parallel to the existing IMF system,” as Lyndon LaRouche recommended years ago. The alliance of China’s Belt and Road Initiative (BRI) and the Russia-led Eurasian Economic Union (EAEU) is already an operational cornerstone of such a proposed new arrangement. [Box: LaRouche on Recovery from the Bankrupt Floating-Exchange-Rate System]
2) Fixed exchange rate system: Trade and productive investment within such a bloc will occur by establishing a fixed-exchange-rate relationship among their currencies, with a small currency band for temporary fluctuations. This arrangement will wall out any penetration by speculative dollar-denominated or related financial flows. Thus, the parities among their respective currencies will have no relationship any longer with the speculative floating-rate dollar system, but will be directly established by government-to-government agreements, and not by the rigged speculative “market.”
A regional common currency will also be negotiated to facilitate international trade, investment, and settlement of accounts—with a gold-backed renminbi being one leading option. This will permit the “negotiation of a nested array of long-term sets of protectionist treaty-agreements on credit, tariffs, and trade among a set of leading nations,” as LaRouche wrote in 2004 (see box, “LaRouche on Recovery from the Bankrupt Floating-Exchange-Rate System” with an excerpt from his 2004 article “On the Subject of Tariffs and Trade”).
3) Full-set capital and exchange controls, and directed credit: Each of the countries will also establish a totally protected national currency and banking system, requiring full-set capital and exchange controls; a fixed exchange rate vis-à-vis other currencies (as indicated in point #2 above); and the issuance of directed, productive credit at low interest rates to priority projects. In the case of Russia, a gold-backed ruble (or new “heavy ruble”) would meet those requirements in an exemplary way; gold-backed currencies could well be put in place in China and India as well, and this could be extended to the common currency.
The era of high interest rates to attract “carry-trade” speculative financial flows from abroad will be brought to a screeching halt. In a developing sector nation, such a strict separation between the protected production-based national currency, and the speculative London-directed international dollar, performs the same function that Glass-Steagall banking separation does in the United States. This is a prerequisite for establishing a Hamiltonian National Bank to organize the issuance of new, low-interest productive credit flows into high-technology sectors of the nation’s physical economy—“a massive supplement of long-term credit for capital formation, with initial emphasis on capital formation in basic economic infrastructure,” in LaRouche’s words.