[R-G] [BillTottenWeblog] Frederick Soddy

[Bill Totten]

Chapter 1 of National Economy: The Way to Abundance (2009)

by Arian Forrest Nevin


In the 1920s Frederick Soddy undertook the first and only scientific
investigation of economics and the monetary system. Soddy was "the father
of nuclear fission", winner of the Nobel Prize in chemistry in 1921,
discoverer of the existence of isotopes (in general, not of a specific
isotope), discoverer of the cause of radioactivity, a professor of
chemistry at Oxford University, and a Fellow of England's most prestigious
scientific organization, the Royal Society. Without Soddy's discoveries we
would never have developed nuclear power. All of these accomplishments
pale in comparison to Soddy's economic and monetary discoveries. After
winning the Nobel Prize Soddy went on to invent a scientific monetary
system and the new science of National Economy - the science of wealth.
With these inventions Soddy forever solved the problem of poverty and
paved the way to national prosperity. Soddy's inventions and discoveries
make it possible for everyone to work less and have more, to forever get
out and stay out of debt, and to live better and longer lives. Today,
Frederick Soddy is little remembered. When he is remembered, it is for his
contributions to chemistry. His greatest achievements are almost
completely unknown. Soddy's investigation is unique. Never before in
history and never since has an investigation of the economic and monetary
system been undertaken by a scientist of the physical sciences, let alone
by an elite Nobel Prize winning scientist, one of the greatest scientists
who has ever lived. Soddy set before himself the impossible task of
discovering how to eliminate poverty and establish national prosperity -
and he succeeded. In Soddy's search, his guiding question was: How can a
nation - as opposed to an individual - become wealthy? Soddy's approach to
the truth was fearless. He did not accept anything said by economists,
banks, and financiers as true on its face. He started his own independent
investigation from the ground up. Feeling that he must reach an
understanding of our monetary system, Soddy spent two years studying what
its advocates had to say about it. After two years of studying the
monetary system he felt he "could make nothing of it". He felt this way
until "one day the truth dawned on me. What I was studying was not a
system but a confidence trick". With good reason, Soddy concluded the
monetary system was a swindle, which depended on keeping people deceived
for its successful operation. To replace the current dishonest monetary
system, Soddy developed a new scientific monetary system. The end result
of his investigation and efforts was the creation of an entirely new
science, the science of wealth - National Economy, which explains why we
do not produce the things we can make and do need and want, and how a
nation, rather than an individual, can be made wealthy.

In his investigation Soddy applied the physical sciences of chemistry and
physics to economics. He gave a concrete scientific basis to economics.
Soddy separated the subject matter of economics into the psychological -
debt - and the physical - wealth. Soddy set out to discover how the
current money system worked and how it should work; to discover how
production and consumption could be maximized; and to find a physical
definition of wealth. 

The product of his investigation was National Economy. National Economy is
at root a social system and is the social counterpart to scientific
discovery. It is the link between science and the human; the system that
connects science and the social. Without National Economy we lack the
ability to utilize science's discoveries fully. Soddy's great discovery
was how to fully utilize scientific discoveries for human ends. As of now,
we are not producing wealth at even one-fifth of our capacity to produce.
What good are further scientific discoveries if we are not fully utilizing
our current ones? Some discoveries are not used at all and most only
partially at best. It is one thing to make a discovery and another to be
able to implement it for mankind. Scientists make discoveries and leave it
to others to utilize them. Soddy developed the social systems necessary
for new advances to be produced, distributed, and used to the maximum
extent possible. Soddy first published his discoveries in 1926 with the
release of the book Wealth, Virtual Wealth, and Debt: The Solution of the
Economic Paradox. This book was followed by Money Versus Man in 1931 and
The Role of Money in 1934. Soddy expected the publication of his
discoveries would have a great impact upon society. Soddy believed that
since the days of Galileo, freedom of scientific thought and discovery had
been won. However, he was to discover that in matters of money, economics,
and finance freedom of thought had yet to be won. In these matters we are
very much still locked in the dark ages. What today passes for economics
is not really a science, and it is completely shielded from any real
criticism. It is shielded by silence. The public is carefully guarded from
any real knowledge of money, economics, and finance. In Galileo's day
scientists were persecuted by the Catholic Church. Today we know
persecution only brings attention, so scientists with inconvenient truths
are simply ignored. Their discoveries are suppressed by silence. Over
eighty years have passed since Soddy first published his discoveries.
Today   they remain unknown and unused. Apart from the silence of the
press in economic matters, there is a second reason Soddy's ideas never
became widely known or popular: they are extremely difficult to
understand. In this work, Soddy's ideas are for the first time made
accessible and clearly explained. In addition, his system, though complete
in a rough form, needed much additional refinement and improvement. I have
expanded, revised, updated, corrected, stripped away the inessential, and
improved the system of National Economy. Further, National Economy is
presented and linked to the systems that exist today. Many of the economic
events we see today, such as the "mortgage meltdown" and "credit crunch",
can be explained by the principles of National Economy. Most importantly,
a practical application of National Economy to alleviate many of the ills
created by our current monetary system is now possible. 

National Economy

There are two kinds of knowledge. The first kind results from the study of
nature. This kind of knowledge is real and does not change. This is the
kind of knowledge acquired through the studies of physics and chemistry.
In this domain humanity does not have any influence on the laws it is
learning. Humanity can only use these laws if it acts in accord with them.
You can only harness or dominate nature by obeying natural laws. The
second kind of knowledge comes from human conventions such as the law. It
is an artificial knowledge created by people and is modified by changes in
society.

We have advanced science and technology, but the human systems necessary
to fully utilize them have not been advanced with them. We have cutting
edge technology alongside a medieval monetary system. It is like having
the technical knowledge of how to make cars and having a factory to make
them, but being unable to do so because management does not know how to
structure work or organize, motivate, and manage people to work together
effectively or efficiently. Our civilization today is a scientific
civilization, and we are thwarted from attaining anywhere near our full
potential by out-of-date human systems.

Any system can have a bottleneck or limiting factor. Simply put, the
government, law, monetary system, and economic system have not kept up
with scientific advances, and all are now bottlenecks strangling our
production and consumption. Right now, we have a massive economic traffic
jam. Production, exchange, and consumption are the activities of any
economic system. Money is the means by which these activities can occur.
Specifically money supports processes that enable society to generate
equivalencies between these three activities, that is, translate the
relative importance of these three activities against and within each
other.

Human activity is required for production, exchange, and consumption.
Whenever there are multiple activities, there must be a mechanism by which
these activities can interact. Money is the mechanism that allows us to
weigh these activities relative to each other. The means of interaction
between the three activities is a purely human convention called money.
The real nature of money needs to be understood, so we can make use of it
rather than be enslaved by it. Production and consumption are both
physical. However, the payment and distribution systems are products of
the human mind and are changeable. The changeable human system should
match and be synchronized with the physically real system. Economics is
comprised of both kinds of knowledge, natural and human. Production and
consumption, which are the ultimate foundation of economics, are both
physical. They are both wholly governed by natural law. The system of
economic exchange and interaction among humans, the money system, is
wholly a human convention. Ultimately, these human conventions sit on top
of the physical systems for which they create equivalencies. Therefore, it
is of the utmost importance that we have a complete and accurate
understanding of the physical processes that underlie economics. Equally
important is that the human economic  conventions be in accord with the
underlying physical reality. We have the physical ability to meet all
human economic needs and desires. We are not fundamentally limited by our
resources or technologies. We have time and time again shown, that as a
race, we have the ability to overcome physical constraints. However,
clearly all societies of the world have people that suffer from economic
hardship. These hardships are imposed by the human economic conventions.
Today, the physical processes underlying economics are not fully
understood, and the human conventions built on top of these processes are
hopelessly out-of-date and not in accord with the physical realities.
Human conventions are strangling us economically. Today, in people's
thoughts, there is a complete inversion of reality. The human convention
of money is thought to be of primary importance, and the underlying
physical reality to be of secondary importance. National Economy is as an
attempt to discover the best that an individualistic society can offer
economically if it were intelligently administered. National Economy is
the science of wealth. The aim of National Economy is to make a nation
wealthy, and continuously increase its wealth with time. Through the study
of the physical realities underlying economics and of the human system
that sits on top of the physical reality, National Economy seeks to
develop the human system that will best utilize our potential. National
Economy seeks to maximize the amount of production and consumption of a
nation up to the limit of physical constraint,   rather than the current
limits imposed by human convention. In the study of National Economy lies
the answer to how all manufacturing that has moved to other countries and
all jobs that have been outsourced can be returned to America forever, how
real wages can be increased dramatically, and how, at the same time, the
people can have more leisure. In short, the study of National Economy
provides the answer to how the nation can be made wealthier.

                                   
The Map

The age we live in is scientific. Daily, the dangers to our scientific
civilization grow. Our civilization is in great peril caused by obsolete
and false medieval ideas. Original and fearless scientific thought is
needed to avert the dangers we face. Economic sufficiency is an essential
foundation of all national progress. We have, today, the ability to create
a nobler and more humane civilization. This book asserts that we have the
capability to completely eliminate poverty, provide excellent medical care
to all, increase leisure time, reduce working hours, be wealthier, provide
every family with a decent home, afford to live and raise children on a
single salary, eliminate the National Debt, eliminate all personal debt,
and to produce almost everything we consume here in America. Not only
could we do all this, but on top of it we have the capability to produce
even more, if for no other purpose than to throw what we produced into a
pit. The problems standing in the way of prosperity are an unsound and
fraudulent money system and a lack of understanding of the physical
reality underlying economics. Nothing could do more to improve the current
state of affairs than instituting and maintaining an honest money system.

What normally passes for economics is really the study of chrematistics.
Chrematistics is the study of commerce, of wants and demands and of how
they exchange for one another. Or simply put the study of buying and
selling. It is a distinct and separate study from National Economy.
National Economy is concerned with the production of wealth by humans to
maintain and enrich their lives. For example, chrematistics will be
concerned with such questions as, given the current level of demand, what
will the price of an orange be if 100 oranges are available? What will the
price be if fifty or 200 oranges are available? How many oranges should be
made available for sale to maximize profit? Will the cost incurred by
advertising be offset by an increase in demand caused by the advertising?
Everything in chrematistics is about buying and selling from an individual
standpoint, whether the individual is a person or an organization.
Chrematistics could also be called Individual Economy. National Economy,
on the other hand, is concerned with maximizing the production and
consumption of the nation as a whole, rather than maximizing the profits
of an individual. Chrematistics is the study of how the economic pie is
divided and of the means to increase an individual or group's share of the
pie. National Economy is the study of how to make the biggest and best
economic pie. The goal of National Economy is to make a nation wealthy and
to increase the wealth of the nation continuously over time. Accomplishing
this aim requires the government to make several changes to the current
unsound monetary system. All of these changes are simple. Many of the
proposed changes are what the Constitution requires, but are today ignored
by the government. To understand what changes need to be made and why the
changes are necessary, the reader must know: (1) the fundamental change to
society that science has brought about which allows for increased national
prosperity, (2) what is preventing this gain from being realized, and (3)
how this gain can be realized.

www.nationaleconomy.net


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