Economics all boils down to two basic ingredients — land and labor. A well-watered, nutrient- and mineral-rich, humus-filled earth in a temperate climatic zone, populated by healthy, hardworking, future-oriented, free and creative individuals, brings forth the best of all economic worlds.
The laws of physics teach us that energy and matter are interchangeable, basically one and the same. As such, the abstract and concrete are one and the same in the real world in a never-ending flow. This perspective is pregnant with economic truth. Economic exchange, thus, when you boil it all down, is nothing more than the exchange of goods and services . . . the swapping of matter (goods) for energy (services and labor), and vice versa. Money, in the sense of classical economic exchange (barter), is a real good, a commodity, matter. . . whether it’s in the form of gold, silver, tobacco leaves, salt, barley, seashells, or wheat — all of which have historically served as money. Money is subsequently also potential, stored, inactive energy, ready to spring forth kinetically as the catalyst for the production of additional goods and services (matter), the end product of the mixture of land and labor. Quickly, we see too that all honest money is ultimately a product of the land, a good, a resource, a commodity, matter, if you will. This viewpoint is consistent with the laws of thermodynamics, the basis of physics and the concrete application of theological truth. The first and second laws of thermodynamics state simply that energy is neither created nor destroyed (first law), but that when energy is transferred or used, useful energy is lost in the transition process (second law). The second law is referred to as entropy . . . that all things move toward a state of decay.
The first and second laws of thermodynamics hold true in a closed system. Although we appear to live in a closed system on this earth, we constantly are blessed with a new shot of energy each and every day, courtesy of the sun. So, in fact, we live in an open system. Because the sun provides us with new, real, usable energy each and every day, we have the opportunity to make real economic progress, and create real new wealth by using working man’s productive efforts to groom the earth and prevent the natural disorder which automatically occurs as the sun’s energy creates new matter. The sun creates matter (real new wealth) on its own. But this newly created matter (real new wealth) will become disorderly and far less useful unless man takes dominion over it.
Real new wealth (matter) is created as new energy (solar) comes into the system. Grass, trees, and ocean vegetation grow freely. Cows, horses, sheep, and fish eat the grass, leaves, and algae and subsequently produce calves, foals, lambs, and more fish. New energy creates new matter.
Real new wealth is thus created. Solar energy, mixed with man’s efforts, brings to harvest the fields of wheat, corn, oats, barley, and soybeans — all of which are real new wealth. While these grains can grow randomly, utilizing just the energy of the sun, when hardworking productive man is added to the equation, aided by the blessing of favorable weather, production of grain protein explodes. And, of course, these products then serve to feed man, providing him with the physical energy necessary to increase the bounty of new wealth (in the form of greater agricultural production).
The late Carl H. Wilken, an American farm economist, proved that a definite link exists between the value of farm products and national income. Wilken’s evidence suggested that real new wealth created in the economy multiplied itself seven times as it worked its way through the economy.
Put simply, $1.00 of farm income generates $7.00 of other income. Also, a 1 percent increase in unemployment results from a 1 percent drop in farm income, according to Wilken’s studies. Wilken stated that the only factor that remains consistent with the earned profits and savings of a nation as a whole is the total price paid for all the raw material production. Agriculture is the largest source of this new wealth. And, as discussed previously, this new wealth is renewable and additional — thanks to the sun — when combined with the savings, creative thoughts, and hard work of free men, and it generates increased wealth year after year.
But, when the price of raw materials drops, there is an exact ratio decline in terms of national income. There is also a commensurate increase in debt expansion and unemployment according to Wilken. Economic good times are multiplied by abundant production of real new wealth. Economic bad times are magnified by declining raw material production and debt assumption.
And what does all this mean to us? It means that real wealth and real money can only be created first in the rural country where the real new energy (solar energy) is converted into matter and harvested, and then transferred to the city where creative, abstract ideas can be applied to transform this new matter into its highest and best use with a minimum of labor under the free division of labor. The illusion under which we suffer today is the false wealth created primarily by the fractional reserve banking system in the cities through debt and compound interest.
Compound interest, an abstract concept — which, theoretically, can increase to infinity — is an ever-heavy anchor which pulls down and impoverishes finite, limited, economically ignorant, error-prone common man.
Wealth and money, if first created in the rural country, are true and honest on both an abstract and concrete level. But wealth and money, if first created in the city, are illusions and shams which cannot last long. Reality comes home to roost for us, here and now. The 1981 net farm income, in uninflated dollars, is the lowest since the Great Depression.