A World War is a steam-vent to relieve pressure at the bottom of an economic cycle. It is a means in the hands of government to create a worthwhile common goal for the citizenry, to stir up patriotism. The closer to the bottom of a depression, the more likely a government will resort to this means.

I described earlier how under today’s economic order cost of production sooner or later catches up with the price of the product. This prevents the employer from making a profit, eliminating his only incentive to invest in production.

        From one world war to the next.

When costs reach the maximum price consumers are willing to pay, the employer cannot reduce costs, because under today’s economic order technological progress can be made more efficient only by capital investment, while at the time of overproduction it is senseless for the employer to invest. There is also no way employees will agree to wage-cuts. A wage-cut would cause them the frustration of a Loss, much more severe than the concomitant inconvenience of a monetary loss. Their resistance to wage-cuts, even when the employer struggles for survival, shows that layoffs cause a lesser feeling of Loss, than a wage-cut. This is not an opinion, this is an observation.

This inflexibility of costs in the down direction causes a drop in sales. Inventory of finished products piles up, and employees get laid off.

Unemployment snowballs with lack of buying power. Inflation caused by newly printed money, aimed to cover additional expenses of the government, snowballs with reduced availability of services for sale. Mounting crime keeps the population insecure in the quiet of their homes and in the streets. General tension rises among the population.

People blame the visible culprit - the government: "They didn't live up to their electoral promises. They are our most skillful and most powerful people, and they are doing nothing to help us out! We want them to do something, and now! If not, we'll replace them by another government!"

In that situation the government must do something, if it is determined to stay in power. Well, it is determined.

Power is and always has been sweet to the human being. And no wonder: power is a continuous source of superiority feeling - pure Profit. Power yields so much Profit that not one millionaire has given up making big money for a while and went into politics to gain power.

It makes no sense to a government to step down and let another government do the right thing for the anxious population. Also, today's government won't do any good to people by giving up power: the next government, after wearing the shoes of the old one, will not do any better. Only the slogans may change ... for a while. It is not the government that caused the trouble. The fault is with the basic principle of labour for sale without profit, under today’s economic order. This basic principle is reflected in the Universal Equation of Contemporary Enterprise shown here in Chapter 4.

When I say the next government will do the same, I mean democratic government of some shade or colour. A dictatorship, a socialist government will ruin the economy faster. Chapter 21 will discuss socialism.

So the government is looking for a way to stay in power, regardless of what is going to happen to the people.

If you wait long enough with your urgent need, and you are eagerly looking for an opportunity to satisfy that need, someone will finally show up to help you. When a wooden house is dry with drought, and someone generously sprinkles it with gasoline, it won't take long until another one will purposely or inadvertently throw a burning match onto it. This match wouldn't do much harm to fresh and juicy wood without the gasoline, as the Vietnam war didn't start a global war. But when government gets edgy about its future ...

                     The accident was well prepared.

          Adolf Hitler gratified a desperate need at the time.

From this perspective it is easier to understand why the great powers keep their people's hatred against the people of rival powers in a ready to serve condition.

        When the government says our country is in danger...

...patriotism takes over and the longing for Profit is shifted
into the challenge of defeating the enemy.

The governments of fighting countries spare neither effort nor money to make sure everyone knows who is responsible for the suffering: it is obviously the hateful enemy. The desire to overcome the enemy shoots up national patriotism to unprecedented heights, while attention to mundane things – food, clothes, and shelter – is reduced to a bare minimum. Also democracy draws less attention, a large part of it disappears. With less democracy, the man in power can afford greater latitude in decision-making, which multiplies his feeling of Profit.

Conquering the enemy becomes the ultimate common goal, and a source of tremendous Profit to everyone. The esteem for a person in society depends now on the perceived size of his/her contribution to this common goal, and less on the amount of money he/she is making. Internal struggles subside into the background. Citizenry joins efforts with the government to achieve victory. Old grudges are all but forgotten. The government, no matter which party happens to be in power, and no matter who personally happens to lead the government, becomes a good government. There is no danger any more for the government to be overthrown, or for the current leader to be voted out of office.

Working together for the glorious common goal, without consuming much and without being particularly concerned with money as a source of Profit, the people raise the country's efficiency despite the lack of means and despite the shortage of young and healthy men, who are recruited. This outburst of enthusiasm and efficiency drags the economy out of the slump. When this is done, the government of that country wants to end the war by all means, even if it takes to throw a couple of nuclear bombs on the heads of citizens of a country whose leaders don’t perceive their job for us is already done. Our old economic order is now fresh and ready for the next cycle.

            From one world war to the next.

What are the risks the government is taking in that war?

If the country is in the winning camp, there is no doubt about the present government staying in power. Who was the only President of the United States to be elected three times?

If the country is defeated, the government of that country may or may not step down. If it does, it can afford to step down gracefully, without losing face. Look what happened after the Falklands War to the Argentine government, and how Margaret Thatcher had risen in the polls.

The instigator of World War Two also gained great Profit: who would remember Adolph Hitler by now without him having started the Second World War? He went down in history as a prominent ruler for centuries!

And Germany, despite the temporary decrease in population and despite the devastation caused by the war, rose from the ashes to become an efficient industrial country ... until the next cycle of today’s economic order brings it to a new slump, together with other countries.

If this chapter so far conveyed the intended message, then you agree with me that at the slump stage of today’s economic cycle governments need a war. There is no other way to divert the attention and raise the cooperation of a nation for a common goal. This need gets satisfied on the blood of the unsuspecting people.

A government engaging in a war at this slump stage of the economy is gaining Profit regardless of the outcome, and therefore doesn't carry risk.

War is a natural consequence of a deficiency in the Universal Equation of Today’s Enterprise. War is not caused by bad intentions of the man in power. Don't blame him. Stepping into his shoes, you would act the same. (And if you see the deficiency, you won’t step into his shoes until the deficiency is fixed.)

Unemployment grows. In order to finance the handouts of benefits, so as to prevent (actually postpone) unrest, the government boosts the money supply, an equivalent of counterfeiting money. The money supply grows, while the supply of services shrinks. More money with less services means inflation.

To reduce the necessity for printing new money, the government raises taxes on the employed. Additional taxation of the unemployed has the same effect - the employee can buy less for his work-hour. According to our understanding, a reduction in services available for sale, while the need for these services doesn't fall, is equivalent to inflation, whether prices rise in dollar terms, or whether they do not. Does it make a difference to you whether you want to buy a $1,000 service with a ten-dollar per-hour wage, or you want to buy a $100 service with a one dollar-per-hour wage? You don't feel the difference, do you? Therefore, all the government does when substituting outright printing with extra-taxing the employed - is creating additional paper-work, that goes with collecting the extra tax. This substitution of extra-taxation for printing makes the inflation figure look better, prices do not rise or rise less. For some, it is a sign of recovery. But the smaller figures for inflation do not reduce the actual inflation as we defined it. With more employees out of work, people buy less and less; savings in banks first grow - for fear of layoffs, then shrink - as unemployed purchase necessities. Banks will try to compensate savers at least for inflation figures, but this will become harder and harder for them to do. And here is why.

Banks make sound profits when the economy is sound. Profits made by industrial borrowers are well above the interest they pay for loans. Then the demand for loans is high and banks can afford to lend only to well-selected borrowers that will surely pay back their loans. Few loans fail to be repaid on time. The few that fail, are foreclosed, and their collateral is readily liquidated, so the bank gets the loan back.

Not so when the economy is slack. Industrial borrowers can hardly hope to repay banking interest from profits made on their loans, even when the interest is low. Consumers, uncertain about their employment, are not sure they can repay their loans either. Consequently, in a slack economy there is less demand for loans.

Here I want to discourage those who expect that reduced figures for inflation and interest rates will automatically induce borrowing for investment and purchases. This borrowing won't happen so long as unemployment (that was caused by overproduction, that was caused by low efficiency, that was caused by lack of motivation to produce, that was caused by lack of opportunity to make Profit on the job-effort) continues to exist.

Banks, desperate for business, are forced to become less selective and lend money to less reliable customers. More borrowers default, their collateral is hard to liquidate. The outcome is that banking profits fall. To make things worse, in a slack economy banks must keep higher reserves in cash, because depositors, worried about their bank’s solvency, may start to panic and cause a run on deposits. With more money lost to bankruptcies and with continuously rising banking expenses, a bank can indeed become insolvent. The good news is that your bank doesn't operate alone. Banks are heavily mutually insured. If your bank runs temporarily out of cash, other banks will help raise the cash.

Not so when the other banks find themselves in the same hardship. At a time when banks hardly make ends meet, a panic of withdrawal by savers will cause the entire credit system to collapse. In a desperate attempt to rescue the banks, the central bank will frantically continue to increase money supply. This new money doesn’t have backing in newly created services, so it will cause the buying power of currency to drop greatly in a matter of days. It will become close to meaningless to work for a wage/salary; it will make much more sense for a family to try becoming self-sufficient. The major means of trade will become barter. Barter is hard to tax, and the only revenue left to the government will come from printing more currency. The ever increasing amount of currency will lead to an even further drop in its value.

With the unemployment rate close to 100%, it will make little sense collecting unemployment insurance at the empty government offices. Unable to remunerate employees and police, the government will turn to military power to keep a semblance of order. Here is where your democratic freedoms will be gone. To maintain key officials and the army, the government will physically plunder the population. To defend themselves, groups of neighbours and relatives will organize to withstand plundering. Also, destitute unemployed together with criminals loose from jails, will rob the rich and the well-to-do. Chaos and anarchy will prevail.

The above scenario shouldn't frighten you. It won't happen. Your government will find a way to involve the country in a war big enough to induce patriotism in you before the credit system collapses.

Here is more good news: the coming World War Three will not start nuclear. Why?

For the West, pressing The Button will eventually cause only physical destruction caused by retaliation from the other side. We know that, our government knows that. And what use can our government derive from thinning out population of another country? It is not this population that caused our depression. Instant destruction inflicted upon the victim country will not satisfy the need of our government to cure economic depression.. What our government needs, is to kindle our patriotism, divert all our attention to the common goal of defeating the enemy; in other words: create for us a common source of Profit under the auspices of our today’s economic order, and thereby rescue our credit system and stay in power. None of these can be achieved by pressing The Button. These goals can be achieved in a long and exhausting conventional war. Therefore, the coming World War Three will be conventional for a few years ... until this goal is attained. Limited use of nuclear weapons is possible only after our economic depression is over and the continued war becomes a nuisance to our government.

This is what occurred at the end of the World War Two: the West and the United States in particular achieved the goal already. Western nations were ready for the start of the next economic cycle. It was useless to carry the war on. The two bombs on Japan did it.

We can reasonably assume that at the end of the fighting neither side will be brought to unconditional surrender. Especially because each side will need the other in the future as a trading partner, and eventually as a dump-site for discarding the consequences of the next inevitable crisis under today’s economic order.

If you accept the above scenarios as plausible, you arrive at the following conclusions:

• that producing additional nuclear weaponry causes nothing but impoverishing expenses;
• that if we don't step into the A-Option phase of the economy soon enough, World War Three is inevitable;
• that this war will last as long as needed to create a momentum of popular patriotism, able to drag the economy out of depression and re-establish government stability;
• that unconditional surrender of the other side will not be the government objective in this war.