draft : Ch 1 : The Matrix : Sections 1-4


Richard Moore

These sections have changed little from earlier versions.

Chapter 1: The Matrix

    One cannot separate economics, political science, and history.
    Politics is the control of economies. History, when accurately
    and fully recorded, is that story. In most textbooks and
    classrooms, not only are these three fields of study
    separated, but they are further compartmentalized into
    separate subfields, obscuring the close interconnections
    between them.
    - J.W. Smith, The World's Wasted Wealth II

* Are you ready for the red pill?

    If you would be a real seeker after truth, it is necessary
    that at least once in your life you doubt, as far as possible,
    all things.
    - René Descartes, Principles of Philosophy
The defining dramatic moment in the film The Matrix (Warner
Bros., 1999) occurs just after Morpheus invites Neo to choose
between a red pill and a blue pill. The red pill promises "the
truth, nothing more." Neo takes the red pill and awakes to
reality - a reality utterly different from anything he or the
audience could have expected. What Neo had assumed to be
reality turned out to be only a collective illusion,
fabricated by the Matrix mainframe and fed to a population
that is asleep, cocooned in grotesque embryonic pods. In
Plato's famous parable about the shadows on the walls of the
cave, true reality is at least reflected in perceived
reality. In the Matrix world, true reality and perceived
reality exist on entirely different planes.

The story is a kind of multilevel metaphor, and the parallels
that drew my attention had to do with political reality. This
chapter offers my own perspective on what's really going on in
the world - and how things got to be that way - in this era of
globalization. Our everyday media-consensus reality - like the
Matrix in the film - turns out to be a fabricated collective
illusion. Like Neo, I didn't know what I was looking for when
my investigation began, but I knew that what I was being told
didn't make sense. I read scores of histories and biographies
of important figures, observing connections between them, and
began to develop my own understanding of the roots of various
historical events.

When I started tracing historical forces, and began to
interpret present-day events from a historical perspective, I
could see the same dynamics still at work and found a meaning
in unfolding events far different from what official
pronouncements, and the media, proclaimed. Such pronouncements
are, after all, public relations fare, given out by
politicians who want to look good to the voters. Most of us
expect rhetoric from politicians, and take what they say with
a grain of salt. But as my own picture of present reality
came into focus, grain of salt no longer worked as a metaphor.
I began to see that consensus reality - as generated by
official rhetoric and amplified by mass media - bears very
little relationship to actual reality. The Matrix was a
metaphor I was ready for.

* Imperialism and the Matrix

    We must find new lands from which we can easily obtain raw
    materials and at the same time exploit the cheap slave labour
    that is available from the natives of the colonies. The
    colonies would also provide a dumping ground for the surplus
    goods produced in our factories.
    - Cecil Rhodes, "founder" of Rhodesia

    When they arrived, we had the land and they had the Bible and
    they told us to close our eyes to pray. When we opened our
    eyes, they had the land and we had the Bible.
    - Desmond Tutu

From the time of Columbus to 1945, world affairs were largely
dominated by competition among Western nations seeking to
stake out spheres of influence, control sea-lanes, and exploit
colonial empires. Each Western power became the core of an
imperialist economy whose periphery was managed for the
benefit of the core nation. Military might determined the
scope of an empire, and wars were initiated when a core
nation felt it had sufficient power to expand its periphery
at the expense of a competitor. This competitive game came to
be known as geopolitics.

Economies and societies in the periphery were kept backward -
to keep their populations under control, to provide cheap
labor and resources, and to guarantee markets for goods
manufactured in the core. Imperialism robbed the periphery
not only of wealth and resources, but also of its ability to
develop its own societies, cultures, and economies in a
sensible way for local benefit. The third world is relatively
poor and backward today only because the West has
intentionally kept it that way.

The driving force behind Western imperialism has always been
the pursuit of economic gain, ever since Isabella funded
Columbus on his first entrepreneurial voyage. The rhetoric of
empire concerning wars, however, has typically been about
other things - the White Man's Burden, bringing true religion
to the heathens, Manifest Destiny, defeating the Yellow Peril
or the Hun, seeking lebensraum, or making the world safe for
democracy. Any fabricated motivation for war or empire would
do, as long as it appealed to the collective consciousness of
the population at the time. The propaganda lies of yesterday
were recorded and became consensus history - the fabric of the

While the costs of territorial empire (fleets, colonial
administrations, wars, etc.) were borne by Western
populations generally, the profits of imperialism were
enjoyed primarily by private industrialists, bankers, and
investors. Government and wealthy elites were partners in the
business of imperialism: corporations and banks ran the real
business of empire while government leaders fabricated noble
excuses for the wars that were required to keep that business
going. Matrix reality was about patriotism, national honor,
and heroic causes; true reality was on another plane
altogether: that of big money. While in the Matrix we chose
our national direction democratically, in reality we were
being sold noblesounding agendas that masked the
expansionist projects of wealthy elites.

Industrialization, beginning in the late 1700s, created a
demand for new markets and increased raw materials; both
demands spurred accelerated expansion of empire. Wealthy
investors amassed fortunes by setting up, or funding,
largescale industrial and trading operations, leading to the
emergence of an influential capitalist elite. Like any other
elite, capitalists used their wealth and influence to further
their own interests however they could.

    People of the same trade seldom meet together... but the
    conversation ends in a conspiracy against the publick, or in
    some contrivance to raise prices.
    - Adam Smith, The Wealth of Nations

Thus capitalism, industrialization, nationalism, warfare,
imperialism - and the Matrix - co-evolved. Industrialized
weapon production provided the muscle of modern warfare, and
capitalism provided the appetite to use that muscle.
Government leaders pursued the policies necessary to expand
empire while creating a rhetorical Matrix, based around
nationalism, to justify those policies. Capitalist growth
depended on empire, which in turn depended on a strong and
stable core nation to defend it. National interests and
capitalist interests were inextricably linked - or so it
seemed for more than two centuries.

* World War II and Pax Americana

1945 will be remembered as the year World War II ended and the
bond of the atomic nucleus was broken. But 1945 also marked
another momentous fission - the breaking of the linkage
between capitalism and national expansionism. After every
previous war, and in many cases after severe devastation,
European nations had always picked themselves back up and
resumed their competition over empire, their geopolitical
game. But after World War II, a Pax Americana was established.
U.S. planners had worked out a new blueprint for world order,
in a series of studies carried out by the Council on Foreign
Relations (CFR):

    Recommendation PB23 (July, 1941) stated that worldwide
    financial institutions were necessary for the purpose of
    "stabilizing currencies and facilitating programs of capital
    investment for constructive undertakings in backward and
    underdeveloped regions." During the last half of 1941 and in
    the first months of 1942, the Council developed this idea for
    the integration of the worldŠ. Isaiah Bowman first suggested a
    way to solve the problem of maintaining effective control over
    weaker territories while avoiding overt imperial conquest. At
    a Council meeting in May 1942, he stated that the United
    States had to exercise the strength needed to assure
    "security," and at the same time "avoid conventional forms of
    imperialism." The way to do this, he argued, was to make the
    exercise of that power international in character through a
    United Nations body (Shoup, 148)

After 1945 the U.S. began to manage all the Western
peripheries on behalf of capitalism generally, while
preventing the communist powers from interfering in the game.
Capitalist powers no longer needed to fight over investment
realms, and competitive imperialism was replaced by
collective imperialism. International financial stability was
provided by the Bretton Woods agreements, which established
fixed exchange rates among the major currencies, all pegged to
the dollar, which was in turn backed by gold. Bretton Woods
also established the World Bank and the International Monetary
Fund (IMF), both intended to provide loans for development
projects in the third world.

The new blueprint thus had two parts, one geopolitical and one
economic. Pax Americana was the geopolitical part, and it
stabilized geopolitics by eliminating armed conflict among the
Western powers. The Bretton Woods system was the economic
part, and it stabilized the global financial environment.

Opportunities for Western investors were no longer linked to
the military power of their nations, apart from the power of
America. In his Killing Hope: U.S. Military and CIA
Interventions Since World War II, William Blum chronicles
hundreds of covert and overt interventions, showing exactly
how the U.S. carried out its imperial management role.

The postwar blueprint was aimed at promoting development and
economic growth on a scale never seen before. The investment
opportunities were immense, with much of the industrialized
world in ruins from the war - in urgent need of rebuilding.
And with the new Bretton Woods institutions, the stage was set
for unprecedented levels of investment and development in the
periphery, the third world.

This development agenda promised great returns for investors
and banks, huge new markets for manufacturers and
entrepreneurs, and unprecedented prosperity for Western
populations. As in the pre-1945 days, primary manufacturing
industries were to be concentrated in the core nations,
providing there good employment, strong national economies,
and content populations. For the third world there was the
hope of modernization and improving living conditions, but
the terms of trade and development continued to be exploitive,
vis a vis the core and the periphery - the West and the third

In the postwar years Matrix reality diverged ever further from
actual reality. In the postwar Matrix world, imperialism had
been abandoned and the world was being "democratized"; in the
real world, imperialism had become better organized and more
efficient. In the Matrix world the U.S. "restored order," or
"came to the assistance" of nations which were being
"undermined by Soviet influence"; in the real world, the U.S.
was "maintaining effective control over weaker territories."
In the Matrix world, the benefit was going to the periphery in
the form of countless aid programs; in the real world, immense
wealth was being extracted from the periphery, by "programs of
capital investmentŠin backward and underdeveloped regions."

Growing "glitches" (anomalies) in the Matrix weren't noticed
by most people in the West, because the postwar years brought
unprecedented levels of Western prosperity and social
progress. The rhetoric claimed progress would come to all, and
Westerners could see that myth being realized in their own
towns and cities. The West became the collective core of a
global empire, and exploitative development led to prosperity
for Western populations, while generating immense riches for
corporations, banks, and wealthy investors.

* Popular rebellion and the decline of the postwar blueprint

The postwar development-centered blueprint served as an
effective governing paradigm for the first two postwar
decades, providing both domestic passivity and good return on
investments. But in the 1960s large numbers of Westerners,
particularly the young and well educated, began to notice
glitches in the Matrix. In Vietnam imperialism was too naked
to be successfully masked as something else. A major split in
American public consciousness occurred, as millions of
antiwar protesters and civil-rights activists punctured the
fabricated consensus of the 1950s and declared the reality of
exploitation and suppression both at home and abroad. The
environmental movement arose, challenging even the
exploitation of the natural world. In Europe, 1968 joined 1848
as a landmark year of popular protest:

In 1968, the entire postwar order was challenged by a series
of insurrections from Berkeley to London, from New York to
Prague. Oddly enough, the challenge was not successful, at
least not in the period in which it actually took place. The
true effects of the student protest movement were felt well
after 1968.

    1968 was a year of revolution. That's the year that John
    Lennon sang Revolution. It's the year that Grace Slick and the
    Jefferson Airplane sang, "Now it's time for you and me to
    have a revolution" from their album Volunteers. In a period of
    unprecedented material prosperity and cultural activity, the
    sons and daughters of the most privileged sections of the
    United States and of Europe decided to make their own
    revolution. They were the sons and daughters of the Left,
    better yet, the Old Left. Their parents, many of them at
    least, were either pink or red, that is, many of them were
    communists, socialists, Trotskyites, feminists, pacifists or
    just plain liberals. Their sons and daughters began to refer
    to themselves as the New Left (Kreis).

These developments disturbed elite planners. The stability of
the postwar blueprint was being challenged from within the
core: the formula of Western prosperity no longer guaranteed
public passivity. A report published in 1975, "The Crisis of
Democracy" (Crozier), provides a glimpse into the thinking in
elite circles. Alan Wolfe discusses this report in Holly
Sklar's eye-opening anthology, Trilateralism (Wolfe, 35-37).
Wolfe focuses particularly on the analysis Harvard professor
Samuel P. Huntington presented in a section of the report
entitled "The United States." Huntington is an articulate
promoter of elite policy shifts, and contributes pivotal
articles to publications such as the Council on Foreign
Relations' "Foreign Affairs."

Huntington tells us that democratic societies "cannot work"
unless the citizenry is "passive." The "democratic surge of
the 1960s" represented an "excess of democracy," which must be
reduced if governments are to carry out their traditional
domestic and foreign policies. Huntington's notion of
"traditional policies" is expressed in a passage from the

    To the extent that the United States was governed by anyone
    during the decades after World War II, it was governed by the
    President acting with the support and cooperation of key
    individuals and groups in the executive office, the federal
    bureaucracy, Congress, and the more important businesses,
    banks, law firms, foundations, and media, which constitute the
    private sector's "Establishment" (Wolfe, 37).

In these few words Huntington spells out the reality that
electoral democracy and the will of the people have little to
do with how America is run, and summarizes the kind of people
who are included within the elite planning community.

The postwar blueprint was failing in its mission of providing
public passivity, but it was already in trouble for another
reason as well: it was costing too much. That is to say, it's
profitability to investors had reached the point of
diminishing returns. By the early 1970s - due to higher labor
costs, taxes, and regulatory restrictions in the West -
investments in industrial development had become far more
profitable in the "underdeveloped" world. It no longer made
financial sense to continue investing capital to maintain a
strong Western industrial base. If people were no longer
pacified by economic prosperity, why should investors continue
paying for that prosperity with unappealing investments?

The essential bond between Western national interests and the
interests of capitalism was broken in 1945, with the advent of
Pax Americana and collaborative imperialism. Nonetheless,
those interests continued to be aligned in the postwar era -
with its emphasis on Western industrialization and stability,
growth and development, and popular prosperity. But this
postwar alignment was one of convenience only, on the part of
investment capital: the arrangement continued only as long as
it was profitable. As the 1970s unfolded, and investments were
increasingly moved out of the West, the postwar system of
economic stability was undermined by the elite investment
community, and we begin to see the establishment of a new and
quite different economic blueprint.

A definitive step in this undermining process occurred on
August 15, 1971, when President Nixon, on the advice of an
elite group in his Treasury Department, took the dollar off
the gold standard. In one fell swoop, the entire basis of
financial stability in the postwar blueprint was undermined.

    When Nixon decided no longer to honor U.S. currency
    obligations in gold, he opened the floodgates to a worldwide
    Las Vegas speculation binge of a dimension never before
    experienced in history. Instead of calibrating long-term
    economic affairs to fixed standards of exchange, after August
    1971 world trade was simply another arena of speculation about
    the direction in which various currencies would fluctuate
    (Engdahl, 129).



"Apocalypse Now and the Brave New World"

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