When National Income Statistics became available after World War II, they revealed that John Maynard Keynes was the seminal socio-economic systems theorist of this century. However before statistics were available, Keynesian economists had institutionalized the rejection of Keynes’s system theory as contrary to principles of the behavior of individuals or microeconomics. During 1941-64, successful policy applied his systems theory. But the political power of Keynesian economists was threatened. They responded by reversing successful policies after the 1964 elections. It soon became clear that U.S. economic system policies based on even interdisciplinary principles of the behavior of individuals oppresses the middle class and poor worldwide much as the policies of racists oppress minorities. Members of Congress proposed the Nobel Prize Program in Economic Science to send a signal to heads of states to identify which scholars were the scientists. Which scholars showed how to reverse political oppression and increase the prospects for world peace? More than forty prizes have been awarded. Each has gone to an economist, historian or others who recognize only system policy that is validated by behavioral science principles. In short, the Nobel Committee sent the wrong signal to heads of state of the world. Federal politicians tried to intervene. Four times the US Supreme Court has refused to order lower court hearings on alleged US crimes against humanity. The issue is being taken to an international penal tribunal. The economic base of the global economy has been seriously damaged by criminal US policy. Participation of parties from other nations in the lawsuit against the U.S. in a world court is solicited.

Keywords: Keynes, Keynesian economics, political crimes, philosophy

In his Presidential Address, Bela Banathy challenged: "West Churchman keeps reminding us that on an ordinary day 35,000 children die of starvation...and nothing is really done about it! How can this be?"(Banathy, 1998) Starving children are only one symptom of economic systems failure that has been predicted since the planned reversal of politically popular economic policy of the Kennedy-Johnson Administration. That policy had increased productivity by reducing poverty and income inequality. Policy makers used interpretations of John Maynard Keynes‘s magnum opus in 1936, The General Theory of Employment, Interest and Money published by systems engineers like Arnold Tustin (Tustin, 1953) and systems scientists such as Boulding (1953) and my mentors (Egle, 1952).

The promise of system theory can be restored if we demand arbitration of three allegations by an international tribunal as proposed by Albert Einstein and Reinhold Niebuhr in the thirties. (Einstein, 1954; Niebuhr, 1935) First, Keynes offered a theory of economic systems which permits proof of the economics of rising relative abundance. Second, Keynesian economics is an ideology that recognizes only the theory of scarcity and therefore redefines Keynes’s theory of economic system abundance as a macro version of the theory of a private firm. As a result, changes in productivity, poverty and inequality of income do not exist in the formal mind set or theory of Keynesian economists. This renders them powerless to confirm evidence in Tables 1 and 2 that their policies reduce productivity, which increases both poverty and income inequality. Third, Keynesian economists have imposed their ideology on the US economy since November 15, 1964 and have therefore increased income inequality worldwide in violation of both civil and human rights of the middle class and poor guaranteed by the US Constitution and/or the U.N. Charter. Moreover they are responsible for precluding the success of President Kennedy’s New Frontier and President Johnson’s Great Society.

The lesson to be learned from the conflict between Galileo and the Vatican over the proper description of the solar system is that systems theory fails when scholars impose a priori blinders on reality. An axiom of we systems theorists is that our first duty is to describe systems accurately. A corollary is that we should not even try to offer a theory of a system until we have respectfully resolved dispute over its most accurate description. This axiom and its corollary are rejected aggressively and dogmatically by Keynesian economists. We do nothing about Churchman’s call to action when more children die of starvation each year than the 11-million who died in the Nazi Holocaust because we place our trust in Keynesian economists who aggregate the crisis!

What I have said thus far hints at the fact that our promise as systems theorists has been denied because we are prisoners of several related myths. One myth is that the failure of socio-economic systems since 1964 is evidence that our founding system theorists like Boulding promised too much. The myth was a major thesis of Bertram Gross, our 1970 president, who helped to convince us that systems analysis had been "oversold." (Gross, 1970) Another version of that myth is Robert Lilienfeld’s characterization of claims by we system theorists that we can predict and control as "pretentious nonsense" (Lilienfield, 1978, 249). The use of medicine for lethal injections in no way invalidates the power of medicine to save lives. In that same sense, the unlawful use of system technology to engineer system failure in no way invalidates its use for predicted success. I suggest a proper reading of the objective, well documented record is that systems scientists, especially those who were economists, dogmatically rejected proof that they failed to promise enough. Indeed, the evidence requires the ruling that Lilienfeld’s claim represents his own pretentious non-sense.

The most disastrous myth of all is that because socio-economic systems look different than physical systems, the rules for prediction and control in physical systems with laws of nature cannot be used to predict socio-economic system change. By this logic, because solar systems look different from atomic structure, the rules that apply for prediction in astronomy do not apply to nuclear physics. I present hoards of supporting statistical evidence on that point in this paper, but can only mention the underlying theoretical argument.

In both the physical and social sciences we divide into disciplines on the basis of direct inspection of evidence, or on the basis of what lawyers call direct evidence. However, successful prediction of system change is invariably traced to good theory of evidence of things not seen, which is defined by lawyers as circumstantial evidence. Gravity and the polio vaccine are illustrative. For the social systems analyst who predicts with success, the independent variables are found in the theory of circumstantial evidence. In the circumstantial evidence I identify social gravity and the live social vaccine as the two most important independent variables. Keynes did not have the statistics to push his ideas this far. In contrast, the dependent variables are found in the direct evidence. The argument that one cannot predict and control a socio-economic systems on the basis of studies of dependent variables the way others predict and/or control physical system change on the basis of their study of independent variables is to compare apples and oranges. Let us settle this dispute on the basis of the circumstantial evidence rather than protests of conflicting faiths.

On the basis of this evidence, I challenge systems theorists to respond to Churchman and act on their moral imperative to proclaim the following system theory expectation based on simulations of 1921-98 history: The 21^st century will record progressively higher rates of starving children, poverty and violent class warfare unless major nations like the United States restore lawful economic policy of the Kennedy-Johnson and Ford Administrations.

Operationally the promise of ISSS can be restored if we will facilitate formal and complete resolution of conflict between Keynesian economists and systems scientists over whether the stipulated statistical evidence is relevant for evaluating the system theory of Keynes. Is the evidence relevant for evaluating his career challenge to the ethics of economists? He captured that challenge in the famous final sentence of his magnum opus: "But sooner or late, it is ideas, not vested interests that are dangerous for good or evil." (Emphasis added, Keynes, 1936.)

Is the evidence relevant for ruling on the validity of the most important hypothesis of his career: "The pace at which we can reach our destination of economic bliss will be governed y ... our willingness to entrust to science the direction of those matters which are properly the concern of science." (Keynes, 1930) This hypothesis appears as the conclusion of his famous 1930 article, "Economic Prospects for Our Grandchildren" -- a title that anticipated Churchman’s concern for our children. In that article Keynes saw the promise for today’s children to live in a world without poverty if the objective of policy is maximized productivity rather than minimized inflation as in Keynesian economics. Is the evidence relevant to evaluate proof that Keynesians attempt to reduce inflation with policies that increase poverty, reduce productivity and therefore increase rates of both inflation and starving children? Is the evidence relevant to evaluate whether the U.S. properly told the President of an African nation that he must starve his children in order to pay his nations debt to US banks? (Jolly, 1989)

Consider the argument by economists who insist that, on these issues, the evidence is not relevant. For economists the sole test for validity of an economic theory is whether or not it is consistent with the fundamental axioms of their theory. Hence Keynesian economists argued that Keynes was necessarily confused when he claimed that his economic system theory of the relationships between emergent properties of the hard boundaries of economic systems proved that economists confuse good and evil. They reported that he was confused because, by definition, "hard" emergent economic system properties as well as "soft" moral and legal issues are beyond the scope of neo-classical microeconomics. Hence they ruled that Keynes had said nothing new (Samuelson, 1947).

Now consider the argument by those who recognize Keynes as the undisputed seminal socio-economic systems theorist of this century. He first hinted at his revolutionary discovery in his 1904 paper, "Ethics in Relation to Human Conduct." Proof that he wrote as a pragmatic philosopher and not an economist is that Bertrand Russell found Keynes’s unpublished findings so important that he used the preface of his 1912 book, The Problems of Philosophy, to alert philosophers. In particular, Keynes’s work on economic systems was an application of his findings as a philosopher and ethicist (Skidelsky, 1996, 17).

By the 1950s, statistics not previously available permitted proof that Keynes had offered a new theory of knowledge required for a successful theory of the non-behavioral, quasi-mechanical emergent properties of economic systems as "hard" parameters that predictably function as system boundaries of the aggregate of "soft" or microeconomic systems. He showed that the non-behavioral boundaries of an economic system function like the odds set by the California State Lottery to control aggregate outcomes of those who buy lottery tickets. His discovery was for social systems what Planck’s Quantum Mechanics in 1927 was for physical systems.

The most important emergent property of an economic system is system productivity, which is no more a function of private productivity of firms and labor than the productivity of the California State Lottery is a function of the productivity of individual gamblers. Keynes empowered us to make a rigorous a priori distinction between the control of the hard boundaries of economic systems for good vs. evil. System boundary controls for good is illustrated in Panel A of Table 1 and system boundary control for evil is illustrated in Panel B of that Table.

Keynes first applied his new theory of knowledge in negotiations at the Peace Conference at Versailles after World War I. For his model of the confusion of good and evil in peacemaking by social scientists, he quoted from those famous lines from the opening scene in MacBeth:

"Fair is foul, and foul is fair,
Hover through the fog and filthy air."

This model was the authority for his prediction at Versailles that the peace would spawn another world war. (Skidelsky, 1996, 20). Observe that this powerful model can be easily understood by ordinary citizens. Experience shows that with this model, the reversals of successful policy in mid-1956, November 15, 1964 and June 1976, as well as the reduced rate of failure of policy since 1992 can be understood by children in junior high. school. This is because children understand evil.. They also understand that coverup of evil is evil. The issue is whether or not we will address our complicity in evil through silent coverup.

Keynes was unable to reverse the process that he predicted in 1919 at Versailles would lead to another world war (Skidelsky, 1996, 20). Frustrated, in a 1930 article he described cohorts of those preoccupied with federal deficits as suffering from a "somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease." (Keynes, 1930)

Fair is foul and foul is fair also predicts that Keynesian economists would insist that policies that predictably produced a surplus should not be repeated because they should have produced a deficit, and policies that predictably produced a deficit should be repeated, because they should have produced a surplus. This is the premise of the Gramm-Rudman Balanced Budget and Emergency Deficit Control Act of 1985 as amended and made more stringent by both the Bush and Carter Administrations.

In light of this history, it is not surprising that Keynesian economists have had to resort to debate tactics of theologians -- where evidence does not matter -- to explain and defend their positions. For example, in 1992 testimony before Congress on policy options of the new Clinton Administration, the liberal Keynesian economist and 1970 Nobel Laureate Paul Samuelson described policies which generated the $11.3-billion surplus for 1946-64, as "sin." And a few months earlier a column by Robert Samuelson in Newsweek on June 8, 1992 carried the title and caption, "Original Sin Remembered: John Kennedy Made a Speech at Yale in 1962. That was the Start of Economic Folly." He made reference to Kennedy’s 1962 Yale Commencement Address, "The Myth and Reality in Our National Economy." JFK called upon citizens to free themselves from the ideology of Keynesian economists and other social scientists. In words that have proven prophetic, he concluded by warning that if we continued to resolve dispute over "sophisticated and technical" questions on the basis of "ideology," we would all "land in the bog of sterile acrimony."

Since both sides in this dispute use the same evidence, what are the rules that justify the contradictory explanations of the same evidence? Those decision rules are known as "tests of evidence." Due to the importance of the issue, let me illustrate with the recent O.J. Simpson trial. The evidence used in the criminal and civil trials was virtually identical. However the two trials reached contradictory inferences from the same evidence due to a difference in what is known in law as tests of evidence. That is, in the criminal trial, the test of evidence was beyond a reasonable doubt. On that basis, Simpson was found not guilty. However in the civil trial the test of evidence was the preponderance of the evidence. On that basis, he was found guilty or liable. Consider another example: A admits killing B on the Mexican-American border and is arrested for murder. Law students are asked: Is that person innocent or guilty? Given these facts, A is guilty if he was arrested by Mexican police, but innocent if arrested by American police. The same facts yields contradictory conclusions due to the difference in tests of evidence. In Mexico the test is guilty until proven innocent and in America it innocent until proven guilty. Social scientists in dispute are like law students who argue over whether A is guilty without recognizing that all debate should focus on the proper test of evidence.

All conflict between Keynesian economists and systems scientists is traced to a difference in their respective tests of evidence for interpreting the identical evidence. The test used by systems scientists but rejected by Keynesian economists was proposed by Keynes in the exposition of what he called a new theory of knowledge. (Keynes, 1921) The formal test is that hypotheses are accepted only if a priori expectations generate successful predictions. That test is cited from the literature on the philosophy of science and is denoted Test II:

"The only test of a theory is the success of its predictions; prediction and explanation are two sides of the same coin, in that explaining a fact is finding another from which it could have been predicted." (Hahn, 1979; crucial emphasis added)

The test of evidence used by Keynesian economists for validating their hypotheses is cited from the conclusion of the 1961 Presidential Address before the American Economic Association by Keynesian economist and Paul Samuelson. He had quoted that famous final paragraph in Keynes’s General Theory in which economists like him were indicted for confusing good and evil. Samuelson rejected the indictment without any reference whatsoever to the evidence, and then concluded his speech with an explanation of why economists do not respond to the evidence. This decision rule is the economists’s version of Test I:

"Our map of the world differs from that of the layman...a discipline like economics has a logic and validity of its own. We believe in our map because we cannot help doing so.

"Not for us is the limelight and the applause (like the approval of U.S. voters). But that doesn't mean...that we do not in the end win the game. In the long run, the economic scholar works for the only coin worth having...our own applause." (crucial emphasis and parenthesis added) (Samuelson, 1962)

Test II which is used by we systems scientists to validate hypotheses is also used to validate success and failure of hypotheses in medicine, public health and space policy. In contrast, Test I used by Keynesian economists to validate their hypotheses is the economic version of the test used to validate ideology. Evidence is not relevant. Test I validates: (1) the Vatican’s hypothesis that optimal population policy requires the rejection of artificial birth control; (2) beliefs of theologians; (3) the tobacco industry's rejection of scientific proof that smoking endangers health; (4) the racist’s and Nazi’s prescription for social justice; and (5) beliefs of economists and other conventional social scientists generally.

Let us summarize. Test I used to validate Keynesian economics has always been used to validate crimes against humanity. It is therefore clear that although Test I may be used by scholars in academia, in law it is an unconstitutional test of evidence for rulings on whether Keynesian economists are responsible for unconstitutional political oppression of the middle class and poor.

Successful economic policy (Panel A, Table 1) is defined as policy that complies with the Employment Act of 1946. Failed economic policy (Panel B) is defined as policy that not only violates that Act but also violates rights of the middle class and poor that are guaranteed by the US Constitution and./or the UN Charter,.

The independent variable in successful policy is the implicit or explicit assumption of the policy maker that emergent system properties show that the cyclical income elasticity of consumer spending exceeds unity. In the technical language of economists, the slope of the short-run consumption function exceeds that of the long-run counterpart. The amount by which the rate of growth of GDP falls below its maximum rate with outcomes still defined as successful is a predictable function of the amount by which policy makers postulate that the elasticity value is less than its empirically determined maximum rate but greater than unity. This body of knowledge offered by systems scientists is defined as Recession Economics. When policy postulates the Recession Model, the inflation rate can be reduced to zero only when reductions in the unemployment rate are rapid enough to induce accelerated productivity as during the 1920s, 1941-56 and 1961-64.

Business fluctuations are defined as mild and downturns are defined as recessions so long as the recorded elasticity exceeds unity. The data are then explained by Recession Economics. As expected a priori, the recorded value of elasticity exceeded unity during these periods when fluctuations were mild: 1921-29, 1936-37, 1941-73.4Q, 1975.2Q-1981.2Q since 1983.2Q.

The independent variable in failed policy is the implicit or explicit assumption of the policy maker that the cyclical income elasticity of consumer spending is less than unity. That is, the slope of the short-run consumption function is less than that of its long-run counterpart as reported in economic textbooks. The amount by which the rate of growth falls below rates when policy is defined as successful is a predictable function of the amount by which policy makers assume that the elasticity value is less than unity. This body of knowledge is known as Depression Economics or Keynesian Economics. When policy postulates the Depression Model, the inflation rate can be predictably reduced to zero only with near-double digit or double digit unemployment. This was achieved in the 1930s, during 1982-83 and was approached in March, 1975 when failed policy was reversed and success was restored until June, 1976.

Business fluctuations are defined as severe and downturns are defined as depressions when the recorded elasticity is less than unity. Then the data are explained by Depression Economics. As expected a priori, the recorded value of elasticity is less than unity during periods when the U.S. economy has failed most severely: 1929-36, 1937-41, 1973.4Q-1975.2Q and 1981.3Q-1983.2Q. If the policy maker postulates Depression Economics or Keynesian economics and the effort to reduce the inflation rate to zero is aggressive, policy transforms recessions as defined into depressions as defined. Policy induced depressions were successfully predicted in the summer of 1974 and in February 1982. No other policy induced depression have been predicted. These are the only two recorded since the 1930s.

The most important dependent variables are productivity and income inequality by income class. By definition, neither exists in Keynesian economic theory. (The rich are defined as the top income quintile, the poor as the bottom and the middle class as the three middle income quintiles.)

Nor do variables exist in Keynesian economics. Economists may verify that the Prescription for Success (used by Systems Scientists) increases the median income of African American families relative to that of white families, whereas in contrast, this powerful indicator of progress in the civil rights movement is reversed with the Prescription for Failure (used by Keynesian economists). Since 1964 the Prescription for Failure, which redistributes income from the poor to the rich, does in fact, redistribute income from African Americans to whites at an even faster rate. Indeed, in both 1991 and 1992, the median income of African American families relative to white families was lower than in any year since 1963, or before the Civil Rights Act of 1964 was enacted. Hence the Prescription for Failure had, by 1991, reversed all economic gains of the civil rights movement. As predicted, the increased racial disparity in income between incomes in the top and bottom income quintiles for African Americans has been greater than the similar inequality among whites. This greater racial disparity in income among the poorest is an important source of increased racial violence including urban riots.

The 1985 Report by Margaret M. Heckler, Secretary, US Department of Health and Human Services, reported that racial disparities in income appears to be the most important variable associated with racial disparities in health care and life expectancies. (Heckler, 1988) These scholars found that during 1979-81, the annual number of deaths of African Americans under 70 years of age was 58,942 higher than the number one would expect if the life expectancy of African Americans were the same as that of whites. The "Causes of Excess Deaths" broke down as follows: heart disease and stroke: 18,181; homicide and accidents 10,909; cancer: 8,118; infant mortality: 6,178; cirrhosis: 2,154; and all other causes: 13,402.

Following my 1975 testimony before the Joint Economic Committee, (Burress, 1975) that committee asked the staff of the Library of Congress to estimate the change in the social indicators associated with the increase in the unemployment rate from 4.9% in 1973 to 5.6% in 1974. M. Harvey Brenner, a noted econometrician at Johns Hopkins University, conducted the study (Brenner, 1984). He made numerous major findings including the following: increased deaths: 204,274; increased arrests: 577,477; increased suicides: 270; increased youth homicides: 403 and increased mental hospital admissions: 8,416.

The reason Keynesian economists cannot discover that they confuse good and evil in economic justice and stabilization policies is that they confuse the trend and the business cycle. Almost a quarter century ago in my 1975 testimony before the Joint Economic Committee I traced this continuing crisis to an "unwitting conspiracy" between errors in theory and econometrics by Keynesian economists (Burress, 1975, 1066).

An Overview: For Keynesian economists, their so called business cycle theory is traced to a 1939 article by Paul A. Samuelson (Samuelson, 1939) with important refinement by others (Duesenberry, Modigliani 1947). In fact, that theory is not a theory of the business cycle as defined shortly but a theory of the trend as defind shortly -- with a rising saving rate over the long run. The econometrics for testing the validity of business cycle theories is traced to a 1939 study by Jan Tinbergen (Tinbergen, 1939). But Tinbergen’s method for validating business cycle theory is proper only for validating a theory of the trend. Hence the unwitting conspiracy of the two errors: Keynesians offer a trend theory and believe it is a business cycle theory and econometricians validate trend theory and believe they are validating business cycle theory. A trend theory is defined as one that accounts for average relationship over a period of time. Period-to-period change is treated as a random event. A business cycle theory is one that accounts for period-to-period change, and treats the average relationship as a random event

This error leads to a confusion of good and evil and requires policy outcomes one expects if policy were based on Marx’s theory of why capitalism must fail. Finally, the error in statistical method precludes discovery of the error. Keynesian economists are formally defined as those who engage in this conspiracy of errors. Hence both liberal economists like Samuelson who advise Democrats, and conservative economists like Milton Friedman, the 1976 Nobel Laureate, and their cohorts are defined as Keynesian economists.

My mentors emphasized that Keynes’s father was active among economists who corrected Marx’s theory of the firm. It has always seemed relevant to me that Keynes used a methodology to correct Marx’s defunct theory of economic systems that is identical to the method used by his father’s generation to correct Marx’s theory of the firm. Marx’s theories of both the firm and the economy were theories of the long-run. They were theories of the trend. In order to expose the error in Marx’s theory of the firm, economists were empowered with marginalism. Marginalism in the theory of the firm is a theory of either positive or negative incremental deviations of costs from their average or trend, as well as either positive or negative incremental deviations of revenues from their average or trend. Keynes’s theory of the economic system is a theory of business cycles as a theory of either positive or negative marginal deviations from the trend in the economy. In the same sense that marginalism is the theory of the firm, Keynes’s marginal deviations of an economy from its trend is his theory of an economic system. If one rejects Keynes’s theory of the business cycle, what is left is the failed trend theory of Marx. As shown below, Keynesian economists reject marginalism, or repeat the error of Marx in his theory of the firm. Hence the opening sentence in a 1997 article by Randall L. Wray is highly predictable: "Let us agree that Keynesian macroeconomics is a failure." (Wray, 1997).

Positive and negative values of marginal revenue with the associated elasticities and inelasticities of demand are easy to grasp intuitively. However Keynes business cycle theory is one of emergent properties, as in Quantum Mechanics. Hence one seeks successful predictions as inferences from reliable description of system processes rather than intuitive understanding. One starts with observed cyclical income elasticities, and then infers as follows: when cyclical change is mild as in the twenties, the business cycle deviation from the trend is negative; however when cyclical change is severe as in the thirties, business cycle deviation from the trend is positive. I adopt the mathematical sign convention from Keynes’s fundamental law (1936, 97). Therefore, marginal change is negative in recession and positive in depression.

The failure of economists to conceptualize Keynes’s system theory as introducing marginalism to Marx’s theory of the trend was evident in a 1953 assertion by Alvin Hansen. He was Samuelson’s professor and the so-called dean of American Keynesians. He asserted: "Keynes, as we have noted, did not clearly differentiate between cyclical movements and secular trends." (Hansen, 1953, p. 78) However, in my 1961doctoral dissertation, I showed that Keynes could not have been more explicit in the distinction between his theory of the business cycle and the theory of the trend. (Burress, 1961) With funding by the Taft Foundation, my mentors arranged for Hansen to visit the University of Cincinnati in May of 1962 to respond to my finding. After reading my work, he declared "How in the world did we miss it? I now see why so many call Keynes a Marxist." Hansen predicted wide, immediate acceptance of my findings. I submitted articles on this interpretation of Keynes to every major journal in the United States and Europe with uniform rejections. My discovery in the late fifties that Keynes’s primary theoretical contribution had been missed was not published until 1972 when it was finally accepted by The South African Journal of Economics. (Burress, 1972) Unable to publish, I had long been fired from academia and had become a journalist starting at Business Week in 1964. All efforts to earn tenure led to my being fired.

Since 1947, Keynesian economists have had the benefit of a theory of the business cycle as a marginal deviation from the trend. So why is there a problem? Why have economists never been able to discover their error? The problem is that economists assume that they can validate their business cycle theory with Ordinary Least Squares (OLS). This is a proper method for estimating the trend as in the work by Marx. But a procedure that is proper for estimating an average can never be used to estimate dispersions from that average like marginal deviations from the trend. This is proven by showing that OLS readings of history are identical, regardless of the sequence in which a given number of observations have unfolded through time. Just think about reversing the sequence of dates associated with points on a scattergram. Squared deviations are unchanged. The OLS estimate is identical! Notwithstanding scholarly impressions to the contrary, the same is true for equations with sophisticated distributive lags. That is, even when OLS is modified with distributed lags, the sequence of history is still treated as a random process. To prove that this is true, compute a regression with the same observations (including distributed lags), assuming again that the data were recorded in reverse order, or a random order. The equation still will be identical. This is true of any average of historical statistics! Econometric theorists have uniformly reported that I am obviously correct. I first noticed this as a student with regressions of real per capita personal savings and disposable income for one period typically moved in opposite directions, but the regression coefficient was positive and several times the standard error. Observe that by definition an analysis that treats period-to-period change as random is trend analysis.

Consider historical data on average monthly temperatures for cities in the northern and southern hemisphere which have the same annual average temperature for several years. An OLS reading of the historical temperature data for the two cities will be insignificantly different. Could there be a better proof that OLS estimates treat the sequence of history as a random process and therefore are inappropriate for reading whether business cycle deviations from the trend are positive or negative? I first presented this to major professional journals in the late fifties and early sixties. I was told by the editors of both Econometrica and The Journal of the American Statistical Association that my analysis was so obviously true that it did not merit publication.

Former Federal Reserve Governor Henry Wallich, a former economics professor at Yale, told me I had explained why monetary policy often made "things worse." He exclaimed: "My mind is boggled!" by regressions with our model. When the raw data show that the relationship between quarterly changes in the money supply and GNP are typically negative, the regression coefficients are still positive and several times their standard error. Twice in the seventies, Wallich invited me to meet with his staff at the Board in Washington to explain why OLS could not reveal the cyclical process the Board was trying to control. Both times he told me later that it was as if I were trying to explain to the Pope why Catholic theology required artificial birth control.

This experience shows that I need to explain more. We may compare business cycle deviations around a 20-year trend of an economy to seasonal fluctuations in temperature around the trend or average annual temperature for 20 years. OLS is perfect for estimating the trend in the monthly temperatures for 20 years; and in this same sense, it is perfect for estimating a 20-year trend in the economy.

To make an important point below, suppose the temperature rose over the 20 years so that the trend coefficient on temperature is positive. Suppose that meteorologists were prisoners of the myth that a reliable OLS estimate of the rising trend in average temperatures for the last 20 years is actually a reliable OLS estimate of seasonal fluctuation in temperature around that trend. Suppose the meteorologist therefore used the OLS trend equations to predict that the temperature would rise slowly between summer and winter, when it always falls. Given this erroneous statistical methodology, the failed forecasts would cause scholars to seek better fitting OLS estimates of rising temperatures in order to successfully predict falling temperatures between summer and winter. However, given a rising trend in temperatures, it would be mathematically impossible to generate a negative coefficient required to predict the falling temperature between summer and winter months. Moreover higher r-squares for rising trend temperatures would yield larger forecast errors for reduced temperatures between summer and winter. Unless they were willing to question their statistical methodology, meteorologists could never discover that their theory reversed reality half the time. It will be shown below that this is exactly why Keynesian economists cannot discover that they reverse reality (good and evil) all the time -- as well as why their forecasting errors kept rising since World War II.

The League of Nations saw clearly that depressed economic conditions were a cause of wars. It commissioned a major study of all business cycle theories and then commissioned the leading econometrician Jan Tinbergen to identify the proper econometrics for testing which business cycle theory was best. (Tinbergen, 1939) He proposed ordinary least squares (OLS). Keynes challenged Tinbergen (Keynes, 1939, 1940). He showed that with OLS one must maximize residuals in order to maximize success in business cycle forecasting. That is, the most successful OLS models for predicting business cycles would have the lowest r-square values. However Tinbergen was trying to minimize residuals, or increase r-squares values.

Keynes therefore concluded that Tinbergen’s econometrics represents "black magic." His final words have proven prophetic: "[T]his brand of statistical alchemy is ripe to become a branch of science...But Newton, Boyle and Locke all played with alchemy, so let him continue." (emphasis added) He had used similar language to describe the economic theory of Marx (Keynes, 1925). He anticipated Nobel Prize winning econometrics! Let me add that Samuelson reported Keynes did not understand linearity (Samuelson, 1947). He was simply wrong!

In 1939 there was not enough evidence to resolve the dispute between Keynes and Tinbergen. However in a landmark 1953 study for the National Bureau of Economic Research, Robert Ferber surveyed the forecasting errors in nineteen different estimates of the business cycle using Tinbergen’s econometrics. (Ferber, 1953, 50-51) He observed what Keynes expected:

"..where the value of R square is plotted against the average absolute per cent error... The overall relationship is positive. *** Further analysis reveals ...a rise in predictive accuracy as goodness of fit declines... ****the predictive accuracy...is the opposite of what one would expect on the basis of the relative sizes of the coefficients of determination...".

Observe that this finding by Ferber clearly validated Keynes’s indictment of Tinbergen’s alchemy as "black magic." However Ferber reasoned that one must reject as "fantastic" the evidence that the accuracy of predictions for the future of an event fall as the reliability of reading its history rises. However this was not and still is not the issue. The issue was and is whether or not errors in forecasting B is related to the history of A? The bottom line is that one may postulate that more reliable readings of the past of either A or B are associated with more reliable forecasts for either A or B. But one may not postulate that more reliable estimates of the history of A permits more reliable forecasts for the future of B. In particular, the history of averages is not relevant to forecasting dispersions from that average. Ferber’s and the entire profession’s embrace of Tinbergen’s "black magic" was a major issue in my 1961 doctoral dissertation . (Burress, 1961, 14)

Recall that from an OLS estimate of a rising trend in temperatures it is mathematically impossible to generate a negative coefficient to permit one to predict the falling temperature between summer and winter months. In 1958 I was urged to leave the doctoral program at Harvard University because I insisted that the following is correct: First I observed that marginal revenue of the firm could be either positive or negative depending upon the elasticity of demand created by the social environment. A priori this could also be true of the relationship defined by the business cycle as a deviation from the trend of macroeconomic economic change. When Keynes wrote in 1936, the social environment was one of depressions. He had few statistics, but it seemed to him to be proper to postulate that the marginal deviation of the business cycle from the trend is positive (i.e., the saving rate rises and falls faster than income, or consumer spending is inelastic with respect to a cyclical change in income or that the SR-MPC is less than the LR-MPC). Recall that this is Depression Economics.

I argued that if Keynes had been writing in the 1920s, the different social environment would have caused him to reverse his "fundamental psychological law." When this law is reversed, the saving rate rises and falls slower than income, or consumer spending is elastic with respect to a cyclical change in income, or the SR-MPC is less than the LR-MPC.. Indeed John R. Hicks, the brilliant theorist, told me in 1966 that he had written that he saw no reason , a priori, why Keynes’s law should not be reversed (Hicks, 1950). However the OLS or trend equation used by Keynesian economists to represent the business cycle always has a positive slope like the trend in rising temperature cited above. Hence it has been impossible for Keynesians to discover that the marginal deviations of the business cycle from its trend have been negative during all cyclical fluctuations since 1921 except during about fourteen years when there was near-double digit or actual double digit unemployment (1929-36,1937-41, 1973.4-1975.2 and 1981.3-1983.2). A schematic of the Recession Model and the Depression Model is being presented at these meetings by my colleague, Sander Rubin, in his paper, "The Shape of the Curve." I urge you to study his paper for simple forecasting rules .

Due to the mind-boggling stability of our socio-economic system, the logic of Lusher’s 1956 and 1964 policy reversals and Greenspan’s June 1976 reversal have enormous implications for understanding his recent comments as representing a high risk of another policy reversal. He is now Chairman of the Board of Governors of the Federal Reserve System. Since early 1993 the Federal Reserve under his leadership has reduced the unemployment rate from 7.0% to 4.2% in March 1999. And instead of rising inflation as predicted by Keynesian economists, the inflation rate has fallen even faster than the unemployment rate.

Greenspan has told Congress and the public that there is no historical precedent or economic theory to explain this success. He repeatedly speaks of the high risk of further reductions in the unemployment rate on the grounds that history tells him the inflation rate might rise sharply. There are few more dramatic examples of how the nation’s social justice policies are a prisoner of the Orwellian revision of history by Keynesian economists. The fact is that all periods listed in Panel A of Table 2 are replete with cases that replicate 1921-29 when the unemployment rate was reduced from 11.9% to 3.2% -- with 1.8% in between. During this period the average inflation rate was negative! There are many shorter periods of the same process in periods listed in Panel B -- as recent as the 1980s. What Greenspan is saying is that as Keynesian economists revise the history, there is no precedent for the simultaneous reduction in the unemployment and inflation rates since 1992.

If we read history with common sense, the current near-universal delight that economic policy has been so successful, with sharply rising stock and bond prices in recent years, was also recorded in the daily newspapers in 1956 and 1964. In both cases there had been simultaneous reductions in both the inflation and unemployment rates as during 1993-99. In both case the periods ended with federal budget surpluses -- for calendar 1956 and fiscal 1965 like in 1998. Observe the other similarities. In the third quarter of 1956 when Lusher first reversed policy, the unemployment rate was 4.1%, and then in November 1964 when he reversed policy again, the unemployment rate was 4.8%. We are there again!

Both times he and other economists acted in secret, which was made possible by the Administrative Law Act of 1946. Under that law Congress delegated the power to make law to experts like Lusher and Greenspan. Both times they read history as revised by Keynesian economists and warned that there was a high risk of inflation unless policy was reversed. Both times restrictive policy of Keynesians reduced productivity and increased the inflation rate. Both times the higher inflation rate they induced was cited as validating their warnings and they then imposed even more restrictive policy which made things worse again!.

With the unemployment rate now at 4.2%, Greenspan and Keynesian economists are sounding the same warnings as they did when policy was secretly reversed in 1956 and 1964. If the changes in policy were based on legislative law after open political debate, there would be little reason for concern. The Congress and the public would discover that history shows that the unemployment rate can be reduced to 2% or less, in which case productivity is so elevated that the inflation rate remains near zero with a constant unemployment rate. Hence I suggest that a proper reading of history dictates the conclusion that there is an unusually high risk that the process which created a simultaneous reduction in the unemployment and inflation rates since 1992 will be secretly reversed and both rates will simultaneously climb higher as during 1956-58, 1965-69, 1973-75, 1977-79, 1981-83 and 1990-92. This is unrevised history!

The risks are somewhat higher than one might expect, given Greenspan’s June 1976 policy reversal. The record shows that I was invited to the White House that month by President Ford’s senior assistant, L. William Siedman. I had been given major credit for Ford’s decision to restore the successful policy of the first Eisenhower and Kennedy-Johnson Administrations. Siedman asked me to come to the White House to offer proof that the simultaneous reduction in the unemployment and inflation rates then underway should not be reversed. At that time, Greenspan was Chairman of President Ford’s Council of Economic Advisors. He had secured approval from the President to urge the Federal Reserve Board to shift to restrictive policy on the grounds that the unemployment rate was being reduced too rapidly. But that rate was then 7.8%! Policy was reversed. As a result, in the final six months of that election year the unemployment, inflation, and interest rates as well as the federal deficit, all rose -- reversing their decline through June. I predicted this at the White House in June.

This important 1976 history of policy during an election year had been off the record and there was no way that historians could confirm it independently until the 1992 Republican convention. At that time a televised show was devoted to Ford’s explanation of why he had lost the 1976 election. He reported that Greenspan told him that the unemployment rate was being reduced so fast that his election in the fall was a virtual certainty. However Greenspan had gone on to advise him -- as required by the revision of history by Keynesian economists -- that the lower unemployment rate would create explosive inflationary conditions and social disorder like that of the late 1960s. Ford said that Greenspan told him that due to escalating social disorder, he would wish he had never been elected. Ford then explained that he accepted Greenspan’s advice to reverse both fiscal and monetary policy. He concluded that he has always been certain that that is why he lost the 1976 election.

Historians have systematically refused to examine the hypothesis that the election results in 1976 were a consequence of the Orwellian revision of history by Keynesian economists who spoke through Greenspan. They do report that it is unlikely that Kennedy would have won the election in 1960 had it not been for a rising unemployment rate. However they also refused to examine the hypothesis that the presidential election results in 1960 were a product of 1956 policy reversal traced to an Orwellian revision of history by Keynesian economists.

Some of you have told me that you shared my admiration and respect for Alfred Kuhn -- an important early member of this society (Hammond, 1997, 335ff). Starting in 1955 he was my professor, then mentor, and finally a colleague at the University of Cincinnati and close friend until his death. He repeatedly agreed with me that a priori the revision of history by Keynesian economists, with broad support by historians and political scientists, is far more dangerous than the revision of history by the Ministry of Truth in George Orwell’s 1984. This was because in 1984 as in Nazi Germany, the Ministry of Truth was created by the central government and imposed Big Lies on the body politic whereas in the US the Ministry of Truth is an informal agency that operates through universities and religious groups. Their conduct was shown by Orwell to be the single greatest threat to freedom: The freedom to use freedom irresponsibly.

Orwell summarized his model as follows: WHO CONTROLS THE PAST, CONTROLS THE FUTURE; WHO CONTROLS THE PRESENT, CONTROLS THE PAST. In 1984, control of the present and therefore the past and future required a revision of history to prevent accountability of an oppressive government. This was the task of the Ministry of Truth. The ministry used doublespeak to secure doublethink. Orwell’s doublethink and doublespeak are defined in Webster's. Doublethink is the "simultaneous belief in contradictory ideas," and doublespeak is "language used to deceive usually through concealment or misrepresentation of the truth."

Consider examples of doublethink. One is the beliefs of Keynesian economists. On one hand, Keynesian economists believe it is important to balance the federal budget, reduce poverty and increase productivity. On the other hand they also believe that policies advocated by systems scientists that predictably produced surpluses, reduced poverty and increased productivity should never be repeated; and that policies (required by their Gramm-Rudman Act of 1985) which they advocate, and that predictably increase deficits, increase poverty and reduce productivity, should always be repeated. An example of doublespeak is Samuelson’s characterization of policies that reverse his proposals as "sin."

Another example is the beliefs of the Nobel Committee in Sweden that selects Nobel Laureates in the sciences. On one hand they believe that their selections of Nobel Laureates in Economic Science comply with the directive by Alfred Nobel in his will that annual prizes shall be awarded "to those who, during the past year, shall have conferred the greatest benefit on mankind." On the other hand, they believe that only Keynesian economists, economic historians, game theorists and other scholars whose ideas are validated by microeconomic theory should receive the prize. A better example of doublethink is the belief that prediction and control of socio-economic systems with the rules that apply in the physical sciences is impossible. Still another is that freedom to create monopolies for services cannot be permitted in business but must be protected in academia.

The debate over why policy had suddenly failed starting in mid-1965 could not have been more acrimonious. When I reported privately to members of Congress my proof that Keynesian economists had reversed successful policies, I was described as a malcontent who had to be asked to leave the doctoral program at Harvard in 1958 because I insisted on challenging Keynesian economics. At a meeting called by Rep. Henry S. Reuss, an influential member of the Joint Economic Committee, the conflicting opinions made clear that there could be no reconciliation among experts in this country. I attended the meeting as Deputy Manager and Economic Advisor of the American Bankers Association.

Rep. Reuss reported that political leaders like himself and heads of states are dumbfounded. They were at a loss to know who was responsible for successful policy for two decades after World War II, and upon whom they could rely for continued progress toward world peace. The focus of that meeting was the enormous damage to US financial institutions due to the sharp increase in interest rates in 1966. Rep. Reuss proposed that the ABA fund a new Nobel Prize program in economics and pay the Nobel Committee to decide who were the true scientists in this field. His proposal was immediately recognized as brilliant. Later it was reported that the central bank in Sweden agreed to fund the prize and pay the cost of the Committee. This was necessary, because a prize in economics was not provided for in Alfred Nobel’s will.

I was dumbfounded when the first prize was awarded jointly to Jan Tinbergen and Ragnar Frisch for their econometric research on the business cycle that Keynes had called black magic. The next prize in 1970 went to Paul Samuelson for Keynesian economic theory that confused the business cycle and the trend. More than forty prizes have been awarded. No prize has ever gone to a scholar who was associated with the systems research that was responsible for all successful policy between 1941 and 1964. No prize has gone to anyone who objects to the econometrics of Tinbergen or the confusion of the trend and the business cycle theory by Samuelson. Nor has any prize gone to scholars who show that the policies and periods listed in Panel A of Table 1 are a scientific option to the failed policies prescribed by Keynesian economists and listed in Panel B. All prizes have gone to those whose research not only requires the prescription for class warfare and economic failure but also rising trends rates of bank failures since 1964!.

In short, through the Nobel Committee, the international scientific community has sent the wrong signal to heads of state throughout the world. In fact the Nobel Committee in its entire program in Economic Science has acted out a far more serious version of its error in 1949 when it awarded the Nobel Prize in Medicine and Physiology to Egas Moniz. He was made a Nobel Laureate for his claim that lobotomies were the proper scientific method to control the behavior of difficult persons. (Shutts, 1982) In the 13 years before 1949, lobotomies averaged 700 per year and then averaged more than 6,000 per the next two years. The activities of the Nobel Committee that makes awards in the sciences is heavily influenced by those who have won prizes in the past. In the case of the Prize in Medicine for lobotomies, there were massive objections throughout the medical profession that were led by past Nobel laureates in medicine. As a result, the error received widespread international attention, and the rate of lobotomies fell dramatically after 1951.

However, the procedures of the Nobel Committee render it impotent to correct its error in economics. In the language of the medical profession, the mental capacity of Nobel Prize winning Keynesian economists to discover that they win awards for their gross professional malpractice has been surgically lobotomized. There is simply no other way to describe the rigorous constraints on freedom to think that are imposed by a deep faith in microeconomics. As a result, Keynesian economists have secured monopolistic control of the Nobel Prize Program in Economic science awards program. Hence one must rule that the capacity of constitutional governments to deliver on their social contract with their citizens has been lobotomized by the Nobel Committee procedures. Under Swedish law, the Nobel Committee is prohibited from responding to objections or otherwise being made accountable for its decisions. Under US law, the courts have ruled time and time again since 1991 that gross professional malpractice which obviously is not protected by the First Amendment of the Constitution is protected by the courts – just as they protected slave owners. In the world court, the named defendants will include Keynesian economists, religious organizations that have used the courts to silence this whistleblowing, and the U.S. Supreme Court. However the named defendants will also include the Nobel Committee and the central bank of Sweden.

U.S. slavery and Nazi Germany teach us that political process can seldom provide a remedy to political crimes of the elite against powerless citizens. In that case two options remain for restoring social system equilibrium. One is judicial, as in Brown vs. Board of Education in 1954. The other is escalating violence until there is violent system overthrow like the Civil War and World War II. Proceedings in fifteen courts since 1991, including the US Supreme Court four times (Burress, 1991-96), reveals that the judiciary in the United States is a far more total prisoner of the ideology of Keynesian economists than they were ever a prisoner of the ideology of racists during slavery. Hence if we fail in ongoing efforts to secure intervention by an international penal tribunal in the institutionalized political crimes of the United States, one must prepare for the rising probability of collective suicide and global system self-destruct. This is an urgent call for systems theorists throughout the world -- especially in poor nations -- to learn more and become a plaintiff in this quest for justice in the international judicial system. Nothing could do more to restore the promise of systems theory. Moreover, if Keynes was correct is that famous 1930 article, "Economic Possibilities for Our Grandchildren," our children will no longer starve

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