Capitalists for Corporatism

There is an odd argument from the political right. That is it seems odd to my political left perspective. The argument is intended to rationalize away regulatory capture by big biz. The basic claim is that only those who come from the corporate sector would have the knowledge and experience to effectively regulate corporations.

This is like arguing that only criminals should be hired as police and judges because they need to have firsthand experience of crime. Or like arguing only enemy combatants should be made into generals of the military they were fighting against because generals need to to have direct familiarity with the enemy. Or like arguing that only the working class should be hired as CEOs because they need to know how a business operates from the ground up (actually, that is a decent argument).

It’s hard to know how seriously to take the argument for big biz regulating itself. Political rhetoric rarely is ideologically principled and consistent, more often being conveniently self-serving. Still, for the sake of argument, I like to take such things at face value. Those making this argument don’t seem to take seriously the implications… or else they don’t notice… or don’t care.

What follows from this line of thought is that corporatism is the inevitable result of capitalism. It also indicates that cronyism is inherent to organizing society around capitalism. As Marxists predicted, capitalism if given free reign will always lead to oligopolies and monopolies through concentration of wealth and power. Regulatory capture, of course, will lead to corruption. There is no way of getting around this. So, if the argument is that regulatory capture is the only way regulation can happen, that puts corruption of government squarely within capitalism itself.

As many have argued, capitalism is far from being the same as free markets. Many anti-capitalists, Marx included, have supported free markets. In fact, the anti-capitalist argument for free markets is far stronger and more compelling. But if the reality of capitalism isn’t identical (or even much resembling) the rhetoric of capitalism, where does that leave us? Even the advocates of capitalism sometimes admit this, even if unintentionally.

So, what would an actual free market look like? How could a market be free without embodying, expressing, and defending the freedom of all people involved in and effected by the economic system? How could an economy and government controlled by big biz be free for anyone other than plutocrats? As always, whose freedom are we talking about?

37 thoughts on “Capitalists for Corporatism

    • As a society, the long term costs for the individual and society will end up being greater than the original costs of medical treatment. But we aren’t seeing the actual costs of anything. In a functioning free market, pharmaceuticals for example wouldn’t be so costly.

      Many argue, though, that free markets simply can’t operate in healthcare because seriously ill patients aren’t in the position to be rational acting customers. In the US, we neither have free market healthcare nor public healthcare. Instead, we have corporatist healthcare, which is the worst aspects of both big gov and big biz.

    • I’m sure, if it’s that bad in the UK, it must be far worse in the US. I don’t know Canada compares to the UK. But I doubt NAFTA, drug wars, and refugee crises have led many young Mexicans to feel hopeful for their future.

  1. Today is the birth of Adam Smith. He has long been a favorite of neoliberal capitalists, but I’m not sure why as he wasn’t a neoliberal capitalist. Smith thought one of the greatest dangers to a free society, not just a free economy, is high inequality. He also advocated for universal public education to counteract the damaging effects of industrialization and mind-numbing repetitive factory work, as cognitively well functioning public is necessary for a free society.

    Furthermore, like many of the American revolutionaries and founders, he saw corporations as a threat. This is why early US law extremely constrained corporations. A corporate charter was only given to specifically defined projects for the public good and for limited duration. When the project was finished or the public good achieved, a corporate charter was dissolved, usually by the terms set in the charter itself. Corporate charters were rare and their revocation was common.

    The dangers of corporations and corporatism was understood early on. Why has this knowledge disappeared? You won’t likely hear this reported in the corporate media or corporatist politics. Nor will you likely be taught it in either public or private schools, at least not in the US. How can such ignorance become so pervasive?

    “In his famous work written in 1776, Wealth of Nations, Smith criticized corporations for their effect in curtailing “natural liberty.” According to David Korton, Smith made specific mention of corporations twelve times in the Wealth of Nations. Not once does he attribute any favorable quality to them.”

    “America was born of a revolution against the abusive power of the British kings. The corporate charter was an institutional instrument of that abuse. Chartered corporations were used by England to maintain control over colonial economies. In addition to such well-known corporations as the East India Company and the Hudson’s Bay Company, many American colonies were themselves chartered as corporations. The corporations of that day were chartered by the king and functioned as extensions of the power of the crown. Generally, these corporations were granted monopoly powers over territories and industries that were considered critical to the interests of the English state.

    “The English Parliament, which during the seventeenth and eighteenth centuries was made up of wealthy landowners, merchants, and manufacturers, passed many laws intended to protect and extend these monopoly interests. One set of laws, for example, required that all goods imported to the colonies from Europe or Asia first pass through England Similarly, specified products exported from the colonies also had to be sent first to England. The Navigation Acts required that all goods shipped to or from the colonies be carried on English or colonial ships manned by English or colonial crews. Furthermore, although they had the necessary raw materials, the colonists were forbidden to produce their own caps, hats, and woolen and iron goods. Raw materials were shipped from the colonies to England for manufacture, and the finished products were returned to the colonies.

    “These practices were strongly condemned by Adam Smith in The Wealth of Nations. Smith saw corporations, as much as governments, as instruments for suppressing the competitive forces of the market, and his condemnation of them was uncompromising. He makes specific mention of corporations twelve times in his classic thesis, and not once does he attribute any favorable quality to them. Typical is his observation: “It is to prevent this reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly occasion it, that all corporations, and the greater part of corporation laws, have been established.”

    “It is noteworthy that the publication of The Wealth of Nations and the signing of the U.S. Declaration of Independence both occurred in 1776. Each was, in its way, a revolutionary manifesto challenging the abusive alliance of state and corporate power to establish monopolistic control of markets and thereby capture unearned profits and inhibit local enterprise. Smith and the American colonists shared a deep suspicion of both state and corporate power. The U.S. Constitution instituted the separation of governmental powers to create a system of checks and balances that was carefully crafted to limit opportunities for the abuse of state power. It makes no mention of corporations, which suggests that those who framed it did not foresee or intend that corporations would have a consequential role in the affairs of the new nation.

    “In the young American republic, there was little sense that corporations were either inevitable or always appropriate. Family farms and businesses were the mainstay of the economy, much in the spirit of Adam Smith’s ideal, though neighborhood shops, cooperatives, and worker-owned enterprises were also common. This was consistent with a prevailing belief in the importance of keeping investment and production decisions local and democratic.

    “The corporations that were chartered were kept under watchful citizen and governmental control. The power to issue corporate charters was retained by the individual states rather than being given to the federal government. The intent was to keep that power as close as possible to citizen control. Many provisions were included in corporate charters and related laws that limited use of the corporate vehicle to amass excessive personal power.’ The early charters were limited to a fixed number of years and required that the corporation be dissolved if the charter were not renewed. Generally, the corporate charter set limits on the corporation’s borrowing, ownership of land, and sometimes even its profits. Members of the corporation were liable in their personal capacities for all debts incurred by the corporation during their period of membership. Large and small investors had equal voting rights, and interlocking directorates were outlawed. Furthermore, a corporation was limited to conducting only those business activities specifically authorized in its charter. Charters often included revocation clauses. State legislators maintained the sovereign right to withdraw the charter of any corporation that in their judgment failed to serve the public interest, and they kept close watch on corporate affairs. By 1800, only some 200 corporate charters had been granted by the states.”

  2. They are saying that the corporations are abandoning the US.

    When the term “Rustbelt” was coined in the 1980s and activists learned the early warning signs of a plant closing, one of those indicators was tax dodging. If a company knew it was planning to close a factory, it would often challenge its property tax assessment or seek other tax breaks. And why not? If it didn’t expect to be hiring locally in the future, why should an employer care about the quality of the schools?

    The national trend today looks like the Rustbelt 1980s on steroids. President Trump’s budget proposal follows the playbook that corporate lobbyists have long pushed in state legislatures: tax cuts for companies and the rich, coupled with dramatic cuts to services that benefit everyone. The resulting permanent damage to those public services begs the question: is Corporate America intentionally disinvesting, abandoning our nation?

    Most striking about these cuts: the legislators who enacted them and the business lobbies that championed them treated them not as temporary tragedies to be repaired when revenues bounced back, but as long-desired permanent cuts to public services. Indeed, many legislatures locked in poorer tax bases by enacting new tax giveaways to corporations and the rich while slashing funding for schools, libraries, and health care. In the same year that Ohio ended full-day kindergarten, legislators phased out the state’s inheritance tax—which had only ever affected the wealthiest seven percent of families.

    One answer appears to lie in the disturbing fact that the fortunes of “American” corporations have become increasingly divorced from those of American citizens. It may never have been entirely true that “what’s good for General Motors is what’s good for the country,” as the company’s president apocryphally suggested in 1953. But it was closer to true when companies relied on Americans both to make and to buy their products. Today, most GM employees and nearly two-thirds of the cars it sells are overseas; it already sells more cars in China than in the U.S. General Motors has been highly engaged in American politics, including as a member of ALEC.

    Yep they’ve looted the US for all they can and are leaving people with nothing.

    • It shows the power of propaganda that it’s taken so long for the American public to realize what has been happening. It’s not as if this all was a recent change. It goes back to before I was born.

      FDR understood that corporations had to be forced against their will to do the right thing, in serving the public good. Every president following him forgot that lesson or rather learned a different lesson. That different lesson was that it is more profitable to be a plutocratic corporatist than a public servant.

    • I didn’t notice any of your comments in spam. But there is a ton of old comments in the spam box. I need to clear it out.

      As for internet eating comments, I long ago got in the habit of copying every comment before attempting to post it. It took me many years of losing comments before I finally forced myself into that habit.

    • There must be something funky going on. I found some comments in the trash. I have no idea how they got there. In the future, I’ll need to regularly check both the spam and the trash. I wish I could solve that problem.

    • Too many Americans assumed that, as imperial subjects, they would always be guaranteed a cut of the profits from neo-colonial plunder, exploitation, and resource extraction. The good life of the American Dream was intended to quiet the collective conscience of the American lower classes.

      The idea was that, even though you might not get rich, you would be ensured to make a decent living and get good benefits while your kids got an education and would do better than you. But the growing middle class in the US was only ever a reality for the briefest moment and mostly limited to a couple of generations, disproportionately whites at that.

      What Americans didn’t understand was twofold. This came at tremendous costs externalized onto minorities and foreign populations. And what is done to others will eventually be done to you. It turns out that the fate of most Americans is directly tied to the fate of most people around the world. Simply living within a plutocracy doesn’t mean that the wealth will trickle down.

      It’s a shame that everything had to get so bad before people began to wake up. When people wait for the oppressors to come for them before speaking out, there may not be anyone left to speak out for them. Caring about the least among us is practical advice, not mere feel-good bullshit.

      The plutocracy is now globalized. But most people are forced to live their lives entirely at the local level. There is no where for us to escape to, as the US turns into just another post-colonial third world nation.

    • I think that it might have been possible to make an egalitarian arrangement, but not with this current group of elites.

      They just wanted to loot society. I don’t think it is a coincidence that the rich stuffed down neoliberal economics as the Cold War was winding down. They knew people wouldn’t revolt.

      They probably knew they could suppress candidates like Sanders.

    • Capitalists may not want to admit it. But our present capitalist system is simply not sustainable.

      One way or another, it will change or be forced to change. The question is will this transition be easy and simple. If change is resisted, the transition could require breakdown or revolution. That would mean a period of shittiness as those in power are eliminated.

      We know what we have to do. And we know it is inevitable. Why make it harder than it has to be?

    • The difference between the US and Sweden is, even though inequality has dramatically risen in Sweden, at least they are willing to try experiments like this.

      They may even go try this on a large scale.

      Not in America I”m afraid.

  3. Thomas Frank (What’s the Matter with Kansas) on the state of the Democratic Party (it’s worthy interview to watch):

    Yep – I think he more or less nailed it.

    • He makes some good points. My only complaint is that he still voted for Clinton.

      As long as the establishment neocon/neoliberals know that enough people will vote for them no matter how badly they act, no matter how corrupt they are, no matter how much corporate money they take, no matter how many people they harm, there will never be any change. It’s because many people supported Clinton after all the shit that happened that the Democrats now believe that they don’t have to do anything different, just keep on punching left and pushing right.

      If Clinton ran again in 2020 or someone as right-wing as her was nominated, Democrats would make the same lesser evil argument and the evil would just keep on getting more evil. Each election cycle will push the two-party ever further right. At some point, voters have to take a stand and refuse to be manipulated endlessly.

      They say that third parties can’t win. But they always say that. Few people thought a third party candidate like Lincoln could win and yet his victory established a new main party that ended slavery, which mainstream politicians and pundits thought was impossible at the time.

    • What bothered me most by that part of what Frank said. The language he used was that he had no choice but to vote for Hillary Clinton.

      If it is true that there was no real choice and Frank was forced against his will to vote for evil, even lesser evil, then we don’t have a democracy. On the other hand, maybe those like Frank did have a choice and if enough of them made a different choice we would now have a different president.

      Our fates are in the hands of the two party system only to the extent that we give our power away.

    • This was one of the comments I found in the trash. It never occurred to me to look for missing comments in the trash. Let me respond now that the comment has been salvaged.

      From the first link: “The scientists then asked whether this effect was reversible. They created new groups of monkeys unknown to each other, and changed their ranks by changing the order in which they were introduced into the new groups. The researchers found that the gene expression levels in immune cells changed in response to the macaque’s new social rank within 3 months of establishing the new groups, and the cells got better at fighting infection.”

      That shows the power of environmental influences. The same kind of result has been shown in human studies. For example, studying siblings that were split with some staying in poor families and others going to wealthier families. This has caused up to an 18 point increase in IQ, which is about the entire racial disparity in IQ. Imagine what could be accomplished if environments were improved for everyone over generations, such that epigenetic and in utero influences would be equalized across all demographic and geographic populations.

      It was noted at the end of the piece that an epigeneticist offered the constructive criticism that, “One caveat of the study is that the researchers did not control for the early life history of the adult macaques, even though many studies have shown that early life adversity can have lifelong effects on health.” Considering all that, it was surprising to see the prospect of equalizing environmental conditions was almost mindlessly dismissed:

      “But the findings also raise questions about how best to help low-status individuals. “It may not be sufficient just to equalize access to healthcare, or protection from microbes and toxins,” Cole says. “What else do we need to do?””

      Sure, it may not be sufficient. Then again, it may be sufficient. It would be ideologically motivated and generally ignorant to conclude anything about equalizing access based on this study. So, why say anything at all, specifically phrased in that way? Equalizing may not be sufficient, but I have no doubt that it would be a necessary early step to move in the right direction. With what we know about epigenetics, this equalizing would have to be continuously maintained for maybe a century or so before would see the full benefit in human terms.

      That seems like an important point to emphasize, such as by making it the concluding comment. Or at the very least by stating it more clearly somewhere in the piece. As a society, we need to get much more serious about this and articles like this should present the issues involved in their fully significance, with no false pretense of moderate neutrality and detached reporting. After all, we are talking about the survival and progress of our civilization. Those are rather high stakes.

      The second link challenges many assumptions, specifically assumptions on the political right but also assumptions that have been accepted by many liberals. This complicates many things.

      To the extent that group selection of genetics might happen, it obviously isn’t as simple as kin-oriented. Furthermore, we don’t need to even go in that direction. This study wasn’t looking at group selection. It showed that the environmental conditions in terms of the social situation determined the chimps behavior.

      It’s interesting how quick we are to interpret data when we know so little. Any of the speculations offered could be correct. But as far as that goes, they could be completely false and some opposing theory might be right instead.

      All we know is that these chimps are acting altruistically in a way that doesn’t necessarily help them as individuals, at least not in a direct way. That is all we know. Everything else is speculation and, if we take those speculations too serious, they become ideologically-driven just-so stories.

  4. I’m listening to the audiobook version of “Infectious Madness” by Harriet A. Washington. There is much of interest in it. She also wrote “Deadly Monopolies” which covers some of the same territory.

    Her discussion of pharmaceutical companies and the medical industry is damning. The way that neoliberal corporatism operates can only be described as evil. It is profit before people and, in some cases, we are talking about the lives of millions of people that are harmed. It’s plain fucked up.

  5. Apparently the rehabilitation of Bush continues:

    Oh and the lazy Gen Y meme?

    Meanwhile Gen Y uses libraries …. a lot.

    • That is interesting about Bush. It’s easy to forget about him, as he has mostly avoided public attention since leaving the presidency. He never seemed like a guy who actually cared about politics. He only became president because he was born into a political dynasty, his grandfather and father having been in politics.

      Bush jr didn’t need politics for power, as he was also born into vast wealth. Even his grandfather got wealthy through Nazi business deals before getting into politics. That is what makes the Bush political dynasty different than that of the Clinton political dynasty, the latter only having made their wealth after their political careers were established.

      Bush sr also avoided the limelight. Maybe that is why it is easier to think back on such presidents with more favorability. They wielded most of their power behind the scenes. The Clintons, on the other hand, have always been very blatant about being power-players, attempting to monopolize the Democratic Party and use it to their own private benefit.

      About Millennials, I’ve long thought the criticisms of them was bullshit. Many of the criticisms of my generation were at least partly correct, as my generation was genuinely fucked up for various reasons such as high rates of lead toxicity.

      But Millennials are moral exemplars, by American standards. The data about Millennials is comparable to the generations of the highly conformist world war era. Millennials show no pattern of being criminals, malcontents, troublemakers, rabblerousers, etc. As I’ve noted before, they are boring prudes when it comes to such things sex and illegal drugs.

      So, the data about work doesn’t surprise me. It fits what we already know about Millennials. I might quibble with the interpretation, though. I doubt Millennials are fundamentally work martyrs and workaholics. It’s more that the economy has become precarious and job security uncommon. They are working harder and longer with fewer vacations because of fear and anxiety, especially as inequality gets worse and real unemployment remains so high. As one commenter put it — Thomas Helms:

      “I fall into this category because I’m of the mindset that at any moment I could be fired and replaced. My particular issue rests on the combination of student debt, starting in a weak economy (worked as a temp warehouse mule for a bit), and lack of advancement opportunities because the older generations aren’t retiring, because they can’t afford to. I personally feel like I have to fight for every dollar, often just to stay afloat. I’m grateful that I’m not in a overeducated/underpaid situation, but understand that that would compound the feeling of desperation.”

      I particularly don’t buy the whole narcissism argument, at least not how it is presented. That criticism has always come off as bullshit to me, more than anything else. Strauss and Howe criticized that narcissism argument. They were raised by Boomers that raised them with the language of narcissism that Millennials repeat, but that isn’t the same as acting narcissistic. Wanting to portray themselves as being important at work probably has more to do with anxiety about their position, knowing that they have to constantly sell themselves in hope of keeping their job. Human worth has become cheapened in this job market. Even the HBR article points toward something more fundamental and concretely real:

      “The first Millennials (like me) came of working age amid the wreckage of the dot-com bubble, and many younger Millennials were searching for jobs during the Great Recession. In other words, to Millennials, a weak economy is the norm. Since this generation also faces historically high levels of student debt, it makes a certain amount of sense that they wouldn’t want to jeopardize their jobs.”

      I can think in one way that narcissism or something like it could be relevant. American society and economy are forcing people into greater social isolation. I think there was data about this, in terms of generations. Younger Americans have smaller social networks and increasingly depend on immediate family. That is probably normal during times of stress and uncertainty, that people turn more toward family, and that is exacerbated by how work has come to consume so much of people’s time. They don’t have the time and energy to connect with a large number of friends, acquaintances, neighbors, etc.

      Feeling isolated does cause one to think more about oneself. But it may not be narcissism in how most people think of it. Consider the example of the Japanese. Interestingly, Japanese measure as far more narcissistic than Americans. This is not in spite of but because of their greater social conformity. Japanese feel more isolated in their personal problems, as their culture makes it unacceptable to make personal problems public. This leads individuals to obsess over these personal problems because they have no way to express them and so deal with them.

      Similarly, Millennials in feeling the pressure to conform and succeed at work can lead them to feel isolated in their own problems and afraid to let those problems show publicly. If it’s narcissism, it is being fueled by social pressure. That isn’t how most Americans understand narcissism, in solely identifying it with the egotism and selfishness of juvenile attention whores like Trump.

      As for public library usage, there surely would be many reasons for that. Young people might have more use for libraries in general, but I doubt that is the sole explanation.

      This particular young generation is more cash-strapped than prior generations were at the same age. Borrowing books from and using the services at public libraries is a great way to save money. Millennials in general make use of public services such as public transport. That might be different compared to my generation that was more cynical and dismissive of all things public. It was hard to have much faith in the public good during the Reagan Revolution. Millennials at least had Obama who spoke of the public good, even as Reagan’s neoliberalism continued to dominate.

      Besides, Millennials have been shown to be highly social in their focus such as volunteering more. Going to public libraries, like volunteering, might be an attempt at escaping their sense of isolation. They are an outwardly focused generation, maybe for the very reason that societal and economic conditions have made their social lives more difficult.

  6. Basically I think that the war on Gen X and Y are the Silent and Boomers trying to conceal their own failings by blaming the young.

    This is getting a lot worse with time, as the full extent of how badly managed the previous generations ran the US is becoming painfully obvious.

    The economy is in the dumpster, the US is following a path downwards, and the plutocrats are firmly in control. Meanwhile the government is too corrupt to fix anything

    • Most GenXers seem to side more with the younger generations than with the older generations. It’s easier for many of them to see the shitty deal the Millennials have been given and so it’s easier to sympathize. Plus, both GenXers and Millennials are inheriting the whole mess. They are going to have to work together to deal with it. They don’t have any other choice.

      The Silents are already retired and Boomers are on their way out. They’ve got theirs and they show little concern for what they are leaving behind. Many in the older generations simply are clueless. They can’t see how the world has changed and how they helped cause that change.

      Even those who are aware of and feeling bad about the problems, it’s less personally and viscerally real. Their concern is to ensure their old age is comfortable and that they get the healthcare they need. It’s harder for older people to care much about the larger world. Aging has a way of making people more selfish, at least that is true in a society like ours.

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