Corporate Capitalism As a State-Guaranteed System of
Privilege
INTRODUCTION.
Manorialism, commonly, is recognized to have been founded by robbery and
usurpation; a ruling class established itself by force, and then compelled the
peasantry to work for the profit of their lords. But no system of exploitation,
including capitalism, has ever been created by the action of a free market.
Capitalism was founded on an act of robbery as massive as feudalism. It has
been sustained to the present by continual state intervention to protect its
system of privilege, without which its survival is unimaginable.
The
current structure of capital ownership and organization of production in
our so-called "market" economy, reflects coercive state
intervention prior to and extraneous to the market. From the outset of the industrial revolution, what is
nostalgically called "laissez-faire", was in fact a system of
continuing state intervention to subsidize accumulation, guarantee privilege,
and maintain work discipline.
Most such intervention is tacitly assumed by mainstream
right-libertarians as part of a "market" system. Although a few intellectually honest ones
like Rothbard and Hess were willing to look into the role of coercion in
creating capitalism, the Chicago school and Randoids take existing property
relations and class power as a given. Their ideal "free market" is
merely the current system minus the progressive regulatory and welfare
state--i.e., nineteenth century robber baron capitalism.
But genuine markets have a value for the libertarian left, and we
shouldn't concede the term to our enemies.
In fact, capitalism--a system of power in which ownership and control
are divorced from labor--could not survive in a free market. As a mutualist
anarchist, I believe that expropriation of surplus value--i.e.,
capitalism--cannot occur without state coercion to maintain the privilege of
usurer, landlord, and capitalist. It was for this reason that the free market
mutualist Benjamin Tucker--from whom right-libertarians selectively
borrow--regarded himself as a libertarian socialist.
It is beyond my ability or purpose here to describe a world where a true
market system could have developed without such state intervention. A world in which peasants had held onto
their land and property was widely distributed, capital was freely available to
laborers through mutual banks, productive technology was freely available in
every country without patents, and every people was free to develop locally
without colonial robbery, is beyond our imagination. But it would have been a world of decentralized, small-scale
production for local use, owned and controlled by those who did the work--as different
from our world as day from night, or freedom from slavery.
THE SUBSIDY OF HISTORY.
Accordingly, the single biggest subsidy to modern corporate
capitalism is the subsidy of history, by which capital was originally
accumulated in a few hands, and labor was deprived of access to the means of
production and forced to sell itself on the buyer's terms. The current system of concentrated capital
ownership and large-scale corporate organization is the direct beneficiary of
that original structure of power and property ownership, which has perpetuated
itself over the centuries.
For capitalism as we know it to come about, it was essential first of
all for labor to be separated from property.
Marxians and other radical economists commonly refer to the process as
"primitive accumulation." "What the capitalist system
demanded was... a degraded and almost servile condition of the mass of the
people, the transformation of them into mercenaries, and of their means of
labor into capital." That meant expropriating the land, "to
which the [peasantry] has the same feudal rights as the lord
himself.” [Marx, "Chapter 27:
The Expropriation," Capital vol. 1]
To grasp
the enormity of the process, we must understand that the nobility's rights in
land under the manorial economy were entirely a feudal legal fiction deriving
from conquest. The peasants who cultivated the land of England in 1650 were
descendants of those who had occupied it since time immemorial. By any standard
of morality, it was their property in every sense of the word. The armies of William the Conqueror, by no
right other than force, had compelled these peasant proprietors to pay rent on
their own land.
J. L. and Barbara Hammond treated the sixteenth century village and open
field system as a survival of the free peasant society of Anglo-Saxon times,
with landlordism superimposed on it. The gentry saw surviving peasant rights as
a hindrance to progress and efficient farming; a revolution in their own power
was a way of breaking peasant resistance.
Hence the agricultural community
was "taken to pieces ... and reconstructed in the manner in which a
dictator reconstructs a free government." [The Village Labourer 27-28,
35-36].
When the Tudors gave expropriated monastic lands to the nobility, the
latter “drove out, en masse, the hereditary sub tenants and threw their
holdings into one." [Marx,
"The Expropriation"]. This
stolen land, about a fifth of the arable land of England, was the first
large-scale expropriation of the peasantry.
Expropriating
Another major theft of peasant land was the "reform" of land
law by the seventeenth century Restoration Parliament. The aristocracy
abolished feudal tenures and converted their own estate in the land, until then
"only a feudal title," into "rights of modern private
property." In the process,
they abolished the tenure rights of copyholders. Copyholders were de jure
tenants under feudal law, but once they paid a negligible quit-rent fixed by
custom, the land was theirs to sell or bequeath. In substance copyhold tenure
was a manorial equivalent of freehold; but since it derived from custom it was
enforceable only in the manor courts. Under the "reform," tenants in
copyhold became tenants at-will, who could be evicted or charged whatever rent their
lord saw fit [Marx, "The Expropriation..."].
Another form of expropriation, which began in late medieval times and
increased drastically in the eighteenth century, was the enclosure of
commons--in which, again, the peasants communally had as absolute a right of
property as any defended by today's "property rights" advocates. Not counting enclosures before 1700, the
Hammonds estimated total enclosures in the eighteenth and nineteenth centuries
at a sixth or a fifth of the arable land in England [Village Labourer 42]. E. J. Hobsbawm and George Rude estimated
enclosures between 1750 and 1850 alone as transforming "something like
one quarter of the cultivated acreage from open field, common land, meadow or
waste into private fields...." [Captain Swing 27].
The ruling classes saw the peasants' right in commons as a source of
economic independence from capitalist and landlord, and thus a threat to be
destroyed. Enclosure eliminated "a
dangerous centre of indiscipline" and compelled workers to sell their
labor on the masters' terms. Arthur
Young, a Lincolnshire gentleman, described the commons as "a
breeding-ground for 'barbarians,' 'nursing up a mischievous race of people'." "[E]very one but an idiot
knows," he wrote, "that the lower classes must be kept poor, or they
will never be industrious." The
Commercial and Agricultural Magazine warned in 1800 that leaving the
laborer "possessed of more land than his family can cultivate in the
evenings" meant that "the farmer can no longer depend on him
for constant work." [Thompson, The Making of the English Working
Class, 219-220, 358]. Sir Richard Price
commented on the conversion of self-sufficient proprietors into "a body
of men who earn their subsistence by working for others." There would, "perhaps, be more
labour, because there will be more compulsion to it." [Marx, "The
Expropriation...."].
Marx cited parliamentary "acts of enclosure" as evidence that
the commons, far from being the "private property of the great
landlords who have taken the place of the feudal lords," actually
required "a parliamentary coup d’état... for its transformation into
private property." ["The Expropriation...."]. The process of
primitive accumulation, in all its brutality, was summed up by the same
author:
these new freedmen [i.e. former serfs] became
sellers of themselves only after they had been robbed of all their own means of
production, and of all the guarantees of existence afforded by the old feudal
arrangements. And the history of this,
their expropriation, is written in the annals of mankind in letters of blood
and fire ["Chapter 26: The Secret of Primitive Accumulation,"
Capital Vol. 1].
Even then, the working class was not sufficiently powerless. The state
had to regulate the movement of labor, serve as a labor exchange on behalf of
capitalists, and maintain order. The
system of parish regulation of the movement of people, under the poor laws and
vagrancy laws, resembled the internal passport system of South Africa, or the
reconstruction era Black Codes. It
"had the same effect on the English agricultural labourer,"
Marx wrote, "as the edict of the Tartar Boris Godunov on the Russian
peasantry." ["The
Expropriation..."] Adam Smith
ventured that there was "scarce a poor man in England of forty years of
age... who has not in some part of his life felt himself most cruelly oppressed
by this ill-contrived law of settlements." [Wealth of Nations
61].
The state
maintained work discipline by keeping laborers from voting with their
feet. It was hard to persuade parish
authorities to grant a man a certificate entitling him to move to another
parish to seek work. Workers were forced to stay put and bargain for work in a
buyer's market [Smith 60-61].
At first glance this would seem to be inconvenient for parishes with a
labor shortage [Smith 60]. Factories
were built at sources of water power, generally removed from centers of
population. Thousands of workers were
needed to be imported from far away.
But the state saved the day by setting itself up as a middleman in
providing labor-poor parishes with cheap surplus labor from elsewhere,
depriving workers of the ability to bargain for better terms. A considerable trade arose in child laborers
who were in no position to bargain in any case [the Hammonds, The Town Labourer
1:146].
Relief "was seldom bestowed without the parish claiming the
exclusive right of disposing, at their pleasure, of all the children of the
person receiving relief," in the words of the Committee on Parish
Apprentices, 1815 [the Hammonds, Town Labourer 1:44, 147]. Even when Poor Law commissioners encouraged
migration to labor-poor parishes, they discouraged adult men and "Preference
was given to 'widows with large families of children or handicraftsmen... with
large families.'" In addition, the availability of cheap labor from
the poor-law commissioners was deliberately used to drive down wages; farmers
would discharge their own day-laborers and instead apply to the overseer for
help [Thompson 223-224].
Although the Combination Laws theoretically applied to masters as well
as workmen, in practice they were not enforced against the latter [Smith 61;
the Hammonds, Town Labourer 1:74].
"A Journeyman Cotton Spinner"--a pamphleteer quoted by E. P.
Thompson [pp. 199-202]--described "an abominable combination existing
amongst the masters," in which workers who had left their masters
because of disagreement over wages were effectively black- listed. The Combination Laws required suspects to
answer interrogations on oath, empowered magistrates to give summary judgment,
and allowed summary forfeiture of funds accumulated to aid the families of
strikers [Town Labourer 123-127]. And the laws setting maximum rates of pay
amounted to a state enforced system of combination for the masters. As Adam Smith put it, “[w]henever the
legislature attempts to regulate the differences between the masters and their
workmen, its counselors are always the masters." [p. 61].
The
working class lifestyle under the factory system, with its new forms of social
control, was a radical break with the past.
It involved drastic loss of control over their own work. The seventeenth
century work calendar was still heavily influenced by medieval custom. Although there were long days in spurts
between planting and harvest, intermittent periods of light work and the
proliferation of saints days combined to reduce average work-time well below
our own. And the pace of work was
generally determined by the sun or the biological rhythms of the laborer, who
got up after a decent night's sleep, and sat down to rest when he felt like
it. The cottager who had access to
common land, even when he wanted extra income from wage labor, could take work
on a casual basis and then return to working for himself. This was an unacceptable degree of
independence from a capitalist standpoint.
In the modern world most people have to adapt
themselves to some kind of discipline, and to observe other' people's
timetables, ...or work under other people's orders, but we have to remember
that the population that was flung into the brutal rhythm of the factory had
earned its living in relative freedom, and that the discipline of the early
factory was particularly savage.... No
economist of the day, in estimating the gains or losses of factory employment, ever
allowed for the strain and violence that a man suffered in his feelings when he
passed from a life in which he could smoke or eat, or dig or sleep as he
pleased, to one in which somebody turned the key on him, and for fourteen hours
he had not even the right to whistle.
It was like entering the airless and laughterless life of a prison [the Hammonds,
Town Labourer 1:33-34].
The factory system could not
have been imposed on workers without first depriving them of alternatives, and
forcibly denying access to any source of economic independence. No unbroken human being, with a sense of
freedom or dignity, would have submitted to factory discipline. Stephen Marglin compared the nineteenth
century textile factory, staffed by pauper children bought at the workhouse
slave market, to Roman brick and pottery factories which were manned by
slaves. In Rome, factory production was
exceptional in manufactures dominated by freemen. The factory system, throughout history, has been possible only
with a work force deprived of any viable alternative.
The surviving facts... strongly suggest that whether
work was organized along factory lines was in Roman times determined, not by
technological considerations, but by the relative power of the two producing classes. Freedmen and citizens had sufficient power to
maintain a guild organization. Slaves
had no power--and ended up in factories ["What Do Bosses
Do?"].
The problem with the old "putting out" system, in which
cottage workers produced textiles on a contractual basis, was that it only
eliminated worker control of the product.
The factory system, by eliminating worker control of the production
process, had the advantage of discipline
and supervision, with workers organized under an overseer.
the origin and success of the factory lay not in
technological superiority, but in the substitution of the capitalist's for the
worker's control of the work process and the quantity of output, in the change
in the workman's choice from one of how much to work and produce, based on his
preferences for leisure and goods, to one of whether or not to work at all,
which of course is hardly much of a choice.
Marglin took Adam Smith's classic example of the division of labor in
pin-making, and stood it on its head.
The increased efficiency resulted, not from the division of labor as
such, but from dividing and sequencing the process into separate tasks in order
to reduce set-up time. This could have
been accomplished by a single cottage workman separating the various tasks and
then performing them sequentially (i.e., drawing out the wire for an entire run
of production, then straightening it, then cutting it, etc.).
without specialization, the capitalist had no
essential role to play in the production process. If each producer could
himself integrate the component tasks of pin manufacture into a
marketable product, he would soon discover that he had no need to deal with the
market for pins through the intermediation of the putter-outer. He could sell directly and appropriate to
himself the profit that the capitalist derived from mediating between the
producer and the market.
This principle is at the center of the history of industrial technology
for the last two hundred years. Even
given the necessity of factories for some forms of large-scale,
capital-intensive manufacturing, there is usually a choice between alternate
productive technologies within the factory.
Industry has consistently chosen technologies which de-skill workers and
shift decision-making upward into the managerial hierarchy. As long ago as
1835, Dr. Andrew Ure (the ideological grandfather of Taylorism and Fordism),
argued that the more skilled the workman, "the more self-willed and...
the less fit a component of a mechanical system" he became. The
solution was to eliminate processes which required "peculiar dexterity
and steadiness of hand... from the cunning workman" and replace them
by a "mechanism, so self-regulating, that a child may superintend it."
[Philosophy of Manufactures, in Thompson 360].
And the principle has been followed throughout the twentieth century.
William Lazonick, David Montgomery, David Noble, and Katherine Stone
have produced an excellent body of work on this theme. Even though corporate experiments in worker
self-management increase morale and productivity, and reduce injuries and
absenteeism, beyond the hopes of management, they are usually abandoned out of
fear of loss of control.
Christopher
Lasch, in his foreword to Noble's America by Design, characterized the process
of deskilling in this way:
The capitalist, having
expropriated the worker's property, gradually expropriated his technical
knowledge as well, asserting his own mastery over production....
The expropriation of the
worker's technical knowledge had as a
logical consequence the growth of modern management, in which technical
knowledge came to be concentrated. As
the scientific management movement split up production into its component
procedures, reducing the worker to an appendage of the machine, a great
expansion of technical and supervisory personnel took place in order to oversee
the productive process as a whole [pp. xi-xii].
The expropriation of the peasantry and imposition of the factory labor
system was not accomplished without resistance; the workers knew exactly what
was being done to them and what they had lost.
During the 1790s, when rhetoric from the Jacobins and Tom Paine were
widespread among the radicalized working class, the rulers of "the cradle
of liberty" lived in terror that the country would be swept by
revolution. The system of police state
controls over the population resembled an alien occupation regime. The Hammonds referred to correspondence
between north-country magistrates and the Home Office, in which the law was
frankly treated "as an instrument not of justice but of repression,"
and the working classes "appear[ed]... conspicuously as a helot
population." [Town Labourer 72]
... in the light of the Home Office papers, ...none of
the personal rights attaching to Englishmen possessed any reality for the
working classes. The magistrates and
their clerks recognized no limit to their powers over the freedom and the
movements of working men. The Vagrancy
Laws seemed to supercede the entire charter of an Englishman's liberties. They
were used to put into prison any man or woman of the working class who seemed
to the magistrate an inconvenient or disturbing character. They offered the easiest and most
expeditious way of proceeding against any one who tried to collect money for
the families of locked-out workmen, or to disseminate literature that the
magistrates thought undesirable [Ibid. 80].
Peel's "bobbies"--professional law enforcement--replaced the posse
comitatus system because the latter was inadequate to control a population
of increasingly disaffected workmen. In
the time of the Luddite and other disturbances, crown officials warned that
"to apply the Watch and Ward Act would be to put arms into the hands of
the most powerfully disaffected."
At the outset of the wars with France, Pitt ended the practice of
quartering the army in alehouses, mixed with the general population. Instead, the manufacturing districts were
covered with barracks, as "purely a matter of police." The manufacturing areas "came to
resemble a country under military occupation." [Ibid. 91-92].
Pitt's police state was supplemented by quasi-private vigilantism, in
the time-honored tradition of blackshirts and death squads ever since. For example the "Association for the Protection of Property against
Republicans and Levellers"--an anti-Jacobin association of gentry and
mill-owners-- conducted house-to-house searches and organized Guy Fawkes-style
effigy burnings against Paine; "Church and King" mobs terrorised
suspected radicals [Chapter Five, "Planting the Liberty Tree," in
Thompson].
Thompson characterized this system of control as "political and
social apartheid," and argued that "the revolution which did
not happen in England was fully as devastating" as the one that did
happen in France [pp. 197-198].
Finally, the state aided the growth of manufactures through
mercantilism. Modern exponents of the
"free market" generally treat mercantilism as a "misguided"
attempt to promote some unified national interest, adopted out of sincere
ignorance of economic principles. In
fact, the architects of mercantilism knew exactly what they were doing. Mercantilism was extremely efficient for its
real purpose: making wealthy
manufacturing interests rich at the expense of everyone else. Adam Smith consistently attacked
mercantilism, not as a product of economic error, but as a quite intelligent
attempt by powerful interests to enrich themselves through the coercive power
of the state.
British manufacturing was created by state intervention to shut out
foreign goods, give British shipping a monopoly of foreign commerce, and stamp
out foreign competition by force. As an example of the latter, British
authorities in India destroyed the Bengalese textile industry, makers of the
highest quality fabric in the world.
Although they had not adopted steam-driven methods of production, there
is a real possibility that they would have done so, had India remained
politically and economically independent.
The once prosperous territory of Bengal is today occupied by Bangladesh
and the Calcutta area [Chomsky, World Orders Old and New].
The American, German and Japanese industrial systems were created by the
same mercantilist policies, with massive tariffs on industrial goods.
"Free trade" was adopted by safely established industrial
powers, who used "laissez-faire" as an ideological weapon to prevent
potential rivals from following the same path of industrialization. Capitalism has never been established by
means of the free market, or even by the primary action of the
bourgeoisie. It has always been
established by a revolution from above, imposed by a pre-capitalist ruling
class. In England, it was the landed
aristocracy; in France, Napoleon III's bureaucracy; in Germany, the Junkers; in
Japan, the Meiji. In America, the
closest approach to a "natural" bourgeois evolution,
industrialization was carried out by a mercantilist aristocracy of Federalist
shipping magnates and landlords [Harrington, Twilight of Capitalism].
Romantic medievalists like Chesterton and Belloc described the process
in the high middle ages by which serfdom had gradually withered away, and the
peasants had transformed themselves into de facto freeholders who paid a
nominal quit-rent. The feudal class
system was disintegrating and being re- placed by a much more libertarian and
less exploitative one. Immanuel Wallerstein argued that the likely outcome
would have been "a system of relatively equal small-scale producers,
further flattening out the aristocracies and decentralizing the political
structures." By 1650 the trend
had been reversed, and there was "a reasonably high level of continuity
between the families that had been high strata" in 1450 and 1650. Capitalism, far from being "the
overthrow of a backward aristocracy by a progressive bourgeoisie," “was
brought into existence by a landed aristocracy which transformed itself into a
bourgeoisie because the old system was disintegrating." [Historical
Capitalism 41-42, 105-106]. This
is echoed in part by Arno Mayer [The Persistence of the Old Regime], who argued
for continuity between the landed aristocracy and the capitalist ruling class.
The process by which the high medieval civilization of peasant proprietors,
craft guilds and free cities was overthrown, was vividly described by Kropotkin
[Mutual Aid 225]. Before the invention
of gunpowder, the free cities repelled royal armies more often than not, and
won their independence from feudal dues.
And these cities often made common cause with peasants in their
struggles to control the land. The
absolutist state and the capitalist revolution it imposed became possible only
when artillery could reduce fortified cities with a high degree of efficiency,
and the king could make war on his own people.
And in the aftermath of this conquest, the Europe of William Morris was
left devastated, depopulated, and miserable.
Peter Tosh had a song called "Four Hundred Years." Although the white working class has suffered
nothing like the brutality of black slavery, there has nevertheless been a
"four hundred years" of oppression for all of us under the system of
state capitalism established in the seventeenth century. Ever since the birth of the first states six
thousand years ago, political coercion has allowed one ruling class or another
to live off other people's labor. But
since the seventeenth century the system of power has become increasingly
conscious, unified, and global in scale.
The current system of transnational state capitalism, without rival since the collapse of the
soviet bureaucratic class system, is a direct outgrowth of the seizure of power
"four hundred years" ago.
Orwell had it backwards. The
past is a "boot smashing a human face." Whether the future is more of the same depends on what we do now.
IDEOLOGICAL HEGEMONY.
Ideological hegemony is the process by which the exploited come to view
the world through a conceptual framework provided to them by their exploiters.
It acts first of all to conceal class conflict and exploitation behind a
smokescreen of "national unity" or "general welfare." Those
who point to the role of the state as guarantor of class privilege are
denounced, in theatrical tones of moral outrage, for "class
warfare." If anyone is so
unpardonably "extremist" as to describe the massive foundation of
state intervention and subsidy upon which corporate capitalism rests, he is
sure to be rebuked for "Marxist class war rhetoric" (Bob Novak), or
"rob- ber baron rhetoric" (Treasury Secretary O'Neill).
The ideological framework of "national unity" is taken to the
point that "this country,” “society," or "our system of
government" is set up as an object of gratitude for "the freedoms we
enjoy." Only the most unpatriotic
notice that our liberties, far from being granted to us by a generous and
benevolent government, were won by past resistance against the state. Charters and bills of rights were not grants
from the state, but were forced on the
state from below.
If our liberties belong to us by right of birth, as a moral fact of
nature, it follows that we owe the state no debt of gratitude for not violating
them, any more than we owe our thanks to another individual for refraining from
robbing or killing us. Simple logic implies
that, rather than being grateful to "the freest country on earth," we
should raise hell every time it infringes on our liberty. After all, that’s how we got our liberty in
the first place. When another
individual puts his hand in our pocket to enrich himself at our expense, our
natural instinct is to resist. But
thanks to patriotism, the ruling class is able to transform their hand in our
pocket into "society" or “our country."
The religion of national unity is most pathological in regard to
"defense" and foreign policy.
The manufacture of foreign crisis and war hysteria has been used since
the beginning of history to suppress threats to class rule. The crooked politicians may work for the
"special interests" domestically, but when those same politicians
engineer a war it is a matter of loyalty to "our country."
The Chairman of the JCS, in discussing the "defense" posture,
will refer with a straight face to "national security threats" faced
by the U. S., and describe the armed forces of some official enemy like China
as far beyond "legitimate defensive requirements." The quickest way
to put oneself beyond the pale is to point out that all these
"threats" involve what some country on the other side of the world is
doing within a hundred miles of its own border. Another offense against fatherland worship is to judge the
actions of the United States, in its global operations to keep the Third World
safe for ITT and United Fruit Company, by the same standard of "legitimate
defensive requirements" applied to China.
In the official ideology, America's wars by definition are always fought
"for our liberties," to "defend our country," or in the
smarmy world of Maudlin Albright, a selfless desire to promote "peace and
freedom" in the world. To suggest
that the real defenders of our liberties took up arms against the government,
or that the national security state is a greater threat to our liberties than
any foreign enemy we have ever faced, is unforgivable. Above all, good Americans don't notice all
those military advisers teaching death squads how to hack off the faces of
union organizers and leave them in ditches, or to properly use pliers on a
dissident's testicles. War crimes are
only committed by defeated powers. (But as the Nazis learned in 1945,
unemployed war criminals can usually find work with the new hegemonic power.)
After a century and a half of patriotic indoctrination by the statist
education system, Americans have thoroughly internalized the "little red
schoolhouse" version of American history.
This authoritarian piety is so diametrically opposed to the beliefs of
those who took up arms in the Revolution that the citizenry has largely
forgotten what it means to be American.
In fact, the authentic principles of Americanism have been stood on
their head. Two hundred years ago,
standing armies were feared as a threat to liberty and a breeding ground for
authoritarian personalities; conscription was associated with the tyranny of
Cromwell; wage labor was thought to be inconsistent with the independent spirit
of a free citizen. Today, two hundred
years later, Americans have been so Prussianized by sixty years of a garrison
state and "wars" against one internal enemy or another, that they are
conditioned to genuflect at the sight of a uniform. Draft dodgers are equivalent to child molesters. Most people work for some centralized
corporate or state bureaucracy, where as a matter of course they are expected
to obey orders from superiors, work under constant surveillance, and even piss
in a cup on command.
During wartime, it becomes unpatriotic to criticize or question the
government and dissent is identified with disloyalty. Absolute faith and obedience to authority is a litmus test of
"Americanism." Foreign war is
a very useful tool for manipulating the popular mind and keeping the domestic
population under control. War is the
easiest way to shift vast, unaccountable new powers to the State. People are most uncritically obedient at the
very time they need to be most vigilant.
The greatest irony is that, in a country founded by revolution,
"Americanism" is defined as respecting authority and resisting
"subversion." The Revolution
was a revolution indeed, in which the domestic political institutions of the
colonies were forcibly overthrown. It
was, in many times and places, a civil war between classes. But as Voltairine de Cleyre wrote a century
ago in "Anarchism and American Traditions," the version in the
history books is a patriotic conflict between our "Founding Fathers"
and a foreign enemy. Those who can
still quote Jefferson on the right of revolution are relegated to the
"extremist" fringe, to be rounded up in the next war hysteria or red
scare.
This ideological construct of a unified "national interest"
includes the fiction of a "neutral" set of laws, which conceals the
exploitative nature of the system of power we live under. Under corporate
capitalism the relationships of exploitation are mediated by the political
system to an extent unknown under previous class systems. Under chattel slavery and feudalism,
exploitation was concrete and personalized in the producer's relationship with
his master. The slave and peasant knew exactly who was screwing them. The modern worker, on the other hand, feels
a painful pounding sensation, but has only a vague idea where it is coming
from.
Besides its function of masking the ruling class interests behind a
facade of "general welfare," ideological hegemony also manufactures
divisions between the ruled. Through
campaigns against "welfare cheats" and "deadbeats," and
demands to "get tough on crime," the ruling class is able to channel
the hostility of the middle and working classes against the underclass.
Especially nauseating is the phenomenon of "billionaire
populism." Calls for bankruptcy
and welfare "reform," and for wars on crime, are dressed up in
pseudo-populist rhetoric, identifying the underclass as the chief parasites who
feed off the producers' labor. In their
“aw, shucks" symbolic universe, you'd think America was a Readers
Digest/Norman Rockwell world with nothing but hard-working small businessmen
and family farmers, on the one hand, and welfare cheats, deadbeats, union
bosses and bureaucrats on the other.
From listening to them, you'd never suspect that multi-billionaires or
global corporations even exist, let alone that they might stand to benefit from
such “populism.”
In the real world, corporations are the biggest clients of the welfare
state, the biggest bankruptcies are corporate chapter eleven filings, and the
worst crimes are committed in corporate suites rather than on the streets. The real robbery of the average producer
consists of profit and usury, extorted only with the help of the state--the
real "big government" on our backs.
But as long as the working class and the underclass are busy fighting
each other, they won't notice who is really robbing them.
As Stephen Biko said, "The oppressor’s most powerful weapon is
the mind of the oppressed."
THE MONEY MONOPOLY.
In every system of class exploitation, a ruling class controls access to
the means of production in order to extract tribute from labor. Under capitalism, access to capital is
restricted by the money monopoly, by which the state or banking system is given
a monopoly on the medium of exchange, and alternative media of exchange are
prohibited. The money monopoly also
includes entry barriers against cooperative banks and prohibitions against
private issuance of banknotes, by which access to finance capital is restricted
and interest rates are kept artificially high.
Just in passing, we might mention the monumental hypocrisy of the
regulation of credit unions in the United States, which require that their
membership must share some common bond, like working for the same
employer. Imagine the outrage if IGA
and Safeway lobbied for a national law to prohibit grocery co-ops unless the
members all worked for the same company!
One of the most notable supporters of these laws is Phil Gramm,
that renowned "free
marketeer" and economics professor--and foremost among the banking
industry's whores in Congress.
Individualist and mutualist anarchists like William Greene [Mutual
Banking], Benjamin Tucker [Instead of a Book), and J. B. Robertson [The
Economics of Liberty] viewed the money monopoly as central to the capitalist
system of privilege. In a genuinely
free banking market, any group of individuals could form a mutual bank and
issue monetized credit in the form of bank notes against any form of collateral
they chose, with acceptance of these notes as tender being a condition of
membership. Greene speculated that a
mutual bank might choose to honor not only marketable property as collateral,
but the “pledging ... [of] future production." [p. 73]. The result would be a reduction in interest
rates, through competition, to the cost of administrative overhead--less than
one percent.
Abundant cheap credit would drastically alter the balance of power
between capital and labor, and returns on labor would replace returns on
capital as the dominant form of economic activity. According to Robinson,
Upon the monopoly rate of
interest for money that is... forced upon us by law, is based the whole system
of interest upon capital, that permeates all modern business.
With free banking, interest
upon bonds of all kinds and dividends upon stock would fall to the minimum bank
interest charge. The so-called rent of
houses... would fall to the cost of maintenance and replacement.
All that part of the product
which is now taken by interest would belong to the producer. Capital, however... defined, would
practically cease to exist as an income producing fund, for the simple reason
that if money, wherewith to buy capital, could be obtained for one-half of one
per cent, capital itself could command no higher price [pp. 80-81].
And the result would be a drastically improved bargaining position for
tenants and workers against the owners of land and capital. According to Gary Elkin, Tucker's free
market anarchism carried certain inherent libertarian socialist implications:
It's
important to note that because of Tucker's proposal to increase the bargaining
power of workers through access to mutual credit, his so-called Individualist
anarchism is not only compatible with workers' control but would in fact
promote it. For if access to mutual credit were to increase the bargaining
power of workers to the extent that Tucker claimed it would, they would then be
able to (1) demand and get workplace democracy, and (2) pool their credit buy
and own companies collectively.
The banking monopoly was not only the “lynchpin of capitalism," but
also the seed from which the landlord's monopoly grew. Without a money monopoly, the price of land
would be much lower, and promote "the process of reducing rents toward
zero." [Gary Elkin, "Benjamin Tucker--Anarchist or Capitalist"].
Given the worker's improved bargaining position, "capitalists'
ability to extract surplus value from the labor of employees would be eliminated
or at least greatly reduced." [Gary
Elkin, Mutual Banking]. As
compensation for labor approached value-added, returns on capital were driven
down by market competition, and the value of corporate stock consequently
plummeted, the worker would become a de facto co-owner of his workplace, even
if the company remained nominally stockholder-owned.
Near-zero interest rates would increase the independence of labor in all
sorts of interesting ways. For one thing, anyone with a twenty-year mortgage at
8% now could, in the absence of usury, pay it off in ten years. Most people in their 30S would have their
houses paid off. Between this and the
nonexistence of high-interest credit card debt, two of the greatest sources of
anxiety to keep one's job at any cost would disappear. In addition, many workers would have large
savings ("go to hell money").
Significant numbers would retire in their forties or fifties, cut back
to part-time, or start businesses; with jobs competing for workers, the effect
on bargaining power would be revolutionary.
Our hypothetical world of free credit in many ways resembles the
situation in colonial societies. E. G.
Wakefield, in View of the Art of Colonization, wrote of the unacceptably weak
position of the employing class when self-employment with one's own property
was readily available. In colonies,
there was a tight labor market and poor labor discipline because of the
abundance of cheap land. "Not
only does the degree of exploitation of the wage-labourer remain indecently
low. The wage-labourer loses into the
bargain, along with the relation of dependence, also the sentiment of
dependence on the abstemious capitalist."
Where land is cheap and all men are free, where every
one who so pleases can obtain a piece of land for himself, not only is labour
very dear, as respects the labourers' share of the product, but the difficulty
is to obtain combined labour at any price.
This environment also prevented the concentration of wealth, as
Wakefield commented: "Few, even
of those whose lives are unusually long, can accumulate great masses of wealth." As a result, colonial elites petitioned the
mother country for imported labor and for restrictions on land for
settlement. According to Wakefield's
disciple Herman Merivale, there was an "urgent desire for cheaper and
more subservient labourers--for a class to whom the capitalist might dictate
terms, instead of being dictated to by them." [Maurice Dobb, Studies
in the Development of Capitalism; Marx, Chapter 33: "The New Theory of
Colonialism," in Capital Vol. 1].
In
addition to all this, central banking systems perform additional service to the
interests of capital. First of all, the
chief requirement of finance capitalists is to avoid inflation, in order to
allow predictable returns on investment. This is ostensibly the primary purpose
of the Federal Reserve and other central banks. But at least as important is the role of the central banks in
promoting what they consider a "natural" level of unemployment--until
the 1990s around six per cent. The reason is that when unemployment goes much
below this figure, labor becomes increasingly uppity and presses for better pay
and working conditions and more autonomy.
Wor- kers are willing to take a lot less crap off the boss when they
know they can find a job at least as good the next day. On the other hand, nothing is so effective
in "getting your mind right" as the knowledge that people are lined
up to take your job.
The Clinton "prosperity" is a seeming exception to this
principle. As unemployment threatened
to drop below the four per cent mark, some members of the Federal Reserve
agitated to raise interest rates and take off the "inflationary"
pressure by throwing a few million workers on the street. But as Greenspan [Testimony of Chairman Alan
Greenspan] testified before the Senate Banking Committee, the situation was
unique. Given the degree of job
insecurity in the high-tech economy, there was “[a]typical restraint on
compensation increases." In 1996, even with a tight labor market, 46% of
workers at large firms were fearful of layoffs--compared to only 25% in 1991,
when unemployment was much higher.
The reluctance of workers to
leave their jobs to seek other employment as the labor market tightened has
provided further evidence of such concern, as has the tendency toward longer
labor union contracts. For many
decades, contracts rarely exceeded three years. Today, one can point to five- and six-year contracts--contracts
that are commonly characterized by an emphasis on job security and that involve
only modest wage increases. The low
level of work stoppages of recent years also attests to concern about job
security.
Thus the willingness of workers in recent years to trade off smaller
increases in wages for greater job security seems to be reasonably well
documented. For the bosses, the high-tech economy is the next best thing to
high unemployment for keeping our minds right. "Fighting
inflation" trans- lates
operationally to increasing job insecurity and making workers less likely to
strike or to look for new jobs.
PATENTS.
The patent privilege has been used on a massive scale to promote
concentration of capital, erect entry barriers, and maintain a mono- poly of
advanced technology in the hands of western corporations. It is hard even to imagine how much more
decentralized the economy would be with- out it. Right-libertarian Murray
Rothbard considered patents a fundamental violation of free market principles.
The man who has not bought a machine and who arrives
at the same invention independently, will, on the free market, be perfectly
able to use and sell his invention. Patents prevent a man from using his
invention even though all the property is his and he has not stolen the inven-
tion, either explicitly or implicitly, from the first inventor. Pa- tents, therefore, are grants of
exclusive monopoly privilege by the State and are invasions of property rights
on the market. [Man, Economy, and State vol. 2 p. 655]
Patents
make an astronomical price difference.
Until the early 1970s, for example, Italy did not recognize drug
patents. As a result, Roche Products charged the British national health a
price over 40 times greater for patented components of Librium and Valium than
charged by competitors in Italy [Raghavan, Recolonization p. 124].
Patents suppress innovation as much as they encourage it. Chakravarthi
Raghavan pointed out that research scientists who actually do the work of
inventing are required to sign over patent rights as a condition of employ-
ment, while patents and industrial security programs prevent sharing of
information, and suppress competition in further improvement of patented
inventions. [op. cit. p. 118] Rothbard
likewise argued that patents elim- inate "the competitive spur for
further research" because incremental inno- vation based on others'
patents is prohibited, and because the holder can "rest on his laurels
for the entire period of the patent," with no fear of a competitor
improving his invention. And they hamper
technical progress because "mechanical inventions are discoveries of
natural law rather than individual creations, and hence similar independent
inventions occur all the time. The simultaneity of inventions is a familiar
historical fact." [op. cit. pp. 655, 658-659].
The intellectual property regime under the Uruguay Round of GATT goes
far beyond traditional patent law in suppressing innovation. One benefit of traditional patent law, at
least, was that it required an invention under patent to be published. Under
U.S. pressure, however, "trade secrets" were included in GATT. As a result, governments will be required to
help sup- press information not formally protected by patents [Raghavan, op.
cit. p. 122].
And patents are not necessary as an incentive to innovate. According to
Rothbard, invention is rewarded by the competitive advantage accruing to the
first developer of an idea. This is
borne out by F. M. Scherer's testimony before the FTC in 1995 [Hearings on
Global and Innovation-Based Competition].
Scherer spoke of a survey of 91 companies in which only seven “accorded
high significance to patent protection as a factor in their R & D
investments." Most of them
described patents as "the least important of considerations." Most companies considered their chief
motivation in R & D decisions to be "the necessity of remaining
competitive, the desire for efficient production, and the desire to expand and
diversify their sales." In
another study, Scherer found no negative effect on R & D spending as a
result of compulsory licensing of patents.
A survey of U.S. firms found that 86% of inventions would have been
developed without patents. In the case
of automobiles, office equipment, rubber products, and textiles, the figure was
100%.
The one exception was drugs, in which 60% supposedly would not have been
invented. I suspect disingenuousness on
the part of the respondants, however.
For one thing, drug companies get an unusually high portion of their R
& D funding from the government, and many of their most lucrative products
were developed entirely at government expense.
And Scherer himself cited evidence to the contrary. The reputation advantage for being the first
into a market is considerable. For
example in the late 1970s, the structure of the industry and pricing behavior
was found to be very similar between drugs with and those without patents.
Being the first mover with a non-patented drug allowed a company to maintain a
30% market share and to charge premium prices.
The injustice of patent monopolies is exacerbated by government funding
of research and innovation, with private industry reaping monopoly profits from
technology it didn't spend a penny to develop.
In 1999, extending the research and experimentation tax credit was,
along with extensions of a number of other corporate tax preferences,
considered the most urgent business of the Congressional leadership. Hastert, when asked if any elements of the
tax bill were essential, said: "I think the [tax preference] extenders
are something we're going to have to work on." Ways and Means Chair Bill Archer added,
"before the year is out... we
will do the extenders in a very stripped down bill that doesn't include
anything else." A five-year
extension of the research and experimentation credit (retroactive to 1 July
1999) was expected to cost $13.1 billion.
(That credit makes the effective tax rate on R & D spending less
than zero.) [Citizens for Tax Justice, GOP Leaders Distill Essence of Tax
Plan].
The Government Patent Policy Act of 1980, with 1984 and 1986 amendments,
allowed private industry to keep patents on products developed with government
R & D money--and then to charge ten, twenty, or forty times the cost of
production. For example, AZT was developed with government money and in the
public domain since 1964. The patent
was given away to Burroughs Wellcome Corp.
[Chris Lewis, "Public Assets, Private Profits"].
As if the
deck were not sufficiently stacked already, the pharmaceutical companies in 1999 actually lobbied Congress to extend
certain patents by two years by a special act of private law [Benjamin Grove,
"Gibbons backs drug-monopoly bill"].
Patents have been used throughout the twentieth century "to
circumvent antitrutst laws," according to David Noble. They were "bought up in large
numbers to suppress competition," which also resulted in "the
suppression of invention itself." [America by Design, pp.
84-109]. Edwin Prindle, a cor- porate
patent lawyer, wrote in 1906:
Patents are the best and most
effective means of controlling competition.
They occasionally give absolute command of the market, enabling their
owner to name the price without regard to the cost of production.... Patents are the only legal form of absolute
monopoly [America by Design p. 90].
Patents played a key role in the formation of the electrical appliance,
communications, and chemical industries.
G. E. and Westinghouse expanded to dominate the electrical manufacturing
market at the turn of the century largely through patent control. In 1906 they curtailed the patent litiga-
tion between them by pooling their patents.
AT&T also expanded "primarily through strategies of patent
monopoly." The American
chemical industry was marginal until 1917, when Attorney-General Mitchell
Palmer seized German patents and distributed them among the major American
chemical companies. DuPont got licenses
on 300 of the 735 patents [America by Design pp. 10, 16].
Patents are also being used on a global scale to lock the transnational
corporations into a permanent monopoly of productive technology. The single most totalitarian provision of
the Uruguay Round is probably its "intellectual property" provisions. GATT has extended both the scope and
duration of patents far beyond anything ever envisioned in original patent
law. In England, patents were
originally for fourteen years--the time needed to train two journeymen in
succession (and by analogy, the time necessary to go into production and reap
the initial profit for originality). By
that standard, given the shorter training times required today, and the shorter
life- span of technology, the period of monopoly should be shorter. Instead, the U.S. seeks to extend them to
fifty years [Raghavan, Recolonization pp. 119-120]. According to Martin Khor Kok Peng, the U.S. is by far the most
absolutist of the participants in the Uruguay Round. Unlike the European Community, it would require patent protection
for plant and animal varieties, and for biological processes for animal and
plant protection [The Uruguay Round and Third World Sovereignty p. 28].
The provisions for biotech are really a way of increasing trade
barriers, and forcing consumers to subsidize the TNCs engaged in
agribusiness. The U.S. seeks to apply
patents to genetically-modified organisms, effectively pirating the work of
generations of Third World breeders by isolating beneficial genes in
traditional varieties and incorporating them in new GMOs--and maybe even
enforcing patent rights against the traditional variety which was the source of
the genetic material. For example
Monsanto has attempted to use the presence of their DNA in a crop as prima
facie evidence of pirating--when it is much more likely that their variety
cross-pollinated and contaminated the farmer's crop against his will. The Pinkerton agency, by the way, plays a
leading role in investigating such charges--that's right, the same folks who
have been breaking strikes and kicking organizers down stairs for the past
century. Even jack-booted thugs have to diversify to make it in the global
economy.
The developed world has pushed particularly hard to protect industries
relying on or producing "generic technologies," and to restrict
diffusion of "dual use" technologies. The U. S.-Japanese trade agreement on semi-conductors, for
example, is a "cartel-like, 'managed trade' agreement." So much for "free trade." [Dieter Ernst, "Technology, Economic
Security and Latecomer Industrialization," in Raghavan Pp. 39-40].
Patent
law traditionally required a holder to work the invention in a country in order
to receive patent protection. U.K. law
allowed compulsory licensing after three years if an invention was not being
worked, or being worked fully, and demand was being met "to a substantial
extent" by importation; or where the export market was not being supplied
because of the patentee's refusal to grant licenses on reasonable terms
[Raghavan pp. 120, 138].
The central motivation in the GATT intellectual property regime,
however, is to permanently lock in the collective monopoly of advanced
technology by TNCs, and prevent independent competition from ever arising in
the Third World. It would, as Martin Khor Kok Peng writes, "effectively
prevent the diffusion of technology to the Third World, and would tremendously
increase monopoly royalties of the TNCs whilst curbing the potential
development of Third World technology." Only one percent of patents worldwide are owned in the Third
World. Of patents granted in the 1970s
by Third World countries, 84% were foreign-owned. But fewer than 5% of foreign-owned patents were actually used in
production. As we saw before, the
purpose of owning a patent is not necessarily to use it, but to prevent anyone
else from using it [op. cit. pp. 29-30].
Raghavan summed up nicely the effect on the Third World:
Given the vast outlays in R
and D and investments, as well as the short life cycle of some of these
products, the leading Industrial Nations are trying to prevent emergence of
competition by controlling... the flows of technology to others. The Uruguay round is being sought to be used
to create export monopolies for the products of Industrial Nations, and block
or slow down the rise of competitive rivals, particularly in the newly
industrializing Third World countries.
At the same time the technologies of senescent industries of the north
are sought to be exported to the South under conditions of assured rentier income [op.
cit. p. 96].
Corporate propagandists piously denounce anti-globalists as enemies of
the Third World, seeking to use trade barriers to maintain an affluent Western
lifestyle at the expense of the poor nations.
The above measures--trade barriers--to permanently suppress Third World
technology and keep the South as a big sweatshop, give the lie to this
"humanitarian" concern. This
is not a case of differing opinions, or of sincerely mistaken understanding of
the facts. Setting aside false
subtleties, what we see here is pure evil at work--Orwell's "boot stamping
on a human face forever." If any
architects of this policy believe it to be for general human well-being, it
only shows the capacity of ideology to justify the oppressor to himself and
enable him to sleep at night.
INFRASTRUCTURE.
Spending on transportation and communications networks from general
revenues, rather than from taxes and user fees, allows big business to
"externalize its costs" on the public, and conceal its true operating
expenses. Chomsky described this state capitalist underwriting of shipping
costs quite accurately:
One well-known fact about trade is that it's highly
subsidized with huge market-distorting factors.... The most obvious is that every form of transport is highly
subsidized.... Since trade naturally
requires transport, the costs of transport enter into the calculation of the
efficiency of trade. But there are huge
subsidies to reduce the costs of transport, through manipulation of energy
costs and all sorts of market- distorting functions ["How Free is
the Free Market?"].
Every wave of concentration of capital has followed a publicly
subsidized infrastructure system of some sort.
The national railroad system, built largely on free or below-cost land
donated by the government, was followed by concentration in heavy industry,
petrochemicals, and finance. The next
major infrastructure projects were the national highway system, starting with
the system of designated national highways in the 1920s and culminating with Eisenhower's
interstate system; and the civil aviation system, built almost entirely with
federal money. The result was massive
concentration in retail, agriculture, and food processing.
The third such project was the infrastructure of the worldwide web,
originally built by the Pentagon. It permits,
for the first time, direction of global operations in real time from a single
corporate headquarters, and is accelerating the concentration of capital on a
global scale. To quote Chomsky again,
"The telecommunications revolution... is... another state component of
the international economy that didn't develop through private capital, but
through the public paying to destroy themselves....” [Class Warfare p. 40].
The centralized corporate economy depends for its existence on a
shipping price system which is artificially distorted by government
intervention. To fully grasp how
dependent the corporate economy is on socializing transportation and
communications costs, imagine what would happen if truck and aircraft fuel were
taxed enough to pay the full cost of maintenance and new building costs on
highways and airports; and if fossil fuels depletion allowances were
removed. The result would be a massive
increase in shipping costs. Does anyone
seriously believe that Wal-Mart could continue to undersell local retailers, or
corporate agribusiness could destroy the family farm?
Intellectually honest right libertarians freely admit as much. For
example, Tibor Machan wrote in The Freeman that
Some
people will say that stringent protection of rights [against eminent domain] would lead to small airports, at best,
and many constraints on construction.
Of course--but what's so wrong with that?
Perhaps the worst thing about
modern industrial life has been the power of political authorities to grant
special privileges to some enterprises to violate the rights of third parties
whose permission would be too expensive to obtain. The need to obtain that permission would indeed seriously impede
what most environmentalists see as rampant--indeed reckless--industrialization.
The system of private
property rights--in which... all... kinds of... human activity must be
conducted within one's own realm except where cooperation from others has been
gained voluntarily--is the greatest moderator of human aspirations.... In short, people may reach goals they aren't
able to reach with their own resources only by convincing others, through
arguments and fair exchanges, to cooperate ["On Airports and Individual Rights"].
The logjams and bottlenecks in the transportation system are an
inevitable result of subsidies. Those
who debate the reason for planes stacked up at O'Hare airport, or decry the
fact that highways and bridges are deteriorating several times faster than
repairs are being budgeted, need only read an economics 101 text. Market prices are signals that relate supply
to demand. When subsidies distort these
signals, the consumer does not perceive the real cost of producing the goods he
consumes. The "feedback loop"
is broken, and demands on the system overwhelm it beyond its ability to
respond. When people don't have to pay
the real cost of something they consume, they aren't very careful about only
using what they need.
It is interesting that every major antitrust action in this century has
involved either some basic energy resource, or some form of infrastructure, on
which the overall economy depends.
Standard Oil, AT&T, and Microsoft were all cases in which monopoly
price gouging was a danger to the economy as a whole. This brings to mind Engels' observation that advanced capitalism
would reach a stage where the state--"the official representative of
capitalist society"--would have to convert "the great institutions
for intercourse and communication" into state property. Engels did not foresee the use of antitrust
actions to achieve the same end [Anti-Duhring].
"MILITARY
KEYNESIANISM".
The leading sectors of the economy, including cybernetics,
communications, and military industry, have their sales and profits virtually
guaranteed by the state. The entire
manufacturing sector, as a whole, was permanently expanded beyond recognition
by an infusion of federal money during
World War II. In 1939 the entire
manufacturing plant of the U.S. was valued at $40 billion. By 1945, another $26
billion worth of plant and equipment had been built, "two thirds of it
paid for directly from government funds."
The top 250 corporations in 1939 owned 65% of plant and equipment, but
during the war operated 79% of all new facilities built with government funds
[Mills, The Power Elite P. 101].
Machine tools were vastly expanded by the war. In 1940, 23% of machine tools in use were less than 10 years
old. By 1945, the figure had grown to
62%. The industry contracted rapidly
after 1945, and would probably have gone into a depression, had it not returned
to wartime levels of output during Korea and remained that way throughout the
Cold War. The R & D complex,
likewise, was a creation of the war.
Between 1939 and 1945, the share of AT&T research expenditures made
up of government contracts expanded from 1% to 83%. Over 90% of the patents resulting from government-funded wartime
research were given away to industry.
The modern electronics industry was largely a product of World War II
and Cold War spending (e.g., miniaturization of circuits for bomb proximity
fuses, high capacity computers for command and control, etc.) [Noble, Forces
of Production pp. 8-16].
The jumbo jet industry would never have come about without continuous
Cold War levels of military spending.
The machine tools needed for producing large aircraft were so complex
and expensive that no "small peacetime orders" would have provided a
sufficient production run to pay for them.
Without large military orders, they would simply not have existed. The aircraft industry quickly spiraled into
red ink after 1945, and was near bankruptcy at the beginning of the 1948 war
scare, after which Truman restored it to life with massive spending. By 1964,
90% of aerospace R & D was funded by the government, with massive spillover
into the electronics, machine tool, and other industries [Noble, Forces of
Production pp. 6-7; Kofsky, Harry S. Truman and the War Scare of 1948].
OTHER SUBSIDIES.
Infrastructure
and military spending are not the only examples of the process by which cost
and risk are socialized, and profit is privatized--or, as Rothbard put it, by
which "our corporate state uses the coercive taxing power either to
accumulate corporate capital or to lower corporate costs."
["Confessions of a Right-Wing Liberal"]. Some of these government assumptions of risk and cost are ad hoc
and targeted toward specific industries.
Among the greatest beneficiaries of such underwriting are electrical
utilities. Close to 100% of all
research and development for nuclear power is either performed by the
government itself, in its military reactor pro- gram, or by lump-sum R & D
grants; the government waives use-charges for nuclear fuels, subsidizes uranium
production, provides access to government land below market price (and builds
hundreds of miles of access roads at taxpayer expense), enriches uranium, and
disposes of waste at sweetheart prices.
The Price-Anderson Act of 1957 limited the liability of the nuclear
power industry, and assumed government liability above that level [Adams and
Brock pp. 279-281]. A Westinghouse official admitted in 1953,
If you were to inquire whether Westinghouse might
consider putting up its own money.., we would have to say "No." The cost of the plant would be a question
mark until after we built it and, by that sole means, found out the
answer. We would not be sure of
successful plant operation until after we had done all the work and operated
successfully.... This is still a
situation of pyramiding uncertainties....
There is a distinction between risk-taking and recklessness [Ibid. pp.
278-279].
So much for profit as a reward for the entrepreneur's risk. These "entrepreneurs" make their
profits in the same way as a seventeenth-century courtier, by obtaining the
favor of the king. To quote Chomsky,
the sectors of the economy that remain competitive are
those that feed from the public trough....
The glories of Free Enterprise
provide a useful weapon against government policies that might benefit the
general population.... But the rich and
powerful... have long appreciated the need to protect themselves from the
destructive forces of free-market capitalism, which may provide suitable themes
for rousing oratory, but only so long as the public handout and the regulatory
and protectionist apparatus are secure, and state power is on call when needed (Chomsky, Deterring
Democracy p. 144].
Dwayne
Andreas, the CEO of Archer Daniels Midland, admitted that “[t]here is not one
grain of anything in the world that is sold in the free market. Not one.
The only place you see a free market is in the speeches of
politicians." [Don Carney, "Dwayne's World"].
Big business also enjoys financial support through the tax code. It is likely that most of the Fortune 500
would go bankrupt without corporate welfare.
Direct federal tax breaks to business in 1996 were close to $350 billion
[Based on my crunching on numbers in
Zepezauer and Naiman, Take the Rich Off- Welfare]. This figure, for federal corporate welfare alone, is over
two-thirds of annual corporate profits for 1996 ($460 billion) [Statistical
Abstract of the United States 1996].
Estimates of state and local tax breaks is fairly impressionistic, since
they vary not only with each critic's subjective definition of "corporate
welfare," but involve the tax codes of fifty states and the public records
of thousands of municipalities. Besides
money pimps in the state and local governments are embarrassed by the sweet
deals they give their corporate johns. In my own state of Arkansas, the incorruptible
Baptist preacher who serves as governor opposed a bill to require quarterly
public reports from the Department of Economic Development on its special tax
breaks to businesses. “[K]eeping
incentive records from public scrutiny is important in attracting
business," and releasing "proprietary information" could have a
"chilling effect."
[Arkansas Democrat-Gazette 3 Feb. 2001]. But state and local corporate welfare could easily amount to a
figure com- parable to federal.
Taken as a whole, direct tax breaks to business at all levels of
government are probably on the same order of magnitude as corporate
profits. And this understates the
effect of corporate welfare, since it disproportionately goes to a handful of
giant firms in each industry. For
example, accelerated depreciation favors expansion by existing firms. New firms find it of little benefit, since
they are likely to lose money their first few years. An established firm, however, can run a loss in a new venture and
charge the accelerated depreciation against its profits on old facilities
[Baratz, "Corporate Giants and the Power Structure”].
The most outrageous of these tax expenditures is the subsidy to the
actual financial transactions by which capital is concentrated. The interest deduction on corporate debt,
most of which was run up on leveraged buyouts and acquisitions, costs the
treasury over $200 billion a year
[Zepezauer p. 122-123]. Without
this deduction, the wave of mergers in the 1980s, or the megamergers of the
1990s, could never have taken place. On
top of everything else, this acts as a massive direct subsidy to banking,
increasing the power of finance capital in the corporate economy to a level
greater than it has been since the Age of Morgan.
A closely related subsidy is the exemption from capital gains of
securities transactions involved in corporate mergers (i.e. "stock
swaps")--even though premiums are usually paid well over the market value
of the stock [Green p. 11]. The 1986
tax reform included a provision which prevented corporations from deducting
fees for investment 'banks and advisers involved in leveraged buyouts. The 1996 minimum wage increase repealed this
provision, with one exception: interest
deductions were removed for employee buyouts [Judis, "Bare Minimum"].
Right libertarians like Rothbard object to classifying tax expenditures
as subsidies. It presumes that tax
money rightfully belongs to the government, when in fact the government is only
letting them keep what is rightfully theirs.
The tax code is indeed unfair, but the solution is to eliminate the
taxes for everyone, not to level the code up
[Rothbard, Power and Market p. 104].
This is a very shaky argument.
Supporters of tax code reform in the 1980s insisted that the sole
legitimate purpose of taxation was to raise revenue, not to provide carrots and
sticks for social engineering purposes.
And, semantic quibbling aside, the current tax system would be exactly
the same if we started out with zero tax rates and then imposed a punitive tax
only on those not engaged in favored activities. Either way, the uneven tax policy gives a competitive
advantage to privileged industries.
POLITICAL REPRESSION.
In times of unusual popular
consciousness and mobilization, when the capitalist system faces grave
political threats, the state resorts to repression until the danger is
past. The major such waves in this
country--the Haymarket reaction, and the red scares after the world wars--are
recounted by Goldstein [Political Repression in Modern America]. But the wave of repression which began in
the 1970s, though less intense, has been permanently institutionalized to a
unique extent.
Until the late 1960s, elite perspective was governed by the New Deal
social contract. The corporate state would
buy stability and popular acquiescence in imperialist exploitation abroad by
guaranteeing a level of prosperity and security to the middle class. In return for higher wages, unions would
enforce management control of the workplace.
But starting during the Vietnam era, the elite's thinking underwent a
profound change.
They concluded from the 1960s experience that the social contract had
failed. In response to the antiwar
protests and race riots, LBJ and Nixon began to create an institutional framework
for martial law, to make sure that any such disorder in the future could be
dealt with differently. Johnson's
operation GARDEN PLOT involved domestic surveillance by the military,
contingency plans for military cooperation with local police in sup- pressing
disorder in all fifty states, plans for mass preventive detention, and joint
exercises of police and the regular military [Morales, U.S. Military Civil
Disturbance Planning]. Governor Reagan
and his National Guard chief Louis Giuffrida were enthusiastic supporters of
GARDEN PLOT exercises in California.
Reagan was also a pioneer in creating quasi-military SWAT teams, which
now exist in every major town.
The wave of wildcat strikes in the early 1970s showed that organized
labor could no longer keep its part of the bargain, and that the social
contract should be reassessed. At the
same time, the business press was flooded with articles on the impending
"capital shortage," and calls for shifting resources from consumption
to capital accumulation. They predicted
frankly that a cap on real wages would be hard to force on the public in the
existing political environment [Boyte, Backyard Revolution pp. 13-16]. This sentiment was expressed by Huntington
et al. in The Crisis of Democracy (a paper for the Trilateral Institution--a
good proxy for elite thinking); they argued that the system was collapsing from
demand overload, because of an excess of democracy.
Corporations embraced the full range of union-busting possibilities in
Taft-Hartley, risking only token fines from the NLRB. They drastically increased management resources devoted to
workplace surveillance and control, a necessity because of discontent from
stagnant wages and mounting workloads [Fat and Mean]. Wages as a percentage of value added have declined drastically
since the 1970s; all increases in labor productivity have been channeled into
profit and investment, rather than wages.
A new Cold War military buildup further transferred public resources to
industry.
A series of events like the fall of Saigon, the nonaligned movement, and
the New International Economic Order were taken as signs that the transnational
corporate empire was losing control.
Reagan's escalating intervention in Central America was a partial
response to this perception. But more
importantly the Uruguay Round of GATT snatched total victory from the jaws of
defeat; it ended all barriers to TNCs buying up entire economies, locked the
west into monopoly control of modern technology, and created a world government
on behalf of global corporations.
In the meantime the U.S. was, in the words of Richard K. Moore,
importing techniques of social control from the imperial periphery to the core
area. With the help of the Drug War and
the National Security State, the apparatus of repression continued to
grow. The Drug War has turned the
Fourth Amendment into toilet paper; civil forfeiture, with the aid of jail-
house snitches, gives police the power to steal property without ever filing
charges--a lucrative source of funds for helicopters and kevlar vests. SWAT teams have led to the militarization of
local police forces, and cross-training with the military has led many urban
police departments to view the local population as an occupied enemy [Weber,
Warrior Cops].
Reagan's crony Giuffrida resurfaced as head of FEMA, where he worked
with Oliver North to fine-tune GARDEN PLOT.
North, as the NSC liaison with FEMA from 1982-84, developed a plan
"to suspend the constitution in the event of a national crisis, such as
nuclear war, violent and widespread internal dissent or national opposition to
a U.S. military invasion abroad." [Chardy, "Reagan Aides and the
'Secret' Government"]. GARDEN
PLOT, interestingly, was implemented
during the Rodney King Riots and in recent anti-globalization protests. Delta
Force provided intelligence and advice in those places and at Waco [Rosenberg,
The Empire Strikes Back; Cockburn, The Jackboot State].
Another innovation is to turn everyone we deal with into a police
agent. Banks routinely report
"suspicious" movements of cash; under "know your customer"
programs, retailers report purchases of items which can conceivably be used in
combination to manufacture drugs; libraries come under pressure to report on
readers of "subversive" material; DARE programs turn kids into police
informers.
Computer technology has increased the potential for surveillance to
Orwellian levels. Pentium III
processors were revealed to embed identity codes in every document written on
them. Police forces are experimenting
with combinations of public cameras, digital face-recognition technology, and
databases of digital photos. Image Data
LLC, a company in the process of buying digital drivers licence photos from all
fifty states, was exposed as a front for the Secret Service.
CONCLUSION.
It is almost too easy to bring back Bob Novak and Secretary O'Neill for
another kick--but I can't resist. "Marxist class warfare?" "Robber baron rhetoric?" Well, the pages above recount the
"class warfare" waged by the robber barons themselves. If their kind tend to squeal like pigs when
we talk about class, it's because they've been stuck.But all the squealing in
the world won't change the facts.
But what are the implications of the above facts for our movement? It is commonly acknowledged that the
manorial economy was founded on force. Although you will never see the issue
addressed by Milton Friedman, intellectually honest right libertarians like
Rothbard acknowledge the role of the state in creating European feudalism and
American slavery. Rothbard, drawing the obvious conclusion from this fact,
acknowledged the right of peasants or freed slaves to take over their
"forty acres and a mule" without compensation to the landlord.
But we
have seen that industrial capitalism, to the same extent as manorialism or
slavery, was founded on force. Like its
predecessors, capitalism could not have survived at any point in its history
without state intervention. Coercive
state measures at every step have denied workers access to capital, forced them
to sell their labor in a buyer's market,
and protected the centers of economic power from the dangers of the free
market. To quote Benjamin Tucker
again, landlords and capitalists cannot extract surplus value from labor
without the help of the state. The
modern worker, like the slave or the serf, is the victim of ongoing robbery; he
works in an enterprise built from past stolen labor. By the same principles that Rothbard recognized in the agrarian
realm, the modern worker is justified
in taking direct control of production, and keeping the entire product of his
labor.
In a very real sense, every subsidy and privilege
described above is a form of slavery. Slavery, simply put, is the use of coercion to live off of someone
else's labor. For example, consider the
worker who pays $300 a month for a drug under patent, that would cost $30 in a
free market. If he is paid $15 an hour, the eighteen hours he works every month
to pay the difference are slavery.
Every hour worked to pay usury on a credit card or mortgage is
slavery. The hours worked to pay
unnecessary distribution and marketing costs (comprising half of retail
prices), because of subsidies to economic centralization, is slavery. Every additional hour someone works to meet
his basic needs, because the state tilts the field in favor of the bosses and
forces him to sell his labor for less than it is worth, is slavery.
All these forms of slavery together probably amount to half our working
hours. If we kept the full value of our
labor, we could probably maintain current levels of consumption with a
work-week of twenty hours. As Bill
Haywood said, for every man who gets a dollar he didn't sweat for, someone else
sweated to produce a dollar he never received.
Our survey also casts doubt on the position of "anarchist"
social-democrat Noam Chomsky, who is notorious for his distinction between
"visions" and "goals."
His long-term vision is a decentralized society of self-governing
communities and workplaces, loosely federated together--the traditional
anarchist vision. His immediate goal,
however, is to strengthen the regulatory state in order to break up
"private concentrations of power," before anarchism can be achieved.
But if , as we have seen, capitalism is dependent on the state to guarantee it
survival, it follows that it is sufficient to eliminate the statist props to
capitalism. In a letter of 4 September
1867, Engels aptly summed up the difference between anarchists and state
socialists: "They say 'abolish
the state and capital will go to the devil.' We propose the reverse." Exactly.
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Revised January 2002