Kevin A. Carson

 

 

 

THE IRON FIST

BEHIND THE INVISIBLE HAND

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].

 

Disciplining

 

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.

 

De-skilling

 

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].

 

Resistance to the factory labor system

 

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].

 

Mercantilism and the power of the state

 

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.

 

“War is the health of the state”

 

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.

 

The Welfare state is for big business

 

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.

 

A colonial situation

 

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.

 

Public costs, private profits

 

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.

 

A war machine against the Third World

 

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: