Capitalism and the Big State

by craig on March 28, 2011 1:02 pm in Economic Policy

There is a very interesting post here from Stumbling and Mumbling about the mutual dependence of big capital and the big state, and by and large he is right. I think he understates the interlocking of big capital and the big state, and the extent to which the modern state is simpky a tool of large corporate interests. He also does not really consider the whole nexus of Eisenhower’s military-industrial-Congressional complex.

In fact, major coroporate interests are now above the nation state. They can effectively be exempt from the criminal law, like BAE Systems. Or avoid the jurisdiction of a nation state almost completely, like Vodafone.

A large state, like large concentrations of capital, produces an excessive concentration of power; to put that another way, both reduce the freedom of individuals. That is why I am not with the corporatist interests who were marching at the weekend, It is also why I am not with the Tories. I retain a quaint belief that the best economic model is one where the workers own the company, at the enterprise level rather than the state level, while natural monopolies and social services are provided directly and simply by the state.

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38 Comments

  1. "I retain a quaint belief that the best economic model is one where the workers own the company" – indeed – my mother always used 'the co-operative' and the 'divi' put food on the table during hard times.

  2. From a biological stand point, there is another mechanism that creates a symbiosis between state and capital, and that is the lack of common competition between two agents sharing a common enterprise.

    The egret and the crocodile work together in symbiosis, because they are not in competition, and they share a common enterprise: that being the meat between the crocodile's teeth. The croc has no tongue to remove the meat, which risks gum infection; therefore allows the egret to do the dental work, whilst the bird gets a free meal.

    In our society, we believe that Marxism and Capitalism are opposites, therefore incompatible; but considering the potential of symbiosis, they could do a mutual deal. That being due to the Capitalist dealing with the economic environment; whilst the Marxists deal with the bureaucratic environment; leaving the common enterprise as 'the workers'.

    Therefore Capitalism and Marxism are working together by treating 'the worker' as a common disposable resource. The bureaucracy manages the 'workers' market, supplying effectively slave labour (c.f. working for you dole, or your freedom from a petty crime: choose from 4,000 new laws of guilt), and the corporate monoliths supply the funds for the bureaucracy.

  3. Craig,

    I think we agree about the best economic model, though how one actually gets there given the massive concentrations of wealth and power in our society, stumps me. I think that we do live in kind of corporate state. What concerns me is that this form of state contains the seeds of 'facism', though probably not the old-style, militeristic, one, at least not at home.

  4. Taking space if you don't mind Craig to report the sad death yesterday of Joe Bageant. I heard him speak in London on his 'Deer Hunting with Jesus' book tour. It was a memorable experience. His new book is just out and this is a review.
    http://dissidentvoice.org/2011/03/bageant-sings-a
    http://www.joebageant.com/joe/2011/03/joe-bageant

  5. Criag – this is your best point:-

    " In fact, major coroporate interests are now above the nation state."

    because, that is the core of the power that drives corporate self-interest expressed in global political and military action.

  6. We have enpowered radical fundamentalists capitalism since the Uruguay round of Globalisation talks, we enabled them to play over the border by getting rid of tarif barriers and other restrictions as they understood it. Now we are back pedalling to the control we have given these enteties.
    If 100 companies are far more powerfull thabn countries, how will they address the important issues we face, with diminishing resources food and water? what are their plans, what will they do and how much has social responsibility encouraged them to think outside their box?
    Answers on a stamp please.
    BTW. this question was asked by my son at a recent conference of business leaders discussing sustainability in 2050. The answer to his question was stunning silence.
    I belief that the extremes of radical capitalism is as dangerous to society, as terrorism.

  7. Craig – I'm an admirer but don't understand why you describe the anti-cuts marchers as "the corporatist interests who were marching at the weekend" Most of the people marching were there as individuals – some affiliated to Trade Unions and others just to protest against decimation of local, civic and national services. What's corporatist about teachers, firemen, cleaners, binn-men, dinner-ladies, mothers, father,s children, the disabled, doctors, nurses, lawyers, students, low-paid admin staff, the clergy etc etc? All and many more from ordinary backgrounds represented on the March.

  8. The ability of corporations to attain effective legal immunity by transcending geographical boundaries is a staple issue in business ethics. Crane & Matten's excellent textbook sets out some examples.

    The issue is also mentioned in the 2003 documentary film "The Corporation": see thecorporation.com for clips and a transcript.

    These undemocratic megaliths are pushing the notion of Corporate Social Responsibility to escape co-ordinated international action, but it's just a sticking plaster. It is economic pressure masquerading as ethical sensitivity.

  9. This is the point I always raise when debating those who claim all the worlds problems will be solved via unrestrained capitalism. While I often agree with a large number of the faults 'free marketers' list about governments, I simply ask how a completely undemocratic entity would fix the problems they just listed. I am yet to get a coherent answer. They also like to ignore fact the we have already tried laissez faire capitalism and it turned out real bad for the average person.

  10. Glenn Greenwald did a speech at The Lannan Foundation on March 8, 2011, which might be of interest in regard to the topic of Craig’s post. The video and a transcript can be found at the link below. There is a link at the end to the video and a transcript of the following Q & A session, as well.

    Glenn Greenwald Speech at the Lannan Foundation; March 8, 2011 http://eyestir.blogspot.com/2011/03/glenn-greenwa

  11. I agree nextus, they see it as a sticking plaster, what we have to recognise that these selfish notions are transcending boundaries, past the coffers of treasuries, in many instances. That these unaccountable giants act like fly by night operators can move and shuffle their behests at any time they wish to, and they frequentlty do, post boxes in pretty Swiss villages seem to have a strange attraction.
    Corporate social responsibility is not just painting the neighbourhood fences, a once/year absolution. By its means and their power it should have the impact to move mountains, instead it moves mountains of money into their own interests.
    Can shareholders not see that sustainability of brands has to do with social responsible nudging in the long term, real investment. We can support such efforts by demanding that companies that want to sell in Britain, should site in Britain, a form of limited protectionism that engages, bonds and fosters mutuality to a local workforce, a first start.

  12. It's true that governments are often influenced far too much by big companies (and in some cases completely in their pockets), but at the same time the only organisations capable of regulating and restraining the big companies – and of gathering enough taxation to provide adequate public services – are governments. It's also the only organisation that can break them up through anti-monopoly laws into sizes small enough for national governments to regulate them.

    So i don't believe a smaller state is the solution – that would just mean the multinational firms would have even less restraints on doing whatever they want to whoever they want to maximise profits.

    Existing elected governments have lots of faults, but they're still more democratic and more responsive to public opinion than multinational companies are.

    We need to put more effort into lobbying governments and into getting democratic reforms (e.g PR, referenda being required before going to war or carrying out major policy changes which weren't in a party's election manifesto).

  13. " I retain a quaint belief that the best economic model is one where the workers own the company, at the enterprise level rather than the state level" http://www.youtube.com/watch?v=prM_0kiuE2o

    "Perfectly valid, but I am afraid I don't think it will work either!"

  14. Capitalism: Nothing wrong with capitalism, it doesn`t work because humans corrupt it.
    Socialism: Nothing wrong with socialism, it doesn`t work because humans corrupt it.

    Its not the system thats wrong, its us.

  15. Another related post:
    Capital Offense–Six Questions for Michael Hirsh; Scott Horton; 3/24/11 http://harpers.org/archive/2011/03/hbc-90008013

    Michael Hirsh, the longtime economics correspondent for Newsweek , now serves as chief correspondent for National Journal. In his new book, Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street, and a current feature he traces the economic crisis of 2008 back to its roots in Washington economic policy from the era after Reagan, arguing that the policy process in Washington was captured by the financial industry. I put six questions to Michael about his book. […]

  16. My view is that the government we see as governing us is just a front – a show so that most citizens think they live in a democracy. Behind this 'government' lies the real power in the form of a permanent government which I believe has huge investments and control over many UK and multinational companies.

  17. Yes. What corporatist interests?

  18. Will tackle that on in a pst tomorrow

  19. "it turned out real bad for the average person."

    *irony warning*

    Only an issue for those worried about the plight of the average person. Inevitably, such complainants tend to be average people. They ought to declare an interest before spouting this stuff. Clearly those who make the rules are not average, so where's the problem?

  20. It is, terrible…; I was hoping to hear better infos about him.
    I am going to miss his writings.

  21. About a hundred years ago Rudolf Steiner wrote a book about these matters called 'Towards Social Renewal' which is still in print. This was off the back of a social movement he initiated around these ideas and his attempt to influence the German government at the time to reject the US/British approach to the peace Treaty of Versailles.

    The gist of his ideas is that society naturally forms three spheres, the economic the political/rights sphere, and the cultural sphere, which includes all creative work from religion, education, scientific development and even product development.

    All these spheres should be fundamentally independent. The economic sphere should be given its head, except where it interferes with human rights, eg unacceptably high or low wages, and irresponsible investing, ie on the value of land or what we now call derivatives. These are rightfully the concern of the political rights sphere because they fuck up people's lives.

  22. David Cameron: The man with the Neutrogena face! Ah, how smooth the texture of his skin, how velveteen his consonants! You'd buy a box of condoms, a used car, or even a weapons system from him! He is the salesman's salesman! He is a cock atop a weather-vane!

    And somewhere below…

    Anthony Blair: The man with the holy, rolling eyes! If you gaze for long enough, you will see blood trickling from his palms and a wound, the size of a Roman spearhead, deep in his flank. Note, as you watch, the neck inclines a little to the right, then a little more. Ah, wounded, plaintive knight, you with your mother's son's eyes, where do you dream? Centurion! Give that man some vinegar!

  23. I disagree entirely. People do things that they would not condone in their personal lives, because they need the money. The corporate structures employ teams of experts to influence the behaviour of their customers and employees. Two heads can out-think one, and four can out-think two; a corporation can out-think any individual. And the immorality of corporate actions is spread throughout the structure, so each individual only carries a seemingly insignificant personal responsibility, little enough that they won't rebel against it. This also serves the structure, by keeping employee replacement fairly low.

    This is why we desperately need ethical politics with true democratic accountability. We really need to get organised, because it's organisations that we're up against.

    Human nature is generally pretty good. Most people just want to raise a family and see that their offspring are secure, ie, exactly what evolution adapted them to be good at. The trouble is that structures, mostly corporations, utilise those urges to the purposes of the structures, and those purposes are not good for Humanity or the ecosphere. No one made this system, corporations just evolved, too.

  24. Dont be tempted into thinking it is something as formal as a 'government' behind our government. It is simply a small collection of international corporations with overwhelming power over our politicians. Nobody reaches positions of political power without bending the knee to these interests. Any individual, party or country which resists will be broken. Some, like Cameron, are willing tools, others like Brown (probably) less so, but all end up with pretty similar policies.

  25. Clark, All I can say is, you have proved my point.

  26. BAE, GIAT, B.P., Total and Areva figure highly on desision to go to war in Libya. The broad sheets making jubilant copy today of the rebels capture of oil terminals. It’s like they crowd sourced another oil war.

  27. I suppose I must have taken your comment too literally. Do clarify if you feel like it.

  28. I agree that people working within a corporation cannot alter the rules. However I would argue that corporations definitely follow the rules set by the super elite. It's no coincidence that the rise of the corporation has occurred at the same time the elite have become richer than ever before. The structures interest is the shareholders interest.

  29. Craig, I am with you here. I have just been reading Towards a Truly Free Market by John Medaille, published by the Intercollegiate Studies Institute.He is a Catholic, but his views on distributism as an antidote to state monopoly (socialism) and corporate power ("conservatism") , on the virtues of co-operatives etc. are ones I am sure you will share. Schumacher, Small is Beautiful, dream on…

  30. Are we getting bogged down in who is what here? I know very little about share ownership distribution, but I think lots of people who are not "super elite" own shares, maybe indirectly through investment plans, etc. Some very wealthy people own lots of shares in particular companies. Some companies own lots of the shares of others. The companies act to increase returns on all their shares, no matter who owns them.

    Aren't the returns on shares for the mega share-holders effectively just "bait" from the structure? The returns are still a small proportion of the worth of the company. Ethical responsibility for the company's behaviour is also apportioned by share ownership, so the "super elite" are just those people whose morals the structure has "bought out", ie if it wasn't them, it would be someone else.

    Does mega-wealth really benefit the individuals that hold it? Beyond a few millions, I would have thought that there was no personal or reproductive advantage in attaining more wealth. It looks to me like the structures are exploiting an obsession in the "super-elite", an addiction to acquisition as a game, a bit like addiction to gambling.

  31. Hear, hear!

    Government is both a force for good, to the extent that it is able to represent its people, and a reactionary force when it is subverted by elite interests. So far, so self-evident.

    The problem is not big government but rather that "representative" government does not do its people's bidding as it is "supposed to". The most effective way to constrain the corruption by moneyed elites is to have a credible threat of corrective action by the people. This exists, has been tried and tested and works very well – I am referring to the institutions that have evolved to enforce popular sovereignty in Switzerland and elsewhere, namely Initiative and Referendum (I&R), Recall and Mandatory Referendum. (Note this set specifically excludes Plebiscite)

    A note for Craig – Direct Democracy as the Swiss like to call their system is proven to be capable of reducing the size of government there, in the sense that where the people have some control over government budgets the result has been increased efficiency in provision of public services. Of course this is just a coincidence because the aim is not smaller government but government that's more optimal as determined by what the people want.

  32. I guess my point was that I don't think corporate structures occurred by chance and that we are all at their mercy. I believe that the elite actively worked to create the corporations and alter laws which enable the current corporate structures to exist. The IMF, World Bank and state laws have all been created to enable the current breed of corporations to exist. They couldn't exist without the active work of the elite and it is not by chance they are structured the way they are.

  33. Yes, evolution is more than just chance, it exploits and builds using chance events. This looks like an unhappy symbiosis. The elite get their fix of power-grabbing (which is what wealth amounts to beyond a few, personally useful millions), and the corps get people with depleted morals to make the decisions that enable the corporate structure to grow.

  34. im intrigued

  35. Corporations are more than the sum of the people.

    Corporations are defined as 'legal persons' with their own rights and interests distinct from the privileges and liabilities of actual persons; they gain the same legal protection as actual persons in the US Constitution. Look up the concept of 'corporate personhood'.

    The worrying thing is although these legal persons have their own interests and rights, distinct from the people who implement them, they have no intrinsic morality. If the employees put aside their own qualms and preferences in the service of corporate interests ("only doing me job, guv"), it can lead to serious ethical abuses that would be abhorrent to the individuals if they were acting alone. Many otherwise docile people will go to sinister extremes to protect an institution. All it takes are a few little Eichmanns (or Jack Straws); who believe they are justified in doing whatever the job demands of them regardless of their personal misgivings. It's the banality of evil.

    Intriguingly, "The Corporation" documentary lists the diagnostic traits of psychopathy, and takes each one in turn, interviewing leading thinkers and business people to show that if corporations were genuinely viewed as persons, they should be classified as psychopaths.

    Some people argue that the corporate ethics should dominate personal ethics and that individuals should only exercise the choice to resign; but for economic reasons the individuals don't always have free choice. Similarly, we had a debate here recently about what an ambassador should do when required to put aside personal qualms for the sake of protecting "British interests". It's fair to say there were differing opinions on the matter.

  36. Democracy and Liberty according to Benjamin Franklin. Read it up, its like an anarchists guide to over throwing government (elected & un-elected)

    Labour stole my idea to re-capitalise the banks. And did a pretty poor job of following the plans. Americans too. I told them they did not have enough to do it themselves in the U.K. , i thought private enterprise could have made a 70 percent funding of the cost and the governnment could have set up an asset management company and loan the remaining 30 percent to those firms, secured over assets. We bought FUCKING shares when we should have issued special bonds to re-capitalise them. They are a bunch of hoora Henry morons running these banks. Time they were placed in a position reflecting their real world market value, Poundstretcher springs to mind.

    I could have fixed the banks had they had given the opportunity to do so. Central and Local government are in a complete state of paralysis just now and its getting worse. They have got used to paying high salary to mates and over spending on just about everything, now its getting tight and they are panicking. Next group inline for a mugging is council and government workers. Many of which hate the public they work for and are very unpleasant when they talk to a customer.

  37. Corporations can't support morality because they are incapable of consciousness and hence conscience. I see two reasons for this: (1) if we equate members in corporations with neurons in brains, corporations just don't have enough brain cells. (2) Communication between neurons is two-way. A 'reward' system reinforces or inhibits a given neuronal connection depending upon the outcome of the behaviour. It is also often circuitous, with many feedback processes. In contrast, communication within corporations is overwhelmingly arranged to be one-way only: from the highest echelons downwards. Mainly, just 'market research' data and profit-loss data are passed upwards. Near the bottom of this arrangement are the 'customers', who these days are always wrong, and generally lied to. Also the exploited providers of raw materials and raw labour.

    Yes, it is inevitable that corporations, as currently structured, will behave amorally, in a psychopathic manner with no conscience. Thus, it is utterly wrong that they are accorded the same rights as people.

  38. German Girl

    1 Apr, 2011 - 3:30 pm

    Nowadays the problem is that governments are so void of loyal experts and advisors that they often don't understand what is going on. Fact is: if you want an advisor to be loyal to you then PAY them. But nowadays so many civil servants are being made redundant because of cuts or "efficiency savings" that many governments are no longer adequately advised by their own advisors.

    Any state simply requires an adequate amount of civil servants (office clerks, lawyers, economists etc.) who execute and administrate and control the enforcement of the governments laws and political policies.

    Funny story from Germany:
    Mr Guttenberg, a barrister/lawyer former minister for the economy, has had his ministry's legal policies written by a private law firm!!!! Official government laws have been written by a private law firm. A copy of this set of laws were even published with the private law firm's adress still visible on the top of the pages!!!
    Mr Guttenberg himself is a lawyer / barrister.
    Note: this happened some time ago before the last elections after which Mr Guttenberg had been promoted to minister of defence. Mr Guttenberg had to give up this post after some serious mistakes and misjudgements and after he has been accused of plagiarism in his Phd thesis. There are claims that more than 100 pages of his Phd thesis (500 pages) are plagiarism!!!!

    So you see Germany is an absolute meritocracy ;-) which promotes people for their minds and their merits and not for having aristocratic titles like Karl Theodor Maria Nikolaus Johann Jacob Philipp Franz Joseph Sylvester Freiherr von und zu Guttenberg (roughly: he has a title which equals "baron" as part of his name), former minister for defence, former possessor of academic merits and possessor of several hundred million euros (family fortune). http://de.wikipedia.org/wiki/Karl-Theodor_zu_Gutt
    Don't worry about him as he is already working on his comeback and he has allegedly been employed by Germany's equivalent of the British "Daily Mail", the Bild.

    ;-)))

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