The corporatist creed

“…the classic economic weakness of all despotic regimes [is that] wealth is seen not as a tool but as a badge of superior status.”  Rodney Stark.[1]

(There is a need)…to reconceive, in the most fundamental sense, the very ideas of bank, money and credit card.  Dee Hock, CEO emeritus of VISA International.[2]

“I sincerely believe… that banking establishments are more dangerous than standing armies.”  Thomas Jefferson.

“…the battle-plain is the harvest-field of the aristocracy, watered by the blood of the people.” Richard Cobden.[3]

Remember, neo-liberalism, championed by the Chicago School of Economics, is not to be confused with traditional or classical liberalism, which concerned itself with controls on centralised power and the elevation of human rights.  Neo-liberalism is about freedom for corporations to chase profits across the globe, accompanied by a careless disregard for human exploitation, the ethics of responsible government, the environment and moral regulation.  Success is measured in monopolised markets, financial shell games and a monstrous banking system rip-off that leaves the top 80 members of the financial elite controlling more wealth than the 3.8 billion poorest people on the planet and the top riches one percent with a combined wealth greater than the other 99%.[4]   The power and influence that makes it possible for a corporate elite to live at the expense of everyone else recapitulates the same freedom enjoyed by the old feudal aristocracies and the large corporations under Nazism.  This should come as no surprise as political fascism and corporations have always enjoyed a close relationship.  It’s good for business.  Famed economist J.K. Galbraith, called this the ‘techno-structure’, characterised by the accumulation of both power and profit by firms, which cooperate as much as they compete, to guarantee the supremacy of cartel capitalism, not free markets. Galbraith favoured a socialism centred on the state.  For inexplicable reasons the great man thought a corporate monopoly on power should be replaced with one run by the state.  Of course, the corporate world was running well ahead of Galbraith and merged their power with the state.[5]  John Ralston Saul, in his 1995 book, The Unconscious Civilisation, notes the same corporate agenda that characterised the NAZI fascist era has been made the standard for our modern western world.  This has involved transferring power that should lie with the people to special interest corporate entities, imposing private free enterprise on areas best left to public bodies (privatisation) and insisting corporate-state interests must be the same as the public interest.  So, in Ralston’s unconscious state western nations have embraced an essentially fascist corporate architecture for both commerce and government.  Hitler, Louis XIV or Charles I could all return and feel perfectly at home. 

Modern global corporatism is also the atheistic lassez-faire capitalism of Ayn Rand, taken to its logical conclusion and entwined with the very over-reaching government Rand so despised.[6]  She preached a radical individualism that worshiped self-interest and despised social altruism.  Corporatism is the natural outcome of her so-called objectivist philosophy.

Marxism-Fascism is the start of a circular continuum that ends in neo-liberalism.  Because large corporations rely on compliant politicians it ends up closely aligned with the state-ism from which free enterprise capitalism is supposed to be far removed.  That explains why large corporatist charitable foundations habitually support left wing causes, because the bend towards centralised government.  No doubt Rand would be appalled to see her individualistic libertarian capitalists siding with the enemy.  Her objectivism too easily turns into the sort of tyranny against the individual she opposed – something she underestimated, even ignored.  No doubt this was because she was intensely narcissistic. Neo-liberalism gives private interests the right to ride roughshod over the real best interests of local economies on a global scale, in order to maximise the selfish interests of stockholders and corporate moguls.  Corporatism is an intense form of organised, institutional, narcissism. It unjustifiably discredits the real nature of classical capitalism and so helps stoke liberal socialist state-ism.  It maintains that private (corporate) enterprise is king and profit is queen; preserved through the hereditary succession of boards and executive elites, in what is the modern equivalent of the old feudal aristocracies.  At bottom corporatism, as Stark observes, is about entrenched superiority and privilege, not social progress.  Natural law and the proper nature of free enterprise does not feature in this lexicon.  In government it translates into a more market driven approach to public management.  When applied as economic policy it will inevitably include:

·         Corporate monopolies at the expense of smaller, local businesses.

·         Gross trade imbalances.

·         The offshore relocation of western industries and jobs on the false claim that stockholder interests must come first.

·         The privatisation of strategic public assets.

·         Volatile stock and other financial asset markets and floating exchange rates that benefit banks and speculators, expose western economies to unnecessary risk and concentrate wealth within a small financial elite. 

·         Allowing the export of profits from a country through tax loopholes and free capital flows.

·         The exploitation of global ‘free’ labour markets, robbing the West of more highly paid manufacturing jobs. [7]

·         The pursuit of stockholder interests with limited referral to ethics, values, culture or social harm.

·         Close interconnections between corporate and political elites.

·         False claims about the trickle-down effect of corporatised ‘open’ commodity and financial markets.

·         The elimination of tariff protections (free trade) for the benefit of corporate money and commodity market trading – at the expense of small local businesses.

·         Fiscal policies that involve central bank debt creation and the promotion of private debt on the false premise it will promote economic growth (Keynesian economics).

The corporate world sold this bill of goods to the West’s liberal politicians by acknowledging capital and manufacturing would head off overseas and claiming the service sector, insurance and the money markets would fill the gap, while consumers would benefit from cheaper goods.  All of these things happened but they did not make western economies stronger, or more resilient.  The benefits did not trickle down to people, easy access to credit inflated property markets and the money markets, left economies exposed to fraud and instability. Private and public debt skyrocketed, unemployment increased, the quality of existing jobs and work conditions declined and more people left paid employment for government handouts.  Worse still the public service value of business and local community orientation was lost.  In 1970 the gross debt of advanced economies aggregated out at about 25% of GDP.  By 2009 it had gone ballistic and stood at about 260% of GDP. Economic instability had also increased markedly over the pre-1970 period when financial controls were in place.[8]  What’s more, the global nature of neo-liberalism means there is no escaping financial crisis in other parts of the world. The conceit behind the rise of corporatism and parallel government policies is the myopic insistence that money makes the world go round.  It may have been a catchy song title but financial capital should never be allowed to eclipse more important forms of ‘capital’, such as:

·      Social (community) capital:  The sense of cohesion, safety, trust, empathy wholeness and wellbeing we humans derive from healthy interactions and selflessness in families, communities, proven institutions and nations.

·      Human capital: All of the accumulated wisdom, skills, experience, enterprise, hope and energy latent in individuals and collectively employed by communities.

·      Fixed capital: A society’s hard ‘artefacts’; its roading, power stations, buildings, industrial estate and homes.

·      Natural Capital: The physical properties of a nation’s natural world including mineral resources, animal life, climate and topography.[9]

Rendering these forms of real capital subservient to artificial financial capital markets has drastically reduced the quality of western community life.  Human dignity, health and rights are also marginalised.  Combine that with liberalism’s assault on western culture and you have the necessary conditions for the collapse of the civilisation and the brutalisation of the rest of humanity.  To capture something of the destructive influence corporatism is having on our world I am drawing on Michael Rowbotham’s excellent work on corporatism and banking, entitled The Grip of Death.[10]  He has successfully pulled together earlier critiques.  My purpose is to demonstrate that the current economic orthodoxy around banking and corporate globalisation is both dangerous and unnecessary. 

The strong ties between liberalism and what I, as a matter of convenience, prefer to call corporatism has been noted previously. There is no doubt that banking and corporate interests collaborate with politicians to prosecute the liberal agenda.  Many politicians and academics sit on the boards of corporations.  Political parties snap up corporate donations and appoint prominent business executives to senior government positions. They maintain close links with media moguls.[11]  The ruling classes in government and academia are joined at the hip to a corporate elite with almost complete dominance over the means of consumer and food production, credit creation, the petro-chemical industry, pharmaceuticals, the mass media and arms manufacturing.  No effective mechanisms exist to counter the meteoric rise in politically and economically dangerous corporate monopolies.  At the time of writing these were some current examples:

·      Five companies control over 70% of the world’s cereal markets and had cornered cereal genetics as well by taking legal action against individuals storing their own seed.

·      Five companies controlled most of the world’s consumer durables market.

·      Another five companies produced over half the world’s production of cars, airliners, electronics and steel.

The most recent and blatant example of the partnership between liberal politics and corporations came with the 2008 money market meltdown.  Charles Ferguson, in his award winning documentary Inside Job, discloses the close working relationship between the banking sector, central banking (the Federal Reserve in the U.S.), private and public sector regulators, politicians and Ivy League economists (academia).  The creation of the derivative market, based on sub-prime mortgages, is a blinding example of the way money market manipulations can reap huge benefits for a few at the expense of ordinary people.  In a process Charles Hugh Smith calls financialisation financial institutions took otherwise low risk debt instruments, combined them with high risk mortgages and bundled them into highly speculative financial products that callously exposed ordinary people to high financial risk.[12] Even more distressing was the fact that the whole sub-prime lending debacle (2008-9) stripped the U.S. black middle-class community of half its net worth (Horowitz, 2014). One of the chief causes of price inflation is the housing market.  Banks love to maximize the loan to value ratio (LVR) of houses to make more profit, carelessly disregarding the effect on ordinary people who are either enticed or feel compelled to shoulder dangerous levels of debt.  The LVR should always have an imposed limit to suppress housing speculation, but the corporate banks habitually push it to 95% and beyond. They could not care less what this means for indebtedness, social inequalities, family stressors and economic stability.  During the sub-prime fiasco the LVR was pushed out to 120% in some cases (Keen, 2011).  This can only be described as criminal.

Neo-liberalism has infiltrated western governments in a form called managerialism, or new public management (NPM); a ‘modernisation’ emphasis that brought commercial business practices into public sector administration. The economic policies and methods attached to both neo-liberalism and NPM confirm my contention that liberalism and corporatism are happy bedfellows.  If politicians, with their attendant liberal world view, had not got behind neo-liberalism it would never have gotten off the ground.[13] Therefore, when I refer to liberals at the political level it is best to describe them as neo-liberal liberals. 

Robert McChesney says in his introduction to Noam Chomsky’s book, Profit over People: Neo-liberalism and Global Order:[14]

“The economic consequences of these (neo-liberal) policies have been the same just about everywhere, and exactly what one would expect: a massive increase in social and economic inequality, a marked increase in severe deprivation for the poorest nations and peoples of the world, a disastrous global environment, an unstable global economy and an unprecedented bonanza for the wealthy.”

In her controversial book on the application of Chicago School economics, Naomi Klein documents the disastrous effects of neo-liberal policies, foisted on unsuspecting populous in countries as disparate as Argentina, Chile, Uruguay, Brazil, South Africa and Poland.  Invariably the result was spiralling debt and inflation, the closure of local businesses, soaring unemployment and wage rate declines.  External corporatist political pressure usually preceded the imposition of neo-liberalism on these countries, with the exception of countries like the U.K. and New Zealand, where the damage was more self-inflicted.  Klein argues the wholesale harm caused by neo-liberalism across the globe was due to the friedmanite (neo-liberal) shock therapy doctrine, that relied on the deregulation of pricing, loans, floating interest and exchange rates and free trade.[15]

Another neo-liberal doctrinal practice, deregulated money markets, was used to great effect against the ‘Asian Tiger’ economies.  Klein describes how rumours were spread to create a money market collapse which lead to violent stock market fluctuations.  This allowed corporations to buy up Asian businesses at bargain prices.  The manufactured crises was also used to break down the protectionist policies that had been guarding economic expansion in Malaysia, Thailand, Japan and South Korea.  The neo-liberal globalisation of the Asian markets was only good for western corporates, not developing countries or western economies.  Here is a typical Klein assessment:

“After the IMF stripped the [Asian] Tigers of their old habits and ways, they were now ready to be reborn, Chicago-style: privatised basic services, independent central banks, ‘flexible’ workforces, low social spending, and, of course, total free trade.  According to the new agreements, Thailand would allow foreigners to own large stakes in its banks, Indonesia would cut food subsidies, and Korea would lift its law protecting workers against mass layoffs.”  To get a loan Korea was forced to “shed 50% of its [banking] workforce (later lowered to 30%).” The Shock Doctrine (pp. 269-270).      

The oft-cited rationale for liberalism is that global corporatism would cause economic success to flow down from corporate enterprise to the middle and lower classes.  The reverse has been the actual experience, with poverty and welfare dependence becoming more ubiquitous.  The western middle classes have seen their net worth decline into the negative. More than 24% of American households had no marketable assets in 2010 and 120 million Americans had net wealth of only $920.  The western middle classes have been losing the value battle, while working longer hours for less pay.  Meantime, between 2012 and 2013, for example, the 400 richest Americans saw their wealth grow by 200 billion.  The richest Britons saw their wealth grow exponentially as well.[16]  The flow down effect did not manage to get past the corporate banking sector either. In 2014 the world’s top 100 banks made $1 trillion.  In the five years between 2008 and 2013 banker bonuses in the UK went up twice as much as corporate tax – 101.4 billion verses 48.6 billion.[17] This picture can be legitimately extrapolated across the developed world. Personal debt to income ratios are out of control.  In the Netherlands (2009 figures) it stood at 241% and in Denmark at 272%.  Government unsecured liabilities on pension plans run into the trillions across the western world as our scurrilous political class have flagrantly masked the impossibility of a debt-laden global neo-liberal model by spending way more than they have taken in.  Their selfish desire to retain power and extend the state’s reach has driven them to adopt practices that border on insanity.[18]

Always keep this in mind. Corporations have no conscience and no soul; it is just business. No corporate entity can be imprisoned for wrong doing.  They are not democratic.  Their loyalties only lie with the bottom line and shareholder interests.  They make what should be a humane economic system, inhumane. All they understand is power, scale and maximised profit.  They must eventually be brought down by minimising the power their small executive elite can exert both economically and politically. As columnist Philip Collins opines:

“If companies cannot work out how to respect their public status, by paying fair taxes to the exchequer and wages to the workforce, then there should be no apology for tough intervention. If executives continue to rig their remuneration to unwarranted levels then they should not complain when they are subject to calls to shift the burden of taxation from income to wealth.”[19]

Corporatist capitalism has staunch defenders amongst economic academics. Professor George Reisman, in a published essay, argues the wealthy corporate 1% support the other 99% - the rest of us.[20]  He believes, without foundation, that we all need the ultra-wealthy to supply us with our consumer goods and provide us with jobs.  Without them we would apparently find ourselves without work and without anything to consume.  This is arrant nonsense.  Riesman takes paternalism to the corporatist extreme by assuming the existing neo-liberal corporatist model is the only way to get things done. An alternative model is provided in this book.  If Riesman is correct then we are all condemned to be at the mercy of a wealthy elite.  He assumes the 99% are just there to work and consume – a human herd, nurtured to sustain the will of the few. The fact is that banking, manufacturing and service industries can be managed according to the participatory workplace system described in Part Four.   Those in Riesman’s camp will never accept that the 99% are as good as the 1%, if they are given the opportunities to maximise their individual potential, within an economic system that does not allow massive wealth and power accumulation by the few at the expense of the many. Under the reforms in Part four free enterprise capitalism is retained, but participation in the creation and distribution of wealth is widened, so all can share in the fruit of their labour, providing they are prepared to gain skills and participate fully and responsibly in the economic life of their communities.  This is not Ayn Rand individualism, this is western classical liberalism informed by the ancient wisdom that goes back through at least three millennia.  

[1] Victory of Reason, p. 192.

[2] Quote taken from Thomas Greco’s book, The End of Money and the Future of Civilisation (p.9).

[3] Revisionist historian Ralph Raico’s 2010 book, Great Wars and Great Leaders: A Libertarian Rebuttal.

[4] Ibid: Sandra Navidi’s 2016 book, $uperhubs: How the Financial Elite and Their Networks Rule Our World.

[5] I was assisted in the short depiction of Galbraith’s views by Roger Scruton’s 2015 book. Fools, Frauds and Firebrands: Thinkers of the New Left. I disagree with Scruton’s scathing denunciation of Galbraith’s position on corporatism.

[6] I’m referring here to the objectivist/individualist philosophy hocked by Rand in her best seller Atlas Shrugged.

[7] These are precisely the policies the USA administrator to Iraq, Paul Bremmer, recommended for that country in 2003.  Watch A Brief History of Neo-Liberalism (1-5) on You Tube.

[8] These figures from Jane Kelsey’s, The Fire Economy (2015).

[9] See Richard Douthwaite’s 1999 book, The Growth Illusion: How Economic Growth has Enriched the Few, Impoverished the Many and Endangered the Planet, p.304.

[10] From his 1998 book, The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economies. Cross reference Rowbotham’s work against David Korten’s, When Corporations Rule the Earth (2nd Ed) and Ulrich Duchrow’s, Alternatives to Global Capitalism: Drawn from Biblical History, Designed for Political Action.

[11] The 2011 revelations about Rupert Murdoch’s News of the World antics are a case in point.  During investigations into the widespread interception of private communications, the close working relationship between the British government and media executives was revealed.

[12] Charles Hugh Ross’s 2016 book, Why Our Status Quo Failed and is Beyond Reform.

[13] This does not mean all those who hold to the liberal world view support neo-liberalism.  Most, outside of the political elite, either oppose it or would do so if they understood the harm it caused, but they are still liberals in their moral and spiritual outlook.  Noam Chomsky, a well-known dyed in the wool liberal is vehemently opposed to neo-liberalism. 

[14] Chomsky is a classic Humanist liberal, but he comes from the cohort that recognises the dangers of corporatism.  His book is only mentioned here for that reason. 

[15] Naomi Klein’s 2007 work, The Shock Doctrine: The Rise of Disaster Capitalism.

[16] Reported in an article entitled ‘The Feral Rich’, by Vanessa Baird in The New Internationalist, Jan-Feb 2013.

[17] The Big Bank Boondoggle by David Ransom, in The New Internationalist, May 2015.  

[18] The figures quoted in the latter section of this paragraph are drawn from Graeme Maxton’s 2011 book, The End of Progress: How Modern Economics Has Failed Us.

[19] The Christchurch Press, Monday, November 9th, 2015.

[20] How the 1 Percent Provides the Standard of Living of the 99 Percent (2015). To give Riesman some credit, he does roundly criticise the interference by big government in the economy.