Posted by Kevin Carson on 29 March 2009
On the economic fascism of crony capitalism and irrational American common sense.
19 Mar 09 | C4SS
There are all too many people in American politics whose real concern, concealed behind all the “free market” rhetoric, is not so much “statism” per se as statism that benefits the wrong class of people. A good example: it was quite amusing to hear some Republicans, during yesterday’s Congressional hearings on the AIG bonuses, wringing their hands over the prospect of “interfering with the management of private business” and “altering the terms of contracts.” Last night Rachel Maddow ran clips of some of the very same people, last December, crowing about how they were forcing the UAW to renegotiate it’s contract and accept lower wages in return for bailout loans to the auto industry.
Another example: I don’t advocate Social Credit or greenbackism, but I don’t understand the reasoning of those who object to either as an increase in statism over the present system.
By way of background, Social Credit is a proposal to remedy corporate capitalism’s chronic tendency toward overinvestment and overproduction by periodically depositing a sum of interest-free new money, equivalent in aggregate to the demand shortfall, in the citizenry’s bank accounts. Greenbackism is a proposal that countercyclical deficit spending, rather than being financed by interest-bearing debt in the form of government bonds, should simply take the form of directly spending money into existence by the Treasury.
It seems to me the sticking point, if there is one, should be at the idea of government as regulator of the money supply by creating fiat money, or of deficit spending to meet demand shortfalls, in the first place. But these things are overwhelmingly accepted in principle by the mainstream public. So the sticking point about Social Credit and greenbackism can only be the sacred principle that the fiat money must be specifically lent into existence at interest, and that deficit spending must be financed by government bonds.
The problem is not the function itself, but only carrying it out in a way that doesn’t enable a class of coupon-clippers to skim the cream off the top.
It also seems to me, on the other hand, that if these basic functions are accepted in principle, it makes it more statist–not less–to compound the injury by doing it through private accomplices, and empowering them to charge interest for the function, rather than simply doing so directly.
It’s just another instance of a broader phenomenon, what the Libertarian Alliance’s Sean Gabb calls “economic fascism.” Economic fascism is his term for the phony regime of “privatization” advocated by such organizations as the Adam Smith Institute. It doesn’t get government out of the business of performing particular functions. It just delegates the function to nominally “private” corporations that perform the function with public money, with government protection from free market competition, and with a guaranteed profit for performing the function (on the regulated utility’s “cost-plus” model).
Under this vulgar libertarian model of “free market reform,” the only thing that matters is the comparative percentages of functions which are carried out by nominally “private” and nominally “public” organizations–not the substance of things. But it seems to me that if a corporation receives its revenue from the government, is protected from competition by the government, and is guaranteed a profit by the government, it IS the government. The only significance of the entity’s profit is to increase the overall cost of performing the function, and thus increase the total injury to the taxpayer.
And while we’re at it, let’s be honest about something. Given the existence of a corporate economy on the present model, countercyclical government spending is absolutely essential to prevent its collapse. Those who advocate a return to the Reaganism and Thatcherism of the ’80s, or the cowboy capitalism of the ’90s, absent high government spending, are either delusional or disingenuous. Reagan was the biggest Keynesian of them all.
There are only two alternatives: to eliminate the existing–statist– structural causes of overinvestment and underconsumption, or to continue adding new layers of statism to counter the chronic crisis tendencies. Either more and more statism, or forward to anarchy.
The American corporate economy has been statist to its core since its beginnings in the late 19th century. There wouldn’t even be a national market at all, or national corporations serving it, had it not been for the land grant railroads and other subsidies to long-distance shipping that made possible artificially large firms and market areas. There wouldn’t be stable oligopoly markets had it not been for the cartelizing effect of patents, or the stabilizing effects of the Clayton and FTC Acts’ restrictions on price warfare.
To repeat, the system was statist from its beginnings. There are all too many on the Right who like to refer to a mythical “free market” system that prevailed before 1932, and to pretend that the “statism” only began when government started intervening on behalf of workers and consumers. But in fact, all the “progressive” interventions of government under the New Deal were secondary, aimed at ameliorating the side-effects of the prior interventions that created corporate capitalism in the first place. Had it not been for the secondary, ameliorative interventions, corporate capitalism as we know it would have collapsed in the 1930s.
Returning to my earlier point: if we are to have statism at all, and we are reduced to quibbling between Democrats and Republicans over what kind of statism it is to be, I make no secret of the fact that I prefer the kind of statism that weighs less heavily on my own neck.
If phony “free market” Republicans accept NLRB certification of unions in principle, and only want to quibble over the Employee Free Choice Act because it makes it easier to certify unions without harassment, intimidation and punitive firing of organizers–well, why would I, a worker, prefer a system of certification that suits the bosses’ interest?
If we’re going to talk about a genuine free market labor regime, then let’s eliminate the Wagner Act–and with it Taft-Hartley’s prohibitions on sympathy and boycott strikes, and its mandatory arbitration and cooling off periods. Let’s eliminate the Railroad Labor Relation Act’s provisions that prevent transport workers turning local and regional disputes into general strikes. In short, let’s eliminate all the legal prohbitions on the tactics that unions were using to win before Wagner was ever passed.
But if we’re going to have government certification of unions, let’s have a form of certification that fulfills its stated purpose–determining the intention of workers–as accurately and automatically as possible.
Likewise, if we’re going to have a welfare state, let’s eliminate the costly and intrusive welfare bureaucracies and spend the same amount of money on a guaranteed income. If we’re going to have a regulatory state, let’s eliminate all the agencies and replace their functions with pigovian taxation of negative externalities.
My goal is the abolition of the state. I would welcome all these things tomorrow, if I thought they were genuine steps toward the abolition of the state altogether the day after tomorrow. They certainly wouldn’t be net increases in statism.
C4SS Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy and Organization Theory: An Individualist Anarchist Perspective, both of which are freely available online. Carson has also written for a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.