Millennium Post

Because American state is a corporation

The corporate state outlines the economic interests of multinational global companies and in collusion with it earmarks four principles of goal attainment- unity, order, nationalism and (economic) success. The first three principles act as ideological supplements to economic growth which is a new form of multinational capital that is truly worldwide in scope. The ‘economic system’ is no longer capitalist in the traditional sense of the term since capital is concentrated among corporates to the detriment of a very large number of small businesses, small tradespeople, craftsmen, merchants, farmers, cottage industries and small-scale factories. The ‘right to private capital’ has been abrogated by the state and the market mechanism is suspended by oligopolistic power.

It would be fair to accept the notion that the market logic of economics applied to politics in explaining political decision making fuelling economic growth has only modest success under a corporatist state. 

Infact, in contemporary world the ‘management’ of large scale industrialised economies, particularly the US and western European nations, have moved away from the ‘economics-politics policy effect’ and clearly outlined ‘ideological considerations’, embodying a sort of ‘general will upon society,’ that appear to account for a great many political and judicial decisions having a legitimate impact on the economic programme to be adopted by the regime in power.

Let us look at some of the features of corporatism that have undermined democratic functioning of political institutions and left behind enormous social costs that citizens have to bear.

First, corporatism concentrates access to and control over enormous amounts of money and power in the hands of ‘managers’ who are supposed to allocate according to the long term good of the social collectivity.   But ‘managed economies’ are notoriously prone to expensive error because ‘managers’ cannot predict the future, and big moves in the wrong direction are far more costly for the economy than are a small business’s small scale personal follies. 

It is well known that most of the banks in the US and in the UK collapsed under the weight of bad investments and vast debt in 2008. Yet, despite the banks getting a bailout that amounted to $700 billion of public money in order to stave off bankruptcy the average citizen was ignored by the government despite legitimate democratic protests against such a political decision. 

In contrast to the bailout of mega-corporations no luxury was afforded to the average citizen with the result that thousands of small and medium sized businesses went bust and hundreds of thousands of homeowners lost their property; to the very institutions the taxpayer was forced, under duress, to bail out. If the system had been one of pure democracy that supports capitalism then none of the banks would have been bailed out. Apparently, under the rules of a free market no company or institution, private or public, should be able to manipulate the system of the free market.

Second, corporate managers justify dubious ways of taking the money for themselves, because the (public money) ‘is right there’, and appears as ‘bonuses’. It is commonplace to hear that Wall Street bankers, whether bankrupt or not, pay themselves mega-million bonuses which suggest that the closer you are to the source of money, the greater proportion of it you would take for yourself.  
William Black, an Associate Professor of Law and Economics at University of Missouri-Kansas City calls this a ‘criminogenic environment’ that virtually guarantees there will be accounting control fraud to disguise looting of the company by its managers and other employees who are in on the fix. In this regard it would be fair to state that wider corporate financial practices manipulate and distribute ‘rewards for industry leaders’ and ‘costs for middle to poorer sections of society’ on the basis of ‘political decisions’ taken by the corporate governors who approve it according to what the various classes of society ‘deserve’. This is a highly corruptible human evaluation.

Third, the steady growth of a corporatist economy has undermined the democratic traditions of US political institutions. In 2006 President George Bush appointed Henry Paulson as the Secretary of the Treasury Department. Paulson had earlier served as the CEO of Goldman Sachs but true to the ‘lingua franca of corporatism’ would be ‘managing the US Treasury Department’.  It would be difficult to evaluate to what extent the Republican President gave a free hand to Paulson in the running of the US economy or was ‘freed’ from democratic government oversight and control.  Nevertheless, Paulson as the political enabler of corporatism foresaw a series of ‘reforms’ to modernise the ‘outdated financial regulatory systems of the US and the global economy. 

He sought to ‘right’ government action or ‘mistaken action’ by reviewing the method of social security spending by the US government; took a decision in September 2008 to use hundreds of billions of treasury dollars to clean-up ‘non-performing mortgages’ in risk-taking financial firms; passed HR 1424 Paulson Manager of US Emergency Economic Stabilisation Fund; set up the Financial Stability Oversight Board and started the Troubled Assets Relief Programmme; and of course, authored the ‘bailout programme’ for US mega-corporations following the global financial crisis of 2008.

Fourth, the impact of corporatism has found political support in the US Courts. In the landmark 2010 Supreme Court case Citizens United v. Federal Election Commission, corporations legally became ‘people’ who could unlimitedly fund political candidates. The Roberts U.S. Supreme Court, ruled that legal entities, such as corporations and labour unions, had the same ‘purely personal rights to free speech as living individuals, and even if they could not vote in an election, they could spend as much money as they liked to influence the outcome of an election’ which ensured that they became politically powerful. Corporations could now direct politicians the way to vote in Congressional debates and address certain issues, in return for a well-financed political campaign.  It is not surprising that in contemporary America a large percentage, possibly 90 per cent of congressional seat winners, are occupied by those heavily financed by corporates.

Corporate management of the US economy has come at a substantial cost reflected in the significant economic downturn of American society. The heart and soul of America’, the middle class, at one time the envy of the world is under siege. It is being ‘ravaged, dismantled and being beaten into submission’ by the unrestrained powers of Corporatism. The fall of the American middle class needs to be contextualised within the legacy of a collusive relationship between the government and the industry, especially the banking industry that created an atmosphere in which ‘vitally important regulations were systematically eliminated and financial manipulation became an art form’. 

Manipulated and tricked by bankers by every conceivable form of fraudulent financial transactions, corporates moved in to take further advantage of the middle class. American transnational corporations, while being ‘headquartered’ in this country, have no bond, allegiance or loyalty to the American people. Many of these corporations, especially the mega retail chains, employ many millions of Americans, who work for the minimum wage and minimal benefits in the distribution and sale of products that are assembled overseas by the ‘global piece rate de-unionised’ worker. 

What these corporations have done is to develop a very clever system of very low cost labour in overseas nations complemented by its expansion into America. With outsourced jobs hovering at 22 per cent to 29 per cent, which also must include ‘contestable’ jobs open to competition and cheap talent across the world, the corporate industry is now in the process of developing a newly reconstituted American workforce that will be entirely different from the one that once was the best and most highly paid in the world. 

This work force, a product of decades of underinvestment in areas of competitiveness, which is short-changed by the outsourcing industry cannot avail or more appropriately qualify for even the few ‘new high skill specialisation manufacturing jobs’ to operate complex machinery available in the US economy in the post recovery (2009-2012) period. Unemployed, they are so desperate for work that they will do anything to get any job no matter how low are the wages. When those who once occupied the middle class are forced to occupy the lower income rungs of our society their purchasing power will no longer fuel and sustain US consumer-driven economy.

Yet, about 46.5 million or 15 per cent of the US population are now poor, an estimation that post 2008 crisis nearly half of the middle class have fallen through to the ‘category of the poor’. 

The author is associate professor, Department of Political Science, Deshbandhu College University of Delhi

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