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Samizdata quote of the day – How did American capitalism mutate into American corporatism?

In free enterprise, the old rule is that the customer is always right. That’s a wonderful system sometimes called consumer sovereignty. Its advent in history, dating perhaps from the 16th century, represented a tremendous advance over the old guild system of feudalism and certainly a major step over ancient despotisms. It’s been the rallying cry of market-based economics ever since.

What happens, however, when government itself becomes a main and even dominant customer? The ethos of private enterprise is thereby changed. No longer primarily interested in serving the general public, enterprise turns its attention to serving its powerful masters in the halls of the state, gradually weaving close relationships and forming a ruling class that becomes a conspiracy against the public.

This used to go by the name “crony capitalism” which perhaps describes some of the problems on a small scale. This is another level of reality that needs an entirely different name. That name is corporatism, a coinage from the 1930s and a synonym for fascism back before that became a curse word due to wartime alliances. Corporatism is a specific thing, not capitalism and not socialism but a system of private property ownership with cartelized industry that primarily serves the state.

The old binaries of the public and private sector – widely assumed by every main ideological system –have become so blurred that they no longer make much sense. And yet we are ideologically and philosophically unprepared to deal with this new world with anything like intellectual insight. Not only that, it can be extremely difficult even to tell the good guys from the bad guys in the news stream. We hardly know anymore for whom to cheer or boo in the great struggles of our time.

Jeffrey Tucker

16 comments to Samizdata quote of the day – How did American capitalism mutate into American corporatism?

  • Deep Lurker

    This is word hash. The issue isn’t government-as-consumer (“We, the Government, are buying a BigNumber of government-model widgets”) but rather government-as-dictator (“You, Citizen Consumer, must buy the government-model widget, rather than model you’d prefer – and you, Citizen Manufacturer, must make the government model rather than models those deplorable Citizens would prefer to buy.”)

    Because, of course, Government in its superior authority has decided that the government-model widget is GoodRight and that those other models that foolish deplorable private buyers would prefer are BadWrong. And those who complain or resist will receive visits by government minions who are there to help them return to the path of righteousness.

    It’s not because of the government buying BigNmber of widgets and so somehow distorting the market, the way any other big buyer might.

  • It’s not because of the government buying BigNmber of widgets and so somehow distorting the market, the way any other big buyer might.

    No, that’s exactly why. Markets are what we call flows of incentive. The reason Big Tech is happy to be the outsourced enabler of state tyranny (rather than working against the politicians & institutions who want to be unchallengeable tyrants), is absolutely because state institutions are their most dependable customer.

    When politicians argue businesses should be nationalised rather than showered with billions of £$Є, they incentivise a very different response. Herni de Saint-Simon & Giovanni Gentile understood that, so did that arsehole Aneurin Bevan who established the NHS by “by stuffing the doctors’ mouths with gold”, simply making it worth their while to go along with what he wanted. Marx did not understand that approach, assuming rival power centres had to be utterly destroyed rather than co-opted.

  • Paul Marks

    Tax law is pro Corporations – they pay, in most (but NOT all) Western countries, much lower taxes than individuals do – this is due to the mistaken idea that Corporations are just the shadows of individual “Aunt Agatha” style share owners – in reality the managers of the vast corporations could not give a damn about “Aunt Agatha” as most shares in most vast (although NOT all) corporations are controlled by other corporate entities – pension funds and other entities (see later). This does NOT mean that taxes on companies should be higher – it means that taxes on individuals should be lower, as they already are in the nations where taxes on individuals and corporations are the same.

    Turning to the Crony Capitalism that the post rightly calls out.

    Partly it is indeed government contracts – which can often be very attractive. For example (at least in Britain – and I think in parts of America to) a “private provider” can (indirectly) bill the taxpayers for properties they buy to provide a service, say provide “placements” for children (“the mortgage is a cost of providing the service – and this mortgage is over three years, so that will be the best part of a million Pounds per child, thank you”) and the “private providers” get to keep-the-properties. Bald-fat-Jews on local government audit committees can complain about this – but they might as well be shouting at the Moon.

    Drug companies, at a modest cost of part funding the regulators, can get immunity from being sued for their toxic products – and can even get the taxpayers to pay them vast sums of money for their toxic products, and government funded advertising for the toxic products, and pushing people into accepting the toxic injections. What is not to like?

    But all this comes a cost to the Corporations – a cultural cost. For example, it is NOT the case that private road repair corporations can just take the tax-money, do a terrible job, and laugh all the way to the bank – getting government money means they have to do the government tap dance, they have to talk endlessly about racial and sexual groups (“what is the sexuality or race of a pothole?” – talk like that and you will be PUNISHED), and the C02 is evil theory – with the modern definition of “science” (sorry “the science”) as a politically motivated dogma, that must not be critically examined, just obeyed.

    This corrupts Corporations – although they are corrupted anyway by their very nature as bureaucracies – F.A. Hayek was fond of pointing out that most people who work for most corporations have no contact with paying customers, and that most (most – NOT all) corporations are controlled by managers who do not own them.

    For example, if you told Bob Iger that his “Diversity” and “Inclusion” policies were destroying the vast Disney Corporation (which he already knows – indeed he has known that for years) he would, if forced to by some “truth drug”, reply “why I should care? I have already got vast sums of money out of this company for myself – via my bloated wages and so on, it is not as if I ever intended to pass this enterprise on to my children, so let Disney BURN, Death to America! Death to America! Death to America!” and the Board of Directors of BlackRock and the other entities that “manage” most shares (many TRILLIONS of Dollars worth of shares) would, privately, nod in agreement “Death to America!, Death to America! Death to America!” would seem a perfectly reasonable position to them – as they have been “educated” to believe that America is evil, and that the world would be a happier place under international governance.

    And the managers of the various corporate entities fondly, but MISTAKENLY, believe that such a world – without “evil” self governing nation-states such as the USA – would be controlled by people like themselves.

  • Paul Marks

    The elephant in the room is fiat money (money created from nothing) and Credit Bubble banking (rather than honest money lending) – this concentrates economic and political power, as Richard Cantillon pointed out centuries ago (Cantillon Effect). And the more it is done – the more concentrated the economic and political becomes.

    There used to be some connection to honesty, but first, 1933, the Federal Government stole privately owned monetary gold, and violated all contracts (specifically the gold clauses of the contracts) public and private, then, in 1935, the Supreme Court de facto ruled it was O.K. for the government to rob the population and to violate all contracts (although that was a 5 to 4 decision – and the dissenting opinions are key documents showing the decline of the American Republic and the decline of a free enterprise economy), lastly in 1971 the Federal Government decided to defraud all other governments (not “just” American citizens) by not providing the gold-for-Dollars it had repeatedly promised.

    President Nixon said that the action of 1971 was a temporary emergency measure, just as the 1933 action was supposed to be a temporary emergency measure.

    But with the passage of time it is clear that these actions were not temporary measures (there is nothing “temporary” about 91 years) – it is now clear that the United States government and the banks and other corporations linked to it, is a vast criminal undertaking – no private individual, business, or foreign government should have money or investments in the United States – as this money or investments may be stolen at any time.

    I am sorry to sound harsh – but this is the position. And statements such as “they will only rob Russians – they will not rob other people” are factually wrong, the establishment are happy to rob anyone – even fellow members of the establishment.

    None of the above should be taken to mean that other governments are honest – of course they are not. But the American Republic has been corrupted – “the system” is a disgrace (people who still support it are deeply misguided) and “the rule of law” no longer applies in the Classical sense.

  • Kirk

    Just as you have self-reinforcing “virtuous circles”, you have the converse: Self-reinforcing “vicious circles” that spiral things down into ultimate destruction.

    The main problem? We put too much power into the government, and into the corporations. Microsoft famously did not have any major lobbying efforts going on until the government went after them for monopoly with the Windows operating system… Now, of course, they do.

    One has to wonder at what the actual motivations were, for those bureaucrats who chose to go after them in the first place. It’s all protection rackets, all the way down.

  • Fraser Orr

    The answer to the question “how” in the OP is not complicated. It is the same reason that causes most of the dysfunctions in our western societies, and the same reason that they are all on the precipice of collapse. The answer is simply that the government got abso-fucking-lutely ginormous. That coupled with iron laws of economics — that suppliers follow customers with money — makes the situation inevitable.

    The solution to a very large number of society’s wows is to reduce the size of government and decentralize it via federalism (then you have lots of mini governments with different needs), but that’s not going to happen. So the foundational question is “Why is that not going to happen?” And that is because the people want a big central government that provides for them from cradle to grave.

    Our populations are so neotinized that WAY too many of them don’t want to stray too far from their mommy’s breast and take responsibility for themselves. Orwell was wrong — it isn’t Big Brother, it is Big Mamma. And that is a problem that largely can’t be fixed — not without a few generations worth of change, a few dramatic economic collapses and a LOT of pain.

    However, it also reminds me of diets. The guy who is 300lbs trying to lose weight thinking a miracle diet will get him to a healthy weight in a couple of months. It took him ten years to get that fat, so it’ll probably take ten years to get back to a healthy weight. So it is with our obese government… there are no quick fixes, and Donald Trump is neither Jenny Craig nor a large dose of Ozempic. I’m afraid we are going to need a couple of heart attacks, diabetic ulcers and a cancer diagnosis before we put down the pizza.

  • GregWA

    IMHO, our (in the US) last, best chance of beating back the guvmn’t was Reagan. When he failed, I knew it was over.

    Instead of “Too Big to Fail”, our mantra should be “Too Big to Possibly Work”. Applies to governments, corporations, labor unions, churches, national laboratories (I work at one), any human organization.

    Of course, it does not apply to Samizdata.net !!! 🙂

  • Stonyground

    I think that consumerism acts as a more effective form of democracy than voting for elected representatives does. Our choices to buy or decline to buy goods with our money gives us a considerable amount of power. It isn’t really surprising that those who wish to rule over us would have a problem with this.

  • William O. B'Livion.

    I’m not sure there’s a better way to contact The Collective that is Samizdata about this, but it appears your RSS Feed is stuck on 12 Feb.


  • Paul Marks

    I think that as late as the 1980s there was still some patriotism among the American Corporate elite – or at lest they pretended to be patriotic – supporting the nation, the family and so on.

    In the 1990s that started to collapse – just as the residential sense of honour and honesty among government officials started to collapse.

    These days the Corporate elite openly hate the nation and traditional virtues, and government officials lie without shame – about everything from historic temperature figures to inflation numbers.

    The courts are also totally corrupted – including big city juries. On political grounds they convict the innocent and they find innocent the guilty – and they know what they are doing.

    John Adams argued that the Republic would last whilst most people were basically good – at least in the big cities (and among the corporate and government elite) they often no longer are.

  • Paul Mark

    Hiring the most skilled person for the job.

    Basic truths, objective reality – knowledge, being real and universal. NOT different depending on “historical period”, or race, or sex.

    These are the principles America once had – but which the “educated” now regard with hatred and contempt.

    They establishment elite see nothing wrong with even pilots and surgeons being selected on the basis of skin tone, or sexuality.

    And the establishment elite mock the very idea of objective knowledge.

    Remember such people are now starting to dominate education.

    “But at least the corporations must hold to objective truth – otherwise how can they provide effective products for their customers?”

    Why should they do that? Remember fiat money, Credit Bubble finance, and that Corporate managers do not own the Corporations – and so can not pass them on to their children.

  • Kirk

    Paul Marks said:

    John Adams argued that the Republic would last whilst most people were basically good – at least in the big cities (and among the corporate and government elite) they often no longer are.

    Yeah, and that’s why they built in all the interlocking features to prevent things from going off the rails… Which the Progressives steadily sabotaged.

    Also, why we’re here. Add in a dollop of “the Founders didn’t imagine the Industrial Revolution” and all the other 19th Century developments, so they didn’t plan countermeasures.

    The raw fact is that people are assholes. You don’t build a government structure based on the fallacy that they’re either noble or wise as a collective whole; you plan for corruption and malfeasance, trying to do the least damage for the longest time.

    Frankly, the Founders had a pretty good run with their ideas, and it’s mostly been the corruption of what they laid out that’s been our downfall… Not the least of which was the change from appointing Senators to popularly electing them. They were supposed to be the state government’s reps in the Federal structure, not long-term untouchable Representatives. The idea that you’d have life-long politicians was not something the Founders really considered. If they had, I think they’d have said something on the issue, and then put term limits in place.

    Every human-run system or organization inevitably corrupts. You can’t get around that; put power into a position or an organization, and the power-hungry careerist types will soon ooze out of the woodwork to do their dirty work, often with other people looking on and commenting. Those “other people” then deserve whatever they get, because what they should have done when Mr. Smarmy Git self-identified himself was to implement the Three-S Philosophy of Personnel Management: Shoot, Shovel, and Shut up. We get what we get because we don’t police our ranks carefully, always looking the other way when peers and superiors get up to malfeasance, which inevitably turns into outright evil when that individual is never censored or restrained.

    Raw fact? We had a pretty good run; something will have to come out of the coming chaos, and I hope that whoever sets things up takes a hint from what went wrong with our system and implements some f*cking controls on the inevitable self-interested assholes that infest our species.

    Frankly, I don’t think we cull enough of our fellow man. There are a lot of people I think back on who turned into criminal assholes as adults that I knew were going to be trouble. Had someone been keeping an eye on them, and the moment they started to actually demonstrate their potential actually done something about it? The world would be a much better place.

    I completely get that killing Hitler in the cradle would have been an immoral thing, but the minute that smarmy git started showing signs of what he was going to do? That should have been a strong hint to his peers that he needed culling.

    I have to applaud his relatives that have self-deleted their genes from the pool. That’s probably not necessary, but I appreciate the gesture.

    I honestly feel that we just aren’t critical enough of the sort of conduct our fellows demonstrate. Every one of the arseholes behind what we’re talking about here isn’t the self-created product of their own selfishness; there are entire ecosystems of supporting obliviots that recruited these characters, trained them, watched them act inside the organization, and then promoted them… You allow someone like, say… Comey, the infamous FBI creepy cretin? You let him prosper in your hierarchy, take high office in it? You have a certain responsibility and moral culpability for what he does. Someone should have said “This asshole has zero morals…” and then fired him. Preferably, long before he got to being head of the FBI. It’s just like the idiot friends of mine at the Seattle PD; told them for years that they needed to do something about the racists on their force, while they steadily insisted they didn’t have a problem…

    Guess what? They do. And, now they’re paying the price for it, along with every other law-abiding citizen of King County. Their moral corruption, demonstrated as racism, gave the leftoid numpties the opening they needed, and which they ran with. SPD is just as much at fault for what happened in Seattle as anyone else, and actually a bit more.

  • Other JJM

    Didn’t Berle and Means warn about this back in the 1930’s? It has been decades since I read ‘The Modern Corporation & Private Property’, but I do remember others noting how it predicted the rise of megalithic corporations by way of alterations to securities law that reduced the incentives & abilities of shareholders to pay detailed attention to what the business managers were doing and also for them to do meaningful things in a timely fashion in response to executive behaviour. Corporations grew enormous through voluminous stock issues etc, stock ownership became much more dispersed, and separation of ownership and management went into overdrive, just as they predicted.

    I’m sure the more-educated and more-experienced here can better pursue or debunk that, I just figured I’d mention it as a contributing factor.

  • Steven R

    How did it get to this point? Simply put: most Americans don’t care how the sausage is made so long as it gets made. They didn’t care about abused coal miners so long as the coal got dug and their power plants still ran. They didn’t care when Marines were sent into the Banana Republics so long as cheap fruits and vegetables were in the supermarkets. They didn’t care about forever wars in places they couldn’t find on a map so long as they were able to get a good job at Bell Helicopters. It was like that a century ago and it will be like that a century from now. So long as the lights stay on, there is food in their bellies, a roof over their head, and a few creature comforts most Americans won’t care enough to demand change.

  • Paul Marks

    Kirk – there is no, good, reason why an industrial city should turn to statism – it was Collectivist ideas among an educated elite who led them the wrong way, then corrupt scumbags (such as Mayor Curley of Boston) did indeed turn up and offer people free-stuff without explaining where the money would come from (that is true – yes).

    Some American cities still have not fallen into this trap – Fort Worth springs to mind.

    Of the big cities – New York and Chicago have the worst debts (even in relation to the size of their economies).

    Most big American cities are now post industrial rather than industrial – due to statism driving out industry.

    The “Finance Economy” is a Credit Bubble economy, a vast SCAM – but then I have ranted on about that many times.

  • Paul Marks

    Kirk think of the mentality of people who find someone guilty of murder – when they know that he is innocent, indeed that there was no murder (that the “victim” died of drugs he had willingly consumed).

    And the mentality of people who find someone liable for millions of Dollars over sexual assault – when they know (indeed giggle as they admit they know) that no sexual assault took place.

    On the mentality of people who will send someone to prison, to be tortured and abused for walking into the Capitol building (even when they were directed in – and did not even cross the rope line inside), or send someone to prison for a joke “meme” that he did invent (“vote by text” was a joke meme invented by Hillary Clinton supporters), or award a million Dollar judgement against a DYING man (Mark Steyn) whose only “crime” was to tell the truth – to call out Michael Mann as the fraud he is,

    It is not just the Democrat judges in the big cities who are evil – so are many of the juries.

    They are just no good – corrupt and vicious people. People who have any decency are carefully removed from the jury pool by such questions as “do you think the 2020 Presidential Election was fair and honest?” – only a scumbag would answer “yes” – but that is the required answer.

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