The Corporate State and Manufactured Dependence

An argument often heard in the 1980s and ‘90s by those favoring lower taxes on the rich was the rich could avoid paying taxes because they had the resources to do so, so why not be pragmatic and set tax rates low enough the rich would actually pay them? The people making this argument overlapped substantially with those arguing poor, and particularly black and brown, drug law ‘offenders’ should face mandatory sentences of decades in prison for drug convictions to ‘send a message’ drug laws will be enforced. The obvious question back is —why would harsh prison sentences dissuade people from using drugs but not from avoiding paying taxes?

This disconnect has elements of racism and class bias, but there is also a deeper precept that economic crimes are ‘victimless.’ With respect to taxes, there are two dimensions here—the premise economic resources are in the first place legitimately distributed and that tax avoidance garners no adverse social consequences. The sources of wealth accumulation in recent decades are inherited (unearned) wealth, corporate executives using monopoly power to extract economic rents, and finance dependent on public backstops and guarantees. None of these sources is supported by the economic theories of capitalism. And the social costs of tax avoidance are evident in poor schools, a dysfunctional healthcare system, deteriorating infrastructure, widespread poverty and under-funded retirement accounts. Economic crimes do have consequences.

Incarnations of a similar argument regarding globalization are today used to explain low corporate tax rates, the ‘outsourcing’ of labor to low wage countries and general fealty to the whims of corporate ‘leaders’ under the premise if we challenge their power they will pick up and move elsewhere. What is missing is clarity around exactly who is dependent upon whom? The multi-national corporations most capable of labor theft through outsourcing and of availing themselves of corporate tax avoidance schemes also receive cost-plus government contracts, technologies developed at public expense they commercialize, transportation and telecommunications infrastructure built at public expense, the ‘benefit’ of a standing military with a long history of murder and pillage in their service, a workforce largely educated at public expense and a breadth and depth of institutions supportive of ‘private’ property rights and state power to protect accumulated wealth.

In the narrow sense of existing institutional context, corporate and plutocrat power can be expressed. Banks can withdraw credit and corporations can fire workers in the U.S. and hire workers at lower wages in low wage countries. And they can use tax avoidance schemes to avoid paying taxes. However, their ability to do so is a function of public policy, not nature. And effective methods of managing the destructive impact of corporate power exist—companies operating in Germany can’t fire workers at will because the German government makes doing so prohibitively expensive. And banks operate by legal charters that can be revoked.

In addition to the ability to withdraw the public support for ‘private’ corporations outlined above, other levers of control are the terms of incorporation as legal charter, the allowable level of retained profit; the minimum wage labor can be paid, the right to sell the goods and services produced and the price at which they can be sold. Variations of these have been used across history and are being used contemporaneously by existing trading ‘partners.’ Through these levers corporations could be made to either sell their goods and services within the U.S. under socially beneficial terms or forgo selling them here entirely. Absent mass and credible rebellion there is little chance legislation to accomplish this will be passed. But that is a function of existing political-economic relations, not the absence of the technical capacity to force socially beneficial economic arrangements.

Current ‘globalization’ is historically related to the epics of imperialism that preceded World Wars One and Two. In contrast to the theories of economists, existing ‘global’ relations retain strong ties to earlier imperial relations. The ‘state capitalism’ of modern China has roots in the mercantilist strategies of imperial England of which China was colonial subject. European ‘corporate’ relations in Africa strongly follow historical imperial relations. And these earlier imperial relations were clearly developed as modes of exploitation and extraction—the dependencies that developed were conceived to force cooperation with imperial imperatives. The results—vast wealth extraction, imperial tensions that led to the most destructive wars in human history, the temporary evictions of imperial powers from their colonies (only to return as ‘free trade’ relations) and new and ‘improved’ strategies of forced dependence. The relevant points are: current circumstance has precedence in prior history; engineered dependence is a colonial strategy of expropriation, and other than a few hundred rich families in the West, we are all colonial subjects under the ‘new’ globalization now.

The sense of economic powerlessness against dominant interests—multi-national corporations and their servants in government, is neither natural nor accidental. ‘At will’ employment as it exists in the U.S., where corporations claim the right to fire workers without reason or cause, has long been contingent on the ability of labor to counter the power to do so through collective action. The fat paychecks the executives of large corporations receive include economic rents, formerly the due of capital, paid for creating and using the mechanisms of economic terror against their own workers and, more broadly, labor held captive by geography and history. The Federal Reserve has long ‘managed’ business cycles to minimize inflation under the theory a material degree of unemployment is ‘natural’ and always preferred to inflation. And the ‘consumer rights’ movement of the 1970s illustrated the power of customers to influence corporate decision making, even if the result was labor cutting its own throat through accepting the separation of consumer from labor economics.

The ‘resistance is futile’ mindset that supports plutocrats and the global corporations they own assumes the existing order is the only possible order and the costs of resistance are too great because ‘they’ have state power and unlimited economic resources on their side. But what is to be gained or lost from resistance very much depends on current and projected circumstances unambiguously in decline for an increasing proportion of the populace. The Keynesian saw companies fire their own customers mistakenly conflates local rationalities—hire / fire decisions made by individual companies in capitalist economies, with the macroeconomic insight an immiserated populace is unlikely to well support a capitalist economy. Plutocrats and their global corporations need not acknowledge this for it to be fact. Imperial relations were never intended to better the lot of imperial subjects. What is left is a populace in need of a functioning economy and an available and substantial proportion of the formerly ‘employed’ with little else to do but acquiesce to creeping immiseration or rebel.

Put another way, there are no ‘no cost’ strategies of political-economic change. But this applies to doing nothing and allowing the current trajectory of corporate-plutocrat dominance to proceed unimpeded as well. The choice isn’t between maintaining current conditions or forcing political-economic self-determination, it is between forcing political-economic self determination or letting corporations and government in the service of plutocrats continue to move the corporate-state nexus in their preferred direction. The exponentially more intrusive trade agreements that institutionalize corporate monopoly power over political-economic self-determination are being negotiated as this is being written. The instruments of totalitarian control—the surveillance state in association with the militarization of the police and class and race based policing, incarceration and murder, is more in evidence with each new disclosure of the corporate state’s abuses of power. The choice is of future, not present, conditions.

In recent decades the American left has largely proposed utopian schemes—worker collectives and local public projects that leave the power of international capital unchallenged. These may be locally constructive, and that has its benefits, but the schemes of dependence and extraction, the nexus of multi-national corporations and state power, appears determined to be all consuming. Increased state power in the service of capital is oppressive by degree, but especially for those only marginally tied to the corporate economy. If the rich and corporations don’t pay taxes, guess who does? Either through cutting ‘public’ expenditures or through back door taxes such as ‘user fees’ for required services, and likely both, the economic extraction will continue. And the ‘trade agreements’ (TPP Trans-Pacific Partnership agreement) being negotiated are to consolidate corporate control over all commercial economic production, not just that already under corporate control (why else the agreements and who precisely is doing the agreeing?).

This isn’t to suggest worker collectives and the build-out of public institutions in the public interest shouldn’t be undertaken—they should. The problem is, as was illustrated by the Brits in China, these powers will not stop the process of expropriation and immiseration until they are made to. The effort to cut social insurance programs now has two Democrat administrations (Clinton, Obama) and one Republican (Bush) having proposed cuts and / or privatization. The goal of doing so is to provide even more social resources to the already wealthy. The mass unemployment resulting from state-supported Wall Street actions doesn’t receive as much as lip service from ‘liberal’ Democrats who leap over one another to beg for corporate donations from companies either partially or wholly dependent on public largesse for their continued existence. And the build-out of the corporate-fascist state has more to do with promoting terrorism against a rapidly increasing swath of the world’s citizenry, including maintaining unjust and exploitative economic relations ‘at home,’ than with fighting ‘terrorism.’

People are right to be cautious when considering actions likely to cause large political-economic dislocations—things can be made worse for lots of people. This is why the neo-liberal program of imperialist economic expansion and neo-conservative project to launch ill-conceived wars for resources and to expand U.S. military power are so radically egregious—crimes by any reasonable standards of ‘civilized’ behavior. The neo-liberal economic program was thrown into the garbage bin of history following the Great Depression only to be revived when its resulting catastrophes were finally removed by time from the collective memory. And the neo-conservative program entirely by accident caused the single greatest diminution of imperial military power in human history. Were it not for the million plus Iraqis killed in the process ‘the world’ might be grateful. This is to agree with those urging caution when considering rearranging the world based on poorly considered schemes of world domination.

But this conclusion leaves the neo-liberal and neo-conservative projects in the past tense when they remain the dominant drivers of economic and foreign policy in Washington, New York, London and Brussels, despite their catastrophic outcomes. This makes reluctance to force political-economic change a form of incaution. The corporate state representatives in Washington, the Wall Street bankers in New York and the inheritance baby John Bircher’s in the mid-west support current circumstance and the political-economic trajectory because they created it. Radical change forced on an unwilling populace by dull ideologues insulated from the consequences of their actions describes current circumstance, not a potential new state of the world. Sure things can get a lot worse—it’s happening right before our eyes.

Finally, to the brothers and sisters of the ISO (International Socialist Organization), I met a bunch of you at Columbia University two or so years back at one of your seminars on Marxian economics. I took several of you aside and politely made a few points about the absence of finance and corporate agents in your explanations of capitalist expropriation. You apparently took great offense, as I never heard from ISO despite leaving my contact info and stating my interest.

I don’t ‘do’ social media so I was unaware of the kafuffle ISO raised over the word ‘tit’ appearing in a Counterpunch headline about Angelina Jolie’s double mastectomy until I read Jeffrey St. Clair’s essay. If seeing this in print doesn’t read like a joke to you, I’m at a bit of a loss. Is this what ‘the left’ in America has been reduced to?

It’s not that the small issues aren’t important, but rather that the big issues are more important. 95% of America has never heard an actual argument from the socialist left. There are some important battles still to be fought. Celebrity breasts are not one of them.

Rob Urie is an artist and political economist in New York. 


Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.