This essay attempts to explain the root causes of the current developing political and Constitutional crisis in the United States as the economy moves toward concentration of capital and wealth reflected by and organically linked to concentrated political power. The crisis includes lawlessness at national and international levels: violation of the First Amendment of the US Constitution, the rising frequency of mass shootings, increasing crime and incarcerations, corruption, violation of UN Charters, agreements, and state sovereignty, termination of trade and arms treaties, ending agreements and conventions, illegal wars, foreign-election meddling, surveillance, and more.
Process of Concentration of Capital: The dynamic of the world economy has been evolving over the past 300 years from a highly progressive capitalism to the current cancerous and destructive system. It started in the Netherlands and England during the seventeen century and over time spread throughout the rest of the world. The process began with small, mostly growing firms that converted into corporate entities as their capital increased. Initially, capitalism as a new economic-political order was highly progressive, advancing technologically, and beneficial to mankind. As the size of corporations grew, they gradually absorbed feudal farm-labor and slaves who moved to cities, converting them into wage laborers, providing them a higher standard of living, and freeing them from their exploiters: feudal landlords and slave owners.
Over time, modern corporations continued to develop huge production capacity through a more highly educated labor force and technology, mechanization, and capital that can be measured by Stock Market Capitalization that has been trending upward exponentially. As a result, corporations can produce much more than they are able to sell in the market. The shortage of demand was partly alleviated through a combination of advertising, credit and loans, the growth of middle-class professionals with higher salaries, and by increasing exports. Consequently, nations engaged in World War I and World War II (WWII) primarily to expand markets. The stock-market crash of October 1929 was unintended remedy, obliterating surplus capital and leading to the Great Depression of 1930s. The world economy could not fully recover from the Depression until the inception of WWII that demanded more production for war. While these two wars destroyed the battleground of Europe twice, the American economy grew rapidly becoming more prosperous. Its excess productive capacity was alleviated by the huge demand for American goods, including weapons during those wars and rebuilding Europe and Japan following WWII, which was reinforced by the Marshal Plan. At the end of WWII, the American economy, measured by GDP, was the largest and equal to the entire rest of the world. More importantly, the dollar was designated to be backed by gold and officially set as the world reserve currency.
Meanwhile, as a result of the economic policies of New Deal, including high individual and corporate-marginal tax rates of above 90 percent, establishing the social security system, and minimum wage, American growth and prosperity continued; that growth started to slow in the late 1960s. In 1971, due to printing of dollars in excess of available gold in the American gold reserve, gold backing of the dollar had to be revoked by President Nixon. Instantaneously, as the price of oil increased sharply, it was determined that it be sold only in dollars, therefore all nations which need to buy oil for their energy needs, were required to purchase dollars to pay for oil. Practically, gold was replaced with oil as the backing of the dollar, and allowed the US to print dollars at no cost, in exchange for importing oil and other real goods and services from the rest of the world. This hegemony of the petrodollar continues today, although recently some countries like Iraq, Libya, and lately Iran, Russia, and China have been trying to substitute other currencies and/or gold for the dollar; there are several reasons for that action, including sheltering themselves from sanctions and economic blackmail. It should be noted that the threat of flight of the dollar remains a big concern for the US, economically and politically, because it implies the elimination of no cost imports, investments abroad, payment for foreign wars, and most importantly the ability to use the dollar as an economic weapon.
Surplus capital continues to move to Finance, Insurance, Real Estate (FIRE), merchant capital, foreign investment, fine art, antiques, stocks, bonds, and more recently to variety of speculative and fictitious assets, including hedge funds. Surplus capital has also moved to real estate, resulting in higher property prices and higher rent, making housing less affordable for the lower-income population. As well, big corporations purchased small ones, causing capital to become centralized, leading to an even higher concentration of capital; surplus capital continues to exist and grow. Currently, the US has about $14 trillion negative-yielding debts. Negative yielding debt refers to the situation where lenders are paying interest to borrowers, rather than borrowers paying interest to the lenders. Negative-yielding debt exists in other countries as well, confirming the existence of a huge surplus of capital in the US and the world.
Likewise, surplus capital has been moving into production of all kinds of weapons, increasingly for the sake of more corporate profit rather than the stated purposes, such as defense, security, peace, and democracy. Excess production of weapons promotes illegal, unjust and unnecessary wars and conflicts, killing millions of innocent people all in an effort to expand markets, gain access to and control of natural resources, and to keep the dollar as a reserve currency; moreover, a very costly arms race has begun, raising the risk of nuclear war and elimination of humanity. Surplus capital is at the root of many current societal problems such as both the legal and illegal drug trade, resulting in rising addiction, child and human trafficking, prostitution, organ sales, increased white-collar and other crimes, more incarceration, and privatization of prison systems. Surplus capital is forcing privatization and purchase of public-sector assets and services such as natural resources like petroleum, other minerals, and water, prison systems, infrastructure such as toll roads, as well as public education commodifying them and extracting monopoly rent. Surplus capital is also moving into speculation, potentially leading to a crash, resulting in loss of capital, and a depression like the Great Depression of 1930s, or the Great Recession of 2008.
Politics as Shadow of Capital: The founding fathers of the US, who were the wealthiest capitalists, land and slave owners, invented a new political design written into the Constitution in 1776 to protect their wealth and interest. That new system was the most advanced and progressive the world had yet seen; however, since only white property owners could vote, and be elected to political offices, it was not a true democracy. Later, this model, that was originally rooted in wealth and capital, progressed allowing voting rights for all whether, or not, they owned property, and including women and non-whites. Somewhat later on, it was imitated in different forms in other countries.
In a similar process, corporate capital as a shadow image has been replicated and linked, monetarily and organically, to all three branches and multiple levels of government; it has evolved to a more concentrated and institutionalized political power, with massive financial backing, through the creation, expansion, and concentration of a variety of mass and social media, Think Tanks, the educational system, and various tax-exempt religious entities to influence public opinion toward promoting the interests of giant corporations, as confirmed by the rising number and level of revenue of Lobbying Corporations, more and larger government entities and institutions that promote the ideology and interests of corporate profit and arm sales, and policies such as supply-side tax cuts that mainly increase surplus capital. These policies evolved to increase capital to its maximum, using all methods of bribes, intimidation, and blackmail, as recently revealed by the Jeffry Epstein saga, at the expense of the working class. Simultaneously workers’ economic and political power, real wages, income and wealth have been in decline along with a higher cost of living and debt, social and political division, insufficient and inadequate health care, and a decrease in social supports. These results are reflected in widening income and wealth gaps, i.e., rising inequality, as empirically confirmed leading to slower economic growth.
The dynamics of the concentrated political economy have led to Global Climate Change due to rising consumption of oil, adversely affecting human beings, for the purpose of continuing free ride of the dollar as reserve currency, as described by scholars such as Michael Hudson:
“Control of oil has long been a key aim of U.S. foreign policy. The Paris climate agreements and any other Green programs to reduce the pace of global warming are viewed as threatening the aim of dominating world energy markets by keeping economies dependent on oil under U.S. control. Also blocking U.S. willingness to help stem global warming is the oil industry’s economic and hence political power. Its product is not only energy but also global warming, along with plastic pollution.”
To that end, the US has been promoting higher consumption of oil worldwide, resulting in rising demand for the dollar to buy oil, enabling the US to print unlimited cost-free dollars for the ultimate goal of ruling the world via corporate capital owned by a small minority, based on the doctrine of Full-Spectrum Dominance. The results of rising consumption of oil worldwide have been rising global temperatures, melting icebergs, increasing evaporation that is central to extreme weather conditions such as heavy rains and droughts, and all types of pollution with various adverse health effects.
Additionally, trillions of dollars of interference by the Federal Reserve, the Department of the Treasury, large banks and other institutions, to move cash into stocks, bonds, and other areas since the 2008 crash, further exposes the political system that is trying hard to prevent a market crash for the protection of capital, and confirms that this “democracy” is hopelessly ruled by agents of corporate capital, in the minority, at the expense of the majority. However, since this process is mathematically unsustainable, it leads toward a diminishing real democracy that gets worse over time, as Paul Street stated:
“The U.S. is not a functioning democracy. It’s not a democracy at all. Not on guns. Not on health insurance. Not on mental health policy. Not on union organizing rights. Not on social welfare. Not on taxation. Not on wages. Not on climate. Not on school funding. Not on “border security: and immigration. Not on criminal justice. Not on “defense” (military empire) spending. Not on the distribution of wealth and income.”
Conclusion: Current concentrated and institutionalized political economy is an intertwined system, its motion centered around capital, which urgently needs to be reorganized and restructured radically through grass-roots and local movements, to be expanded to the national and even international level, and institutionalized to support only political candidates and officials at all levels who commit themselves before elections to a sharp reduction of concentrated and institutionalized political power, toward real democracy, free of bribes, intimidation, and blackmail, and equality of political power so that ordinary citizens have an equal voice to billionaires. Plus, state and national laws should be passed that people have the right to dismiss, or fire, elected officials prior to election if they do not act as they committed before the election. The job and the process are difficult, but doable. It can start with: nationalization of failed banks rather than bailouts and bail-ins, and elimination of Citizens United that allows corporations to give unlimited money “indirectly” to corporate–sponsored political action committees for political candidates.