The ascendance of Wall Street, and of a managerial bureaucracy (PMC) more generally, largely explains the political realignments that have been playing out in the U.S. Beginning in the 1970s, the American political class made decisions at the behest of business interests and oligarchs to restructure the U.S. economy in ways intended to shift the balance of political and economic power towards capital. Finance was, and still is, the method of affecting this transfer of power. However, the current epoch of finance capitalism has run its course. Its logic has been lost. The threats to the neoliberal order are now internal to it.
Bi-partisan claims that China is a growing economic and military threat to the U.S. places economic competition within the national frame that American capitalists have spent the last five decades arguing is no longer relevant because of globalization. This posture of a unified national interest follows several decades of American industrialists cum financiers doing everything they can to concentrate wealth and power for themselves. Now, having done so, the frame of ‘nation’ is being opportunistically reasserted to claim a unified national interest to oppose ‘foreign’ competition. However, China didn’t pass NAFTA and China didn’t bail out Wall Street.
The contours of current U.S. political divisions can be seen in the graph above. The top three sectors in terms of contribution to GDP by industry are finance, professional services and government. Manufacturing has declined as a relative contributor just as the neoliberal program intended. Unionized industrial jobs have been replaced with non-unionized service jobs. The PMC is the functionary class facilitating this shift as it assumes roles as, and managing, service sector workers. It is the representative face of capital as manufacturing has been migrated abroad. The ‘anti-labor left’ that has emerged in the U.S. since the 1990s is concentrated within the PMC.
The latter point isn’t meant to be gratuitous. In descriptive terms, a central goal of liberalism is to make capitalism fair. However, fairness in capitalist terms is that .0000000000001% of the population owns half of the national wealth. This is equitable distribution in capitalist theory. So, liberalism wants to make the system where .000000000001% of the population owns half of the wealth fair without changing the system or redistributing wealth. Inclusivity— the ‘level playing field,’ is the metric of fairness. Support for labor, and the power of labor, is a challenge to that system of distribution. It balances the power of employers. But it is antithetical to neoliberalism.
Caution needs to be applied in considering the actual economic contribution of finance. In the first, the GDP arithmetic is Price X Quantity = Output. Government support for finance has resulted in a very large rise in ‘P’ in finance and professional services. Pay levels (‘P’) in these industries have risen as they have stagnated or declined for ‘ordinary’ service workers. This represents the concentration of economic power, not the production of the stuff that money can buy. The tautology that people are paid the value of what they produce gets turned around when bankers create most of the money.
The size of finance relative to the making of actual stuff is a case of the proverbial tail wagging the dog. The theoretical justification for its existence is as facilitator of the productive economy. As facilitator, its ‘cut’ should be a small fraction of what is produced. The same is true of the PMC whose role is to manage the production of stuff and the provision of services. What has been effectively created in the U.S. is a bureaucratic neo-feudalism where nominal facilitators take most of what is produced globally for themselves. The rising power of China is seen as a threat to this practice.
The imperial-colonial frame of ‘managerialism’ is of an elite class that organizes the labor of colonial subjects who are constitutionally incapable of organizing their own economic production. Modern managerial practices were first conceived and implemented to ‘manage’ slaves on American plantations. The 1990s narrative of neoliberalism was of American managers organizing global economic production. This explains in part the willingness of industrialists and the U.S. political ‘leadership’ to send industrial production abroad. The result: an eviscerated and immiserated domestic working-class now lorded over by wildly overpaid and self-congratulatory bureaucrats.
This economic taxonomy has thus far left out the petite bourgeois shopkeeps who Gramsci identified a century ago as the reactionary core of European fascism. While the prevalence of small business is often overstated through the inclusion of branch offices of large corporations, small business owners exist on the front-line of capitalist mythology. And they are often the victims of its ordinary tendency toward economic concentration. Most small businesses fail very quickly. Those that succeed feed a myth of self-reliance that turns to resentment when power or happenstance turn against them.
The fragility of the global ‘supply chain,’ the dependence of billions of people on the interdependence of globalized production, was brought to the fore through shortages caused by the pandemic. In fact, people who are dependent on international trade for critical supplies like food, energy, medical supplies, etc. are vulnerable to the whims of predictable and unpredictable forces. The power dynamic of this manufactured ‘state of nature’ is of economic dependencies to which screws are then applied. In good times, this leverage is used to enforce favorable terms of trade. In bad, famines and world wars are its product.
Since the pandemic began a large number of small businesses have gone under and large enterprises like automobile makers that made themselves reliant on global supply chains have been forced to limit production. On the one hand, the pandemic is a rare enough occurrence in recent history to have made planning for it a low-payoff endeavor for businesses. On the other hand, prior epochs of globalization ended quite poorly for related reasons. Economic dependencies are sources of political and economic leverage. Economic warfare tends to be taken with offense by those on its receiving end.
With globalization under reconsideration by economists in the West, the intersection of state with business interests is being restated in geopolitical terms. The base charge is against the utopian ‘one-world’ version of global capitalism that grew to prominence in the U.S. in the 1990s. In this version, an adjunct of the Marshall Plan capitalism that followed WWII, global trade would produce political integration to facilitate the economic integration undertaken between trading partners. This theory requires near-total ignorance of the impact of the Great Depression on global trade and its contribution to the rise of European fascism.
The newly restated frame of globalization whereby business interests represent the vanguard of state interests is (descriptively) liberal politics attached to a liberal theory of the state. Posed as an answer to the charge of globalization utopianism, it relies on the imagined history of the early capitalist theorists. ‘The state’ is neither singular, nor has its non-singularity been static across time. The American state has spent the last five decades in league with oligarchs to support their interests. In contrast, the Chinese state— motivated in part by a desire for political stability, has concentrated on raising living standards for the Chinese people.
In Western economic theory ‘Mercantilism’ is the integrated state-private enterprise whereby state power is used to support the expansion of business interests. The sleight-of-hand used to bring ‘us’ from this earlier period to the present is an imagined starting point where economic power was equitably redistributed in the way needed to make capitalism ‘fair.’ If Western states supported the accrual of private wealth— which many did, then capitalism was rigged from the start. At any rate, the fantasy of the clean break of capitalism from state support is just that, a fantasy. Otherwise, when did it occur? Please be specific.
More recently, the Obama administration rebuilt Wall Street under the theory that it would serve as a vanguard against growing Chinese political power. That Wall Street, in league with PMC neoliberals, spent three-plus decades outsourcing U.S. military production to China illustrates the not-well-thought-outness of economic liberalism with respect to so-called national interests. While most of the anti-China rhetoric in the U.S. is for domestic political consumption, the idea that the U.S. would launch a military conflict against China while it is dependent on military production from it illustrates the shallow logic of neoliberalism.
To bring this back around, Wall Street was rebuilt (in 2009) to serve the state interests that it effectively controls. This makes it true that capitalism is a projection of state power without answering the question of the nature of state power. The U.S. war against Iraq is a modern example of state power being used to assure a steady supply of oil for Western oil companies. All of the current U.S. geopolitical flash-points— Iran, Syria, Yemen, Venezuela, Ukraine, Russia, etc. tie to the resource needs of capitalist enterprises. The Bush administration stated publicly that Iraq played no role in 9/11— a geopolitical event, while it used the attack as a pretext for its war against Iraq.
The ‘political’ question within the U.S. from the perspective of citizens in an allegedly democratic nation is: what makes the economic interests of wealthy bankers any more worthy of state support than anyone else? In fact, banks make loans that create a legal obligation to repay. Debt has been used as a geopolitical weapon for centuries. Its utility as a weapon lies in the legal obligation to repay it. Failure to repay can be used to seize assets and / or assume a controlling interest in far more valuable enterprises. In this sense, debt joins other economic dependencies— such as fragile and tenuous global supply chains, as potential weapons in power politics.
This isn’t to argue that debt is universally or intrinsically bad. It is to make the point that U.S. policy makers have long understood that it is a geopolitical ‘tool.’ Austerity is a term used to describe the economic conditions imposed by the IMF on debtor countries to force them to accept neoliberal reforms. However, if these reforms are mutually beneficial, why are countries being forced to accept them? Additionally, ‘countries’ are historically and legally contingent entities. From the side of power, oligarchs and political leaders benefit from the political leverage that indebtedness provides them.
For oligarchs, corporate executives and workers in industries favored by government policies and bailouts, neoliberalism is producing its promised benefits. That these benefits are the product of, or more minimally, associated with, specific government policies and largesse points to the role of ‘the state’ in economic outcomes. The IMF has long represented the economic interests of large banks along with the political interests of state representatives in the Federal government. This is an integrated relationship, not a matter of serendipity. The banks make loans, a business decision, after which the IMF forces reforms that assure both the repayment of money owed and future business for the banks.
What is being brought into focus is the growth in class privilege that is created through the integration of state with private power. There is no logical reason in purely political terms for the oil industry to have a say in U.S. foreign policy, for agricultural conglomerates to have a say in agricultural policy, or for the health care industry to have a say in healthcare policy. In ‘political’ terms, these are realms to be legislated by and for citizens, not corporations. And yet these industries determine policy. They not only determine it, but in many cases, they write the actual legislation.
The short-sightedness of elevating the alleged facilitators of capitalism—finance, professional services and government, has a bloated, lemon-socialist quality in that the question of how people get by in the world ultimately impacts the political-economic order. That this elevation is tied through policy and history to ‘freeing’ industrial workers to compete internationally while creating a large working class of service workers who labor for less than a living wage without benefits, gives a distinctive class character to this elevation. That managerialism is tied to the imperial / colonial projects through hierarchies of labor crafted through dubious distinctions adds to this class dimension.
This all ties back to the question of globalization through complicating the (descriptively) liberal conceptions of both ‘the state’ and capital. It is telling that a central role of U.S. presidents has been to sell wars of economic conquest as having geopolitical motives. One of Howard Zinn’s contributions in A People’s History of the United States was to ascribe economic motives to American ‘political’ history. Adam Tooze did an admirable job in The Wages of Destruction detailing the economic motives of the Nazis. In class terms, the PMC now plays the reactionary role of the petite bourgeoisie described by Gramsci in the 1920s. That didn’t end well.