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Title: Faux Private Interests Author: Kevin Carson Date: May 2005 Language: en Topics: capitalism, privatisation Source: Retrieved on 3rd September 2021 from https://mutualist.blogspot.com/2005/05/nature-of-ruling-class.html][mutualist.blogspot.com]], [[https://mutualist.blogspot.com/2005/05/faux-private-interests-part-ii.html][mutualist.blogspot.com]], [[https://mutualist.blogspot.com/2005/05/faux-private-interests-part-iii-sean.html][mutualist.blogspot.com]] and [[https://mutualist.blogspot.com/2006/01/faux-private-interests-revisited.html
Discussing faux private interests that are actually part of the State,
Brad Spangler puts a new spin on Rothbard’s likening of the state to a
holdup man. In the case of state capitalism, he writes, the state is
just an accomplice to “private” interests:
...one robber (the literal apparatus of government) keeps you covered
with a pistol while the second (representing State-allied corporations)
just holds the bag that you have to drop your wristwatch, wallet and car
keys in. To say that your interaction with the bagman was a “voluntary
transaction” is an absurdity. Such nonsense should be condemned by all
libertarians. Both gunman and bagman together are the true State.
Brilliant. I’ve seen too many “libertarian” defenses of big business
that attempt to absolve it of any guilt for its role in this
partnership. Big business is just the passive victim, so they say,
forced to accept corporate welfare and obtain special privileges in
self-defense against the forces of the regulatory state. According to
this argument, the recipients of differential tax advantages are the
good guys, managing to keep a bit more of their own money.* Complete and
utter horseshit.
The rotation of personnel between senior corporate management and
political appointees in government agencies is such that corporate and
government leadership are, for all intents and purposes, a single power
elite. Large corporations are not passive victims of the state; they act
through the state. It makes about as much sense to separate them from
the state, as it would have made to separate the landholding class from
the state in Medieval times. The state, by definition, is the instrument
of a ruling class. Sometimes the state and the ruling class are one and
the same, as under Soviet-style bureaucratic collectivism. But sometimes
the state is the instrument of a nominally “private” ruling class, or of
a mixed ruling class of state and corporate interests (e.g. Scandinavian
“social democracy”).
Most of the recipes for “free market reform” I see coming from
neoliberal politicians leave the gunman in place, but increase the ratio
of nominally-private bagmen to gunmen. The more of the work of robbery
can be “privatized” to the bagmen, supposedly, the larger the portion of
all activity is nominally private. So isn’t that a freer market? Isn’t
that “a step in the right direction”? To see some of the contemporary
agitprop in favor of increased “global trade,” it must be.
welfare,” by the way: please remember that the practical effect of such
exemptions is exactly the same as if we started with a corporate tax
rate of zero, and then imposed a tax penalty on those not engaged in
favored forms of enterprise. The effect of rapid depreciation, say, is
the same as a punitive tax on those not engaged in capital-intensive
forms of production. The fiscal and competitive effects are identical.
Last week I linked to a Brad Spangler post on faux-private interests,
where he used this analogy to describe “private” interests that benefit
from state capitalism:
...one robber (the literal apparatus of government) keeps you covered
with a pistol while the second (representing State-allied corporations)
just holds the bag that you have to drop your wristwatch, wallet and car
keys in. To say that your interaction with the bagman was a “voluntary
transaction” is an absurdity.
Now I find this (via Progressive Review): “Chertoff Wants to Set Up
Non-Profit Agency to Spy on You”
Homeland Security Secretary Michael Chertoff this week floated an idea
to start a nonprofit group that would collect information on private
citizens, flag suspicious activity, and send names of suspicious people
to his department. The idea, which Chertoff tossed out at an April 27
meeting with security-industry officials, is reminiscent of the Defense
Department’s now-dead Total Information Awareness program that sought to
sift though heaps of foreign intelligence information to root out
potential terrorist activity. According to one techie who attended the
April 27 meeting, Chertoff told the group, “Maybe we can create a
nonprofit and track people’s activities, and an algorithm could red-flag
individuals. Then, the nonprofit could give us the names.”
Hey, it’s too bad Hitler didn’t turn the Gestapo into a private
corporation, so Nazi Germany could be a good “free market” country like
Pinochet’s Chile.
An old gem from Free Life Commentary:
To be fair, the Adam Smith Institute has never been in the same business
as the Libertarian Alliance or the Institute of Economic Affairs. It
does not propagate ideas independent of who is in power, and wait for
some political interest to take them up. Instead, it sells market
solutions to statist problems. A typical Libertarian Alliance pamphlet
on privatisation, for example, will explore the abstract justifications
for getting government out of a certain area, and will describe the
general benefits of doing so. An Adam Smith Institute report, on the
other hand, will look at the technical questions of how to privatise —
at what the shape of the new private activity ought to be, at what
special interests need to be conciliated, and so forth. And the report
will often only sketch out the details of a proposal that will be fully
explained in direct consultancy with a company or ministry....
My objection is not to what Dr Pirie is doing at the moment or what he
is about to do. Rather, it is to the whole strategy of the Adam Smith
Institute as developed since the early 1980s. It may be that Dr Pirie
believes in limited government under the rule of law.... But I have to
doubt whether his overall effect on British politics has been to do
other than help entrench statism far more securely than it ever was in
the past.
The old statism was at least mitigated by incompetence. The people in
charge of it were paid too little to feel really important; and much of
their energy was absorbed in disputes with stupid or malevolent union
leaders. They presided over a system that was never very strong, and
that failed to weather the storms of the 1970s.
As reconstructed in the 1980s — partly by the Adam Smith Institute — the
new statism is different. It looks like private enterprise. It makes a
profit. Those in charge of it are paid vast salaries, and smugly believe
they are worth every penny....
But for all its external appearance, the reality is statism. And because
it makes a profit, it is more stable than the old. It is also more
pervasive. Look at these privatised companies, with their boards full of
retired politicians, their cosy relationships with the regulators, their
quick and easy ways to get whatever privileges they want....
As with National Socialism in Germany, the new statism is leading to the
abolition of the distinction between public and private. Security
companies, for example, are being awarded contracts to ferry defendants
between prison and court, and in some cases to build and operate
prisons. This has been sold to us on the — perfectly correct — grounds
that it ensures better value for money. But it also involves grants of
state powers of coercion to private organisations. All over the country,
private companies are being given powers of surveillance and control
greater than the Police used to possess.
....There has been no diminution in the economic power of the State,
only a change in its mode of operation....
Yes, I have written for the Adam Smith Institute. I hold many of its
people in high regard. I have enjoyed many of its Christmas gatherings —
though no more after this appears on the Internet, I suspect! But it has
done nothing on the whole to promote liberty in the past 21 years. Every
one of the panegyrics on Hayek that I find in its Catalogue is more than
balanced by advocacies of the kind of market reform that simply
strengthens the hand of the statist enemy. Dr Pirie may pride himself on
the number of solutions he has provided. In truth, he is part of the
problem.
Once again, this sort of thing is why I don’t welcome “privatization”
and “deregulation” as a “step in the right direction,” just because it
increases the amount of activity that’s carried out in the nominally
“private” sector. When it takes place within an overall statist
framework, it just makes state capitalism more efficient and stable;
although the nominal public sector may control a smaller percentage of
GDP, the system as a whole becomes even more statist and exploitative.
As Brad Spangler noted in my previous post’s blockquote, increasing the
ratio of quasi-private bagmen to the state gunman just makes robbery
more efficient. The nominally private corporations that profit from the
ASI’s “privatized” version of political capitalism, like the big
industrialists who conspired with Papen and Hindenburg to put Hitler in
power, are part of the state.
Social Memory Complex tears David Boaz a new corn chute for his typical
display of vulgar libertarian public choice theory (or as Jeremy put it,
“the old Cato Institute line that institutional analysis need only go so
far as to frame up politicians, letting the other players in the
politics itself go blameless”). Boaz writes:
When you spread food out on a picnic table, you can expect ants. When
you put $3 trillion on the table, you can expect special interests,
lobbyists and pork-barrel politicians....
Actually, I think it’s the other way around. When you’ve got a
centralized state that’s amenable to control by a ruling class, you get
$3 trillion on the table. Of course, it’s something of a chicken-and-egg
thing. Big business is a lot bigger and more cartelized because of big
government. But big government is also a lot bigger because of big
business acting through it to stabilize political capitalism. The
synergy between them has been there since the moneyed classes created a
Hamiltonian federal government, and both government and business have
enjoyed cancerous rates of growth since the simultaneous corporate
revolution and explosion of centralizing federalism in the 1860s.
Anyway, getting back to Boaz:
People invest money to make money. In a free economy they invest in
building homes and factories, inventing new products, finding oil, and
other economic activities. That kind of investment benefits us all —
it’s a positive-sum game, as economists say. People get rich by
producing what other people want.
But you can also invest in Washington. You can organize an interest
group, or hire a lobbyist, and try to get some taxpayers’ money routed
to you. That’s what the farm lobbies, AARP, industry associations, and
teachers unions do. And that kind of investment is zero-sum — money is
taken from some people and given to others, but no new wealth is
created.
If you want to drill an oil well, you hire petroleum engineers. If you
want to drill for money in Washington, you hire a lobbyist. And more
people have been doing that.
At Social Memory Complex, Jeremy responds:
And if you want to kill somebody, you hire a hitman. That doesn’t make
it ok that people hire them, just because the service is available for
purchase. This apologism for the corporate influence in — nay, the
perpetuation of — state capitalism is the very portrait of the vulgar
libertarian approach. Selling influence is bad. But buying influence is
mere economic survival. Politicians should be more principled, but
businessmen looking for a buck can be forgiven for looking at the short
term gains of rigging the game.
In fact, Brad Spangler once argued not only that the corporate
beneficiaries of statism are directly culpable in the state’s coercion,
but that it’s misleading even to call one side of the equation “public”
and the other “private.” Rather, he referred to the latter as “faux
private interests that are actually part of the state”:
Let’s postulate two sorts of robbery scenarios.
In one, a lone robber points a gun at you and takes your cash. All
libertarians would recognize this as a micro-example of any kind of
government at work, resembling most closely State Socialism.
In the second, depicting State Capitalism, one robber (the literal
apparatus of government) keeps you covered with a pistol while the
second (representing State-allied corporations) just holds the bag that
you have to drop your wristwatch, wallet and car keys in. To say that
your interaction with the bagman was a “voluntary transaction” is an
absurdity. Such nonsense should be condemned by all libertarians. Both
gunman and bagman together are the true State.
Jeremy says something similar here:
Here’s the truth of the matter: mega corporations derive their
existence, power, and modus operandi from the government from the
get-go. Government charters corporations and protects them from
liability, subsidizes, allows de-facto cartelization, etc. Big business
has sought not only to expand their influence of gov’t, but to expand
the power of that very state they are buying an interest in — using
regulation to offset market mechanics, accquire sweetheart loans and
bailouts, sieze private property through eminent domain, and otherwise
manipulate this so-called free market. For every businessman who
distastefully lobbies Congress there are at least 5 who see the dollar
signs and are quite content to let our individual freedoms and
pocketbooks take the hit.
Business is part of the problem. Corporations are quasi-states, using
government to gobble up the market and returning the favor by funding
the politicians who enable it. They’ve always been part of the political
equation, from the Civil War at least.