Rob has asked OpEd News readers to imagine what a world without billionaires would be like. In a comment stream he noted Chrystia Freeland's new book, "Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else". Plutocracy, which means rule by the rich (the "plutocrats"), is not a new American (or global) phenomenon, though it has grown enormously larger and more dominant and gone "supranational" in recent decades. Corporations and their "stars" and CEOs are now replacing nation-states and their politicians as the predominant power players on the global stage. Nor is reporting on and critical analysis of plutocracy a recent innovation.
I'm currently reading C. Wright Mills' 1956 book, "The Power Elite", about the corporatization (concentration and institutionalization) of the wealth of America's power elite. American plutocracy began in earnest during the post Civil War Gilded Age when control of the financial and economic resources of America (including vast swaths of prime development real estate given to railroads and other private businesses) was gained by the industrial "robber barons" of that era via legal, financial and political machinations. As always, the big Anglo-American banks who create all the credit money to finance and monetize these gains are central players. WWI and WWII financial and industrial profiteering vastly increased both the absolute size and wealth and the concentrated ownership of the new financial, industrial and real estate corporate aristocracy.
After WWII, corporatism was fully in command of America's economic life. The Cold War mentality of permanent war readiness provided the military-industrial "defense" industries with not only lucrative and secure government funded corporate profits, but a virtual monopoly on the most high tech scientific and engineering talent and inventions. The "militaristic worldview" of the elites, the politicians and the general public also elevated the military commanders to new heights of foreign policy and even domestic economy policy influence. International relations were no longer "diplomatic" relations, they were now military relations: everyone was either ally or enemy.
At Senate Armed Services Committee hearings before his confirmation as Secretary of Defense, former CEO (and at the time still a very large stockholder) of General Motors Charles Erwin Wilson was asked if he could make a decision as Secretary of Defense that would be adverse to General Motors. His famously misquoted answer was that he could not conceive of such a situation because, "for years I thought what was good for our country was good for General Motors". Corporate interests were (and are) identified as "America's" interests, but they are really just the money, power and status interests of the ruling class. These interests sometimes coincide with the interests of independent business and of labor, but "policy" is made to serve the large interests, not the small interests or "the people". To a significant extent democratic and populist political rhetoric is just a smokescreen to disguise the real corporate-friendly objectives of policy choices, which is well known to readers of non-corporate news sources like OpEd News.
Mills describes how the corporate plutocracy has developed (and in most cases believes in) a worldview that is embodied in what he calls the "Romantic conservative". This mythical image of the political economy is rooted in the classical liberal ideal of "balance": free markets in economics and politics where competitive forces work "as if by an invisible hand" to prevent anyone from gaining power and to optimize socioeconomic outcomes for everyone. This view is "romantic" because it imagines a wonderful world that might be, and chooses not to see the real world as it is.
The seminal documents of this attractive but anti-historical and counterfactual worldview are two books published in the mid-18th century. The first was Montesquieu's 1750, "The Spirit of the Laws", where he lays out his tripartite system of government where each of the Executive, Legislative and Judiciary branches of government acts as effective checks on each other's aspirations to power; the vaunted "checks and balances" system. America adopted Montesquieu's system in the constitution of its government.
In 1864 a Frenchman named Maurice Joly published a book titled, "The Dialogue in Hell Between Machiavelli and Montesquieu: Humanitarian Despotism and the Conditions of Modern Tyranny". Machiavelli published "The Prince" in 1513. Joly pits Machiavelli's devious Prince against Montesquieu's rational system of government. In the book the recently deceased Montesquieu joins Machiavelli in Hades where they await the Resurrection and Judgment. Montesquieu regales Machiavelli with the genius of his "incorruptible" balance of powers political system. Machiavelli proceeds to lay out how he could indeed corrupt Montesquieu's "incorruptible' system in very short order. And as the coup de grace, Machiavelli informs the now horrified Montesquieu that his beloved republican France has ALREADY descended into the tyranny of (Napoleonic) Empire.
"Balance of power" is an Enlightenment "theory" of ideal government, but Joly demonstrates how political realism, the reality of corrupting power, easily defeats the aspirations of enlightened reason. People can be corrupted by appeals to their narrow and shortsighted self interest. As Donald Wood concludes in his 1996 book, "Post-Intellectualism and the Decline of Democracy: The Failure of Reason and Responsibility in the Twentieth Century", the Enlightenment ideals of enlightened self interest have not been realized. Human nature has not "improved" as was hoped. "Self government" is not possible, if the people prefer bread and circuses provided by their rulers.
The other founding document of the classical liberal worldview is of course Adam Smith's 1776, "The Wealth of Nations", where Smith invites us to imagine a free market of individual small entrepreneurs, butchers and bakers and candlestick makers, independent businesspeople competing within their trade for the privilege (and profits) of serving the needs and wants of the population. Clearly Romantic conservatives have never actually "read" Smith's book, or they would be appalled to encounter such heresies as,
"It is to prevent this reduction of price, and consequently of wages and profit, by restraining that free competition which would most certainly occasion it, that all corporations, and the greater part of corporation laws, have been established."
Smith wrote The Wealth of Nations as an indictment against the "actual" British political economy of his era, which was corporate mercantilism. The largest and most domineering of Britain's economically and politically dominant corporations was the British East Indies Company, against whose commercial predations Americans revolted at the Boston Tea Party and the American Revolution. The Company effectively wrote its own laws much like ALEC writes corporate laws for the US government today. In the last paragraph of his chapter, "Conclusion of the Mercantile System", Smith wrote,
"It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interests have been entirely neglected; but the producers, whose interest has been so carefully attended to; and among this latter class our merchants and manufacturers have been by far the principal architects. In the mercantile regulations, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it."
Corporatism, which is "political" economy as contrasted with the politically independent free market economic ideal of classical liberalism, is essentially an industrial era adaptation of feudal rule by a landed aristocracy. In both cases the owners of the property exercise the power of their wealth to make the laws and "rule" the nation. The nation does not "govern itself' as if the Hand of Providence (embodied in the divine right of the king), or its secular equivalent the "invisible hand of the marketplace", is automatically guiding the fortunes of humanity. Men exercising power govern the economic and political affairs of the nation.
Corporatism is a kind of collusion or harmonizing of the interests of the commercial and the political classes. The political class makes laws that enable the commercial class to extract and accumulate wealth, and wealth is shared via mutual favors and interconnected ownership of financial and economic resources among the members of these two classes. "Labor" is just another economic resource that is used to generate wealth that is extracted as profits. Just as in the feudal era and the era of classical liberalism, the interests of labor and independent small business are not present in the power structure. These interests are, in Smith's word, "sacrificed" to the interests of the powerful.
Ownership and control of the nation's wealth is ALWAYS a central feature of a ruling class. Personal wealth is a prerequisite for membership in the elite, the ruling class. Great wealth gives its owner great economic power. Control of the economic life of a nation is control of the nation.