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Plutocracy

By       Message Derryl Hermanutz     Permalink
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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."

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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,

 

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"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.

 

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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.  

 

In bygone eras control was gained by the sword and was maintained by a feudal system where the peasants were completely powerless and military force was the exclusive preserve of the land owning aristocracy.   The serfs were also property of the lords of the feudal estates, who in turn owed service to the King who claimed ownership rights over the entire nation and at whose pleasure the lords held their estates.   The Church, in service to these relatively stable social structures, preached peasant submission to their heavenly and earthly kings.

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I spent my working life as an independent small business owner/operator. My academic background is in philosophy and political economy. I began studying monetary systems and monetary history after the 1982 banking crash that was precipitated by (more...)
 

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