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General News    H4'ed 9/11/14

Steve Fraser: The Return of the Titans

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Rupert Murdoch, on the other hand, looks and dresses like an accountant and lives mainly in the shadows. Like Trump, he inherited a family business. Unlike Trump, his family pedigree was auspicious. His father was Sir Keith, a media magnate from Melbourne, Australia, and Rupert went to Oxford. Now, the family's media influence straddles continents, as Rupert attempts -- sometimes with great success -- to make or break political careers and steer whole political parties to the right.

The News Corporation is a dynastic institution of the modern kind in which Murdoch uses relatively little capital and a complex company structure to maintain and vigorously exercise the family's control. When the Ford Motor Company finally went public in 1956, it did something similar to retain the Ford family's dominant position. So, too, did Google, whose "dual-class share structure" allowed its founders Larry Page and Sergey Brin to continue calling the shots. Murdoch's empire may, on first glance, seem to conform to American-style managerial corporate capitalism, apparently rootless, cosmopolitan, fixed on the bottom line. In fact, it is tightly tethered to Murdoch's personality and conservative political inclinations and to the rocky dynamics of the Murdoch succession. That is invariably the case with our new breed of dynastic capitalists.

Sheldon Adelson, the CEO of the Las Vegas Sands Corporation and sugar daddy to right-wing political wannabes from city hall to the White House, lacks Murdoch's finesse but shares his convictions and his outsized ambition to command the political arena. He's the eighth richest man in the world, but grew up poor as a Ukrainian Jew living in the Dorchester neighborhood of Boston. His father was a cab driver and his mother ran a knitting shop. He went to trade school to become a court reporter and was a college drop-out. He started several small businesses that failed, winning and losing fortunes. Then he gambled and hit the jackpot, establishing lavish hotels and casinos around the world. When he again lost big time during the global financial implosion of 2007-2008, he responded the way any nineteenth century sea dog capitalist might have: "So I lost twenty-five billion dollars. I started out with zero... [there is] no such thing as fear, not to any entrepreneur. Concern, yes. Fear, no."

A committed Zionist, Adelson was once a Democrat. But he jumped ship over Israel and because he believed the party's economic policies were ruining the country. (He's described Obama's goal as "a socialist-style economy.") He established the Freedom Watch's dark-money group as a counterweight to George Soros's Open Society and to MoveOn.org. According to one account, Adelson "seeks to dominate politics and public policy through the raw power of money." That has, for instance, meant backing Newt Gingrich in the Republican presidential primaries of 2012 against Mitt Romney, whom he denounced as a "predatory capitalist" (talk about the pot calling the kettle black!), and not long after, funneling cash to candidate Romney.

Free Markets and the Almighty

Charles and David Koch are perfect specimens of this new breed of family capitalists on steroids. Koch Industries is a gigantic conglomerate headquartered in the heartland city of Wichita, Kansas. Charles, who really runs the company, lives there. David, the social and philanthropic half of this fraternal duopoly, resides in New York City. Not unlike George "the Duke" Pullman, Charles has converted Wichita into something like a company city, where criticism of Koch Industries is muted at best.

The firm's annual revenue is in the neighborhood of $10 billion, generated by oil refineries, thousands of miles of pipelines, paper towels, Dixie cups, Georgia Pacific lumber, Lycra, and Stainmaster Carpet, among other businesses. It is the second largest privately owned company in the United States. (Cargill, the international food conglomerate, comes first.) The brothers are inordinately wealthy, even for our "new tycoonery." Only Warren Buffett and Bill Gates are richer.

While the average businessman or corporate executive is likely to be pretty non-ideological, the Koch brothers are dedicated libertarians. Their free market orthodoxy makes them adamant opponents of all forms of government regulation. Since their companies are among the top 10 air polluters in the United States, that also comports well with their material interests -- and the Kochs come by their beliefs naturally, so to speak.

Their father, Fred, was the son of a Dutch printer who settled in Texas and started a newspaper. He later became a chemical engineer and invented a better method for converting oil into gasoline. In one of history's little jokes, he was driven out of the industry by the oil giants who saw him as a threat. Today, Koch Industries is sometimes labeled "the Standard Oil of our time," an irony it's not clear the family would appreciate. After a sojourn in Joseph Stalin's Soviet Union (of all places), helping train oil engineers, Fred returned stateside to set up his own oil refinery business in Wichita. There, he joined the John Birch Society and ranted about the imminent Communist takeover of the government. In that connection he was particularly worried that "the colored man looms large in the Communist plan to take over America."

Father Fred raised his sons in the stern regimen of the work ethic and instructed the boys in the libertarian catechism. This left them lifelong foes of the New Deal and every social and economic reform since. That included not only predictable measures like government health insurance, social security, and corporate taxes, but anything connected to the leviathan state. Even the CIA and the FBI are on the Koch chopping block.

Dynastic conservatism of this sort has sometimes taken a generation to mature. Sam Walton, like many of his nineteenth-century analogs, was not a political animal. He just wanted to be left alone to do his thing and deploy his power over the marketplace. So he stayed clear of electoral and party politics, although he implicitly relied on the racial, gender, and political order of the old South, which kept wages low and unions out, to build his business in the Ozarks. After his death in 1992, however, Sam's heirs entered the political arena in a big way.

In other respects Sam Walton conformed to type. He was impressed with himself, noting that "capital isn't scarce; vision is" (although his "one stop shopping" concept was already part of the retail industry before he started Walmart). His origins were humble. He was born on a farm in Kingfisher, Oklahoma. His father left farming for a while to become a mortgage broker, which in the Great Depression meant he was a farm re-possessor for Metropolitan Life Insurance. Sam did farm chores, then worked his way through college, and started his retail career with a small operation partly funded by his father-in-law.

At every juncture, the firm's expansion depended on a network of family relations. Soon enough, his stores blanketed rural and small-town America. Through all the glory years, Sam's day began before dawn as he woke up in the same house he'd lived in for more than 30 years. Then, dressed in clothes from one of his discount stores, off he went to work in his red Ford pick-up truck.

Some dynasts are pietistic and some infuse their business with religion. Sam Walton did a bit of both. In his studiously modest "life style," there was a kind of outward piety. Living without pretension, nose to the grindstone, and methodically building up the family patrimony has for centuries carried a sacerdotal significance, leaving aside any specific Protestant profession of religious faith. But there was professing as well. Though not a fundamentalist, he was a loyal member of the First Presbyterian Church in Bentonville, Arkansas, where he was a "ruling elder" and occasionally taught Sunday school (something he had also done in college as president of the Burall Bible Class Club).

Christianity would play a formative role in his labor relations strategy at Walmart. His employees -- "associates," he dubbed them -- were drawn from an Ozark world of Christian fraternity which Walmart management cultivated. "Servant leadership" was a concept designed to encourage workers to undertake their duties serving the company's customers in the same spirit as Jesus, who saw himself as a "servant leader."

This helped discourage animosities in the work force, as well as blunting the -- to Walton -- dangerous desire to do something about them through unionizing or responding in any other way to the company's decidedly subpar working conditions and wages. An aura of Christian spiritualism plus company-scripted songs and cheers focused on instilling company loyalty, profit-sharing schemes, and performance bonuses constituted a twentieth century version of Pullman's town idyll.

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Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch (more...)
 

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