cj#823> GRI/I.2- “Evolution of political power: from national kingdoms to global corporate rule, via democracy”

1998-08-27

Richard Moore

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              Globalization and the Revolutionary Imperative
                     Part I - Chapter 2 - preliminary

                    Copyright 1998 by Richard K. Moore
                        25 August 1998 - 3630 words
                   comments to: •••@••.•••
          online book: http://cyberjournal.org/cadre/gri/gri.html


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Part I - Corporate globalization: what it is, where it came from, where it
is heading
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Chapter 2 - Evolution of political power: from national kingdoms to global
corporate rule, via democracy
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The previous chapter presented a one-dimensional perspective on power in
the world. This perspective focused on the power of nations, and it
identified economic power with the nations in which economic interests are
based. This perspective is not wrong, indeed it remains central to
understanding how the world system works, but it tells only one layer of
the story.

To gain a fuller perspective, we must examine more closely the structure of
political power within nations, and power-constellations which cannot be
identified with any nation. We must look at the role of elites and of
corporations, especially transnational corporations (TNC's.) We must take a
fresh look at democracy and question, based on the experience of
globalization, what the Enlightenment was really about.

To understand modern geopolitics it was necessary to go back to classical
Rome, whose shadow continues in the Western psyche, and from whose regime
modern Europe evolved. To understand modern political power one need not
look back quite so far. Modern political structures were born in the
Enlightenment (c. late eighteenth century,) in the form of republics, and
the context out of which the Enlightenment arose provides an adequate
starting point for understanding the primary political forces at work
today.

During the era of feudalism (c. 500AD - 1500AD), there were three European
elites: the church hierarchy, the landed aristocracy, and the titled
(nobility and royalty.) As that system ended, an additional elite -- the
business wealthy -- gained status and influence through trade and
manufacture. These elite groups competed for power, with different
accommodations from time to time and place to place.

For the general population, the elites represented security or tyranny,
depending on ones perspective. But it was obvious to all that elites ran
things; no one pretended society was democratic or that elites did not
actively seek to maintain their power. With the advent of the Enlightenment
and of "democratic republics" the older elites were removed from power,
while the business wealthy, who ushered in capitalism, remained relatively
undisturbed. Did this transformation bring about democracy in any genuine
sense, or merely monopolization of power in the hands of the single
remaining (capitalist) elite? We will consider this question in what
follows.

The fundamental Enlightenment philosophy was liberty, or liberalism.
Enlightenment thinkers were opposed to top-down autocratic power, and
wanted it to be replaced by bottom-up systems of control. Political liberty
was expressed in constitutional democracies, which provided for popular
representation and which theoretically created societies that were of, by
and for the people. Economic liberalism was expressed as free markets which
theoretically provided for bottom-up economic control through the actions
of individual producers and consumers. Free-market economics has since come
to be known as capitalism.

The Enlightenment principle of democracy was most eloquently expressed by
Thomas Paine, in his record-setting bestseller Common Sense (January,
1776). Indeed Common Sense has been credited with turning the tide of
public opinion in America toward independence, which was declared only six
months following the book's publication. The book had been read aloud in
villages and towns, and its language was so plain and clear that even the
illiterate could understand its message. Paine argued the legitimacy of
popular sovereignty, a principle we take for granted today but which was
initially disconcerting to a culture that for nearly two millennia had
found social order in rule by elites, whose power had always claimed sacred
legitimacy.

Enlightenment economic principles were perhaps best articulated by Adam
Smith in his Wealth of Nations (also 1776), which provides the classic and
still often quoted rationalization for capitalism. Smith argued that
competitive markets, through a mechanism he called the invisible hand,
would provide optimum economic benefits to producers, consumers, and
society generally. In Smith's model the economic role of governments was
minimal, being primarily to see that markets remained competitive.
Monopolies were eschewed by Smith, as they were seen as a form of
autocratic power.

There is a tension inherent in these two principles of political and
economic liberty, a tension which is epitomized by Smith's minimal economic
role for government. If popular sovereignty is expressed as democratic
government, and if government's role is limited over economic affairs, then
popular sovereignty is similarly limited. Inherent in Enlightenment
principles, then, is a tension between democracy and economic liberalism,
between popular sovereignty and the power of wealth.

In the ideal world of theory this tension would not be a serious problem.
If markets were truly competitive -- without monopolies -- excessive
concentration of economic power would not occur. If the wealthy were not
too powerful, and if democratic political systems truly embodied popular
sovereignty, then one could expect the development of democratic societies
with an equitable distribution of "life, liberty, and happiness", and the
realization of "liberty, equality, and fraternity," to quote the customary
American and French summations of the revolutionary Enlightenment goals.

But as the map is not the territory, so theory is not reality. In practice
the maintenance of competitive markets has been very problematic, and
monopoly capitalism has arisen frequently in the post-Enlightenment West.
The embodiment of popular sovereignty in constitutions and institutions has
proven to be equally problematic, with all manner of corruption,
demagoguery, and power-brokering leading to domination by undemocratic
forces of one sort or another.

The most corrupting of these undemocratic forces has proven to be the
capitalist elite. From the very beginning the wealthy elite exerted
influence in both politics and in economic affairs. The inherent tension
between political liberty and economic liberalism expressed itself as
political corruption, as the elite used their political influence to
further their own economic interests.

According to Smith's market model, and in actual practice, the goal of a
capitalist is to maximize the profits from investments and to increase his
or her wealth. In the competitive marketplace some operators proved more
successful than others, and concentrations of wealth did occur. In
addition, large concentrations of wealth pre-dated the Enlightenment
republics, and these too distorted in practice the perfect theory of
competitive markets. With the advent of the (capital-intensive) industrial
revolution, wealth concentrated still further, and the capitalist elite
emerged as an identifiable class and a political force of the first rank.

Once wealth becomes concentrated the owners of that wealth, as might be
expected, have always sought means to expand their wealth still further --
to escape competitive pressures, including whatever rules government might
have imposed in the interest of assuring competitive markets. These means
have included driving competitors out of business by selective
price-cutting and other predatory practices, direct influence over
political decisions, and using ownership of the popular press to influence
public opinion, and hence indirectly the political process.

In the rhetoric of democracy the fundamental role of elite power in
republics goes unrecognized. Without the support of wealthy elites, who had
in mind the economic triumph of capitalism, republican democracies would
not have emerged, at least not as we have known them. As long as elite
interests benefitted from strong republics, democracy had a
partner-of-convenience in the form of nation-based capitalism. Democratic
rhetoric gives too much credit to the power of popular will, and fails to
recognize that healthy republics have been always contingent on the tacit
acquiescence of the elite. With the advent of globalization, as will be
discussed below, the weakness of Western democracy lies exposed -- as the
capitalist elite withdraws its support, the fabric of republics
disintegrate.

In order to investigate political power within republics, the United States
serves as an excellent example. Besides being the first modern republic --
beating France in this record by a few years -- American patterns have come
eventually to dominate in the West. The US is central not only to
geopolitics, as we saw in the previous chapter, but also to understanding
the dynamics of political power and the role of the capitalist elite in
Western societies.

The problems of monopoly capitalism and giant corporations were not unknown
to the framers of the US Constitution. The colonies had in fact been
established by Queen Elizabeth I primarily as investments, and the entire
colony of Pennsylvania was a private corporation owned by a single family.
The sentiment in the new Republic was that the power of corporations must
be limited, and corporate charters were in the early days granted only for
limited purposes and limited times.

But the mostly wealthy leaders who wrote the Constitution, and assumed
leading public positions in the new nation, were split in their relative
allegiance to the economic and political principles of the Enlightenment.
The man credited with architecting the Constitution -- James Madison -- was
from the school that feared an excess of democracy, what they called "mob
rule", and believed that the nation should be run by "those who own it."
Some of this school had openly advocated that the new nation be established
as a monarchy, rather than a republic.

The American Constitution was a compromise between those who wanted
priority given to popular sovereignty, and those who wanted to insure that
government's economic role be favorable to wealthy interests. Most of the
language of the Constitution is devoted to formulating democratic
mechanisms, with a reasonable system of checks and balances, a two-house
Congress, guarantees of civil liberties, and firm protections for the
Constitution itself. But there were also mechanisms included that gave the
wealthy elite the foothold they needed to exert the special influence over
the new society to which they felt entitled.

As Noam Chomsky points out in his analysis of "Madisonian Democracy,"
property rights are given pre-eminence in the Constitution over other kinds
of rights. One's right to property is guaranteed by law; one's right to
liberty, happiness, or even life itself is largely contingent on one's
being able to afford them. This emphasis on property rights represents what
one might call a policy choice, favoring to a not insignificant degree
economic liberalism over popular sovereignty.

Perhaps more significant, the central banking functions of the nation were
put under private ownership instead of direct government control. The power
of banking can hardly be overstated, affecting as it does the operation of
the economy, the stability of the currency, and the ability of the
government to finance its programs. Control over the nation's banking and
finances gave considerable leverage to the budding capitalist elite, as we
can see in the power wielded by today's still-private Federal Reserve
System, which gives higher priority to Wall Street performance than to
national economic health.

Still further, as Howard Zinn points out in A People's History of the
United States, the system of representation tends to prevent the formation
of popular movements for significant political change. The Senate, with its
less representative base, and longer terms of office, acts as a
conservative flywheel, and if a popular political movement occurs, it is
likely that regional factionalism can be exploited trough power-brokering
to maintain the status quo.

US history has in fact been a see-saw battle for control between popular
interests and business interests. At times, as in the 19th century
robber-baron era, business tycoons brazenly ruled. John. D. Rockefeller
bragged about how many government officials were "in his pocket." At other
times, as during Franklin Roosevelt's administration, government seemed
more responsive to the needs and wishes of the general population.

By and large the claim "The business of America is business" (Calvin
Coolidge, 1925) has been an accurate description of US political
priorities. Much of domestic policy, and even more of foreign policy, has
been dictated by the demands of capitalism, which have always been for
ever-greater opportunities for growth and economic development. The general
population has generally gone along with these priorities on the
expectation that an ever-growing pie would provide benefits for everyone.

But the distribution of the pie has not typically been equitable, and US
history is full of bitter labor struggles against business operators who
sought to wring as much as possible from their workers while paying as
little as possible in wages. More often than not the power of government
was wielded on the side of capital in such struggles, partly because such
was the property interest involved, and partly because of the political
influence wielded by the capitalist elite.

Equitably distributed or not, development, expansion, and economic growth
have been the unwavering and energetic agenda of American capitalism and of
the American government. The first dramatic growth phase was westward
expansion, accomplished through purchase (Louisiana Territory, 1803;
Alaska, 1867), aggressive warfare (American Southwest, Mexican War,
1846-1848), and by exterminating most of the native Americans.

As the US grew in military and economic power, it was able to extend its
influence beyond its continental borders and enter into the game of
competitive imperialism. With the Monroe Doctrine (1823) it effectively
established all of Latin America as its own economic sphere of influence.
Admiral Perry sailed to Asia (1852-1854) and forced Japan to open her ports
to American trade. In the Spanish American war (1898) the US seized Cuba,
Puerto Rico, and the Philippines from Spain. By the end of World War 1
(1918), the US had taken its place as a first-rank world power, a full
member of the Western competitive-imperialist club.

As American imperialism developed, the power and wealth of the capitalist
elite was greatly extended. From an economic perspective, imperialism was
primarily a capitalist affair. The US government maintained order in the
territories and defended trade routes, but it was capitalists who built
trading empires, exploited territorial resources, and who gained the
primary economic benefit from the imperial system. Not surprisingly, elite
capitalist control of American foreign policy has been even more total than
over domestic affairs.

America, and especially its capitalists, had grown accustomed to rapid and
dramatic expansion. By 1918 America had become a major world power, and
there were no easy pickings left to seize. Much of the world was already
colonized by European powers. A war with Spain was one thing, but there was
scant political likelihood of stirring up wars with other European powers
in order to challenge control of their colonies. How was America to
continue its never-ending dramatic growth?

In the 1920's a kind of growth was obtained through hyped-up domestic
development, but this was unsustainable and the collapse of the bubble
contributed to the global depression of the 1930's. Selling weapons and
supplies to Nazi German and Imperial Japan provided considerable benefits
to American capitalism in the inter-war years, and the war itself was even
more profitable. The war brought full employment and intensive industrial
activity to the the US, providing for a brief time the kind of rapid growth
to which US capital aspired.

Whether by design or by luck, in the three decades between the end of WW1
(1918) and the end of WW2 (1945) the US rose from new entrant in the
geo-competitive game to global hegemon, with the power and prestige, as we
saw in the previous chapter, to guide the course of the postwar world
according to its own designs. America's postwar power provided the means to
insure favorable participation of US capital in the postwar global economy.
The challenge for the elite was to use this means to provide the desired
high level of ongoing capital expansion.

During the course of the war the balance of domestic political power
between popular interests and business interests shifted significantly in
favor of business interests, and in particular in favor of very large
corporations. The industrially-intensive war effort involved close
collaboration between government and industry, leading to the creation of
what President Dwight Eisenhower called the "military industrial complex."
As a consequence of this consolidation of elite capitalist political
influence, American postwar economic and foreign policy can best be
understood in terms of the growth opportunities developed for American
capital.

From a geopolitical perspective, as discussed in Chapter 1, the postwar
American policy was to transform the partitioned, national-competitive
imperialist system into a collectivized Western system. The collective
empire was called the Third Word, or the underdeveloped world, and
development was the name given to the ongoing practice of economic
exploitation.

From a global-economics perspective, the collectivization of empire could
be seen as a means by which American capital could elbow its way into
realms previously controlled by European powers. With the Bretton Woods
emphasis on open markets, and with immense postwar advantages --
controlling the lions share of the world's wealth and industrial capacity
-- US corporations were well positioned to enjoy a considerable head start
in the exploitation of the new global opportunities.

Bretton Woods and Pax Americana provided the foundations for what was later
to be called globalization, and the political power of American capitalism
insured that the postwar geopolitical and economic agendas would serve
corporate interests. One of the most striking consequences of this
proto-globalization regime was the rise of TNC's.

There had been early examples of TNC's, notably the "Seven Sister"
petroleum majors, but it was in the Pax-Americana postwar world that TNC's
came into their own. With imperial partitions removed, corporations which
had been insulated from one another could now compete and expand into one
anothers territories. TNC's became powers in their own right, no longer
dependent on their home countries to defend their interests. Pax Americana
not only ended nation-based competitive imperialism, it also severed the
bond which had kept the Western capital elites to some extent "loyal" to
their home counties.

Increasingly the interests of nations and the interests of TNC's grew
apart. Especially as a consequence of the anti-militarist and
pro-environmental movements of the sixties and seventies, strong Western
nation states were becoming more a hindrance than a support to ongoing
capitalist expansion. TNC's found that Third-World conditions suited their
operations better than did Western conditions. In many ways, globalization
can be understood as the transformation of Western nations according to the
Third World model.

In 1973, President Richard Nixon took an action which fatally undermined
the postwar Bretton Woods arrangements, and moved the world another major
step closer to modern globalization. He took the US off the gold standard,
purportedly a necessity to continue financing the Vietnam War.

The cornerstone of the Bretton Woods financial-stability package had been a
fixed rate of exchange among leading currencies, anchored by the US dollar
which was pegged to gold. By going off the gold standard, the US ripped the
scaffolding from under these arrangements, and floating global currency
values immediately followed. This represented a major shift of financial
power from nations to private international bankers, and set the stage for
later financial collapses in Latin America and Southeast Asia. These
collapses, whether engineered or fortuitous, were systematically exploited
to the advantage of Western capital interests.

Whatever was in Nixon's mind, his 1973 action amounted to the opening salvo
in an assault by TNC's on the nation state. In 1980 the neoliberal
revolution was launched, an all-out campaign to dismantle the leading
republics (beginning with the US and UK,) privatize their assets, reduce
their regulatory power, and bankrupt their treasuries. There was an
accompanying propaganda campaign, played out in the mass media, aimed at
demonizing government and politicians, denigrating democratic institutions,
and hard-selling the virtues of free trade, privatization, and "smaller
government."

In parallel with these twin campaigns to destabilize Western republics,
another project was being carried out in the realm of world trade
agreements. In this arena as well, TNC's were busy wresting power from
nation states, by transferring economic decision-making -- economic
sovereignty -- from nations to corporate-dominated bureaucracies. In 1995,
with the creation of the World Trade Organization (WTO,) the basic
structure of a TNC-dominated world government was in place. These
developments, together with the successful destabilization of the Soviet
Union and the interventionist precedent set by the Gulf War, brought the
globalization project to a near-final stage of completion.

Lest the trees hide the forest, permit me to summarize what has been said
so far, from a high-level perspective...

     As the upcoming wealthy elite in the West began to feel
     constrained by the elites of the feudal era, they sought a way to
     achieve greater power. By supporting and guiding the creation of
     republics, they got rid of the old elites, while preserving for
     themselves a privileged position in the new regimes. The public
     rhetoric of democracy minimized the role of the wealthy elite and
     encouraged people to believe that genuine democracy had been
     attained and that republics had arisen from popular will alone.

     In the era of competitive imperialism Western nations served as the
     fortresses of capital, the defenders of colonial economic
     territory. Capital was thus bound to, and supportive of, strong,
     sovereign, Western republics. But under Pax Americana, and
     non-partitioned imperialism, this bond was broken and the elite
     support of strong nation states was no longer profitable, in fact
     popular sovereignty and democracy became a net corporate
     liability.

     The elite therefore chose to scuttle and abandon the Western
     national ships of state. They escaped to a new vessel of their
     own design, a TNC-dominated global government, backed up by an
     appropriate system of geopolitical control (Chapter 1.) The
     rhetoric of patriotic nationalism, expounded by the
     wealth-controlled press for two centuries, was replaced by the
     denigration of governments and politicians, easing the way toward
     national destabilization.

     As living standards continue to decline in the West -- as the
     West becomes more like the Third World -- the blame is to be
     placed on "competing civilizations." Western populations can be
     expected to permit their declining national budgets to be spent
     on "peace keeping" operations and "defending the West."


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references are to be included -- suggestions invited.



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