cj#826.2/2> GRI/I.3 – “Capitalism: the growth imperative, the finite Earth, and the monopoly endgame”

1998-09-02

Richard Moore

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Each of these capitalist phases, competition, shakeout, and monopoly,
provides its own characteristic investment vehicles which are able to ferry
the ever-growing capital pool to the succeeding phase. These same three
phases have played out in sequence in many places and at many scales of
manifestation. Occurring first in in Britain and then other countries,
first in national economies and later in colonial empires, this sequence of
phases is now being played out in the global economy. These upward changes
of scale are the macro-level regime evolution by which capitalism has
punctuated its ongoing growth. Although the rhetoric of "global free trade"
is increased competition and efficiency, the reality is simply a
redeployment of the oft-proven sequence of first competition then shakeout
and finally monopoly.

In the rhetoric of capitalist apologists the shakeout phase is presumed to
be an extension of the competition phase in which the less efficient
operators fall by the wayside. But as we have seen, the IMF chooses which
economies, and hence which operators, to destroy. The culling of
competitors is not on the basis of efficiency, but on the basis of elite
choice. Similarly in the American robber-baron era of the previous century,
it was not only efficiency which led to domination by Standard Oil, US
Steel, and others, but the skill by which elite operators were able to
carry out predatory practices against their competitors, and the skill by
which the regulatory regime could be influenced to their selective
advantage.

Although the impersonal pressure of the capital pool provides the wind for
the ship of capitalism, it is elites who are at the helm. Whenever a regime
change has been required -- when it has come time to take a new tack in
order to further the ship on its course -- elites have chosen which
particular tack to take and hence determined which operators could survive
the change of regime.

One of the myths of globalization is that it represents a relative decline
of Western interests, that market forces will allow other regions to make
inroads against traditional Western domination. With the postwar economic
rise of Japan and later Southeast Asia, this myth in fact gained
considerable credibility. But as the postwar boom began to level out, and a
new regime of growth became necessary, it has become clear that the global
capital elite remains primarily a Western elite. The IMF is in fact
dominated primarily by Western-based interests, and its power has been used
to selectively cull non-Western operators.

While the IMF culls competitors using the power of the purse strings, the
US and NATO accomplish the same objective in other ways. In the case of the
petroleum market, where limiting supply is crucial to maintaining desired
global oil prices, geopolitical machinations have been employed to restrict
at various times the production of Iran, Iraq, Libya, and others. By
encouraging the split up of Yugoslavia, which competed in several world
markets including automobile production, additional culling was
accomplished.

As capitalism enters its global era, it is doing so under the control of
the Western capitalist elite. This elite dominates the leading Western
nations politically, even more firmly controls the foreign policies
(geopolitical policies) of those nations, and totally controls the policies
of the IMF, the World Bank, and the other institutions of the global
governmental apparatus. All the potent agencies which determine the course
of global societal evolution are firmly in the control of the Western
elite.

But in another sense the decline of the West is not myth but reality.
Western elites remain in firm control and continue to prosper under
globalization, but Western societies are in fact in decline --
economically, culturally, and politically. This decline is intentional,
planned and implemented by the capitalist elite as a societal change
designed, as always, to create growth opportunities for the capital pool.

This particular episode of Western societal engineering is called the
neoliberal revolution and it was formally launched with the candidacies of
Ronald Reagan in the US and Margaret Thatcher in the UK, and with the
adoption of the Maastricht Treaty in Europe. The agenda of the neoliberal
revolution is summed up in the all-too-familiar mantra free trade,
deregulation, privatization, and reform. The true meaning of this agenda
can be easily found by analyzing each transaction in terms of its
consequences for capital growth.

Free trade, whose practical definition must be inferred from the terms of
the international free-trade agreements, in fact means the elimination of
national sovereignty over the flow of capital and goods. The consequence is
that TNC's have more flexibility in optimizing production and distribution,
and in exploiting the opportunities created by the culling of competitors.
This flexibility is the growth vehicle provided by the free-trade plank of
the neoliberal platform.

Deregulation refers to the elimination of national sovereignty over
corporate concentration, corporate operations, pricing, and product
standards. Again the benefit is clear. Greater freedom in concentrating
ownership, operating without environmental or other restraints, raising
prices, and reducing standards -- these all provide vehicles for growth in
this neoliberal phase of capitalism in Western economies.

Privatization refers to the sale of national assets to corporate operators
and the transfer of control over national infrastructures to those
operators. Each such transfer creates an immediate growth vehicle for
capital, in the exploitation of the asset and the infrastructure. In
addition the transfers have been in fact sweetheart deals where negotiators
on both sides of the transactions have represented the interests of the
same capitalist elite. Asset values have been heavily discounted, through
various tried-and-true trickeries of accounting, and the "sales" have in
fact represented immediate transfers of wealth from public ownership
directly into corporate coffers. The sale transactions themselves are
growth vehicles.

Reform, besides referring to generic compliance with the neoliberal agenda,
also means reducing the taxes of corporations and the wealthy, eliminating
social services, and generally cutting back the functions of government.
Obviously these tax changes serve to grow the capital pool. The elimination
of social services also serves as a growth vehicle in two ways. Workers
become hungrier for employment, creating a downward pressure on wages. New
enterprises can be started in order to provide the services formerly
provided by government (medical care, insurance, etc).

The general cutting back of government functions is simply part of the
sovereignty transfer from national governments to the centralized regime of
global institutions. As power and administration is concentrated globally,
the role of national governments is being reduced and refocused. As has
been long true of governments in much of the Third World, the role of
Western governments is devolving toward three major functions: conforming
to the dictates of the global regime, making payments on the national debt,
and controlling the domestic population. The paramilitarization of police
forces, the rise in prison populations, and the extension of police powers
are very necessary societal changes required to enable the full
implementation of the neoliberal agenda.

It is no accident that in the USA, where the neoliberal agenda has been
most thoroughly implemented, the collateral police-state apparatus is also
most thoroughly deployed. Swat teams, midnight raids, property
confiscations, mandatory and draconian sentencing, a booming
prison-construction industry, increased surveillance and monitoring of
individuals and organizations -- these are all an increasing part of the
American scene. Government officials have stated that Americans must expect
even more dramatic security measures, and that military vehicles and
weapons can be expected in domestic situations where warranted by security
concerns.

The neoliberal agenda in fact amounts to the dismantlement of Western
societies, undoing what was in some sense many decades of social progress.
Although the dominant global elite remains based in the West, strong
Western societies are no longer required under the global regime, as they
were in the era of competitive nationalism. Just as the IMF devastates
non-Western societies in ways that provide growth vehicles, so the
neoliberal revolution devastates Western societies for the same purpose, if
at a somewhat more gradual pace. Police-state regimes, whether or not
acknowledged by that name, are an inevitable necessity if Western nations
are to be kept in line as the neoliberal dismantlement, which is still in
its early days, continues to unfold.

The implementation of the global regime, a colossal project of societal
engineering, sets the stage for an ultimate growth phase of the capital
pool. The process of globalization, as we have seen, comes with a whole
spectrum of growth vehicles of its own, some (privatization) deployed in
the West and others (IMF destabilizations) elsewhere. As these vehicles
provide their temporary ride for capital, the global regime is being
consolidated. With all political and economic power fully centralized, and
with global wealth and commerce concentrated in a small number of
elite-selected TNC's, the ultimate phase of capital growth will be
accomplished by the maximum practical exploitation of this awesome power
and wealth.

The centralized global institutions contain not only "front line"
organizations such as the World Bank, the IMF, and the WTO, but they also
contain background organizations, think tanks and planning commissions,
entities such as the The World Information Products Organization (WIPO) and
the Organization for Economic Cooperation and Development (OECD). There is
no reason to speculate about how global capital might exploit its ultimate
global power, for these background organizations are busily documenting the
elite agenda for this ultimate phase of growth.

Absolute power, systematized in elite institutions, is unleashing
incredibly imaginative schemes for creating investment vehicles. Whole new
kinds of property are being created by decreeing that life forms can be
patented, that pre-existing processes can be claimed and owned, and that
previously free public information can be incorporated into corporate-owned
databases and then protected by strong copyright. Such new kinds of
property and property rights, and there are others, create whole new
information property marketplaces as vehicles for capital growth.

Other creative stratagems include seeds genetically-engineered to be
resistant to pesticides, not only creating markets for premium-priced
seeds, but also opening room for growth in pesticide sales. Seeds are being
forced on the market which are infertile, requiring farmers to buy new
seeds each year, no longer able to save useful seeds from last year's crop.
Bans on the sale of non-prescription vitamins and health foods are being
drawn up, which will allow that market to be taken over by large
pharmaceutical and medical operators, offering substitute products (perhaps
of identical composition) at higher prices and under prescription.
Developments in genetic engineering are enabling factory production to
replace on-the-land agriculture, creating room for capital growth by
cutting production costs of traditionally agricultural products.

These are only a few examples, and the global regime is only beginning to
flex its creative muscles. With full control over technology development,
pricing, distribution, and the regulatory regime, together with direct
control over markets, capital, and resources, one cannot predict what
imaginative investment vehicles will be created and deployed in the
ultimate growth phase of global capitalism.

Under globalization, the capitalist transformation of society will have in
some sense run its course. As we have seen, countless schemes for minor
changes which create ever more investment vehicles are possible. But with
power and wealth fully centralized under the control the Western capitalist
elite, and with the mechanisms of societal engineering systematized in
corporate institutions, it would seem that capitalism will have largely
reached its ideal, unimprovable world.

But every phase of capital growth has always run up eventually to an
external barrier, a barrier that cannot be overcome within the framework of
the current regime. In the case of the global corporate regime, that
barrier is the finiteness of the Earth itself. Whether you look at water
resources, fisheries, topsoil, overall use of biomass, or any number of
other measures, the evidence is clear that the overall collection of growth
vehicles -- the global economy -- simply cannot continue to grow much
longer, and certainly not at the rate required by capitalism.

As overall growth of the capital pool becomes increasingly difficult to
maintain, one obvious elite stratagem will be to seek the reallocation of
ownership of the capital pool itself, to transfer non-elite capital to
elite hands. Consider for example pension funds, which are the property of
millions of workers and their families, but which are under privatization
coming under the management of corporate financial institutions. These
funds are invested and become part of the global capital pool, supporting
the regime of economic growth. As regulations continue to be dismantled,
these funds become vulnerable to dramatic speculative losses, as occurred
with Bearings Bank and earlier with the American Savings and Loan industry.

Just as IMF diktats can destroy a society and cull its productive
competitors from global markets, so can deregulation selectively make funds
and industries vulnerable to speculative looting. The net consequence of a
looting episode is that wealth is transferred from one community of capital
investors to another -- the ownership of the capital pool itself becomes
more concentrated. In fact ownership of capital is already highly
concentrated, with xxx individuals, for example, owning xx% of common
stock.

As the global economy approaches the barrier of the finite Earth, and
overall growth stagnates, we can expect all manner of engineered market
collapses and industry failures resulting in the near total concentration
of wealth and consolidation of societal operations into the hands of the
remaining clique of TNC megacorps and a small wealthy elite who own most of
the stock.

This elite, assuming they maintain their political hegemony, can take
society as close to the brink of global disaster as they see fit, and they
can even take society right over the edge into the breakdown of
civilization or perhaps the end of human life on Earth. But such
universally dire outcomes would hardly be characteristic of the human
ingenuity exhibited every time a previous barrier has been reached. One can
expect, I suggest, a more creative solution to moving beyond this final
growth barrier, a solution which leads to a favorable outcome for the
capitalist elite, who after all must live on the Earth and in society.

In a world where everything is run by a few megacorps which are owned by a
small global elite, and where that elite has available effective means of
maintaining global and civil order, then the landscape begins to resemble
much earlier worlds. The globe will have become a single empire,
administered by central institutions, and ruled according to the wishes of
a small wealthy elite who literally own the world. Nations become
provinces, to be run by designated governors on behalf of the global
regime. Populations become a mass of human resources and consumers, the
disempowered bottom end of the global hierarchy.

What is being described here is an autocratic global system based on the
absolute power of an elite oligarchy. It seems that the era of capitalism
and of Enlightenment doctrine, based supposedly on the quest for political
and economic liberty, is in fact to bring the world full circle back to
elite tyranny.

Ultimately the question of capital growth becomes a non-issue in such a
world. The elite own the megacorps, the megacorps run the world, and growth
can simply be defined as a non-goal. Stock markets can be eliminated,
having served their purpose of concentrating wealth in a few hands. It will
then be possible to run the economy within the bounds of a finite Earth,
but how much of that Earth will still be in viable condition is an open
question.



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