rkm> The rise of capitalist elites

2001-03-08

Richard Moore


The rise of capitalist elites


Central to Smith's model of a market  economy was the condition that all buyers 
and sellers must be small.  In this way, prices could not be influenced by 
individual actors, but would reach a fair and reasonable level - through fair 
competition between sellers, and comparison shopping on the part of buyers. In 
Smith's model, very large producers - who had the power to dominate markets - 
were specifically forbidden. The dynamics of capitalism, on the other hand, lead
naturally toward monopoly.  While Smith's arguments helped pave the way for 
capitalism, it is the natural dynamics of capitalism which have prevailed, not 
the enlightened dynamics which Smith prescribed.

If one central principle could be identified, which best characterizes the 
essence of the Industrial Revolution, that principle would be 'economy of 
scale'. That's what factories, and steam engines, and mass production are all 
about.  By concentrating lots of equipment, resources, and workers all in one 
place, it is possible to produce more and cheaper products than with many small 
operations.  In a large operation one can use more powerful and efficient 
equipment; one can demand discount prices from suppliers; one can set up an 
efficient distribution system - and there are many other advantages as well. 
Unless there are sufficient regulatory restrictions placed on the size of an 
operation, the natural tendency is for the large to gobble the small, and the 
larger to gobble the large, '...and so adinfinitum'.  And this is exactly what 
has happened, right up to the current  day - with its mega retail stores, global
fast-food chains, transnational corporations, and the increasing concentration 
of world commerce into the hands of a small number of huge operators.

In order to understand the dynamics of capitalism, recall the capitalist 
paradigm: 'wealth accumulation through initiative & innovation'. Building 
factories showed one kind of initiative, and lobbying for new economic policies 
showed another.  The entrepreneur and the investor, in pursuit of greater 
wealth, must always ask themselves the following question: 'Given my available 
assets, what strategy will bring me the greatest future returns?'  The answers 
to this question are as varied as the human imagination, and it is that 
'creativity in pursuit of ever-greater wealth' which has guided the course of 
history ever since capitalism took hold.

Industrialists, bankers, and financiers formed the core of the capitalist 
community, and as such they were clearly an important and influential segment of
society. Governments looked to this community when financing was needed for wars
and other government endeavors, and it was from this community that Finance 
Ministers and other important government officials would usually be selected. 
The interests of government and the interests of capitalism became intertwined, 
and government policy increasingly came to favor the further advance of 
capitalism - and the further concentration of wealth and power into fewer hands.
This is the scenario that unfolded first in Britain, and later in every other 
nation which adopted capitalism.  Today, with globalization, we see this trend 
in its ultimate form: the establishment of a centralized world government (the 
WTO, IMF, etc.) which is totally dominated by the interests of global 
corporations.

The strategies - which capitalists have used to increase their wealth - have 
included imperialism (and its necessary wars), government subsidies, favorable 
tax regimes, sweetheart government contracts, and many others - leading 
ultimately to today's neoliberal globalization.  Capitalism can be best 
understood not as an economic regime, but rather as an elite political movement.
Economic regimes, under capitalism, have varied considerably, depending on 
market conditions and political circumstances.  

Often, when political pressure from below threatened to shift the balance of 
political power, capitalist elites have responded with semi-socialist economic 
regimes, in order to co-opt the political threat.  We saw this under Franklin 
Roosevelt with his New Deal, and we saw it after 1945, with Labor governments in
Britain, and socialist governments in Europe.  But during such defensive 
intervals, capitalist enterprises continued to grow nonetheless - and when 
pressure from below subsided, the economic regime began again to pursue its 
inevitable evolution toward today's rampant hyper-capitalism.

In the final analysis, capitalism amounts to the usurpation of political power 
by a particular species of wealthy elite.  Unlike aristocracies of old, which 
sought primarily to _rule society, capitalist elites seek always to _change 
society in order to create ever-more ways to increase their wealth.  From their 
point of view, societies and populations are simply a means to an end.  For this
reason, the history of capitalism includes frequent episodes of 
coldly-calculated genocide.  

Whole populations have been intentionally decimated, because their continued 
existence was considered counter-productive to capitalist development.  The 
mass-slaughter of Native Americans and Australian Aborigines are the classic 
examples, but there have been many others, such as in East Timor. In Guatemala, 
the murder of indigenous populations is underway at this very moment - as mining
is being developed by foreign operators.  

In Sub-Saharan Africa, a pattern of wholesale genocide is unfolding as the IMF 
intentionally destabilizes economies, the CIA stirs up civil wars, and 
pharmaceutical companies use WTO rulings to prevent the distribution of AIDS 
medicines.  From the point of view of capitalism, people have value only if they
contribute to the wealth-accumulation process.  And if they have no value they 
are expendable - subject to being cleared away to make room for development.

One of the most recent capitalist innovations has been the privatization of 
national water supplies, implemented by means of conditions attached to IMF 
loans.  In the year 2000, twelve nations, mostly in Africa, were subjected to 
water privatization  in this way.  Water prices have subsequently risen 
dramatically, threatening the survival of the poorest segments of society.  The 
net effect of this innovation is to deny water to 'valueless' locals, and make 
it available to export-oriented agribusiness operators. Once again, in the 
capitalist equation, populations must perish so that wealth accumulation can 
continue. 


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Richard K Moore
Wexford, Ireland
Citizens for a Democratic Renaissance 
email: •••@••.••• 
URL: http://cyberjournal.org

    A community will evolve only when
    the people control their means of communication.
    - Frantz Fanon

    "One cannot separate economics, political science, and
    history. Politics is the control of the economy. History,
    when accurately and fully recorded, is that story. In most
    textbooks and classrooms, not only are these three fields of
    study separated, but they are further compartmentalized into
    separate subfields, obscuring the close interconnections
    between them" -- J.W. Smith, The World's Wasted Wealth 2,
    (Institute for Economic Democracy, 1994), p. 22.

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