You Can’t Go Home Again: The Liberal State Is No More

Also in Counterpunch.

In a previous article I argued that often confusing and divergent arguments within the neoliberal critique could be best understood as the tensions between two opposing currents of thought. One tendency understands neoliberalism as the unfettered reign of the free market, often called Free Market Fundamentalism (FMF), the other sees neoliberalism as the fusion of the corporation and the state sometimes called Corporate Power.

If it’s FMF what does that mean for activism. If it’s Corporate Power what does that imply for strategy?

The greater the emphasis on FMF then the more possible it might seem to re-regulate the corporations back to within tolerable limits after recapturing the state through elections. The greater the emphasis on corporate power the less possible incremental (primarily) electoral approaches seem, and the more likely that revolutionary measures will be required to abolish corporate power.

You Can’t Go Home Again

FMF remains such a popular idea among progressives precisely because it allows us to imagine an easy escape. That escape is a return to the liberal-regulatory state that governed the US between the mid-1930s and mid-1970s. The problem — and most likely an insurmountable one — is that the old liberal-regulatory state was dismantled and replaced by a new corporate-regulatory state.

This bit of wishful thinking also forgets that the now defunct liberal state was codified by law and mandated by election due to massive protest and organizing in the 1930’s and cemented into place only at the high human costs of world war. The construction of the liberal state required mass movements, some with revolutionary aspirations, and it’s reconstruction would require nothing less. 

Equally daunting is the fact that the decline of the liberal state wasn’t caused by the rise of neoliberalism alone but by urban rebellions and social movements. Why would we return to the liberal state that brought us the Vietnam War, COINTELPRO, environmental destruction and the urban crisis among other wonders?  

In Death of the Liberal Class, Chris Hedges argues that the liberals who once managed the regulatory state were marginalized or adapted to the corporate state.

“But the assault by the corporate state on the democratic state has claimed the liberal class as one of its victims. Corporate power forgot that the liberal class…gives legitimacy to the power elite. And reducing the liberal class to courtiers…who have nothing to offer but empty rhetoric, shuts off this safety valve and forces discontent to find other outlets…The inability of the liberal class to acknowledge that corporations have wrested power from the hands of citizens, that the Constitution and its guarantees of personal liberty have become irrelevant, and that the phrase consent of the governed is meaningless, has left it speaking and acting in ways that no longer correspond to reality.”[1]

The Bill of Rights is in tatters. “We the people” do not rule. Representative democracy is all but dead. Welcome to the real world.

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Q: What killed Democracy? A: Corporate Empire.

The corporate power destroyed the limited democracy of the liberal state because it was an obstacle to its insatiable need for power and profit.

If democracy is dead, what is the new reality we face? By the 1980s a new version of the two-party system emerged: the extreme right-wing takeover of the Republican Party accomplished largely by the “Reagan revolution” on one hand and the rise of “third way” or corporate Democrats represented by the Clinton machine on the other — both wings of one duopoly dedicated to establishing and maintaining the new corporate order.

Along with the earlier restructuring of the US government in order to wage our imperial wars — it was this corporate takeover of the political parties and the government they have a chokehold on that killed American democracy. And, both parties championed policies that were responsible for a steep decline in the power of the working class.  

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Follow the Money

This new corporate political class managed the fusion of the state and corporation — as can be clearly seen in the history of finance capital. Banks are the executive branch of corporate power dispatching capital, natural resources and labor in a war for profits. To the degree that capitalism is planned, bankers do the planning. During the exceptional period of limited economic democracy from the mid-1930s to the mid-1970s, capital was forced to share the wealth. But by the 1970s big changes were underway. As a response to the upheavals of mid-20th century, the ruling elites reasserted their class power and bankers were their vanguard.

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In All the Presidents’ Bankers: The Hidden Alliances That Drive American Power, Nomi Prins documents the relationships between presidents and bankers. By the 1980’s that relationship had grown less personal and more institutional. Not only were bankers routinely appointment to powerful government posts but all agreed that free-market neoliberal ideology was the best rhetorical strategy to maintain US hegemony — even as they created the corporate state.[2] 

Before long the power of capital grew to such proportions that it overshadowed even presidential power, as well as the other branches of government. The bankers’ supremacy was based on the remarkably rapid concentration of capital and control in the hands of a few. Between 1960 and 1979 there were 3,404 bank mergers, from 1980 to 1994 there were 6,345, but in a short period from 1995 to 2000 — in the middle of the Clinton presidency — 11,100 banks merged, crushing competition, centralizing power and overtaking the state in the name of the free market.[3]

Corporate Coup or Merger of the Corporation and the State?

The rise of the corporate state was nothing so sudden or confrontational as a coup. Nor will it be undone easily. Corporate power is the outcome of a century of growing corporate influence, imperial war and the historical development of capitalism itself. There was no hostile takeover — the economic policies of Reagan, Bush, Clinton, Bush, Obama and Trump — and the parties they led — fully supported the aims and ambitions of the largest bank and corporations. 

[T]he federal government and Fed response to the third world debt crisis, S&L bailout, and 1987 stock market crash was to subsidize the banking system with federal and multinational money. The bankers had succeeded in pushing the presidency to back losses….They had succeeding in privatizing their profits and socializing the costs of failure.  This fiscal policy had officially become US domestic and foreign policy.[4] [emphasis added]

Socializing costs and privatizing profits reached new heights after the 2008 crisis but the instruments of corporate power were already well in place. On a few days notice the elites launched a global bailout of unprecedented scale and scope that rescued banks “too big to fail.” Few asked how we were going to pay for it but during the height of the crisis 19 $trillion was made available in subsidies and bailouts to bankers.[5] Profits and wealth inequality soon returned to record levels while permanent austerity for millions was sold as the cost of “shared sacrifice.”

The faux reform of the Dodd-Frank bill was a revealing response to the crisis because it only further cemented the corporate state while preserving the largest concentration of capital in US history.

The bill was riddled with holes punched out by bank lobbyists with Washington connections: forty-seven of fifty Goldman Sachs lobbyists had previously held government jobs (or were “revolvers”). In addition forty-two of forty-six JPMorgan Chase lobbyists in 2010 were revolvers, as were thirty-five of Citigroup’s forty-six. President Obama signed the bill into law on July 21, 2010.[6]

Dodd-Frank was the corporate-regulatory state in action.

The unprecedented concentration of capital through mergers, loan guarantees, massive bailouts to investors, enormous subsidies, tax breaks and virtually free cash infusions — while shielding the same bailed-out bankers from prosecution for fraud — made the US government the agent and guarantor of vast wealth inequality. If these payments were cash transfers to the poor it would clearly be understood as part of the liberal-regulatory state but cash transfers to finance capital are seen as what? Free market fundamentalism? No, its corporate power.

The merger between corporations and government was accomplished at the pinnacles of power. Antonio Gramsci showed us the right place to look when he wrote, “The historical unity of the ruling classes is realized in the state.”

The great wall between public and private, between government and corporation has come tumbling down. Maximizing profit and power are the new rules shaping the regulatory environment because under the dictates of the corporate state, power = money and money = power. The 2010 Supreme Court decision Citizens United simply legalized the existing order by protecting corporations as people and money as free speech. The consequences? Corporations are the only “people” who matter and money the only form of “speech” heard by politicians.  

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This fusion of finance capital with national executive power may well be the economic foundation of fascism. In order to secure the equivalence of money and power, the corporate state seeks to weaken democratic institutions, such as trade unions, and institutionalize austerity — paving the way for the rise of fascism. The concept of corporate power helps us better understand that neoliberalism and fascism are blood kin. One cannot save us from the other — that much should be clear. 

What is the Passage Beyond Corporate Power?

The corporate capture of the state means any return to the liberal-regulatory state — let alone genuine economic democracy — would require something more like revolution. History would suggest that the kinds of popular unrest and social movements responsible for the long period of reform from the Great Depression to the end of the Vietnam War are the true engines of history and should be the true goals of strategy. For it was those movements that both created the liberal state and began a transition beyond it.

In the last revolution, the civil rights/black power and the peace/anti-imperialist movements provided transition beyond what was then called the “liberal consensus.” Many people started out from a straightforward moral perspective wanting something that seemed like an achievable and reasonable reform: peace and racial justice. Later many discovered that the entire system was largely based on racism and empire and that both Democrats and Republicans were guardians of the establishment. So to win those seemingly simple reforms people had to build disruptive movements that raised the question of capitalism, white supremacy and empire itself as a necessary part of challenging power. What will allow us passage beyond today’s neoliberal consensus?

Climate Crisis and War

The return to the liberal state would require us to literally live on a different planet. The environmental crisis will prohibit returning to past ways of reforming capitalism because past models were also based on permanent war, unsustainable growth and the insatiable drive to plunder earth’s resources and human labor. It’s unlikely that legislation or even significant electoral victories are going to be enough to re-regulate the corporations and scale back, let alone dismantle, the world’s largest empire. Show me an empire dismantled by legislation or an ecosystem saved by the profit motive. Show me an example from history when a crisis — of similar proportion and scale to what we currently face — was resolved by “normal” electoral means.

When the people of Standing Rock stood up against some of most powerful corporate interests in the world, their prayers, their prophecy, their vision was not to cage the “black snake” but to kill it. We defeat corporate power or it will defeat us.

Climate destruction may just be our last stand, our greatest opportunity and most dangerous crisis. But, to make the most of it we’ll have to raise revolutionary demands and adopt the movement-building strategies that have the best chance of challenging corporate power.

 

 

[1] Hedges, Death of the Liberal Class, p.9

[2] Prins, All the Presidents Bankers p. 319-323 

[3] Prins, 382

[4] Prins, 356

[5] Prins, 411-414

[6] Prins 415

 

 

 

About Richard Moser

Richard Moser has over 40 years experience as an organizer and activist in the labor, student, peace, and community movements. Moser is author of "New Winter Soldiers: GI and Veteran Dissent During the Vietnam Era," and co-editor with Van Gosse of "The World the Sixties Made: Politics and Culture in Recent America." Moser lives in Colorado.
This entry was posted in American Culture, Capitalism, Corporate Power, electoral strategy, Empire, History, Organizing Strategy, Racism, revolutionary strategy, Socialism, Strategy, War, White Supremacy, Working Class and tagged , , , , , , . Bookmark the permalink.

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