Plutocracy, Then and Now - The Lesser of Two Evils

The world being what it is, we sometimes have to choose between two less than desirable options. The problem with choosing the lesser of two evils that are distasteful enough is that one has to numb their conscience to do it. This is what is known as a 'Faustian bargain.' We may lie to others and especially ourselves about it, but there it is.

But the individual will find that if they choose to make this kind of rotten deal with their own conscience enough times, and put their inner voice aside to make an expedient, practical choice rather than a moral one, and pile lie upon lie to ease the pain of their betrayal, eventually their conscience will fail them when it matters the most.  Or they may simply find themselves too compromised to do anything but overtly choose what is objectively wrong or suffer serious personal consequences.  They have intertwined their fingers with the power of darkness so deeply that now they are his.

And this is how the banal, time serving functionaries familiarize themselves into eventually doing otherwise unthinkable, and sometimes monstrous things.

The road to hell is paved, not with one climactic choice, but a long series of increasingly bad choices and lies, that eventually grow into a complete betrayal of duty, and our honour, and our sacred oaths of service.

We Americans are not usually thought to be a submissive people, but of course we are. Why else would we allow our country to be destroyed?  Why else would we be rewarding its destroyers?  Why else would we all— by proxies we have given to greedy corporations and corrupt politicians— be participating in its destruction?

Most of us are still too sane to piss in our own cistern, but we allow others to do so and we reward them for it. We reward them so well, in fact, that those who piss in our cistern are wealthier than the rest of us. How do we submit?  By not being radical enough.  Or by not being thorough enough, which is the same thing.

Wendell Berry


Under pretence of governing they have divided their nations into two classes, wolves and sheep. I do not exaggerate. This is a true picture of Europe. Cherish therefore the spirit of our people, and keep alive their attention. Do not be too severe upon their errors, but reclaim them by enlightening them.

If once they become inattentive to the public affairs, you and I, and Congress, and Assemblies, judges and governors shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions; and experience declares that man is the only animal which devours his own kind, for I can apply no milder term to the governments of Europe, and to the general prey of the rich on the poor.

Thomas Jefferson, 16 January 1787


Special privileges and the use of the taxing power for private gain, these are the twin pillars upon which plutocracy rests. To take away these supports and to elevate the beneficiaries of special legislation to the path of honest effort is the purpose of our party.

And who can suffer injury by just taxation, impartial laws and the application of the Jeffersonian doctrine of equal rights to all and special privileges to none? Only those whose accumulations are stained with dishonesty and whose immoral methods have given them a distorted view of business, society and government.

Accumulating by conscious frauds more money than they can use upon themselves, wisely distribute or safely leave to their children, these denounce as public enemies all who question their methods or throw a light upon their crimes.

Plutocracy is abhorrent to a republic; it is more despotic than monarchy, more heartless than aristocracy, more selfish than bureaucracy. It preys upon the nation in time of peace and conspires against it in the hour of its calamity. Conscienceless, compassionless and devoid of wisdom, it enervates its votaries while it impoverishes its victims.

It is already sapping the strength of the nation, vulgarizing social life and making a mockery of morals. The time is ripe for the overthrow of this giant wrong. In the name of the counting-rooms which it has defiled; in the name of business honor which it has polluted; in the name of the homes which it has despoiled; and in the name of religion, upon which it has placed the stigma of hypocrisy, let us make our appeal to the awakened conscience of the nation.

William Jennings Bryan, 30 August 1906


The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Franklin D. Roosevelt, Inaugural Address, March 4, 1933


Still another danger is represented by those who, paying lip service to democracy and the common welfare, in their insatiable greed for money and the power which money gives, do not hesitate surreptitiously to evade the laws designed to safeguard the public from monopolistic extortion. American fascists of this stamp were clandestinely aligned with their German counterparts before the war, and are even now preparing to resume where they left off, after 'the present unpleasantness' ceases.

They claim to be super-patriots, but they would destroy every liberty guaranteed by the Constitution. They demand free enterprise, but are the spokesmen for monopoly and vested interest. Their final objective toward which all their deceit is directed is to capture political power so that, using the power of the state and the power of the market simultaneously, they may keep the common man in eternal subjection.

Henry Wallace, 9 April 1944


It was of the utmost importance to me that people in western Europe should see the Soviet regime for what it really was. Since 1930 I had seen little evidence that the USSR was progressing towards anything that one could truly call Socialism. On the contrary, I was struck by clear signs of its transformation into a hierarchical society, in which the rulers have no more reason to give up their power than any other ruling class.

George Orwell, Animal Farm preface, 1945


Now we remember that it was Bill Clinton's administration that deregulated derivatives, deregulated telecom, and put our country's only strong banking laws in the grave. He's the one who rammed the North America Free Trade Agreement (NAFTA) through congress. Mass incarceration and the repeal of welfare, two of Clinton's other major achievements, are the pillars of the disciplinary state that has made life so miserable for Americans in the lower reaches of society. He would have put a huge dent in Social Security too, had the Monica Lewinsky sex scandal not stopped him. If we take inequality as our measure, the Clinton administration looks not heroic but odious.

Mounting a campaign against plutocracy makes as much sense to the typical Washington liberal as would circulating a petition against gravity. What our modernized liberal leaders offer is not confrontation but a kind of therapy for those flattened by the free-market hurricane: they counsel us to accept the inevitability of the situation.

Thomas Frank, Rendezvous With Oblivion, 1 September 2006


Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it.

Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government, 5 January 2016


We are not left to conjecture how the moneyed power, thus organized and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country when the Bank of the United States waged war upon the people in order to compel them to submit to its demands can not yet be forgotten.

The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, and a scene of cheerful prosperity suddenly changed into one of gloom and despondency ought to be indelibly impressed on the memory of the people of the United States. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors?

No nation but the freemen of the United States could have come out victorious from such a contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few, and this organized money power from its secret conclave would have dictated the choice of your highest officers and compelled you to make peace or war, as best suited their own wishes. The forms of your Government might for a time have remained, but its living spirit would have departed from it.

Andrew Jackson, Farewell Address, 4 March 1837


A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.

Chrystia Freeland, The Rise of the New Global Elite, January 2011


That first [gilded] age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent. Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

Major commercial and investment banks—and the hedge funds that ran alongside them—were the big beneficiaries of the twin housing and equity-market bubbles of this decade, their profits fed by an ever-increasing volume of transactions founded on a relatively small base of actual physical assets.

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

Recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

Simon Johnson, The Quiet Coup, May 2009


The American economy increasingly serves only a narrow part of society, and America's national politics has failed to put the country back on track through honest, open, and transparent problem solving. Too many of America's elites-among the super-rich, the CEOs, and many of my colleagues in academia-have abandoned a commitment to social responsibility. They chase wealth and power, the rest of society be damned.

Jeffrey Sachs, The Price of Civilization, January 2012


The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy.

Dean Baker, Vicissitudes of the Marketplace Would Be a Big Improvement, 29 September 2014


Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Charles Ferguson, Predator Nation, June 2012


This elite-generated social control maintains the status quo because the status quo benefits and validates those who created and sit atop it. People rise to prominence when they parrot the orthodoxy rather than critically analyze it. Intellectual regurgitation is prized over independent thought. Voices of the dispossessed, different, and un(formally)educated are neglected regardless of their morality, import, and validity.

Real change in politics or society cannot occur under the orthodoxy because if it did, it would threaten the legitimacy of the professional class and all of the systems that helped them achieve their status.

Kristine Mattis, The Cult of the Professional Class, 4 April 2016


Plutocracy is not an American word but it's become an American phenomenon. Back in the fall of 2005, the Wall Street giant Citigroup even coined a variation on it, plutonomy, an economic system where the privileged few make sure the rich get richer with government on their side.

By the next spring, Citigroup decided the time had come to publicly 'bang the drum on plutonomy.' 

Over the past 30 years the plutocrats, or plutonomists— choose your poison— have used their vastly increased wealth to capture the flag and assure the government does their bidding.

This marriage of money and politics has produced an America of gross inequality at the top and low social mobility at the bottom, with little but anxiety and dread in between, as middle class Americans feel the ground falling out from under their feet.

Like those populists of that earlier era, millions of Americans have awakened to a sobering reality: they live in a plutocracy, where they are disposable. Then, the remedy was a popular insurgency that ignited the spark of democracy. Now we have come to another parting of the ways, and once again the fate and character of our country are up for grabs.

Democracy only works when we claim it as our own.

Bill Moyers, last episode of Bill Moyers Journal, 30 April 2010


Hubris calls for nemesis, and in one form or another it's going to get it, not as a punishment from outside but as the completion of a pattern already started.

Mary Midgley, The Myths We Live By, 2003

US Middle Class Wealth Has Collapsed, Consumed by the Gods of Finance

"As flies to wanton boys are we to the gods.

They kill us for their sport."

William Shakespeare, King Lear

“Reality denied comes back to haunt.”

Philip K. Dick, Flow My Tears, the Policeman Said

Let's file this under 'why aren't people buying things and saving more?'

Yes I know that wealth is not income. That is a small consolation when you don't have much of either.

The Recovery™ is like Equal Justice™ these days of the Pax Americana and Pax Brittanica.

It is reserved for some, and keeps two sets of books.

Median Household Net Worth is back to what it was in the 1960's.

At least we had better music then.

So who are you going to vote for this time?  Bush, or Clinton?

And may the odds be ever in your favour.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Moyers: Our Democracy Is Flatlined - Moneyed Interests and Politics

"There was a Princeton study by Martin Gilens and Ben Page. The largest empirical study of actual policy decisions by our government in the history of our government. And what they did is they related our actual decisions to what the economic elite care about, what the organized interest groups care about, and what the average voter cares about.

And when they look at the economic elite, you know, as the percentage of economic elite who support an idea goes up, the probability of it passing goes up. As the organized interests care about something more and more, the probability of it passing goes up. But as the average voter cares about something, it has no effect at all, statistically no effect at all on the probability of it passing.

If we can go from zero percent of the average voters caring about something to 100 percent and it doesn't change the probability of it actually being enacted. And when you look at those numbers, that graph, this flat line, that flat line is a metaphor for our democracy.

Our democracy is flatlined. Because when you can show clearly there's no relationship between what the average voter cares about, only if it happens to coincide with what the economic elite care about, you've shown that we don't have a democracy anymore."

Lawrence Lessig

"It [big money] mattered enormously. It mattered in the selection of candidates. You know, long before we even heard their names, the candidates were selected if they were basically comfortable working for big-money donors. And that in itself gets you out of the realm of inspirational leadership. And then, of course, it mattered in the drowning of ads and the sense that people outside of any accountable power, super PACs outside of any accountable power, were really sort of running the system."

Zephyr Teachout

 

 

Real News: Deep State, Big Lies, Organized Plunder, and the Power of the Moneyed Interests

A new set of interesting conversations with David Cay Johnston about his work as an investigative reporter and writer on the Real News.

This is what the one percent do not wish you to hear or understand. You will not hear this on any prime time news programs. Not even Public Broadcasting will touch this story.

This is how easily the system is manipulated, by design, for those who have the money, means, and the connections. I think Johnston explains it much better than most.

In the upcoming elections, and especially the Presidential elections of 2016, it is highly unlikely that either major party candidate will not be fully vetted and approved by the moneyed interests as a corporate brand, no matter what big time wrestling theatrics are staged to portray them as 'different' and get people worked up about it. This is not a choice; this is just sad.

Try to listen to what Johnston says without knee jerk reactions from the slogans that have been inserted by endless repetition into your thinking by corporate news outlets and think tanks. Try to hear the facts as they are.

The 'deep state' is at the heart of the partnership between private power and the government.

Part 3


Part 4


Part 1


Part 2

The Most Destructive Bubbles of All: Corporate Profits Amid Private Poverty

"The money was all appropriated for the top in the hopes that it would trickle down to the needy.

Mr. Hoover didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellow’s hands.”

Will Rogers, St. Petersburg Times, Nov 26, 1932


“Much like Herbert Hoover, Barack Obama is a man attempting to realize a stirring new vision of his society without cutting himself free from the dogmas of the past, without accepting the inevitable conflict. Like Hoover, his is bound to fail.”

Kevin Baker, Barack Hoover Obama: The Best and the Brightest Blow it Again, Harper's


"In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest.

Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

Adam Smith, The Wealth of Nations


“We Americans are not usually thought to be a submissive people, but of course we are. Why else would we allow our country to be destroyed? Why else would we be rewarding its destroyers? Why else would we all — by proxies we have given to greedy corporations and corrupt politicians — be participating in its destruction?

Most of us are still too sane to piss in our own cistern, but we allow others to do so and we reward them for it. We reward them so well, in fact, that those who piss in our cistern are wealthier than the rest of us."

Wendell Berry


“Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”

John Kenneth Galbraith


"Fascism is capitalism plus murder."

Upton Sinclair

 

US Healthcare Costs a Global Outlier and Monument to Crony Capitalism

I think the Big Pharma/Health and Big Finance sectors have similar cartel like structures where a few large companies dominate the field, exercising considering political power and the ability to obtain subsidies and protections from the system while fending off regulation and price restraints.

There are others of course, like the energy field from exploration to distribution, often known as Big Oil, but which now includes natural gas and electric energy production and distribution.

The recurring myths of the efficient market and 'free trade' are exacting a heavy toll on the general public and the real economy.  They provide ideological cover to a favored elite that is acting in the manner of a privileged and extractive aristocracy while beguiling many with the allure of easy money.

The concentration of ownership in the media has become an inhibiting and directing influence in public discourse that is hard to miss.

The current recovery fueled corporate perks and ZIRP for the financial sector, a fine example of 'trickle down' economics, will be remembered as one of the great policy errors of modern economic history. They pretend ignorance, they feign helplessness, and they know.  But they are getting paid not to act effectively, and even not to see, but to spin some fantasy.

They 'feel your pain.'  They just do not do anything substantial about it.  Even a second term president can still talk as though he is a recently arrived outsider, critiquing the actions of some predecessor and a corrupt system in which is he barely involved.

These are not leaders.  They are like modern CEO's, professional organizers and managers, who talk a great game about their accomplishments but, when the truth comes out, posture that they stand outside the very system for which they have long held the ultimate responsibility.  

But even worse are those who make little pretense to justice and goodness and moral principle, preferring to appeal to the darkest impulses, the fears and hatreds of a society.  Their actions betray their words.

The lack of serious reform, in large part because of the partnership between Big Money and Washington's new political class, and the dormancy of the progressive impulse, will eventually stress the fabric of society to the limit.  And then change will come.

Read the entire story here.

Inverted Totalitarianism

"Thus the elements are in place: a weak legislative body, a legal system that is both compliant and repressive, a party system in which one party, whether in opposition or in the majority, is bent upon reconstituting the existing system so as to permanently favor a ruling class of the wealthy, the well-connected and the corporate, while leaving the poorer citizens with a sense of helplessness and political despair, and, at the same time, keeping the middle classes dangling between fear of unemployment and expectations of fantastic rewards once the new economy recovers.

That scheme is abetted by a sycophantic and increasingly concentrated media; by the integration of universities with their corporate benefactors; by a propaganda machine institutionalized in well-funded think tanks and conservative foundations; by the increasingly closer cooperation between local police and national law enforcement agencies aimed at identifying terrorists, suspicious aliens and domestic dissidents."

Sheldon Wolin, Inverted Totalitarianism, 2003 essay

I thought it would be interesting to find the seminal essay from 2003 in The Nation magainze in which Sheldon Wolin describes the emerging US empire as an 'inverted totalitarianism.'  It is still not quite clear to me what the distinction is between this and an oligarchy, although the difference from fascism is apparent. 

One learns by asking questions and making distinctions. Ignorance abhors questions and makes few distinctions, preferring dogma, bias and arrogant disdain to discernment and an informed perspective. This is what passes for knowledge and news today. That was certainly apparent in Jamie Dimon's address today to the Council on Foreign Relations on the nature of finance and the US economy. He is yesterday's man. But unfortunately there are quite a few of them hanging on to power, dragging the West down.

If the US is an inverted totalitarian regime, what are China and Russia? Certainly not the personal fascist dictatorships of the era of Hitler, Stalin, and Mao, albeit the latter two with a proletarian façade, but more a totalitarianism by bureacracy or committee perhaps, wherein business and government are in partnership for their own ends, because they are increasingly one.  Is it a matter of emphasis, of ascendancy between the private and corporate?  What if there really is little difference between them?

I cannot yet say although I suspect for Wolin it would be that the corporate holds the whip hand and most of the direct implementation of policy, even if the government may codify it. 

And what of the UK, which is without an empire of its own, but has a remarkably similar political structure to the States, but with vestigial figureheads to enhance the illusion. A sidekick to Empire, in the manner of Robin to Batman, or faithful retained, like Afred?

I am a little disappointed that I was not familiar with it contemporaneously,  but I was deeply involved in the study of money and macroeconomics from 1999 through 2006 and missed quite a bit.

I am surprised that I did not encounter  this perspective through my readings of Chalmers Johnson, whose review of Wolin's book Democracy Incorporated is included below. I also have a video excerpt of Chris Hedges' use of the concept.

The Nation
Inverted Totalitarianism
By Sheldon Wolin
May 1, 2003

The war on Iraq has so monopolized public attention as to obscure the regime change taking place in the Homeland. We may have invaded Iraq to bring in democracy and bring down a totalitarian regime, but in the process our own system may be moving closer to the latter and further weakening the former.

The change has been intimated by the sudden popularity of two political terms rarely applied earlier to the American political system. "Empire" and "superpower" both suggest that a new system of power, concentrated and expansive, has come into existence and supplanted the old terms. "Empire" and "superpower" accurately symbolize the projection of American power abroad, but for that reason they obscure the internal consequences.

Consider how odd it would sound if we were to refer to "the Constitution of the American Empire" or "superpower democracy." The reason they ring false is that "constitution" signifies limitations on power, while "democracy" commonly refers to the active involvement of citizens with their government and the responsiveness of government to its citizens. For their part, "empire" and "superpower" stand for the surpassing of limits and the dwarfing of the citizenry.

The increasing power of the state and the declining power of institutions intended to control it has been in the making for some time. The party system is a notorious example. The Republicans have emerged as a unique phenomenon in American history of a fervently doctrinal party, zealous, ruthless, antidemocratic and boasting a near majority. As Republicans have become more ideologically intolerant, the Democrats have shrugged off the liberal label and their critical reform-minded constituencies to embrace centrism and footnote the end of ideology.

In ceasing to be a genuine opposition party the Democrats have smoothed the road to power of a party more than eager to use it to promote empire abroad and corporate power at home. Bear in mind that a ruthless, ideologically driven party with a mass base was a crucial element in all of the twentieth-century regimes seeking total power.

Representative institutions no longer represent voters. Instead, they have been short-circuited, steadily corrupted by an institutionalized system of bribery that renders them responsive to powerful interest groups whose constituencies are the major corporations and wealthiest Americans. The courts, in turn, when they are not increasingly handmaidens of corporate power, are consistently deferential to the claims of national security.

Elections have become heavily subsidized non-events that typically attract at best merely half of an electorate whose information about foreign and domestic politics is filtered through corporate-dominated media. Citizens are manipulated into a nervous state by the media's reports of rampant crime and terrorist networks, by thinly veiled threats of the Attorney General and by their own fears about unemployment. What is crucially important here is not only the expansion of governmental power but the inevitable discrediting of constitutional limitations and institutional processes that discourages the citizenry and leaves them politically apathetic.

No doubt these remarks will be dismissed by some as alarmist, but I want to go further and name the emergent political system "inverted totalitarianism." By inverted I mean that while the current system and its operatives share with Nazism the aspiration toward unlimited power and aggressive expansionism, their methods and actions seem upside down. For example, in Weimar Germany, before the Nazis took power, the "streets" were dominated by totalitarian-oriented gangs of toughs, and whatever there was of democracy was confined to the government. In the United States, however, it is the streets where democracy is most alive--while the real danger lies with an increasingly unbridled government.

Or another example of the inversion: Under Nazi rule there was never any doubt about "big business" being subordinated to the political regime. In the United States, however, it has been apparent for decades that corporate power has become so predominant in the political establishment, particularly in the Republican Party, and so dominant in its influence over policy, as to suggest a role inversion the exact opposite of the Nazis'. At the same time, it is corporate power, as the representative of the dynamic of capitalism and of the ever-expanding power made available by the integration of science and technology with the structure of capitalism, that produces the totalizing drive that, under the Nazis, was supplied by ideological notions such as Lebensraum.

In rebuttal it will be said that there is no domestic equivalent to the Nazi regime of torture, concentration camps or other instruments of terror. But we should remember that for the most part, Nazi terror was not applied to the population generally; rather, the aim was to promote a certain type of shadowy fear--rumors of torture--that would aid in managing and manipulating the populace. Stated positively, the Nazis wanted a mobilized society eager to support endless warfare, expansion and sacrifice for the nation.

While the Nazi totalitarianism strove to give the masses a sense of collective power and strength, Kraft durch Freude ("Strength through joy"), inverted totalitarianism promotes a sense of weakness, of collective futility. While the Nazis wanted a continuously mobilized society that would not only support the regime without complaint and enthusiastically vote "yes" at the periodic plebiscites, inverted totalitarianism wants a politically demobilized society that hardly votes at all. Recall the President's words immediately after the horrendous events of September 11: "Unite, consume and fly," he told the anxious citizenry. Having assimilated terrorism to a "war," he avoided doing what democratic leaders customarily do during wartime: mobilize the citizenry, warn it of impending sacrifices and exhort all citizens to join the "war effort."

Instead, inverted totalitarianism has its own means of promoting generalized fear; not only by sudden "alerts" and periodic announcements about recently discovered terrorist cells or the arrest of shadowy figures or the publicized heavy-handed treatment of aliens and the Devil's Island that is Guantánamo Bay or the sudden fascination with interrogation methods that employ or border on torture, but by a pervasive atmosphere of fear abetted by a corporate economy of ruthless downsizing, withdrawal or reduction of pension and health benefits; a corporate political system that relentlessly threatens to privatize Social Security and the modest health benefits available, especially to the poor. With such instrumentalities for promoting uncertainty and dependence, it is almost overkill for inverted totalitarianism to employ a system of criminal justice that is punitive in the extreme, relishes the death penalty and is consistently biased against the powerless.

Thus the elements are in place: a weak legislative body, a legal system that is both compliant and repressive, a party system in which one party, whether in opposition or in the majority, is bent upon reconstituting the existing system so as to permanently favor a ruling class of the wealthy, the well-connected and the corporate, while leaving the poorer citizens with a sense of helplessness and political despair, and, at the same time, keeping the middle classes dangling between fear of unemployment and expectations of fantastic rewards once the new economy recovers. That scheme is abetted by a sycophantic and increasingly concentrated media; by the integration of universities with their corporate benefactors; by a propaganda machine institutionalized in well-funded think tanks and conservative foundations; by the increasingly closer cooperation between local police and national law enforcement agencies aimed at identifying terrorists, suspicious aliens and domestic dissidents.

What is at stake, then, is nothing less than the attempted transformation of a tolerably free society into a variant of the extreme regimes of the past century. In that context, the national elections of 2004 represent a crisis in its original meaning, a turning point. The question for citizens is: Which way?

Sheldon Wolin is the author of Alexis de Tocqueville: Man Between Two Worlds and Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism.

A Review of Sheldon Wolin's Democracy Incorporated by Chalmers Johnson.

Aktion T4 - In the Garden of Beasts

"The perpetrators were scholars, doctors, nurses, justice officials, the police and the health and workers’ administration.

The victims were poor, desperate, rebellious or in need of help. They came from psychiatric clinics and childrens hospitals, from old age homes and welfare institutions, from military hospitals and internment camps.

The number of victims is huge, the number of offenders who were sentenced, small."

Commemorative Tablet at Tiergartenstraße 4, Berlin

Most people are unaware or simply overlook the actions of the German government that began in 1939, in which the State, with the active cooperation of the medical and legal professions, began the systematic murder of people who were physically and mentally inferior, at least according to the judgement of the State.

It was this decision, and its willing acceptance by the thought leaders and intellectuals of the day, in defining who had the right to live based on their ability to serve the State according to its own needs, that laid the groundwork for the death of compassion, and the murder of over ten million people in the name of unnatural selection.

Once the State has the power to say who is a worthwhile human being and who is not, no one is safe.

We do not often hear about Aktion T4, the euthanasia program, because the weakest have little or no constituency, and are sometimes overlooked because others think that their own causes, or their own pain, is more significant.

This is not about abortion, which is the preoccupation of many sincere people today. This is a question that is inescapable, unequivocal, to those who say that they value life.

This is about respect for a human life after it is born, and comes into the world, which so many people willfully overlook and forget.

What good is it to fight for the right of a child to be born, and then to promote a policy of social Darwinism, a survival of the fittest as if people were animals, forcing them to compete with slave labor in foreign lands in the name of The Market?   Or to embrace a healthcare system that holds parents hostage, as they bankrupt themselves while frantically trying to care for their sick child or their loved one, in the name of The Market?

Despite a lucky few who manage to emerge triumphant from The Hunger Game, inhuman policies and a system of privilege virtually condemn the unfortunate child to a lifetime of desperation and poverty, to be caught in the infamous 47% of the country that struggles to live and to merely survive, and to raise their children, often from hand to mouth. 

These are the working poor, students, the elderly, the disabled, who are sanctimoniously condemned and caricatured for not being able to outwit the abuses of the law and resist the perversions of the powerful that allow the select few to cheat and rob them at every step of the way. This is no deep economic mystery; it is a crime.

It was the professional class, the doctors and the lawyers, who willingly sanctioned the murder of the innocents in Germany. And for that great crime against God and Man, which almost no one protested against, the country was brought low and laid to ruin.  

And it is a terrible trap to think that we today are so different, so exceptional, that we are not capable of permitting the same thing to happen all over again.  After all, we are only doing what is necessary, what is required, because The Market says.

In their desire to escape the pain and complexity of being human, men can make themselves into beasts, one step at a time. And then there is hell on earth.

"Aktion T4 was the name used after World War II for Germany's "Euthanasia programme" during which physicians killed thousands of people who were "judged incurably sick, by critical medical examination".

The programme officially ran from September 1939 until August 1941, but continued unofficially until the end of the Nazi regime in 1945.

During the official stage of Action T4, 70,273 people were killed, but the Nuremberg Trials found evidence that German and Austrian physicians continued the murder of patients after October 1941 and that about 275,000 people were killed under T4.

More recent research based on files recovered after 1990 gives a figure of at least 200,000 physically or mentally handicapped people killed by medication, starvation, or in the gas chambers between 1939 and 1945.

The name T4 was an abbreviation of "Tiergartenstraße 4", the address of a villa in the Berlin borough of Tiergarten which was the headquarters of the Gemeinnützige Stiftung für Heil- und Anstaltspflege, bearing the euphemistic name literally translating into English as Charitable Foundation for Curative and Institutional Care.

This body operated under the direction of Reichsleiter Philipp Bouhler, the head of Hitler's private chancellery, and Dr. Karl Brandt, Hitler's personal physician. This villa no longer exists, but a plaque set in the pavement on Tiergartenstraße marks its location."

"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people.

What is called 'fellow traveling' (collaboration) was primarily business interest: one pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much. That is a general law of the status quo."

Theodor Adorno


“Then shall He say also unto them on the left hand, ‘Depart from Me, ye cursed, into the eternal desolation prepared for Satan and his angels. For I hungered, and ye gave Me no meat; I was thirsty, and ye gave Me no drink; I was a stranger, and ye took Me not in; naked, and ye clothed Me not; sick and in prison, and ye visited Me not.’

Then shall they also answer Him, saying, ‘Lord, when did we see Thee hungering or thirsting or a stranger, or naked or sick or in prison, and did not minister unto Thee?’ Then shall He answer them, saying, ‘Verily I say unto you, inasmuch as you did it not to one of the least of these, ye did it not to Me.’

Look in the mirror, Narcissus, and see what you are becoming.

Chris Hedges: The Reaping of America

"We will all swallow our cup of corporate poison. We can take it from nurse Romney, who will tell us not to whine and play the victim, or we can take it from nurse Obama, who will assure us that this hurts him even more than it hurts us, but one way or another the corporate hemlock will be shoved down our throats. The choice before us is how it will be administered.

Corporate power, no matter who is running the ward after January 2013, is poised to carry out U.S. history’s most savage assault against the poor and the working class, not to mention the Earth’s ecosystem. And no one in power, no matter what the bedside manner, has any intention or ability to stop it.

If you insist on participating in the cash-drenched charade of a two-party democratic election at least be clear about what you are doing. You are, by playing your assigned role as the Democratic or Republican voter in this political theater, giving legitimacy to a corporate agenda that means your own impoverishment and disempowerment.

All the things that stand between us and utter destitution—Medicaid, food stamps, Pell grants, Head Start, Social Security, public education, federal grants-in-aid to America’s states and cities, the Women, Infants, and Children nutrition program (WIC), Temporary Assistance for Needy Families and home-delivered meals for seniors—are about to be shredded by the corporate state.

Our corporate oligarchs are harvesting the nation, grabbing as much as they can, as fast as they can, in the inevitable descent...

Obama is not in charge. Romney would not be in charge. Politicians are the public face of corporate power. They are corporate employees. Their personal narratives, their promises, their rhetoric and their idiosyncrasies are meaningless. And that, perhaps, is why the cost of the two presidential campaigns is estimated to reach an obscene $2.5 billion. The corporate state does not produce a product that is different. It produces brands that are different. And brands cost a lot of money to sell.

You can dismiss those of us who will in protest vote for a third-party candidate and invest our time and energy in acts of civil disobedience. You can pride yourself on being practical. You can swallow the false argument of the lesser of two evils. But ask yourself, once this nightmare starts kicking in, who the real sucker is. "

Chris Hedges, How Do You Take Your Poison?

Read the rest here.

Quo vadimus, Domine?

Karl Polanyi On Liberal Economics and the Rise of Fascism

"Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required.

From this novel point of view, a free society could be regarded as consisting of two races: property owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrates were necessary as hunger was a better disciplinarian than the magistrate...

The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith's humanistic foundations, and incorporated those of Townsend...Economic society had emerged as distinct from the political state."

Karl Polanyi, The Great Transformation, 1944

Plus ça change, plus c'est la même chose. Only the percentages and the methods of sorting seem to matter to a certain type of ubermensch mentality. And of course force and fraud are indispensable to the accumulation and protection of their wealth.

I have spent the last day or two reading Karl Polanyi's landmark work of economic history, The Great Transformation: The Political and Economic Origins of Our Time.

Polanyi's history is particularly good because he describes in some detail how the predominant economic thought changes and adapts itself to its cultural context, the changing attitudes and philosophies of people and particular historical developments. And how it even begins to shape history as a branch of political philosophy. What are people, and what is their relationship to society as a whole? What is power? What is moral?

It is a grave mistake to treat economics as a physical science like chemistry. Chemistry seeks to quantify and explain an essentially unchanging physical world in substance if not in incidentals.  There are real laws. Theory becomes verifiable fact, and new facts build to new theories. Chemistry evolves, in that it changes with a remarkably evident progression of one thing on another which can be seen against some objective standard.

Economics reflects the changing attitudes of politics and the other social sciences to the relationship among the individual, society, and nature.  That is not to say that there is no learning in a social science. There is plenty of learning, but also a strong tendency to have to re-learn the same hard lessons over and over again. 

If someone in astrophysics were to say that the sun revolves around the earth they would be laughed off the podium and booted out of their positions. But if an economist says even now that markets are naturally self-regulating and efficient if left alone, they might be given a large grant and the chairmanship of an economics department, even though this theory has been found wanting, or as some might phrase it, a howler. 

There is a remarkably poignant paragraph in Polanyi where he says that since self-regulating markets have been proven to be nonsense "we are witnessing a development under which the economic system ceases to lay down the law to society and the primacy of society over that system is secured." As John Kenneth Galbraith put it, there are no new financial frauds, just variations on the old familiar themes.

Keep in mind that there is a difference between monetary theory, which is more akin to finance, and macroeconomics, which operates more generally in the realm of broad relationships and what is essentially morals or public policy. It is well said that a little learning is a dangerous thing, because one does not understand the scope of the field and their own limitations.

A certain school of economics can, and often did as shown in this history, coolly observe that profits will be maximized if a large percentage of the workers are maintained on the verge of starvation and insecurity without any support or interference from society, in the service of a superior few. We can clearly see the descendants of that particular moral philosophy in the world today.

It should be understood that by 'liberal economics' is meant 'self-regulating,' or essentially unregulated markets, and not progressivism as we might think of it today.  Polanyi goes to some lengths to show that there are no self-regulated markets that are fair and efficient.  Mostly those markets that are called self-regulated are set up with a bias that favors the insiders that control them.  Or as I said the other day, naturally occurring self-regulated markets are as common as seals reciting Shakespeare.

It is a long book. I will almost certainly read it again in more leisure. I tend to read quickly online, and more carefully when holding an actual book. But it was enjoyable and those inclined might read it with some benefit.   It gave me a framework on which to hang quite of bit of independent thought and learning, providing some additional coherence.  I think I understand why certain things have happened in the way that they have.

Bear in mind that Polanyi is a man of his time. I disagreed with many of his thoughts on the gold standard for example, even though I am not even in favor of it today as I have said, for some of the same reasons he cites. I have seen another 60 or more years of history without a gold standard, and know that what he saw was not so much attributable to the gold standard but the inflexibility of a single currency system, much as we are seeing with a euro currency and a multiplicity of fiscal regimes in the euro zone today.   And for the dollar reserve currency in the world which is in a similar process of failing for similar reasons.  I still wonder at who conceived these monstrosities and what they were really thinking, except for an expedient solution that became institutionalized with a powerful set of adherents and beneficiaries, and so long outlived its usefulness.

I include here only key passages, by no means exhaustive or complete. I have left out whole sections of his thought on land for example. But the major progression of his thought is here.

A Utopian system leads to an impasse between the adherents attempting to sustain the unsustainable and those who are obliged to endure its conflicts with reality. Much in the manner of the Wall Street financialisation cartel and the real productive economy today. The system might function well during a spectacular growth period, but when some return to normal growth occurs the system fails and a standoff occurs.

Unless resolved by organic reform that impasse can lead to 'reform by other means,' or an extreme solution and with it a general unhappiness. This is in fact his thesis, that the failure of neoliberal economics and its unwillingness to relieve the deadlock in which it held the real world economy led to the rise of the extreme solutions of fascism, communism, and the second great war. He makes an interesting case.

Enjoy.

"A market economy is an economic system controlled, regulated, and directed by markets alone; order in the production and distribution of goods is entrusted to this self-regulating mechanism. An economy of this kind derives from the expectation that human beings behave in such a way as to achieve maximum money gains. It assumes markets in which the supply of goods (including services) available at a definite price will equal the demand at that price. It assumes the presence of money, which functions as purchasing power in the hands of its owners.

Production will then be controlled by prices, for the profits of those who direct production will depend upon them; the distribution of the goods also will depend upon prices, for prices form incomes, and it is with the help of these incomes that the goods produced are distributed amongst the members of society. Under these assumptions order in the production and distribution of goods is ensured by prices alone...

Nothing must be allowed to inhibit the formation of markets, nor must incomes be permitted to be formed otherwise than through sales. Neither must there be any interference with the adjustment of prices to changed market conditions—whether the prices are those of goods, labor, land, or money. Hence there must not only be markets for all elements of industry, but no measure or policy must be countenanced that would influence the action of these markets. Neither price, nor supply, nor demand must be fixed or regulated; only such policies and measures are in order which help to ensure the self-regulation of the market by creating conditions which make the market the only organizing power in the economic sphere...

A self-regulating market demands nothing less than the institutional separation of society into an economic and political sphere. Such a dichotomy is, in effect, merely the restatement, from the point of view of society as a whole, of the existence of a self-regulating market...

A market economy must comprise all elements of industry, including labor, land, and money. (In a market economy the last also is an essential element of industrial life and its inclusion in the market mechanism has, as we will see, far-reaching institutional consequences.) But labor and land are no other than the human beings themselves of which every society consists and the natural surroundings in which it exists. To include them (people) in the market mechanism means to subordinate the substance of society itself to the laws of the market...

To allow the market mechanism to be sole director of the fate of human beings and their natural environment, indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity "labor power" cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man's labor power the system would, incidentally, dispose of the physical, psychological, and moral entity "man" attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation.

Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society...But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill...

But on the island of Juan Fernandez (an economic analogy described earlier) there was neither government nor law; and yet there was balance between goats and dogs. That balance was maintained by the difficulty the dogs found in devouring the goats which fled into the rocky part of the island, and the inconveniences the goats had to face when moving to safety from the dogs. No government was needed to maintain this balance; it was restored by the pangs of hunger on the one hand, the scarcity of food on the other. (This is the law of predator and prey).

Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they (people) were actually beasts and that, precisely for that reason, only a minimum of government was required. From this novel point of view, a free society could be regarded as consisting of two races: property owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrates were necessary, for hunger was a better disciplinarian than the magistrate...

The paradigm of the goats and the dogs seemed to offer an answer. The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith's humanistic foundations, and incorporated those of Townsend...Economic society had emerged as distinct from the political state...

To the politician and administrator laissez-faire was simply a principle of the insurance of law and order, with the minimum cost and effort. Let the market be given charge of the poor, and things will look after themselves...

What induced orthodox economics to seek its foundations in naturalism was the otherwise inexplicable misery of the great mass of the producers which, as we know today, could never have been deduced from the laws of the old market. But the facts as they appeared to contemporaries were roughly these: in times past the laboring people had habitually lived on the brink of indigence (at least, if one accounted for changing levels of customary standards); since the coming of the machine they had certainly never risen above subsistence level; and now that the economic society was finally taking shape, it was an indubitable fact that decade after decade the material level of existence of the laboring poor was not improving a jot, if, indeed, it was not becoming worse... (trickle down theory had not worked, mystifying economists.  The old canards are the best).

The acceptance of near-indigency of the mass of the citizens (roughly 47 to 99 percent apparently) as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism. The improvidence (lacking personal responsibility) of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. (born to be vile?) Also what would become of the fatherland unless we could rely on the poor? "For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?"...

Robert Owen, in 1817, described the course on which Western man had entered and his words summed up the problem of the coming century...The organization of the whole of society on the principle of gain and profit must have far-reaching results. He formulated these results in terms of human character. For the most obvious effect of the new institutional system was the destruction of the traditional character of settled populations and their transmutation into a new type of people, migratory, nomadic, lacking in self-respect and discipline—crude, callous beings...

He proceeded to the generalization that the principle involved was unfavorable to individual and social happiness. Grave evils would be produced in this fashion unless the tendencies inherent in market institutions were checked by conscious social direction made effective through legislation...The Industrial Revolution was causing a social dislocation of stupendous proportions, and the problem of poverty was merely the economic aspect of this event. Owen justly pronounced that unless legislative interference and direction counteracted these devastating forces, great and permanent evils would follow...

The trading classes had no organ to sense the dangers involved in the exploitation of the physical strength of the worker, the destruction of family life, the devastation of neighborhoods, the denudation of forests, the pollution of rivers, the deterioration of craft standards, the disruption of folkways, and the general degradation of existence including housing and arts, as well as the innumerable forms of private and public life that do not affect profits...

Two vital functions of society, the political and the economic, were being used and abused as weapons in a struggle for sectional interests. It was out of such a perilous deadlock that in the twentieth century the fascist crisis sprang...

Economic liberalism (liberal in the sense of laissez-faire) was the organizing principle of a society engaged in creating a market system. Born as a mere penchant for non-bureaucratic methods, it evolved into a veritable faith in man's secular salvation through a self-regulating market. Such fanaticism was the result of the sudden aggravation of the task it found itself committed to: the magnitude of the sufferings that were to be inflicted on innocent persons as well as the vast scope of the interlocking changes involved in the establishment of the new order...

The global sweep of economic liberalism can now be taken in at a glance. Nothing less than a self-regulating market on a world scale could ensure the functioning of this stupendous mechanism. (one world government) ...No wonder that economic liberalism turned into a secular religion once the great perils of this venture were evident. There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course...The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism...  (At the end of the economic continuum, both extreme laissez-faire and communism meet, becoming almost indistinguishable in their destruction of the individual and their particular social institutions which inhibit centralized control).

Stabilization of currencies became the focal point in the political thought of peoples and governments; the restoration of the gold standard became the supreme aim of all organized effort in the economic field. The repayment of foreign loans and the return to stable currencies were recognized as the touchstones of rationality in politics; and no private suffering, no infringement of sovereignty, was deemed too great a sacrifice for the recovery of monetary integrity.  (austerity anyone?)

The privations of the unemployed made jobless by deflation; the destitution of public servants dismissed without a pittance; even the relinquishment of national rights and the loss of constitutional liberties were judged a fair price to pay for the fulfillment of the requirement of sound budgets and sound currencies, these a priori of economic liberalism...

The root of all evil, the liberal insists, was precisely this interference with the freedom of employment, trade and currencies practiced by the various schools of social, national, and monopolistic protectionism since the third quarter of the nineteenth century; but for the unholy alliance of trade unions and labor parties with monopolistic manufacturers and agrarian interests, which in their shortsighted greed joined forces to frustrate economic liberty, the world would be enjoying today the fruits of an almost automatic system of creating material welfare.  

Liberal leaders never weary of repeating that the tragedy of the nineteenth century sprang from the incapacity of man to remain faithful to the inspiration of the early liberals; that the generous initiative of our ancestors was frustrated by the passions of nationalism and class war, vested interests, and monopolists, and above all, by the blindness of the working people to the ultimate beneficence of unrestricted economic freedom to all human interests, including their own.

A great intellectual and moral advance was thus, it is claimed, frustrated by the intellectual and moral weaknesses of the mass of the people; what the spirit of Enlightenment had achieved was put to nought by the forces of selfishness In a nutshell, this is the economic liberal's defense. Unless it is refuted, he will continue to hold the floor in the contest of arguments...

To separate labor from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, an atomistic and individualistic one.  (a vision of Orwell's 1984).

This effect of the establishment of a labor market is conspicuously apparent in colonial regions today. The natives are to be forced to make a living by selling their labor. To this end their traditional institutions must be destroyed, and prevented from re-forming, since, as a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in a like predicament...

Now, what the white man may still occasionally practice in remote regions today, namely, the smashing up of social structures in order to extract the element of labor from them, was done in the eighteenth century to white populations by white men for similar purposes... (the economic hitmen come home again).

Mankind was in the grip, not of new motives, but of new mechanisms., Briefly, the strain sprang from the zone of the market; from there it spread to the political sphere, thus comprising the whole of society. But within the single nations the tension remained latent as long as world economy continued to function...

Eventually, the moment would come when both the economic and the political systems were threatened by complete paralysis. Fear would grip the people, and leadership would be thrust upon those who offered an easy way out at whatever ultimate price. The time was ripe for the fascist solution.

The fascist solution of the impasse reached by liberal capitalism can be described as a reform of market economy achieved at the price of the extirpation of all democratic institutions, both in the industrial and in the political realm. The economic system which was in peril of disruption would thus be revitalized, while the people themselves were subjected to a re-education designed to denaturalize the individual and make him unable to function as the responsible unit of the body politic.

This re-education, comprising the tenets of a: political religion that denied the idea of the brotherhood of man in all its forms, was achieved through an act of mass conversion enforced against recalcitrants by scientific methods of torture.

The appearance of such a movement in the industrial countries of the globe, and even in a number of only slightly industrialized ones, should never have been ascribed to local causes, national mentalities, or historical backgrounds as was so consistently done by contemporaries...

In fact, there was no type of background— of religious, cultural, or national tradition—that made a country immune to fascism, once the conditions for its emergence were given. Moreover, there was a striking lack of relationship between its material and numerical strength and its political effectiveness. The very term "movement" was misleading since it implied some kind of enrollment or personal participation of large numbers. If anything was characteristic of fascism it was its independence of such popular manifestations. Though usually aiming at a mass following, its potential strength was reckoned not by the numbers of its adherents but by the influence of the persons in high position whose good will the fascist leaders possessed, and whose influence in the community could be counted upon to shelter them from the consequences of an abortive revolt, thus taking the risks out of revolution.

A country approaching the fascist phase showed symptoms among which the existence of a fascist movement proper was not necessarily one. At least as important signs were the spread of irrationalistic philosophies, racialist aesthetics, anticapitalistic demagogy, (and procapitalist demagogy for that matter) heterodox currency views, criticism of the party system, widespread disparagement of the "regime," or whatever was the name given to the existing democratic set-up...

What we termed, for short, "fascist situation" was no other than the typical occasion of easy and complete fascist victories. All at once, the tremendous industrial and political organizations of labor and of other devoted upholders of constitutional freedom would melt away, and minute fascist forces would brush aside what seemed until then the overwhelming strength of democratic governments, parties, trade unions.

If a "revolutionary situation" is characterized by the psychological and moral disintegration of all forces of resistance to the point where a handful of scantily armed rebels were enabled to storm the supposedly impregnable strongholds of reaction, then the "fascist situation" was its complete parallel except for the fact that here the bulwarks of democracy and constitutional liberties were stormed and their defenses found wanting in the same spectacular fashion...  (or as Orwell put it, a revolution is the kicking in of a rotten door - Jesse)

Fascism, like socialism, was rooted in a market society that refused to function. Hence, it was world-wide, catholic in scope, universal in application; the issues transcended the economic sphere and begot a general transformation of a distinctively social kind. It radiated into almost every field of human activity whether political or economic, cultural, philosophic, artistic, or religious. And up to a point it coalesced with local and topical tendencies. No understanding of the history of the period is possible unless we distinguish between the underlying fascist move and the ephemeral tendencies with which that move fused in different countries."

Karl Polanyi, The Great Transformation, 1944

Inequality Matters: Why Nations Fail

"To Egyptians, the things that have held them back include an ineffective and corrupt state and a society where they cannot use their talent, ambition, ingenuity, and what education they can get. But they also recognize that the roots of these problems are political.

All the economic impediments they face stem from the way political power in Egypt is exercised and monopolized by a narrow elite. This, they understand, is the first thing that has to change.

Yet, in believing this, the protestors of Tahrir Square have sharply diverged from the conventional wisdom on this topic. When they reason about why a country such as Egypt is poor, most academics and commentators emphasize completely different factors.

Some stress that Egypt’s poverty is determined primarily by its geography, by the fact that the country is mostly a desert and lacks adequate rainfall, and that its soils and climate do not allow productive agriculture. Others instead point to cultural attributes of Egyptians that are supposedly inimical to economic development and prosperity. Egyptians, they argue, lack the same sort of work ethic and cultural traits that have allowed others to prosper, and instead have accepted Islamic beliefs that are inconsistent with economic success.

A third approach, the one dominant among economists and policy pundits, is based on the notion that the rulers of Egypt simply don’t know what is needed to make their country prosperous, and have followed incorrect policies and strategies in the past. If these rulers would only get the right advice from the right advisers, the thinking goes, prosperity would follow. To these academics and pundits, the fact that Egypt has been ruled by narrow elites feathering their nests at the expense of society seems irrelevant to understanding the country’s economic problems.

In this book we’ll argue that the Egyptians in Tahrir Square, not most academics and commentators, have the right idea. In fact, Egypt is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it, such as the $70 billion fortune apparently accumulated by ex-president Mubarak. The losers have been the Egyptian people, as they only too well understand.

We’ll show that this interpretation of Egyptian poverty, the people’s interpretation, turns out to provide a general explanation for why poor countries are poor. Whether it is North Korea, Sierra Leone, or Zimbabwe, we’ll show that poor countries are poor for the same reason that Egypt is poor.

Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities.

We’ll show that to understand why there is such inequality in the world today we have to delve into the past and study the historical dynamics of societies. We’ll see that the reason that Britain is richer than Egypt is because in 1688, Britain (or England, to be exact) had a revolution that transformed the politics and thus the economics of the nation. People fought for and won more political rights, and they used them to expand their economic opportunities. The result was a fundamentally different political and economic trajectory, culminating in the Industrial Revolution.

The Industrial Revolution and the technologies it unleashed didn’t spread to Egypt, as that country was under the control of the Ottoman Empire, which treated Egypt in rather the same way as the Mubarak family later did. Ottoman rule in Egypt was overthrown by Napoleon Bonaparte in 1798, but the country then fell under the control of British colonialism, which had as little interest as the Ottomans in promoting Egypt’s prosperity.

Though the Egyptians shook off the Ottoman and British empires and, in 1952, overthrew their monarchy, these were not revolutions like that of 1688 in England, and rather than fundamentally transforming politics in Egypt, they brought to power another elite as disinterested in achieving prosperity for ordinary Egyptians as the Ottoman and British had been. In consequence, the basic structure of society did not change, and Egypt stayed poor."

Daron Acemoglu and James Robinson, Why Nations Fail

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

Simon Johnson On the Quiet Coup d'Etat in the Anglo-American Financial System

This is a reprise of an interview with MIT economist Simon Johnson which was posted here in February, 2009.

Have we heeded Simon Johnson's warning? Has he proven to be prescient? Is crony capitalism and the kleptocracy becoming bolder, more aggressive, ever more demanding?

"I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs...

But, exactly what you said, it's a small group with a lot of power. A lot of wealth. They don't necessarily - they're not necessarily always the names, the household names that spring to mind, in this kind of context. But they are the people who could pull the strings. Who have the influence. Who call the shots...

...the signs that I see this week, the body language, the words, the op-eds, the testimony, the way they're treated by certain Congressional committees, it makes me feel very worried.

I have this feeling in my stomach that I felt in other countries, much poorer countries, countries that were headed into really difficult economic situation. When there's a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. And you know you need to come in and break that power. And you can't. You're stuck....

The powerful people are the insiders. They're the CEOs of these banks. They're the people who run these banks. They're the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them...

But it really shows you the arrogance, and I think these people think that they've won. They think it's over. They think it's won. They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing....

...these people are throughout the system of government. They are very much at the forefront of the Treasury. The Treasury is apparently calling the shots on their economic policies.

This is a decisive moment. Either you break the power or we're stuck for a long time with this arrangement."


Bill Moyer's Journal - Interview with Simon Johnson, February, 2009.

Johnson also wrote a piece in the Atlantic Magazine titled The Quiet Coup. It may be worth re-reading.

Here is the introduction to this in The Fall of the American Republic: The Quiet Coup d'Etat in August 2010.

"I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government.

Let's be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform."

As far as I can tell, we are right on track for a very bad time of it. And you might be surprised at how far a belief in exceptionalism and arrogant superiority can go before it finally ends, or more likely, falls.