This diary series is a slightly edited version of Contradictions of Capitalism, a book that I wrote in the early 90's which is still available now on Amazon. I have updated some parts of it to reflect the very important changes in the corporate economy since the mid-1990s with the appearance of a global economy rather than a national, which has important effects which much of the socialist movement has still not fully grasped.
This is the final installment of the series.
Previous entries in this series can be found here:
Part One: http://www.dailykos.com/...
Part Two: http://www.dailykos.com/...
Part Three: http://www.dailykos.com/...
Part Four: http://www.dailykos.com/...
Part Five: http://www.dailykos.com/...
Part Six: http://www.dailykos.com/...
Part Seven: http://www.dailykos.com/...
Part Eight: http://www.dailykos.com/...
Part Nine: http://www.dailykos.com/...
Part Ten: http://www.dailykos.com/...
Part Eleven: http://www.dailykos.com/...
(This chapter consists of excerpts from my book World, Incorporated: The History of the Supra-National Corporation and its Global Stranglehold on Freedom and Democracy, available here at Amazon: http://www.amazon.com/...
TWELVE: World, Incorporated
"The corporations of the world have united—and they have lost their chains."
It has become a trivial truism in American politics that “corporations have too much power” and that “corporate money dominates our political system”. These cries intensified in 2010, after the Supreme Court ruled that corporations have the First Amendment “free speech” right to pour virtually unlimited amounts of their vast fortunes into the political process. In concluding that “money equals speech”, the Supreme Court neglected to consider that, in our electoral system, money also equals votes. Inevitably, the effect of the Court’s ruling will be increasing domination of our national life by the corporations.
Few people understand, however, that this is just a symptom of a much larger and much more ominous trend—the vast shift in global power that has already occurred from 1990 to 2010, when corporate domination of nations reached levels it had never been able to attain before, when corporate power superceded national power, and when global economic structures gained control over democratic governmental structures.
We no longer live in a world made up of “nation-states”. Today, power and control has passed to huge multi-national mega-corporations who have no country, owe loyalty or obedience to no government, and who answer to no nation. There is no longer any such thing as an “American” corporation, or a “Japanese” corporation, or a “Chinese”, or “German”, or “British”. A tiny handful of mega-conglomerates now have global reach and global power. They all own big chunks of each other, and have become so intertwined and interlocking that it is no longer possible to differentiate them. They are larger, richer, more powerful, and have more effect on people’s lives than “nations”. National sovereignty and national borders are irrelevant to them; national governments, even the largest, are unable to challenge or control them.
They have become supra-national.
The supra-national corporations exercise economic control through a global network of international agreements and enforcement bodies, like the World Bank and the World Trade Organization, which are unelected, undemocratic, and have more power than any national government. These organizations have control over the budgets, trade policies and financing of every nation; they have veto power over national laws; they decide where jobs shall go and where they shall not. We are all utterly dependent upon them. Everything necessary for our lives—our food, our clothing, our consumer goods, our energy sources, our jobs, our financing, everything—now comes from somewhere else on the planet, and we depend completely on the supra-nationals to bring them here for us, cheaply and reliably. Today, the supra-national corporations can manufacture an item in China using materials that come from Brazil and South Africa, and sell that item in a store in New York or London, more cheaply than a factory could if it was located right next door. And even the credit card we use to pay for that item comes through financing obtained from banks in Iceland or Saudi Arabia. Without this vast interconnecting global economic structure, 21st century life would be impossible. It is this supra-national network, and the handful of corporations which run and profit from it, that determine the very shape of our lives.
No nation is, or can be, an island anymore—we are, all of us, everywhere, part of the global economic network. Supra-national corporations like Citicorp, British Petroleum, Samsung, Royal Dutch Shell, Toshiba, or Daimler-Benz, determine the lives of people in India and Guatemala and Nigeria just as much as they do people in America or Britain or Japan. The very idea of a “sovereign nation-state” is now dead, a quaint relic from an outdated 20th century worldview. We now live in a global corporate planet—World, Incorporated. “Nations” are merely wholly-owned subsidiaries.
That change has been profound—and has gone almost entirely unnoticed and virtually unchallenged in the US. Particularly by the radical left, which has failed to realize that the very basis of their previous actions and organizations--the national state--is now an outdated irrelevancy.
The transition from a multi-national world to a supra-national one happened quickly--in less than 20 years. By the 1980's, virtually every industrialized economy had become dominated by huge mega-corporations who dominated the landscape both economically and politically. But these were, for the most part, limited to the national theater. Like Mafia dons, each corporation ruled unchallenged within its own territory. It was in the 1980's that the mega-corporations, driven by a crushing need for new markets for expansion, began to invade each others' turf. The Japanese were the first--Japanese car, auto and electronics corporations began muscling their way into the American market and soon drove many of the most iconic American corporations to their knees. The result was what I call "The Multi-National Wars", a brief but bitter economic fight in which every territory became open, and huge global corporations from every country fought each other in the world marketplace to the bitter end. When the Multi-National Wars ended in the early 1990's, the entire global economic landscape had been changed. Instead of a series of industrial nation-states, each dominated by a tiny number of their own nation-based corporations, there stood a single undifferentiated global economy, now dominated by an even tinier number of huge global mega-corporations (all the other giant corporations had either been merged or driven out of existence).
But now the global economic world faced a challenge, and ironically, it was a repeat of a challenge they had already faced earlier in history. One of the primary reasons for the appearance of the modern nation-state in the 15th and 16th centuries was the merchant class’s need for a uniform set of trade regulations. In the earlier feudal period, each individual fiefdom was more or less independent, and each feudal lord had the authority to decree whatever currency, taxes, duties, tolls or trade restrictions that he pleased. As the merchant class grew more powerful and trade routes became longer and more widespread, they ran headlong into this bewildering patchwork of laws and regulations, and, recognizing that it would be far more advantageous for them if they faced a uniform set of laws and regulations everywhere, the merchants threw their support behind the idea of ”nationalism”, in which a single government would have control of each national territory and impose upon it a single uniform set of rules.
At the end of the Multi-National Wars in the early 1990’s, the global corporations ran into a similar problem. As their operations expanded into dozens of countries, they butted up against a bewildering array of separate national currencies, trade laws, tariffs, taxes and regulations. And the solution they proposed for this problem was the same as the old mercantilists—a uniformity of rules.
The economic blood-letting unleashed by the Multi-National Wars had also deeply shaken the corporations on all sides. The casualty rates among corporations were high, as once-mighty corporate behemoths disappeared in mergers or buyouts or bankruptcy, and the multinationals searched frantically for a way to avoid such costly economic wars in the future by setting up a single uniform set of rules by which everyone would abide and a central authority to enforce them. This could not be done by national governments; even the largest and most powerful national governments simply were not strong enough to compel obedience from the supra-national corporations (who were now richer, larger and more powerful than any single national government). As a result, the global corporations were forced to set up their own government, able to make its own rules which the no-longer "sovereign" national governments had no choice but to accept. The administrative bodies of this new global corporate government are the WTO, the IMF and the World Bank, and its "laws" are set in "free trade agreements", which guarantee every global corporation equal access to all of the world's markets.
By 1999, then, the world-wide shadow government of the corporations was complete. The WTO had veto power over any national government, and prevented any nation—even the largest and most powerful—from asserting its own national interests against the interests of the corporations. The corporations were now global; they served no national interest, answered to no national government, and heeded no national border. In the 1980’s, the corporations transformed themselves from “national” to “multi-national”; in the 1990’s, they transformed themselves from “multi-national” to “supra-national”. The United States and its nation-based corporations, which had ruled unchallenged for half a century, were no longer at the top of the pyramid—they had been replaced by a multifaceted global corporate economic structure. By World, Incorporated.
But this global economic system is already being driven by its own internal needs to produce the changes that will kill it . . .
The most ironic thing about the 21st century mega-corporations is that they have accomplished nearly everything that the radical Socialist Party of the 1910’s wanted to do. The Socialist Party wanted to eliminate the private ownership of capital and replace it with collective ownership; today the corporations are not owned by individual proprietors, but by a collective body of shareholders. The Socialist Party wanted to remove ownership from management and introduce managers who held their position by election, rather than by ownership; today the corporations are run by professional managers who are hired by a board of directors that is elected by the shareholders. The Socialist Party wanted to eliminate economic competition and replace it with economic cooperation; today the corporations have become vast interconnected networks who own parts of each other through cooperative joint projects and multilateral ventures. The Socialist Party wanted to replace what they called the “anarchy of the marketplace” with planned economic production over long-term goals; today corporations try in every way to eliminate the shocks of market uncertainty by long-term planning. The Socialist Party wanted to eliminate national borders and replace them with internationalism; today the corporations have become multinational, have built up a global economic framework, and have made national boundaries economically irrelevant.
In essence, the corporations have already socialized the entire process of production. The task that will now face them is how to socialize distribution—how to insure that people can still receive the necessities of life in a world where automation and mechanization continue to make more and more jobs unnecessary, where globalization continues to move more and more jobs to low-wage havens, and where economic processes push “normal” unemployment rates higher and higher. Inevitably, there must be a decoupling of job income and consumption, allowing people to obtain what they need whether they have jobs or not.
Another utopian goal of the Socialist Party was “world government”, and once again, the corporations are today moving along the same path. The corporations have already built international economic structures—the WTO, IMF and the various free trade agreements--and these already have control over national economic policies and legal veto power over national laws.
Along with the buildup of international economic power must inevitably follow the buildup of international political power. Just as the “nation” has become irrelevant economically and has been replaced by international economic structures, so too has the “nation-state” become irrelevant politically, and will inevitably be replaced by international political structures—and the corporations have already begun that process.
The seeds of that international political structure (the United Nations) are, of course, completely undemocratic and are dominated by the handful of wealthy powerful nations.
But the poor nations (and poor people) of the world are now no longer powerless. Globally, progressives must force the UN to democratize, by degrees, and turn it into a real international government. It is, in essence, the very same process we have already done in the process of democratizing various national governments, but this time we must repeat it on an international scale instead. Just as we once fought for national democracy, now we must fight for international democracy. It’s no longer a question of whether we should have a world government or not—we already have one. The only question now is whether it should be democratic, or continue to be dominated by the wealthy and powerful.
Fortunately for us, we do not have to start from scratch. There already are national organizations for democracy and for social justice, for fair trade and for control over corporate power, for labor rights, environmental protection, consumer safety, etc all over the world. What we need to do is unify those separate parts into one coordinated whole. Instead of Ford workers in Detroit and Ford workers in Shanghai being in different unions (or in no union at all), we need all of them in the same union, under the same contract. Instead of environmental groups focusing just on their own country, we need to unify them into a global environmental group which fights for the same environmental protections everywhere. In every area—consumer rights, workplace safety, product standards, minimum wages, fair labor laws—we must fight to implement global laws and regulations which apply everywhere, rather than the current patchwork of laws and regulations which only apply in this nation or that. Just as the corporations are seeking a uniform set of global rules, so too must we--but we must force those rules to protect our interests, not theirs.
That is how we get the beginnings of a supra-national social justice movement—by unifying all the national ones that already exist. And “unify”, doesn’t just mean “give money or moral support to each other”, nor simply “we share the same goals”. It means unify into one single global organization, just like the corporations already have. The corporations are already unified at the global level. They have already led the way. We must follow.
"Workers of the world, unite!" was once just a utopian political slogan. Today, it is our only survival strategy.
CONCLUSION
In his voluminous writings, Marx rarely made any reference to the process of transition between capitalism and socialism, or to the kinds of social relationships which would exist within the socialist mode of production. This is understandable, since Marx was not a Utopian, but preferred to deal with concrete reality rather than idealistic speculation or supposition. Since socialism did not yet exist, Marx was quite unable to describe its workings or mechanisms.
Today, despite the claims of the “Marxist-Leninists” and the “Communists”, socialism still does not exist. As a result, we are equally unable to give an empirical description of what socialism looks like. Nevertheless, it is tempting to conclude our analysis of capitalism with a tentative look at its successor.
In order to do this, we must look again at the internal forces within the capitalist system which are steadily undermining it, as well as the actions being taken to prevent this process. The socialist system will spring from the internal crises of capitalism, just as capitalism itself resulted from the internal stresses which destroyed feudalism.
There are a number of trends visible within capitalism which point to its impending dissolution. In the processes of change and alteration which capitalism has undergone since the days of “laissez-faire economics”, we can see the inability of capitalism to deal with the social and economic tasks which presently face it, and we can detect the beginnings of a new social and economic system which will be better suited to these new conditions.
The first of these changes to occur was the establishment of the joint stock corporation. In forming these conglomerates of capital, the capitalist class was acknowledging that the prior framework of private individual ownership of property was no longer suited to social circumstances, and that expanded production required the cooperation of a number of capital-owners under a joint management.
Today, this process has reached an extreme. Although the corporate sector of the economy is owned jointly by the capital-owning class (the small number of stockholders), it cannot be said that any corporation is “owned” by any individual (unless, of course, the corporation is itself a family-owned business). In essence, the capitalist system itself has done away with private property ownership and has introduced social property in its place.
In the heyday of the capitalist system, economic decisions were the prerogative of a single owner, who made his decisions individually and in his own short-term interests. Today, however, this capitalist ideal no longer applies. In the modern corporation, the search for long-term stability and profitability forces the corporations to make long-term plans for the investment and use of their capital and resources. These decisions are no longer made by individual property-owners; they are made by a network of hired managers and professionals. In essence, private short term investment has given way to joint long-term planning for the optimum utilization of resources.
Another crucial factor which resulted from the joint stock company is the separation (both legally and in practice) of ownership from management. In the early days of capitalism, the capital-owner had to serve as his own entrepreneur and manager. He could profit from his investment only if he himself made the decisions upon which profitability was based. This allowed the capitalist to justify his appropriation of surplus value as “compensation” for his decision-making entrepreneural role.
Today, however, the socialized capital-owning class has no such connection to business decision-making. Instead, the capitalist stockholders are able to hire the services of a network of professional managers, decision-makers and innovators who perform this role for them Those who own a majority of stock in a corporation have no need of business sense or entrepreneural ability; they can merely hire others who have these abilities. The stockholder-capitalist makes his living without lifting a finger. He performs no labor, produces no commodity, and develops no new innovation. The only thing he does is allow the managers to use his capital and then cash the dividend checks they send to him. Even if one accepts the argument that the capitalist as decision-maker receives his profits as compensation for his decision-making ability, one can certainly not make this argument when the capital-owner makes no decisions at all, but merely hires others to do this for him.
Thus, capitalist practice itself demonstrates that the capital-owner, the stockholder, is superfluous and parasitical. If the managers perform their tasks on behalf of the absentee stockholders, they can perform them just as well if those stockholders are deposed and replaced by elected representatives from the workplace and the surrounding community. There is no reason why the managers cannot be made responsible to the social entity as a whole rather than to the minority of stock-owners.
Developing methods of capitalist management are beginning to acknowledge this fact. In the days of individual capitalism, economic enterprises were essentially top-down affairs, mere extensions of a single capitalist who ran the enterprise in essentially dictatorial fashion—Carnegie Steel, Ford Motor Company, the Gould railway empire.
As corporations moved towards social ownership and control by professional managers, however, they turned from a vertical system of organization to a horizontal association of diverse economic enterprises. This process accelerated with the onset of the overproduction crisis, which forced corporations to diversify in order to survive.
The old “dictatorial” method of management works fine for a vertical organization which only had to monitor a small number of routine tasks, but top-down management fails miserably when faced with the task of integrating and coordinating a large number of diverse units.
As a result, modern managers have been forced to adopt methods which are more horizontal and “democratic”, through the use of such concepts as project teams, work councils, ad hoc committees, and autonomous project teams. And, since this diverse economic process is too large and too involved to be overseen by a small number of hired managers, it has become necessary to integrate the workers in the shop more fully into this coordination process. This management concept was pioneered by the Japanese, and has since been adopted by US corporations, which have referred to it as “job enhancement” or “industrial democracy”.
The long-term effects on the capitalist mode of production will be profound. These new management styles weaken the very core of the capitalist’s raison d’etre. If management and workers can make economic decisions without the input of the owners, it is obvious that the owners are not needed and can be dispensed with. Furthermore, the increasing integration of workers into this management process will make the workers able to carry out these management tasks by themselves, thus making the professional management sector equally unnecessary. The capitalist program of “industrial democracy” is the beginning of a new social and economic structure which will eventually bring full control of the economy to the workers who run it. These infant “workers councils” represent the future society of worker control; they represent the beginnings of socialism.
Current political changes in the capitalist countries are hastening this process and adding to the framework within which the workers can seize control. As we have seen, many capitalist nations have nationalized key industries and placed them under direct state management, in order to protect the framework of the capitalist system. In this manner, a part of industry has been placed, if only theoretically, under the control of society as a whole rather than under the control of private owners.
New political movements make this process a future instrument of working class power. State ownership over industry means nothing to the working class unless it has ownership over the state, and right now the bourgeois state is completely dominated by the moneyed interests. However, this domination is also beginning to fall apart.
In the early republics, the right to vote was granted only to white male property-owners. Since then, working class struggle has forced expansion of the right to vote, and today suffrage is almost universal.
This is still a hollow right, however, since the moneyed interests completely dominate the campaign and electoral process, and thus limit the options from which the voters can choose. Current movement towards public campaign financing and legal limits on the terms of elected officials, however, will weaken the grip of the wealthy elites on the election process, and the increasing empowerment of the referendum and initiative will place more and more political power in the hands of the working class.
The most significant step which has been taken in this direction is the legal addition of local community and working class representatives to corporate decision-making boards. Laws such as the German “co-determination law” and regulations in the US which limit the actions of corporate plant closings show the beginnings of a trend towards joint economic decisions made by community representatives and worker representatives, and thus represent the beginnings of a new social structure which will allocate economic resources without the need for capitalist property-owners or their professional managers. The economic and political decisions of a social group will be the prerogative of that social group. Economic decisions will be made, not according to the criteria of wealth and profit, but according to that of the production of things that are needed and the efficient distribution of these things. Production and distribution will follow the formula, “From each according to ability, to each according to need.”
The high productivity of the capitalist system is the final method by which it is undermining itself. Given the incredible productive forces that could result from the full utilization of productive capacity, it will be possible for an industrialized society to produce all of its needs while utilizing only one-half or one-third of its present work force. Farming has already undergone such an explosion of productivity under capitalism. While under feudalism nearly all of the population was engaged in production of food, under capitalism the impact of machinery has produced a society where more than enough food can be produced using only 5% of the population.
Similarly, manufacturing ability has expanded to the point where most people simply do not need to produce anything. The capitalists recognize this fact by acknowledging that acceptable levels of unemployment have been rising steadily over the past few decades. In addition, the capitalist process of industrialization and mechanization has introduced a means of reducing the working population still further, by replacing the human worker with machinery, automation and robotic factories.
Capitalism is thus caught in a contradiction which it cannot escape. In order for people to obtain the necessaries of life, they must have income from jobs, but the capitalist process itself is steadily eroding and eliminating these jobs. Thus, capitalism cannot meet the needs of the social body, and must be altered. It must be forced to develop methods of distribution which are not based on the income from wage labor. Rather than distributing scarce commodities on the basis of who has the money to pay for them, capitalism is now faced with the problem of distributing abundant resources according to who needs them.
The result is a social system of production and distribution which is not based on profit, wage labor or capital accumulation, but on the production and distribution of useful things; on the production of use-values, not exchange values. It is a social-ist system, in which human needs determine what is done, not the desires of private property-owners. It is a society which is characterized by social control over resources rather than private, by long-term planning rather than short-term profit, by the integration of political and economic decisions rather than the separation of them, and by production for use rather than production for profit.
Such a socialist system will also free us to develop the full potential of our human interactions and relationships. Free from the constraining limits imposed by the bourgeois need to replicate and propagate existing social relationships through sexism, racism, heterosexism, authoritarianism, etc., humans will be free to interact with each other in any way they desire.
The full process of social interaction, between humans and nature, between man and woman, between worker and non-worker, between straight and gay, between order-giver and order-taker, will be under the direct and conscious control of human needs and desires, by human beings who are fully conscious of their existence as social beings. Human needs and desires will once again be the root of human actions, and humans will once again become Homo sapiens, “conscious humans”.