The Defeat of the Predator State - Democratic Underground

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Tue Apr-07-09 09:00 PM
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The Defeat of the Predator State

In a recent post, titled “The Predator Class and the Predator State”, I discussed how a small group of oligarchs in our country has amassed a huge fortune, as the economic health of the American people as a whole has remained stagnant or deteriorated since the early 1980s. In that post I describe James Galbraith’s conception of the United States as a predator state, from his book, “The Predator State”:

In the late 1970s and 1980s… business leadership saw the possibility of something far more satisfactory from their point of view: complete control of the apparatus of the state. In particular, reactionary business leadership, in those sectors most affected by public regulation, saw this possibility and directed their lobbies – the K Street corridor – toward this goal. The Republican Party… became the instrument of this form of corporate control. The administration… of George W. Bush became little more than an alliance of representatives from the regulated sectors seeking to bring the regulatory system entirely to heel. And to this group was added… those who saw the economic activities of government not in ideological terms but merely as opportunities for private profit on a continental scale…

This is the predator state. It is a coalition of relentless opponents of the regulatory framework on which public purpose depends, with enterprises whose major lines of business compete with or encroach on the principal public functions of the enduring New Deal. It is a coalition, in other words, that seeks to control the state partly in order to prevent the assertion of public purpose… They are firms that have no intrinsic loyalty to any country… They assuredly do not adopt any of society’s goals as their own, and that includes the goals that may be decided on by their country of origin, the United States. As an ideological matter, it is fair to say that the very concept of public purpose is alien to, and denied by the leaders and the operatives of this coalition… In the predator state, the organization exists principally to master the state structure itself… Their reason for being is to make money off the state – so long as they control it. And this requires the marriage of an economic and a political organization…

I then provided some examples from Galbraith’s book, including: The health insurance industry’s crusade to prevent us from getting universal health care, the movement to destroy our public school system and replace it with privatized education, the movement to privatize/destroy Social Security, and the role of the predatory state in the home foreclosure crisis.

In this post I discuss Galbraith’s ideas on how to defeat the predator state by replacing it with a more democratic system of government. But we must understand that it is nothing new for oligarchs to amass vast fortunes at the expense of everyone else. In our country it started with slavery, which plagued our nation for the first 89 years of its existence. Then, after slavery ended, with the widespread industrialization in our country we entered the Gilded Age, in which vast fortunes were accumulated upon the backs of the American worker. Thus it was that the attempts of American labor to organize itself in order to make a better life for itself were met with the “War against Socialism”.

A brief summary of the century and a half war against socialism in the U.S.

I discuss our war against socialism more thoroughly in this post. Some of the earlier highlights of that war include: the suppression of the labor movement in the United States, most famously exemplified by the framing, imprisoning, and execution of labor leader “terrorists” for the Haymarket Square bombing of 1886 (See “Death in the Haymarket – A Story of Chicago, the First Labor Movement and the Bombing that Divided Gilded Age America” for an excellent discussion of this); the repeated imprisoning of Eugene Debs, perennial Socialist candidate for President of the United States, for speaking out about his beliefs; and, as recorded by Richard Hofstadter writing in 1970, at least 160 instances in which state or federal troops intervened in strikes, and at least 700 labor disputes in which deaths were recorded, with most of the violence being perpetrated by state or federal authorities against workers.

Our first military intervention against Communism occurred in 1918, when we sent troops to Russia to fight in the Russian Civil War in an unsuccessful effort to oust the Communists from power.

President Franklin Delano Roosevelt led a sort of counter-attack on the war against socialism, as he brought our country out of the Great Depression in the 1930s. Though he didn’t actually use the word “socialism”, many of his New Deal policies that led us out of depression, such as the Social Security program that still protects so many Americans against financial ruin today, have characteristics of socialism. Consequently, a military coup against FDR was planned, but fell apart when word of it leaked out prematurely.

Shortly after FDR’s death, with the onset of the Cold War, our war against socialism hit full steam. Using the Soviet Union as an excuse, our CIA and military intervened in dozens of nations anywhere and everywhere in the world to overthrow the legally elected governments of other countries or to prevent them from being elected in the first place. This gave rise to repressive right wing governments all over the world and resulted in untold misery widely distributed throughout the world. Richard Walton sums up the situation in his 1976 book, “Henry Wallace, Harry Truman and the Cold War”.

Various right wing dictators… were quick to perceive that the United States was supporting them not out of a genuine concern for their people but because they were allies in an anti-Communist crusade that took precedence over all other considerations… It is difficult to think of a single instance where the United States took effective measures to end repressive, undemocratic practices of a regime it claimed to be supporting in the defense of democracy…

Following a pause during Jimmy Carter’s Presidency, the practice of CIA and military intervention in sovereign governments in the name of anti-Communism picked up full steam again under the Reagan/Bush presidency, until the end of the Cold War in 1989.

The United States today as a predator state

It is important to understand the war against socialism in the United States as background to today’s situation, because the conservative oligarchy in our country still makes frequent use of it. They take every opportunity to use of the prejudice against socialism to label any policy that is unfavorable to their interests as “socialism” or “communism” or “class warfare”. James Galbraith describes in his book how that has translated into today’s social policies in the United States:

Deregulation of monopolies
Thanks to the U.S. labor movement and the efforts of some progressive politicians, including Presidents Theodore and Franklin Roosevelt, there were times in our history when we made reasonable efforts to prevent or regulate corporate monopolies. However, that changed for the worse beginning with the Reagan Revolution. Galbraith explains:

Deregulation of wages and prices… is nothing more than a rearrangement of social power relations… (This) has mainly to do with whether the regulated entity is being supported and assisted by the controls, or whether it has elements of monopoly power of which the controls and regulations have inhibited the exploitation.

What actually happened in the great wave of deregulation? … In most cases regulation had served mainly to keep monopoly pricing power under control. And where regulation served that cause, the effects of deregulation were bound to be adverse.

Corporate “heroes” and screwing the vulnerable
The opposite of socialism is the so-called “free market”. This then is what the oligarchs base their entire economic philosophy on. But Galbraith explains how, more often than not, the so-called “free market”, especially with regard to the essentials of life, has worked more to protect monopoly power than to foster competition. Galbraith explains how this monopoly power has so often been used in the United States:

The capacities to manipulate…, discriminate, and exploit become in their turn the defining characteristics of corporate success. And those who pursue such strategies most aggressively are, naturally, the heroes of the corporate world. It is not that there is a thin line between meeting consumers’ needs and presenting them with complex choices intended to make them easier to fleece. It is that there is no line at all: one practice bleeds over into the other. Success in meeting needs and success in screwing the vulnerable cannot be readily distinguished, except perhaps by prosecutors and juries much later. Thus, the CEO who is initially celebrated for brilliant innovation is later exposed as a crook… Complexity and deregulation transforms and actually criminalizes the market…

A system that absolutely encourages corruption and crime
Galbraith explains that so much has the so-called “free-market” become ingrained in our nation’s consciousness that even liberals dare not speak against it (until recently, that is). He explains how this has prevented us from reforming our economic system:

Few liberals want to suggest that corporate titans are simply paid too much… The abuses are noted, to be sure. But the pattern linking them together is not, and the role of the state… is not placed front and center. When a crisis erupts, as happens with mind-numbing regularity, an enthralling moral tale of greed and hubris can be told and retold. The message is that occasionally large corporations fall under the leadership of bad people… The issue is therefore punted to the legal system; it stays off the docket of social reform.

A look at a better system – The Scandinavian countries

Galbraith uses the Scandinavian countries as an example of how economic systems should work for the benefit of a nation’s people. An assessment of income inequality in 2002 showed that all four Scandinavian countries (Denmark, Norway, Sweden, and Finland) were among the top nine in the world in income equality. The United States did not make it to the top 30, and it is a lot worse today in that regard than it was when this assessment was conducted in 2002. Galbraith explains why Scandinavians enjoy such a high quality of life today:

The Scandinavian countries are the most egalitarian capitalist economies on earth. They have nearly universal unions, high minimum wages, and a strong welfare state… They also are highly open (with regard to free trade). They practice free trade. Business there is free to import, export, and outsource… and otherwise conduct itself as it sees fit. And yet the Scandinavians enjoy, most of the time, the lowest unemployment rates in Europe.

How can this be so?... The true secret lies in the aggressive regulation of wages. If you are a business in Sweden or Norway… there is one thing you are not free to do: you are not free to cut your wages. You are not free to compete by going after cur-rate workers, either native or immigrant. You are not free to undercut the union rate. You have to pay your workers at the established scale, and if you cannot do that and earn a profit, too bad.

The effect of this on business discipline is quite wonderful. To succeed, businesses must find ways to compete that do not involve running down the wage standards of their workforces. They do it by keeping productivity high and investing in the search for technological improvement. This means that advanced industries thrive in Scandinavia, while backward ones die out. (Progressive businessmen prosper, while reactionaries fade away.) As a result, the economies as a whole stay competitive: the Scandinavian countries started the twentieth century poor and ended it at the top of the world’s distribution of income and wealth. The tax and welfare systems then make sure that everyone has enough to live on….

The need for planning

Galbraith explains that planning is one of the two major antidotes to the predator state. This is something that is very familiar to me, since I have worked in the public health field for the past 30 years. My training in public health was filled with planning courses. Every job I have held as an adult has been predicated on the assumption that public health planning by government is essential to the public health of a nation. It is a function that cannot be privatized because, when it is, the quest for profits routinely trumps and obstructs the need to protect the public’s health. Galbraith explains the importance of government planning to a nation’s people:

A country that does not have a public planning system simply turns that function over to a network of private enterprise – domestic or foreign – which then becomes the true seat of economic power. That that is why the struggle over planning is, and remains, such a sensitive issue: It is a struggle over power. It is a struggle… between those – scientists, engineers, some economists, and public intellectuals – who attempt to represent the common and future interest and those – banks, companies, lobbyists, and the economists whom they employ – that represent only the tribal and current interest. It is an uneven struggle… in which … the (public) planners have prevailed on only rare occasions.

But it is an inescapable struggle. If the future is to be provided for, you must have a community of planners… To walk away from this problem with a shrug about “markets” is to disenfranchise the future… To “rely on the market” is to guarantee that the interests of the future will never be provided for.

The need for regulation and standards

As with government planning, government standards and corporate regulation are processes that the oligarchs have always strenuously attempted to equate with “socialism”, “Communism”, and “class warfare”:

Government regulation and standard as a means of leveling the playing field
Galbraith explains the need for regulation and standards as a means of leveling the economic playing field:

In most cases, price controls are put in place in order to reduce economic inequalities – They are by far the simplest, most direct, most effective way of achieving this objective… Likewise the provision, not so long ago, of tuition-free enrollment in major state universities, and still of the provision of tuition-free public schools. Likewise the cost-fee provision of medical care in more expansive social democracies than ours. Likewise many laws and other means of regulating interest rates. The benefit in each case lies in ensuring that key components of a civilized life – including electricity, communications, energy, banking, education, and health care – were available to all, regardless of their money income. This fact placed a floor under the real incomes of working, retired, and disabled people so far as the most basic consumption goods were concerned. It placed a ceiling on profits that could be extracted from certain markets by virtue of monopoly power. It is therefore no accident that rising inequality almost always follows the deregulation of wages, prices, rents, and utility rates….

The defeat of the predator state
Galbraith explains how government regulation and standards, far from stifling competition, can actually be used to encourage the kind of competition that our nation needs in order to move forward. By doing so, reactionary businesses lose their monopolistic advantages and therefore lose their power to abuse the American citizenry. Galbraith explains how such policies, if widely implemented, will eventually end the predator state.

What must happen in a democracy substantially dominated by corporate interests is in some sense a coalition of the (relatively) progressive forces, including labor and some elements of business, against the reactionary business powers. That is, for a standard to work, firms that are capable of meeting standards must be found, and they must be prepared to accept them … more or less in alliance with labor and environmental or consumer interests… For such firms, once they put their minds to it, the standards are a competitive weapon. They work to expand the market share of those who comply against those other firms that cannot or will not do so. The standards are then met, the reactionaries must either adapt or be forced out of business, and the best practice becomes the norm. Wage standards, which push the whole of industry toward best practices, are simply the general version of what can be done with environmental, health, and occupational and consumer safety issues.

Imposing standards, and enforcing them, is thus the general policy response to the rise of the Predator State, which is just a coalition of the reactionary forces within business who seek to maintain competitiveness and profitability without technological improvement, without environmental control, without attending to product or workplace safety. They are the forces behind deregulation, behind tort reform, and behind the assault on unions. If they will not adapt – and the experience of the past three decades demonstrates (they) have no intention of adapting – then they must be defeated politically. And following their political defeat, they should be pushed, by aggressive implementation of new standards, to the economic wall.

Conclusion

Galbraith concludes his argument for government standards and regulation with the following:

In short, the populist objective is to raise American wages, create American jobs, and increase the fairness and security of our economic system… Is there a better way to do this…? Of course there is – and that is to do it directly. You want higher wages? Raise them. You want more and better jobs? Create them. You want safer food, cleaner air, fewer carbon emissions? Pass laws and establish agencies to achieve this…

These are the kinds of things that our conservative oligarchs and the Republican Party (along with some Democrats) that they pay to represent them will fight tooth and nail as long as they live. They will yell SOCIALISM!! or COMMUNISM!! or CLASS WARFARE!! in order to convince large segments of the Americans people that government regulation is the work of Satan himself.

We must voice our opposition to that kind of self-serving demagoguery. I admire the way that then candidate Obama stood up to the barrage of charges of socialism by refusing to back down on his pledge to rescind the Bush tax cuts. His solid election victory showed that the power of the “socialism” label to derail progress is wearing thin with the American people. I’ve been much less pleased with some of President Obama’s more recent actions, such as his apparent backing down from his campaign promise to work for a universal health care system in which government plays the major role (as opposed to private for-profit insurance companies).

Time will tell in what direction President Obama and our Congress intend to move on these things. But in the meantime we can’t afford to trust that our elected leaders will do the right thing, when they are facing so much pressure to do the wrong thing. Instead, we should never stop letting them know what we think.