Remembering Corporate Liberalism


by Roderick Long
http://c4ss.org/content/23042

Remembering Corporate Liberalism

The main plotline of the Star Wars prequel trilogy concerns an apparent conflict between the central government (the Senate) on the one hand and a coalition of mercantile interests (the Trade Federation, the Commerce Guild, etc.) on the other. As events unfold, however, it quickly becomes obvious to the audience (though much less quickly to the protagonists) that the conflict is largely a ruse, with the leadership of the two sides (Chancellor Palpatine and Count Dooku, respectively) secretly working hand in glove.

Which isn’t to say that all is rosy between them. Each wants to be the dominant partner; witness Dooku’s failed attempt to betray Palpatine in Episode II, and Palpatine’s successful backstabbing of Dooku and his corporate allies in Episode III. Still, the partnership is stable enough to succeed in manipulating the protagonists into unwittingly undermining the very liberty they have been seeking to protect. As the pseudo-conflict escalates, there are, in the words of Episode III’s opening crawl, “heroes on both sides” – but the good guys on the two sides have been duped into fighting one another, each side grasping the evil of the other side’s leadership but not yet that of its own.

Unfortunately, this is not just science fiction.

During the first half of the 20th century, there was a widespread perception that big government and big business were fundamentally at odds. Free-market individualists generally regarded themselves as defenders of peaceful business interests against the rapacious state. Those on the left saw the same opposition though with the reverse evaluation; for them government, especially (in the U.S.) the federal government, was the champion of the common people against rapacious business interests. To be sure, the libertarians would periodically complain about businesses seeking subsidies and protectionism, and the left would periodically complain about governmental violations of civil liberties – but by and large each side saw these problems as embarrassing deviations from the mostly noble record of their favoured allies.

It hadn’t always been so. In the late 19th and very early 20th century, there was a much more widespread understanding among both leftists and free-marketers of the symbiotic relationship between state and corporate power. Just imagine telling William Graham Sumner, or Benjamin Tucker, or Emma Goldman, that the relationship between government and business is one of enmity!

But this insight seems to have gotten submerged in the triumphant advance of progressivism and social democracy. By the 1920s Sumner was dead, Tucker in voluntary exile, and Goldman deported; and former anarchists like Victor Yarros had forgotten everything they’d once known about class analysis. By the 1930s, it was possible for someone like FDR to cartelise the entire economy under a plutocratic elite and yet have his policies viewed (with admiration in some quarters, alarm in others) as an assault on the business class on behalf of workers and the downtrodden.

But in the 1960s things began to change, with the discovery, or rediscovery, of what came to be known as corporate liberalism. It’s no coincidence that this era saw the emergence of both the new left and modern libertarianism – and both movements differed from their predecessors precisely over this question. The research of new left historians like Gabriel Kolko, James Weinstein, and William Appleman Williams, and journals like Studies on the Left, revealed that the corporate elite had been both the chief beneficiaries of and the chief lobbyists for the supposedly anti-business regulations of the Progressive Era; and Murray Rothbard and his associates at the journal Left and Right and its successor Libertarian Forum eagerly brought the same message to the libertarian “right.” Free-marketers were discovering that their beloved business class, far from being Ayn Rand“s “persecuted minority,” had all along been in league with the hated state; while those on the left were simultaneously learning that their beloved liberal state, far from being the bulwark of the poor against the plutocracy, had all along been in league with the hated corporate elite.

In a famous 1965 speech, SDS president Carl Oglesby spoke for much of the new left in pointing out that the “menacing coalition of industrial and military power” and its “demand for acquiescence” against which he and his fellow radicals were organising were “creatures … of a Government that since 1932 has considered itself to be fundamentally liberal.”

The original commitment in Vietnam was made by President Truman, a mainstream liberal. It was seconded by President Eisenhower, a moderate liberal. It was intensified by the late President Kennedy, a flaming liberal. Think of the men who now engineer that war – those who study the maps, give the commands, push the buttons, and tally the dead: Bundy, McNamara, Rusk, Lodge, Goldberg, the President himself. … They are all liberals.

Oglesby concluded that “corporate liberalism …. performs for the corporate state a function quite like what the Church once performed for the feudal state. It seeks to justify its burdens and protect it from change.”

On the libertarian side, Rothbard was arguing in the same year that the political program of big business had always been to “fasten upon the economy a cement of subsidy, stabilization, and monopoly privilege,” and that the aim and effect of the New Deal in particular had simply been “to impose a State monopoly capitalism through the NRA, to subsidize business, banking, and agriculture through inflation and the partial expropriation of the mass of the people through lower real wage rates, and to the regulation and exploitation of labor by means of government-fixed wages and compulsory arbitration.”

Corporate liberalism functions via a façade of opposition between a purportedly progressive statocracy and a purportedly pro-market plutocracy. The con operates by co-opting potential opponents of the establishment; those who recognise that something’s amiss with the statocratic wing are lured into supporting the plutocratic wing, and vice versa. Whenever the voters grow weary of the plutocracy, they’re offered the alleged alternative of an FDR or JFK; whenever they grow weary of the statocracy, they’re offered the alleged alternative of a Reagan or Thatcher. Perhaps the balance of power shifts slightly toward one side or the other; but the system remains essentially unchanged. (Which explains, for example, why the recent much-trumpeted power shift in Congress has resulted in precious little policy change.)

Alas, just as the insights of the 19th century were largely lost by the 1920s, so the insights of the 1960s seem to have become largely lost by the 1980s. Probably Reagan indeed played a crucial role in sowing confusion once more, this time by wrapping fascism in libertarian rhetoric just as the Progressives and FDR had wrapped fascism in leftist rhetoric. In any case, many libertarians today (sometimes even professed followers of Rothbard) have gone back to thinking of business as a persecuted minority to be defended against the creeping “socialism” of the regulatory state, while many on the left (sometimes even professed anarchists, like Noam Chomsky) look to the federal government as a bulwark against so-called “laissez-faire” and indulge in nostalgia for the New Deal.

If the left/libertarian coalition of the 19th century, abortively re-attempted in the 1960s, is to be reestablished, as it should be, it is above all an understanding of the nature of corporate liberalism – its non-accidental nature, given the incentives inherent in state power – that must be revived.

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5 responses to “Remembering Corporate Liberalism

  1. American taxation of “big business” is now some of the highest in the world (when State, not just Federal, Corporation tax is taken into account), and American regulations declare as “crimes” what would be minor clerical errors in other countries. So the idea that the American government governs in the interests of big business is absurd – whatever the government is, the “executive committee of the capitalists” it is not.

    Certainly there are loopholes and so on. But even taking those into account – business enterprises (and wealthy individuals) pay vastly more in tax in American places (such as New York and California) than they do (say) in New Zealand.

    However, Corporate Welfare does exist and is harmful. Most obviously the policy of “cheap money” (low interest rate monetary expansion) which does indeed tend to benefit mostly wealthy people and large enterprises. Although the ideology behind this (Keynesianism) is not about benefitting the rich (indeed Krugman,, Stiglitz and so on hate the rich and hate “big business”) one must look at effects (not just intentions) and the effects of a “cheap money” policy is to benefit mostly rich people and mostly large business enterprises – at least in the short and medium term (in the long term everyone loses by the idea that one can “print prosperity” – finance lending by monetary expansion rather than by REAL SAVINGS). Of course even now certain banks find that government power carries a price for – in the case of J.P. Morgan Chase first Dodd-Frank-Obama (the three politicians the banks had paid the most money to betrayed them – “one would have to have a heart of stone – not to laugh”) and then a 13 billion Dollar fine (on top of lot of other fines and other such) supposedly for X, Y, Z but really because Jamie Dimon made the mistake of saying critical things about the Obama Administration.

    Mr Dimon you wanted a vast powerful government (because you thought you would benefit from it) and then you were shocked that you did not have free speech any more? Silly you. You were lucky you did not end up like Putin’s former friends (although one is being let out of the prison camp for Christmas).

    Other examples of Corporate Welfare tend not to work out even in the short to medium term.

    For example, many health insurance companies supported Obamacare – it seemed like a good idea for them, subsidies from the government and people being forced (by the government) to buy their product (health insurance) – however it is not turning out to be such a good deal for the health insurance companies, the government keeps changing the deal (and in ways that hit these business enterprises).

    However, this was what they should have expected – those who get into bed with the government tend to get …………. (and drug companies – your turn will come, you wait till the government is the “single payer” then all those promises you have been given will turn out to be worthless).

    So to sum up……..

    Most large business enterprises (“big business”) in the United States are hurt (not helped) by big government (due to the weight of taxation and regulation). And even those minority of large business enterprises who think they have a good deal from the government – should expect nasty shocks down the road.

  2. As for the idea of an alliance between libertarians and the left…..

    At the risk of sounding like Bill Clinton it depends what is meant by “the left”.

    If one means someone like Frederick Bastiat (who did indeed sit on the lefthand side of the French National Assembly) then there is no problem.

    However, these days “the left” means a bit more than where someone sits in a legislature – and it is not really about whether one is a monarchist or not (the issues of Church and Throne are not the central ones of modern politics).

    Today “the left” means those who support the evil doctrine of “Social Justice” – the principle that all income and wealth rightly (hence “justice”) belong to “the people” and should be “distributed”. This is exactly what libertarians are AGAINST.

    Libertarians stand for private property rights – for the owners of property in the means of production, distribution and exchange AGAINST those who claim to speak for “the people” with the demand of “fair shares”.

    This is not exactly rocket science. Anyone who has ever seen an “Occupy” event knows they are enemies of the Libertarian position. Red Flag waving Marxists marching along side Black Flag waving communal “anarchists” – all haters of private property, all people who blame “the capitalists” for everything. And the behaviour of the “Occupy” movement (such as Occupy Oakland), their rapes, their violence, their destruction of property, are in line with their collectivist ideology.

    As always the general rule of thumb applies – “any friends of the Teacher Unions are no friends of libertarians” and the left (especially “Occupy”) are great friends of the Teacher Unions (in Chicago and everywhere else).

    The only thing that can be said in favour of the modern left is that they are no longer, as in the 1960s. marching in favour of Mao (the largest scale mass murderer in human history).

    True they have their modern heros (such as the governments that are destroying Venezuela and Argentina), but these regimes (vile though they are) are not in the same league as Mao (or Pol Pot, or “Uncle Ho”, or Joe Staliin and Lenin before them).

    The modern left are vile (see “Occupy” and the Teacher Union thugs) but they are not marching in support of “Uncle Ho” and Pol Pot any more. Because these creatures are not around any more..

    Modern leftist regimes (even North Korea – the most leftist regime on the planet, but with few supporters) are simply not in same league as the old leftist regimes that the left (including the Hollywood left) loved in previous decades.

    As for the universities……..

    The universities (with a few honourable exceptions, such as Hillsdale that refuse government “loans”) are essentially a lost cause. Even the handful of academics who call themselves libertarians at the government backed universities sometimes turn out to be Social Justice supporters of the Occupy mob (even if they do not go around burning cars and raping women themselves).

    The solution?

    I am tempted to say just bulldoze the universities and sell the land – but that would be a council of despair.

    What should be done is to end all government support for these places (including government backed “student loans” – now a TRILLION Dollar scam in the United States) and see what develops over time.

    Much the same as the libertarian view of banking.

    Get rid of the Federal Reserve, let people use whatever commodity they want as money (physical gold. silver – whatever) and finance all loans by REAL SAVINGS (not credit expansion). Honest lending must be from the SACRIFICE OF CONSUMPTION (thrift) which is what “real savings” actually means.

    Who knows Jamie Dimon – perhaps you would prosper in an honest financial system.

    At least you could speak your mind without fear. And is living in fear a price worth paying for the toys that government subsidies have got you? Toys that the government can take away at any time – ask the man who has just left the prison camp in Russia.

  3. Julie near Chicago

    Dr. Long writes,

    The research of new left historians like Gabriel Kolko, James Weinstein, and William Appleman Williams, and journals like Studies on the Left, revealed that the corporate elite had been both the chief beneficiaries of and the chief lobbyists for the supposedly anti-business regulations of the Progressive Era….

    But why should we trust these men’s views of history? I can’t say that anything the New Left has said or done has left me feeling it had anything positive to offer, except perhaps some of its apostates’ cautionary tales and statements about their experiences as members. And it is notorious for erroneous judgments and statements.

    In any case, here is an excerpt from an introduction to a paper examining Mr. Kolko’s interpretation of the history of political corporatism in America, by scholars Roger Donway and Robert Bradley. A brief writeup of their experience from the Institute for Energy Research follows the excerpt. The introduction is found in full at The Atlas Society:

    http://www.atlassociety.org/brc/gabriel-kolko-political-capitalism

    The article itself, which is also linked from the URL above, is at

    http://www.independent.org/pdf/tir/tir_17_04_05_bradley.pdf

    In a new article, “Reconsidering Gabriel Kolko: A Half-Century Perspective,” Robert Bradley and Roger Donway explain why libertarians should not embrace the views of historian Gabriel Kolko.

    September 16, 2013 — In 1963, Gabriel Kolko revolutionized the then-prevalent understanding of American business history with his book The Triumph of Conservatism. In it, he disputed the Progressive historians’ narrative of the Gilded Age and the Progressive Era, specifically, their assertions that the economic legislation passed between 1887 (the Interstate Commerce Act) and 1914 (the Federal Trade Commission and Clayton Antitrust Acts) had been enacted to restrain the power of the large new corporations, which seemed impervious to competition. Kolko argued instead that the legislation had actually been passed at the behest of the large new corporations, in order to protect them from a gale of competition that they could not otherwise withstand. Such legislation would now be termed “crony capitalism,” but Kolko, borrowing a term from Max Weber, called it “political capitalism.”

    Kolko’s interpretation was eagerly embraced by many libertarians, following Murray Rothbard’s endorsement of it in 1965. Kolko, Rothbard said, had pulled down the two pillars of Progressivist history: that big business was the friend of free enterprise and that the Gilded Age was an era of laissez-faire capitalism. These, of course, had been the chief contentions of the New Deal apologists, who had put forward the homeopathic thesis that FDR’s liberalism “saved capitalism from itself” by curbing its power and thus staving off a violent socialist revolution. As libertarians saw it, Kolko had shown that all of liberalism’s economic legislation had been utterly unnecessary—even from a Progressive point of view. Had government merely stayed out of the way, economic competition by itself would have curbed the power of the great corporations, just as capitalist theory argues.

    Last spring, I and Rob Bradley (founder and chairman of the Institute for Energy Research) published an article in Independent Review examining the strength of Kolko’s evidence. In accordance with IR’s six-month embargo, this article (“Reconsidering Gabriel Kolko: A Half-Century Perspective”) has just come on-line. In the article, Bradley and I conclude that Kolko’s evidence for political capitalism, when critically examined, is extremely weak. We also aver that libertarians who have adopted Kolko’s thesis as their response to the “Robber Baron” theory of business history do not understand what he is offering as an alternative.

    […]

    . . .

    About Mr. Donway:

    http://www.instituteforenergyresearch.org/fellows/roger-donway/

    Roger Donway
    Senior Research Fellow

    Roger Donway is a senior research fellow at the Institute for Energy Research (IER). Donway’s previous endeavors include a position as assistant editor at the Middle East Forum, managing editor of Orbis: A Journal of World Affairs, and editor of Navigator: An Objectivist Review of Politics and Culture. The Pulitzer Prize–winning historian Walter McDougall said of Donway, “An editor of his experience, loyalty, high standards, and erudition is almost impossible to find nowadays.”

    Donway has published more than one hundred articles in philosophy, politics, economics, and the arts and is co-author of Laissez-Parler: Freedom in the Electronic Media (Social Philosophy and Policy Center, Bowling Green State University). He has also written a book-length manuscript, The Steelmasters, a history of steel technology told through the biographies of the men who created it.

    Most recently, Donway has been editing and performing research for a forthcoming book by Robert L. Bradley Jr., Political Capitalism: Insull, Enron & Beyond.

    . . .

    About Mr. Robert L. Bradley:

    http://www.instituteforenergyresearch.org/staff/robert-l-bradley-jr/

    Robert L. Bradley Jr. is the CEO and founder of the Institute for Energy Research. As one of the nation’s leading experts on the history and regulation of energy markets, he has testified before the U.S. Congress and the California Energy Commission, as well as lectured at numerous colleges, universities, and think tanks around the country. Bradley’s views are frequently cited in the media, and his reviews and editorials have been published in the New York Times, Wall Street Journal, and other national publications.

    Bradley is a visiting fellow at the Institute of Economic Affairs in London, an honorary research fellow at the Center for Energy Economics at the University of Texas at Austin, and an adjunct scholar at both the Cato Institute and the Competitive Enterprise Institute. He is a member of the academic review committee at the Institute for Humane Studies at George Mason University.

    As the author of seven books, most recently Edison to Enron: Energy Markets and Political Strategies (John Wiley & Sons, Scrivener Publishing), Bradley has applied the classical liberal worldview to recent corporate controversies and energy policy debates. His energy primer (coauthored with Richard Fulmer) is Energy: The Master Resource.

    Bradley received a B.A. in economics (with honors) from Rollins College, where he also won the S. Truman Olin Award in economics. He received an M.A. in economics from the University of Houston: and a Ph.D. in political economy (with distinction) from International College. He has been a Schultz Fellow for Economic Research and Liberty Fund Fellow for Economic Research, and in 2002 he received the Julian L. Simon Memorial Award for his work on energy and sustainable development.

    He is currently a member of the International Association for Energy Economics, the American Economic Association, Southern Economic Association, and the American Historical Association.

  4. Quite so Julie. And G. Kolko himself mocked the Rothbardian use of his work in the 1960s onwards.

    Kolko did not want free enterprise (an end to government regulation) Kolko wanted socialism – he was a socialist. He wanted to destroy anything that is left that is good, and replace it with a nightmare of collectivism.

    To claim that most business enterprises (or even most large business enterprises) benefited from the policies of T. Roosevelt and Woodrow Wilson is false.

    It is as false as to claim that most business enterprises (or most large business enterprises) benefitted from the “Great Society” policies of President Johnson in the 1960s – which the Marxists (and the Fellow Travellers such as the “libertarian” left) also claimed.

    Do these people really believe the absurd things they claim?

    Who knows? And who cares?

    Those who made a choice to march with the Marxists (the friends of such creatures as Mao – the largest scale mass murderer of human history) in the 1960s, and choose to march with the “Occupy” collectivists now, have made their choice.

    I no longer care what their motives are – what self justifications they make up.

  5. As for the small amount of truth, and the vast amount of lies, in the “Robber Baron” theory of American economic history – see Burton W. Folsom “The Myth of the Robber Barons: A New Look at the Rise of Big Business in America” (Sixth Edition – 2010).