Capitalists Criticize Obama for … Capitalism?

by Kevin Carson

Note: If I were unfortunate enough to be an American, I’d happily vote for Mr Amabo. Unlike the various Liberace impersonators the Republicans specialise in putting up for election, he doesn’t claim to speak with Jesus, and hasn’t once suggested it would be a good idea to blow the world up. SIG

The silliness about Obama’s “socialism” and his deficient understanding of “Americanism” just keeps coming from the Romney campaign. In a recent Romney campaign conference call, Ohio businessman Kyle Koehler came up with this howler:

“It seems to me that the Obama America, there’s no risk but there’s plenty of reward. That’s called socialism to me.”

Never mind the mind-bending feat of imagination it takes to believe Obama — a man who’s arguably given big business more subsidies and monopoly protections than any president in the past century — is some sort of “socialist.”

More importantly, what Koehler describes is the very definition of American-style corporate capitalism — as American as apple pie and Swiss bank accounts. As far as I know, it’s certainly not any kind of “Kenyan Anti-Colonialism” Kwame Nkrumah would recognize.

Think about it. Just consider, one at a time, the major industries in the American — and global — corporate economy.

Software, entertainment, biotech and pharma are the dominant players in the global economy, all of them heavily dependent on draconian “intellectual property” law — law which the Obama administration, and particularly Joe Biden, have obsessively fixated on strengthening — as their main source of profit. Biotech and pharma, in particular, are dependent on large-scale subsidies to R&D.

Agribusiness is dependent not only on massive domestic subsidies in the U.S. (can you think of an easier real estate investment than owning land you get paid to not grow stuff on?), but on large-scale foreign intervention by the U.S. government. This intervention takes the direct form of a century of gunboat diplomacy and filibustering to make the world safe for landed oligarchs. It takes both the direct form of neoliberal trade policy and the indirect form of World Bank and IMF policy aimed at coercing Third World countries into “export-oriented development” (i.e. helping states transfer land from the people who work it to the landed oligarchs who collect rent on it, so they can collude with transnational agribusiness in producing cash crops for export).

The modern electronics industry, and a major portion of other forms of manufacturing as well, were originally offshoots of the military economy. By far the majority of electronics R&D during and after WWII, through the 1960s, was funded with “Defense” Department money. Microminiaturized electronics were introduced almost entirely in the original context of military technology. Electronics in particular and industrial technology in general are heavily dependent on patent law. And the military economy, with its hundreds of billions of dollars spent on procurement, absorbs a considerable portion of total idle capacity in the industrial economy.

Offshoring, in which actual manufacturing is carried out by independent sweatshops in Third World countries but the goods are sold under American trademarks, depends heavily on American muscle to enforce “intellectual property.” But it also depends on large-scale subsidies to the actual transportation and utility infrastructure without which profitably offshoring production would be impossible. Such infrastructure funding was the main purpose of foreign aid and World Bank loans in the postwar decades.

Every major industry is characterized by an oligopoly, in which most of the market is controlled by a handful of producers. Prices in such markets tend to be sticky, following a punctuated equilbrium of brief price wars followed by long periods of administered prices and tacit collusion via the price leader system. In industries where this oligopoly structure exists, it probably adds a 20% markup to the retail price of goods. And it exists in large part because of regulatory cartels — including the pooling and exchange of patents — enforced by the state.

If this is all “socialism,” it’s the kind of “socialism” mocked by Noam Chomsky as “socialism for the rich and free enterprise for the rest of us” — in which the state “socializes” risk and cost to the taxpayers, while “privatizing” profit to big business.

Any American capitalist who complains — with a straight face — about “no risk” and “plenty of reward” for business, deserves an Oscar.

15 responses to “Capitalists Criticize Obama for … Capitalism?

  1. Once again, Kevin conflates property rights with subsidy. By this analysis, any and all property is a State subsidy, and leads one inevitably to the leftist conclusion that property rights should be abolished.

    There is a commonplace belief among many libertarians in “natural” rights. Kevin and I would probably agree (?) that there are no “natural” rights. Rights are a human construct. Hardly any of the people who have ever existed have had property rights, and those they have had have been limited and couched around with all sorts of provisos; you own your land unless the State wants it (“eminent domain”), you own your production except those parts the State claims as taxes and so on. But libertarianism generally has, and I believe generally should, nucleate around a central belief in property rights, and the extension of them, and be generally absolutist in that regard- if you own X, nobody (including and especially the State) can take it from you, end of story.

    Without a natural derivation of rights, no society is under any obligation to base itself upon property rights. But there is a simple, profound reason to do so, which is deeper than mere preference, or opinion; to whit: without property, there are no markets. Without markets, there is no means to rationally deploy resources and production. One can certainly argue that if bakers did not own their bread, everyone could take their bread and nobody would go hungry. But one can also argue that in such a society, nobody would choose to bake bread for others. The communist solution provides everyone with as great a proportion of zero as they choose to take. With no intellectual property rights, everyone could get free movies. But who would spend $100M on a movie for others to take for free? It is notable that nobody is obligated to copyright their work. The anti-propertarians thus have to answer an important question- why have not free movies, music, etc, obliterated the paid-for, copyrighted sector? There is simply no need to argue for the abolition of copyright. If movie making works better on a propertyless model, it can already happen and should be already happening. But it isn’t. Because if you can’t charge people for the finished product, there is simply no reason to spend your money and time making it. And neither, indeed, is there any way to know what movies to make anyway.

    So, is copyright a subsidy? Only in the sense that any property right is a subisidy; because without property rights, no prices can be assigned, and there is no market. “Free” is economically quite interesting. It isn’t actually a value of zero. It is a price of zero because the value of the product is arithmetically undefined. No property==no prices==no market==no means to rationally allocate production.

    Which is why communism has never worked, and it never will.

  2. Neither Mitt Romney or any Republican Presidential candidate has ever claimed that Jesus speaks to them. It is true that every Republican Presidential candidate since Lincoln has “speak to Jesus” and most Democrats do to – it is called “praying”. Now an athiest may regard it as absurd (and perhaps it is) – but most Americans do pray, so if one wishes to exculde people who “speak to Jesus” (or speak to God if Jewish) you are going to have a rather limited electorate.

    K.N. was not a Kenyan socialist – he was from Ghana (what used to be called the Gold Coast). If you want an example of a socialist in the context of “Kenya” then Barack Obama senior would be a good example.

    As for the idea that Barack Obama is a socialist being “absurd” – that could only be, honestly, said by someone who has never bothered to do any background research on Barack (i.e. someone who is totally ignorant of the subject).

    Both of Barack’s parents were socialists and although he did not know his father he was brought up to honour his ideas (it is “Dreams FROM My Father” not “Dreams OF My Father” – and it is not limited to Kenya, for example the section on Indonesia is written in Marxist agit prop terms).

    Frank (Barack’s mentor after his mother sent him back to the United States) was a Communist and taught the doctrines of this faith to young Barack (although he already had the anti American basics from those three hour daily indoctrination sessions he got from his mother before he was even old enough to go to school).

    After Frank there was Occidental in California – and Barack was certainly a Marxist at that time.

    Then there was Columbia – all those Marxist conferences (with Francis Fox Piven and so on) and the close friendships with various acadademics (just the real bad ones).

    Then there was Chicago – where he went to join the Comrades (although he had already met Bill Ayers and co in New York).

    Then there was the period in Harvard Law – again a close alliances with the hard core collectivists academics (not with the moderates).

    Then back to Chicago – for DECADES of close work with the Comrades ,including the fake religion “Liberation Theology” stuff with J. Wright and co.

    I thought you said you hated the “Jesus” stuff Kevin?

    Or is the difference that Mitt (possibly) believes in Jesus, whereas Barack was just doing the Liberation Theology Marxist dance?

    “But Barack accepts money from businessmen and subsides them”.

    Yes I know – “Bought and Paid For” as the book says.

    Accept “Lenin”did thge same thing (with Dr Hammer and co) – as he said “the capitalists will sell us the rope with which we will hang them”.

    Someone like Jamie Dimon (J.P. Morgan Chase), corrupt though he is, is essentally a greedy child.

    Mr Dimon (and the other top bankers and so on) think they that people are motivated only by money and that they can bribe anyone.

    They are starting to understand that (with Barack and others) they are dealing with something else. (although Jamie Dimon may not fully grow up till the radicals murder his family in front of his eyes – and those evil days may well be comming).

    Sure Barack is corrupt (he, and his wife, were in the Chicago Machine) books such as “The Case Against Barack Obama” and “The Culture of Corruption” are not wrong – but that is not ALL Barack is.

    The way he justifies his corruption to himself is easy – it is Saul Alinsky “the ends justify the means”. Barack taught that for many years.

    One accepts money from businessmen – one repays them with government subsidies.

    But it is legit – because it is the “road to power”.

    Then, when the time is right, one turns on the corrupt businessmen who helped one into power.

    First one organises trouble on the streets (economic chaos helps with this) then one takes advantage of it – and fundemenatlly transforms society.

    “Bottom up, top down, inside out”.

  3. As for the economic side of what Kevin Carson wrote.

    YES the United States (and all other major nations) need radical dereguation.

    An end to the FCC (in television and radio) the FDA (in medical drugs), And on and on.

    Including an end to “anti trust” and “competition policy” which do NOT help the free market – but help undermine it.

    Also subsidies (such as farm subsdies and, even worse, health and higher education subsidies) should be abolished.

    However, to claim that there is no real competition in American economic life (to pretend that most prices are just set by cosy cartels) is false – in fact it is nonsense.

    Anyone with five minutes experience of economic life (in most industries) would know that there is competition for the money of customers – real competition on both quality of goods and services and on price.

    Kevin Carson , in denying this, might as well claim that the Moon is made of cheese.

    A market where government regulations and subsdies exist is not as good as a market where they do not exist.

    But there very much IS a market in most areas of American (and other) economic life – competition over quality of goods and services and over price is not only real – it is intense.

    As for the related idea that if it were not for regulations and subsdies then all business enterprises would be small…..

    Again not true.

    Diseconomies of scale (for example the difficulty of effective management – when it is impossible, due the size of the business, for the top people to really know everything that is going on) are real – that is correct.

    But economies of scale are ALSO real.

    Even without government subsies and regulations some business enterprises would be very large – because economies of scale are real.

    To deny that is to deny objective reality.

    Even in an economy that was lot more free than this one is – most people would still be EMPLOYEES (not owners of small business enterprises).

    To pretend that (if only the state got out of the way) most people would end up owning their own business, is just wrong.

    To reverse what Trotsky said……

    Where the state is NOT the sole employer, where there are many potential employers, then opposition is NOT “death by slow starvation”.

    A free employee is NOT a slave or a serf.

    And someone who claims they are – is a liar.

  4. Paul, I generally agree, but I’d just like to add that one can imagine capitalism without the employer/employee dichotomy. We already have it to a significant degree, with the contracting relationship which, notably, the left keep trying to stifle- their persistent hypocrisy in hating capitalism while being dependent on it (without the mill owner and oppressed workers, the unions are out of a job).

    I started thinking about all this long before I’d even heard of Libetarianism, when I spent a considerable period doing agency work. An ideological shift to recognising that there isn’t a one-way power relationship, but rather that “employers” and “employees” are simply agents in the market trading with each other, is a way forward I would like to see. And I think it is very thoroughly Libertarian.

  5. It would be possible for the state to forbid the employment – although it would be a very radical move. Living standards would be a tiny fraction of what they are today (i.e. vast numbers of people would starve to death) if the only form of economic activity that was allowed was that which did not include employees.

    A less radical move would be to forbid corportate emploment (whilst still allowing individuals to employ other individuals).

    This would also mean a crash in living standards – but not so radical a crash. Some people might justify such an attack with the old myth that the corporate liimited liablity form is an invention of the 19th century (in reality of course the corporate idea (as opposed to a particular statute) is ancient – and covers, churches, clubs, socieites….. as well as trading companies). Or is “unlibertarian” – in reality the corporate form is only unlibertarian if people are not told UP FRONT that they are dealing with a lmited liability enterprise (for example an insurance company – rather than Lloyds “names” who they can take down to the underwear if need be).

    In some ways this, the undermining of corporations, is already happening in the United States.

    The degree of regulation of corporations (going back well before the current regime – statutes as S-O) and the level of corporate taxation (the highest level of corporate taxation in the world – and not all American enterprises are corporate “pets” like General Electric who are allowed to not pay much Corporation Tax).

    All this means that owner-manager enterprises (and partnerships?) are making a come back – most new enterprises are not actually corporations (and thus avoid the heavy weight of corporate regulation) and file under the individual income tax code (not under the corporate tax code). That is why (by the way) it is vital to prevent the rise in the INDIVIDUAL income tax that Barack is working for.

    At this level of corporate regulation and corporate taxation the corporate form just is not efficient for a new enterprise (although an established large sscale enterprises may still prosper), so people are turning to the owner-manager form (which, after all, used to be the norm anyway).

    This does not mean that most people will own their own business enterprises – it just means they may (perhaps) be employed by individuals rather than corporate enterprises.

    Also at State level – some States have long made things tough for corporations.

    For example, North Dakota has traditionally made it very difficult for family farms to go into corporate ownership.

    This, in the past, did have the negative effect of making it very hard for farmers in North Dakota to borrow much money from banks (as the banks had little chance of getting ownership of the land if the farmers did not pay back the loan).

    But it has had the interesting effect that oil and gas found on land in North Dakota tends to be found on individually owned land (because that is the sort of land there is).

    This has had the effect of, so I am told, meaning that there are more indiviudal millionaries in North Dakota, as a percentage of the population, than in any other State.

    Although, of course, still a small minority of the population.

    “Bottom line”.

    It might well be possible to do without the corporate form (although it would be economically damageing to do so).

    But to do without employment (being employed by individuals as well as by corporate bodies) would be a far more radical step – creating radically more economic harm.

    Although though that are deeply opposed to being employed do have other options.

    Begging is an obvious example of self employment (of a sort). And does not involve the hard work of offering goods to market.

    But there are also communes (and other such), both relgious and secular – for those who like that sort of thing.

    Although a general rule against the corporate form would actually make communes (monasteries and so on) unlawful.

  6. By the way – a country that forbad corporate employment (but allowed individual employment), would most likely have far GREATER inequality of income and wealth than a country that allowed corperate employment. Remember economies of scale are REAL – so forbidding corporate employment would mean that that the very large enterprises were owned by a few indiduals (not be masses of shareholders).

    Although in a country were there were no tax and regulation advantages for pension funds (and the like) most shares would be individually owned – which is not the case in distorted markets like modern Britain.

    1965 was the last year when most shares were owned by individuals in this country (I do not know what the year was in the United States).

    A system where most shares are owned by organisations (rather than individuals has obvious problems with it) – as it leads to hired managers (at corporations) being under the control of other hired managers (at pension funds).

    A feeding frenzy in terms of corporate manager pay and benefits tends to be the result of such developments – and an obsession with the short term.

    A comparison with Germany (where most companies are still dominated by individuals and familes) is instructive.

    The push (supported by Warren Buffett – and others of his kind) for inheritance tax to be used to undermine German family owned companies is clearly vile.

  7. “Every major industry is characterized by an oligopoly, in which most of the market is controlled by a handful of producers.”
    This is certainly true of car manufacturers, and for an entirely logical reason; at the dawn of the motor industry, enterprising engineers who would later become famous names would design and build motor cars in their garden sheds, often just for their own amusement. Then their friends would ask them to build them one and so on. Today things could not be more different. It costs literally $millions in R&D to develop and market a new car, and the only people capable of doing this are the large manufacturers, who know they will be able to sell their new model in the vast quantities necessary to recoup the development costs. This is a natural if regrettable evolutionary process. A small manufacturer only needs a handful of unsold cars on the forecourt before they run out of cash. If Herbert Austin or William Morris were starting today they would not stand a chance.

  8. The reason modern cars are an expensive design is that they are full of govt “mandated” shite and must jump thro’ the hoops of endless legal oppression, A car was not easy to design and build back in the day–the basic design has not changed much but it is the electronics that have changed. With modern componants, CAD etc, it would, in a true free market, be perfectly possible for the great British car makers to live again and produce new models in the profusion they once did. And in a free market, without thieving taxes and the destructive effects of endless moronic laws, there would be plenty of people with the money to buy those cars.

    • Agreed Mr Ecks although the pro union laws are some of the most destructive regulations. There are of course new enterprises making cars in the United States but the vast subsidies to General Motors (Government Motors – dominated by the vile U.A.W.) are a serious problem.

      On the British case Morgan is a nice case – I always liked the things Mr Morgan said.

      For example kicking out Sir John Havey Jones (the so called media “Trouble Shooter”) who arrived at the company and just said borrow more money – Mr Morgan showed him the door.

      And when asked how fast a Morgan went Mr Morgan replied “how fast do you want it to go?”

      If you would pay his price (which would be high) he would build a car that would do what you wanted.

      As with luxury shoes and so on there is a room for small business enterprises – but it is normally at the top end of the market.

      At the mass market level size does matter. Although new entries to the market do happen – the Japanese companies in the past (Mr Honda was told to stick to making motor cycles by the Japanese government MITI, he told them to take a hike) and the Korean companies in recent years.

      But yes – the pro union laws enforced in the 1930s and the health and safety regulations enforced (thanks to Mr Ralph Nader and his friends) from the 1960s, do blight the industry – especially for small business enterprises.

      By the way I do not understand the Liberace reference. Is Kevin saying that the Republican candidates are good at playing the piano? Or is he saying they wear colourful jackets? Or is he making some sort of point about homosexuality? Like most of the stuff he writes, it just makes no sense.

  9. Paul, I wasn’t saying the government should “forbid” anything, let alone business employment contracts. Merely that it should not discourage people selling their labour as “companies” rather than on fixed employment contracts.

    As an example, in IT this was quite popular until the government declared it a “loophole” and closed it down; likewise, recent moves to force contract workers into a more employment-like situation via “rights” legislation etc.

  10. Also I believe the Liberace comment was from Sean’s intro not Kevin Carson’s article.

    • Ian I do not believe you do want to forbid employment – all I did was explore the idea (as I know some people wish to forbid it).

      People declaring themselves companies? That is done in Britain as the corporation tax is lower than the higher rates of income tax.

      IIn the United States it is the other way round – Corporation Tax (other than for pet corps such as General Electric) is higher (not lower) than the top rates of income tax.

      Mr Ecks – my mistake.

      Athough I am still baffled – is Sean Gabb saying that George Bush and John McCain (the last two Republican candiates for President) are like Liberace?

      Or perhaps he is saying that Mr Romney wears colourful jackets or is a homosexual?

      It just does not make any sense.

      Perhaps Liberace would have made a good President – after all recent Presidents are hardly a hard standard to beat.

    • Mr Ecks you remind me of another problem.

      “good idea to blow the world up”.

      I just assumed that was Kevin Carson being insane (i.e. Kevin Carson being Kevin Carson), However, if Sean Gabb said it, the words do raise a question.

      The idea that the American conservatives (even the weak as dishwater “conservatives” that the Republicans tend to produce as candidates) are wackos who want to “blow up the world” has a been a standard of Marxist and NeoNazi propaganda for many years.

      German, French and British NeoNazis have made a centre piece of their antiAmericanism.

      But Sean Gabb is NOT a neoNazi. At least he has always denied being one.

      Although, to be fair, the Johnson campaign of 1964 also used this wildly dishonest line of attack – claiming (in the infamous daisy girl ads) that Barry Goldwater wanted to blow up the world.

      So Sean Gabb may have got the idea from the example of the LBJ campaign. A classic example of the success of a “big lie” based campaign.

  11. Paul-

    People declaring themselves companies? That is done in Britain as the corporation tax is lower than the higher rates of income tax.

    True, but the government explicitly declared this a “loophole” and, in the case of those billing a single client explicitly forbade it, thus the State formally decided that they must be “employees”. There was quite a to-do about it in the IT industry a few years ago.

    Curiously, the government hasn’t applied this to those “consultants” and “contractors” whose solitary client is… the government.