The Corporate State

Independence Day always leads to an outbreak of stories about the glories of democracy from the usual suspects in the media. One of the stranger things in my lifetime is the fact that when I was young, democracy was a fetish of the Left, while the Right scoffed at the wisdom of the masses. Today, it is a fetish of the Right and the Left is making ominous noises about the foolishness of elections and democracy. The result is the so-called conservative media turns July 4th into a saccharine celebration of democracy.

Most everyone reading this is bright enough to know that America was never intended to be a democracy and it is not a democracy today. The Founders imagined a republic composed of sovereign states that would do the bulk of the governing. The Civil War obliterated the sovereignty of the states, thus allowing the Federal government to assume most of the governing. Our state governments perform administrative tasks on behalf of the Federal government, often financed by Federal tax dollars.

It’s tempting to think America is on a long path toward Caesarism, where the institutions of republican government are hollowed out as power is transferred into the hands of an authoritarian. The trouble with that is the modern nation state is too complicated for that sort of autocratic rule. The nation state is a vast bureaucracy today with a semi-permanent staff loyal only to the bureaucracy. They take direction from the executive, but the scope of the government is too massive to control in a fine detail way.

Consider some numbers from the US government. Health and Human Services has about 150 employees who report directly to the president. These are appointees usually brought in the by the Secretary of HHS. The department has 78,000 employees that are civil servants. Most of what HHS does on a daily basis is unknown to the White House staff. Most of it is unknown to bureaucracy itself. An organization of that scale and permanence takes on a life of its own. It’s a giant blob that absorbs what it touches.

This is why we have elections and not much changes.The rhetoric changes and maybe the way the bureaucracy is sold to the public changes a bit. Otherwise, the only thing that changes is the overall size of the state. It always gets bigger. 50 years ago the Feds spent about $4500 per citizen and today they spend close to three times that. This is in inflation adjusted dollars. That’s a lot of elections with nothing ever changing, suggesting something else determines the size and scope of the state.

A better way to think of the modern nation state is as a corporation. The modern publicly traded corporation is setup to profit the owners, who are the stockholders. The people running the corporation, the CEO, the CFO, the senior managers and so forth, are put in place to run the enterprise in the interests of the owners. You, as a stockholder in Apple, want to see the company make money so your stock goes up in value. You don’t get to set company policy, but you have a vote at a shareholder meeting.

Now, the major stock holders have some say in the management of the firm. These are the people who sit on the board and decide who is put in as a CEO or push for a shakeup of the management team when necessary.They are not running the daily operations, but they get to decide who is running the daily operations. Like the small stockholders, they want to see profit so presumably they have the same interests as those small shareholders. Sometimes they have other motives, which are at odds with the shareholders.

The modern state is similarly arranged. The super rich are not bound by the state any more than a major shareholder is bound to the company. They sit on the board as major political donors and fixers, but they may perform this function for many countries, just as a rich guy sits on the boards of many firms. Sheldon Adelson is just as involved in Israeli politics as he is US politics. George Soros is involved in the politics of a dozen countries, including countries that are in competition with one another.

The voters of countries are the small shareholders. They have some say in things, but only at the fringes. When the board puts up two candidates for the CEO position, the voters get some input on which one gets the job, but usually both choices are offering the same thing. Whenever there is a shareholder revolt and an alternative option is presented, the members of the board close ranks to fight it. They do this to protect their prerogatives as major shareholders. Even if the people are right, they cannot be allowed to dictate policy to management, much less the board. After all, the corporation is not a democracy.

That’s the state of the West. The nation states are now just corporate states, run by a relatively small number of global billionaires. The small shareholders get to show up at shareholder meetings and pretend to have a say in things, but the management is not beholden to them. The managers in the corporate state are the politicians and their accessories in the political class. These people answer to the board that put them in their positions. It’s why no matter who wins an election, the results are always the same.

It’s also why we are seeing attempts at merging the nations of Europe into a single conglomerate. Consolidation is the natural dynamic in the corporate world. It’s why we are down to three PC makers when 25 years ago there were dozens. It’s why there are two mobile phone players when there used to be a dozen. Corporations must always grow to survive so when growth is no longer possible, they merge with others or acquire smaller firms. Global governance is really just Google streamlining the corporate states to make them more efficient for the purposes of the major shareholders.

It’s tempting to say this has always been the arrangement, but it was not always thus. Within living memory it was impossible for a guy like George Soros to play in domestic politics across borders. Countries were like family business and the owners were covetous of them. The credit age has allowed every nation in the West to go public and turn themselves into formless corporate blobs, slowly loosing their original identity. The planned merger of Europe into one big soap ball is intended to cleanse national identity.

How this ends up is anyone’s guess. The history of the equities markets is the story of bubbles and busts so the credit money era will do to nations what it has done to many businesses and industries. Of course, every corporate entity goes through tough times and must downsize. That usually means layoffs and terminations. The application of that to the corporate state should be interesting. Maybe that’s why both parties in Washington suddenly want to take away all the guns.

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Conservative Buddhist
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Conservative Buddhist

After 15 years in a corporation, I read 1984 for a 3rd time. In contrast to the bugaboo of Big Brother so much on people’s minds when I first read it in 1982, it was now clear to me that the bureaucracy was what held the power.

Etcetera
Guest

Orwell based “1984” on his experiences working for the BBC, which at the time wasn’t even that bad as bureaucracies go. He hated office work.

Member
We all make use of similes and metaphors in an effort to come to an understanding of the events around us. Some seem to do the job better than others and our acceptance or rejection of them in large part is determined by the ideas and opinions we bring with us at the time. Occasionally we come across an idea the application of which springs out of somewhere unexpected, as recently occurred to me. One of the books I have been reading of late has been The Great Chain of Being by Arthur Lovejoy. In the introduction he gives a… Read more »
Lorenzo
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“Countries were like family business and the owners were covetous of them.”

This made me think of the Habsburgs.

Dan Kurt
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re: Habsburgs

Took Western Civilization circa 1959-60. Not a gut course and not politically correct. The professor told stories for the two semesters and the lectures were not tested. Tests came from the Book. The lectures were to awaken an interest in history for the rest of one’s life.

I recall one anecdote about the Habsburgs, as to the Austrian branch. When the ruler was about to transfer power to his successor he in private whispered “NEVER CHANGE A THING!”

Dan Kurt

fodderwing
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One word: Sears. Once the biggest thing around, now a dim memory. When having lost touch with the customers and what it is that they want, it’s hard to sell anything. Corporations do meet with diminution of not demise, even European Unions and the Corporation of the United States. Everyone will get their turn.

Ivar
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I spent the 4th with my good friends who are all much younger than I. We all agreed that the name of the day should be changed to “Fireworks Day,” because the fireworks are all that’s left. I wonder if our masters realize how much the United States is despised by many of the unwashed in Flyover Country.

guy
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” I wonder if our masters realize how much the United States is despised by many of the unwashed in Flyover Country”

If they didn’t they wouldn’t be so obsessed with gun confiscation.

Etcetera
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This is your best post since I started reading this blog about a year ago.

LetsPlay
Member

Your stuff is really good. You should be on the Watcher of Weasels Council, or at least be nominated to the them. Don’t know if you are interested in getting involved with their little clique but they could use some “fresh air.” http://www.watcherofweasels.org/

LetsPlay
Member
I think it is funny that you call the US government a “corporation” but I understand what you mean. It is the anti-thesis of a business run by methods like zero based budgeting, hiring the best and brightest talent available, having clear goals and performance metrics, consequences for those who do not meet their goals, rewards for those who make genuine “contributions” towards the stated goals, aim to continuously improve quality and reduce costs, and improve customer satisfaction. Such things are what contribute to “maximizing profits.” Seems the powers that be are one trick ponies and think that only cheap… Read more »
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Karl Horst (Germany)
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There were three key turning points that have had more impact on human life than any others; (1) the industrial revolution, (2) the second machine age we are currently experiencing, and (3) the development of the corporation in its present state. Global corporations function beyond the limits of national boundaries and can do far more damage to a country than any invading army and in less time. The old model of nation state is stubbornly sustained only by the bureaucracy that constantly expands to justify its own existence. The west has already transitioned into a corporate state where politicians squabble,… Read more »
LetsPlay
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” … the whole concept of the militia soldier and gun ownership as described in the US Constitution to protect oneself against a tyrannical government is both antiquated and pointless.” Oh ye of little faith in the individual fighting for their freedom. You will be amazed at what American families will do for their own and others. No one on the face of this earth, in the history of mankind, has known the degree of freedom we have had. No one has dared even consider it. That is why this experiment, this American Republic has known so much, accomplished so… Read more »
Karl Horst (Germany)
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@ LetsPlay – The American experiment has proven out very well. It took the worlds “…tired, your poor, the huddled masses” and created the most powerful nation on earth. It then went beyond that and extended the same freedom to others around the world by willingly sacrificing it’s own for others like no other country in history. My comments take nothing away from that nor do they diminish American valor or the courage of your countrymen in anyway. I think you have read enough of my previous comments to know that unlike many here in Europe, I am not an… Read more »
LetsPlay
Member
You sounded a bit like the elites when you said ” the whole concept of the militia soldier and gun ownership as described in the US Constitution to protect oneself against a tyrannical government is both antiquated and pointless.” Sure. Turn over your guns. Don’t buy any. Just “Trust us.” And all will be well. End well. For us. Not you. That is their pipe dream. To many, the idea of America is not dead even though to the elites they treat the Constitution like an old piece of worthless paper. In any case, I still think Yamamoto’s caution is… Read more »
Karl Horst (Germany)
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@ LetsPlay & Drake – I have always believed that the real threat to the US would come from within, and not from an external force. From this one can appreciate the sense of self reliance that other conservative Americans seem to share especially towards gun ownership. While I can understand how my comments may sound elitist, it’s a logical conclusion of how a technically advanced government will effectively overwhelm the people who have nothing but a hope, prayer and a full clip. My fear isn’t that the government will roll tanks down the streets like some third world dictatorship… Read more »
Drake
Guest

The reaction to something like that is unknowable. Either all out revolution or complete submission. Either way, everything we know would be over.

Karl Horst (Germany)
Guest

@ Drake – I would argue it is completely “knowable” given the past examples of how the American government has used excessive force or trumped up charges against citizens in order to either ruin them financially in the courts, or through violent physical force even if it means killing husbands, wives and children. Has the guy who was responsible for the video that caused Bengazi been released from jail yet? One look no farther than the trail of the Clinton’s and all the literal skeletons in any number of their closets.

LetsPlay
Member
Karl, I like the dramatic way you state things. But even if the gummint did shut things down, that does not automatically force people “out of their homes and into the streets.” That would be throwing down the gauntlet and effectively starting the war. You give gummint way too much credit. Since when have they ever done anything well? And on a large scale against so large an enemy who resents … no hates them. No, the idea of liberty, freedom and independence still lives hot and bright in many, many hearts and that fire will snuff out the darkness… Read more »
Drake
Guest
I think (and truly hope) that they won’t and can’t take what they want (guns). You have no idea how deeply that runs in our culture. This country was born when the Brits tried to do just that. The military would disintegrate if they were assigned the job. I spent a combined 10 years in the Marine Corps and Army National Guard. The combat arms are very conservative and unlike politicians, take their oath to the Constitution seriously. That, and National Guardsmen are not going to go to their own neighborhoods and seize their own guns. Many local cops would… Read more »
walt reed
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Zappa put it best: Politics is the entertainment division of the military/industrial complex.

CaptDMO
Guest

While not wrong, Zappa was short sighted when he said that.

Doug
Guest
How it ends up is exactly how it is going, until it doesn’t. We are in the last stage of tyranny by corporate fiat. Think about it. We got served political fiat in 1860, bankster fiat when the 12 banking families where given carte blanc with the “federal” reserve, industrial war/bankster fiat in 1913, debt device fiat in 1929, another huge round of industrial military/bankster fiat in 1939, then 30 years of cold war bankster/industrial corporate fiat, with no “enemies” we where served up a steaming helping of islamic/terrorist fiat, but by then there where so many greasy meathooks in… Read more »
Drake
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I’ll leave Pournelle’s Iron Law of Bureaucracy here: “In any bureaucratic organization there will be two kinds of people: First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisers in the former Soviet Union collective farming administration. Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters… Read more »
Doug
Guest

Dr. Pournelle is one amazing guy. That is great you bring up his Iron Law, has stood the test of time. We all could do worse than read his “Consent of The Governed”:
https://www.jerrypournelle.com/chaosmanor/consent-of-the-governed/

james wilson
Guest

CYRIL PARKINSON’S FIRST LAW OF BUREAUCRACY
Work expands to fill the time available for completion. Officials want to multiply subordinates, not rivals.

SgtBob
Guest

Republican candidates used to say the government should be run like a business. Well, there you go.

Drake
Guest

The difference is that businesses have competitors and shareholders. A bloated, poorly run firm with 78,000 employees will soon have far fewer employees or none. Part of the job of CEOs, CFOs, and COOs is to smash entrenched bureaucrats when they become too expensive or burdensome. I see it all the time.

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