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.

29 thoughts on “The Corporate State

  1. 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.

    • 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.

  2. 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 reason to support the use of figures of speech to understand and think about current problems: “The seeming novelty of many a system is due solely to the novelty of application or arrangement of the old elements which enter into it.” The book then goes on to describe how the Platonic/Aristotelian idea called the “principle of plenitude” has permeated history largely in literature and philosophy. For how it has affected science one may read E. A. Burtt (The Metaphysical Basis of Modern science). In a footnote Lovejoy makes note of a passage from Matthew Barker (Natural Theology) making use of the principle: “…where there are degrees of perfection, there must needs be some greatest perfection.”
    It occured to me at that moment that the principle of plenitude is not dead at all in the mind and imagination of people, and that it lies at the root of much thinking about the presumptions many of us have about the way things work. It is the basis of historicist thinking criticized by Karl Popper, and is the mechanism for arriving at utopianist ideals. And one need not be an idiot philosopher or theologian to make use of it either. My Dad was a missionary doctor in Africa. He had a hard time getting African-Africans (heh) to take their meds as scheduled because, hey, if one of these pills is good, taking them all at once will cure me sooner. Hobbes said that all humans have approximately the same level of intelligence, because it is not an object of envy. I’ve always been inclined to believe him on that point.

  3. “Countries were like family business and the owners were covetous of them.”

    This made me think of the Habsburgs.

    • 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

  4. 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.

  5. 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.

    • ” 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.

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

  7. 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/

  8. 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 labor is what is important.

    Every entity has a life cycle and the elitist dream of utopia is finding itself in jeopardy because they overstep and abuse their power. Like the EU, like the Clinton’s, the elites controlling America are facing an eminent threat and that is why they are making a bigger push for gun control. They also probably feel that Trump will win and with that, their dreams on further gun control will vanish for a long time. So a last ditch effort led by none other than California and Moonbeam Brown and that notorious assault weapon 30 round magazine. Oh, so nasty! Don’t even look at one, it could kill you!

    Molon labe!

  9. Pingback: The Corporate State – Shpot

  10. 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, people ‘vote’ for politicians who all have the exact same agenda, and the distraction of it all keeps the media and the plebs occupied. Meanwhile corporations, not countries and politicians, decide the fates, fortunes and destiny of all of humanity.

    The two greatest empires in the last 2,000 years were Rome and Great Britain. But the lack of corporate power and global financial control didn’t exist as it does today and thus their demise. Up until Great Britain became a world empire, nations attempted to expanded their empire through land acquisition by means of war. However tiny Britain expanded farther than Rome ever imagined and well beyond what the rest of Europe could attempting to accomplish. Today, in logical conclusion to what the British started, corporations recognize no national sovereignty, no natural borders and have no allegiance to any flag or people other than the board of directors.

    To the point of gun control – 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. The banks can simply wipe out your financial assets over night, backed by a police state that can seize your property through legal civil forfeiture. The idea “they will get my gun when they pry it out of my cold dead hands” is a very romantic notion. However I seriously doubt any American family is going to follow that statement to the extreme conclusion as the Jews did at Masada in defiance of the Romans.

    I have included two links you may find interesting; ‘Gangs of America” is about the evolution of the corporation. The second is link to a study done by the Swiss Federal Institute of Technology called “The Network of Global Corporate Control” that shows how 147 companies control everything.

    http://www.gangsofamerica.com/gangsofamerica.pdf
    http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0025995

    • ” … 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 much in so little time. Maybe it was a flash in the pan compared to other empires but none ever burned so brightly. But do not denigrate the valor, the courage, the willingness of the American to fight for his countryman and to die if necessary.

      And I do not brook any of this “respect to the liberals and I will defend their rights to the death” crap. I hope they all burn in hell. In fact, instead of RIP, for them it should be BIH, Burn in Hell. I know that final judgment if up to God but we can have an opinion about it.

      • @ 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 America-basher, so please don’t confuse criticism of your government with that of your countrymen.

        My point being, in today’s world, your own government (like any government) can, and will, take what it wants from you no matter how well armed you are. As thezman points out, the pure concept of democracy is long gone even in America. Corporations now make the decisions – politicians and the media simply provide the bread and circuses to distract the masses.

        • 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 still relevant to conquering America even by a domestic enemy “There would be a rifle behind every blade of grass.” He knew it because he lived in America and back then we have far fewer patriots (about 133M vs. 320M today). There are many more now although we have many more rats also. It is called a “target rich environment.” We are everywhere. We are legion. Resist by any means.

          • @ 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 and collect your weapons as they did in Australia. I do agree that idea goes against the grain of the American psyche. But what they can do without firing a shot is simply shut of your electricity, your water and empty your digital bank account. Effectively forcing you and your family out of your home and into the street. Let’s not include any number of trumped up criminal charges they can bring against you. It’s a simple truth that you are out numbered in the same way as the world watched (in horror under the Clinton administration) those in Waco Texas some years ago. It’s not to say you wouldn’t go down fighting just as they did, but do so many Americans accept this is the fate they and their families have to look forward to?

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

          • @ 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.

          • 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 of the evil that such a government would represent. “They” exist only because of our acquiescence.

        • 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 refuse. Some who do try will simply be killed. They are trained and equipped to arrest criminals. They have no ability to confront a group of Veterans with hunting rifles.

          That leaves the federal cops – all those armed alphabet teams – FBI, ATF, IRS, etc… those may be the battle lines of a civil war.

  11. Zappa put it best: Politics is the entertainment division of the military/industrial complex.

  12. 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 the feed trough of corporate/government largess, fiat everything had become a beast, the leviathan, unlike Hobb’s could have imagined, even in the midst of it most of us can’t see the forest for the trees of it’s total scope and reach. It’s insatiable and it’s consuming the seed corn of west. That is the sign it will jump the shark and go full in on world war. Where else, by what method, can it find enough to satisfy it insatiable greed for power and dirt peoples wealth?

  13. 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 staff, etc…

    The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.”

    I work for a Fortune 500 Company with 45k or so employees. When I see single government agencies with 78k employees it boggles the mind. I think the DoD is up over 600k civilian employees now – more than the actual Army. What they actually do (if anything) is a mystery. I think we would be better off if they really didn’t do anything.

    Maybe if we elect a guy with a “you’re fired!” catchphrase, things will get better although I doubt it.

    • 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.

Comments are closed.