In an earlier post on this topic I made the claim that the thing which changed everything in this country was the rise of capitalism as the dominant economic model. It’s time to make good on that claim.
Firstly, we need to understand, once and for all, just what Capitalism is and how it is misunderstood in these sorts of discussions.
Capitalism is an umbrella term used to describe a variety of practices under one general heading, practices like mercantilism, industrialization, and interest-based lending. But to be precise, all these different practices overlap but are not themselves capitalism.
Capitalism is the strategic use of money to determine the value of money and thereby transfer latent wealth from one sector of an economy to another.
This simple distinction does much to explain the animosity throughout the 19th Century toward any kind of centralized bank, including the Jacksonian war on the United States Bank, and Jeffersonian suspicion of corporate power. It is nothing less than the ability of a small group to determine the value of local currency and the buying power of a community, all through the manipulation of currency exchange markets (like Wall Street), regardless of intrinsic values of manufactures and production.
But we have so conflated this with all other aspects of our much-vaunted “free” enterprise system that to criticize capitalism is seen as an attack on the American Way of Life. It is not. Although many Left attacks on it become hopelessly mired in broad attacks on wealth, it is not so much an attack on wealth per se—that is, wealth based on the prosperity of a community—but wealth derived at the expense of the community.
Which is what we are seeing take place today. Which has taken place often in our history.
The difficulty is, this has been one of the most successful economic systems ever for creating prosperity, especially for the individual who understands it and works it, and, if properly regulated, has been the foundation of American achievement, at least materially. So any critique can be made to seem like a critique of America itself. This fact has been useful to plutocrats defending their practices against attempts to rein in and control abuses. The coupling of what in extremes are parasitic practices of economic pillage with grass roots patriotism has been the most difficult combination to deal with in our history. In its contemporary guise, it couches itself in an argument that socially responsible community-based efforts to address economic and resource inequality are Socialist and therefore fundamentally un-American. This is historically inaccurate and strategically manipulative, but the bounds between the anti-federalist sentiments that began even before the revolution and became quasi-religious among certain groups in the aftermath of the Civil War are many and strange and need teasing apart to understand.
The central myth of our national ethos is this: an American is self-made, independent, capable all on his own of creating his life and success and by virtue of a unique freedom from government interference has made a success not only of his personal life but of the country as a whole, being a nation comprised of millions of separate, vital, omnicompetent, self-motivated, natural-born geniuses. The fact that the frontiers have generally been initially settled by independent people who faced the challenges with little or not help from a central government, and that many if not most of them succeeded in creating viable homesteads that eventually melded into vital and prosperous communities feeds this myth with the substance of reality, although never a reality consistent with the myth. Through successive waves of redefintion as each frontier became “back east” how the myth played out in the popular imagination changed while leaving intact the core idea that an American builds his life all on his own and the worst thing that could happen was for a government to interfere with that process.
The reality was always different. We could examine the process of frontier community building in detail and find variations, but a constant has always been the call for military aid in confronting Indians and the second generation establishment of courts of law enforcement as quickly as possible once something resembling a town emerged. The “independence” was in force only until such time as a community identity developed that could collectively request all the services these settlers were presumably fleeing in their westward quest.
Because the fact was, what these people overwhelmingly were doing was going in search of independent wealth—not here defined as a capacity to own their own leisure but rather the ability to provide a dependable source of provender and security. They came for the land. They came to be free of eastern industrial wage-penury. They came to own something outright. But most recognized they could not be secure in that ownership without the body of law and the structure of government to defend it, maintain it, and make it viable over many generations. While it may be true that some groups fled the east to get away from certain government practices, the fact remained that as soon as they could they erected a government, taking those elements they thought workable and, hopefully, leaving out what they disliked. Eventually, it emerged that they needed much more of what they left behind than perhaps they originally thought—but the whole purpose of petitioning for statehood, which was a popular movement, was to secure the benefit of federal laws that sometimes restricted the abuses of territorial governments but brought the benefits of a national law system that was seen as superior to local, often improvised, systems.
Perhaps the epitome of the independent American in popular myth is the Mountain Man. But even here, a close examination shows that the most prominent and successful of these apparent hermits were anything but social self-exiles. Many were educated businessmen. They hazarded extreme hardship and risk to bring to market products they expected would bring high prices. They depended absolutely on the communities popular fiction suggests they had no use for.
This is not to say there were no such men of lore, but they were singular examples and not an example of the norm. To suggest that our national economy and politics should be constructed to accommodate their example is absurd, but it seems that is often what the Right is suggesting.
However, despite the trend, there were and are pockets of entrenched resentment to any and all government. I have identified sources of these strains—political, religious, and economic. They feed into a river of anti-federal thinking that is often simply contrarian, but not to be lightly dismissed. Many of these can be loosely described as Libertarian, but even that can be deceptive.
The threads are these:
Because of British law that forbade westward settlement and then imposed taxes on unrepresented colonists, a strain of resentment toward government that seemed to favor external concerns over citizen’s concerns fed into the break with England.
Because of Alexander Hamilton’s experiment in internal taxes and community engineering to establish a national industrial base at the expense of subsistence enterprise, there developed a suspicion of all central government and taxes.
Because of the Millennarian nature of many of the religious movements in America, parallel ethics developed—one that tied Christian probity and salvation to hard work and disinterested success, the other that elevated moral prerogatives above secular law and rejected interference from the larger community in matters of law, behavior, and individual rights.
Because of the perceived imposition of modes of living and commerce by the North on the South after the Civil War, a pool of entrenched resentment toward federal governments was created that worked continually against the hegemony of Washington D.C.
These threads, combined with the myth of the American, created a large, often disparate, and usually unorganized base of people poised to resist anything that smacked of a national paradigm emerging from the federal government. Along with this you can add intransigent tax rebels, racists, and a vein of self-educated conspiracy theorists, all of which adds up to an ill-defined but persistent Right at the grass roots level.
The recent element is organization. From the mid Seventies on we have seen a growing coalition of all these disparate groups into a unified block that has consistently voted Republican. Since the mid Sixties and Johnson’s revolutionary civil rights activism drove the Southern Democrats to join and become a large part of a diminished Republican Party, the core of of the Right have sought a base from which to attack liberalism in general, social reconstruction in particular, and a little more than a decade after the passage of the Civil Rights Act they found their core constituency in the Moral Majority, which combined most of the religious components of a revitalized conservatism. Under Reagan, who successfully rallied the anti-federal sentiments—government is the problem—these religious reactionaries joined the fiscal conservatives and the anti-federalists to become the foundation of our contemporary, ever-more reactionary Right.
What has happened since Reagan, however, is even more troubling. What began in many instances as a grass roots reaction to government and social change has been manipulated by the moneyed interests to target government regulation and tax structures that barred corporate pillage. By feeding an angry voter block with the idea that their causes are one with the top two percent, they have successfully distorted the national dialogue to their advantage to undo decades of financial regulation and now are mounting a growing and evermore successful attack on all manner of collective activism that traditionally protects and promotes the interests of working class and middle class people.
The historical roots beneath all these different conservative groups extend back to the beginnings of our history, but never before have they all been so successfully merged into a solid block of voters. But any legitimacy these ideas may have had has been corrupted by the usurpation of corporate manipulation.
The question needs to be asked—if, as it is believed by these groups, big government is a fundamental problem, how is it any different in the case of big corporations? It would seem obvious that the operative word is Big. Some corporations, multinationals all, have achieved such a size as to function as de facto nation-states. Except for the fact that they have no national boundaries, they meet all other criteria. Yet no one seems to be addressing this reality.
Another question—if it is the desire of the Right that government be stripped of its ability to address equity issues, who then will do that work? Because the government stepped in initially because no one else could. Arguments over the ethics of states’ rights fall when it is remembered that states did not address civil liberties issues. It required federal intervention to assert what should have been recognized as not only the law of the land but common decency in matters of race, gender, and economic disparity.
A final question for this present essay—why is it that people who are losing ground economically, socially, and institutionally seem so willing to vote against their own interests in support of a false representation of what America is? That is a more difficult question to answer and I will not here attempt to do so. In this and the last six posts I have laid out the historical threads of the Right’s current manifestation. Conclusions may be drawn from there.
I will address one thing here. I said corporate pillage. We have been witnessing since the Eighties large and growing transfers of wealth from the community to private hands. We have been told that these transfers have been necessary to keep our private institutions from collapsing and causing even more havoc. In a case by case analysis, there may be some truth in certain instances, but overall this has been a con. I say this because the transfers came largely with no conditions on the recipients and practices which produced and exacerbated the calamities of 2008. To pay for these transfers, the Republicans have waged a persistent and successful battle to defund and end programs which they claim we cannot afford. Here, however, is a chart that shows the dollar-for-dollar transfers. However one may feel about the nature of the programs affected, it is obvious that this is in no way to the general taxpayer benefit. This is all special interest, corporate plunder, and in return programs that enable the possibility of social equity and potential upward mobility among struggling Americans are put in jeopardy. When the Right bleats about class warfare, here is where it is actually being waged.
The issue of tax fairness is a constant in this country. In the last few decades, the rhetoric has been added about who is benefiting and why certain people have the right to benefit from “my” taxes. It sounds like an equity issue. But the way it plays out is an excuse to extract wealth from the community.
Let me explain. It has to do with a concept called latent value.
Latent value can best be understood as the wealth held in reserve, stored, if you will, after periods of labor to build. “Unmarketed” value, so to speak. We tap into this each time we take out a home equity loan. The assumed value of your property is used as collateral to guarantee the fungible manifestation of the loan. We have paid into the property over years. More than that, we have maintained it, added on, upgraded, taken care of it to maintain or improve that value.
The same is true for entire communities and a business taps into that latent value when it opens its doors. It hires people from the community, relies on the roads, the electricity, water, sewer services. It utilizes local government offices for licensing, inspection, zoning. It depends on the laws of that community to protect it from arbitrary attack, it uses the banks to underwrite its operations, and on and on. The community as a whole is a resource and it “lends” part of its latent value to the business.
In return, that business owes it to that community to add to its latent value. This is done in a variety of ways, including taxes that can be used to maintain or add services and infrastructure for public use. If all works as it should, the business gets to generate a profit from what it does and the community gets value added from the new activity. Both benefit.
That has in many instances changed. At a certain level, there has been a de facto repudiation of this relationship on the part of business. Some of this has always been the case, but it has not reached such criminal levels since before the Great Depression.
What is happening now is that business is extracting wealth from the community. It is leaching the latent value out of the community. This is sometimes known as “WalMart Syndrome.”
Let me describe it as it happens in business. Say Company A comes in and buys Company B. Company B has existed for decades, it has a successful product, employs a few hundred people, but has recently been struggling (or, what is ever more common, it has gone public and the shareholders are not happy with their returns). Company A is in a position to acquire it. This could be a good thing—with the greater resources of Company A, Company B could once more become healthy, and continue on. That is, if Company A is at all interested in continuing Company B for the profits is generates as a going concern. (Please note—there are many Company A’s who do just that, take a struggling smaller firm, fix it, and make it profitable again. I stress this point because I want it clear that this system can work. What more often happens is not necessary!)
However, the aim of Company A is to extract the latent value out of Company B as quickly as possible. The operations are reorganized. Maintenance is cut back to the bare minimum and in some instances eliminated completely. Staff is laid off. Production is increased. The cost of manufacturing is drastically lowered per unit. As things break, they are not replaced. The good name of Company B continues to sell the product on the open market until it becomes clear that all the cuts have resulted in an inferior product. When gross sales dip below a certain level, the company is shut down, everyone laid off, and the remaining stock sold as salvage. Company B is destroyed, but before it is gone the wealth is has built up, latent in its very substance, has been extracted in short order by Company A and added to its bottom line.
All this is driven by shareholder and corporate greed. No investment is made in Company B at all and in the process a great many workers lose employment, and, depending on the size of the community in which Company B exists, the local town may be terribly crippled.
The continual assault on taxes with the concomitant bribery by communities to attract businesses that then fail repeatedly to invest in that community even while they use the resources—the latent value—of that community is exactly the same process and it is tearing this country down.
It is not Socialism that we expect investment that seeks to raise the standards and expectations of the people in general, and the payment of taxes, horribly distorted because of the special deals made to a small number of extremely rich entities, is not punishment but a way to raise the value of the whole. We are no longer a frontier country. That mythology is being used to convince people to vote in such a way that the latent wealth embedded in our national fabric can be more easily converted into transferable funds and extracted by those with no sense of responsibility to anyone but themselves and their own class. (And not even each other—at this level, they will pillage and ruin one of their own just as readily as an essentially defenseless middle class or poor community.)
Because the strains of historical animosity and intransigence that have existed throughout the two plus centuries of our existence, the Right has managed to codify and effective propaganda campaign to destroy essentially progressive, socially responsible government, all to the benefit of a class that may well establish themselves as a new aristocracy, with feudal powers. The only thing that is enabling all this is superior organization and obsessiveness.
It should be obvious by now that all this Right wing activism has nothing to do with anyone’s rights. Everything that functionally protects the rights of people who do not own their own wealth—in other word, the ninety-five percent of us who work for a living because we can’t live on the interest from our holdings—is under attack.
But the one thing that needs to be understood in all this is that to push back is not to repudiate the idea of American success. Making money, succeeding, is not at issue. What is at issue is a resurgent capitalism that no longer has a country.