March 14, 2011

Corporatism is Legalized Crime


As Ted Nace points out early in his survey of corporatism, Gangs of America, the worst crimes of corporations seldom involve technical breaking of the law or the personal evil of corporate executives, but the pattern of destructive anti-social activity which corporatism (and its corrupted system of “law”) enshrines in principle as normal and normative. Corporatism is in fact the ideology and practice of formally enshrined organized crime.
The banks recently crashed the real economy, and permanent joblessness (including the waste of life termed “underemployment”) creeps toward and over 20% according to the measure. This destruction of the basis of our lives is a calculated, intentional corporate-dictated policy. Today we see quarter after quarter of corporations reporting record levels of “profit”, building up record cash hoards, and their executives personally looting these corporate hoards in the form of “bonuses”. All this even though the original stated purpose of the Bailout was to get liquidity circulating again. Today, not only does the government tolerate what’s obviously fraudulent accounting, disaster profiteering, and the obstinate refusal of corporate elites to live up to the terms of the Bailout. (I include all corporate sectors among the bailed out, since the bankster and government allegation was that all sectors would perish unless the TBTF banks were bailed out, and no other sector dissented from this, because they all expected the Bailout to trickle down to at least their own stock prices and exec comp.)
Not only does it do this, but it proclaims that this “jobless recovery” is in fact the real recovery they intended all along. Thus we have the same history as in Iraq: The initial rationale is proven to have been a Big Lie. The government then starts inventing new rationales ad hoc, temporarily proclaiming victory according to each, until forced by reality to move on to the next, further attenuated rationale and metric.
So we have Sodom-like corporate profiteering as the real economy continues to deteriorate, indeed in inverse proportion to the rising calls for “austerity”, that public amenities and civil society need to be gutted because there’s not enough existing wealth to support them.
Corporate profiteering and personal looting by executives, vs. austerity. This ratio is a direct metric of organized crime. It’s nothing but monumental, capital crime. Corporatism is the system of command economy, and trickle-down is ideology meant to justify it. But corporatism is nothing but robbery, and trickle-down nothing but the verbal part of fraud. Advocacy of it abets capital robbery. This incriminates both Washington gangs, the entire MSM, most of academia, and conservatism and liberalism as a whole.
In a formula:
Capitalism = corporatism and trickle-down = organized crime.
This is not a new kind of corporate behavior. Privateering, the formal charter to commit crimes, goes back to the 16th century, the dawn of the corporate form. Corporations were envisioned in the first place to help enable “violent crime grafted onto trade”, as Nace put it. The very term “free trade” originally referred directly to freedom from the law. Or as Hannah Arendt wrote in Origins of Totalitarianism, legalized gangsters sought to use politics to regulate their bloodshed. The British East India Company’s violent lawlessness is exactly mirrored today in the form every sort of corporate thuggery and the way corporate crimes are generally considered above and outside the law. Blackwater, explicitly declared above the law and granted a charter to literally perpetrate massacres, is merely the distillation of the way every large corporation is empowered to act, and the way they usually do act. Indeed, in principle this is the way they are required to act according to the core principle that profit-seeking is the only acceptable value. (The question of what kind of sick society would ever have enshrined such a sociopathic form in the first place I’ll leave for another time. But I’ll say here that the very existence of profit-seeking corporations reflects a self-loathing and self-destructiveness on the part of civilization itself.)
Today’s “free trade” has exactly the same criminal nature, but the term has been sanitized to refer to an economic theory rather than a legal concept of chartered outlawry.
Today it’s true in a precise sense that corporations are formally legalized criminal organizations. Take for example the repeal of the bucket laws, which used to recognize gambling as gambling whether done over dice in a back alley or stocks on an exchange. A bank couldn’t ask the state to enforce a wager any more than a two-bit hood. But these sane laws started being repealed in the 1980s. The process culminated in the CFMA in 2000. Now what was naturally unproductive antisocial gambling was legalized as a “contract”. The result was massively bloated bank profits and hideous distortions of the economy, climaxing in the crash of the real economy. (This is the intended culmination of financialization itself.) The crash was then used as the pretext for the Bailout and austerity. This entire process was premeditated and had its origin in the legalization of what are naturally outlawed acts. The massive conspiracy, dating back to the 90s, to fraudulently induce mortgages was enabled by this original legalization. And the rest of the crimes were piggybacked on these.
This is both the most extremely destructive and the most typical of the formal legalizations of organized crime which are bound up in the corporate form. While many of the subsequent crimes may still technically be illegal, they were enabled by the underlying legalization of gambling. (And once the government has been corrupted enough, even existing laws are no longer enforced, as we see every day. This is simply the de facto legalization of corporate crime.)
Yet today most people fail to see this. The magnitude of the crime, and the government imprimatur accorded it, is such that it becomes hard to register. Pro-corporate propaganda and indoctrination reinforce this self-obfuscation. This is what Hitler intended with his doctrine of the Big Lie. (This same magnitude of crime enabled by the hijacked law and corrupted polity also renders it impossible for the existing system of law to rein such crimes back in and impose any deserved justice. When the day comes that the people finally take back their country from such criminals, nothing short of a Nuremburg-level proceeding is sufficient to the task of justice.)
So we have a regime where responsibility for every crime, the robbery of trillions, international murder, slavery, the ravaging of the environment, conspiracies against plant genomes, and anything else profitable, are either directly legalized at the corporate behest or else laundered through the corporate form and dissolved.
All this is within the prescribed use of corporations. These are not “abuses”.
Here’s another example. Corporations serve as the underlying for the stock market. The stock market has a fraudulent basis in the first place, since only the first offering actually raises capital. The rest is just the same legalized gambling. It has never been anything but socially and economically destructive. And by what reality-based measure does stock price reflect value at all? Yet once you enshrine it as the most important measure of value, control fraud becomes ideologically justified. From there the next step is to change the law and/or regulation itself. Again, organized crime becomes legalized.
One of the ways the law gets changed is through pro-corporate SCOTUS decisions, like the recent one striking down most of the enforcement potential* of the “honest services” law, which was a modest attempt to retain some criminal liability for the most egregious executive fraud. This is just one example of how corporate power has corrupted our institutions, that even in the rare cases where the legislative branch tries to do part of its job, the judiciary blocks it.
[*In my previous corporatism post I referred to the double standard of law and jurisprudence enshrined by the SCOTUS where it comes to corporate speech. Corporate speech “rights” are interpreted extremely loosely, while at the same moment, in the same cases, corruption is interpreted with extreme pedantry. If there’s not a physical sack with a dollar sign drawn on it, it’s not corruption.
The SCOTUS just applied this same strict standard of “corruption” in the honest services case, declaring that the law is constitutional only where applied to explicit kickbacks and such. Obviously, this is meant to gut the law in practice, since today’s corruption is generally more sophisticated than that. But SCOTUS jurisprudence is designed to let all implicit corruption elude accountability.]
We’ll soon find out what’s the latest from the SCOTUS on unconscionable contracts of adhesion, extortionate “contracts” forced upon us through the coercion of monopoly and artificially created economic hardship. These strong-arm contracts are increasingly popular, and are imposed anywhere the corporations attain the position of dominance which enables them. In theory such contracts, just like gambling, are supposed to be unenforceable, uncontracts. But here too the SCOTUS has usually served as the corporate goon. The Lochner era was based upon the legalization of “contract” extortion, and although the court nominally abandoned this doctrine in 1937, in practice courts almost always still find such contracts valid. In the case of AT&T vs. Concepcion, AT&T’s thefts were so outrageous that the lower courts found the contracts it imposed, forestalling its victims to combine to sue as a class, to be unconscionable. But this will be the SCOTUS’ big chance to restore Lochner as official court doctrine. 
Meanwhile government contractors, starting with the weapons rackets, are implicitly encouraged to bilk the taxpayer out of billions. By now it’s not conventional corruption but systematic corporatist robbery, with the DoD and other agencies as bagmen. Robert Gates once explicitly told an audience of weapons racketeers that where it comes to the military Obama’s top priority is an ever-escalating Pentagon budget as such, as a value in its own right.
Those are just a few examples of systematic corruption, i.e. organized crime. The term kleptocracy should be understood in a profound way. Corporatism comprises a new paradigm of criminal practices, and the pro-corporate mindset is a characteristic, immutable criminal mindset. It’s not just a set of criminal actions, but an indelible criminal essence. It’s the mindset that we can no longer exist at all without being totally controlled by corporations, having all we produce monopolized and stolen by corporations, and submitting at every moment to corporate imperatives even in our very thoughts. The elites, for obvious reasons, believe this themselves. The system they’ve set up is dedicated to enforcing this corporate totalitarianism from the top down. The corporations themselves have no purpose at all except to preserve and intensify this kleptocracy, and to keep stealing.
But we know that we don’t need corporations to have a vibrant, productive economy. We know we’d be far more productive without them. Without them we would restore our prosperity, our communities, our social morality, and our democracy. The only thing in the way of our redeeming our humanity and saving our lives and freedom are a few gangsters, organized as big corporations. The corporate form is what enables this in the first place. Let’s abolish it. 


  1. The criminality you describe is even easier to see if you stop using the word “capitalism,” which is both loaded and a lie. I’ve alredy said elsewhere that I view economics itself as a deception, so reaching the conclusion that the more purely political description of the system is also a deception isn’t much of a stretch.

    What we have is financialism: a political economy driven by finance, not capital. The goal of financialism is to manage a world of finite resources to simulate infinite growth. This kind of scheme when practiced on a much smaller scale is known as a Ponzi scheme. I already refer to the dominant neoliberal Chicago School of economics as “ponzinomics,” and it is easy to think of the neoliberal politics of the Washington Consensus as “ponzitics.”

    The corporate form is merely a tool employed by the financialist to achieve financialism’s goals. Install a different value system, i.e., replace financialism with something more human and humane, and the corporate form could disappear on its own.

    As long as financialism rules the roost, however, the corporate form could be the people’s last refuge. There’s nothing stopping citizens from organizing themselves into corporations and revitalizing their social contracts to each other that way. I have made some tentative first steps in investigating this route for healthcare insurance, i.e., could you form something like a credit union for the purpose of aggregating purchasing power for health insurance.

    Comment by Tao Jonesing — March 14, 2011 @ 12:02 pm

    • Economics sure is a deception. Especially since the mid 20th century it’s been nothing but ideological lies intended to serve only as weapons and as misdirection.

      I’m inclined to dispense with the term “capitalism” completely, since as you say it’s nothing but a fraud. Although I do wonder how worthwhile it is trying to convince those who reject this status quo but still believe in the utopian possibility of some “real” capitalism like in the econ textbooks; to try to convey that there can never be any such thing in real life, that the “capitalism” we’ve always known in reality is the real capitalism, and there can never be any other because in reality it always behaves exactly this way. That’s the Rule of Rackets, as I call it.

      I concur that for the duration of the corporate form we need to look for innovative ways to turn it to our purposes. We discussed that once before, a few months back. I have some vague ideas for how essentially political and/or communal groups could in some contexts find it to their advantage to organize as nominally profit-seeking corporations.

      If I recall correctly the idea you mentioned, you thought workers could try to organize that way. And the credit union idea can have all sorts of applications.

      Comment by Russ — March 14, 2011 @ 12:49 pm

    • Hi Tao. I have recently been thinking along the same lines as you, in the process of comparing the legal implications for organising under different recognised structures (ie incoporation vs worker’s co-op vs sole proprietorship etc). It seems unwise to deny oneself a tool that the enemy uses extensively (limited liability), but I wonder to what extent the systemic incentives set up by virtue of incorporation may subvert the ultimate goal of the organisation. I’m still not sure how I feel about that.

      Comment by paper mac — March 14, 2011 @ 3:51 pm

      • Paper mac, maybe the key to answering that question is to examine under what conditions limited liability is deemed desirable, useful or necessary. [I’ve never really understood the concept (then again, I’ve never examined it closely either).]

        Part of this issue of liability seems connected to sheer size of the enterprise; small enterprises with a limited scope don’t have need for limited liability, and in fact it seems to be smaller companies where the “corporate veil” is most frequently pierced. Larger undertakings could go back to being the purview of the government, or of limited chartered companies.

        Comment by Lidia — March 14, 2011 @ 4:10 pm

      • I assumed that it would probably have to stay a privately held corporation, just membership-owned, and only those devoted to an ideal as members.

        Comment by Russ — March 14, 2011 @ 4:32 pm

      • @paper mac,

        The key is to realize that finance-driven corporations are not profit-driven, they’re growth driven. What matters is the promise of perpetual exponential profit growth, not the profit in any given quarter. The point of a finance-driven corporation is not to maximize profits but display perpetual compounding growth at a rate that exceeds inflation. That kind of growth is what you have to show to convince somebody to park their idle cash in your company’s stock instead of in a treasury bond, for example.

        The top 5% of the income distribution have enough idle cash that they want to see it “grow,” but the vast majority of the bottom 95% either have no savings at all or are leveraged to the point where they live paycheck to paycheck. I’d argue that for the bottom 80% of the income distribution, many would prefer to see their cost of living go down today over the promise of some kind of payoff in 5, 10 or 20 years.

        This is where the idea of the “public union” corporation could play an essential role, even if it aims for nominal profits of say 5% per year with no growth. Shareholders that benefit from a cost of living reduced by eliminating economic rents– i.e., private taxes– imposed upon them by the finance-driven, growth-focused corporations will be able to start saving.

        I really don’t think a growth-focused corporatin can compete against a pay-as-you-go corporation.

        You definitely have to address concerns of capture by finance, but you can do that in the corporate documents by setting it up with a poison pill or other similar protections. You may have to pass a new law to create a new type of corporate entity, which is what I’d prefer to do.


        Limited liability is of primary interest to the shareholder. Without limited liability, the shareholder as part owner of the company would be jointly and severally liable for all debts and liabilities incurred by the company, putting the entirety of the shareholder’s wealth at risk. So, say you have $1 million saved up and you want to invest 10% of that in a new company. Without limited liability, you as a shareholder are actually putting your entire $1 million at risk. With limited liability, you are only putting $100 thousand at risk.

        So, selling limited liability to the potential shareholder is easy. To sell limited liability to the public, you have to engage in some kind of “trickle down” argument, which is the basis of Russ’s “trickle down” argument above. Personally, I think there are immediate benefits to putting idle capital to productive use by forming new businesses. The jobs that created are not truly “trickle down,” but I understand why Russ takes a different position.

        The crux of the problem is where to strike the balance between private interests and the public interest. Clearly, we’re nowhere near having that balance now.

        Comment by Tao Jonesing — March 14, 2011 @ 9:41 pm

      • I’m getting way, way ahead of myself here, since I’m probably 3 years off from being able to start work on setting up the worker’s co-op I have in my head. But I’ve been thinking some about the nitty-gritty and ownership structures and so on.

        Generally speaking, I’m leery of limited liability as a concept because it’s facilitated many of the abuses Russ has so ably described for us here. On the other hand, operating without it makes a small worker’s co-op a tough sell to prospective members, since as the only shareholders of the organization, the workers can be wiped out pretty quickly. I can see this being a major problem for a food production co-op down the line, as it seems to me that the corporate food producers are likely to use legal action as a bludgeon. And if someone gets sick from your food, you’re cooked. At least with limited liability the business can be wiped out without taking the workers along.

        I think the trajectory I have sketched out right now is to set up a sole proprietorship until I get things off the ground, then convert to a worker’s co-op if things are working and people want to help out. Incorporating and diluting the investment across the workers would ensure that no one’s life is destroyed if things don’t pan out.

        It’ll be difficult to effectively argue against corporatism while incorporating one’s own co-op, though. As I say, I’m not sure that this is the best approach, and maybe it’s better to try to stay out of those structures entirely and operate as federated sole proprietorships or partnerships.

        Comment by paper mac — March 14, 2011 @ 11:25 pm

      • You may have to pass a new law to create a new type of corporate entity, which is what I’d prefer to do.

        You mean like expanding the range and/or legal strength of the B corporation?


        (In that connection, here’s a proposed legal innovation along similar lines, the General Public License for Plant Germplasm (GPLPG).

        http://blog.p2pfoundation.net/a-general-public-license-for-seeds/2010/11/23 )

        I’d argue that for the bottom 80% of the income distribution, many would prefer to see their cost of living go down today over the promise of some kind of payoff in 5, 10 or 20 years.

        This is where the idea of the “public union” corporation could play an essential role, even if it aims for nominal profits of say 5% per year with no growth. Shareholders that benefit from a cost of living reduced by eliminating economic rents– i.e., private taxes– imposed upon them by the finance-driven, growth-focused corporations will be able to start saving.

        That’s one of several versions I’ve heard of the same basic argument, that we need to figure out how to convince the public (and perhaps investor-types) of the importance of other factors besides cash profit. (Usually it’s the overall return on relocalization and community-building.)

        There has to be some simple and politically effective way to convey: Finance/growth is a TAX on the rest of us, while we can lower our cost of living now (repealing this tax) if we instead empower alternative economic forms.

        To sell limited liability to the public, you have to engage in some kind of “trickle down” argument, which is the basis of Russ’s “trickle down” argument above. Personally, I think there are immediate benefits to putting idle capital to productive use by forming new businesses. The jobs that created are not truly “trickle down,” but I understand why Russ takes a different position.

        Now I think I see how we misunderstood one another on that. I never meant that any and every plan whatsoever, no matter what it is, to put existing capital to use constitutes “trickle down”. By that measure, my basic Food Sovereignty plan would be trickle down.

        Nor did I mean any attempt to forage for opportunities amid this hostile trickle-down environment is in itself tirckle-down. On that contrary, the infusion of the democratic will, as well as any innovations like the ones we’re discussing which mitigate or abolish the growth-profiteering fetish, would be a contravention of the trickle-down ideology and partial building of economic democracy. Building the old within the new, as they say.

        My definition of trickle-down, in the broadest sense, is the theory and practice of policy and forms dedicated to the idea that wealth hoards need to be tolerated and encouraged in the first place, and that nothing can be done unless profiteering toll booths are set up.

        In practice it leads only to our current state, where government never does anything for its own sake, but only from the point of view: How does this maximize corporate rent extraction chokepoints? (That’s why Obama’s the corporatists’ dream president, because even more than Bush he seems like a robot programmed to think only in this way. I’ve said before that if someone were to suggest to him a directly constructive government policy, he’d be sincerely confused. “But if it’s not going to enable corporate interests to increase profits, why do it at all?”)

        What we’re discussing here would be dedicated to abolishing and transcending that mindset and eventually all related practices.

        I’m getting way, way ahead of myself here, since I’m probably 3 years off from being able to start work on setting up the worker’s co-op I have in my head. But I’ve been thinking some about the nitty-gritty and ownership structures and so on.

        I have to start thinking more about that as well, since it’s an important aspect of relocalization, how we’re going to withstand and repel whatever invasive power the system will still have in the coming years.

        It’ll be difficult to effectively argue against corporatism while incorporating one’s own co-op, though.

        In the purely rational sense, this is easy. In a violent world where everyone is armed and both premeditated and random assaults are common, it’s folly to unilaterally disarm on one’s own. (Which of course does not have to mean becoming aggressive oneself.)

        This is the same thing, and the assault aspect isn’t even all that metaphorical. The system has set itself up to try to conscript everyone into its own kind of behavior.

        (I do see how this, however reasonable, may sometimes be difficult to render politically convincing to a general or hostile audience.)

        A core part of the day-to-day struggle is how to be as much of an anarchist as possible in practice while still surviving and effectively fighting back, which often requires some tactical flexibility.

        Comment by Russ — March 15, 2011 @ 2:38 am

  2. Another excellent post, Russ.

    This comment may be of interest, re. the SCOTUS:


    While the Chamber of Commerce has recently tried to downplay the favorable treatment it receives from the Supreme Court, its own top lawyer admitted a few years after Roberts joined the Court that the justices give his client special treatment:

    Carter G. Phillips, who often represents the chamber and has argued more Supreme Court cases than any active lawyer in private practice, reflected on its influence. “I know from personal experience that the chamber’s support carries significant weight with the justices,” he wrote. “Except for the solicitor general representing the United States, no single entity has more influence on what cases the Supreme Court decides and how it decides them than the National Chamber [of Commerce] Litigation Center.”

    Comment by Lidia — March 14, 2011 @ 3:31 pm

    • Thanks, Lidia. I don’t know if you saw this post


      but it discusses the relationship of the SCOTUS, the Chamber, and how the position of solicitor general has become an institutionalized revolving door compartment. I was thinking of including that as another example in this post, how the revolving door is legalized corruption.

      Comment by Russ — March 14, 2011 @ 4:30 pm

  3. I’m curious, since you find capitalism so abhorrent – no judgment there, just stating a fact – what country’s current political regime do you find acceptable? Or perhaps “least objectionable” would be easier to answer. Again, purely out of curiosity.

    Comment by Hu Flung Pu — March 14, 2011 @ 8:19 pm

    • What we really have is nothing like the capitalism in theory, which is one of the reasons I prefer not to use the term. Since we don’t have capitalism, it makes no sense to talk about it. Others prefer to say that what we have today is what capitalism really is, but I think “capitalism” is a loaded word that encourages mental shortcuts and leads to abject stupidity.

      What we really have is financialism, which demands we manage the finite resources of the real world so as to simulate perpetual exponential growth (that’s what compounding interest to infinity gets you, and that’s what you have to do in any discounted cash flow analysis of a stock’s value). Like any Ponzi scheme, financialism must fail.

      The capitalism of theory would be a giant step up from today’s financialism, provided that we forced economists to identify and model finance and its evils as part of economic theory. Since modern economic theory was created to obscure the role of finance, speculation and rents in the actual economy, economists would pretty much have to start from scratch. Boohoo.

      One of the more intersting things about your comment, HFP, is that you refer to capitalism as America’s “political regime,” when it is, in fact, an economic system. Your confusion is somewhat common and clearly intended by neoliberalism, which set out to transform citizens into consumers with no say in the political process, which officially is a republic based on representative democracy.

      Comment by Tao Jonesing — March 14, 2011 @ 9:56 pm

      • Immediately after my post (to which you replied) and well before your reply I clarified capitalism as an economic regime as opposed to a political regime (you can see the post below). Just to clarify that I understand the distinction.

        I would agree completely that the US doesn’t operate under pure capitalism. I’d call it quasi-capitalism. (If you want to refer to it as financialism, that’s ok by me.) Just as I’d label many of the systems in Western Europe quasi-socialism. And Soviet Russia was quasi-communism. Etc., etc. Obviously we have never seen a pure version of any -ism, as none will ever exist in practice (only in theory).

        So, to ask my question again – since you didn’t answer it (although it was asked of Russ, but please feel free to add your own view) – which country’s economic OR political regime (or “system” if you prefer) do you favor most?

        Comment by Hu Flung Pu — March 14, 2011 @ 11:51 pm

      • Tao, I have to disagree with you about capitalism. As I’ve said elsewhere, I see capitalism as being like fractional-reserve banking, but with real stuff.

        Capitalism pretends it can take surplus wealth and “create” even more surplus wealth. It’s supposed to take 100, and give back 105. Where does the 5 come from? (it doesn’t matter whether it is framed as rent, bonuses, interest, dividends…). The 5 has to come from somewhere Outside the System.

        The “Big Lie” of capitalism is that it has obtained extracted wealth from Outside the System (via conquests of lands and peoples, labor arbitrage, fossil fuel exploitation) and *pretended* that it came from Within the System, which is clearly impossible.

        Now that capitalism is global and oil is beyond its peak, there is no “Somewhere Else” from which to bring wealth into the system. The game’s over, which is why financial structural instability is everywhere. Maybe the Chinese can get a bump out of Africa, as it seems they are trying to do, but the scale required just isn’t there, I don’t think… not on the scale of the America=>China hand-off, anyway.

        Capitalism does absolutely nothing to create wealth, it’s merely very efficient (overly so) at Moving Wealth Around. It’s also very good at destroying wealth!

        However, you refer to a “capitalism of theory” which would have no financialism: no speculation, rents or rates of interest. Do you have any resources or references that flesh out how this “pure”, unsullied capitalism would work? What would make it different from merely “pay-as-you-go”?

        When you think about it, surplus set aside for all but the strictest necessities is a kind of theft from the future. A fascinating book about aboriginal peoples of the Americas describes systems they used to slough off (rather than accumulate) excess wealth (“Society Against the State” by Pierre Clastres).

        One very difficult aspect of transforming consumers back into citizens is going to be that “capitalism” has become synonymous with American patriotism.

        Comment by Lidia — March 15, 2011 @ 8:15 am

      • @Lidia,

        I don’t think you disagree with me as much as you think you do. The word “capitalism” is getting in the way, I think.

        The capitalism of theory, the system that many people insist we have right now, does not demand perpetual growth. The capitalism of theory can work just fine without conquest or theft. Capitalism in theory is merely a system for distributing the fruits of labor’s productive use of capital (i.e., surpluses) between labor and the owners of the capital.

        The financialism that we actually have, which you could call Ponzi capitalism, overlays usury on top of capitalism and, like a vampire squid, leeches value out of the system. When I say “rents,” I’m referring to what are essentially private taxes imposed by the holders of wealth on labor and capital.

        Financialism requires perpetual growth to work, which is why conquest and theft are necessary to keeping it going.

        The clearest articulation of the difference between “pure” capitalism and what I’m calling “financialism” or “ponzi” capitalism is Karl Marx’s distinction between M-C-M’ (labor creates a surplus by working the capital) and M-M’ (making money from money).

        This piece from Michael Hudson gets to the heart of the matter:


        As to whether I can point you to resources or references on how to make capitalism work, I doubt it. For the most part, capitalist theory and the economics used to model it are pure fiction that studiously ignore the dominant role of finance in driving our economy. The key is recognizing the role that finance plays and then redefining it to serve instead of rule.

        Comment by Tao Jonesing — March 15, 2011 @ 12:25 pm

    • Asking that question of an anarchist is like asking a vegan “What sort of meat do you find least objectionable?”. It kind of misses the point.

      Comment by Karl — March 15, 2011 @ 2:43 am

  4. I probably should have said “economic regime” above, but you understand what I’m asking…

    Comment by Hu Flung Pu — March 14, 2011 @ 8:21 pm

    • There’s no existing political or economic regime which I find acceptable (meaning that I wouldn’t be trying to radically change it). I believe politically in true (bottom-up) federalism and direct democracy, economically in a system based on useful possession and cooperation (although with the freedom to produce individually, within the useful possession framework).

      Since to the best of my knowledge these don’t prevail anywhere today, it follows that I couldn’t fully accept anything that exists.

      As for which are relatively better than others, state social democratic regimes like those of Chavez or Morales have undertaken some significant restitutions of wealth to the producers. Cuba has a sane and relatively fair agricultural program. Even Brazil has made some progress in some ways.

      So while these aren’t ideals to me (I don’t accept state socialism, social democracy, or reformed capitalism), and I’d still be a radical within any of them, they’ve at least made some progress toward a more human way of living.

      Comment by Russ — March 15, 2011 @ 2:53 am

      • Gotcha. Many thanks for the clarification.

        I’m a bit fascinated with that last bit, though… “a more human way of living.” (Perhaps you meant “humane”?) In my view – and with the benefit of vast experience (like yourself, I’d imagine) – humans, including yours truly, are deeply flawed. We are in various degrees greedy, selfish, irrational beings. (We also have many good qualities, of course, but you see my general point.) Ergo, any political or economic system involving humans will be deeply flawed. And all we’re doing is trying to find the system that minimizes the enormous flaws that will always be present as a result of us being… well… humans. So, when you say, “a more human way of living” I would suggest that you’re witnessing just that: various deeply flawed systems which reflect our deeply flawed humanity.

        You didn’t ask, but just to state my bias… personally, despite its many flaws, my preference is some form of quasi-capitalism, although to name just a few modifications, I’m in favor of greater regulation of large financial institutions, higher capital requirements, higher taxes on the super-wealthy, a transaction tax on financial trades, a national health care option, etc. Thus the “quasi” in front of the capitalism. My view is that you can’t have a healthy society with the degree income inequality we have here in the US (specifically, I’m referencing the super rich here). But, having said that, I do feel that markets do a better job of allocating resources than central planners the vast majority of the time – but not all of the time. Just my 2 cents.

        Interesting discussion, anyway. Hopefully your contentment in this life isn’t dependent on actually seeing this ideal you have in mind come to fruition. Otherwise, you’re in for a bitter, disappointing ride. If there’s anything that groups of humans are really good at it’s crushing ideals.

        Comment by Hu Flung Pu — March 15, 2011 @ 1:59 pm

      • Yes, you could take it as “humane”. That’s close to what I mean. But I also mean a society centered on self-management for individual and cooperative production. I think it’s at the core of our humanity to wish to be autonomously creative, if the definition of creative is expansive enough to encompass any meaningful work. A human society is one which maximizes the opportunities for this productive creativity. An anti-human one, like the one which exists today, seeks to destroy such opportunities for all but a privileged handful (who almost always fail to even use that freedom) and turn the rest into servants, and now slaves.

        That’s what capitalism seeks to do in principle and practice.

        (Corporate capitalism is a partial command economy, BTW. Bailout America is at least as centrally planned as the countries I listed. And as I said, I don’t support any state-planned economy, or the existence of any state at all. I want true bottom-up federalism, political and economic.)

        The kind of domesticated capitalism you describe has been tried, and we know those kinds of reforms are impossible to be built into a permanent order. Some of them were briefly enacted at the height of the Oil Age, as a luxury of the oil surplus, and then were rescinded as the world system prepared for Peak Oil. And that was that. The New Deal was specific to a unique, never-to-be-repeated moment in history. That’s why reformism can never work again even temporarily.

        So you too are doomed to a disappointing ride if you’re dependent on the dream of that.

        As for my own ride in this life, anarchism/democracy is both an end goal and a lived process. I try to figure out how to help achieve the end goal, but just as important is the day-to-day lived experience, trying to achieve the goal, building the old within the new, as much as is possible right here, right now. So I contribute my ideas, and I take relocalization action in life. As long as I live up to that continuing goal, I can never be disappointed in life.

        As for the end goal, I know it’s inevitable, and I hope to live to see its significant achievement. But if the arc is longer than that, at least I know I’m fulfilling my responsibility to it. So there too, I won’t be disappointed.

        Comment by Russ — March 15, 2011 @ 3:15 pm

      • That’s cool. I have very low expectations of humans – although I enjoy their company! – so I’m rarely disappointed. I’m a pragmatist by nature, so I have no idealistic dreams of what humans are or aren’t going to do. While anathema to you, I’m quite content taking what the system gives. I rather enjoy all of the irrational surprises that pop up. Anyhow, we’re all gonna die, so all that really matters is the degree of contentment we create for ourselves in our lifetime, and hopefully that includes creating contentment for others as well.

        Anyhow, you seem more certain of everything than I am of anything. I guess we’ll see how it all turns out – I’m sure it will be most interesting, as anything with humans involved tends to be.

        Comment by Hu Flung Pu — March 15, 2011 @ 3:39 pm

  5. Good blog, Tao.

    Hu, glad you are so amused by the spectacle of totally unnecessary and widespread human suffering. Enjoy.

    Those of us with guts and vision will be putting our “ideals” into action. As Howard Zinn says, it’s ultimately more fun than being a gum-chewing bystander.

    Comment by Janice — March 17, 2011 @ 4:29 pm

    • It’s true – as harrowing and exhausting as this often is, it’s also often fun.

      As one of the American Revolutionaries (John Adams) said of their endeavors, “action, not rest, was our pleasure.”

      Comment by Russ — March 17, 2011 @ 5:17 pm

    • Widespread human suffering doesn’t amuse me. In fact, unless your personal “guts and vision” involve continuous, hands-on work with and financial support of children in a developing nation, then I’m a few miles ahead of you in that department.

      Having said that, I’m completely unconvinced that you or anyone else has any Big Ideas that the human populace will rally behind which will result in dramatic political or economic changes (for the better, that is). In my view, there are a lot of folks whose arrogance is exceeded only by their naivete. And I choose not to participate in their follies. But I wish them the best in their endeavors nevertheless.

      Comment by Hu Flung Pu — March 17, 2011 @ 6:35 pm

      • In my view, there are a lot of folks whose arrogance is exceeded only by their naivete. And I choose not to participate in their follies.

        Yes, you describe the advocates of the status quo well.

        Comment by Russ — March 18, 2011 @ 5:25 am

      • I think it describes a lot of folks on many sides of any issue – it’s part and parcel of the human archetype. And I find it amusing.

        My suggestion – worth exactly what you’re paying for it – is that folks who want to change the world start small. I live in San Diego and spend a great deal of time and money on an orphanage in Tijuana called El Faro. We could use some help (http://www.friendsofelfaro.com/default.htm)… but it will require a bit more than sitting in front of a keyboard (and fluency in Spanish would be helpful but is not required).

        While I’m sure that all of this High-Minded Blogging of Very Important Ideas is an enjoyable hobby… there’s some real work that needs to be done on the ground as well.

        Comment by Hu Flung Pu — March 18, 2011 @ 1:59 pm

      • Way ahead of you. I said I’m involved in relocalization activism. In fact just last night was our farmers’ market committee meeting. Just one small step toward the eventual relocalization of food production and distribution, which would be one giant leap toward shedding the elitist tyranny like the rotten, flea-bitten costume it is.

        As for High-Minded Writing of Very Important Ideas, we’ll see how important my particular writing turns out to be. But nothing worthwhile in this world ever happened without that writing.

        Comment by Russ — March 18, 2011 @ 3:38 pm

      • “But nothing worthwhile in this world ever happened without that writing.”

        Agreed. The problem, of course, being that for every one Thomas Jefferson there are 999 Marxes, Pol Pots and L. Ron Hubbards.

        Comment by Hu Flung Pu — March 19, 2011 @ 1:22 pm

      • Given the way things have developed, why exactly do you think Jefferson’s posterity has fared better than that of Marx?

        If anything, Jefferson (slave owner, conscious builder of a de jure slave system) has more responsibility for the tyranny erected in his name than Marx did.

        Not that I belabor the slaver origin any more than is necessary, or let it affect every aspect of what the founders did. But you’re the one who brought it up.

        Comment by Russ — March 19, 2011 @ 2:26 pm

      • Jefferson and the Founders were all deeply flawed men – like the rest of us. Hypocrites to varying degrees, no doubt. And our current system here in the U.S. is but a bastardized version of Jefferson and the Founders’ vision; that’s what happens after a couple of centuries. But, clearly, the modern U.S. would still be considered a piece of Jefferson’s posterity, as you would put it.

        Now, Marx’s ideas were also bastardized over time by various folks. But, Marx’s influence on Leninist-Marxist theory, which then engendered Stalinism (among other horrors) is also clear. (Doesn’t almost every communist dictator pay homage to Marx in some manner?) Consequently, if we’re going to lay (to some extent) the current system in the U.S. at the feet of Jefferson and the Founders, we must also lay (to some extent) Soviet Russia, modern-day Cuba and other communist regimes at the feet of Marx. Again, don’t most of them cite Marx as an inspiration?

        So, I would argue that despite the many flaws that we have here in the U.S., our system – Jefferson and the Founders’ wayward posterity – has engendered considerably more contentment and opportunity for the average person than have the various systems greatly influenced by Marxist thought.

        So, on a relative basis, I think the “tyranny erected in Marx’s name” (to use your phrasing) has been far greater than whatever tyranny has been erected in Jefferson’s name. And, further, this “tyranny” that has been erected in Jefferson’s name – our “de jure slave system” – is your description, not mine (or that of many others). So, simply because you label at as such doesn’t make it so. Although everyone’s free to their own opinion.

        Personally, I care less about which man (Jefferson or Marx) is more responsible for the systems (re: “tyranny” in your words) erected in their names than I am about which system has engendered greater human contentment and less human suffering. In my view, Jefferson wins hands down on that count. Or perhaps you would like to argue that the various communist regimes from the last many decades have been particularly “humane”? Regardless, almost all of them have Marx’s fingerprints (admittedly, much to his chagrin) all over them.

        Comment by Hu Flung Pu — March 20, 2011 @ 1:58 pm

      • Regarding that de jure slave system, I can’t tell if you misunderstood me, so I’ll be more explicit:

        Article 1, section 2.

        Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.

        Article 1, section 9.

        The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.

        Article 4, section 2.

        No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, But shall be delivered up on Claim of the Party to whom such Service or Labour may be due.

        That’s as de jure as it gets. I could add Dred Scott. Karl Marx would never have countenanced anything remotely like it.

        But like I said, I’m not interested in playing stupid who’s-worse games. All hierarchical systems are proven to be immoral and to be failures at what they promise to accomplish. Direct democracy is the only form of society which has any legitimacy left. Read and respond to my most recent posts, if you still want to argue against democracy.

        (And while I have no affection for Cuba’s authoritarian socialism, they do have a far more rational and equitable agricultural system. We’re discussing that at the latest thread as well.)

        Comment by Russ — March 20, 2011 @ 3:24 pm

      • Jefferson was both a hypocrite and a pragmatist regarding slavery (my summary was “deeply flawed,” but I’ll be more specific). A hypocrite because he both opposed slavery philosophically and yet held slaves. A pragmatist because he both opposed slavery (but for his own!) philosophically and yet felt that the issue was too contentious to resolve during his era. So, he turned a blind eye to the issue (but for his own, where they were right in front of him!). Having said all that, it’s telling that many prominent African-American classical liberals – Walter Williams, Thomas Sowell, Clarence Thomas, and I could go on and on – give Jefferson a pass on this issue as a “man of his times and circumstances.” Rightly or wrongly…

        As I’m sure you’re aware, the three-fifths clause was not a measurement of human worth; it was an attempt to reduce the number of pro-slavery proponents in Congress. By including only three-fifths of the total numbers of slaves into the congressional calculations, Southern states were actually being denied additional pro-slavery representatives in Congress. As you’re also aware, the other sections you cited were concessions that the anti-slavery Founders gave to the pro-slavery Founders in order to get the Constitution ratified (it’s called “compromise” – something that was necessary at the time). Slavery had existed for over two hundred years in America prior to the Constitution. To expect it to be eradicated at the time of the Constitution is a bit much. With the passage of more time, and Lincoln’s influence, it finally gone done.

        Had you been born a caucasion in Mississippi during the 1920s you’d likely have been a racist; a product of your time and circumstances. That’s not an excuse so much as a reality. Likewise, regarding the Founders. Personally, I don’t (nor do most folks – including many African-Americans) discount all of the Founders’ principles simply because they were vexed by the issue of slavery. But, that’s just me.

        But the real difference between our views is summed up your comment that, “I’m not interested in playing stupid who’s-worse games.” You see, in my view, the game of “who’s worse” is not only NOT “stupid”, it’s the ONLY game in town. There is no Utopia, as you believe. There are only bad systems to choose from (back to the nature of flawed humans) and we simply try to choose the least bad option. Humans have an enormous capacity for compassion and reason; they also have an enormous capacity for pettiness, greed, envy and irrationality (among other things). Which is why your Utopia will never come about. And why the “who’s worse” game – which you deem “stupid” – is so important. And why I think noting that Marx’s progeny have fared far worse than those of Jefferson and the Founders (with respect to improving the human condition on this planet) is important. We can agree to disagree.

        While “all hierarchical systems are proven to be immoral” in YOUR eyes, the fact remains that humans like hierarchies! While most humans have an inherent desire for some level of freedom, clearly many of them also, on some level, like to be told what to do. A certain degree of freedom is objectionable to many folks. That’s why for every entrepreneur in this country there are 25 people who just want to punch the clock and be told what to do (and there’s nothing wrong with that). Consequently, on this issue, I think you have a profound misunderstanding of human nature, which leads to an equally profound misunderstanding of where humanity is likely headed. But, on that count, I’ll have to acknowledge my ignorance – I have no idea where we’re headed. Your crystal ball must be of higher quality than my own.

        But, in any case, we’ll see how it all turns out. The larger issue is that you have a blogging hobby that you enjoy.

        Comment by Hu Flung Pu — March 21, 2011 @ 1:04 pm

      • Hu, I told you. I don’t believe in Utopia. Only you do, or pretend to.

        Now are you here to fight for democracy or not?

        Comment by Russ — March 21, 2011 @ 7:37 pm

      • Your vision looks awfully Utopian to me. And I’d bet a fair amount of money that you’ve heard it from others before. But we can agree to disagree on that issue.

        My vision – a choice of “least-bad options” (my own words)… how can you possibly view that as Utopian?

        I think you’re the only person on Earth who would paint my views as Utopian; in fact, on the contrary, most would probably find my somewhat cynical pragmatism downright dystopian.

        But, hey, it’s your blog. You’re going to believe what you want to believe.

        Comment by Hu Flung Pu — March 21, 2011 @ 7:57 pm

      • Do you believe in appeasement of fascism or not? That’s where we are now.

        Comment by Russ — March 21, 2011 @ 8:07 pm

      • I’m reasonably content with the general outline of the system we have in place, although if I had the power to do so I’d make some pretty substantial changes, particularly in the area of income inequality, which I think is at the root of many of our current problems here in the U.S. I won’t go into all of the other things I’d like changed because it’s a reasonably long list and I don’t have the patience. But, again, I’m reasonably content with what we have – but there are a number of things I’d like to tweak. But I’m not naive enough to believe that I’m ever going to have my way where these issues are concerned.

        So, you will say that our current system is fascist and will want to debate the definition of fascism in the context of our system, and sophistry will abound and… I just won’t care enough to debate.

        So, let me take a short cut: If you would like to label me a fascist for my beliefs, then by all means do so. I have no problem with that. You see, it’s mind over matter: I don’t mind because you don’t matter (in the larger scheme of things). I, also, don’t matter – to be clear. The difference between us being that you mistakenly believe that you do matter; this blog and its earnest content being Exhibit A in support of my view.

        Comment by Hu Flung Pu — March 21, 2011 @ 8:27 pm

      • I’m not debating, Hu. I already gave my precise definition of fascism.


        Comment by Russ — March 22, 2011 @ 8:56 am

  6. Hu, I’ve spent 30 years of my life educating the underprivileged in circumstances most would not endure, so my qualifications as a humanist are modest but not negligible. I’ve never taken corporate money, so I’m quite poor but je ne regrette rien.

    Power is what many seek, and I agree with you that every power-seeker produces corruption in some form. I don’t find our founders more to be followed than many thinkers from across the spectrum.

    Influence is different, in that to seek influence through the dissemination of ideas one is convinced will help make life better for the average person, can be an activity free from corruption. I would like to influence the course of history. Does that sound arrogant? All it means is that by example and by what I write and speak, I’d like to be one little part of an influence toward a more just and sustainable life for humans.

    Recently I’ve realized this is the one necessity in my life. I have no idea yet how I’m going to put this into a new form of action apart from my long-time activism, the channels of which now seem outworn. I’m interested to see what Russ is proposing. His writing influences me.

    Comment by Janice — March 21, 2011 @ 4:01 pm

    • Hi Janice. Did you see my posts about community presentations which could explain Fraudclosures?



      I don’t think I’ll be able to carry out this project myself this year, because I’m already committed to several other projects. But I’m willing to talk more about what this project might entail, and I have lots of links saved up.

      Comment by Russ — March 21, 2011 @ 7:46 pm

    • Janice, I think humans are inherently selfish. But that selfishness often manifests itself in counterintuitive ways. I don’t want to get into a debate about the nature of altruism, but I suspect that you get immense “psychic income” from educating the underpriviledged, which is great (just as I get psychic income working with the kids at El Faro). That you’ve never taken corporate money… well, that’s been your choice. I have no opinion on that whatsoever.

      If it makes you feel better to think that you’re influencing the course of history in some small manner, then wonderful. Again, more psychic income. If it increases your contentment, then so be it.

      If, however – and you didn’t suggest this, by the way – it’s important to you that you have some meaningful influence on history, well that would be arrogant… and I would bet against you, just as I would bet against 1,000 people with the same goal… and I’d be right 999 times. But, again, that doesn’t appear to be your position… so you’re not setting yourself up for disappointment.

      Comment by Hu Flung Pu — March 21, 2011 @ 8:09 pm

  7. Russ, I’ll take a look at the posts you reference, thanks.

    Hu, can anyone think in this spring of 2011 that it is possible to be a neutral, semi-satisfied observer of society?

    I look at the Japanese standing with babies in their arms and wonder what they are thinking. Surely they are not thinking that all the nuclear protestors over the years were “too earnest” or just selfishly getting kicks out of playing altruist.

    Comment by janice — March 26, 2011 @ 2:24 am

    • I hope you find them useful, Janice. I’m still taking a break here, but I’ll be back writing later this week.

      Comment by Russ — March 27, 2011 @ 6:12 am

  8. Hi Russ,

    I thought you might be interested in Wm K Black’s current article at New Economics Perspectives:


    This article seems to fit in with your concerns about corporate corruption and the decline of the judicial system in the USA. I had not been aware of the timeliness (sic) of Powell’s underhanded memo:

    ‘Confidential Memorandum:
    Attack on the American Free Enterprise System

    DATE: August 23, 1971
    TO: Mr. Eugene B. Sydnor, Jr., Chairman, Education Committee, U.S. Chamber of Commerce
    FROM: Lewis F. Powell, Jr.


    Comment by William Wilson — April 27, 2011 @ 4:34 pm

    • Thanks, William. I’ll check it out.

      Powell’s strategy memo was one of the seminal documents of neoliberalism.

      Comment by Russ — April 27, 2011 @ 5:18 pm

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