The Compulsive Explainer

Democracy Overwhelmed

First, a basic fact:

Democracy and Capitalism are not natural allies, they are opposing forces.

This has been known for over a hundred years, when the evils of Big Business were well-known—and the government, in the persons of Teddy Roosevelt and FDR reined them in—much to the satisfaction of the general public. But then we forgot.

This is the basic point of Supercapitalism, and the title of its main chapter. When capitalism became supercapitalism it became the most powerful force on earth, and could do what it pleased—especially with the government, which it owned. Instead of the government representing the people, it represented them.

I have added a point of my own, that Robert B. Riech overlooked: Americans have become used to working in totalitarian organizations (the corporations) where they have no power, and this helplessness has carried over into their political life.

As a result, democracy has declined. And it cannot be fixed.

Role of Companies in American's Golden Age

I am still reading Supercapitalism. As I mentioned before Robert B. Reich considers the period between 1945 and 1975 to be America's not quite golden age—and I agreed. Economically is was golden, but socially it was unpleasant with Senator McCarthy (who my father approved of, except for his bad manners) and the start of the Cold War.

He refers to the book The Modern Corporation and Private Property, published in 1932. It noted that top executives of America's giant companies were not even accountable to their own shareholders and operated their companies in their own interest. The solution, the authors said, was to make these executives responsible to a broad range of interests: investors, employees, consumers, and the general public. According to him, this actually happened:

Sitting atop America's largest corporations were men who repeatedly stated that their job was to balance the needs of everyone affected by the corporation. “The job of management.” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in a 1951 address that typified what other chief executives were saying, “is to maintain an equitable and working balance among the claims of the variously affected interest groups...Fortune lectured its executive readers on their duty to maintain a broad national perspective: “To take the professional point of view, the executive must adopt a detached, reserved attitude toward the opportunities and tactics of the moment. He must become an industrial statesman.”

These business leaders could afford to be corporate statesman—acting, in their view, for the betterment of the nation rather than strictly for the benefit of their own consumers and shareholders—because the oligopolistic system allowed them the license to be statesmen. Just as they could grant their blue-collar workers generous wages and benefits without any worry that a competitor would undercut them, they could go to Washington and advocate the Marshal Plan without concern that a rival would steal away market share while their attention was elsewhere.

He finishes this chapter with these words:

Then something happened that changed everything: America and the world got on the road to supercapitalism.

Americans Stopped Taking Care of America

What happened to America? Americans are unhappy with the way America is now,  but before we rush on we ought to consider where we have been. Reasonable enough?

I am still reading Supercapitalism and the author has a number of reasons for what happened after America's Golden Age (or actually Not Quite Golden Age). 

• Globalization (where America is only one of many players)
• High mortality rate for companies (especially true in Silicon Valley)
• New technologies (semiconductors, computers, Internet, shipping containers)
• The race to the bottom, where only profits count (instead of social responsibility)
• Deregulation (loss of control by the government)
• Decline of unions (none in high-tech)
• Decline of manufacturing and rising power of financial industry (that makes nothing)

And the list could probably go on and on. But behind this is one fact: we blew it. We didn't take care of ourselves.  We can only point our fingers towards ourselves, and not towards anybody else, such as the bad, bad terrorists.

Lots of other forces (including some terrorists) rushed in to fill this vacuum.

The New Economy has Destroyed Middle-Class values

One of these values is the career. The young are no longer interested in one, and the those that have persevered, and accumulated huge college loans, are not happy with the result. They are exploited almost as badly as the factory workers were at the beginning of the Industrial Revolution. They are well-paid, by comparison, but they are only part of the machinery, which is constantly being improved. As in the Red Queen's world, they have to run to stay in one place.

They are only valued for what they can produce. As one software manager from Microsoft once told me: “They have to produce a lot of high-quality work.” She added that she had demanded that they work on Saturdays, to meet a current crisis. This is is not uncommon in the software world; they sometimes work for days at a time with no sleep, right through the holidays. As another friend told me: “The things you have to do in a startup shorten your life”. After devoting their lives to the company, they get replaced by younger blood when they can no longer keep up the pace. They can always find someone who is smarter and harder-working than they are. To put it bluntly: you gotta kiss ass and eat shit. But I see I have digressed.

I should define some terms. In the title I spoke of the new economy, one that is dominated by the financial industry instead of manufacturing. It is also devoted to a free market, with no social controls of any kind. In other words neoliberalism, but I hesitate to use that term because Americans have no idea what it means—and refuse to acknowledge its existence.

In America, we also speak of the middle-class. In Europe this is referred to in French: the bourgeoisie. Americans are uncomfortable with the term; it is too high-brow for them, and their plain ways of thinking.

I defined these terms so you could understand the following excerpts from False Dawn, by John Gray, a professor at the London School of Economics, where George Soros studied too. We like to think of George as one of our own, but he most definitely is not; he is just another shark swimming where the feeding is best—but one with keen intellectual interests.

To read the following, you will have tolerate some academic language, of the British variety. But it won't kill you. Grit your teeth, and plow on.

Amongst the human needs that free markets neglect are the needs for security and social identity that used to be met by the vocational structures of bourgeois society. A contradiction has emerged between the preconditions of an intact bourgeois civilization and the imperatives of global capitalism. The chronic insecurities of late modern capitalism, especially it most virulent free-market variants, corrode some of the central institutions and values of bourgeois life.

The most notable of these social institutions may be that of the career. In traditional bourgeois societies, most middle-class people could reasonably expect to spend their working lives in a single vocation. Few can now harbor any such hope. (Some American career councilors even recommend a career change every six years. My note.) The deeper effect of economic insecurity is to make the very idea of a career redundant.

In the lives of a working majority, an old-fashioned career in which professional seniority tracks the normal life cycle is barely a memory. The post-war trend to embourgeoisment is being reversed, and working people are being in some degree re-proletarianized.

Although de-bourgeoisification may have advanced furthest in the US, economic insecurity is increasing in nearly all the world's economies. This is partly a side-effect of global free markets, whose workings mimic Gresham's Law (which states that bad money drives out good) by making socially responsible varieties of capitalism progressively less sustainable. World-wide mobility of capital and production triggers a “race to the bottom” in which the more humane capitalist economies are compelled to deregulate and trim back taxes and welfare provisions.

Gray is saying some dynamite stuff here. It's too bad we don't read him—especially Obama's economic advisors. If they really understood him, they might really save America—instead of just pretending to.

Iran: Rafsanjani Poised to Outflank Supreme Leader Khamenei

From Eurasianet.org

A source familiar with the thinking of decision-makers in state agencies that have strong ties to Supreme Leader Ayatollah Ali Khamenei said there is a sense among hardliners that a shoe is about to drop. Ali Akbar Hashemi Rafsanjani — Iran’s savviest political operator and an arch-enemy of Ayatollah Khamenei’s — has kept out of the public spotlight since the rigged June 12 presidential election triggered the political crisis. The widespread belief is that Rafsanjani has been in the holy city of Qom, working to assemble a religious and political coalition to topple the supreme leader and President Mahmoud Ahmadinejad.
…
Ayatollah Khamenei now has a very big image problem among influential Shi’a clergymen. Over the course of the political crisis, stretching back to the days leading up to the election, Rafsanjani has succeeded in knocking the supreme leader off his pedestal by revealing Ayatollah Khamenei to be a political partisan rather than an above-the-fray spiritual leader. In other words, the supreme leader has become a divider, not a uniter.

Now that Ayatollah Khamenei has become inexorably connected to Ahmadinejad’s power grab, many clerics are coming around to the idea that the current system needs to be changed. Among those who are now believed to be arrayed against Ayatollah Khamenei is Grand Ayatollah Ali al-Sistani, the top Shi’a cleric in neighboring Iraq. Rafsanjani is known to have met with Grand Ayatollah al-Sistani’s representative in Iran, Javad Shahrestani.

A reformist website, Rooyeh, reported that Rafsanjani already had the support of nearly a majority of the Assembly of Experts, a body that constitutionally has the power to remove Ayatollah Khamenei. The report also indicated that Rafsanjani’s lobbying efforts were continuing to bring more clerics over to his side. Rafsanjani’s aim, the website added, is the establishment of a leadership council, comprising of three or more top religious leaders, to replace the institution of supreme leader. Shortly after it posted the report on Rafsanjani’s efforts to establish a new collective leadership, government officials pulled the plug on Rooyeh.
…
To a certain degree, hardliners now find themselves caught in a cycle of doom: they must crack down on protesters if they are to have any chance of retaining power, but doing so only causes more and more clerics to align against them.
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Personally, I have been wondering much the same thing. Islam believes in the rule of law: their law, of course, but still a law with some fine features. It’s about time it was applied.