The US Capitalist Elite Claim Another Stupid Prize

Removing yet another check on their own destructive greed

The most dangerous thing for an elite is to be so utterly unchallenged that they start to believe their own propaganda, dismantle the very societal bases upon which their power depends and descend into profiteering and rentiership. From 1975 onwards the US capitalist elite mounted a class war against the class compromises that they had to make during the 1930s depression (the New Deal) and after the society-wide project that was required to win WW2. They have been successful beyond their wildest dreams, destroying the regulatory limits that stopped the financial system becoming an elite corrupt casino and stopped corporations dominating their markets, while to all intents wiping out union power in the private sector. There has also been a multi-decadal drive to turn the US Supreme Court (SCOTUS) into an oligarchic star chamber that can be used to destroy any form of democratic regulation of US society.

A major fruit of this drive was the 2010 Citizen’s United SCOTUS ruling that deemed that money equalled speech through an utterly twisted reading of the US First Amendment (providing for free speech). Allowing the full domination of US politics by the donor class, and what amounts to legalized bribery. This turned back the court to the role that it had had prior to the Great Depression, a pure servant of the bosses where it had used anti-monopoly law against unions rather than the intended corporate monopolies and ruled again and again against any pro-worker legislation (to the point of Roosevelt threatening to flood SCOTUS with new progressive judges). One of the greatest hatreds of the US capitalist ruling class has been that of the US regulatory state, which has the power to pass and enforce regulations that limit corporate power. Ever since Carter in the 1970s there has been a bonfire of the regulations, “red tape” as such things are always referred to by both Republican and Democratic administrations.

But what if the power to set and enforce such regulations could be removed? A capitalist ruling class wet dream, where every such enforcement could be challenged and substantially overcome in the courts. Where every regulatory official would have to weigh the legal costs of enforcing a regulation and corporations could overwhelm the regulatory bodies with court cases. This is exactly what the SCOTUS has achieved with its latest ruling in the Loper Bright Enterprizes ruling, which removed the previous Chevron precedent where courts generally defer to regulatory agencies that are part of a democratically elected administration. As The Verge correctly states “the Supreme Court has declared war on an administrative state that touches everything from net neutrality to climate change”. One of the hallmarks of a failed state is the inability of the central state apparatus to function in its regulation of society, whether it be through extensive corruption or a lack of state power. The SCOTUS has just knee-capped the US regulatory state, substantially removing any limits on widespread corporate behaviour that is against the long-term interests US society. Such as polluting rivers, turning the internet into a private reserve, colluding to profiteer off consumers, suppliers and workers; the list is endless. To add insult to injury the SCOTUS also recently “gutted a key federal bribery statute”.

Another four years of Donald Trump as president, looking more and more a sure thing, will bring with it a new bonfire of the regulations and the replacement of any dying SCOTUS judges (because thats about the only way they leave) with fully religious-level neoliberal justices. Also, in the past few decades there has been a significant project to both place neoliberal judges across all of the US legal system and “educate” judges into a view that property rights (i.e. the rights of the capitalist ruling class) are above all other rights; the real meaning of “liberalism”. There will also most probably be a new drive to destroy the last bastion of strong US unions, the public sector unions. Adding to these negative trends will be a new level of corporate gouging at the state trough through such things as “Public Private Partnerships” (the public takes all the risks and the corporations all the profits) and the general further privatization of public services from schools to the military.

For corporations to operate effectively in generating increased social welfare they must be regulated effectively to stop them descending into monopolization and rentiership, a trend in the US that Micheal Hudson has so well identified. The state must also be able to build the institutions, such as technical universities and cross-society knowledge distribution, that support economic upgrading. A course that the German state took in the late 1800s to drive the second industrial revolution, the Scientific Industrial Revolution. In China, the Party-state operates independently of the capitalists (there is a Party-state ruling class not a capitalist one) and therefore can effectively manage the corporations to focus their energies on socially-positive activities. Recently in Russia, we can see the state being able to more and more act independently of the oligarchs - a position which will greatly aid Russia’s future development. The same relatively independent state that “managed” capitalism can be seen in the development of the “Asian Tigers” of Japan, South Korea, Taiwan, and Singapore. French development was also successful under what was termed dirigisme (where the state plays a strong directive role in the economy) until the early 1980s. Most recently, the Indonesian state has shown that ability by restricting the export of unprocessed raw materials; a move that has driven a new wave of industrialization while improving the terms of trade.

Mariana Mazzucato describes very well the role of what she calls the “Entrepreneurial State” in driving economic development and technology upgrading in the US in the post-war period. Ezra Vogel also described the central role of the state in the Asian Tigers in his classic book The Four Little Dragons: The Spread of Industrialization in East Asia. A good description of part of the central role of the state in economic growth and development:

An excellent comment on this video sums up the issue with the US so well:

The classical role of government is to tax away economic rents and use it to lower the cost of production. This is done through subsidies for such things as public infrastructure, education, and health care, not raising the cost of living and therefore the cost of labor, as with monopolistic privatization. The problem with economics as it is understood in America, is that there is no distinction between wealth production and wealth extraction. Production of goods and services speaks for itself, but monopolies and the banks (FIRE, finance, insurance, and real estate) extract what is called economic rent. The free market Adam Smith talked about is free FROM economic rent, not free FOR economic rent.

A great TED Talk from Mazzucatto, and the different between value creation and value extraction:

Left to itself the “invisible hand” which is really just a mainstream economist’s way of hiding the realities of elite power and unequal exchange, will drive socially-negative outcomes such as rent-seeking monopolies, financial speculation and corruption, and corporate collusion as much as economic development and technology upgrading. The SCOTUS ruling has now driven a stake through the heart of the already deeply-undermined regulatory state, while extensive state privatization and outright profiteering has destroyed much of the public goods that support economic development. We see this with the latest US attempts at industrial policy (e.g. the IRA Act subsidies to support EV technologies and other to support Chip technologies) which are in reality just massive state giveaways to private corporations rather than the development of core private and public goods.

The course is set for the US, fully driven by a bought and paid for political class and a bought and paid for SCOTUS (many judges of which enjoy much largesse from the capitalist class, as with Clarence Thomas’s friendship with a billionaire); courtiers who faithfully serve their owners. That course is the destruction of the power of the US by the very capitalist ruling class that depends upon that power, as that class descends into extremes of corruption and rentiership; unable to act to protect its longer-term interests. Every elite requires some level of discipline upon its actions, otherwise it becomes an increasingly self-referential, self-indulgent and self-defeating monstrosity which invites either internal revolt or external defeat. The US elite has even greatly reduced the refreshing influence of upward mobility as so much of the US education system, the US polity, and the US media industries have pulled up the mobility ladders and devolved into significant nepotism; a trend on full display in Hollywood with the nepo-babies phenomenon but also widespread in other parts of US society. The US capitalist ruling class and their more wealthy courtiers more resemble the French court of the late 1700s than a modern-day competent functioning societal elite.

China, Russia, Iran and others can only be pleased at the recent SCOTUS rulings, and the probability of a Trump presidency, both guaranteed to increase the pace of internal US decline.