The Necessary Alliance of Social Welfare and State Corporatism.

The cooperation of political monopoly industry and progressive welfare reform is a fundamental componet of the corporate state.
by Gene DeNardo
(libertarian)
Saturday, November 7, 2009

Perhaps, the most confusing aspect of current political posturing is identifying and comprehending the formidable alliance of the "progressive" left and the "conservative" right. While they may appear bitterly at odds, they are in ultimate agreement. They may "visualize" different ends, but the means that they employ lead to an identical destination.

Even the least politically astute observer recognizes the need of both the right and left to employ a "big" and powerful state to fulfill their objectives. A less obvious point of consensus between their supposed antagonistic worldviews is how they both "view" the state and the markets.

Both the left and right view the state as that entity which restrains and controls corporate business interests. While the conservative faction sees regulation and intervention as a negative activity, the removal of which they believe would bring prosperity and wealth through greater profits, the progressive faction sees the state as a necessary agent to "reign in" corporate power, mandatory for the protection and well being of the average working citizen.

The right harks back to the nineteenth century as the heyday of the free market and laisse faire capitalism while the left sees this period as the realm of the "robber baron", when business criminals were free to fleece and extort the public. Conservatives view the prosperity of this period as proof that wealth is inversely proportional to government intervention. The Liberal sees this era they also perceive as the "free market", as witness to the need for the "protective" measures of big government to control the tendency of big business to "exploit" the weaker element of society for their own benefit.   

That both sides are in agreement that the nineteenth century was a time of market freedom and lack of government intervention borders on the fantastic. With very little "unearthing" of early events in the colonization of our nation, it becomes evident that we violently severed our tie from Mother England in order to further the cause of the state economy, not the free market. State economic intervention has always been a factor, if not a basic fundamental of our markets.

Many of the founding fathers, including George Washington, were deeply involved in state privileged land speculation long before the signing of the Constitution. "Grants" of land, many exceeding 100,000 acres in size were "bestowed" upon the early elites directly from the decree of the King through the "governors" of the colonies. These grants were partitioned and sold at great profits [hard not to profit on land that is granted!] to the early settlers, subsequently these privileged elites rapidly amassed great fortunes.

In fact, it was a declaration by the King in 1736 to limit this land scam to the Atlantic Drainage that may have precipitated the revolution more than any desire to no longer be imperial subjects. It was this wish to control and continue profit creation in collusion with the state, which the forefathers may have desired more than "freedom" for all.

With a large percentage of the settlers, some estimates of a third to a half, owing their transport to the new world to slavery or indentured servitude, it is unlikely the founding fathers pictured a new beginning, but rather a continuation of old policies of state granted wealth under new leadership with new beneficiaries and the abundant profit opportunities of the new land and plenty of free labor.

This seed of state capitalism had been planted and it grew quickly to massive proportions. The soil of the new land was a fertile bed for the political distribution of economic advantage. The endless early state development of infrastructure and shipping subsidy proceeded with the land grants and government funded construction of the railroads. No economist who possesses even a hint of his faculties would insinuate that the iron horse was a product of the free market. Harbors, shipping lanes and the United States Navy followed suit. We were determined to best our former masters at their own game with state domination of the sea and control of shipping and trade.

The government gladly immersed itself in the profitable waters of social capitalism to accomplish this task. Industrial imperialism was well on its way, expanding both by land and sea. Back to the point, would any of these and other similar conditions fulfill the structural requirements for what both progressives and conservatives refer to as the "free market" or "laissez faire capitalism"?

 The two factions had however, reached different conclusions as to the outcome of this proclaimed economic "freedom"; conservatives saw only the many "benefits", while the progressive saw massive unhampered exploitation of the masses.

This misunderstanding by progressives of the origin of economic privilege and the corresponding permission to exploit labor and resource led them to turn to the same entity that enabled this situation in hopes that it would provide a remedy; the state. At the dawn of the twentieth century, social liberals began to adopt the idea that the state could monitor, regulate and control the beast that state capitalism had become and provide the necessary ingredients that would allow the worker to live a productive and satisfying life.

It is falsely assumed that this idea is rooted in traditional socialism. The two pillars of historical socialism are revolution and evolution: Marx’s violent reform and confiscation of the state with its sequential transformation into a tool of the proletariat along with its anarchical offshoots and the free association left’s natural evolution of the human to a degree where the use of force and government become remnants of the past, freeing the worker and society from its bondage. Both insights perceive the existing state as the root cause of the problem, not the solution.

Instead, this new social thought had its origin in Fabian ideology. The worker was incapable of fighting his own battle and must be led by more educated and enlightened intellectual elites who could work in unison with the state to provide what the worker needed, but was incapable of providing for himself.

The state would be a powerful ally in this endeavor. The left had come to the same conclusion the political industrialist had reached many decades before; the power and force of the state was to be used and reinforced, not to be denied or fought. There would no longer be a "worker’s movement", instead the worker would be "moved".  

The political industrialist saw the worker as a "little man", who only posed a problem when organizing, refusing to work or demanding more than he deserved. With more recurrent working uprisings and social turmoil becoming common, they quickly concluded that it was not only necessary to have the backing of the state to provide infrastructure and subsidy to encourage profit taking, it was now necessary to use the power of the state to control and reign in the worker when he got feisty and rambuncous. The "little man" was growing up. It had become necessary to apply the force of the state directly on the worker’s physical body. The long term prospects for this action were not good. An injured or dead worker is not a good worker and true economic fascism would be much too restrictive on industry.  

Competition had also become an issue, threatening profit and primarily benefiting the consumer. The political industrialist would also soon find that the regulations and restrictions that posed as consumer or worker protection could greatly reduce competition and embed market monopoly for those who could afford to be regulated, eliminating those who could not.

The largest initial demonstration of this coordinated system occurred during the Great Depression with the implementation of the "New Deal". The country was out of work and hungry, many were starving. In spite of this, food was being left to rot in the fields or destroyed outright, usually at the dictates of the government, under the assumption that there was no money to purchase it. The nation was on the verge of violent revolution and it is unlikely that if a revolt actually occurred, the end result would have been the continuation of the current political monopoly economy. With little food on the table, radical change was in the air and change is usually detrimental to the status quo.  

Roosevelt’s early relief programs addressed the basic needs of many hungry citizens. Through the state, massive numbers of the needy were put on the dole and given something to do that resembled work. Government checks kept them alive and subdued. What Roosevelt did was supply through the government what the monopoly capital industry in collusion with the same government, had failed to provide; a minimum level of sustenance. And, he didn’t even require that children of relief be forced into servitude, as the mother country had done with its historical relief programs!

The industrialist took his tongue lashings from the chief, knowing that social welfare was the necessary tradeoff for the similar government checks industry was receiving. Without the social subsidy, industry would never again receive the advantage of the state corporate alliance. There was the definite possibility that there might be no state, at least in its present form.

Without acknowledging how much they really had in common, these two opposing interests had stumbled upon an agreeable compromise: the monopoly corporate state would be accepted by both sides in exchange for the creation of the welfare and regulatory state. In this way, labor organization could be compromised and brought over to the same table that both the progressive and the conservative were eating off; that of the state controlled political economy.

To do this, it was eventually necessary to create a new class of worker; the privileged laborer. He must be separated from his brethren in both living conditions and ideology. His wages and benefits must be suitable and warranted, while nothing should be for certain for the "outclass". Those left out of the mix, must be perceived as lazy and slothful and receive little sympathy from the new worker. And, with the simplification and "dumbing down" of work tasks, there was always the possibility that one could lose their livelihood and security to one of these misfits. That certainly didn’t hurt the cause. Divide and conquer is much more effective than pummeling the masses, especially if you want them to show up for work on monday. 

The great slight of hand, was to accomplish this not only with the worker’s unabashed approval, but with his own pocketbook or at least that of the taxpayer. He must accept not his own labor, but the integration of his labor into the corporate monopoly state as his livelihood.

This was done with a continuous assault of propaganda, introducing program after program under false guises. Social Security, the formal term for "old age pensions", championed by the Republicans running in the 1934 elections and later instituted by Roosevelt, was advertised as a "social insurance program", while its legitimacy as a "tax" {not a fund} was fought and upheld by federal lawyers in the Supreme Court. Payments automatically deducted from wage earner’s checks were proclaimed "premiums", while the same were quietly legitimized as "tax withdrawals" and filed under IRS guidelines.

As it was also with Medicare, a health service for the "retired" worker no longer able to attend to his productive daily routine. The state would provide care for his aging body. And, those caught between the demands for their employment would find a little to tide them over with the unemployment "insurance" program. Those injured on the job would find a government "disability" check in the mailbox.

It would seem the progressive had been successful in furthering his view of the "new world" and the conservative denied his wishes, but it that really the case?

We cannot deny the desire of humans to have health whether working or not, to be able to afford a little of this and that after one’s productive usefulness has come and gone. One should be able to survive the "slow" times in your field of employment or not to end up on the street due to a work injury. But, who would bear the cost of this? Where does the burden naturally fall?

As there is nowhere else to draw value from, it can only come from the product. The worker, of course, would never deny himself this portion of the product given the choice and the freedom, as any human wouldn’t. The employer’s choice, if the ball was in his court, was either to grant the employee his wishes or to deny that portion of the product and keep the change.  

In a system of free economics, by definition that which benefits many would be chosen by the many. That is the nature of preference and choice in the absence of force. The cooperation between the willing and better compensated worker and the more generous employer would ensure the survival of both. The struggle would never have arisen. It is force and lack of choice which initiates counterforce force.

The great "laissez faire" capitalism of the nineteenth century, that both the progressive and conservative claim to have witnessed, was simply a period of unrestrained state privilege. Choice was not an option. Strikes and bloody worker riots were not a case of the worker trying to claim more than "his" share. Workers cannot absorb more than their share of the product without loss of their employment. The product can never "exceed" its own value and find a market. Wouldn’t the theory of marginal value confirm this, let alone the labor theory?

The "accomplishments" of the progressive movement fulfilled the ultimate latent expectations of the conservative; it systematically and emphatically ended the labor movement. The Fabian strategy terminated any true socialist tendencies growing within the distressed Capital economy. The worker would no longer be motivated to provide or demand for himself from his employer what was provided through the welfare state. He would become a compliant and for the most part, satiated cog in the corporate industrial machine, all made possible by state supplements originating from his own wallet.  

Monopoly industry was no longer required to compete among themselves with labor welfare and wage. The state mandated and supplied the minimum standard, including unemployment payments to subsidize the inefficiency of the controlled system, eliminating much pesky and profit consuming work stoppage, negotiation and litigation. Real strikes and lockouts soon became a thing of the past, delegated and defined instead by agreement and small concession. The union boss now led the toast to prosperity, clicking his beer bottle lightly against management’s martini cocktail glass.

Together, the progressive and conservative forces had unified and firmly established the monopoly political economy. Current events, bailouts, unemployment extensions, mandatory health insurance, federal underwriting of the banking sector is simply another act in their play.  

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©2009 Gene DeNardo, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Saturday, November 7, 2009
Last modified: Saturday, November 7, 2009

The views expressed in this article are those of Gene DeNardo only and do not represent the views of Nolan Chart, LLC or its affiliates. Gene DeNardo is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.

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