"We warned the president -- don't ever, ever agree with the Republicans,"

[Fantastic Anarchist]

195. Also want to add:

AUSTRIAN AND MARXIST THEORIES OF
MONOPOLY-CAPITAL
A Mutualist Synthesis

http://www.mutualist.org/id10.html


INTRODUCTION
My starting point for this article is a
ground-breaking study by Joseph
Stromberg. In "The Role of State
Monopoly Capitalism in the
American Empire ," (1) Stromberg
provides an insightful Austrian analysis
of state capitalist cartelization as the
cause of crises of overproduction and
surplus capital. In the course of his
argument, he makes reference to
Progressive/Revisionist and (to a lesser
extent) Marxist theories of imperialism,
and analyzes their parallels with the
Austrian view.
Although the state capitalism of the
twentieth century (as opposed to the
earlier misnamed "laissez faire" variant,
in which the statist character of the
system was largely disguised as a
"neutral" legal framework) had its roots
in the mid-nineteenth century, it
received great impetus as an elite
ideology during the depression of the
1890s. From that time on, the problems
of overproduction and surplus capital,
the danger of domestic class warfare,
and the need for the state to solve
them, figured large in the perception of
the corporate elite. The shift in elite
consensus in the 1890s (toward
corporate liberalism and foreign
expansion) was as profound as that of
the 1970s, when reaction to wildcat
strikes, the "crisis of governability," and
the looming "capital shortage" led the
power elite to abandon corporate
liberalism in favor of neo-liberalism.
But as Stromberg argues, the American
ruling class was wrong in seeing the
crises of overproduction and surplus
capital as "natural or inevitable
outgrowths of a market society." (2)
They were, rather, the effects of
regulatory cartelization of the economy
by state capitalist policies.
The effects of the state's subsidies and
regulations are 1) to encourage creation
of production facilities on such a large
scale that they are not viable in a free
market, and cannot dispose of their full
product domestically; 2) to promote
monopoly prices above market clearing
levels; and 3) to set up market entry
barriers and put new or smaller firms at
a competitive disadvantage, so as to
deny adequate domestic outlets for
investment capital. The result is a crisis
of overproduction and surplus capital,
and a spiraling process of increasing
statism as politically connected
corporate interests act through the state
to resolve the crisis.
Although I cannot praise Stomberg
enough for this contribution, which I
use as a starting-point, I diverge from
his analysis in several ways. Stromberg,
himself a Rothbardian anarcho-capitalist
affiliated with the Mises Institute, relies
mainly on Schumpeter's analysis of
"export-dependent monopoly
capitalism," as read through a Misean/
Rothbardian lens. Secondarily, he relies
on "corporate liberal" historians like
Williams, Kolko and Weinstein. To the
extent that he refers to Marxist analyses
of monopoly capital, it is mainly in
passing, if not utterly dismissive. But
such theorists (especially Baran and
Sweezy of the Monthly Review group,
James O'Connor, and Paul Mattick) have
parallelled his own Austrian analysis in
interesting ways, and have provided
unique insights that are complementary
to the Austrian position.
Starting with Stromberg's article as my
point of departure, I will integrate both
his and these other analyses into my
own mutualist framework. More
importantly, as a mutualist, I go much
further than Stromberg and the
Austrians in dissociating the present
corporate system from a genuine free
market. Following the economic
arguments of Benjamin Tucker and
other mutualists, I distinguish capitalism
from a genuine free market, and treat
the state capitalism of the twentieth
century as the natural outgrowth of a
system which was statist from its very
beginning.
THE RISE OF STATE CAPITALISM
Stromberg's argument is based on
Murray Rothbard's Austrian theory of
regulatory cartelization. Economists of
the Austrian school, especially Ludwig
von Mises and his disciple Rothbard,
have taken a view of state capitalism in
many respects resembling that of the
New Left. That is, both groups portray it
as a movement of large-scale, organized
capital to obtain its profits through state
intervention into the economy, although
the regulations entailed in this project
are usually sold to the public as
"progressive" restraints on big business.
This parallelism between the analyses of
the New Left and the libertarian Right
was capitalized upon by Rothbard in his
own overtures to the Left. In such
projects as his journal Left and Right ,
and in the anthology A New History of
Leviathan (coedited with New Leftist
Ronald Radosh), he sought an alliance
of the libertarian Left and Right against
the corporate state.
Rothbard treated the "war collectivism"
of World War I as a prototype for
twentieth century state capitalism. He
described it as
a new order marked by strong
government, and extensive and
pervasive government intervention
and planning, for the purpose of
providing a network of subsidies and
monopolistic privileges to business,
and especially to large business,
interests. In particular, the economy
could be cartelized under the aegis
of government, with prices raised
and production fixed and restricted,
in the classic pattern of monopoly;
and military and other government
contracts could be channeled into
the hands of favored corporate
producers. Labor, which had been
becoming increasingly
rambunctious, could be tamed and
bridled into the service of this new,
state monopoly-capitalist order,
through the device of promoting a
suitably cooperative trade unionism,
and by bringing the willing union
leaders into the planning system as
junior partners. (3)
This view of state capitalism, shared by
New Leftists and Austrians, flies in the
face of the dominant American
ideological framework. Before we can
analyze the rise of statist monopoly
capitalism in the twentieth century, we
must rid ourselves of this pernicious
conventional wisdom, common to
mainstream left and right. Both
mainline "conservatives" and "liberals"
share the same mirror-imaged view of
the world (but with "good guys" and
"bad guys" reversed), in which the
growth of the welfare and regulatory
state reflected a desire to restrain the
power of big business. According to this
commonly accepted version of history,
the Progressive and New Deal programs
were forced on corporate interests from
outside, and against their will. In this
picture of the world, big government is
a populist "countervailing power"
against the "economic royalists." This
picture of the world is shared by
Randroids and Chicago boys on the
right, who fulminate against "looting" by
"anti-capitalist" collectivists; and by NPR
liberals who confuse the New Deal with
the Second Advent. It is the official
ideology of the publick skool
establishment, whose history texts
recount heroic legends of "trust buster"
TR combating the "malefactors of great
wealth," and Upton Sinclair's crusade
against the meat packers. It is
expressed in almost identical terms in
right-wing home school texts by
Clarence Carson and the like, who
bemoan the defeat of business at the
hands of the collectivist state.
The conventional understanding of
government regulation was succinctly
stated by Arthur Schlesinger, Jr., the
foremost spokesman for corporate
liberalism: " Liberalism in America has
ordinarily been the movement on
the part of the other sections of
society to restrain the power of the
business community." (4) Mainstream
liberals and conservatives may disagree
on who the "bad guy" is in this
scenario, but they are largely in
agreement on the anti-business
motivation. For example, Theodore
Levitt of the Harvard Business Review
lamented in 1968: "Business has not
really won or had its way in
connection with even a single piece
of proposed regulatory or social
legislation in the last three-quarters
of a century. " (5)
The problem with these conventional
assessments is that they are an almost
exact reverse of the truth. The New Left
has produced massive amounts of
evidence to the contrary, virtually
demolishing the official version of
American history. (The problem, as in
most cases of "paradigm shift," is that
the consensus reality doesn't know it's
dead yet). Scholars like James
Weinstein, Gabriel Kolko and William
Appleman Williams, in their historical
analyses of "corporate liberalism," have
demonstrated that the main forces
behind both Progressive and New Deal
"reforms" were powerful corporate
interests. To the extent that big
business protested the New Deal in fact,
it was a case of Brer Rabbit's plea not to
fling him in the briar patch.

<snip, more at link>