Blogs > Liberty and Power > Remembering Corporate Liberalism

Feb 6, 2007

Remembering Corporate Liberalism

[cross-posted at Austro-Athenian Empire]

The main plotline of the Star Wars prequel trilogy concerns an apparent conflict between the central government (the Senate) on the one hand and a coalition of mercantile interests (the Trade Federation, the Commerce Guild, etc.) on the other. As events unfold, however, it quickly becomes obvious to the audience (though much less quickly to the protagonists) that the conflict is largely a ruse, with the leadership of the two sides (Chancellor Palpatine and Count Dooku, respectively) secretly working hand in glove.

Which isn’t to say that all is rosy between them. Each wants to be the dominant partner; witness Dooku’s failed attempt to betray Palpatine in Episode II, and Palpatine’s successful backstabbing of Dooku and his corporate allies in Episode III. Still, the partnership is stable enough to succeed in manipulating the protagonists into unwittingly undermining the very liberty they have been seeking to protect. As the pseudo-conflict escalates, there are, in the words of Episode III’s opening crawl, “heroes on both sides” – but the good guys on the two sides have been duped into fighting one another, each side grasping the evil of the other side’s leadership but not yet that of its own.

Unfortunately, this is not just science fiction.

During the first half of the 20th century, there was a widespread perception that big government and big business were fundamentally at odds. Free-market individualists generally regarded themselves as defenders of peaceful business interests against the rapacious state. Those on the left saw the same opposition though with the reverse evaluation; for them government, especially (in the U.S.) the federal government, was the champion of the common people against rapacious business interests. To be sure, the libertarians would periodically complain about businesses seeking subsidies and protectionism, and the left would periodically complain about governmental violations of civil liberties – but by and large each side saw these problems as embarrassing deviations from the mostly noble record of their favoured allies.

It hadn’t always been so. In the late 19th and very early 20th century, there was a much more widespread understanding among both leftists and free-marketers of the symbiotic relationship between state and corporate power. Just imagine telling William Graham Sumner, or Benjamin Tucker, or Emma Goldman, that the relationship between government and business is one of enmity!

But this insight seems to have gotten submerged in the triumphant advance of progressivism and social democracy. By the 1920s Sumner was dead, Tucker in voluntary exile, and Goldman deported; and former anarchists like Victor Yarros had forgotten everything they’d once known about class analysis. By the 1930s, it was possible for someone like FDR to cartelise the entire economy under a plutocratic elite and yet have his policies viewed (with admiration in some quarters, alarm in others) as an assault on the business class on behalf of workers and the downtrodden.

But in the 1960s things began to change, with the discovery, or rediscovery, of what came to be known as corporate liberalism. It’s no coincidence that this era saw the emergence of both the new left and modern libertarianism – and both movements differed from their predecessors precisely over this question. The research of new left historians like Gabriel Kolko, James Weinstein, and William Appleman Williams, and journals like Studies on the Left, revealed that the corporate elite had been both the chief beneficiaries of and the chief lobbyists for the supposedly anti-business regulations of the Progressive Era; and Murray Rothbard and his associates at the journal Left and Right and its successor Libertarian Forum eagerly brought the same message to the libertarian “right.” Free-marketers were discovering that their beloved business class, far from being Ayn Rand“s “persecuted minority,” had all along been in league with the hated state; while those on the left were simultaneously learning that their beloved liberal state, far from being the bulwark of the poor against the plutocracy, had all along been in league with the hated corporate elite.

In a famous 1965 speech, SDS president Carl Oglesby spoke for much of the new left in pointing out that the “menacing coalition of industrial and military power” and its “demand for acquiescence” against which he and his fellow radicals were organising were “creatures ... of a Government that since 1932 has considered itself to be fundamentally liberal.”

The original commitment in Vietnam was made by President Truman, a mainstream liberal. It was seconded by President Eisenhower, a moderate liberal. It was intensified by the late President Kennedy, a flaming liberal. Think of the men who now engineer that war – those who study the maps, give the commands, push the buttons, and tally the dead: Bundy, McNamara, Rusk, Lodge, Goldberg, the President himself. ... They are all liberals.

Oglesby concluded that “corporate liberalism .... performs for the corporate state a function quite like what the Church once performed for the feudal state. It seeks to justify its burdens and protect it from change.”

On the libertarian side, Rothbard was arguing in the same year that the political program of big business had always been to “fasten upon the economy a cement of subsidy, stabilization, and monopoly privilege,” and that the aim and effect of the New Deal in particular had simply been “to impose a State monopoly capitalism through the NRA, to subsidize business, banking, and agriculture through inflation and the partial expropriation of the mass of the people through lower real wage rates, and to the regulation and exploitation of labor by means of government-fixed wages and compulsory arbitration.”

Corporate liberalism functions via a façade of opposition between a purportedly progressive statocracy and a purportedly pro-market plutocracy. The con operates by co-opting potential opponents of the establishment; those who recognise that something’s amiss with the statocratic wing are lured into supporting the plutocratic wing, and vice versa. Whenever the voters grow weary of the plutocracy, they’re offered the alleged alternative of an FDR or JFK; whenever they grow weary of the statocracy, they’re offered the alleged alternative of a Reagan or Thatcher. Perhaps the balance of power shifts slightly toward one side or the other; but the system remains essentially unchanged. (Which explains, for example, why the recent much-trumpeted power shift in Congress has resulted in precious little policy change.)

Alas, just as the insights of the 19th century were largely lost by the 1920s, so the insights of the 1960s seem to have become largely lost by the 1980s. Probably Reagan indeed played a crucial role in sowing confusion once more, this time by wrapping fascism in libertarian rhetoric just as the Progressives and FDR had wrapped fascism in leftist rhetoric. In any case, many libertarians today (sometimes even professed followers of Rothbard) have gone back to thinking of business as a persecuted minority to be defended against the creeping “socialism” of the regulatory state, while many on the left (sometimes even professed anarchists, like Noam Chomsky) look to the federal government as a bulwark against so-called “laissez-faire” and indulge in nostalgia for the New Deal.

If the left/libertarian coalition of the 19th century, abortively re-attempted in the 1960s, is to be reestablished, as it should be, it is above all an understanding of the nature of corporate liberalism – its non-accidental nature, given the incentives inherent in state power – that must be revived.

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Sheldon Richman - 2/7/2007

Hear, hear! Who would have thought that the libertarian movement of the 21st century would be less sophisticated than that of the 19th? One root of the problem is the libertarian love affair with the “Founding Fathers” (Madison, especially) and the Constitution. Once that root is dug up, we may make some progress. Does no one read Nock’s Our Enemy the State anymore?

Sudha Shenoy - 2/7/2007

Interesting that American libertarians at one time thought they had to defend American companies against the US govt.

In Britain at the beginning of the 1960s liberals abhorred the CBI [Confederation of British Industry] as much as the TUC [Trades Union Congress]. Both were regarded as seekers after govt-granted special privilege. The ideal was to subject _both_ to the market.

Mark Brady - 2/7/2007

Thank you for a good defense of your choice of word, and a gentle correction of my careless etymology.

Roderick T. Long - 2/7/2007

I take the terms "statocrat" and "statocracy" from Bertrand de Jouvenel, who uses them to describe that class of persons whose power derives from their holding office (whether elected or appointed or anointed) within the apparatus of the state -- basically politicians and bureaucrats together -- as opposed to those who exercise power through influence on the state but without necessarily holding office.

Admittedly it's an ugly word, being a Latin-Greek hybrid -- but it's less ambiguous than, say, "politocracy," given the vast range of meanings that "political" has in English. At any rate, as de Jouvenel uses it (and it's been used so seldom by anyone else, so far as I know, that I think his usage may trump the dictionary) it doesn't mean exclusive state control.

Mark Brady - 2/6/2007

One minor, or perhaps not so minor, query. The word "statocracy" was new to me (and also struck me as an ugly hybrid of English and Greek) so I checked the Oxford English Dictionary online. I was informed that it means "Government or rule by the state alone, uncontrolled by ecclesiastical power" and directed to one quotation (from the 1864 edition of Chauncey A. Goodrich, ed., An American Dictionary of the English Language, citing O. A. Brownson).

Isn't there perhaps a better word than statocracy for what you're talking about? For one thing, you're not discussing the absence of ecclesiastical power. And for another, you're not discussing government or rule by the state alone but in the interests of the plutocratic elite.

Kenneth R Gregg - 2/6/2007

As you correctly perceived, "Alas, just as the insights of the 19th century were largely lost by the 1920s, so the insights of the 1960s seem to have become largely lost by the 1980s."

For the libertarian movement in the 1980's, the single most salient change was the rise of the LP. With the Koch seed money feeding the LP and the moderate libertarians taking up political action as their methodology, the practical result, even though many still proclaimed class analysis, was a denial of class analysis by participation in politics.

I saw this change in ideology at the time and realized then that it would take a generational change to get politics out of libertarian activists' system and back into libertarian class theory. With the constant and consistent failure of the LP, the waste of human and financial resources of the libertarian movement, and the growth of such institutions as the Mises Institute and the Independent Institute, I can only conclude that my "shrugging" in the 1980's was correct.

Corporate liberalism is still there, growing daily. Libertarian critiques and studies are also growing again against it. The LP deserves a quick death so that libertarianism can continue the battle!

Just a thought.
Just Ken