Evolution of the Political Economy

The last transformative crisis of capitalism was a punctuated evolutionary event that called into question the system of a bifurcated power structure of public and private domains discussed in previous articles. After The Great Depression, the power elite admitted contemplating whether the power structure should be modeled as fascist or communist. The bifurcation of the power structure was a threat to elitist power because it was too unstable and was providing empirical confirmation of the Marxist critique of classical capitalism.

The elite could not very well adopt a model we had fought a world war to prevent, and communism, while it would allow the elite to sytematically keep its power by maintaining an elitist administrative model, is antithetical to the Hamiltonian model of a ruling "class" society of private power with the force and legitimacy of public authority (government). Since the Hamiltonian model was too unstable, it would have to be modified (evolved) to survive. The conservative "principle" of strict bifurcation of the power structure that produces "great" wealth, and the legal authority to accumulate that wealth, causing a "great" depression, mutated into a "mixed" Keynesian economy.

Marx predicted this evolution of capitalism and called it "anti-socialist socialism." While the "decision" (the economic determinism) to adopt a more public/private mix of power was to prevent confirming Marxist hypotheses, all it did was confirm the critique of classical economic theory that the accumulation and consolidation of wealth and power will result in crises that evolves the power structure into an evermore equitable distribution to save itself. The power elite hang on to the vestigial emblems and rhetoric of consolidated power as long as possible.

The conservative rhetoric we hear now, that society is "naturally" ruled from the center-right, is but a desperate vestige of an empirical failure in an evermore scientifically cognizant society. There is really very little the conservative element can do in the face of economic determinism. We can continue with regressive (deflationary) burdens to publicly finance Keynesian policies and programs to validate the Hamiltonian model of power as application of the general welfare, like the SCHIP legislation, for example, but as we have seen, kick the systemic risk out the front door, it just comes in the back; and with every punctuated event toward a more pluralistic power structure, each recession is accompanied with a higher level of social expectation so that, while the detriment is monetized, it still "feels" like The Great Depression.

Financial markets will continue to be volatile. Equities will dip to oversold levels till the professionals have shook out and consolidated as much equity share as possible...you know the old saw, "the market can wait longer than you have money." This is where the zero-sum plays in the macro-economic cycle, where the mainstream economists falsely assure small investors that the lost value is not being consolidated. The bear market will end, and the recovery phase of the macro cycle begins, when the professionals are largely buying and selling to themselves.

Small investors will panic-out if not sell out of necessity. The wealthiest among us (the power elite of the Hamiltonian model) will consolidate those shares and sell them back on the uptick of the business cycle to small investors that, among other things, have to pay a more significant tax burden by a function of the size of their income (this is the reserve--the surplused value--used to buy, or consolidate, the wealth in a state of distress and an indirect means of accomplishing a zero-sum accumulation). The value of a regressive tax burden, including the burden of a flat tax, is magnified by the element of crisis. The false argument that there is no zero-sum loss of asset value is easily made by economists by ignoring the full mechanics of the macro systematic cycle. That is what they are educated, if not paid, to do.

Falsely arguing a non-zero-sum accumulation of wealth, and power, is an easy con because the sum lost is gained on the uptick of the business cycle and not at the time of the distressed value, the crisis, where the victim (the zero-sum loser) is experiencing the deflation of asset value. Ingenius as this system of expropriating value may be, it is not sustainable because, over time, the distribution of value is so strikingly inequitable that not only does it cause crisis, but as the distribution tends to become incrementally more equitable, the members of cafe society appear increasingly clownish and the compensation for it to be intolerably absurd.

The army of MBA's that have been graduated over the past twenty years to administer the means that finance the incomes of cafe society become the scorn of non-elite society. They will have to look to more pluralistic means to satisfy their dreams of success, unless of course we retrench to accepting the false efficiency of "bigger is better" compensated by an organized means of "too big to fail," condemning ourselves to an unneccessary farce of cyclical crisis in which we reward failure with success.

Arguing the value of rewarding success is the last vestige of conservative rhetoric to persuade us that the natural progress of a more pluralistic society should be resisted because it leads to the evil, alternative "ism" to capitalism. It is an argument that masquerades ideology as intelligence, pressing for adherence to principles that are but the passe' rationalism of 18th Century utilitarianism evolved into the "isms" (the unempirical belief systems) of modern ideology.

While 18th Century utilitarianism motivated the production of great wealth, it is now an argumentative absurdity that lacks the empirical truth of daily modern life. We observe failure being lavishly rewarded with success; and when the non-elite lose their jobs and their savings as a consequence of the failure-rewarded-as-success, it is absurdly argued as a non-zero-sum economic expansion of the pie.

Calculating economic growth liquidated into negative growth, like we are experiencing now, as the general welfare, or a "collective" gain produced by an inequitable distribution of wealth and power, the conservative utilitarian argument has evolved into complete absurdity. The productive "utility" of the argument is that we emerge collectively stronger as non-elites must work harder to achieve the measure of success that, by definition, cannot be collectively had. The non-elite must sacrifice to achieve the reward of "success" in zero-sum so that the only way to share in success is for someone to be unsuccessful, or a system condemned to a struggle, a conflict, of a change of elites. While it may motivate a productively innovative capacity, it does not promote a peaceful means to prosperity. A moral existence becomes secondary to the struggle. The Nietzche-like "will to power" becomes the dominant existential value, or the moral imperative beyond what is good and what is evil. The moral imperative is, then, confirmed to be the interest of the self, and the powerful, then, have achieved power with a moral and, thus, legitimate collective security of what we all ultimately strive to achieve as individuals.

Where the adherence to passe' conservative principles lacks the intellectual capacity to recognize and allow for the natural evolution of a more pluralistic structure of power, it is full of self-interest, which forms the fallacious composition of the conservative argument: that the welfare of the elite (ensuring the success of the individual) is the general welfare (ensuring the success of the collective). The argument is defeated by the very definition of the elements that compose it: the elite by definition are successful by the non-success of others (a zero-sum). This is also where conservatives discredit the operation of a free-market mechanism that allows for a peaceful and prosperous evolution of pluralistic society.

Defeating the pluralistic, democratic, mechanism of free-market economics while maintaining its moral and collective legitimacy is an elegant success of the capitalist model to consolidate power and keep it. Success in the free market is defined by defeating its operation. The accumulation of wealth that causes liquidity crisis is the reward of that success and cyclically causing the crisis ensures its consolidation into a zero-sum over time. Pluralizing the accumulated power of this freely acquired success by an intervention of the public sector (government) to ensure the operation of the free-market mechanism is regarded as a threat to freely pursue the rewards of success by denying the full value--the full power--of it. Government, therefore, as it was in the 18th Century, can only be regarded as evil unless it operates to keep the power privately consolidated for the public (collective) good (the Hamiltonian model). The communist model of government operates with the same utility of consolidated power but without the distinction between a public and private sector which is becoming evermore mixed whether capitalist or communist. The contradiction, and the practical organizational convergence, is readily apparent.

The practical evolution of mixing what is public and private to maintain a consolidated model of accumulated power is not necessarily an improvement. Progress is not always linear.

The businessperson has always tried to defeat the free market out of self-interest, and where the free market obtained, self-interest has always been verifiably checked in the collective interest, or for the general welfare.

We are not doomed to the determination of a natural existence. We are not merely the ineffective subjects of an economic determinism in which the convergent forces of evolving organizational technologies result in a dystopic hegemony of consolidated power and a continuous conflict to willfully ascend its structure. Whether the legitimacy of power is capitalist or communist, for the individual or the collective interest, we achieve existential satisfaction when freedom is the measure of our success.

Government that ensures a free and unconsolidated marketplace in priority operationalizes all the elements of power--what is public, what is private, the individual interest or the collective interest--into a peaceful process of pluralism. What is otherwise an eternal sea of differing opinions that forces a perpetual conflict of competing interests is rendered a peaceful progression of realizing our natural existence both individually and collectively. Rather than a fate of economic determinism, we are free both individually and collectively to determine our fate.

Just because the proponents and practitioners of consolidated capitalism falsely argue the legitimacy of free-market economics does not mean it cannot be rendered a true legitimacy with the force of public authority. The result will be a peaceful prosperity that allows for the freedom to pursue the good life rather than the dictates of the will to power beyond what is good and evil determining the fate of our natural existence.

by Griffith Lighton

March 1, 2009

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