Let's review -
Corporatism arose in the US because of the needs of the Civil War. Corporations were temporary entities until the Supreme Court decided the 14th amendment applied to companies too, making them "entities" with many of te same rights and privileges of a human being! This continued after the war, and the Federal Government began to integrate itself managerially and financially into the operation of the railroads.
Corporations had therefore the potential, from the onset, to become very powerful. Even Abraham Lincoln recognized this:
"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. ... corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
— U.S. President Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins) Ref: “The Lincoln Encyclopedia”, Archer H. Shaw (Macmillan, 1950, NY)
Adam Smith, in his famous book the Wealth of Nations, the “bible” of capitalism, was also critical of some aspects of corporate activity. He saw corporations as working to evade the laws of the market, trying to interfere with prices and controlling trade etc.
As Robbins further points out, from this ability to influence, “corporate libertarianism” emerged, which placed the rights and freedoms of corporations above that of individuals. This influence also led to cultural and economic ideologies known by numerous names such as neo-liberal, libertarian economics, market capitalism, market liberalism etc.
Some of the guiding principles of this ideology, as Robbins continues, included:
- Sustained economic growth as the way to human progress
- Free markets without government “interference” would be the most efficient and socially optimal allocation of resources
- Economic globalization would be beneficial to everyone
- Privatization removes inefficiencies of public sector
- Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts.
Corporations in and of themselves may not be a bad thing. They can be engines of positive change. But, especially when they become excessively large, and concentrated in terms of ownership of an industry and in wealth, they can also be engines for negative change, as seems to have happened. There is of course, the common concern about the drive for profit as the end goal sometimes contradicting the social good, even though it is claimed that the “invisible hand” ensures the drive for profit is also good for society. Sometimes this has surely been the case. But other times, it has not.
There is much recognized and unrecognized corporate influence in our lives. Indeed, much of western culture and increasingly, around the world, consumerism is expanding.
Corporate influence can reach various parts of societies through various means, which many other entities don’t have the ability to do, as they lack the financial resources that corporations have:
- Influence on general populations via advertising and control and influence in the mainstream media.
- Influence on public policy and over governments, as hinted to above. This can range from financing large parts of elections, to creating corporate-funded think tanks and “citizen” groups, to support from very influential political bodies such as the Trilateral Commission, the Council on Foreign Relations and the Bilderberg group, etc.
- Influence on international institutions, such as the World Trade Organization, as well as international economic and political agreements.
An explosion of new discoveries and inventions took place, causing such profound changes that some termed the results a "Second Industrial Revolution." Oil was discovered in western Pennsylvania. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. And by the dawn of the 20th century, cars were replacing carriages.
Parallel to these achievements was the development of the nation's industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Large iron mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these two important raw materials could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.
As industry grew larger, it developed mass-production methods. Frederick W. Taylor pioneered the field of scientific management in the late 19th century, carefully plotting the functions of various workers and then devising new, more efficient ways for them to do their jobs. Also fueling mass production was the increase in efficiency due to the electrification of factories from steam power to electric power. Electric line shafts and electric group drives improved efficiency through reduced energy loss, improved work environment, reduction in fire hazards and ability to reorganize factories into specialized departments. (True mass production was the inspiration of Henry Ford, who in 1913 adopted the moving assembly line, with each worker doing one simple task in the production of automobiles. In what turned out to be a farsighted action, Ford offered a very generous wage—$5 a day—to his workers, enabling many of them to buy the automobiles they made, helping the industry to expand.)
Whew! Got all that? Good!
Now let's talk about the beginnings a codified approach to state capitalism, as opposed to this scattershot stuff.
Economic Policy & World War One
Continuing integration is the name of this game. European demands for war supplies mobilized some sectors of the American economy before the United States entered World War I. Exports increased from $2.1 billion to $2.6 billion annually between 1911 and 1914 and jumped to $5.7 billion in 1916. Changes in the public sector were less dramatic. The government established the National Advisory Committee for Aeronautics, the U.S. Shipping Board, and the Council of National Defense, with an advisory commission, before 1917. But President Woodrow Wilson's policy of neutrality and the powerful peace sentiment in Congress and the rest of the country precluded systematic planning for a war economy.
The private nature of economic mobilization in the United States did not disappear after U.S. entry into the war on 6 April 1917. Throughout the spring and summer, volunteer committees of corporation executives tried to design production, transportation, and price schedules for army and navy supplies. Congress and the president, in the meantime, clashed over the nature of the government's economic policies and administrative controls, and the military services scrambled for supplies in an essentially free market. But much of the output of vital materials, such as steel and coal, had already been committed for months in advance to private and Allied purchasers.
In July 1917 the president increased the scope and power of the U.S. Shipping Board and established the War Industries Board (WIB) to regularize business-government relations. On 10 August Congress empowered the president to control food and fuel supplies and to fix a minimum price for wheat. Congress continued to yield to presidential initiatives in subsequent months, albeit reluctantly, and the War Trade Board, the Alien Property Custodian, and the Aircraft Board appeared in October. By that time, the administration had also taken the first tentative steps toward fixing prices on industrial raw materials.
Urgent Allied demands for ships and munitions, as well as transportation breakdowns in the desperate winter months of 1917–1918, touched off a much more rigorous extension of public economic controls in 1918. The president enlarged and redefined the functions of the WIB early in March and set up the National War Labor Board and the War Finance Corporation in April. The WIB's Price Fixing Committee negotiated a series of maximum prices with raw-material producers, and its Priorities Board broadened the range of restrictions on nonwar production. The military services launched a variety of internal reforms that made it easier for the board to coordinate its economic policies.
Wilson inaugurated a series of weekly meetings with his top war administrators in the spring of 1918, but the administration, and this is the main point here, never fully centralized the responsibility for economic mobilization. The WIB offered the greatest potential for such a development, but the Armistice of November 1918 came before all aspects of economic mobilization were fully integrated. Achievements varied, therefore, from one sector of the economy to another. By the time of the armistice, for instance, there were surpluses in some agricultural products and industrial raw materials, while production lagged in ships and aircraft.
The economic boom that eventually lead to the great American depression, occurred as a direct result of the war. the economic boom of the 1920s.
The boom was caused by the "re-mobbing" (sending home) of the soldiers after the war, more resources were needed and everything was in higher demand, so businesses produced more and more. However, not everyone benefited from the boom. The price of farm produce dropped as the demand was no longer as high (people had no need for cheaper goods now that their husbands were bringing in so much money from their booming businesses) in order for farmers to make up for the money they were losing, they produced more causing over-production. They were left with too much produced that they were unable to sell and could not sell it abroad because of the expensive tariff that had been put in place (The Fordney-McCumber tariff)- this happened in the 1920s towards the end of the boom as the economy began to crash. Other events occured as well but it take forever to explain. Sorry, we don't have room. Poorer people, black americans, most chinese immigrants also did not benefit. The economic boom was also social. Flappers began making bold actions (women who cut their hair short and burnt their bras) advertisement was HUGE. Fads (crazes) such as marathon dancing, public stunts such as pole-sitting, etc became a huge part of the entertainment business, along with cinemas...
----THEN THE GREAT DEPRESSION HAPPENED-----
I am not going to rehash this. Everybody knows that Roosevelt tried literally hundreds of programs, almost none worked, and real cure for it was World War Two. SO, on with the show -
During World War Two (or, as my father put it, ("WW2"), the War Production Board coordinated the nation's productive capabilities so that military priorities would be met. Converted consumer-products plants filled many military orders. Automakers built tanks and aircraft, for example, making the United States the "arsenal of democracy." In an effort to prevent rising national income and scarce consumer products to cause inflation, the newly created Office of Price Administration controlled rents on some dwellings, rationed consumer items ranging from sugar to gasoline, and otherwise tried to restrain price increases.
By the early 1940s, the United States had managed to pull itself strongly out of the Depression, largely due to World War II, but there is an ongoing, politically charged debate on whether Franklin Roosevelt's social-democratic policies had anything to do with this, and some argue that Roosevelt's policies hampered recovery, or even made the problem worse than it would have been. Recovery was also, in part, at least, due to the natural resilience of the economy; the Great Depression was the sixth depression in U.S. history. Wall Street enjoyed the longest bull run in history in this post-war period, as the stock market climbed almost uninterrupted from 1949 to 1957. The U.S. government involvement in social welfare and what Dwight Eisenhower called the "military-industrial complex" continues to this day.
But what is the "military-industrial complex"? It is the child of Generals George Marshall and Hap Arnold. These two set out to create a systemically tight integration of industrial production and military specifications for product. in order to meet wartime necessities. Industries making swords in times of war could make plowshares in times of peace, for example. However, it was not until the 19th or 20th century that military weaponry became sufficiently complicated as to require a large subset of industrial effort solely dedicated to warfare. Firearms, artillery, steamships, and later aircraft and nuclear weapons were markedly different from ancient or medieval swords -- these new weapons required years of specialized labor, as opposed to part-time effort. Furthermore, the length of time necessary to build weapons systems of high complexity and massive integration required pre-planning and construction even during times of peace; thus a portion of the economies of the great powers (and, later, the superpowers), was dedicated and maintained solely for the purpose of defense (and war). This trend of coupling some industries towards military activity gave rise to the concept of a "partnership" between the military and private enterprise. Thus, the USA deliberately developed what was originally expressed by Daniel Guérin, in his 1936 book "Fascism and Big Business", about the fascist government support to heavy industry. It can be defined as, “an informal and changing coalition of groups with vested psychological, moral, and material interests in the continuous development and maintenance of high levels of weaponry, in preservation of colonial markets and in military-strategic conceptions of internal affairs”
Six million women took jobs in manufacturing and production during the war; most were newly created temporary jobs in munitions. Some were replacing men away in the military. These working women were symbolized by the fictional character of Rosie the Riveter. After the war many women returned to household work as men returned from military service. This use of women workers during World War II paved the way for the later integration of women into the American workforce.
One step further toward true state capitalism: what is referred to by economists as national capitalism or corporate nationalism which is a political and economic philosophy that expects private enterprise to work mainly towards the national good, rather than solely for profit maximization. In a quid-pro-quo, national policies are expected to favor the large corporations, whose representatives are present in the earliest stages of drawing up legislation. Corporate goals and national ones are seen to coincide.
Wow, that was tough, but hang in there...I'll make my real point eventually... I think... someday...
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