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How Dominant are Big US Corporations?
Originally published on Economics from the Top Down
Blair Fix
I recently had a lively Twitter debate with Jonathan Nitzan, Shimshon Bichler and Cory Doctorow1 about the future of big corporations in the United States. The debate was prompted by Doctorow’s piece ‘End of the line for Reaganomics’, which I reposted on capitalaspower.com.
Doctorow argues that we may be witnessing a sea change in the way governments treat big corporations. Since the Reagan era, the US government has taken most of the teeth out of antitrust enforcement. The reason is not well known. In fact, I’m ashamed to admit that as a trained political economist, I didn’t learn this antitrust history in grad school. I learned it from Doctorow’s blog.
In Bork we trust
The antitrust story revolves around a judge named Robert Bork, who came up with a way to defang antitrust law by changing how it was interpreted. His 1978 book The Antitrust Paradox argued that antitrust law should be interpreted narrowly in terms of ‘consumer welfare’. And ‘consumer welfare’, in turn, meant one thing: low prices.
To make an antitrust case, Bork argued that you needed to show that the offending firm had used its monopoly power to raise prices. Moreover, you needed to demonstrate that government intervention would do more good than harm. The paradox, according to Bork, was that by interfering in the ‘free market’, antitrust prosecution tended to protect inefficient firms from competition, and so led to higher prices.
From a scientific standpoint, Bork’s arguments are a flaming pile of garbage. But they are fiendishly clever ideology. Once judges were indoctrinated in the Borkian worldview, it became nearly impossible to successfully prosecute an antitrust case. The problem is simple: if a sector is monopolized, you cannot tell what the prices would be if the sector was not monopolized.
Take, for example, big tech companies like Google and Facebook, which dominate the market for online advertisements. Do these companies use their power to set prices? Absolutely. Can we tell what advertising prices would be in a ‘competitive’ market? Absolutely not.
Sure, we can speculate about these prices. We can even run models. But once we start doing that, antitrust law devolves into an obscure exercise in model building. In other words, it enters the terrain of neoclassical economics, where absurd assumptions get buried in a wall of math, and where the outcome can be tweaked to give the results you want. Whoever can hire the most model-building economists wins. When you play that game, deep-pocketed corporations are almost always victorious. And so as Bork’s ideas became widespread (in the 1980s), antitrust law all but died.
Fortunately, Doctorow notes, there are signs that things are changing. The Biden administration has put antitrust proponent Lina Khan in charge of running the FTC. Under her watch, the government has launched a major antitrust case against Facebook.
That’s the good news. The bad news is that the judiciary remains indoctrinated in the Borkian worldview. In June 2021, justice James E. Boasberg threw out the Facebook case, arguing that prosecutors had failed to provide evidence that Facebook was a monopolist. Channelling Borkian ideology, Boasberg wrote:
It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist. After all, no one who hears the title of the 2010 film “The Social Network” wonders which company it is about. Yet, whatever it may mean to the public, ‘monopoly power’ is a term of art under federal law with a precise economic meaning.
(my emphasis)What Boasberg actually means is that under federal law, ‘monopoly power’ has a precise ideological meaning that differs from the common-sense view held by the public. Hence, what seems like an obvious monopoly to the average person is, in the eyes of the law, a ‘competitive market’.
Legal setbacks aside, Doctorow remains optimistic that antitrust law is poised to regain its teeth.
A tight grip on power
Alright, that’s Doctorow’s take. Jonathan Nitzan and Shimshon Bichler then entered the Twitter debate backed by their own research on corporate power. For their part, Nitzan and Bichler are less optimistic that the US government will seriously challenge the power of big corporations.
Here’s their reasoning. By several metrics, corporate power has tracked upwards over the last 70 years. Figure 1 shows Bichler and Nitzan’s analysis of profit concentration in the United States. The blue line shows the share of profits earned by the top 100 US corporations (ranked by market capitalization). The red line shows the profit share of the top 500 US corporations. Both measures of concentration have trended upward since data began in 1950.
Figure 1: The largest US corporations’ share of total profit. Source: Bichler and Nitzan.While this trend is worrying, Bichler and Nitzan argue that it actually understates the growth of corporate power. That’s because at the same time that big corporations have become more profitably, small corporations have struggled. So relative to the average level of profit, big corporations’ grip on power has grown to astonishing levels.
Figure 2 shows this alternative measure of corporate power. The blue line compares the average profits of the top 100 US corporation (ranked by market capitalization) to the average profits of all US corporations. The red line shows the same ratio, but measures the profits of the top 500 corporations. Both metrics have increased by more than an order of magnitude since 1950.
Figure 2: Profits of top US corporations relative to the average profit of all US corporations. Source: Bichler and Nitzan.Looking at this data, Bichler and Nitzan argue that big corporations are more powerful than ever. So although the Biden administration may talk about enforcing antitrust law, Bichler and Nitzan think that the government is unlikely to put a serious dent in the power of dominant firms.
Big corporations vs. big government
Here’s where I enter the debate. I am more optimistic than Bichler and Nitzan that the US government will challenge corporate power. The reason is that the COVID crisis has forced a drastic change in government policy. Let’s have a look.
What I think is missing from Bichler and Nitzan’s analysis is government itself. Their data shows that when judged against the average company, top corporations are shockingly powerful. What this data does not show, however, is that big corporations have government under their thumb. To make the case for the corporate dominance of government, we need to analyze government behavior.
One option is to look at government policy and determine whether it is pro-big-business or not. That’s a messy job that I’ll leave for a later date.
The other option is to simply measure the size of government and see how it compares to the size of big corporations. This size gives us a sense of the tug-of-war between the public and private sector. It’s not a perfect indicator, since government spending can be channelled into private-sector coffers (that’s what the Pentagon does). Still, when the government spends money, it is using its power to shape society.
With that in mind, I’m going to compare the sales of top US corporations to the expenditure of the US federal government.2 Think of this comparison as a measure of corporate power relative to government power. If big US corporations have government under their thumb, we expect this metric to increase. And indeed it has.
Figure 3 shows trend in the United States. I’ve plotted here the ratio between the sales of the top 500 US firms (ranked by sales) and the expenditure of the US federal government. From 1950, corporate power trended upwards, as indicated by the dashed grey line.
Figure 3: Sales of the top 500 US corporations relative to expenditures of the Federal government. I’ve ranked corporations by sales, and then aggregated the sales of the 500 largest corporations. Then I divide these sales by US federal expenditures. [Sources and methods].
The steady creep of corporate power (from 1950 to 2019) elicits a feeling of inevitability. And had 2020 been a ‘normal’ year, corporate power might have continued to increase. But 2020 was not a normal year. It was the year of COVID. While there is little to love about the COVID pandemic, it did demonstrate something important: society is the way we make it.
It is our collective ethos that determines the balance of power between big corporations and government. Yes, the ethos can seem inevitable. And under ‘normal’ circumstance, it is difficult to change. That’s why for the last half century, big corporations increasingly dominated society, all the while championing the ethos of ‘free markets’. But we should not forget that an ethos can change, sometimes in a shockingly short time.
And that, I believe, is what we are witnessing in Figure 3. In a single year — 2020 — the corporate grip on power was reversed to levels not seen since 1952. We all know what happened. Faced with the need to keep people home but not have them starve, governments around the world went on spending sprees so massive that they would make JM Keynes blush.
While we can debate the effectiveness of this spending, what seems clear is that it constitutes a cataclysmic shift in our collective ethos. Talk about free-market competition was suddenly dominated by talk about social welfare. As David Graeber put it, COVID woke us from a collective dream:
[t]he crisis we just experienced was waking from a dream, a confrontation with the actual reality of human life, which is that we are a collection of fragile beings taking care of one another, and that those who do the lion’s share of this care work that keeps us alive are overtaxed, underpaid, and daily humiliated, and that a very large proportion of the population don’t do anything at all but spin fantasies, extract rents, and generally get in the way of those who are making, fixing, moving, and transporting things, or tending to the needs of other living beings.
My take, then, is that Doctorow’s optimism is justified. Yes, Bichler and Nitzan are correct that big corporations became increasingly powerful over the last half century — a period during which the public sector was beaten into submission by private power. And until 2020, the growth of corporate power looked inevitable. But it was not. The last year has shown that society is what we make it. If we want pro-social spending that shirks the doctrine of free markets, we can have it.
The last year has been surreal in so many ways. Stock markets are up. Unemployment reached levels not seen since the Great Depression. And yet the poverty rate actually fell. That’s the funny thing about giving people money. It makes them unpoor.
Moreover, widespread eviction moratoriums relieved the burden of paying rent. By so doing, they laid bare the facts of property rights. There is no ‘natural law’ that says landlords should earn money from their property. No, that stems from the human-made law of property rights. And guess what … if the government stops enforcing that law, property income vanishes.
Whether all the changes that COVID has wrought will last is anyone’s guess. And whether these changes will translate into robust antitrust policy is unknown. But I prefer to remain hopeful that pro-social change is possible.
Sources and methods
For details about Bichler and Nitzan’s analysis, see their research note: ‘Dominant capital is much more powerful than you think’.
Data for the sales of top US corporations is from COMPUSTAT, series
SALES. I rank firms by sales, and then sum the gross income of the top 500 firms. Data for US federal government expenditures comes from FRED seriesFGEXPND.Notes
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Doctorow is a science fiction author by trade, but he’s also a prolific blogger who writes about the perils of big tech, monopoly, and the abuses of property rights. (Check out his blog Pluralistic). I’m an avid reader of Doctorow’s work, and find that he often writes more insightful commentary about modern capitalism than do trained economists. The reason is painfully obvious to heretics like me: Doctorow hasn’t been brainwashed by the economics profession, so he retains his critical faculties.↩
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A note on my analysis of corporate-vs-government power. On the corporate side, I use sales (not profit) to measure firm size because there is no equivalent of profit in the public sector. And on the government size, I use expenditures (rather than tax revenue) because tax revenue is only part of the government’s ‘income’. The federal government can also create its own income by printing money. So total expenditures tells us about both taxation and money creation.↩
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“Doctorow hasn’t been brainwashed by the economics profession, so he retains his critical faculties.”
I like it! Well said. I have some observations.
The bumpy curves in figure 2 could be read as curves flattening as they approach an asymptote, rather than as straight lines going ever upward. Maybe? The inflection from 1990 would seem to be from the 1989 stock crash. The flattening from 2000 onwards from the tech crash, Global Recession and COVID-19 sequentially. That’s a kind of mix of endogenous and exogenous shocks where endogenous means in the economy and exogenous means outside and coming from the environment. But endogenous limits are also being reached. Peak oil, peak benign climate etc. It’s a complex mix of causes.
Thomas Piketty has given us his marvellous conditional equation:-
“If r greater than g then inequality increases.” Where r = return and capital and g = growth, both as prescribed and measured by the rituals of capital (from a CasP perspective).
To my mind, CasP analysis and Piketty’s equation both point to the clear fact that capitalist finance is an axiomatic system. By that I mean a system governed by axiomatic rules and by prescribed algorithmic calculation methods. Axioms may be quasi-descriptive in a sense, deriving some empirical input from reality like the axioms of Euclidean geometry, and then prescribing the idealised case. Euclidean geometry can be seen to idealise flat plan geometry. Clearly we both observe and create approximately flat planes (and plains) in the real world. That is the empirical inspiration of the idealisations in the axioms of Euclidean geometry.
Axioms may also be prescriptive, based on ideology, like the axioms (founding rules) of private property and capitalist finance. Axioms which are wholly prescribed create an axiomatic system with discoverable and provable theorems. Piketty’s equation above is a theorem. The graphs of Shimshon Bichler, Jonathan Nitzan and Blair Fix are also graphical depictions of axiomatic and thus “theorem-etic” outcomes of the axiom system. At least, that is the way I see it.
The thing about ideological axioms, or any inflexible axioms, when applied to reality is that they only work, in the applied fashion, if they don’t break the hard laws of reality: hard laws being those fundamental laws discovered (and indeed as yet undiscovered) by the hard sciences namely physics, chemistry and biology. They can also work, in applied fashion, and then break down which of course indicates approaches to asymptotes.
Of course, this points to the conclusion of “Change the axioms. Change the rules.” This involves changing beliefs. It also involves, as Jonathan Nitzan and others have pointed out, a battle against established, dominant power. Jesús Suaste Cherizola has pointed out in his essay ‘From Commodities to Assets: Capital as Power and the Ontology of Finance’ the importance of analysing capital finance assets with ontological consistency (without the real-ideal or real-fictional bifurcation). He locates the operation of ritual calculative power there (in assets and the rituals of finance generating and supporting them) and the command and control of socioeconomic creordering performances (performative power) as coming from there.
Commodities still matter and Jesús points this out. There is no continuation and reproduction of human life in a civilization without the consumption of commodities. But commodities perform another role. It’s the role we can sum up succinctly as the circuses part of bread and circuses (panem et circenses being a phrase attributed to Juvenal). The asset form matters as expounded by Jesús. The commodity form matters too. Commodities are used not just to reproduce life but to reproduce and intensify ideology by false facts (Fox News) and also of course for the general production of false consciousness. Many people became happy and excited recently in my country because of the Australian Rules Football final. This event is anticipated, talked about, hyped up by media and broadcast live of course. Reality TV sets up silly shows like The Voice and The Block (a renovation show) to titillate people with low brow entertainment, faked human drama and advertainment dangled in front of viewers as consumer pawn. (I’ve misspelt that last word to not run afoul of any automatic filters on this blog.) We can note that this is well televised but i contrast contemporary documentaries of people dying en masse in hospitals from the COVID-19 pandemic are rarely if ever shown. What is shown and not shown determines how people see contemporary events.
We are not going to make progress against capital as power unless the people act directly. The required action is the strike. Strikes, and other direct actions, are the performative power of the people. Strikes need not be limited to the work strike or general strikes. Indeed, in a pandemic crisis such strikes may well be counter-productive to the causes of the peoples as workers and the poor and vulnerable alike. But such strikes do not exhaust the possible forms of strikes. The rent strike is a particularly appropriate form both against rentier capitalism and against the circuits of capital. Of course, prepared strategies and tactics are required, especially to avoid such strikers harming themselves and to prevent conflict escalations to a point which suits the capitalist class and their violence apparatus. After all, not paying your rent, even to a slumlord, breaks the current laws of capitalism.
Another important strike is the consumption strike which will manifest as boycotts. If people refuse to consume certain goods and services, making sovereign consumer decisions, since the sovereignty of consumer choice is much touted and not proscribed, then again they can choose performatively where the money goes (or does not go) as it goes or not into the circuits of capital. The question is how to get people to boycott “circus” events for example. Whilst we permit the capitalists to manipulate us with public spectacles (for this is what large professional sporting events are) we remain under the spell of false consciousness. We are induced to care which great, big muscled idiots (in any collision sport) in which colored jersey or uniform, win arbitrarily defined games, if we look at ludic theory or the theory of games (not economic game theory), run for the purpose of the subsidised funnelling of money into elite pockets. The big stadiums are all heavily subsidised by public funds. We are induced to forget that people are dying in hospitals and exhausted, stressed, under-payed, under-protected, under-resourced staff are struggling to save people. The production of false consciousness by commodity and media manipulation has reached stupendous levels along with the manufacture of pure ignorance.
Trying to swim against and advocate against this false consciousness is an enormous and probably risky enterprise for those who attempt it. The baying crowds want their escapes and will turn on iconoclasts who seem to want to smash their sporting, entertainment and social media icons. The fact they (we?) so desperately need these escapes says something about the entire system and the way(s) they (we?) have to spend their non-discretional time under the forces of capital as power. I will cease at this point. I am simply pointing out the need for praxis in the end. Theory is all of necessary, interesting and diverting in its own right. But without praxis it is nothing. The capitalists have their praxis. Where’s ours?
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Dominant Capital and the Government
Shimshon Bichler and Jonathan Nitzan[1]
Originally published on The Bichler and Nitzan Archives.
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This note contextualizes the ongoing U.S. policy shift toward greater ‘regulation’ of large corporations. Cory Doctorow (2021) and Blair Fix (2021) are optimistic about this shift. We doubt it.
1. The Limits of Power
Large U.S.-based corporations are extremely powerful, but the growth of their power has decelerated considerably.
Figure 1, updated from our ‘Corporate Power and the Future of U.S. Capitalism’ (Bichler and Nitzan 2021), shows the earnings before interest and taxes (EBIT) of the top 200 U.S.-based corporations, ranked by market capitalization, relative to those earned by the average U.S. corporation. The top series confirms that this differential – which proxies the relative power of the top 200 firms – has grown exponentially, rising from roughly 1,000 in 1950 to more than 15,000 in the 2000s. The bottom series, though, shows that the rate at which this differential power has grown trends downwards.
This long-term deceleration is not accidental. In fact, it is built into the very nature of social power. In our capital-as-power research – or CasP, for short – we argue that power always elicits resistance from those on whom it is imposed; that this resistance tends to rise along with power; and that the greater the resistance the more difficult it is to augment power even further. In other words, power is self-limiting (Bichler and Nitzan 2012, 2016, 2020).
The twenty-first century revival of anti-corporate sentiments and anti-capitalist movements around the world is part of this resistance – as are some of the policy reforms emerging in their wake. But these reforms shouldn’t be over-hyped.
2. The Capitalist Mode of Power
Our CasP analysis claims that, as capitalism develops, governments and large corporations become increasingly intertwined organs of the same capitalist mode of power. We call this mode of power the ‘state of capital,’ and we label the large government-backed corporate coalitions at its core ‘dominant capital’.
The coalescence of governments into the capitalist mode of power does not mean that ‘policymakers’ can no longer take an independent stance. They can. But the likelihood of them doing so, as well as the scope of their independence, tend to diminish as the capitalist mode of power creorders – or creates the order of – more and more aspects of social and private life. As this corporate-government integration unfolds, government organizations and officials, including ‘reformers’, not only get entangled in the web of capitalized power, but they also find themselves conditioned by its very concepts, symbols, ideologies and rituals. Consequently, most of them cannot even conceive of fundamental change, let alone bring it about.
From this broad perspective, a meaningful shift within capitalism – and certainly a shift away from it – is less and less likely to come from above. If this shift is to materialize – and in our view, the current prospects for it remain dim – it is likely to come not from reformist governments and soulful corporations, but from below or from without. It will be affected either by social movements mobilized by radical rethinking of capitalized power, or by environmental calamity. Finally, and importantly, this change is likely to materialize not peacefully, but conflictually.
3. Why are Neoliberal Governments so Big?
Think of contemporary governments. Since the 1980s, neoliberal ideology has demanded that state ‘intervention’ and ‘regulation’ be scaled back. It has called for capitalist efficiency to substitute for bureaucratic red tape, for market transparency to replace state corruption, and for equal opportunity to displace hierarchical power. It insists that government should stop ‘crowding-out’ private investment and cease interfering with the so-called free market. It argues that for markets to expand, governments must shrink.
And yet, as Figure 2 shows, the victory of neoliberalism hasn’t made government any smaller. Not by a long shot. In high-income countries, the national income share of government consumption spending remains as large as it was before the onset of neoliberalism, while in low- and middle-income countries, it continues to grow bigger and bigger.
And that shouldn’t surprise us. The capitalist mode of power and the dominant-capital coalitions that rule it do not require small governments. In fact, in many respects, they need larger ones.
As a mode of power, capitalism thrives on multiple forms of ‘strategic sabotage’ – that is, on limiting and redirecting the energy of human beings toward the augmentation of capitalizing power. Dominant capital prevents most people from cooperating, democratically and directly, to improve the well-being of their society and environment. Instead, it forces them to fortify and amplify the very capitalized power that dominates them. And this forcing requires a whole slew of threats, limitations, and the open use of force – in other words, it begets strategic sabotage.
The thing is that, left unregulated, strategic sabotage can easily overbuild, causing the mode of power to implode under its own weight. And that’s where government spending comes in as a mitigating force. From this viewpoint, bigger government – particularly its sprawling social programs and transfer payments – mirrors not the failure of neoliberalism, but its very success.
Figure 3 shows the changing importance of federal transfer payments in the United States. The dashed series depicts the level of current expenditures by the federal government, expressed as a share of U.S. national income. Note that these expenditures include purchases of goods and services, as well as transfer payments for which no goods and services are rendered in return. The solid series displays the share of transfer payments in overall current federal expenditures.
The relationship between the two proportions is telling. Initially, the association was negative. During the 1930s and 1940s, when the national income share of current federal expenditures increased, the share of transfers in these expenditures declined – and vice versa when government expenditures fell. This inverse relationship means that transfers were relatively stable, and that most of the ups and downs in federal spending were due to ups and downs in current government consumption.
But soon enough the relationship flipped. From the 1950s onward, the national income share of current federal expenditures trended upward – and, for the most part, this uptrend was driven by a relentless increase in the share of transfers. All in all, during the postwar era, this share rose 13-fold – from less than 5 per cent in the early 1940s, to nearly 65 per cent presently.
With this observation in mind, it is perhaps worth noting that the 2020 Covid19-related surge in current federal spending – a surge that many like/hate to think of as active ‘Keynesianism’ – was accounted for mostly by passive transfers.
The gradual shift from discretionary expenditures on goods and services to reactive transfers is typical of many governments around the world, and it suggests that these governments are far less potent than their size might imply. In fact, one can argue that the bigger ‘transfer states’ of today are far weaker than the smaller ‘consumption states’ of the Keynesian era. Their apparent largess indicates not greater power but subjugation: a built-in deference to dominant capital, whose strategic sabotage must be offset, at least in part, by unemployment insurance benefits, welfare payments and the like.
4. Summary
On paper, the U.S. government is free to legislate its path and determine its policies. In principle, there is little to prevent a resolute U.S. administration from challenging the power of the country’s dominant capital and clip the wings of its largest firms.
But it would be good to remember that the U.S. government – like most other governments – has become part and parcel of an increasingly global state of capital. This integration has undermined the de facto autonomy of governments everywhere. Whether willing or reluctant, many if not most policymakers have become pawns of a global mode of power they cannot control and that forces them to tranquilize the increasingly vulnerable population that dominant capital helps create. Government spending has inflated, but this inflation betrays weakness, not strength.
Larger-yet-weaker neoliberal governments are the alter-ego of bigger-and-meaner dominant capital. It is hard to think of any important sector or aspect of society, in the United States and elsewhere, where dominant capital does not dominate. It is true that, faced with increasing resistance, the rising power of dominant capital in the United States has slowed down significantly over the years and seems to have stalled completely in recent times (Figure 1). But the level of this power is still greater than ever, and it is yet to show any meaningful decline. Finally, and importantly, the stalling advance of U.S. dominant capital makes it extra vigilant against any serious challenge.
Prediction: if the current U.S. government delivers on its promise to curtail the might of the country’s largest corporations, it will face the wrath of the most powerful megamachine the world has ever seen.
Endnotes
[1] Shimshon Bichler and Jonathan Nitzan teach political economy at colleges and universities in Israel and Canada, respectively. All their publications are available for free on The Bichler & Nitzan Archives (http://bnarchives.net). Work on this note was partly supported by SSHRC.
References
Bichler, Shimshon, and Jonathan Nitzan. 2012. The Asymptotes of Power. Real-World Economics Review (60, June): 18-53.
Bichler, Shimshon, and Jonathan Nitzan. 2016. A CasP Model of the Stock Market. Real-World Economics Review (77, December): 119-154.
Bichler, Shimshon, and Jonathan Nitzan. 2020. The Limits of Capitalized Power. A 2020 U.S. Update. Working Papers on Capital as Power (2020/06, December): 1-16.
Bichler, Shimshon, and Jonathan Nitzan. 2021. Corporate Power and the Future of U.S. Capitalism. Real-World Economics Review Blog, January 4.
Doctorow, Cory. 2021. End of the Line for Reaganomics. Capital as Power Blog, September 26.
Fix, Blair. 2021. How Dominant are Big US Corporations? Economics from the Top Down, September 29.
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I refer to the prediction.
“Prediction: if the current U.S. government delivers on its promise to curtail the might of the country’s largest corporations, it will face the wrath of the most powerful megamachine the world has ever seen.”
An interesting prediction and one I agree with. However, how can we forget China? Firstly, China is now the largest manufacturing country in the world with about 30% of global manufacturing capacity. The USA is second with about 15%. China is equal to two USAs on that measure. Secondly, China is the largest economy in the world on PPP measures. Such measures, PPP adjusted or not, may be dubious. That is why we should pay more attention to the production of real stuff, like the first measure above and other basic measures like the production of steel, concrete and even miles, or kilometres, of fast train track built per year. In all such measures, China already dwarfs the USA in production, as it does in population too. If we want to look at the future of capitalism, we must look at China. Is it possible to do the above stats and graphs for China or is it too difficult to get reliable data? China is opaque, perhaps by design.
China unleashed capitalism internally. My theory is that it was an intentional strategy with a pre-conceived endgame. China saw the Soviet Union excluded from the world system, broken up and then Russia was readmitted (late in the day) to be gutted by neoliberal “reforms”. China was determined to avoid this fate. Most Favored Nation (MFN) status was granted to the People’s Republic of China (PRC) by the USA in 1979. It was thought that China would liberalise with liberalisation driven by capitalism, free markets and free trade. Whether this was really believed or the policy was driven by pure US dominant capital greed is worth pondering. In their arrogance, the US believed they could never be surpassed so granting China MFN was not considered any kind of risk.
The plan of China, in my opinion, was to use capitalism to defeat capitalism. Part one of the plan was to use access to Western markets, to Western capital and to the world system of capital, resources and markets in general to develop into the largest and most technologically advanced economy in the world. This goal is largely achieved. Marxists, whose analysis of capitalism is excellent in many respects, understood how the capitalist system would respond. That is to say, the transfer of manufacture to China was predictable when the bait was cheap labor and the transfer would be effected by the capitalist endogenous force of global labor arbitrage.
China has now largely completely this project, becoming the largest economy in the world with the greatest proportion of global manufactures of any nation. It also has now a developed seaboard and an under-developed interior. Capitalists were unleashed into and in China but now is the time to rein them in according to the CCP plan. We see Xi Jinping taking these steps to re-establish authoritarian communist control over the Chinese capitalists and corporations. We can rephrase Jonathan’s prediction as a question in relation to China.
“If the current Chinese government delivers on its promise to curtail the might of the country’s largest corporations, will it face the wrath of the most powerful megamachine the world has ever seen?”
This question would refer to both the capitalist megamachine as it is in China, and the global capitalist megamachine outside China which is still in total much larger than China with 70% of the global manufacturing capacity being still outside China and the finance control loci being more outside China than inside China. The capitalist megamachine component as it exists in China is almost, as it were, now a capitalist megamachine fifth-column in China with respect to the goal of Xi Jinping to apparently shift back to, not socialism, but to state capitalism rather than corporate capitalism. China at this stage can probably export goods to its interior rather than depending on external markets as much. Whether it can continue to draw in world resources might be the limiting issue. This would especially be the case if the rest of the world system, led to it or forced to it by the USA, implemented an incrementally tightening strategic blockade of China. To do it all at once would start WW3. I am not advocating any courses of action here, simply outlining realpolitik possibilities.
Can CasP analyse China in the manner applied to the USA? Is the data available and reliable? If possible, we need to see what is happening in the world’s largest and still rising economy. The contest between state capitalism and corporate capitalism seems to be the coming reality, all in a world which has nearly hit the limits to real growth (as opposed to nominal growth in supposedly inflation adjusted, inflation-chained, dollars.)
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However, how can we forget China?
We are silence on China because we don’t understand and read any of its languages and are dubious of its data. CasP research of China will have to be done by people who can read the languages and assess the data.
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Thanks, Jonathan and Shimshon, for this entry into the debate. Two quick thoughts come to mind.
The first is a question: who receives ‘federal transfers’, and how has this distribution changed overtime?
Second, I think that one area where CASP analysis is lacking is in cross-country comparison. We know that the US is a business dominated society. But what of other countries? I’d be interested to know how the power of dominant capital relates to metrics of social well-being across countries.
This is part of a wider project that James McMahon and I are trying to get off the ground. We want to generalize CASP analysis to a big sample of countries to see what we can conclude, in general, about ‘sabotage’. So far James is doing the heavy lifting of compiling the data.
On that front, it would be nice to have something similar to the SESHAT project, but for capital as power — a sprawling database that researchers can use to test CASP ideas.
Anyway, thanks for these ideas. And a reminder to FORUM users. Tonight at 8pm, we will be pausing the forum so that we can transfer capitalaspower.com to a better server.
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This is part of a wider project that James McMahon and I are trying to get off the ground. We want to generalize CASP analysis to a big sample of countries to see what we can conclude, in general, about ‘sabotage’. So far James is doing the heavy lifting of compiling the data.
Hopefully I don’t screw up!
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This is part of a wider project that James McMahon and I are trying to get off the ground.
Excellent.
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