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Reading Neoliberalism and the Global Financial Crisis Politically

Although it has become more common to hear criticism of neoclassical economics, and neoliberal ideology more broadly, the anti corporate social movements need to guard themselves against the coming reaffirmation, perhaps even reconstruction, of these ideas. This will require first dispensing with a few illusions.

It would be false to suppose that the great recession, precipitated by a global financial crisis, has now rendered neoliberal ideology and its underlying justification in free market economics illegitimate. It never had any intellectual legitimacy to start off with. The Savings and Loans collapses of the 1980s, the global debt crisis, the Asian financial crisis, the collapse of Long Term Capital Management and so on demonstrated that neoliberalism had no real intellectual justification. Despite this the reigning free market orthodoxies continued to carry the day both in academia, the media and government.

This is not even to go into what should be seen as the first chapter of the unipolar era; the disaster that neoliberalism occasioned in Eastern Europe, especially Russia.

There are important institutional reasons why this was so. The past 30 odd years has seen a quite conscious one sided class war being waged by the rich, the purpose, not the affect, of which was to skew wealth and power towards the few at the top. In 2006 the top 1% of the US population had 22.6% of national wealth, the same level as in 1929. To get that level back to the level on the eve of the Great Depression took some work. During the neoliberal era there has been a marked shift in the wages-profit share towards corporate profits. This was enabled by stagnating real wages for non-supervisory workers, partly obtained through what Alan Greenspan called “increasing worker insecurity.” This was developed through the threat of job transfer following the globalisation of production.

It should be stressed that this shift towards profits occurred in the context of increasing labour productivity in the United States. Though workers were working harder and smarter nonetheless wages, for the most part, stagnated. The proceeds of greater productivity went to big business and, thereby, the rich. Living standards and wealth were increasingly maintained by way of high household debt levels and rising real estate prices. During the boom in asset prices this gave Americans a feeling of prosperity, but as the Nazi’s infamously exclaimed during the Weimar Republic that was very much a type of “sham prosperity.” Prosperity built on the back of stagnating wages and highly leveraged exposure to asset prices in a speculative bubble is illusory.

It has been pointed out that in the United States during the neoliberal era policy really was not wholly dominated by free market ideology at all. A better description would be “socialism for the rich and free markets for the poor.” The US has always relied on a dynamic state sector, like all advanced industrial economies, to socialise cost and risk. For example much of the development of high technology industry has come by way of the Pentagon. Military Keynesianism has also typically been the preferred method of demand management in the United States. This is because with this type of economic pump priming various assorted nasties, such as spending on the needy and the somewhat greater equitable distribution of national income, occasioned by orthodox Keynesianism are avoided.

Even in the financial sector where doctrines such as rational expectations and the efficient markets hypothesis were dominant free market dogma does not fully account for policy. To be sure such free market dogma was used to justify deregulation, which enabled financial corporations to act with greater degrees of freedom in the pursuit of profit, nonetheless risk has always been socialised. The bail out of Wall Street in the wake of the current crisis has brought this to relief. However as stated risk has been socialised throughout the neoliberal era as the Saving and Loans and LTCM bailouts demonstrate. The affect of neoliberalism is to socialise risk without financial institutions at the same time being required to be mindful of the wider social affects of their activities. The latter, of course, follows on from deregulation.

A good description of the mechanics of neoliberalism can be found in the writings of Adam Smith. In his “The Wealth of Nations”, the supposed sacred text for neoliberals, Smith speaks of what he calls the vile maxim; “ All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” That is what neoliberalism is; it is the vile maxim as currently adopted by the masters of mankind. Given the shift against wages in the wages-profit share it is also worth taking on board another quote from the supposed master of neoliberal thought; “The liberal reward of labour, therefore, as it is the affect of increasing wealth, so it is the cause of increasing population. To complain of it, is to lament over the necessary effect and cause of the greatest public prosperity.” When you put the two quotes together, when it comes to neoliberalism, all is revealed.

Socialising the risk of financial institutions by exposing the rest of society to risk externalities, whilst privatising profits, is an example of the vile maxim par excellence.

Neoliberalism should not be confused with classical liberalism, after all for Smith the argument for liberty was based on the supposition that it would lead to equality. The “neo” in neoliberalism comes from the economic thought of the mid-to-late 19th century, which represents a bastardisation of Smith.

So what is neoliberalism really all about then? The past 30 years has seen relatively stagnant economic growth and a greater transfer of wealth and power to the few, even though workers were more productive. A large scale social, economic and political process such as this cannot simply happen. It is not possible that the broader population would consent to such robbery in the absence of some compelling set of justifications manufactured for this very purpose, especially in a democracy. Large scale social processes, including thievery on a grand scale, requires some type of ideological justification. This is the main purpose of neoliberal ideology. The ideology serves to justify the application of the vile maxim. That the ideology had no intellectual justification and was framed in a misplaced pseudo-scientific framework does not really matter. The ideology was highly functional for the corporate institutions that dominate society.

The libertarian Marxist thinker Harry Cleaver has argued that the way to read Marx is “politically.” Cleaver argues that “Das Kapital” was meant to serve as a “weapon” for the working class in order to facilitate the self-emancipation of the working classes. We should read neoliberalism “politically” also. Hayek et al have furnished a weapon for the rich to use against the poor and the working class. Neoliberalism, as such, is a form of Marxism for the rich.

So long as corporations continue to dominate society then the reigning ideology will be reaffirmed or reconstructed in one form or another. The current focus on neoliberalism by the the anti-corporate global justice movements is both appropriate and corrosive. It is appropriate because this is how the great social robbery of the past 30 years has been justified. It is corrosive because policy never really has been motivated by free market dogma and undue focus on neoliberalism tends to obscure the institutional framework that underlies the current crisis. This is especially the case for behavioural critiques of neoclassical economics.

In a real sense the great recession is really a political, rather than an economic, crisis. Corporations have acquired far too much power and because they are motivated by profit it is to be expected that they would like to maintain their privileged position in society. To the extent that neoliberal dogma is increasingly challenged in the mainstream it is because of the consequences that financialisation has had on the broader real economy; it has hurt the rich too, especially of the manufacturing sector.

What this means is that free markets for the poor and socialism for the rich will continue to dominant policy. This will be so irrespective of the fate of neoliberal ideology. So long as corporations are able to ensure that their preferences are attended to by the state and society this must be so. It might be that the next phase of the current crisis is a reconstruction of neoliberal ideology in one guise or another. The proper response to any such reconstruction is to bring to relief the underlying institutional causes of the crisis in order for us to achieve the social constraint of the corporation. Such constraint would be achieved in hope of the eventual supplanting of this particularly crass form of economic and social organisation all together.

One way in which this neoliberal counteroffensive will proceed is through concern over budget deficits. This is how the first neoliberal offensive kicked off. At the time of stagflation neoclassical economists argued that budget deficits would, and did, lead to all sorts of bad effects, especially a so-called “crowding out” of private investment and hence economic growth. Crowding out was justified by an application of rational expectations, the same underlying idea behind the efficient markets hypothesis. In fact, however, the largest economic expansion in US history followed on after the massive World War Two era deficit. Fiscal deficits lead to economic expansion and they pay for themselves as a result.

Society will come under further attack using budget deficits as a pretext. This will happen all over the western world and will be a classic play coming right out of the neoliberal play book. This play will be enacted by both conservative and social democratic and labour based governments.

Social democratic and labour parties everywhere have fallen into line with neoliberal dogma, for reasons first articulated by libertarian socialist and Marxist thinkers during the height of the revisionist controversy of yesteryear. The industrial labour movement everywhere must now reconsider what are the appropriate forms of political action for it to adopt, given that their preferred political parties have everywhere facilitated the 30 year long assault on the working class.

Social democracy has been a grand failure. Slowly trade unionists are recognising this. Now is the time for the industrial labour movement to show courage and rethink the political sphere. One way this can be achieved is by unions and social movements working together from the grass roots up to attack the immense power of the corporation. Neoliberalism represents a fundamental assault on democracy. A powerful affirmation and extension of democracy is the most useful antidote to corporate power. There is nothing the corporation fears more than an aroused citizenry fighting for its rights.

The Global Financial Crisis: Minsky Moment or Marx Moment? Or Maybe a Marxsky Moment?

The noted American marxist journal, The Monthly Review has a most fascinating debate on the global financial crisis between Thomas Palley, a structural keynesian, and John Bellamy Foster and Robert McChesney, both orthodox marxists. The debate featured in the April 2010 edition of this important publication.

Now I have always argued that the crisis has had class war right at its core; that is, it is not possible to understand the economic crisis without taking into account the fact that wages for non-supervisory workers have been largely stagnant, in the United States (the state of “really existing neoliberalism”), throughout the neoliberal era.

But I have also been fond of Misky’s financial instability hypothesis. I have felt that these two aspects need to be combined in some fashion.

Palley does this in a most forceful way. He argues,

The new Marxist, SSA, and structural Keynesian views trace the roots of the crisis back to the adoption of the neoliberal growth model in the late 1970s and early 1980s when the post-Second World War “Treaty of Detroit” growth model was abandoned. The essence of the argument is that the post-1980 neoliberal growth model relied on rising debt and asset price inflation to fill the hole in aggregate demand created by wage stagnation and widened income inequality. Minsky’s financial instability hypothesis explains how financial markets filled this hole and filled it for far longer than might reasonably have been expected

Palley goes on to develop a model that does this in greater detail. His work is impressive, well argued and persuasive. He does speak of Minsky “super cycles”, which Foster and McChesney chide him for on grounds that such cycles do not appear in Minsky’s work. Foster and McChesney here make good points, but the real issue is whether such cycles obtain or not. That is an empirical question requiring detailed study.

To borrow from Isaac Newton, I frame no hypothesis.

The real difference between the two revolves around whether capitalism can be reformed so that such crises do not repeat themselves. For Foster and McChesney the crisis is a reflection of a long standing and deep seated crisis of stagnation, what Paul Krugman would perhaps have called “the age of diminished expectations”, brought about by a persistent crisis of accumulation. This is intrinsic to capitalism and cannot be eliminated.

So they write,

the underlying problem of accumulation in the advanced economies today is one of a deep-seated stagnation tendency arising from a high degree of monopoly (oligopoly) and industrial maturity. More actual and potential economic surplus is generated than can be easily or profitably absorbed by consumption and investment, pulling the economy down into a slow growth state. As a result, accumulation becomes increasingly dependent on special stimulative factors

With such stimulative factors taking the form of overt financialisation, speculative bubbles in asset prices and the like. You could still add in Minsky’s approach here, I think.

Palley is surely right to identify the real issue at play

If there is a difference, it may well be a difference of degree of optimism. Structural Keynesians believe it possible to design appropriate institutions that, combined with traditional Keynesian demand management, can escape capitalism’s stagnationist tendencies and deliver full employment and shared prosperity. New Marxists and SSA theorists are more pessimistic about the capitalist process, the ability to escape stagnation, and the social possibilities of markets. Consequently, their institutional design would have a larger public sector and more nationalization, especially regarding the financial sector

I think Foster and McChesney would agree that this is essentially the debate’s bottom line, so to speak. I certainly myself form that impression.

The problem with Palley’s approach is that he does not really provide us with any real discussion as to why the neoliberal growth model was adopted.

I do not believe, furthermore, that the model is a “growth” model at all.

During the hey day of keynesian demand management, that is what is sometimes called the “golden era of capitalism”, there was a much more equal spread between wages and profits. The whole edifice was broadly social democratic and the trend rate of economic growth was higher than the trend rate throughout the neoliberal era.

The neoliberal “growth” model actually tolerates economic growth that was less than trend, by about 50% less,than that exhibited during the hey day of the keynesian growth model. Growth was not really the object of policy. What was?

To see what was we need to consider the origins of the neoliberal growth model. The reason was declining corporate profits. The purpose of neoliberalism was to increase profits, hence the wages squeeze to which Palley refers. In reality what we had was a neoliberal profit model. Economic growth was below trend, as discussed above, but the take of profits in the wages-profit share leaped to record levels. In fact the record kept getting broken like the record in women’s pole vaulting. That’s why you had stagnating wages, for how can you manage to achieve record profit shares when growth is well below trend? Simple; you take and take some more. For the consumer to maintain the American dream required taking on very high private debt, which brings in my pal Minsky.

I don’t agree with how Foster and McChesney frame their argument, but nonetheless we must recognise that profits, not growth per se, is at the core of capitalism. In this sense a growth model that is great for GDP growth, but which has the tendency to restrict profits, is not functional in the long run under a capitalist system dominated by large corporations whose raison d’etre is to maximise profits.

It’s a type of institutional contradiction. So I think that Palley’s argument is not deep seated enough. I agree with Foster and McChesney on that.

Having said that I also like to add one more point that I think Foster and McChesney do not appreciate.

Say Palley is right about the prospects that a reformed capitalism, the type he outlines, can prevent future crises and lead to sustainable economic growth. That Palley’s approach would do this with greater equity and fairness seems to be an unspoken corollary of the argument. That means corporations would need to acquiesce in the curtailing of super profits.

What implication would this have for the case for socialism?

Precisely zero.

The argument for socialism rests on moral grounds. Marxists, especially marxian economists, like to focus on pragmatic considerations such as accumulation crises, stagnation crises and the like.

The case for socialism is developed through an application of pre-industrial classical liberal ideas, that arose out of the enlightenment and the rise of a spirit of rationalism therein, to a modern industrial capitalist society. Any economic system that has vast concentrations of private power is unjust for precisely the same reasons that the classical liberals used to critique the state during their era.

The case for socialism flows on from such considerations. Marxian economics is quite irrelevant.

What is at issue between Palley and Foster and McChesney is not so much socialism versus capitalism as it is the scientific credentials of marxian economics.

On the latter I pretty much agree with the Australian post keynesian economist, Steve Keen, who has developed a pretty convincing argument rebutting the scientific basis of marxian economics.

This fits in to my broader view that no theory of economics deserves the title “theory” or the honorific “scientific”.

But the fact that marxian economics has no legs does not in the least bit upset my socialist convictions.

Rudd’s Climate Change Policy Back Flip on the ETS Appeases Big Business

Paul Kelly is not my favourite cup of tea, but every now and then he offers up pretty good analysis. His latest essay, in today’s The Australian, on Rudd’s ETS back flip is definitely in the latter category.

He calls this the most damning back flip by a Prime Minister in decades. Kelly would be accused of exaggerating a tad, but I don’t think so. Kelly correctly points out that Rudd defined the issue in very stark moral terms, even in terms of survival. Climate change is the leading moral issue of our times, so Rudd’s argument went.

The mismatch between the back flip, for reasons of political expediency, and the declared moral stakes does indeed raise core issues about the credibility of both Rudd and the government he leads. Kelly might have added that the same applies to his intellectual cheerleaders.

But, of course, maybe Paul Kelly doesn’t understand things properly. You see for Robert Manne, who knows better, Rudd is “an intellectual in politics.”

However Kelly, and most other commentary in the corporate media, makes one major error. It is true that the back flip is due to political expediency. This is how Kelly explains it in his article

In truth, Rudd has lost his nerve. This is a political and policy retreat. He says the ETS remains “the most effective and least expensive” means of combating greenhouse gas emissions. His tacticians will call this smart and they may be right. But it betrays a government weak to its core. Understand what this is about: it is giving Rudd a political strategy to maximise his re-election by removing the only mechanism he had to deliver his ETS policy. He has chosen safe politics over policy delivery. Any voter who believed Rudd was genuine about climate change needs to reassess

Polls actually indicate that support for an ETS type policy remains high even following the failure of the Copenhagen summit. Take a report in today’s The Age on the ETS back flip by Michelle Grattan

A Lowy Institute poll, released yesterday, found 72 per cent agreed ”Australia should take action to reduce its carbon emissions before a global agreement is reached”. But 33 per cent were not prepared to pay anything extra to help solve climate change. An Essential Research poll showed 57 per cent rated the government’s performance as ”poor” in handling introduction of a scheme

Those figures are fairly consistent with Rudd’s previous climate change policy; put in the ETS at a low CO2 cap and then wait for the rest of the world to move as well and then raise the cap. I don’t want to argue here whether Rudd’s policy was the way to go or not.

The point here is that it is consistent with public opinion. Rudd couldn’t have ditched a core policy so easily based on fear of a public backlash pre-election. This gives Abottman too much credit. Not even Rudd is this brittle.

What has happened here is that Rudd is appeasing big business, especially the Australian Industry Group and the Australian Chamber of Commerce. You can see that when you take on board the tail end, the most important end, of Grattan’s article

But the Australia Industry Group said industry remained committed to reducing emissions. The Australian Chamber of Commerce and Industry said the delay was a ”step in the right direction”

The Chamber hasn’t really been on board with Rudd from the start. Since Copenhagen the AIG has gone cold on the ETS. It’s true that energy sector companies are not happy due to investment uncertainty but the Chamber and the AIG outweigh them, especially the latter.

Rudd wants to lock in the support of big business pre-election. He understands that Abottman has faltered with big business, so the two are now engaged in a competitive race to secure the backing of the big end of town.

This race will determine the outcome of the election. The ETS back flip should be seen in this context.

It will be interesting to see what Rudd’s leading kiss asser in academia will write in the next edition of The Ruddly.

Kelly liked to take pot shots at Grattan in his work of comedy, The March of Patriots, but she is way better than he.

Categories: ALP, Corporation

Kevin Rudd’s Productivity Agenda and the Ideological Basis of the Productivity Commission

Last summer the philosopher king, Kevin Rudd, returned from his holiday and gave us his essay on the global financial crisis and neoliberalism. Kiss ass intellectuals such as Robert Manne were in awe of Rudd and his mighty achievement.

A year later, his return from the Christmas break saw him put increasing productivity at the centre piece of his Government’s narrative. After his scolding by school students on the ABC he shifted again to health reform, in an effort to show that he was not all spin and no action.

Consider the issue of productivity. The emphasis on productivity came accompanied with a lot of rhetoric of how the Rudd “Labor” Government was to boldly continue the economic reforms of the past 30 odd years otherwise known as neoliberalism. This is what “economic reforms” means in Australian public discourse. It was even alleged that the previous Howard Government was indolent in this respect. Rudd Labor would do better. Everybody forgot his awe inspiring essay from exactly a year earlier, including the kiss ass in chief who published the damn thing.

Now one of the main institutions in Australia that seeks to advance productivity, and the reforms it perceives is necessary to achieve them, is the Productivity Commission.

It is well known that industrial democracy, defined as greater worker participation and control in industry, increases productivity. Greater worker control over the management decisions of the corporation would boost productivity. Involving other stakeholders, such as local communities, presumably would have the same affect.

But try and find any reference to that in any Rudd “Labor” Government policy announcement since the productivity agenda was announced. See if you can find any Productivity Commission study directed towards making suggestions about how the structure of the corporation can be reformed in a fashion designed to increase industrial democracy within the firm.

You won’t do that of course because the productivity agenda is infused by the vile maxim. The purpose is to increase productivity whilst at the same time shifting the wages-profit share further towards profits. That’s not profits for workers and community stakeholders of the corporation. That’s profits for the narrow sectors of power and privilege that benefit from the tyrannical and largely unaccountable structure of the corporation.

It’s a bit like what happened in the 1980s to early 1990s under Hawke and Keating. The Labor Party and the Australian Council of Trade Unions used wage restraint to boost productivity while the take of profits in the wages-profit share increased, quite deliberately. This was sold on the basis that increasing productivity would boost investment, which it did but it was of the junk sort favoured by the rich. It was all basically a party for the rich. Booming credit growth and so on saw the Hawke Government smash the population with high interest rates leading to the “recession we had to have.”

The rich have the wild orgy and then when the hangover sets in the broader population is required to make the sacrifices to get things right again. Things haven’t changed. Southbank and Kew, where the spivs live that gave us the global financial crisis, are doing well whilst most of the burden of the unemployment rises are in Sunshine and Broadmeadows. That’s to be expected given the vile maxim.

Of course, I can’t help but notice that one of the big spruikers of the productivity agenda is Brand Rudd’s socialist minister for deregulation, Lindsay Tanner. You’d think he would, being a socialist and all, make the link between industrial democracy and productivity.

But he doesn’t, naturally. The “careerist” knows which side his bread is buttered on, as do all those Labor MPs who don’t live in their scummy working class electorates, including that fine specimen of Labor manhood, Tim Holding who doesn’t want to live too close to his voters in Springvale. The Herald-Sun reported today that Liberal Party MPs tend to live in their electorates in contrast to Labor MPs.

Labor MPs don’t because they are of the same class as the Liberals, so it is that we observe little difference between the ALP and the Liberal Party when it comes to policy. They hail from the same class and they represent the same class. Policy is thereby largely convergent.

Policy converges on the vile maxim because that is the maxim that the people of Kew, Hawthorn, Southbank and the rest hold with great gusto. They wrap this up in a smug sense of cultural and moral superiority, which is the necessary cultural and moral accompaniment to the vile maxim.

Categories: ALP, Corporation

Lindsay Tanner Vs Barnaby Joyce: Who is the Real Freak Show

The former shadow minister for finance, Barnaby Joyce, was sacked because he was not an economic rationalist. Lindsay Tanner, Kevin Rudd’s socialist minister for deregulation, by contrast, is an economic rationalist. The contrast explains why Lindsay Tanner holds his post and why Joyce has found himself out on his ass.

Tanner liked to taunt Joyce as a “freak show.” However, Joyce is no freak show. The former shadow finance minister understands full well that he has a constituency and a core belief system built around serving that constituency. Joyce’s constituency is those segments of rural and regional Australia, particularly in his native Queensland, who have been hit hard by globalisation and neoliberalism.

Joyce has stayed true to his constituency and his beliefs even though Abbottman bumped up into the shadow finance portfolio.

It is easy to see that it is Lindsay Tanner who is the real freak show.

This is someone who claims that he is a socialist. This is someone who hails from the “socialist left” of the ALP. Yet he understands full well that he owes his lofty position to his enthusiastic support for, and facilitation of, neoliberal deregulation.

Unlike Barnaby Joyce, Comrade Tanner is more than happy to plunge the knife into the back of his core constituency, if we understand that constituency not to be big business and the banks.

Comrade Tanner has lead the charge against Abbottman’s paid parental leave plans. On what grounds? Because Abbottman’s policy would tax big business. Comrade Tanner not only likes deregulating big business but he also likes to keep their taxes nice and low.

He now is spending plenty of time thinking about how to cut back spending on the broader population. In fact his very political identity now seems to be built on it, judging by the title of his pathetic blog which connotes “the razor gang.”

Keep corporate taxes low, but cut back public spending on the people. Only spend on the people when the rampant greed of the rich threatens to fuck up the economy. That’s freak show Tanner’s motto.

It’s interesting to observe how Abbottman got himself into a spin after making this announcement. He started to attract pretty bad press after his small defiance of corporate power. Big business is wondering; is he really a social conservative that is prepared to hit our interests in the name of social and family cohesion?

I am sure that Brand Rudd and his freak show of a deregulation minister have internalised this lesson. Stay nice and close to the big end of town.

What is especially freakish is that the freak show had the nerve to attack the Greens for “dividing the progressive vote”. Naturally progressives would turn to a party that stands for progressive principles, unlike the backstabbing freak show who exists to serve the interests of big business.

The Corporation and Australia’s Human Rights Debate

The human rights debate in Australia is deeply flawed. The terms of the debate have been set by the well known report of the Human Rights Consultation Committee, chaired by Father Frank Brennan. The Federal Government has yet to formally respond to the report, especially with respect to its key finding. The report recommended that a statutory human rights charter be adopted to weigh the human rights implications of government acts.

The debate is flawed because the debate concerns itself with the rights of the individual with respect to the state only. This has been quite deliberate. The Brennan proposals, let us call them however unfairly, expressly excluded social and economic rights, even though such rights are a critical part of the United Nations Human Rights Convention. Brennan has acknowledged that such rights should be promoted but “nonetheless in light of advice received from the Solicitor-General, we don’t think the courts have a role to play in the progressive realisation of these rights”.

So on one side of this limited debate we have those who argue that recent high profile cases, especially in relation to counter terrorism, demonstrate the limitations of the “rights revolution” in Australia. A more robust system of protections is needed to protect the individual from capricious legislation that seeks to restrict liberty.

On the other hand, conservatives argue that human rights is being used to cloak an agenda being pursued by Australia’s cultural-intellectual elite to advance their preferred ideological whims. It is understood that these elites lack public support, so they naturally seek to enshrine their policy preferences by bypassing the ballot box. The purpose and affect is to subvert democracy. On the latter point it is argued that a human rights act will hand too much power to the judiciary, thus undermining parliament.

In focusing on the state a very important and powerful collectivist institution is being neglected, namely the corporation. Large corporations are able to violate the human rights of the individual just as much as the state, and for pretty much the same reasons.

Corporations have overwhelming resources and power. The asymmetry between the resources that the corporation is able to command and that of the individual is vast. Moreover, unlike the state the corporation is an unaccountable tyranny. It is a top-down hierarchical institution which functions very much akin to the fascist ideal, as pointed out in a classic study by the political economist Robert Brady. It is also concerned with little else other than profit, and if trampling over the rights of the individual, both within and without the organisation, advances profit maximisation then so be it.

In our legal system corporations are recognised as being persons, this is known as the organic conception of the corporation. The recent judgement by a reactionary, not conservative, US Supreme Court on campaign finance legislation has brought this largely unrecognised facet of Western society to relief.

The political philosopher, Ronald Dworkin, who should have recognised this long ago, stated that the “nerve of the argument” used by the Court, “that corporations must be treated like real people under the First Amendment” is “preposterous” because “corporations are legal fictions. They have no opinions of their own to contribute and no rights to participate with equal voice or vote in politics.”

Notice that Dworkin is referring to one of the bill of rights to the US constitution.

The organic view of the corporation was enacted through late 19th century judicial activism, not primarily by way of legislation. The underlying philosophical conception used to justify this position, neohegelianism, does not place ontological primacy upon the individual. Furthermore, these ideas are at variance with other staples of enlightenment thought, such as rationalism. They are also quite popular within the academic left.

The primacy that has been accorded the corporation in society is founded upon a thorough rejection of classical liberal ideas. The notion that the pro corporate policies of the past 30 odd years, known as “neoliberalism”, somehow have something to do with classical liberalism is a fiction just about shared by all.

Governments can be defeated at election time. Mechanisms exist to advance the public interest in the policy making process. That these mechanism are meagre does not obscure their existence. On the other hand corporations are unaccountable in the absence of regulations. Yet deregulation has been central to neoliberal policy making. We now even have, with Lindsay Tanner, the absurdity of a professly socialist minister for deregulation.

The controversial statements on the nanny state by Formula One driver Mark Webber are relevant here. We have seen increasing regulation and red tape being extended over the individual. Yet at the same we have witnessed progressive corporate deregulation. It follows that ours is not a society that places the rights and interests of the individual at its core. Nothing can be allowed to trump the rights of the corporation.

One can observe this in many a court case, with listings such as, say, Joe Bloggs vs Acme Corporation or such. The title itself implies neutrality. Yet we have two competing rights systems. On the one hand we have the right of the individual. On the other we have the right of the corporation to pursue profit. We also have the asymmetry of power.

It is improper to suppose that the corporation be treated as a person, with rights equal to that of the individual, nor that the right of the corporation to pursue a profit is somehow on a par with the right of the individual. The rights of the individual outweigh the rights of the corporation. The corporation should have rights, if any, not for itself but to the extent that it contributes to the social good, just as liberal theory recognises with respect to the state.

But what is called “liberalism” today mostly concerns itself with ensuring that corporations can do as they please.

Corporate hegemony has been allowed to proceed because of the tight linkages between corporate power and the state. Corporations have privileged access to policy makers and are able to use a variety of techniques, owing to an asymmetry of power relative to the individual, to ensure that their interests are “peculiarly attended to”, as Adam Smith had it, in legislation.

The individual does not enjoy such privileged access. This leads to a rights asymmetry between the individual and the corporation. The individual still has the power of the ballot box. However, this occurs in a money driven political system and where corporations control the media. The result is that we have a managed political system that is largely in tune with corporate power.

If opinion does not cater to advertisers then it won’t become a part of public discourse, absent publicly funded media. Surely the American philosopher, John Dewey, was on to something when he pointed out, as corporations were being granted the rights of persons, “politics is the shadow cast on society by big business.”

Given this asymmetry it is necessary that some form of enshrined human rights protections exists to check the power of corporations to subvert our democracy in ways detrimental to the rights of the individual. In fact this problem is deep seated given the provisions on commerce in the Australian constitution, doubtless deliberately framed to protect the then emerging corporate shadow over society.

By far on any given day across the length and breath of Australia the rights of living and breathing human beings are being infringed more by corporations than they are by the state.

Any human rights act or other similar mechanism that purposefully neglects corporate dominance with respect to the individual is extremely limited, indeed highly flawed. So we have two elites engaged in debate. One cultural-intellectual based. The other economically based.

The people of Australia, whose rights and interests should be at the forefront, are neither here nor there. They remain voiceless although both elites claim to know their sores. If the Liberal Party were truly a party of liberalism and if the Labor Party were truly a party of the working class then both would seek to advance the rights of the individual with respect to the corporation.

That both place greater priority on tending to the needs of big business tells us a great deal about both the theory and practise of Australian democracy.

Categories: Corporation