Jonathan Tepper — Competition Is Dying, and Taking Capitalism With It

We need a revolution to cast off monopolies and restore entrepreneurial freedom. First of two excerpts from “The Myth of Capitalism.”

Bloomberg Opinion
Competition Is Dying, and Taking Capitalism With It

Jonathan Tepper

See also a short review of The Myth of Capitalism

A lot of times, when you read reviews about books on the economy, you end up wondering what the reviewer’s ‘priors’ are as people like to say in economics. You read the review and wonder where the biases of the reviewer are, because that can tell you a lot about the review.

So I’m going to lay it out there.

The ‘Corporatist’ is a kleptocrat masquerading as a believer in liberty. He uses terminology based in liberty to construct an ideology solely as a means of furthering the gains of a specific strata of society allied with the corporatist and at the expense of other strata, by coercion if necessary.

That’s me, seven years ago on this very website in a post I called Corporatism masquerading as Liberty. So, those are my priors coming into this; I’m someone who sees the ‘ideology’ of freedom and liberty being used as a cloak and shield for people who are almost entirely self-interested. And what I believe has happened is that ideology has been injected into our form of capitalism as a way of disarming naysayers and allowing the ‘Corporatist’ to benefit at everyone’s expense.

So when I read “The Myth of Capitalism" (henceforth The MOC) was subtitled “Monopolies and the Death of Competition", I was intrigued because the question for me was how self-interested people are able to reap all the gains of our system, while avoiding a lot of the downsides....

econintersect
"The Myth Of Capitalism"
Edward Harrison, Credit Writedowns

See also

"Freedom" at the tip of a missile. Making the world "safe" for capitalism American style, or else.

AntiWar
Pompeo Promises New Liberal World Order – New Wine In Old Bottles?

Ron Paul and Daniel McAdams

See also

Huawei chief financial officer Wanzhou Meng is facing extradition to the United States after being arrested in Canada on suspicion of violating U.S. sanctions on Iran, the Globe and Mail reports.

Making the world safe.

Axios

Top Huawei executive arrested on suspicion of violating Iran sanctions

Zachary Basu

also

Mere hours after Chinese officials finally affirmed President Trump's description of Saturday's trade 'truce' - this after fears that the true nature of the agreement might have been "lost in translation" helped trigger the worst one-day market selloff since October - the DOJ has gone ahead and kicked the hornet's nest, seriously jeopardizing the prospects for a prolonged trade detente between the world's two biggest economies....

Zero Hedge
Trade Truce Over? Canada Arrests Huawei CFO At US Request

Tyler Durden

Duncan Green — Why is Latin America Going Backwards?

Increasingly, however, academics and development practitioners are looking at a less visible and tangible obstacle – the capture of the State by economic and political elites. The extreme concentration of economic and political power reinforces the ability to unduly co-opt, corrupt and divert the democratic process, and influence the role of the State, perpetuating measures that reinforce privilege on the one hand and inequality and exclusion on the other. This elite capture is manifested in the ability to influence public policies, fiscal systems (regressive rather than progressive), and keep wages low (one in six workers with formal employment in the region live in poverty). It also leads to corruption and an erosion of democratic process, principle and institutions.

The UN Economic Commission for Latin America and the Caribbean (ECLAC) call it “the culture of privilege.” Latinobarometro in its 2017 report “Decline in Democracy”, refers to a ‘democratic diabetes’, an invisible illness that isn´t alarming in itself but slowly kills you. 75% of Latin Americans believe they are governed by an elite that rules for its own benefit.

There you have it.

Neoliberalism is a political theory based on elite capture of the state and using the state apparatus to further elite interests. It is a form of oligarchy (rule by a few) called "plutonomy," literally "the rule of wealth." "The culture of privilege" summarizes it aptly in sociological terms as a manifestation of downward causation in a system of networks, with the upper nodes controlling lower nodes.

What about "the failure of socialism"? Socialism was doing fine in the commodity boom, even with elite opposition support from abroad. When that boom ended and the economic situation shifted, elite interest saw a chance to regain control and the result has been destabilization, again with foreign support.

Oxfam Blogs — From Poverty to Power
Why is Latin America Going Backwards?

Duncan Green, strategic adviser for Oxfam GB

Bill Mitchell — The Left propaganda that the state is powerless – continues

When we published our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – last September, Thomas Fazi and I approached the UK Guardian to see if they would publish an Op Ed by us summarising the main arguments presented in the book. We received no response. Pluto tell us that the book is one of their better sellers since it was published. And it is not as if the topic is irrelevant in the Guardian’s assessment. That is clear from the fact that on April 5, 2018, they published one of their ‘long read’ articles by Rana Dasgupta – The demise of the nation state – which is a direct refutation of the ideas advanced in our book. This ‘long read’ also falls into the same traps and analytical errors that we point out has besotted the Left side of politics since the 1970s. The article is clearly part of the Guardian’s agenda to appear progressive but, in fact, be anything of the sort. As I have noted previously, the Guardian seems content to publish a torrent of anti-Brexit articles and criticisms of Jeremy Corbyn rather than provide any semblance of balance.

In the US, we call them "limousine liberals" and "latté liberals." They pretend to be progressives on the side of the people, but their real mission is to support the power elite in their push for transnational corporate totalitarianism in the name of "liberalism" and "Western values." The fact is that they are fascists. Fascism is aligned with capital being the chief political factor. In a representative democracy, this occurs through corruption of the political process and state capture. Is the Guardian in the category of promoting this?

Bill Mitchell – billy blog
The Left propaganda that the state is powerless – continues
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Aída Chávez — GOP Senator Says Impeachment of Judges Who Struck Down Gerrymandered Map Is “A Conversation That Has to Happen”

In the wake of a Pennsylvania Supreme Court order that struck down a Republican congressional map as unconstitutionally gerrymandered, Sen. Pat Toomey said that impeachment of the justices is “a conversation that has to happen.”

The GOP map had given Republicans a nearly 3-1 congressional majority in a state that leans Democratic; the court’s new map will still give Republicans a significant advantage, but slightly less of one. For Toomey, that amounted, he said, to a “blatant, unconstitutional, partisan power grab that undermines our electoral process.”...

The US is "democratic" in name only.

The Intercept
GOP Senator Says Impeachment of Judges Who Struck Down Gerrymandered Map Is “A Conversation That Has to Happen”
Aída Chávez

Also

Patrick Ryan, a congressional candidate from New York, is leaning on his experience as a small business entrepreneur to establish his readiness for office, but he has curiously failed to mention the business he used to work in: domestic surveillance.

Seven years ago, Ryan, then working at a firm called Berico Technologies, compiled a plan to create a real-time surveillance operation of left-wing groups and labor unions, hoping business lobbyists would pay top dollar to monitor and disrupt the actions of activist groups across the country. At one point, the proposal included the idea to spy on the families of high-profile Democratic activists and plant fake documents with labor unions in a bid to discredit them....

The Intercept
Democratic Congressional Candidate Built Lucrative Career Spying on Left-Wing ActivistsLee Fang

Dean Baker — Policy Choices, Not ‘the Market,’ Produce a ‘Small Number of Very Wealthy People’

It is amazing how frequently we hear people asserting that the massive inequality we are now seeing in the United States is the result of an unfettered market. I realize that this is a convenient view for those who are on the upside of things, but it also happens to be nonsense.
The latest nonsense-pusher is Amy Chua, who warns in a New York Times column (2/20/18) about the destructive path the United States is now on, where a disaffected white population takes out its wrath on economic elites and racial minorities. The key part missing from the story is that the disaffected masses really do have a legitimate gripe.
We didn’t have to make patent and copyright monopolies ever longer and stronger, allowing folks like Bill Gates to get incredibly rich. We could have made Amazonpay the same sales tax as their mom-and-pop competitors, which would mean Jeff Bezos would not be incredibly rich. We could subject Wall Street financial transactions to the same sort of sales taxes people pay on shoes and clothes, hugely downsizing the high incomes earned in this sector. And we could have rules of corporate governance that make it easier for shareholders to rein in CEO pay....

Neoliberalism is corporate control of government policy (state capture).

FAIR
Policy Choices, Not ‘the Market,’ Produce a ‘Small Number of Very Wealthy People’
Dean Baker

Asher Schechter — UN Study Warns: Growing Economic Concentration Leads to “Rentier Capitalism”

Earlier this year, a Stigler Center paper by Luigi Zingales [Faculty Director of the Stigler Center and one of the editors of this blog] argued that market concentration can lead to a vicious circle, in which companies use market power to gain political power that in turn allows them to gain more market power, and vice versa. Zingales called this the “Medici vicious circle”: “Money is used to gain political power and political power is then used to make more money.”

A new UN report shows that this vicious circle is now a prominent feature of the global economy. Thirty years of hyperglobalization, according to the report, have led to sharp increases in global market concentration and a proliferation of rentierism, whereby the world’s largest corporations attempt to protect their market power through a variety of rent-seeking activities, such as lobbying or systematic abuse of intellectual property laws. While many of these companies are headquartered in the United States, the “endemic rent-seeking that stems from market concentration, heightened corporate power, and regulatory capture” has spread much further, leading to the emergence of “global rentier capitalism.”...

Neoliberalism = rentier capitalism

UNCTAD’s research is among the first to assess the rise in market concentration on an international scale. It also attempts to measure the growth of rents—that is, the income that large companies derive solely from the ownership and control of assets, rather than from innovation.

In order to do that, UNCTAD built a database comprised of financial statements made by publicly traded non-financial companies in 56 developed and developing countries between 1995 and 2015. Measuring the size of corporate rents is difficult due to the scarcity of data and the wide variety of rent-seeking activities companies can engage in, but the UNCTAD research team tries to approximate their magnitude by estimating surplus profits within specific sectors. Using the median value of firms’ rate of return on assets (ROA), they estimate the median performance of firms within a given industry. The difference between this estimate and the actual profits firms made is the surplus profit....

Market power begets political power, which begets further market power....

Throughout history, Blankenburg notes, economists and political theorists, from Adam Smith to John Maynard Keynes, have raised concerns that capitalism has a tendency to be captured by rentiers. The UNCTAD report echoes these historical concerns. “Rentier capitalism means that there isn’t just a few annoying rentiers in some countries that a bit of government intervention can rein in or neutralize,” says Blankenburg. “It is becoming an endemic part of capitalism, a new normal—at least for powerful corporations.”
The authors offer several remedies to tackle the rise of market power, among them tougher antitrust enforcement, the revision of existing trade agreements (and avoidance of signing new ones), and labor market interventions that focus on reducing inequality. “A good start,” they write, “would be to recognize that both knowledge and competition are first and foremost global public goods, and that their manipulation for private profit should be effectively regulated.”

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
UN Study Warns: Growing Economic Concentration Leads to “Rentier Capitalism”

Asher Schechter

Deidre Fulton — Corporate Crime Runs Rampant Thanks to 'Rigged' System: Elizabeth Warren

Report suggests 'some giant corporations—and their executives—have decided that following the law is merely optional'…

This is the damning verdict of Sen. Elizabeth Warren's (D-Mass.) report released Friday, Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy (pdf).

Common Dreams
Corporate Crime Runs Rampant Thanks to 'Rigged' System: Elizabeth Warren

Deidre Fulton

Bill Mitchell — The co-option of government by transnational organisations

Today, some more analysis of the debate about globalisation and the capacities of the nation-state. We consider the debates in the early 1970s about the power of transnational corporations and the claims that they undermined the capacity of the nation-state to further the interests of the population. On the one hand, the free-market liberals claimed that the emergence of the transnational corporation was a move towards increased global efficiency and the nation-state, which served narrower interests, would be swept aside, along with its regulative structures, by this trend. Global welfare (and solutions to international poverty) would be maximised by the demolition of national borders by transnational capitalism. This view considered the nation-state to be ‘dispensable’ – that it only served narrow interests and the global organisation of production no longer required national governments to operate in this way. The Marxist position was, understandably, at odds with this view. It considered the nation-state to be indispensable to the growing needs of international capital. This was in the sense that governments could provide essential stability to reduce the risk of transnational operations. My position is more in line with the latter view although it clearly recognises the relevance (and power) of the national governments in which they choose to operate. Further, these transnational corporations are typically very large firms within the nations they operate. it is hard to differentiate the political clout that being large exerted from the influence of being global. Certainly, the early literature was not clear on that issue.…

Bill Mitchell – billy blog
The co-option of government by transnational organisations
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Elias Isquith — Controlled by shadow government: Mike Lofgren reveals how top U.S. officials are at the mercy of the “deep state”

A corrupt network of wealthy elites has hijacked our government, ex-GOP staffer and best-selling author tells Salon.

Salon
Controlled by shadow government: Mike Lofgren reveals how top U.S. officials are at the mercy of the “deep state”
Elias Isquith

Bill Allison and Sarah Harkins — Fixed Fortunes: Biggest corporate political interests spend billions, get trillions

Between 2007 and 2012, 200 of America’s most politically active corporations spent a combined $5.8 billion on federal lobbying and campaign contributions. A year-long analysis by the Sunlight Foundation suggests, however, that what they gave pales compared to what those same corporations got: $4.4 trillion in federal business and support. 

That figure, more than the $4.3 trillion the federal government paid the nation’s 50 million Social Security recipients over the same period, is the result of an unprecedented effort to quantify the less-examined side of the campaign finance equation: Do political donors get something in return for what they give? 

Four years ago, the U.S. Supreme Court suggested the answer to that question was no. Corporate spending to influence federal elections would not “give rise to corruption or the appearance of corruption,” the majority wrote in the landmark Citizens United v. Federal Election Commission decision. 

Sunlight decided to test that premise....

In its Citizens United decision, the court took for granted that “favoritism and influence” are inherent in electoral democracy and that “democracy is premised on responsiveness” of politicians to those who support them. We found ample evidence of that.

“The appearance of influence or access,” the court said, “will not cause the electorate to lose faith in our democracy.”

It appears that the electorate — who stayed away from the polls this year in droves — might not agree.

Banana republic.

Sunlight Foundation
Fixed Fortunes: Biggest corporate political interests spend billions, get trillions
Bill Allison and Sarah Harkins

Bill Blunden — Is There a “Triple Government” at Work?

Another view of deep politics, the deep state, clandestine services, plutonomy, and state capture.

“Double government.” Walter Bagehot coined the term in his 1867 book, The English Constitution. He hypothesized that British government had split into two separate layers. On the outer surface were high-profile “extrinsic” institutions such as the House of Lords, which gave the appearance of being in charge. On the inside were less conspicuous organs of government, such as the House of Commons, that actually ran the show. 

Expanding upon Bagehot’s ideas is Michael J. Glennon, a professor of international law at Tufts University. Glennon has written “National Security and Double Government“, a book which argues that a similar double government has emerged in U.S. politics.
Regarding national security, Glennon contends that “judicial review is negligible, congressional oversight dysfunctional, and presidential control nominal.”[i] Instead, he says, the actual decision-making is performed by “several hundred executive officials who manage the military, intelligence, diplomatic, and law enforcement agencies”[ii] that are “slowly tightening centralized power, growing and evolving organically beyond public view.” [iii] (Read WhoWhatWhy’s first take on Glennon here)
But are elected officials such as the President truly hostages to murky, unseen elements within government? 

Congressional investigations, leaked classified documents, and statements by former intelligence officers paint a completely different picture. Far from being out of control, the public record indicates that security services are obedient arms of the executive. And, further up the chain of command, the executive itself is responsive to profound sources of private influence residing outside of government.…

While most institutions suffer from some form of dysfunction, it’s clear that both the Pentagon and the American intelligence community largely do what they’re told by POTUS. In the absence of overwhelming public sentiment, the President mainly attends to the needs of various corporate factions which have the ability to provide incentives to political leadership. These business interests transmit their mandates to the political class through a structural layer of intermediaries that surround the visible state, the “Deep State” first described by Peter Dale Scott. 

In other words, the remarkable continuity of national security policy isn’t entirely a matter of double government; equally, it is a matter of state capture by deep sources of wealth and power outside of government.

Who, What, Why
Is There a “Triple Government” at Work?
Bill Blunden

Jeffrey Sommers and Michael Hudson — The Koch Brothers’ Governors

The Koch Brothers are the closest thing the United States has to Russia’s oligarchs.

You get the gist. But this is not even the half of it. The Koch Bros. have captured the state government is virtually all the red state at least to some degree, since there are other interests involved in the capture, too.

Michael Hudson
The Koch Brothers’ Governors
Jeffrey Sommers, associate professor at the University of Wisconsin – Milwaukee and visiting faculty at the Stockholm School of Economics in Riga, and Michael Hudson, visiting distinguished research professor at the University of Missouri – Kansas City

Jon Hellevig — Jailing of Khodorkovsky Was Crucial for Russia's Prosperity

The Russian version of the Koch Bros. Khodorkovsky was a piker in comparison.

Russia Insider
Jailing of Khodorkovsky Was Crucial for Russia's Prosperity
Jon Hellevig | managing partner of Awara Group

Chris Dillow — Fighting The Pro-Capitalist State

Marx thought that the pro-capitalist state could only wither away after a socialist revolution. I fear he was right - and that such a revolution is a distant prospect.

Stumbling and Mumbling
Fighting The Pro-Capitalist State
Chris Dillow | Investors Chronicle

Matt Bruenig — It Matters How Rich the Rich Are

Capital share/labor share ratio and rent capture by capital and at higher end of labor due to power that are institutionally driven.

…the economy is itself just a large government program. Through its laws and the police, the government has put in place a vast array of economic institutions that collectively determine who gets what at any moment in time. To assess the effectiveness of the institutional design choices the government has made, we need to know who is benefiting from them and to what degree. That means, among other things, knowing how rich the rich are.

Policy Shop

It Matters How Rich the Rich Are

Matt Bruenig

Amy Goodman and Aaron Mate interview Nomi Prins — All the President's Bankers: Nomi Prins on the Secret History of Washington-Wall Street Collusion

Video and transcript of Amy Goodman and Aaron Mate interviewing Nomi Prins

Democracy Now! | Video Interview
All the President's Bankers: Nomi Prins on the Secret History of Washington-Wall Street Collusion
Amy Goodman and Aaron Mate interview Nomi Prins

See also Zero Hedge, All The Presidents' Bankers: The Hidden Alliances That Drive American Power

Prins is getting full spectrum coverage. This is left-right bipartisan issue, although the diagnosis and treatment differs.

Mark Karlin interviews Nomi Prins — The Oligarchy Doesn't Care About Democracy, Just Rigged Markets

Through thorough research and incisive writing, Nomi Prins has revealed how tightly Wall Street and White House policy have been aligned for more than a century. This is a difficult relationship to nail down, but Prins - as one reviewer noted - "followed the money." As a result, All the Presidents' Bankers is a must-read blockbuster of a book that names names and nails down the reality that US domestic and foreign policy is largely driven by the interests of economic hegemony and consolidated wealth.

Prins, a former executive on Wall Street and now an author and journalist, knew where to find the evidence - and it is startling to read the details.

In an extensive interview with Truthout, Prins discusses "the hidden alliances that drive Amercan power."

Truthout | Author Interview
The Oligarchy Doesn't Care About Democracy, Just Rigged Markets
Mark Karlin interviews Nomi Prins, formerly a managing director at Goldman Sachs, a senior managing director at Bear Stearns in London, a strategist at Lehman Brothers, and an analyst at the Chase Manhattan Bank. She is currenty a Senior Fellow at the non-partisan public policy think-tank, Demos.

Robin Broad — Governments and Activists are Fighting the Corporate “Right” to Sue Governments

This post is drawn from a new article regular TCB contributor Robin Broad wrote with John Cavanagh, “A Strategic Fight Against Corporate Rule,” The Nation, February 3, 2014.

TripleCrisis
Governments and Activists are Fighting the Corporate “Right” to Sue Governments
Robin Broad

Daron Acemoglu and James Robinson — Democracy vs. Inequality

Overall, our results suggest that democracy does represent a real shift in political power away from elites and has first-order consequences for redistribution and government policy. But the impact of democracy on inequality may be more limited than one might have expected.

Though our work does not shed light on why this is so, there are several plausible hypotheses. The limited impact of democracy on inequality might be because recent increases in inequality are “market induced” in the sense of being caused by technological change. But equally, this may be because, as in the Director’s Law, the middle classes use democracy to redistribute to themselves.

But the Director’s s Law is unlikely to explain the inability of the US political system to confront inequality, since the middle classes have largely been losers in the widening inequality trends.

Could it be that US democracy is captured? This seems unlikely when looked at from the viewpoint of our typical models of captured democracies. But perhaps there are other ways of thinking about this problem that might relate the increasingly paralyzing gridlock in US politics to capture-related ideas.

Ya think? Maybe look outside the silo?

Why Nations Fail
Democracy vs. Inequality
Daron Acemoglu, Killian, Professor of Economics at MIT, and James Robinson, David Florence Professor of Government at Harvard University

John Light — An Icy New Hampshire Walk Sparks a new Movement to get Money out of Politics (via Moyers & Company)

An Icy New Hampshire Walk Sparks a new Movement to get Money out of Politics (via Moyers & Company)

The temperatures started to drop Tuesday morning, and continued to plummet through the night, so by Wednesday at 8 a.m. it was 0° Fahrenheit in Concord, NH. In the lobby of the Marriott Fairfield Inn next to Interstate 93, noted activist Lawrence Lessig…

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