Saturday, November 22, 2008

The State and the Corporation (a long one)

The overall framing concept for Libertarians is the transition from being Inhabitants of a Progressive State back to being Citizens of the American Nation

Part One: The Progressive State

The Progressive State is

• Paternalistic

• Imperialistic

• Monopolistic

Therefore, the Progressive State represents an attempt to convert the American Nation into a hydraulic empire.

Once the State owns or controls the means of production and redistribution of wealth, legitimizes the use of force to pursue a particular ideology, and maintains a military posture sufficient to keep strategic threats to its territorial integrity from appearing….

That State has rendered itself effectively immortal.

The State may be considered Paternalistic if

• The State utilizes its power to insist on an ideological indoctrination focused on the elimination of most differences of status, wealth, and education, with the exception of that provided to an elite few who emerge as the managerial/ruling class.

• The State therefore controls the definition of what is acceptable behavior based on mandates including ideological precepts and the “will of the people” as interpreted by the State and distinct from the opinions of individual citizens.

• The State’s need for power is measured entirely by the necessity for sufficient strength to do “good works” rather than being limited by the necessity of preserving the liberty of its citizens, because the State becomes (by definition) both the defining authority of individual rights and liberties AND the only mechanism for enforcing them.

The State may be considered Imperialistic if

• The State interferes—either directly or through surrogates, but always essentially unilaterally—in the internal affairs of other nations to secure the long-term economic or military dominance of the State over all potential competitors.

• The State develops and projects military force—either traditional military forces, covert intelligence assets, or surrogate military forces—for missions that are almost always tactically offensive, and builds a world-wide infrastructure to support that projection of force.

• The State insists upon a doctrine of preemptive war, with the necessary threat requirements being measured only by the State’s managerial/ruling elite, and not subject to examination or review by other authorities, either internal or transnational.

The State may be considered monopolistic if

• The State exerts control—either by direct assumption of operations or through an extensive network of regulations—of entire sectors of the national economy.

• The State utilizes its power of taxation and regulation to perform ideologically motivated transfers of wealth designed to impose State-mandated levels of social and economic equality.

• The State arrogates to itself the control of the meta-historical narrative in order to label certain individuals, activities, and economic sectors as being inimical to the public good, and therefore legitimate targets for State control.

Part Two: The Corporation

The Corporation is the natural (if often unwitting) tool of the State in the agglomeration of greater power.

The Corporation shares with the State a form of instrumental immortality, granted through judicial interpretation of the 14th Amendment that provided Corporations with the status of artificial persons with all the same due process rights as an American citizen. Moreover, the personal liability protections involved in Corporate organization mimic the functions of the State’s sovereign immunity, in that individuals can only rarely—if ever—be held legally accountable for aggressive actions (force or fraud) that they instigated through the Corporation. Finally, the Corporation serves a tax-farming function for the State, and allows the State to exercise indirect monopolistic control of entire economic sectors through tax incentives provided to Corporations and regulatory limitations placed upon them.

Thus, the Corporation can be summarized as

• Providing individuals a form of Corporate Immunity against redress against their initiation of force or fraud against other American citizens.

• Servicing the State by acting as a private tax collection agency—Tax Farming.

• Empowering the State to engage in monopolistic behaviors via Tax Incentives and Regulation.

Conversely, however, the Corporation can be seen as a counter-weight against the power of the State in certain circumstances.

The Corporate organization allows for the concentration and preservation of large amounts of Private Wealth more effectively than other business/industrial organizations. Traditionally, accumulations of wealth have drawn the attention of States in need of treasure to support war, empire-building, and the expenses of governing. It is functionally much easier and cost-effective to collect revenue from concentrated, private wealth, than it is to collect the same amount of revenue from poor farmers or artisans in small villages. This reality led to increasingly complex trade organizations designed to shelter wealth from the State, and to shelter the owners of large enterprises from legal and financial consequences of their actions.

A variety of such organizational vehicles came into existence, including joint-stock companies and royal charters. Note that these vehicles [pre-corporate and Corporate] invariably required some form of State Charter and depended [de facto if not de jure] on close informal relationships, both personal and financial, between the elite of the business/mercantile class and the elite of the governing class.

This reality is best exemplified by the easy and regular transition of wealthy individuals between senior Corporate and senior State positions. Having achieved Corporate prominence is usually considered qualification to manage a large State organization, and vice versa. While the skill set for successfully managing large organizations are quite similar whether the organization is State or Corporate, the important outcome of this constant exchange is to blur the line between the State and private enterprise at the highest levels.

This unfortunately means that the Corporation has no interest in the restriction of State power as a general rule; the Corporation is interested in protecting its favored status and using tax policies and regulation as a mechanism for securing economic advantage outside of the functioning of the free market.

Heretical as it may sound, the Corporation has relatively little interest in the Free Market. Competition may lower prices and better service for consumers, but because the Corporation is primarily interested in profit, it seeks rather to reduce costs and increase revenue, and the easiest route to both is usually through monopolistic practice and preferential State policy.

This leads to one of the primary and most dangerous ironies of the State-Corporate relationship: the State, which itself is a vehicle for enforcing monopolistic power, is the only vehicle for enforcing anti-trust and anti-monopoly laws on the Corporation.

The challenge for Libertarian theory is to develop mechanisms for concentrating and protecting private wealth from the State without either making that private wealth a functional arm of State power or insulating the individuals who amass that wealth from accountability for the initiation of force and/or fraud.


Waldo Lydecker's Journal said...

So, I guess, the moral is, if I got enough money, I can buy the rights I'm otherwise denied?

Steven H. Newton said...

Waldo, that's true in virtually any society, isn't it?

"Rights" is a tough concept, because how you define them depends on whether you use a negative definition (rights as something the government cannot alienate) or a positive definition (as something you receive from the government).

But rights are also tied into cultural and social beliefs that may allow de jure rights to exist, but strip them away de facto.

My problem with rights emanating from the State is that the kind of rights you have then depends on who controls the apparatus of the State, not on any specific principles.