F Financial Sector Induced Systemic Instability of Economy

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Financial Sector Induced Systemic Instability of Economy

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that  growth of financial sector represents a direct threat to the stability of the society. Positive feedback loops creates one financial crisis after another with the increasing magnitude leading up to a collapse of financial system like happened in 1927 and 2008.

News Casino Capitalism Recommended Links  Stability is destabilizing: The idea of Minsky moment Corruption of Regulators Quiet coup
Neoliberalism as a New Form of Corporatism Principal-agent problem Numbers racket Criminal negligence in financial regulation Corruption of FED Invisible Hand Hypothesis
The “Too Big To Fail” Problem In Goldman Sachs we trust Citi - The bank that couldn’t shoot straight JPMorgan AIG collapse Lehman
Free Markets Newspeak as Opium for regulators Derivatives Lobby Corrupts Congress Lobbying and the Financial Crisis Control Fraud
(crisis of corporate governance)
Stock Market with buybacks as a Ponzi scheme Derivatives
Small government smoke screen Financial Bonuses as Money Laundering Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Corporatism   Financial obesity
Webliography of heterodox economists HFT Aleynikov vs. Goldman Sachs Casino Capitalism Dictionary Financial Humor Etc
  "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

The Cost of Capitalism: Understanding Market Mayhem and Stabilizing our Economic Future, by Robert Barbera

The flaw with Capitalism is that it creates its own positive feedback loop, snowballing to the point where the accumulation of wealth and power hurts people — eventually even those at the top of the food chain. ”

Uncle Billy Cunctator
In comment to Economic Donkeys

 
  Banks are a clear case of market failure and their employees at the senior level have basically become the biggest bank robbers of all time. As for basing pay on current revenues and not profits over extended periods of time, then that is a clear case of market failure --  
  The banksters have been able to sell the “talent” myth to justify their outsized pay because they are the only ones able to deliver the type of GDP growth the U.S. economy needs in the short term, even if that kills the U.S. economy in the long term. You’ll be gone, I’ll be gone.  
  Unfortunately, many countries go broke pursuing war, if not financially, then morally (are the two different? – this post suggests otherwise).

I occurs to me that the U.S. is also in that flock; interventions justified by grand cause built on fallacy, the alpha and omega of failure. Is the financial apparatchik (or Nomenklatura, a term I like which, as many from the Soviet era, succinctly describes aspects of our situation today) fated also to the trash heap, despite the best efforts of the Man of the hour, Ben Bernanke?

 

Introduction

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that growth of financial sector represents a direct threat to the stability of the society (Keynesianism and the Great Recession )

Without adult supervision, as it were, a financial sector that was already inherently unstable went wild. When the subprime assets were found to be toxic since they were based on mortgages on which borrowers had defaulted, highly indebted or leveraged banks that had bought these now valueless securities had little equity to repay their creditors or depositors who now came after them. This quickly led to their bankruptcy, as in the case of Lehman Brothers, or to their being bailed out by government, as was the case with most of the biggest banks. The finance sector froze up, resulting in a recession—a big one—in the real economy.

Neoliberal revolution, or, as Simon Johnson called it after "quite coup" (Atlantic), brought political power to the financial oligarchy deposed after the New Deal. Deregulation naturally followed, with especially big role played by corrupt Clinton administration.  Positive feedback loops creates one financial crisis after another with the increasing magnitude. "Saving and loans" crisis followed by dot-com crisis of  2000, which in turn followed by the collapse of financial system in 2008, which looks somewhat similar to what happened in 1927.  No prominent financial honcho, who was instrumental in creating "subprime crisis" was jailed.  Most remained filthy rich.

Unless the society puts severe limits on their actions like was done during New Deal,  financial firms successfully subvert the regulation mechanisms and take the society hostage.  But periodic purges with relocation of the most active promoters of "freedom for banks" (aka free market fundamentalism) under the smoke screen of "free market" promotion does not solve the problem of positive feedback loops that banks create by mere existence. That's difficult to do while neoliberal ideology and related neoclassical economy dominates the society thinking (via brainwashing), with universities playing especially negative role -- most of economics departments are captured by neoliberals who censor any heretics. So year after year brainwashing students enter the society without understanding real dangers that neoliberalism brought for them.  Including lack of meaningful employment opportunities.

Of course, most of high level officers of leading finance institutions which caused the crisis of 2008-2009 as a psychological type are as close to  gangsters as one can get. But there is something in their actions that does not depend on individual traits (although many of them definitely can be classified as psychopaths), and is more related to their social position.  This situation is somewhat similar to Bolsheviks coup d'état of 1917 which resulted in capturing Russia by this ideological sect.  And in this sense quite coupe of 1980 is also irreversible in the same sense as Bolsheviks revolution was irreversible:  the "occupation" of the country by a fanatical sect lasts until the population rejects the ideology with its (now apparent) utopian claims.

Bolshevism which lasted 75 years, spend in such zombie state the last two decades (if we assume 1991 as the year of death of Bolshevism, its ideology was dead much earlier -- the grave flaws in it were visible from late 60th, if not after the WWII).  But only  when their ideology was destroyed both by inability to raise the standard of living of the population and by the growing neoliberal ideology as an alternative (and a new, more powerful then Marxism high-demand cult) Bolsheviks started to lose the grip on their power in the country. As a result Bolsheviks lost the power only in 1991, or more correctly switched camps and privatized the country. If not inaptness of their last General Secretary, they probably could last more. In any case after the ideology collapsed, the USSR disintegrated (or more correctly turn by national elites, each of which wanted their peace of the pie).

The sad truth is that the mere growth of financial sector creates additional positive feedback loops and increases structural instability within both the financial sector itself and the society at large. Dynamic systems with strong positive feedback loops not compensated by negative feedback loops are unstable. As a result banks and other financial institution periodically generate a deep, devastating crisis. This is the meaning of famous Hyman Minsky phrase "stability is destabilizing".

In other words, financial apparatchiks (or Financial Nomenklatura, a term from the Soviet era, which succinctly describes aspects of our situation today) drive the country off the cliff because they do not have any countervailing forces, by the strength of their political influence and unsaturable greed. Although the following analogy in weaker then analogy with dynamic systems with positive feedback loops, outsized financial sector can be viewed in  biological terms as cancer.

Cancer, known medically as a malignant neoplasm, is a broad group of diseases involving unregulated cell growth. In cancer, cells divide and grow uncontrollably, forming malignant tumors, and invading nearby parts of the body. The cancer may also spread to more distant parts of the body through the lymphatic system or bloodstream. Not all tumors are cancerous; benign tumors do not invade neighboring tissues and do not spread throughout the body. There are over 200 different known cancers that affect humans.[1]

Like certain types of cancer they depend of weakening "tumor suppressor genes"  (via "Quiet coup" mechanism of acquiring dominant political power) which allow then to engage in uncontrolled growth, destroying healthy cells (and first of all local manufacturing).   

The other suspicion is the unchecked financialization always goes too far and the last N percent of financial activity absorbs much more resources (especially intellectual resources) and creates more potential instability than its additional efficiency-benefits (often zero or negative) can justify. It is hard to imagine that a Hedge Fund Operator of the Year does anything that is even remotely socially useful to justify his enormous (and lightly taxed) compensation. It is pure wealth redistribution up based on political domination of financial oligarchy.  Significant vulnerabilities  within the shadow banking system and derivatives are plain vanilla socially destructive. Yet they persist due to inevitable political power grab by financial oligarchy  (Quiet coup).

Again, I would like to stress that this problem of the oversized financial sector which produces one devastating crisis after another   is closely related to the problem of a positive feedback loops. And the society in which banks are given free hand inevitably degrades into "socialism for banks"  or "casino capitalism" -- a type of neoliberalism with huge inequality and huge criminality of top banking officers.  

Whether we can do without private banks is unclear, but there is sound evidence that unlike growth of manufacturing, private financial sector growth is dangerous for the society health and perverts society goals.  Like cult groups the financial world does a terrific job of "shunning" the principled individuals and suppressing dissent (by capturing and cultivating neoliberal stooges in all major university departments and press),  so self-destructing tendencies after they arise can't be stopped within the framework of neoliberalism. In a way financial firm is like sociopath inevitable produces its  trail of victims (and sociopaths might be useful in battles exactly due to the qualities such as ability to remain cool in dangerous situation, that make them dangerous in the normal course of events).

This tendency of society with unregulated or lightly regulated financial sector toward self-destruction was first formulated as "Minsky instability hypothesis" -- and outstanding intellectual achievement of American economic Hyman Minsky (September 23, 1919 – October 24, 1996). Who BTW was pretty much underappreciated (if not suppressed) during his lifetime because his views were different from  orthodox (and false) neoclassic economic theory which dominates US universities, Like flat Earth theory was enforce by Catholic church before, it is fiercely enforced by an army of well paid neoliberal economics, those Jesuits of modern era. Who prosecute heretics who question flat Earth theory even more efficiently then their medieval counterparts; the only difference is that they do not burn the literally, only figuratively ;-)

Minsky financial instability hypothesis

Former Washington University in St. Louis economics professor Hyman P. Minsky had predicted the Great Recession decades before it happened.  Hyman Minsky was a real student of the Great Depression, while Bernanke who widely is viewed as a scholar who studied the Great Depression, in reality was a charlatan, who just tried to explain the Great Depression from the positions of neo-classical economy. That's a big difference.

Minsky instability hypothesis ("stability is destabilizing" under capitalism) that emerged from his analysis of the Great Depression was based on intellectual heritage of three great thinkers in economics (my presentation is partially based on an outstanding lecture by Steve Keen Lecture 6 on Minsky, Financial Instability, the Great Depression & the Global Financial Crisis). We can talk about three source of influence, there authors writing of which touched the same subject from similar positions and were the base of Hyman Minsky great advance in understanding of mechanics of development of financial crisis under capitalism and the critical role of financial system in it (neoclassical economics ignores the existence of financial system in its analysis): 

  1. Karl Marx influence
  2. Irving Fisher influence
  3. Joseph Schumpeter influence

Karl Marx influence

Minsky didn't follow the conventional version of Marxism  . And it was dangerous for him to do so due to McCarthysm. Even mentioning of Marx might lead to strakism fromthe academy those years.  McCarthy and his followers in academy did not understand the difference between Marx great analysis of capitalism and his utopian vision of the future. Impliedly this witch hunt helped to establish hegemony of neoclassical economy in economic departments in the USA.

While Minsky did not cited Marx in his writings and did use Marx's Labor Theory of Value his thinking was definitely influenced by Marx’s critique of  finance. We now know that he read and admired the Capital. And that not accidental due to the fact that his parents were Mensheviks -- a suppressed after Bolshevik revolution more moderate wing of Russian Social Democratic Party that rejected the idea of launching the socialist revolution in Russia --  in their opinion Russia needed first to became a capitalist country and get rid of remnants of feudalism. They escaped from Soviet Russia when Mensheviks started to be prosecuted by Bolsheviks.

And probably the main influence on Minsky was not Marx's discussion  of finance in Volume I of Capital with a "commodity" model of money, but critical remarks scattered in   Volumes II & III (which were not edited by Marx by compiled posthumously by Engels), where he was really critical of big banks as well as Marx's earlier works (Grundrisse, Theories of Surplus Value) where Marx was scathing about finance:

"A high rate of interest can also indicate, as it did in 1857, that the country is undermined by the roving cavaliers of credit who can afford to pay a high interest because they pay it out of other people's pocket* (whereby, however, they help to determine the rate of interest  for all) and meanwhile they live in grand style on anticipated profits. 

Irving Fisher influence

The second source on which Minsky based his insights was Irving Fisher. Irving Fisher’s reputation destroyed by wrong predictions on stock market prices. In aftermath, developed theory to explain the crash and published it in his book  "The Debt Deflation Theory of Great Depressions". His main points are:

According to Fisher two key disequilibrium forces that push economic into the next economic crisis are debt and subsequent deflation

Joseph Schumpeter influence

Joseph Schumpeter was Joseph Schumpeter has more positive view of capitalism than the other two. He authored the theory of creative destruction as a path by which capitalism achieves higher and higher productivity. He capitalism as necessarily unstable, but for him this was a positive feature -- instability of capitalism the source of its creativity. His view of capitalism was highly dynamic and somewhat resembles the view of Marx (who also thought that capitalism destroys all previous order and create a new one):

Unlike Marx, who thought that the periodic crisis of overproduction  is the source of instability (as well as  gradual absolute impoverishment of workers), Minsky assumed that the key source of that instability of capitalist system is connected with the cycles of business borrowing and fractional bank lending, when "good times" lead to excessive borrowing leading to high leverage and overproduction and thus to eventual debt crisis (The Alternative To Neoliberalism ):

Minsky on capitalism:

The idea of Minsky moment is related to the fact that the fractional reserve banking periodically causes credit collapse when the leveraged credit expansion goes into reverse. And mainstream economists do not want to talk about the fact that increasing confidence breeds increased leverage. So financial stability breeds instability and subsequent financial crisis. All actions to guarantee a market rise, ultimately guarantee it's destruction because greed will always take advantage of a "sure thing" and push it beyond reasonable boundaries.  In other words, marker players are no rational and assume that it would be foolish not to maximize leverage in a market which is going up. So the fractional reserve banking mechanisms ultimately and ironically lead to over lending and guarantee the subsequent crisis and the market's destruction. Stability breed instability.

That means that fractional reserve banking based economic system with private players (aka capitalism) is inherently unstable. And first of all because  fractional reserve banking is debt based. In order to have growth it must create debt. Eventually the pyramid of debt crushes and crisis hit. When the credit expansion fuels asset price bubbles, the dangers for the financial sector and the real economy are substantial because this way the credit boom bubble is inflated which eventually burst. The damage done to the economy by the bursting of credit boom bubbles is significant and long lasting.

Blissex said...

«When credit growth fuels asset price bubbles, the dangers for the financial sector and the real economy are much more substantial.»

So M Minsky 50 years ago and M Pettis 15 years ago (in his "The volatility machine") had it right? Who could have imagined! :-)

«In the past decades, central banks typically have taken a hands-off approach to asset price bubbles and credit booms.»

If only! They have been feeding credit-based asset price bubbles by at the same time weakening regulations to push up allowed capital-leverage ratios, and boosting the quantity of credit as high as possible, but specifically most for leveraged speculation on assets, by allowing vast-overvaluations on those assets.

Central banks have worked hard in most Anglo-American countries to redistribute income and wealth from "inflationary" worker incomes to "non-inflationary" rentier incomes via hyper-subsidizing with endless cheap credit the excesses of financial speculation in driving up asset prices.

Not very hands-off at all.

Steve Keen is probably the most well know researcher who tried to creates model of capitalist economy based on Minsky work (  http://www.debtdeflation.com/blogs/manifesto/ )

John Kay in his January 5 2010 FT column very aptly explained the systemic instability of financial sector hypothesis: 

The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. The first phase was the emerging market defaults of the 1990s. The second was the new economy boom and bust at the turn of the century. The third was the collapse of markets for structured debt products, which had grown so rapidly in the five years up to 2007.

The manifestation of the problem in each phase was different – first emerging markets, then stock markets, then debt. But the mechanics were essentially the same. Financial institutions identified a genuine economic change – the assimilation of some poor countries into the global economy, the opportunities offered to business by new information technology, and the development of opportunities to manage risk and maturity mismatch more effectively through markets. Competition to sell products led to wild exaggeration of the pace and scope of these trends. The resulting herd enthusiasm led to mispricing – particularly in asset markets, which yielded large, and largely illusory, profits, of which a substantial fraction was paid to employees.

Eventually, at the end of each phase, reality impinged. The activities that once seemed so profitable – funding the financial systems of emerging economies, promoting start-up internet businesses, trading in structured debt products – turned out, in fact, to have been a source of losses. Lenders had to make write-offs, most of the new economy stocks proved valueless and many structured products became unmarketable. Governments, and particularly the US government, reacted on each occasion by pumping money into the financial system in the hope of staving off wider collapse, with some degree of success. At the end of each phase, regulators and financial institutions declared that lessons had been learnt. While measures were implemented which, if they had been introduced five years earlier, might have prevented the most recent crisis from taking the particular form it did, these responses addressed the particular problem that had just occurred, rather than the underlying generic problems of skewed incentives and dysfunctional institutional structures.

The public support of markets provided on each occasion the fuel needed to stoke the next crisis. Each boom and bust is larger than the last. Since the alleviating action is also larger, the pattern is one of cycles of increasing amplitude.

I do not know what the epicenter of the next crisis will be, except that it is unlikely to involve structured debt products. I do know that unless human nature changes or there is fundamental change in the structure of the financial services industry – equally improbable – there will be another manifestation once again based on naive extrapolation and collective magical thinking. The recent crisis taxed to the full – the word tax is used deliberately – the resources of world governments and their citizens. Even if there is will to respond to the next crisis, the capacity to do so may not be there.

The citizens of that most placid of countries, Iceland, now backed by their president, have found a characteristically polite and restrained way of disputing an obligation to stump up large sums of cash to pay for the arrogance and greed of other people. They are right. We should listen to them before the same message is conveyed in much more violent form, in another place and at another time. But it seems unlikely that we will.

We made a mistake in the closing decades of the 20th century. We removed restrictions that had imposed functional separation on financial institutions. This led to businesses riddled with conflicts of interest and culture, controlled by warring groups of their own senior employees. The scale of resources such businesses commanded enabled them to wield influence to create a – for them – virtuous circle of growing economic and political power. That mistake will not be easily remedied, and that is why I view the new decade with great apprehension. In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

While Hyman Minsky was the first clearly formulate the financial instability hypothesis, Keynes also understood this dynamic pretty well. He postulated that a world with a large financial sector and an excessive emphasis on the production of investment products creates instability both in terms of output and prices. In other words it automatically tends to generate credit and asset bubbles.  The key driver is the fact that financial professionals generally risk other people’s money and due to this fact have asymmetrical incentives:

This asymmetry is not a new observation of this systemic problem. Andrew Jackson noted it in much more polemic way long ago:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

This asymmetrical incentives ensure that the financial system is structurally biased toward taking on more risk than what should be taken. In other words it naturally tend to slide to the casino model, the with omnipresent reckless gambling as the primary and the most profitable mode of operation while an opportunities last.  The only way to counter this is to throw sand into the wheels of financial mechanism:  enforce strict regulations, limit money supplies and periodically jail too enthusiastic bankers. The latter is as important or even more important as the other two because bankers tend to abuse "limited liability" status like no other sector.

Asset inflation over the past 10 years and the subsequent catastrophe incurred is a way classic behavior of dynamic system with strong positive feedback loop.  Such behavior does not depends of personalities of bankers or policymakers, but is an immanent property of this class of dynamic systems. And the main driving force here was deregulation. So its important that new regulation has safety feature which make removal of it more complicated and requiring bigger majority like is the case with constitutional issues.

Another fact was the fact that due to perverted incentives, accounting in the banks was fraudulent from the very beginning and it was fraudulent on purpose.  Essentially accounting in banks automatically become as bad as law enforcement permits. This is a classic case of control fraud and from prevention standpoint is make sense to establish huge penalties for auditors, which might hurt healthy institutions but help to ensure that the most fraudulent institution lose these bank charter before affecting the whole system.  With the anti-regulatory zeal of Bush II administration the level of auditing became too superficial, almost non-existent. I remember perverted dances with Sarbanes–Oxley when it was clear from the very beginning that the real goal is not to strengthen accounting but to earn fees and to create as much profitable red tape as possible, in perfect Soviet bureaucracy style.

Deregulation also increases systemic risk by influencing the real goals of financial organizations. At some point of deregulation process the goal of higher remuneration for the top brass becomes self-sustainable trend  and replaces all other goals of the financial organization. This is the essence of  Martin Taylor’s, the former chief executive of Barclays,  article FT.com - Innumerate bankers were ripe for a reckoning in the Financial Times (Dec 15, 2009), which is worth reading in its entirety:

City people have always been paid well relative to others, but megabonuses are quite new. From my own experience, in the mid-1990s no more than four or five employees of Barclays’ then investment bank were paid more than £1m, and no one got near £2m. Around the turn of the millennium across the market things began to take off, and accelerated rapidly – after a pause in 2001-03 – so that exceptionally high remuneration, not just individually, but in total, was paid out between 2004 and 2007.

Observers of financial services saw unbelievable prosperity and apparently immense value added. Yet two years later the whole industry was bankrupt. A simple reason underlies this: any industry that pays out in cash colossal accounting profits that are largely imaginary will go bust quickly. Not only has the industry – and by extension societies that depend on it – been spending money that is no longer there, it has been giving away money that it only imagined it had in the first place. Worse, it seems to want to do it all again.

What were the sources of this imaginary wealth?

In the last two of these the bank was not receiving any income, merely “booking revenues”. How could they pay this non-existent wealth out in cash to their employees? Because they had no measure of cash flow to tell them they were idiots, and because everyone else was doing it. Paying out 50 per cent of revenues to staff had become the rule, even when the “revenues” did not actually consist of money.

In the next phase instability is amplified by the way governments and central banks respond to crises caused by credit bubble: the state has powerful means to end a recession, but the policies it uses give rise to the next phase of instability, the next bubble…. When money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up to the hilt. Thus previous bubble and crash become a dress rehearsal for the next.

Resulting self-sustaining "boom-bust" cycle is very close how electronic systems with positive feedback loop behave and   cannot be explained by neo-classical macroeconomic models. Like with electronic devices the financial institution in this mode are unable to provide the services that are needed.

As Minsky noted long ago (sited from Stephen Mihm  Why capitalism fails Boston Globe):

Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

...our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. But with a growing number of economists eager to declare the recession over, and the crisis itself apparently behind us, these policies may prove as discomforting as the theories that prompted them in the first place. Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

And he understood the roots of the current credit bubble much better that neoclassical economists like Bernanke: 
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what [Minsky] called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further.

As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Minsky’s financial instability hypothesis suggests that when optimism is high and ample funds are available for investment, investors tend to migrate from the safe hedge end of the Minsky spectrum to the risky speculative and Ponzi end. Indeed, in the current crisis, investors tried to raise returns by increasing leverage and switching to financing via short-term—sometimes overnight— borrowing (Too late to learn?):

In the church of Friedman, inflation was the ol' devil tempting the good folk; the 1980s seemed to prove that, let loose, it would cause untold havoc on the populace. But, as Barbera notes:

The last five major global cyclical events were the early 1990s recession - largely occasioned by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there a significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbable heights and then collapsed. From 1945 to 1985, there was no recession caused by the instability of investment prompted by financial speculation - and since 1985 there has been no recession that has not been caused by these factors.
Thus, meet the devil in Minsky's paradise - "an investment boom and an associated asset market [that] ran to improbable heights and then collapsed".

According the Barbera, "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

Current economy state can be called following Paul McCulley a "stable disequilibrium" very similar to a state  a sand pile.  All this pile of  stocks, debt instruments, derivatives, credit default swaps and God know corresponds to a  pile of sand that is on the verse of losing stability. Each financial player works hard to maximize their own personal outcome but the "invisible hand" effect in adding sand to the pile that is increasing systemic instability. According to Minsky, the longer such situation continues the more likely and violent an "avalanche".

The late Hunt Taylor wrote, in 2006:

"Let us start with what we know. First, these markets look nothing like anything I've ever encountered before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness, the light-speed at which information moves, the degree to which the movement of one instrument triggers nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary to price them speak to the reality that we are now sailing in uncharted waters.

"... I've had 30-plus years of learning experiences in markets, all of which tell me that technology and telecommunications will not do away with human greed and ignorance. I think we will drive the car faster and faster until something bad happens. And I think it will come, like a comet, from that part of the night sky where we least expect it."

This is a gold age for bankers as Simon Johnson wrote in New Republic (The Next Financial Crisis ):

Banking was once a dangerous profession. In Britain, for instance, bankers faced “unlimited liability”--that is, if you ran a bank, and the bank couldn’t repay depositors or other creditors, those people had the right to confiscate all your personal assets and income until you repaid. It wasn’t until the second half of the nineteenth century that Britain established limited liability for bank owners. From that point on, British bankers no longer assumed much financial risk themselves.

In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous.

Enter, in the early part of the twentieth century, the Federal Reserve. The Fed was founded in 1913, but discussion about whether to create a central bank had swirled for years. “No one can carefully study the experience of the other great commercial nations,” argued Republican Senator Nelson Aldrich in an influential 1909 speech, “without being convinced that disastrous results of recurring financial crises have been successfully prevented by a proper organization of capital and by the adoption of wise methods of banking and of currency”--in other words, a central bank. In November 1910, Aldrich and a small group of top financiers met on an isolated island off the coast of Georgia. There, they hammered out a draft plan to create a strong central bank that would be owned by banks themselves.

What these bankers essentially wanted was a bailout mechanism for the aftermath of speculative crashes -- something more durable than J.P. Morgan, who saved the day in the Panic of 1907 but couldn’t be counted on to live forever. While they sought informal government backing and substantial government financial support for their new venture, the bankers also wanted it to remain free of government interference, oversight, or control.

Another destabilizing fact is so called myth of invisible hand which is closely related to the myth about market self-regulation. The misunderstood argument of Adam Smith [1776], the founder of modern economics, that free markets led to efficient outcomes, “as if by an invisible hand” has played a central role in these debates: it suggested that we could, by and large, rely on markets without government intervention. About "invisible hand" deification, see The Invisible Hand, Trumped by Darwin - NYTimes.com.

The concept of Minsky moment

The moment in the financial system when the quantity of debt turns into quality and produces yet another financial crisis is called Minsky moment. In other words the “Minsky moment” is the time when an unsustainable financial boom turns into uncontrollable collapse of financial markets (aka financial crash). The existence of Minsky moments is one of the most important counterargument against financial market self-regulation.  It also expose free market fundamentalists such as "former Maestro" Greenspan as charlatans. Greenspan actually implicitly admitted that he is and that it was he, who was the "machinist"  who helped to bring the USA economic train off the rails in 2008 via deregulation  and dismantling the New Deal installed safeguards. 

Here how it is explained by Stephen Mihm in Boston Globe in 2009 in the after math of 2008 financial crisis:

“Minsky” was shorthand for Hyman Minsky, an American macroeconomist who died over a decade ago.  He predicted almost exactly the kind of meltdown that recently hammered the global economy. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. As economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

Minsky theory was not well received due to powerful orthodoxy, born in the years after World War II, known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing free market had selectively absorbed a few insights from John Maynard Keynes, the great economist of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment. Most economists still believed that free-market capitalism was a fundamentally stable basis for an economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances play a role in keeping the economy - and employment - on an even keel.

Economists like Paul Samuelson became the public face of the new establishment; he and others at a handful of top universities became deeply influential in Washington. In theory, Minsky could have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter, as well as future Nobel laureate Wassily Leontief.

But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists. While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall Wray, a former student, a “character.”

So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University. Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997 simply noted that his “work has not had a major influence in the macroeconomic discussions of the last thirty years.”

Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which despite its seeming importance had no place in the theories formulated by Samuelson and others. He also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call “bastard Keynesianism.”

Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this shift was already underway: postwar stability, financial innovation, and the receding memory of the Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem, not the solution.

Moreover, the new dogma coincided with a remarkable era of stability. The period from the late 1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience among most major industrial economies. Things had never been more stable. The likelihood that “it” could happen again now seemed laughable.

Yet throughout this period, the financial system - not the economy, but finance as an industry - was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing use of leverage within the financial system.

By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.”

Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another depression [won’t] cure.”

But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive and unstable - never mind that it produces inequality and unemployment, as Keynes had observed - now what?

After spending his life warning of the perils of the complacency that comes with stability - and having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.

To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank” - step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of the Depression - it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor - by building a new high-speed train line, for example.

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”

But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into a catchy phrase and carried on banners.”

It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy. But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”

Stephen Mihm is a history professor at the University of Georgia and author of “A Nation of Counterfeiters” (Harvard, 2007). © Copyright 2009 Globe Newspaper Company.

 

Some important albeit random (and overlapping) points about instability of financial system

The first thing to understand is that attempt to weaken positive feedback looks via regulation, approach that can be called  “regulation as a Swiss knife” does not work without law enforcement and criminal liability for bankers, as there is an obvious problem of corruption of regulators. In this sense the mechanism of purges might be the only one that realistically can work.

In other words it’s unclear who and how can prevents the capture of regulators as financial sector by definition has means to undermine any such efforts. One way this influence work is via lobbing for appointment of pro-financial sector people in key positions. If such "finance-sector-selected" Fed chairman does not like part of Fed mandate related to regulation it can simply ignore it as long as he is sure that he will be reappointed. That happened with Greenspan.  After such process started it became irreversible and only after a significant, dramatic shock to the system any meaningful changes can be instituted and as soon as the lessons are forgotten work on undermining them resumes.

In essence, the Fed is a political organization and Fed Chairman is as close to a real vice-president of the USA as one can get.  As such Fed Chairman serves the elite which rules that country, whether you call them financial oligarchy or some other name. Actually Fed Chairman is the most powerful unelected official in the USA. If you compare this position to the role of the Chairman of the Politburo  in the USSR you’ll might find some interesting similarities.

In other words it is impossible to prevent appointment of another Greenspan by another Reagan without changes in political power balance.  And the transition to banana republic that follows such appointment is irreversible even if the next administration water boards former Fed Chairman to help him to write his memoirs.  That means that you need to far-reaching reform of political system to be able to regulate financial industry and you need to understand that the measures adopted need vigilant protection as soon as the current crisis is a distant history.

Additional reading

Several other source of financial instability were pointed out by others:

There are some outstanding lectures and presentation on YouTube on this topic. Among them:

See an expended list at Webliography of heterodox economists

Dr. Nikolai Bezroukov


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[Oct 22, 2017] Is [neo]Liberalism a Dying Faith

Nationalism really represent a growing threat to neoliberlaism.
Rumor about eminent death of neoliberalism are slightly exaggerated ;-). Currently there is still no alternative social order that can replace it. Collapse of the USSR discredited both socialism even of different flavors then was practiced in the USSR. National socialism would be a step back from neoliberalism.
Notable quotes:
"... What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey." ..."
"... Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power. ..."
"... Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers. ..."
"... It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc. ..."
"... If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008). ..."
"... And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade". ..."
"... The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election. ..."
"... Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency. ..."
"... But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism. ..."
Oct 22, 2017 | www.unz.com

Is Liberalism a Dying Faith? Pat Buchanan • October 20, 2017 • 900 Words • 30 CommentsReply

Asked to name the defining attributes of the America we wish to become, many liberals would answer that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more democratic -- and the model for mankind's future.

Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state at whose altars Liberal Man worships.

But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting what America has on offer.

In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician peoples of Spain are following the Catalan secession crisis with great interest.

The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote, delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized from the Freedom Party. Summarized it is: Austria for the Austrians!

Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.

South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians are talking of separation.

By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."

Platform Promise: Keep the Muslim masses out of the motherland.

To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that in their own nations than did Jefferson in his

... ... ...

European peoples and parties are today using democratic means to achieve "illiberal" ends. And it is hard to see what halts the drift away from liberal democracy toward the restrictive right. For in virtually every nation, there is a major party in opposition, or a party in power, that holds deeply nationalist views.

European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion of the continent along the routes whence the invaders came centuries ago, not as a manageable problem but an existential crisis.

To many Europeans, it portends an irreversible alteration in the character of the countries their grandchildren will inherit, and possibly an end to their civilization. And they are not going to be deterred from voting their fears by being called names that long ago lost their toxicity from overuse.

And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled by American elites, they also seem to reject the idea that foreigners should be treated equally in nations created for their own kind.

Europeans seem to admire more, and model their nations more, along the lines of the less diverse America of the Eisenhower era, than on the polyglot America of 2017.

And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of 1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.

Kennedy promised that the racial and ethnic composition of the America of the 1960s would not be overturned, and he questioned the morality and motives of any who implied that it would.

Jason Liu , October 20, 2017 at 12:02 pm GMT
Yes. Fuck yes.

Liberalism is the naivete of 18th century elites, no different than today. Modernity as you know it is unsustainable, mostly because equality isn't real, identity has value for most humans, pluralism is by definition fractious, and deep down most people wish to follow a wise strongman leader who represents their interests first and not a vague set of universalist values.

Blind devotion to liberal democracy is another one of those times when white people take an abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide doesn't mean diversity is good.

The retreat of liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives:

https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html

Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been false, and flies against the long arc of history. Time for nationalists around the world to smash liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies and the primacy of majorities instead of guilt and pathological compassion dressed up as political ideology.

TG , October 20, 2017 at 1:10 pm GMT
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.

What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey."

Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power.

Paul's Ghost , October 20, 2017 at 6:08 pm GMT
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who lack the imagination to change their habitual targets for so long.

To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed in a suspicious plane crash that was never properly explained.

Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers.

And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now are in favor of Endless Unconstitutional War around the world.

Which can only mean that the term 'Liberal' has been so completely morphed away from its original meanings to be completely worthless.

The last true Liberal in American politics was Paul Wellstone. And even by the time he died for his sins, he was calling himself a "progressive" because after the Clintons and the Gores had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by bankers, a society at constant war and throwing money constantly at a gigantic war machine, a society of censorship where the government needed to control all music lyrics, the same corrupt government where money could by anything from a night in the Lincoln Bedroom to a Presidential Pardon or any other government favor.

Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in the American People over the profits of bankers were calling themselves Progressives in disgust at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even the term Progressive into bombing the world 365 days a year and still constantly throwing money at the military machine and the problems it invents.

So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must be getting senile and just throwing back out the same lines he once wrote as a speechwriter for the last Great Lefty President Richard Nixon.

Miro23 , October 20, 2017 at 6:17 pm GMT

Is Liberalism a Dying Faith?

Another question is whether this is wishful thinking from Pat or some kind of reality.

I think that he's right, that Liberalism is a dying faith, and it's interesting to check the decline.

It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc.

If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).

And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade".

In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich global elite to draw on a sea of globalized serf labour with little or no identity, while their media and SWJ activists operate a scorched earth defense against any sign of opposition.

The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election.

reiner Tor , October 20, 2017 at 6:39 pm GMT
@Randal

A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz, but then over time started moving to the right. It is often speculated that he started it for cynical reasons, like seeing how the right was divided and that there was essentially a vacuum there for a strong conservative party, but there's little doubt he totally internalized it. There's also little doubt (and at the time he and a lot of his fellow party leaders talked about it a lot) that as he (they) started a family and having children, they started to realize how conservatism kinda made more sense than liberalism.

With Kurz, there's the possibility for this path. However, he'd need to start a family soon for that to happen. At that age Orbán was already married with children

Verymuchalive , October 20, 2017 at 10:10 pm GMT
@Paul's Ghost

Liberalism ( large L) is indeed long dead.

Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency.

Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition laws, unlike any President since Clinton. Socially, he was interventionist, though this may have been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies were a long-term failure.

Price Control was quickly dropped, as it was in other Western countries. Long term Price Control, as in present day Venezuela, is economically disastrous.

KenH , October 21, 2017 at 1:51 pm GMT
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration and everything else that ails the West and has made it the sick and dying man of the world.

But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism.

What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing, and physically assaulting all of its enemies on the right who are gaining strength much to their chagrin. They resort to these methods because they can't win an honest debate and in a true free marketplace of ideas they lose.

[Oct 21, 2017] Socialism, Land and Banking 2017 compared to 1917 by Michael Hudson

Notable quotes:
"... Socialism a century ago seemed to be the wave of the future. There were various schools of socialism, but the common ideal was to guarantee support for basic needs, and for state ownership to free society from landlords, predatory banking and monopolies. In the West these hopes are now much further away than they seemed in 1917. Land and natural resources, basic infrastructure monopolies, health care and pensions have been increasingly privatized and financialized. ..."
"... Instead of Germany and other advanced industrial nations leading the way as expected, Russia's October 1917 Revolution made the greatest leap. But the failures of Stalinism became an argument against Marxism – guilt-by-association with Soviet bureaucracy. European parties calling themselves socialist or "labour" since the 1980s have supported neoliberal policies that are the opposite of socialist policy. Russia itself has chosen neoliberalism. ..."
"... Few socialist parties or theorists have dealt with the rise of the Finance, Insurance and Real Estate (FIRE) sector that now accounts for most increase in wealth. Instead of evolving into socialism, Western capitalism is being overcome by predatory finance and rent extraction imposing debt deflation and austerity on industry as well as on labor. ..."
"... Failure of Western economies to recover from the 2008 crisis is leading to a revival of Marxist advocacy. The alternative to socialist reform is stagnation and a relapse into neofeudal financial and monopoly privileges. ..."
"... Russia's Revolution ended after 74 years, leaving the Soviet Union so dispirited that it ended in collapse. The contrast between the low living standards of Russian consumers and what seemed to be Western success became increasingly pronounced. ..."
"... When the Soviet Union dissolved itself in 1991, its leaders took neoliberal advice from its major adversary, the United States, in hope that this would set it on a capitalist road to prosperity. But turning its economies into viable industrial powers was the last thing U.S. advisors wanted to teach Russia. [3] Their aim was to turn it and its former satellites into raw-materials colonies of Wall Street, the City of London and Frankfurt – victims of capitalism, not rival producers. ..."
"... It should not be surprising that banks became the economy's main control centers, as in the West's bubble economies. Instead of the promised prosperity, a new class of billionaires was endowed, headed by the notorious Seven Bankers who appropriated the formerly state-owned oil and gas, nickel and platinum, electricity and aluminum production, as well as real estate, electric utilities and other public enterprises. It was the largest giveaway in modern history. The Soviet nomenklatura became the new lords in outright seizure that Marx would have characterized as "primitive accumulation." ..."
"... The American advisors knew the obvious: Russian savings had been wiped out by the polst-1991 hyperinflation, so the new owners could only cash out by selling shares to Western buyers. The kleptocrats cashed out as expected, by dumping their shares to foreign investors so quickly at such giveaway prices that Russia's stock market became the world's top performer for Western investors in 1994-96. ..."
"... The basic neoliberal idea of prosperity is financial gain based on turning rent extraction into a flow of interest payments by buyers-on-credit. This policy favors financial engineering over industrial investment, reversing the Progressive Era's industrial capitalism that Marx anticipated would be a transition stage leading to socialism. Russia adopted the West's anti-socialist rollback toward neofeudalism. ..."
"... Russia joined the dollar standard. Buying Treasury bonds meant lending to the U.S. Government. The central bank bought U.S. Treasury securities to back its domestic currency. These purchases helped finance Cold War escalation in countries around Russia. Russia paid 100% annual interest in the mid-1990s, creating a bonanza for U.S. investors. On balance, this neoliberal policy lay Russia's economy open to looting by financial institutions seeking natural resource rent, land rent and monopoly rent for themselves. Instead of targeting such rents, Russia imposed taxes mainly on labor via a regressive flat tax – too right wing to be adopted even in the United States! ..."
"... Theories of Surplus Value ..."
"... This Western financial advice became a textbook example of how not ..."
"... By 1991, when the Soviet Union's leaders decided to take the "Western" path, the Western economies themselves were reaching a terminus. Appearances were saved by a wave of unproductive credit and debt creation to sustain the bubble economy that finally crashed in 2008. ..."
"... The same debt overgrowth occurred in the industrial sector, where bank and bondholder credit since the 1980s has been increasingly for corporate takeovers and raiding, stock buybacks and even to pay dividends. Industry has become a vehicle for financial engineering to increase stock prices and strip assets, not to increase the means of production. The result is that capitalism has fallen prey to resurgent rentier ..."
"... Theories of Surplus Value ..."
"... American Journal of Economics and Sociology ..."
"... Super-Imperialism ..."
"... The Great Credit Crash ..."
"... The Contradictions of Austerity: The Socio-Economic Costs of the Neoliberal Baltic Model ..."
"... Journal of Economic Issues ..."
Oct 20, 2017 | www.counterpunch.org
Socialism a century ago seemed to be the wave of the future. There were various schools of socialism, but the common ideal was to guarantee support for basic needs, and for state ownership to free society from landlords, predatory banking and monopolies. In the West these hopes are now much further away than they seemed in 1917. Land and natural resources, basic infrastructure monopolies, health care and pensions have been increasingly privatized and financialized.

Instead of Germany and other advanced industrial nations leading the way as expected, Russia's October 1917 Revolution made the greatest leap. But the failures of Stalinism became an argument against Marxism – guilt-by-association with Soviet bureaucracy. European parties calling themselves socialist or "labour" since the 1980s have supported neoliberal policies that are the opposite of socialist policy. Russia itself has chosen neoliberalism.

Few socialist parties or theorists have dealt with the rise of the Finance, Insurance and Real Estate (FIRE) sector that now accounts for most increase in wealth. Instead of evolving into socialism, Western capitalism is being overcome by predatory finance and rent extraction imposing debt deflation and austerity on industry as well as on labor.

Failure of Western economies to recover from the 2008 crisis is leading to a revival of Marxist advocacy. The alternative to socialist reform is stagnation and a relapse into neofeudal financial and monopoly privileges.

Socialism flowered in the 19 th century as a program to reform capitalism by raising labor's status and living standards, with a widening range of public services and subsidies to make economies more efficient. Reformers hoped to promote this evolution by extending voting rights to the working population at large.

Ricardo's discussion of land rent led early industrial capitalists to oppose Europe's hereditary landlord class. But despite democratic political reform, the world has un-taxed land rent and is still grappling with the problem of how to keep housing affordable instead of siphoning off rent to a landlord class – more recently transmuted into mortgage interest paid to banks by owners who pledge the rental value for loans. Most bank lending today is for real estate mortgages. The effect is to bid up land prices toward the point where the entire rental value is paid as interest. This threatens to be a problem for socialist China as well as for capitalist economies.

Landlords, banks and the cost of living

The classical economists sought to make their nations more competitive by keeping down the price of labor so as to undersell competitors. The main cost of living was food; today it is housing. Housing and food prices are determined not by the material costs of production, but by land rent – the rising market price for land.

In the era of the French Physiocrats, Adam Smith, David Ricardo and John Stuart Mill, this land rent accrued to Europe's hereditary landlord class. Today, the land's rent is paid mainly to bankers – because families need credit to buy a home. Or, if they rent, their landlords use the property rent to pay interest to the banks.

The land issue was central to Russia's October Revolution, as it was for European politics. But the discussion of land rent and taxation has lost much of the clarity (and passion) that guided the 19 th century when it dominated classical political economy, liberal reform, and indeed most early socialist politics.

In 1909/10 Britain experienced a constitutional crisis when the democratically elected House of Commons passed a land tax, only to be overridden by the House of Lords, governed by the old aristocracy. The ensuing political crisis was settled by a rule that the Lords never again could overrule a revenue bill passed by the House of Commons. But that was Britain's last real opportunity to tax away the economic rents of landlords and natural resource owners. The liberal drive to tax the land faltered, and never again would gain serious chance of passage.

The democratization of home ownership during the 20 th century led middle-class voters to oppose property taxes – including taxes on commercial sites and natural resources. Tax policy in general has become pro- rentier and anti-labor – the regressive opposite of 19 th -century liberalism as developed by "Ricardian socialists" such as John Stuart Mill and Henry George. Today's economic individualism has lost the early class consciousness that sought to tax economic rent and socialize banking.

The United States enacted an income tax in 1913, falling mainly on rentier income, not on the working population. Capital gains (the main source of rising wealth today) were taxed at the same rate as other income. But the vested interests campaigned to reverse this spirit, slashing capital gains taxes and making tax policy much more regressive. The result is that today, most wealth is not gained by capital investment for profits. Instead, asset-price gains have been financed by a debt-leveraged inflation of real estate, stock and bond prices.

Many middle-class families owe most of their net worth to rising prices for their homes. But by far the lion's share of the real estate and stock market gains have accrued to just One Percent of the population. And while bank credit has enabled buyers to bid up housing prices, the price has been to siphon off more and more of labor's income to pay mortgage loans or rents. As a result, finance today is what is has been throughout history: the main force polarizing economies between debtors and creditors.

Global oil and mining companies created flags of convenience to make themselves tax-exempt, by pretending to make all their production and distribution profits in tax-free trans-shipping havens such as Liberia and Panama (which use U.S. dollars instead of being real countries with their own currency and tax systems).

The fact that absentee-owned real estate and natural resource extraction are practically free of income taxation shows that democratic political reform has not been a sufficient guarantee of socialist success. Tax rules and public regulation have been captured by the rentiers , dashing the hopes of 19 th -century classical reformers that progressive tax policy would produce the same effect as direct public ownership of the means of production, while leaving "the market" as an individualistic alternative to government regulation or planning.

In practice, planning and resource allocation has passed to the banking and financial sector. Many observers hoped that this would evolve into state planning, or at least work in conjunction with it as in Germany. But liberal "Ricardian socialist" failed, as did German-style "state socialism" publicly financing transportation and other basic infrastructure, pensions and similar "external" costs of living and doing business that industrial employers otherwise would have to bear. Attempts at "half-way" socialism via tax and regulatory policy against monopolies and banking have faltered repeatedly. As long as major economic or political choke points are left in private hands, they will serve s springboards to subvert real reform policies. That is why Marxist policy went beyond these would-be socialist reforms.

To Marx, the historical task of capitalism was to prepare the way for socializing the means of production by clearing away feudalism's legacy: a hereditary landlord class, predatory banking, and the monopolies that financial interests had pried away from governments. The path of least resistance was to start by socializing land and basic infrastructure. This drive to free society from economic overhead in the form of hereditary privilege and unearned income by the "idle rich" was a step toward socialist management, by minimizing rentier costs (" faux frais of production").

Proto-socialist reform in the leading industrial nations

Marx was by no means alone in expecting a widening range of economic activity to be shifted away from the market to the public sector. State socialism (basically, state-sponsored capitalism) subsidized pensions and public health, education and other basic needs so as to save industrial enterprise from having to bear these charges.

In the United States, Simon Patten – the first economics professor at the new Wharton business school at the University of Pennsylvania – defined public infrastructure as a "fourth factor of production" alongside labor, capital and land. The aim of public investment was not to make a profit, but to lower the cost of living and doing business so as to minimize industry's wage and infrastructure bill. Public health, pensions, roads and other transportation, education, research and development were subsidized or provided freely. [1]

The most advanced industrial economies seemed to be evolving toward some kind of socialism. Marx shared a Progressive Era optimism that expected industrial capitalism to evolve in the most logical way, by freeing economies from the landlordship and predatory banking inherited from Europe's feudal era. That was above all the classical reform program of Adam Smith, John Stuart Mill and the intellectual mainstream.

But the aftermath of World War I saw the vested interests mount a Counter-Enlightenment. Banking throughout the Western world find its major market in real estate mortgage lending, natural resource extraction and monopolies – the Anglo-American model, not that of German industrial banking that had seemed to be capitalism's financial future in the late 19 th century.

Since 1980 the Western nations have reversed early optimistic hopes to reform market economies. Instead of the classical dream of taxing away the land rent that had supported Europe's hereditary landed aristocracies, commercial real estate has been made virtually exempt from income taxation. Absentee owners avoid tax by a combination of tax-deductibility for interest payments (as if it is a necessary business expense) and fictitious over-depreciation tax credits that pretend that buildings and properties are losing value even when market prices for their land are soaring.

These tax breaks have made real estate the largest bank customers. The effect has been to financialize property rents into interest payments. Likewise in the industrial sphere, regulatory capture by lobbyists for the major monopolies has disabled public attempts to keep prices in line with the cost of production and prevent fraud by breaking up or regulating monopolies. These too have become major bank clients.

The beginning and end of Russian socialism

Most Marxists expected socialism to emerge first in Germany as the most advanced capitalist economy. After its October 1917 Revolution, Russia seemed to jump ahead, the first nation to free itself from rent and interest charges inherited from feudalism. By taking land, industry and finance into state control, Soviet Russia's October Revolution created an economy without private landlords and bankers. Russian urban planning did not take account of the natural rent-of-location, nor did it charge for the use of money created by the state bank. The state bank created money and credit, so there was no need to rely on a wealthy financial class. And as property owner, the state did not seek to charge land rent or monopoly rent.

By freeing society from the post-feudal rentier class of landlords, bankers and predatory finance, the Soviet regime was much more than a bourgeois revolution. The Revolution's early leaders sought to free wage labor from exploitation by taking industry into the public domain. State companies provided labor with free lunches, education, sports and leisure activity, and modest housing.

Agricultural land tenure was a problem. Given its centralized marketing role, the state could have reallocated land to build up a rural peasantry and helped it invest in modernization. The state could have manipulated crop prices to siphon off agricultural gains, much like Cargill does in the United States. Instead, Stalin's collectivization program waged a war against the kulaks. This political shock led to famine. It was a steep price to pay for avoiding rent was paid to a landlord class or peasantry.

Marx had said nothing about the military dimension of the transition from progressive industrial capitalism to socialism. But Russia's Revolution – like that of China three decades later – showed that the attempt to create a socialist economy had a military dimension that absorbed the lion's share of the economic surplus. Military aggression by a half dozen leading capitalist nations seeking to overthrow the Bolshevik government obliged Russia to adopt War Communism. For over half a century the Soviet Union devoted most of capital to military investment, not provide sufficient housing or consumer goods for its population beyond spreading literacy, education and public health.

Despite this military overhead, the fact that the Soviet Union was free of a rentier class of financiers and absentee landlords should have made the Soviet Union the world's most competitive low-cost economy in theory. In 1945 the United States certainly feared the efficiency of socialist planning. Its diplomats opposed Soviet membership on the ground that state enterprise and pricing would enable such economies to undersell capitalist countries. [2] So socialist countries were kept out of the IMF, World Bank and the planned World Trade Organization, explicitly on the ground that they were free of land rent, natural resource rent, monopoly rent and financial charges.

Capitalist economies are now privatizing and financializing their basic needs and infrastructure. Every activity is being forced into "the market," at prices that need to cover not only the technological costs of production but also interest, ancillary financial fees and pension set-asides. The cost of living and doing business is further privatized as financial interests pry roads, health care, water, communications and other public utilities away from the public sector, while driving housing and commercial real estate deeply into debt.

The Cold War has shown that capitalist countries plan to continue fighting socialist economies, forcing them to militarize in self-defense. The resulting oppressive military overhead is then blamed on socialist bureaucracy and inefficiency.

The collapse of Russian Stalinism

Russia's Revolution ended after 74 years, leaving the Soviet Union so dispirited that it ended in collapse. The contrast between the low living standards of Russian consumers and what seemed to be Western success became increasingly pronounced. In contrast to China's housing construction policy, the Soviet regime insisted that families double up. Clothing and other consumer goods had only drab designs, needlessly suppressing variety. To cap matters, public opposition to Russia's military personnel losses in Afghanistan caused popular resentment.

When the Soviet Union dissolved itself in 1991, its leaders took neoliberal advice from its major adversary, the United States, in hope that this would set it on a capitalist road to prosperity. But turning its economies into viable industrial powers was the last thing U.S. advisors wanted to teach Russia. [3] Their aim was to turn it and its former satellites into raw-materials colonies of Wall Street, the City of London and Frankfurt – victims of capitalism, not rival producers.

Russia has gone to the furthest anti-socialist extreme by adopting a flat tax that fails to distinguish wages and profits of labor and capital from unearned rental income. By also having to pay a value-added tax (VAT) on consumer goods (with no tax on trading in financial assets), labor is taxed much higher than the wealthy.

Most Western "wealth creation" is achieved by debt-leveraged price increases for real estate, stocks and bonds, and by privatizing the public domain. The latter process has gained momentum since the early 1980s in Margaret Thatcher's Britain and Ronald Reagan's America, followed by Third World countries acting under World Bank tutelage. The pretense is that privatization will maximize technological efficiency and prosperity for the economy as a whole.

Following this advice, Russian leaders agreed that the major sources of economic rent – natural resource wealth, real estate and state companies – should be transferred to private owners (often to themselves and associated insiders). The "magic of the marketplace" was supposed to lead the new owners to make the economy more efficient as a byproduct of making money in the quickest way possible.

Each Russian worker got a "voucher" worth about $25. Most were sold off simply to obtain money to buy food and other needs as many companies stopped paying wages. Russia had wiped out domestic savings with hyperinflation after 1991.

It should not be surprising that banks became the economy's main control centers, as in the West's bubble economies. Instead of the promised prosperity, a new class of billionaires was endowed, headed by the notorious Seven Bankers who appropriated the formerly state-owned oil and gas, nickel and platinum, electricity and aluminum production, as well as real estate, electric utilities and other public enterprises. It was the largest giveaway in modern history. The Soviet nomenklatura became the new lords in outright seizure that Marx would have characterized as "primitive accumulation."

The American advisors knew the obvious: Russian savings had been wiped out by the polst-1991 hyperinflation, so the new owners could only cash out by selling shares to Western buyers. The kleptocrats cashed out as expected, by dumping their shares to foreign investors so quickly at such giveaway prices that Russia's stock market became the world's top performer for Western investors in 1994-96.

The Russian oligarchs kept most of their sales proceeds abroad in British and other banks, beyond the reach of Russian authorities to recapture. Much was spent on London real estate, sports teams and luxury estates in the world's flight-capital havens. Almost none was invested in Russian industry. Wage arrears often mounted up half a year behind. Living standards shrank, along with the population as birth rates plunged throughout the former Soviet economies. Skilled labor emigrated.

The basic neoliberal idea of prosperity is financial gain based on turning rent extraction into a flow of interest payments by buyers-on-credit. This policy favors financial engineering over industrial investment, reversing the Progressive Era's industrial capitalism that Marx anticipated would be a transition stage leading to socialism. Russia adopted the West's anti-socialist rollback toward neofeudalism.

Russian officials failed to understand the State Theory of money that is the basis of Modern Monetary Theory: States can create their own money, giving it value by accepting it in payment of taxes. The Soviet government financed its economy for seventy years without any need to back the ruble with foreign exchange. But Russia's central bank was persuaded that "sound money" required it to back its domestic ruble currency with U.S. Treasury bonds in order to prevent inflation. Russian leaders did not realize that dollars or other foreign currencies were only needed to finance balance-of-payments deficits, not domestic spending except as this money was spent on imports.

Russia joined the dollar standard. Buying Treasury bonds meant lending to the U.S. Government. The central bank bought U.S. Treasury securities to back its domestic currency. These purchases helped finance Cold War escalation in countries around Russia. Russia paid 100% annual interest in the mid-1990s, creating a bonanza for U.S. investors. On balance, this neoliberal policy lay Russia's economy open to looting by financial institutions seeking natural resource rent, land rent and monopoly rent for themselves. Instead of targeting such rents, Russia imposed taxes mainly on labor via a regressive flat tax – too right wing to be adopted even in the United States!

When the Soviet Union dissolved itself, its officials showed no apprehension of how quickly their economies would be de-industrialized as a result of accepting U.S. advice to privatize state enterprises, natural resources and basic infrastructure. Whatever knowledge of Marx's analysis of capitalism had existed (perhaps in Nicolai Bukharin's time) was long gone. It is as if no Russian official had read Volumes II and III of Marx's Capital (or Theories of Surplus Value ) where he reviewed the laws of economic rent and interest-bearing debt.

The inability of Russia, the Baltics and other post-Soviet countries to understand the FIRE sector and its financial dynamics provides an object lesson for other countries as to what to avoid. Reversing the principles of Russia's October 1917 Revolution, the post-Soviet kleptocracy was akin to the feudal epoch's "primitive accumulation" of the land and commons. They adopted the neoliberal business plan: to establish monopolies, first and most easily by privatizing the public infrastructure that had been built up, extracting economic rents and them paying out the resulting as interest and dividends.

This Western financial advice became a textbook example of how not to organize an economy. [4] Having rejoined the global economy free of debt in 1991, Russia's population, companies and government quickly ran up debts as a result of its man-made disaster. Families could have been given their homes freely, just as corporate managers were given their entire companies virtually for free. But Russian managers were as anti-labor as they were greedy to grab their own assets from the public domain. Soaring housing prices quickly plagued Russian's economy with one of the world's highest-priced living and business costs. That prevented any thought of industrial competitiveness with the United States or Europe. What passed for Soviet Marxism lacked an understanding of how economic rents and the ensuing high labor costs affected international prices, or how debt service and capital flight affected the currency's exchange rate.

Adversaries of socialism pronounced Marxist theory dead, as if the Soviet dissolution meant the end of Marxism. But today, less than three decades later, the leading Western economies are themselves succumbing to an overgrowth of debt and shrinking prosperity. Russia failed to recognize that just as its own economy was expiring, so was the West's. Industrial capitalism is succumbing to a predatory finance capitalism that is leaving Western economies debt-ridden. [5] The underlying causes were clear already a century ago: unchecked financial rentiers , absentee ownership and monopolies.

The post-Soviet collapse in the 1990s was not a failure of Marxism, but of the anti-socialist ideology that is plunging Western economies under domination by the Finance, Insurance and Real Estate (FIRE) sector's symbiosis of the three forms of rent extraction: land and natural resource rent, monopoly rent, and interest (financial rent). This is precisely the fate from which 19 th -century socialism, Marxism and even state capitalism sought to save the industrial economies.

A silver lining to the Soviet "final" stage has been to free Marxist analysis from Russian Marxology. Its focus of Soviet Marxology was not an analysis of how the capitalist nations were becoming financialized neo- rentier economies, but was mainly propagandistic, ossifying into a stereotyped identity politics appealing to labor and oppressed minorities. Today's revival of Marxist scholarship has begun to show how the U.S.-centered global economy is entering a period of chronic austerity, debt deflation, and polarization between creditors and debtors.

Financialization and privatization are submerging capitalism in debt deflation

By 1991, when the Soviet Union's leaders decided to take the "Western" path, the Western economies themselves were reaching a terminus. Appearances were saved by a wave of unproductive credit and debt creation to sustain the bubble economy that finally crashed in 2008.

The pitfalls of this financial dynamic were not apparent in the early years after World War II, largely because economies emerged with their private sectors free of debt. The ensuing boom endowed the middle class in the United States and other countries, but was debt financed, first for home ownership and commercial real estate, then by consumer credit to purchase of automobiles and appliances, and finally by credit-card debt just to meet living expenses.

The same debt overgrowth occurred in the industrial sector, where bank and bondholder credit since the 1980s has been increasingly for corporate takeovers and raiding, stock buybacks and even to pay dividends. Industry has become a vehicle for financial engineering to increase stock prices and strip assets, not to increase the means of production. The result is that capitalism has fallen prey to resurgent rentier interests instead of liberating economies from absentee landlords, predatory banking and monopolies. Banks and bondholders have found their most lucrative market not in the manufacturing sector but in real estate and natural resource extraction.

These vested interests have translated their takings into the political power to shed taxes and dismantle regulations on wealth. The resulting political Counter-Reformation has inverted the idea of "free market" to mean an economy free for rent extractors, not free from landlords, monopolists and financial exploitation as Adam Smith, John Stuart Mill and other classical economists had envisioned. The word "reform" as used by today's neoliberal media means undoing Progressive Era reforms, dismantling public regulation and government power – except for control by finance and its allied vested interests.

All this is the opposite of socialism, which has now sunk to its nadir through the Western World. The past four decades have seen most of the European and North American parties calling themselves "socialist" make an about-face to follow Tony Blair's New Labour, the French socialists-in-name and the Clinton's New Democrats. They support privatization, financialization and a shift away from progressive taxation to a value-added tax (VAT) falling on consumers, not on finance or real estate.

China's socialist diplomacy in today's hostile world

Now that Western finance capitalism is stagnating, it is fighting even harder to prevent the post-2008 crisis from leading to socialist reforms that would re-socialize infrastructure that has been privatized and put a public banking system in place. Depicting the contrast between socialist and finance-capitalist economies as a clash of civilizations, U.S.-centered "Western" diplomacy is using military and political subversion to prevent a transition from capitalism into socialism.

China is the leading example of socialist success in a mixed economy. Unlike the Soviet Union, it has not proselytized its economic system or sought to promote revolution abroad to emulate its economic doctrine. Just the opposite: To avert attack, China has given foreign investors a stake in its economic growth. The aim has been to mobilize U.S. and other foreign interests as allies, willing customers for China's exports, and suppliers of modern production facilities in China.

This is the opposite of the antagonism that confronted Russia. The risk is that it involves financial investment. But China has protected its autonomy by requiring majority Chinese ownership in most sectors. The main danger is domestic, in the form of financial dynamics and private rent extraction. The great economic choice facing China today concerns the degree to which land and natural resources should be taxed.

The state owns the land, but does fully tax its rising valuation or rent-of-location that has made many families rich. Letting the resulting real-estate and financialized wealth dominate its economic growth poses two dangers: First, it increases the price that new buyers must pay for their home. Second, rising housing prices force these families to borrow – at interest. This turns the rental value of land – value created by society and public infrastructure investment – into a flow of interest to the banks. They end up receiving more over time than the sellers, while increasing the cost of living and doing business. That is a fate which a socialist economy must avoid at all costs.

At issue is how China can best manage credit and natural resource rent in a way that best meets the needs of its population. Now that China has built up a prosperous industry and real estate, its main challenge is to avoid the financial dynamics that are subjecting the West to debt deflation and burying Western economies. To avoid these dynamics, China must curtail the proliferation of unproductive debt created merely to transfer property on credit, inflating asset prices in the process.

Socialism is incompatible with a rentier class of landlords, natural resource owners and monopolists – the preferred clients of banks hoping to turn economic rent into interest charges. As a vehicle to allocate resources "the market" reflects the status quo of property ownership and credit-creation privileges at any given moment of time, without consideration for what is fair and efficient or predatory. Vested interests claim that such a market is an immutable force of nature, whose course cannot be altered by government "interference." This rhetoric of political passivity aims to deter politicians and voters from regulating economies, leaving the wealthy free to extract as much economic rent and interest as markets can bear by privatizing real estate, natural resources, banking and other monopolies.

Such rent seeking is antithetical to socialism's aim to take these assets into the public domain. That is why the financial sector, oil and mineral extractors and monopolists fight so passionately to dismantle state regulatory power and public banking. That is the diplomacy of finance capital, aiming to consolidate American hegemony over a unipolar world. It backs this strategy with a neoliberal academic curriculum that depicts predatory financial and rentier gains as if they add to national income, not simply transfer it into the hands of the rentier classes. This misleading picture of economic reality poses a danger for China sending its students to study economics at American and European universities.

The century that has elapsed since Russia's October 1917 Revolution has produced a substantial Marxist literature describing how finance capitalism has overpowered industrial capitalism. Its dynamics occupied Marx in Volumes II and III of Capital (and also his Theories of Surplus Value ). Like most observers of his era, Marx expected capitalism to make a substantial step toward socialism by overcoming the dynamics of parasitic capital, above all the tendency for debt to keep on expanding at compound interest until it produces a financial crash.

The only way to control banks and their allied rentier sectors is outright socialization. The past century has shown that if society does not control the banks and financial sector, they will control society. Their strategy is to block government money creation so that economies will be forced to rely on banks and bondholders. Regulatory authority to limit such financial aggression and the monopoly pricing and rent extraction it supports has been crippled in the West by "regulatory capture" by the rentier oligarchy.

Attempts to tax away rental income (the liberal alternative to taking real estate and natural resources directly into the public domain) is prone to lobbying for loopholes and evasion, most notoriously via offshore banking centers in tax-avoidance enclaves and the "flags of convenience" sponsored by the global oil and mining companies. This leaves the only way to save society from the financial power to convert rent into interest to be a policy of nationalizing natural resources, fully taxing land rent (where land and minerals are not taken directly into the public domain), and de-privatizing infrastructure and other key sectors.

Conclusion

Markets have not recovered for the products of American industry and labor since 2008. Industrial capitalism has been sacrificed to a form of finance capitalism that is looking more pre-capitalist (or simply oligarchic and neofeudal) with each passing year. The resulting polarization forces every economy – including China – to choose between saving its bankers and other creditors or freeing debtors and lowering the economy's cost structure. Will the government enforce bank and bondholder claims, or will it give priority to the economy and its people? That is an eternal political question spanning pre-capitalist, capitalist and post-capitalist economies.

Marx described the mathematics of compound interest expanding to absorb the entire economy as age-old, long predating industrial capitalism. He characterized the ancient mode of production as dominated by slavery and usury, and medieval banking as predatory. These financial dynamics exist in socialist economies just as they did in medieval and ancient economies. The way in which governments manage the dynamics of credit and debt thus are the dominant force in every era, and should receive the most pressing attention today as China shapes its socialist future.

Notes.

[1] I give the details in "Simon Patten on Public Infrastructure and Economic Rent Capture," American Journal of Economics and Sociology 70 (October 2011):873-903.

[2] My book Super-Imperialism (1972; new ed. 2002) reviews this discussion during 1944-46.

[3] I discuss the IMF and World Bank plan to wipe out Russian savings with hyperinflation and make manufacturing investment uneconomic in "How Neoliberal Tax and Financial Policy Impoverishes Russia – Needlessly," Mir Peremen (The World of Transformations), 2012 (3):49-64 (in Russian). МИР ПЕРЕМЕН 3/2012 (ISSN 2073-3038) Mir peremen М. ХАДСОН, Неолиберальная налоговая и финансовая политика приводит к обнищанию России, 49-64.

[4] I give details in "How Neoliberals Bankrupted 'New Europe': Latvia in the Global Credit Crisis," (with Jeffrey Sommers), in Martijn Konings, ed., The Great Credit Crash (Verso: London and New York, 2010), pp. 244-63, and "Stockholm Syndrome in the Baltics: Latvia's neoliberal war against labor and industry," in Jeffrey Sommers and Charles Woolfson , eds., The Contradictions of Austerity: The Socio-Economic Costs of the Neoliberal Baltic Model (Routledge 2014), pp. 44-63.

[5] For more analysis see Dirk Bezemer and Michael Hudson, " Finance is Not the Economy: Reviving the Conceptual Distinction ," Journal of Economic Issues , 50 (2016: #3), pp. 745-768.

[Oct 16, 2017] C Wright Mills called the US state a plutocracy all fifty years ago

Notable quotes:
"... Indeed; smart, intelligent, "clever" folks in no way confers any degree of civility on their "vested" interests. Manipulation and control are suitably useful tools for their purposes. ..."
"... The media is not a major player in running the country, contrary to what much of the right has been brainwashed to believe. It's a tool of the elite. A hammer is also a very useful tool but it doesn't do much to determine what the carpenter builds. ..."
"... We convinced ourselves that our form of oligarchy was somehow "better" than other forms, when in fact, the end game was always the same..concentrating the power in as few hands as possible. Denial was the name of the game here in the US. ..."
"... They learned their lessons well after the 60's, the last time the people really raised up against the machine, so they have given us all the; junk food at a low cost, all the TV and mindless sexually charged entertainment, all the "debt wealth", a simple minded, unread, semi-literate, beer swilling fool could ever ask for. And we all gladly gobble it up and follow the crowd, for who wants to be on the outside looking in... ..."
"... There is always a ruling elite because power is the wellspring of all human actions. There is also a certain moral consciousness that many people argue is innate in human nature, and that consciousness is fairness. The fairness instinct survives where ordinary human sympathy may fail. Based upon this basic morality of fairness those of us who are willing to take risks in the interest of fairness need to prune and tend the ruling elites as soon as possible. We proles need to act together. ..."
"... Waiting for the oligarchy to rot from within isn't what i would call a viable plan. Not when there is a far better and far more sure way to get the job done. Start with capping wealth accumulation. ..."
"... With all the upheaval in today's politics, it's hard not to think that this moment is one in which the future of the political system might be more up for grabs than it has been in generations. ..."
"... Dominance of oligarchic political power, through neoliberalism, over the last four decades has effectively put such policies out of bounds. ..."
"... The last one I recall was an article by Kenan Malik on identity politics . For what exists in this country, the UK, I have previously used the term "oligarchy by profession" ... meaning a pool of the usually upper half of the middle class, or a group in whom that group is disproportionally represented, who not only likely have a select education but who go on to become part of certain professions - accountants, lawyers, journalists, bankers, doctors etc. ... and of course, politicians tend to be drawn from these. ..."
"... Apparently we're so distracted that we're also all genuinely shocked that Hollywood is rife with pedophilia and extreme sexual harassment as though it's some revelation that we didn't know already, but that's another conversation. ..."
"... If we're all so distracted then it's not difficult for our political 'representatives' -- I use that word very tentatively because they barely ever do -- to subject themselves to the oligarchs for a few scraps more than we have ourselves. ..."
"... Limiting govt still leaves economic power and the tendency towards monopoly untouched. ..."
"... Culture is the key, much more than any genetic impulse, which is practically meaningless and so explains nothing. ..."
"... As wealth defense is so important to oligarchs, there is a constant pressure to cheat and break the law. One solution therefore is to apply the law but also to construct legislation with specific principles in mind. If the point of tax legislation is to contribute your share towards the general good then those who avoid and evade tax would be guilty of a technical breach but also a breach of the principle. ..."
"... However our laws are skewed to allowing the wealthy to defend their wealth and so a party of the people is always needed. Always. ..."
Oct 16, 2017 | discussion.theguardian.com

cognitivedissonance1 , 15 Oct 2017 13:25

Nothing new here, C Wright Mills, the US state as a plutocracy , government by the few , said it all fifty years ago , especially the economic oligarchs

http://www2.ucsc.edu/whorulesamerica/theory/mills_critique.html

http://plutocratsandplutocracy.blogspot.co.uk/2016/05/the-power-elite.html

imipak -> NoBets , 15 Oct 2017 13:21
I would again point to Plato. Those whose affluence exceeds the critical threshold stagnate. They have no need to work, no need to hold anything as valuable, they contribute nothing and take everything.

What is the point in being so rich? There's nothing you can gain from it, other than bank account pinball.

The purpose of being rich is to enable you. It is the only purpose. Once you are fully enabled, money has no value.

Those who are poor can't afford the tools to work well, the education/training needed, anything by which they could better themselves and be upwardly mobile.

There are some who are poor by choice. Voluntary hermits are common enough. They're not included in here because they're self-sufficient and have the tools they need so fall out of scope.

The middle band, where prone work the best, function the best, are mentally and physically the best, is very very big. Nothing stops you cramming society into there because they've plenty of room to stretch out.

But people always want to improve. No big. Make tax follow a curve, so that you always improve but the game gets harder not easier. Would you play a computer game where level 100 was easier than level 1? No, you'd find it boring. As long as it's a single curve, nobody gets penalized.

You now get to play forever, level billion is better than level million is better than level thousand, but it's asymptotic so infinite improvement never breaks outside the bounds.

"Asymptotic" is a word that meets your objection AND my rebuttal. You do not have to have either a constant, infinity or hard ceilings. Leave straight lines to geometers and enter the world of inflection points.

Viddyvideo , 15 Oct 2017 13:19
Elites exist the world over -- East, West, North and South. Question is how do we create a world where power is shared -- Plato and his Guardians perhaps or are we doomed to be ruled by elites until the end of time?
handygranny -> R Zwarich , 15 Oct 2017 13:14
Indeed; smart, intelligent, "clever" folks in no way confers any degree of civility on their "vested" interests. Manipulation and control are suitably useful tools for their purposes.
memo10 -> ashleyhk , 15 Oct 2017 13:11

Yet most of the media is resolutely "liberal" or leftist How do you explain that?

The media is not a major player in running the country, contrary to what much of the right has been brainwashed to believe. It's a tool of the elite. A hammer is also a very useful tool but it doesn't do much to determine what the carpenter builds.

RecantedYank -> mjmizera , 15 Oct 2017 13:09
Rapid is still quite right... We convinced ourselves that our form of oligarchy was somehow "better" than other forms, when in fact, the end game was always the same..concentrating the power in as few hands as possible. Denial was the name of the game here in the US.
CommanderMaxil -> Elgrecoandros , 15 Oct 2017 13:08
jessthecrip's comment was clearly not calling for JRM to be imprisoned or in any way punished for his views , but for his votes . Specifically his votes in the House of commons to support benefit cuts for disability claimants. Admittedly that a pretty extreme position from my point of view, but nonetheless you are misrepresentating what was said, whether deliberately or because you genuinely have not understood only you can know
Spudnik2 -> Gunsarecivilrights , 15 Oct 2017 13:05
More people should simply look up from time to time and quit living in fantasy books. The whole and real truth is not written in a book its all around you if you are willing to except what you see.
vinny59er , 15 Oct 2017 13:04
Form a government in same way we select juries. No entrenchment of the same old guard, no lobbyists,no elite, no vested interests.Just people like you,and you.People like your children.People like your parents.People like your neighbors
mjmizera -> RecantedYank , 15 Oct 2017 13:03
The industrial-military complex of the 50-70s didn't just disappear, but morphed into today's structures.
mjmizera -> voogdy , 15 Oct 2017 13:00
Not anymore, as conspiracy nuts are now serving their new masters, the altRight. They joined the enemy.
theseligsussex -> Sailor25 , 15 Oct 2017 12:59
Not really driven by the oligarch, more looted. And there's normally 1 greedy bugger, Sulla or Pompey, who has to have it all and upsets the apple cart, and then you get Augustus.
mjmizera -> ashleyhk , 15 Oct 2017 12:58
There is never the right far enough that one can't be to the left of.
mjmizera -> RecantedYank , 15 Oct 2017 12:55
All the good/bad labels lose their meaning without a qualifier - for whom.
winemaster2 , 15 Oct 2017 12:54
The US and it being a democracy, the word that is no where mentioned in the Constitution is one big hoax and the perpetuation of the same, where the missed people in this country are further conned by the elite and the rich. Then on top of it all we f or sure not practice what we preach. To that end our political system with two senators from each of 50 states m irrespective to the population is lot to be desired in terms of any real democratic process, let alone equality in representation. To add insult to injury, the US House of Representatives where Congressional Districts are gerrymandered just about every two years, is even worst. Just as the US Congress in which over 90% of the people have no confidence.
sejong -> ashleyhk , 15 Oct 2017 12:50
Yet most of the media is resolutely "liberal" or leftist How do you explain that?

Liberal MSM has been emasculated. It doesn't know it's dead. It doesn't move any needles. It just brays on in ineffective anti-Trump outrage and one identity politics issue after another.

Rightwing media is king in USA.

makingalist , 15 Oct 2017 12:47
One way they get away with it is by having their own separate education system. It's high time private schools were closed down.
handygranny -> ID3924525 , 15 Oct 2017 12:47
Who was it again who said he loves the undereducated and uninformed during the campaign season of 2016?
laerteg -> ValuedCustomer , 15 Oct 2017 12:44
Yes- the demonization of liberalism on the right and the turning away from liberalism on the left *has* paved the way for oligarchy.

Divide and conquer, as usual, is working.

Shrimpandgrits -> imperium3 , 15 Oct 2017 12:44
Slavery -- chattel slavery -- was an element.

Socialist, mass slavery was not.

Leon Sphinx , 15 Oct 2017 12:41
The House of Lords in the U.K. and the Senate in the US were originally there to prevent poor people - always the majority - from voting to take away wealth and lands from the rich. Basically, if such a vote was cast, the HoL and Senate - filled with the elites of society - had the power to block it.
ashleyhk , 15 Oct 2017 12:41
This is a fascinating dissection of how the "leftist/liberal" media was completely disrupted by Trump. It is a long read and quite difficult (so not likely to appeal to most of the knee-jerk commentators) but, whatever your politics it is well worth a look
https://www.theatlantic.com/technology/archive/2017/10/what-facebook-did/542502 /
Laurence Bury , 15 Oct 2017 12:41
The human (and probably animal) world is made up of oligarchies that deal with each other. History has shown that only lone soldiers can upset established orders: Alexander, Napoleon, Lenin, Castro and Bin Laden come to mind.
laerteg -> Hibernica , 15 Oct 2017 12:40
I agree with the article's premise. We have allowed the oligarchs to consolidate power.

Why? Because Americans revere wealth and power. We have bought into the capitalist model hook, line, and sinker. We willingly elect candidates and sign on to policies that allow oligarchs to consolidate their power, increase their wealth and income inequality, pomote greed and selfishness, and undermine democracy - the power of the people.

We have been busy electing agents of oligarchy to Congress since 1980. Buying ino the "small government" con, the "taxes are theft" con, "the business is overregulated" con, the "corporations are the job creators" con and its twin the "government never created jobs" con, the anti-union con, etc, etc, etc.

Our political system would be a lot more representative of the people if the people would get off their butts and start participating in it. Our electoral ststem is open to anyone who wants to participate.

But who and how many participate any more?

When the people create a vacuum with their apathy and cynicism, the oligarchs fill it with their greed.

Oligarchs will always be attracted to power, no matter what system is in place. What's needed to minimize their ability to entrench themselves is vigilance in defending our institutions against corruption.

And vigilance is something that the American people seem to have less and less of every day.

Matt Quinn , 15 Oct 2017 12:40
Maximise aggregate happiness as John Nash suggested. Cooperation beats competition in almost every sphere. Uniting the 99% will happen after the 1% have brought civilisation to a standstill and a billion people starve.
vinny59er , 15 Oct 2017 12:38
The biggest impediment to true and real democracy is the existence of political parties.
RapidSloth -> RecantedYank , 15 Oct 2017 12:27
Denial is a powerful mental mechanism, that and also people tend to associate oligarchy with brutal, straight forwards autocratic rule.
US has a very sophisticated socio-political system that has isolated the elite and the common man through many filters rather than one solid brick wall - so people dont see it. This paired with large enough populations who are cretinous enough to actually vote for somebody like Trump or give a second term to the likes of G.W Bush makes fooling extremely easy.

There is also the tendency of treating laws like dogma and the constitution like the bible. A stark example of it is how they boast about freedom of speech. Everybody is keen to point out that one can publicly criticize politicians without fear of prosecution but nobody seems to notice how useless that speech is and how effectively the political elite shelters itself from negative opinion and is able to proceed against the public will. I find it quite fascinating.

RecantedYank , 15 Oct 2017 12:20
ALL oligarchies are bad...they just function from a different starting point.
In the US, we have an oligarchy based on wealth,who then uses their money to buy the political animals.
In Communist countries, you had a political oligarchy, who used their political powers to corner the wealth.
And in religious oligarchies you have a few selected "high priests" using religious fervor/special communication lines with whatever deity, to capture both wealth and politics.

None of these are preferable over the other as they all concentrate power into the hands of the few (1-2%), against the interests of the many.

virgenskamikazes , 15 Oct 2017 12:20
The fact is Western Democracy (democratic capitalism) is not and was never a true democracy.

Historians from at least 300 years from now, when studying our historical time, will state our system was capitalism, whose political system was plutocracy -- the rule of the capitalist class from behind the curtains, through puppet governors.

Sure, the same historians will, through archaeological evidence, state, correctly, that we called and considered ourselves to live in a democracy. But they will also find evidence that this claim was always contested by contemporaries. Emperor Augustus restored the façade of the Republic and called himself princeps instead of king, and, officially, Rome was still a Republic until the time of Marcus Aurelius to Diocletian (maybe the first emperor to openly consider himself a monarch) -- it doesn't fool today's historians, and it seems it didn't fool the Roman people also.

sejong , 15 Oct 2017 12:15
Oligarchy in USA is secure. For a generation, it has leveraged rightwing media to get unquestioning support from white America based on aggrieved truculence toward the liberal, the brown, and the black. And that was pre-Trump.

Now Trump rampages against the very symbol of the grievance: Obama.

It's midnight in the world's leading third world country

voogdy , 15 Oct 2017 12:10
Anyone who's been accusing united states of being an oligarchy so far was branded as a conspiracy nut. So does this article rehabilitates them and confirms their assertions?
j. von Hettlingen , 15 Oct 2017 12:07
In ancient Greece: "While the ruling class must remain united for an oligarchy to remain in power, the people must also be divided so they cannot overthrow their oppressors." Today the oligarchs aren't always united, because they see each other as rivals. But they have nothing against dividing and weakening the people in order to prevent them from rising up to "their oppressors."
Mass indoctrination is the answer. Oligarchs around the world seek to build up a media empire to brainwash a gullible public and sow discord in the society. The most notorious members of a civil oligarchy in the West are Silvio Berlusconi and Rupert Murdoch. Like oligarchs in ancient Greece, their modern counterparts need democratic support to legitimise their goals. And they support candidates in elections who will do their bidding once in office.
Oligarchy and plutocracy will continue to rule America, because the worship of money is a popular faith. As long as an individual is well off, he/she sees little incentive to help improve social equality. A revolution will only be possible if a critical mass is behind it.
PeterlooSunset -> maddiemot , 15 Oct 2017 12:06
The current US education system was put in place by the oligarch foundations of the Rockefellers, Carnegies and Guggenheims . It exists to keep the majority of the citizenry misinformed, thus docile workers and passive consumers.
ID3924525 -> 37Dionysos , 15 Oct 2017 12:05
Sounds about right - a least some, a very small minority, realise they're being suckered - the overwhelming majority die pig ignorant, whether they believe they've made it or live in a trailer park.
lasos2222 , 15 Oct 2017 12:03
it's very rare that an article in the Guardian doesn't have an obvious agenda. Simple click bait stuff. This article is different, and worthwhile reading. Excellent.
RecantedYank , 15 Oct 2017 12:02
I am only surprised that anyone would still be in the dark about whether or not the US is an oligarchy. It's been obvious now for at least the past three-four decades.
RapidSloth , 15 Oct 2017 12:01
If the general public opposes rule-by-economic-elites, yep sure... too elections held in the last two decades contradict that statement.
37Dionysos -> OldTrombone , 15 Oct 2017 12:01
Yep---for where very few have very much and most have nothing, you have a pressure-cooker. The property-police must indeed grow in number and brutality.
37Dionysos -> ID3924525 , 15 Oct 2017 11:58
And the other half of it is what Ben Franklin warned about, "the corruption of the people." The gangsters really sense and know how to play people against themselves---arousing appetites, appealing to short-term pleasure, to short-term feel-good thinking and acts, and to greed and lust for seemingly easy power. When you realize you're had, it's too late: "In every transaction, there's a sucker. If you're wondering who that is, it's you."
Feindbild -> PSmd , 15 Oct 2017 11:55
Yep sure. The 'big white kid' pritecting the brown kid does tend to be working class or middle class Jewish, and indeed, more likely to be socialist than liberal (in my experience).

I wouldn't limit credit for this kind of thing to any particular ethnicity. But I will say that most major successful reform 'crusades' of modern Western history were inspired by Christian ideals, and often led by Christian clergy, including the anti-slavery Abolition movement in 19th-century America, the Civil Rights movement in the 1950s and '60s, and the anti-Communist revolutions in 1980's Eastern Central Europe. Even in the anti-Apartheid movement, the churches played a leading role, personified, of course, by Bishop Tutu.

MTorrespico -> OldTrombone , 15 Oct 2017 11:52
Correct, because that would be too easy . . . for 'Muricans, because Other people might benefit, and because it is too, too logical a solution for the Turd World USA.
37Dionysos , 15 Oct 2017 11:51
In the Oxford English Dictionary you find that "profit" and "advantage" are close cousins etymologically. Makes sense, since "profit" (the word for value you did not put into an exchange) creates "advantage"---and then you use advantages to give even less and take even more profit. Round and round she goes, and there's no bottom. "Advantage" of course is also inherently relative to somebody else's "DIS-advantage": hence our planet full of "disadvantaged" working people.
OldTrombone -> rg12345 , 15 Oct 2017 11:50
No, I think the Democrats are the ones most successful at diverting the people from their own power in favor of the banks. The Republicans are far less successful by their own control, instead benefitting only from luck such as Wasserman-Schultz denying Elizabeth Warren from her rightful place in the Oval Office. Sanders was the consolation candidate for Warren voters. Warren would have beaten Trump 50-nil.
MTorrespico -> Nash25 , 15 Oct 2017 11:50
Correct. Two equal evils from the same nest-egg, a political party with two right-wings. At the least, the public know why the First Nazi of Great America has an aura of flies.
name1 -> Skip Breitmeyer , 15 Oct 2017 11:46
Divisions or hijacking? I suspect the latter.
PeterlooSunset , 15 Oct 2017 11:39

a colleague of mine asked if America was really at risk of becoming an oligarchy. Our political system, he said, is a democracy. If the people don't want to be run by wealthy elites, we can just vote them out.

Thanks for the cracking joke. That was hilariously funny.

teamofrivals , 15 Oct 2017 11:38
There's a term on everything and a rhythm to all things and its an impertinence to think that any political system lasts forever for our security.
brianBT , 15 Oct 2017 11:34
full and transparent disclosure of all finical and gift transactions between elected official and anyone not in govt.. this include "payments" to family, friends their charities.. etc.. if you cant see the lie no one fight to have the laws and rules changed... additionally lobbyist must no longer be allowed to have the type of closed door access to our leaders.. all these conversations must be moderated or flat out banned and a new form of communication is developed.... put it this way I have never been able to get a meeting with my leading politician yet big business can at almost any time.. I'm glad this issues is being more openly discussed.. we need more of the same
ID3924525 -> ID3924525 , 15 Oct 2017 11:32
Karl Marx, in The Communist Manifesto , indentified this in his concept, "False Consciousness", and Orwell, taking Stalinism to exemplify it, points to the same in Animal Farm , though I bet they weren't the first, and hope they won't be the last.
OldTrombone , 15 Oct 2017 11:31
Machiavelli was right, when you need political favors to get to the top, then you will always owe the favor-givers when you get there. Machiavelli also said this:

Sortition works!

When the most powerful person has literally zero interest in the outcome, they will defer to moral utilitarianism every time. Ask Canada's John Ralton Saul "The Unconcious Civilization" and Australia's Ricky Muir from the Motoring Enthusiasts Party [seriously] who scuppered Aussie right-wingers from bringing US-style education-loans to rent-seek our economy to death.

laerteg , 15 Oct 2017 11:29
The problem is that today's so-called "populists" have been so propagandized into despising the liberalism that could fight the oligarchs, and buying into the very policies and philosophies that allow the oligarchs to consolidate their power (endless tax cuts, undermined government, deregulation, big money in politics, destruction of unions, etc, etc.) that they play right into their hands.

They've mistaken a demagogue for a man of the people and continue to cheer on the dismantling of the checks on oligarchy that our system provides.

This country is in a world of hurt and those who should be exercizing their democratic power to diminish the power of the oligarchs are busy dismantling it, thanks to decades of right wing media propaganda.

All I see is more oligarchy, more autoctacy, and less power to the people. We just keep sticking it to ourselves.

Elgrecoandros -> jessthecrip , 15 Oct 2017 11:28
I literally copy pasted the comments in order, how have I twisted anything?

The person complained about some reaction to Rees-Mogg for having different political views being over the top and you promptly justified their claim.

OldTrombone , 15 Oct 2017 11:25
Capitalist oligarchies = bad, right?

So... communism, then, right?

It's time for SORTITION

When anyone could instantly become president, then everyone has to be educated as much as possible. Right? Hey classical policy scholars, sortition worked in Ancient Greece too! As well as everywhere else ever since. Ever heard of court juries?

ID3924525 , 15 Oct 2017 11:22
Divide and rule - the oldest trick in the book, and incredibly easy, as long as people are kept ignorant by propaganda (currently known as The Media) and education.
rg12345 -> Rainborough , 15 Oct 2017 11:21
Many (most?) Of us do understand it, that's why we're opposed to Citizens United, whereas the Republicans are for it.
Nash25 , 15 Oct 2017 11:20
Hillary Clinton lost because the working class (correctly) perceived her to be a supporter of oligarchy in the USA. Her ties to Wall Street, corporate power, and the upper class were too obvious.

Yes, Trump fooled many voters into believing that he was populist, but their perception of Clinton was still accurate.

If the Democratic party leaders had chosen Sanders as their candidate, they would have won the election. But the "Democratic" party leaders (ironically) feared what he offered: real democracy.

jessthecrip -> Elgrecoandros , 15 Oct 2017 11:19
You are an expert twister and no mistake. I can only salute you
SoxMcCarthy -> TragicomedyBeholder , 15 Oct 2017 11:18
"The Bad Hayek emerged when he aimed to convert a wider public. Then, as often happens, he tended to overreach, and to suggest more than he had legitimately argued. The Road to Serfdom was a popular success but was not a good book. Leaving aside the irrelevant extremes, or even including them, it would be perverse to read the history, as of 1944 or as of now, as suggesting that the standard regulatory interventions in the economy have any inherent tendency to snowball into "serfdom." The correlations often run the other way. Sixty-five years later, Hayek's implicit prediction is a failure, rather like Marx's forecast of the coming "immiserization of the working class.""
fivefeetfour , 15 Oct 2017 11:18
Lenin has written that politics is a concentrated economy more than a century ago.
rg12345 -> OldTrombone , 15 Oct 2017 11:16
Do you think Democrats are the only ones trying to consolidate wealth and power? You must have missed the part about keeping people divided.
Lafcadio1944 , 15 Oct 2017 11:15
This of course is a simplified version and can't really touch on everything, however he glaringly leaves out the deliberate human suffering results from the oligarchy protecting its wealth and aggressively taking over ever more markets. Yes, of course, what today is called "alignment of interests" among the oligarchy is necessary but that alone is not enough they mus also be ruthless beyond that of others. Nothing stands in the way of profits nothing stands in the way of ever greater control. The oligarchy has decided that nature itself is just another obstacle profit making - there is no room for empathy in the world of the oligarchy poverty suffering from curable disease mutilation from bombs are acceptable external consequences to their obsessive accumulation of wealth.

The real reason the oligarchy wins is because they are willing to be ruthless in the extreme and society rewards ruthlessness and ridicules the empathetic.

Elgrecoandros -> jessthecrip , 15 Oct 2017 11:14
"Perhaps the OP was proposing prison for JRM for expressing a viewpoint..."

Nobody was proposing that, it was hyperbole from rjm2017.

Well it was hyperbole until your comment calling on punishment for those with different political views.

R Zwarich -> Kay Nixon , 15 Oct 2017 11:14
This may be true, they often seem so blinded by their raw greed that their powers of reason become dysfunctional. I don't think, however, that the stupid things they do to slake their greed means that they are stupid. When the chips are down, they are capable of bringing their considerable powers of reason to bear.

However stupid or smart they might be, we surely must realize that they have been at least smart enough to gain total ownership and control of all our mass media. They use this tool, the most powerful tool of social control that has ever existed, with consummate skill in pursuit of their agenda(s).

If you look at the overall content of our mass media, you can see an impressive level of 'mind' at work, 'behind the curtain'. This 'mind' is constantly manipulating our consciousness, using very highly sophisticated, highly skilled techniques.Their understanding of human psychology, and their ability to manipulate us using our most basic appetites and desires, is characterized by true genius, even ig that genius is diabolical in its designs.

'They' choose what movies get made. Which TV shows are produced. Which songs get airplay. Which social and political issues are sensationalized and which are buried.

Most of the citizens of our ostensible 'democracy' have been 'trained', just as any animals are trained to any behavior, to be 'consumers' rather than 'citizens'. We are well trained by an omnipresent mass media that assaults us constantly. In any direction that we turn our gaze, or our attention, 'they' are there, to direct our thoughts as they think serves their purposes.

I sure wouldn't sell these people's intelligence short. They may often do stupid things to serve their greed, but they did not acquire the power that they have through any lack of intelligence.

fragglerokk , 15 Oct 2017 11:13
what everyone seems to forget is that whilst ancient Greece was the cradle of democracy it was not only a slave state (whose slaves had no rights to vote) but that only an elite minority were eligible to vote themselves - power very much rested with the vested interests of the few.

I agree that societies are a reflection of the 'will' of the people these days, even if that will is ill informed, reactionary or, as seems to be the case, largely uninterested in voting. You get the governments you deserve and people in the West have become lazy, permanently distracted, often ignorant and usually in the grip of one addiction or another, thus allowing 'democracy' to be subverted. The media have had their role in this by allowing themselves to be manipulated and owned by vested interests, rarely reporting the truth and doing as they are told by various govt offices and departments. Uninformed people make poor decisions.

OldTrombone , 15 Oct 2017 11:13
What the Black Lives Matter movement is telling us is that the Oligarch's enforce their rules of 'law' precisely at the barrels of guns, and by the words of one man after one man, each with a uniform on and a camera off.
TheResult -> J.K. Stevens , 15 Oct 2017 11:13
National Anthems only make sense in context of International Games
Where 2 anthems are played out of respect for each other
Elgrecoandros -> Elgrecoandros , 15 Oct 2017 11:11
Further, you stated above that you were "...responding to a poster who called for imprisonment for those concerned", when in fact the quote shows they were complaining about people calling for imprisonment, not calling for it.

That shows you are twisting what was said, it is incredibly disingenuous of you.

Skip Breitmeyer -> sparkle5nov , 15 Oct 2017 11:09
It's the divisions of the left that allow Tory and Republican minority rule to prevail. In the US the divide is quite bitter between Hillary and Bernie wings of the Dems- at the moment I don't really see where reconciliation can emerge. And of course in Great Britain you actually have two major parties competing rather self-destructively for the available votes on the left. (As well as the mighty Greens...). Divided and conquered, indeed. And such a bloody cliche!
OldTrombone , 15 Oct 2017 11:06

Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality

And yet Marx doesn't rate a single mention in the entire article...

jessthecrip -> Elgrecoandros , 15 Oct 2017 11:06
No, even though you've quoted me you have misunderstood what was perfectly plain. I stated 'like everyone else who voted to cut even more from disabled people's benefits'. Perhaps the OP was proposing prison for JRM for expressing a viewpoint, but that was not and is not where I'm coming from.
OldTrombone , 15 Oct 2017 11:05

At its core, oligarchy involves concentrating economic power and using it for political purposes.

Here is the exact reason why the Democratic Party is lost now. The Clintons, Wasserman-Schultz, and their new Goldman Sachs alumni hero in New Jersey, and now Kamala Harris seeking the same money from the same bankers.

And who did Hillary blame? Bernie, of course.

PSmd -> Dark Angel , 15 Oct 2017 11:02
It's sort of worked against the right though. Take a look at the last election. Yes, the Tories got most votes, but they've pretty much lost all ethnic minorities, including asian professionals, hindus and sikhs. Why is this, especially when Labour moved to left and are now more socialist than left liberal?

Purely because the right has been subsumed by angry grievance mentality, or aggreived entitlement. The internet is awash by people who hate assertive blacks and asians, Dianne Abbott received half of all abuse of female MPs. And so.. the Labour pick up votes that Tories had gained under Cameron. If you are a prosperous hindu dentist or stockbroker, sure you might have shrugged off your parents labour voting tendencies and might be Tory. But also, you might be seeing this sort of stuff, the bile on the internet, the resentment expressed behind internet anonymity. And you might be thinking that deep down underneath that expensive suit of yours, you are your father and mother, a tentative, slightly frightened, cheaply dressed immigrant who has arrived as an outsider and are visibly aware that half the population likes you, but the other half doesn't.
And so you vote Labour.

Divisiveness actually divides the core group you are aiming to win. If you do white chauvinism, well, you end up unite everyone who is not white. Black, brown, yellow, all huddle together scared, back under the labour fold. And you end up dividing the whites into the patriotic and the 'self hating libtard'.

Elgrecoandros -> jessthecrip , 15 Oct 2017 11:01
The sequence of comments was...

Rjm2017

"Just read the language of many in here...apparent JRM should be banished and locked away. You don't need to look to far to find odeous beliefs."

Your reply to that:

"Not locked away. Prison is expensive for the taxpayer. Assets sequestered for the good of the commons and put to work cleaning - streets, hospitals, care homes - on workfare. Like everyone else who voted to cut even more from disabled people's benefits, causing what the UN has described as a 'catastrophe' for disabled people in this country"

My reply to you:

"You are advocating confiscation of private property and forced physical labour for people who hold different political views to you. Is Stalin a hero of yours?"


Yours is a call to punish people for holding different political views to you.

Yours is an extremist position and, like all extremists, you think it is justified.

barciad -> FrankLittle , 15 Oct 2017 10:57

e.g. Park Chung-hee sent thousands of homeless people to camps where they were used as slave labour, many were were tortured and executed.


Like I said, benignish. He took a third world basket case (which is what South Korea was up until his seizure of power) and set it on the way to becoming a first world economy.
Skip Breitmeyer -> BayardDC , 15 Oct 2017 10:56
One of the most interesting mini-discourses I've read anywhere. I would only add that the 'mob' currently in charge of the polity of the House is actually a minority that has gamed the system.
AladdinStardust -> Gunsarecivilrights , 15 Oct 2017 10:56
which is exactly what the author did when her ill health meant that she no longer had medical insurance. Ain't life a bitch?
OldTrombone , 15 Oct 2017 10:55

They also tried to keep ordinary people dependent on individual oligarchs for their economic survival, similar to how mob bosses in the movies have paternalistic relationships in their neighborhoods

Like Wine-stine? (Wine-stain?)

Rainborough , 15 Oct 2017 10:55
"Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality."

No democrat with two working brain cells to rub together could honestly suppose that great concentrations of wealth, which necessarily confer political power on the wealthy class, can fail to undermine democracy. A capitalist democracy is an oxymoron and a delusion.

ChesBay -> maddiemot , 15 Oct 2017 10:52
They admire the rich, and the lifestyles of the rich, although it is out of their reach.
They do not admire the wise, and the experienced.
They don't know who are their state and federal representatives.
They don't know the reason for the Civil War.
They don't know much about our history, our constitution, or anything about civics.
They don't know much about world history.
They don't read much, and are suspicious of education, and the properly educated.
They are easy marks for lies, and negative influence, because they never question.
They refuse to address, or even admit, their own irrational prejudices.
They don't vote, but they do plenty of complaining, and like to blame others for the problems of our nation.
AveAtqueCave , 15 Oct 2017 10:51
Good luck with that.
FrankLittle -> barciad , 15 Oct 2017 10:45
I do not think that benign or even benign(ish) suits the majority of the above e.g. Park Chung-hee sent thousands of homeless people to camps where they were used as slave labour, many were were tortured and executed.

Not sure how Carl Mannerheim gets to be on your list? He was appointed Military chief during the Finnish civil war and he was elected President of Finland

DammedOutraged , 15 Oct 2017 10:44
Oh you mean a bit like all those plebs going out and voting to wreck the EU oligarchy's vision as to whats best?
vastariner , 15 Oct 2017 10:44

At the same time, they sought to destroy monuments that were symbols of democratic success. Instead of public works projects, dedicated in the name of the people, they relied on what we can think of as philanthropy to sustain their power.


That was more because there was no income tax regime - something difficult to impose when there was no centralized collection from a single consistent professional government. So if the Athenian navy wanted a ship, it got a rich chap to pay for it. Rather than out of general taxation.

Athens got rich on levies it imposed on its allies by way of protection money, which eventually collapsed in acrimony, but that's a different story.

StephenR45 -> TheWindsOfWinter93 , 15 Oct 2017 10:43
You'll be first "over the top" then?
Alfandomega -> timiengels , 15 Oct 2017 10:41
Owen Jones ? ......a man of high minded principle and unblemished
virtue . Don't think he would object to a spot of terror........in defence
of his liberal principles , of course..
somebody_stopme , 15 Oct 2017 10:41
I guess we are seeing some of oligarchy break down. Many oligarchs support many socialist policies to avoid tension between classes. For eg: many rich support universal basic income and some even support single payer healthcare.
imperium3 -> Sailor25 , 15 Oct 2017 10:41

You make a good point but in my wide but less than comprehensive knowledge of rapid development often occurrs in periods of oligarchy.

All those mills that drove the industrial revolution, created by oligarchy.

All those armies and aqueducts that drove the Roman Empire, created by oligarchy.

All those libraries and universities that drove Greek learning, funded by the oligarchy.

The great library of Alexandria, oligarchy.

OK, I'll concede that. Which makes for an interesting perspective on things overall, actually. One can see the advantage of an oligarchy - wealth and power is concentrated in few enough hands to achieve great things, but not so few that, like in a monarchy or dictatorship, the leader must spend most time and effort on keeping their power. Whereas a more equal democracy lacks the capacity to make bold steps or drive through unpopular new ideas. But this also means the oligarchs have the power to grind down those underneath them, and therefore in order to enjoy the fruits of that development, the oligarchy needs to be destroyed.

In other words, oligarchies deliver growth, democracies deliver prosperity. I would certainly not like to live under an oligarchy (assuming I'm not an oligarch) but it would be beneficial for a country to have had one in the past.

Kay Nixon , 15 Oct 2017 10:40
I have come to the conclusion that the oligarchy which rules the world are complete imbeciles who haven't a clue that the whole Neoliberal system they built in the 1970's is collapsing and they are clueless on how to handle it. Just because they are wealthy and greedy doesn't mean they are intelligent.
J.K. Stevens -> TheResult , 15 Oct 2017 10:40
In order to prevent the protests from going out over the airwaves Fox (sports) in all their 'logic' started excluding broadcast of the Anthem. Early on I said I would not watch any of these sporting events with, as you say, these jingoistic displays going out and Fox has obliged me but I wont say thanks.
desertrat49 -> BayardDC , 15 Oct 2017 10:39
Yes....Nothing in current affairs would surprise the ancient political philosophers who were students of real human nature ...and real history!
yule620 , 15 Oct 2017 10:37
Understanding Greece is not something you associate comfort with.
desertrat49 -> DrPepperIsNotARealDr , 15 Oct 2017 10:36
It serves as a relieve valve...just as it did in Ancient Greece and Rome.
Obfusgator , 15 Oct 2017 10:36
It's very simple really. The law system makes a complete mockery of democracy and the judiciary is comprised of a bunch of laissez-faire twits.
desertrat49 -> TheResult , 15 Oct 2017 10:35
The last recourse of scoundrels is patriotism!...always been thus because it always works...see H.L. Mencken et. al. !
Postconventional -> SenseiTim , 15 Oct 2017 10:34
Britain isn't different. Oligarchy is built into our system of governance, e.g. royals and house of lords. We even have special oligarch schools where children are sent to be educated for leadership
desertrat49 -> zootsuitbeatnick , 15 Oct 2017 10:33
You do not think the pomp and circumstance of Oligarchs, Monarchs and Military Dictators is without purpose or effect, do you?
StephenR45 -> DolyGarcia , 15 Oct 2017 10:32
Ban Keeping up with the Kardashians.
Gunsarecivilrights -> ID059068 , 15 Oct 2017 10:31
Or in other words, "I can't take care of myself, so I demand the government take money from others and give it to me!"
maddiemot , 15 Oct 2017 10:31
"An informed citizenry is at the heart of a dynamic democracy." - Thomas Jefferson

We have Americans who don't know when the Civil War was fought, or even who won, but insist we must stand for the national anthem before a ballgame.
So much for 'the Land of the Free'.

EquilibriaJones -> Sailor25 , 15 Oct 2017 10:31
Saying life can only get better if we are all collectively greedy together is not a logical argument. Ask the polar bears.
StephenR45 -> davshev , 15 Oct 2017 10:30
It didn't start with Trump.
Gunsarecivilrights -> DirDigIns , 15 Oct 2017 10:30
More people need to read Atlas Shrugged.
desertrat49 -> MarmaladeMog , 15 Oct 2017 10:30
All of the wishful thinking is hugely naive.....they have not been studying the lessons of history.
J.K. Stevens -> OldTrombone , 15 Oct 2017 10:29
And in the older grades, they prescribe (hand out) adderall, CSN stimulants, like chiclets to help student study (cram) and with comprehensive test taking.

https://www.huffingtonpost.com/allen-frances/why-are-so-many-college-a_b_8331958.html

desertrat49 -> DolyGarcia , 15 Oct 2017 10:28
This is the rub.....and the mob does not value education while the rulers value propaganda. Notice the close association between Autocratic and Oligarchic systems and religion, historical mythology and hyper-patriotism!
EquilibriaJones -> Sailor25 , 15 Oct 2017 10:28
Or that's the evil of it. Economic inequality rises until people die. Like homeless on the streets, starving food banks, grenfell tower, waiting on hospital beds instead of famine and pitchfork wars.
The idea is to progress and solve problems before they escalate to pitchfork wars. Praising grotesque inequality is not part of the solution, it's the cause of the problems.
desertrat49 -> Crusty Crab , 15 Oct 2017 10:25
H. L. Mencken is a must read on this!
Alfandomega -> Peter Martin , 15 Oct 2017 10:24
Very remote possibility . I think you'll find their over inflated salaries
weigh more heavily in the balance than their " principles ".
SenseiTim , 15 Oct 2017 10:24
This article should be required reading for all Americans. I am posting a link to Twitter and Facebook to get as many Yank eyeballs on it as possible.
desertrat49 -> Langsdorff , 15 Oct 2017 10:24
What emerges from Plutocracy is Oligarchy...what emerges from Oligarchy is Autocracy. Autocracy is one form or another is the natural state of human society....all the others are ephemeral systems...or systems that disguise the actual Oligarchy or Autocracy!
davshev , 15 Oct 2017 10:23
The biggest contributor to America's plutocracy is our abysmally uninformed electorate.
HL Mencken knew this nearly a century ago when he said:
"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron."
desertrat49 , 15 Oct 2017 10:20
Just exactly when was it that "democracy defeated oligarchy in ancient Greece"?
What proportion of the population in Ancient Athens, for example, were actually citizens...and what proportion of those actually held the franchise?...I believe that you would find the numbers surprising!
Also ...when these (and other) writers speaks of Ancient Greece.....it is usually Athens that they are mythologizing....most the Ancient Greek world had little by way of representative government...let alone "Democracy"!
jessthecrip -> Elgrecoandros , 15 Oct 2017 10:18
No I wasn't. I already responded to you regarding this. To remind you, I said

when people in positions of power take £28 billion (at least) off one of the most powerless and already impoverished groups in our country (disabled people), resulting in hundreds of suicides, enormous suffering, worsened isolation, serious lack of care support, and thousands dying soon after being found 'fit to work' (a situation the UN has described as a 'catastrophe') then I think it perfectly reasonable to favour some punishment for those politicians who inflicted such suffering on their fellow citizens

I was not suggesting punishment for 'thought crime' or for expressing views, but for actions seriously damaging to our citizens.
OldTrombone , 15 Oct 2017 10:17
I have worked in several of the American rich's schools where they charge $30k per kid, families have 3-5 kids there, plus they donate another $30k per kid per year. These schools shame their $50k/year teachers into donating hundreds and thousands per year to their own schools in order to prompt further donations from parents, who expect the poor teachers to prove their fidelity to these rich kids by giving their own money to them. I have seen these schools' principals fire teachers who teach "how to change things". I have seen them promote teachers who teach absolutely nothing, because then the rich kids enjoy insulting and demeaning those teachers' weaknesses. I have heard rich $chool principals tell Harvard psychology lecturers that grade inflation is a marketplace necessity. I have seen rich principals tell school inspectors that the curriculum presented for verification is supplied by a currently-employed teacher (who was awfully bad at teaching) when in fact it was written and prepared by a teacher who had just been fired "for methodology problems"...

American rich schools are the sickest schools on earth, even sicker than British boarders, even sicker than other countries' orphanages.

davshev -> ID50611L , 15 Oct 2017 10:15
Yes, but we now have the consummate...emphasis on "con"...bullshit artist in the White House whose first order of business has been to discredit the media whenever it exposes him for what he truly is. Trump has thousands of people believing that any media story about him which is negative is "fake."
Sailor25 -> JosephCamilleri , 15 Oct 2017 10:14
Yes they did and in all those political systems there where rich bastards at the top making the decisions.

They may have been bastards but on balance they actually made some pretty good decisions.

RutherfordFHEA , 15 Oct 2017 10:13
In his book Culture Inc. , Herbert Schiller quoted a recent study on neoliberal deregulation in the US which began with the question:

"Is deregulation... a strategy on the part of corporations to re-appropriate the power lost to democratic reforms of the mid-20th century?"

Sailor25 -> Dan2017 , 15 Oct 2017 10:13
So you are in favour of populism?

I consider populism an important part of the process as it creates a balance for oligarchy.

I would consider that the greedy big picture thinking of oligarchy drives growth while the greedy small picture thinking of the plebs (of which I am one) tries to get that growth more equally distributed.

ID50611L -> debt2zero , 15 Oct 2017 10:12
Spot on
MoonMoth -> Tenthred , 15 Oct 2017 10:10
It is perhaps unlikely that a radical Athenian democrat from ancient Greece would recognise any current form of government as genuinely democratic.

The cleverest way to maintain a long term oligarchy in these enlightened times might be to have an elective one, only dressed up as something like say a 'parliamentary democracy'. Luckily no-one has come up with this idea yet.

Dark Angel , 15 Oct 2017 10:10
Exactly that is going on now - we have 'workers' and 'benefit scroungers', British against 'immigrants' who exactly are not immigrants as having legal rights to live in the UK (EU citizens), 'deserving' poor and 'undeserving' poor.
Divide and rule.
Without knowing the past, it is impossible to understand the true meaning of the present and the goals of the future.
It's so annoying that is has been so easy to manipulate with our society - Tories and UKIP say 'hate!' and people do as if they are trained animals - hate people on benefits, EU citizens, immigrants, asylum seekers, a conflict between Brexiters/Remainers...
Sailor25 -> Swoll Man , 15 Oct 2017 10:09
Laughing at the fact that you chose to write an insult rather than engage in debate.
barciad -> FrankLittle , 15 Oct 2017 10:08
Benign(ish) dictators of the 20th Century:-
Tito (Yugoslavia)
Carl Mannerheim (Finland)
Kemal Ataturk (Turkey)
Fidel Castro (Cuba)
Nasser (Egypt)
Park Chung-hee (South Korea)
Like I said, benign(ish). Each one the subject for a debate within themselves.
Sailor25 -> Boghaunter , 15 Oct 2017 10:07
There is always winners and losers but the worst loser in modern British society had a better standard of living than a winner of a century ago.

The key to human development is driving sustainable progress not worrying about who losses out today.

Of course there must be balance because morally we must consider who loses our today. The question is how much do we hamstring the children of tomorrow to help the losers of today.

Langsdorff , 15 Oct 2017 10:06
To war on the Oligarchs is to war on our own nature.
whitman100 , 15 Oct 2017 10:03
The super rich conservative oligarchy, currently running the UK, get away with it because enough of the British people vote against their own economic interest.

Parents, for example, effectively vote for the food to be taken from their children's mouths, converted to cash and given in tax cuts to the super rich conservative elite so they can send their children to £30k a year private schools.

Political economy and political science should be compulsory in primary and secondary school so that the ripping-off of the British people is made obvious through education and ended through democratic revolution.

GKB507 -> Giftshop , 15 Oct 2017 10:02
.. it's scary though.. automation will eliminate the economic support line for many, while companies like Google have eyes and ears in every household.
JamesKeye -> webapalooza , 15 Oct 2017 10:02
Definition of democracy: "a system of government by the whole population or all the eligible members of a state, typically through elected representatives." You are presenting an anti-Democratic party talking point, not an enlightened understanding of subtle political differences. Of course, the intention was a democracy in the USA, as compromised as it was and is. What we are not, and never have been, is an absolute direct democracy -- a form of governance appropriate only to small communities.
dcroteau -> Hibernica , 15 Oct 2017 10:01
Considering that "the people" are not that much more enlightened than they were in ancient Greece, yes it is the will of the people that allowed the US to become an oligarchy.

Considering the voting turnout around 56%, that means that 44% decided that they didn't care whether or not their leader would be a good or a bad one.

That's more than 1 in 3 people who couldn't care less about the outcome of the elections.

So political apathy is the will of the people.

KK47 , 15 Oct 2017 10:00
Oligarchs would fund the creation of a new building or the beautification of a public space.

When I read this I think: why am I reminded of the words 'gentrification' and 'privately-owned public spaces'?

https://www.theguardian.com/cities/2017/sep/26/its-really-shocking-uk-cities-refusing-to-reveal-extent-of-pseudo-public-space

Excerpt from the above link:
the spread of pseudo-public space in London – large squares, parks and thoroughfares that appear to be public but are actually owned and controlled by developers and their private backers

And I'm also reminded of Attlee's great words about the attitudes of oligarchs in general:

http://www.azquotes.com/quote/688837

Excerpt from the above link:
Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim. - Attlee

J.K. Stevens -> Peter Martin , 15 Oct 2017 10:00
I know that it's just geography but it appears that the 'left coast (west coast) teams (players))' are taking a leadership role in this struggle. Unlike other professional sports systems, the NFL players are at a disadvantage in terms of career length and working conditions (eg, head injuries). I believe they're going to need some outside help (in whatever form) to be successful which doesn't give me hope. There are a bunch of chicken s____ outfits and power players out there at present that, as an example, allowed (contributed) the Executive Branch takeover by a Russian backed interloper.
ID50611L -> Giftshop , 15 Oct 2017 09:58
agree 100%
Sailor25 -> imperium3 , 15 Oct 2017 09:58
You make a good point but in my wide but less than comprehensive knowledge of rapid development often occurrs in periods of oligarchy.

All those mills that drove the industrial revolution, created by oligarchy.

All those armies and aqueducts that drove the Roman Empire, created by oligarchy.

All those libraries and universities that drove Greek learning, funded by the oligarchy.

The great library of Alexandria, oligarchy.

I recognise that it takes a plebeian revolt now and again to get the wealth shared out fairly but the engine that drives the wealth so it can be shared often seem to be oligarchy.

sparkle5nov -> FE Lang , 15 Oct 2017 09:58
Agree! I've been saying for years; cheap fast food, cheap ale and cheap television have replaced religion as the opiate of the people.
ID50611L -> zootsuitbeatnick , 15 Oct 2017 09:57
Trump is using the toolbox created by the Bush & Obama administrations.
Crusty Crab , 15 Oct 2017 09:57
A free educated and honest press may be the answer to a true democracy ?
DolyGarcia -> Hector Hajnal , 15 Oct 2017 09:55
And how do you keep the people informed and educated when the oligarchs control the media?
ID50611L , 15 Oct 2017 09:54
how is it, then, that the wealthy control so much of government? ...consequence of a lap dog media who lick the ass rather than expose and speak the truth to power elites.
TheResult -> J.K. Stevens , 15 Oct 2017 09:53
Now is the right time to ban the National Anthem

Brainwashing jingoist nonsense is a bandwagon platform for wet farts

W.a. Thomaston , 15 Oct 2017 09:50
The captured author/minions have obviously not had full access to the reading room
*And the secret writings of
Part of a small cache of loose leaf scrolls smuggled out of Alexandria before the fire
Last entrusted to a small elite 13th century band of chainsaw wielding warrior...
Comedy writing nuns
Hector Hajnal , 15 Oct 2017 09:49
Is about education, oligarchy wins to ignorant people. In order to have a healthy democracy the people must be informed and educated other wise oligarchies groups will inundate everything with cheap adds, will manipulate and will win control, methinks
Id1649 -> Sailor25 , 15 Oct 2017 09:45
And all brought down when the elites forgot that they were only the top of a pyramid and that they ultimately relied on those below. We at the foot of the monolith can see that the oligarchs serve only themselves so no longer buy into their project. We see that it is one big club and we - unlike our political masters - ain't in it. So empires fall.
MarmaladeMog , 15 Oct 2017 09:45
Sitaraman's colleague sounds worryingly naive.
Sailor25 -> EquilibriaJones , 15 Oct 2017 09:44
True, perhaps that's the beauty of it.

The senators have to supply the bread and circuses the plebs want or out come the pitchforks.

webapalooza , 15 Oct 2017 09:44
The author demonstrates his ignorance of the American system of government. He uses the word "democracy" no less than 8 times, yet American is not a democracy and never has been a democracy. You will find no form of the word "democracy" in any of the founding documents. The Founding Fathers knew very well the dangers of democracies, and so they created the American government as a constitutional republic. Not once does the author mention that; I doubt he even knows what it means, let alone the difference.
NoBets -> imipak , 15 Oct 2017 09:43
If you're complaining because prices are (inevitably) regressive on the "poor" (however defined), what do you say to the obvious retort that this is indeed the main difference between being "poor", being comfortable, being affluent and being rich?

What is the point of working and earning if it isn't aimed at making oneself less "poor" or more affluent?

FrankieOwen -> TheResult , 15 Oct 2017 09:38
Dunno, doesnt appear that they do in the rough parts of Chicago.
furryandrew -> Commem , 15 Oct 2017 09:38
Or as Mayer Amschel Rothschild correctly summed up the situation in 1790 - "Let me issue and control a nation's money and I care not who writes the laws"

What this article fails to draw our attention to , and they never do, is that private banks CREATE 97% of our entire money supply (look up "fractional reserve banking"). Whilst that remains the case the "oligarchy" will always have firm control over the rest of us.

Peter Martin -> J.K. Stevens , 15 Oct 2017 09:36
Wonder what would happen if all players took a knee, if they all stood together then the owners would start to fret.
nhickman -> TheWindsOfWinter93 , 15 Oct 2017 09:32
There was a time when the deadliest military weapon was the longbow. It could only be handled by men who had been trained up since infancy.
It enabled the English to rout a numerically superior French force at Agincourt, 1415.
The notion that the early 15th century was a period of democratic government is an interesting reading of history.
zootsuitbeatnick , 15 Oct 2017 09:32
imo
In the US today, the oligarchy cannot win without an assist from a significant segment -- not necessarily a majority -- of the overall population.
9/11 taught us that many people are willing to give up freedoms for the myth of security.
The Trump presidency is teaching us that many people are willing to give up their voice -- democracy -- for the myth of returning to a perceived better way of life (group superiority over racial, gender, religious, etc equality) from some bygone era.
imo
Newmacfan , 15 Oct 2017 09:30
We are currently experiencing a destabalisation of our nation and fellow Western Nations by the dominant Western Nation to try to halt the failure of this vastly endebted bigger brother......how do we stop this?
J.K. Stevens , 15 Oct 2017 09:28
On this NFL Sunday it is not hard to imagine the secret meetings that owners and/or their representatives had to coalesce against Kaepernick's 'taking a knee' to stop this form of protest in its tracks as a oligarchical institution. On Tuesday, when Dallas Cowboys owner, Jerry Jones declared that any player taking a knee would not play today, the circle of the objective to chill dissent was complete.

And the plutocratic beat goes on.

TheLibrarianApe -> imperium3 , 15 Oct 2017 09:27
Top post.
DrPepperIsNotARealDr , 15 Oct 2017 09:26
Democracy was always like this. What is that famous quote, by Earl Grey or Sandwich or someone, in Parliament, about allowing peasants to have the vote? "I do this, not to weaken our power, but to preserve it"

Democracy in the UK and the US has always been a forum for the oligarchy to resolve their own disputes rather than rule for the people by the people. Brexit is an example, a referendum held essentially because of the split in conservative party.

FE Lang -> zippy200 , 15 Oct 2017 09:25
And conservatives are going to save us all from done minded feel good policies of the left, is that it?
Since the 80's American politics had swing do far to the right liberals are capitalists monied elites, but the right had an army of simple minded uneducated lemmings on thier side, people that will be against thier own personal interests because of 12th century religious horse spit or group think. Thier are more Right winners in State houses, leadership positions then ever before, they control the Congress, the courts, the Presidency and yet dolts like you still say the country is going in the wrong directions and listen to son misters tell you its the fault of the left. Somewhere in your reptilian brain you know this makes no sense, but you lack of depth, you inability to comprehend what you read or to shake free from the group think or right wing ideology will never let you understand that the bet people you vote in time after time are the very ones whom have sold your job to the Chinese, profited from your child's illnesses, war, chaos in some far off land.
Keeping voting Republicans, it's working out so well for you tailer, Nascar types...
BayardDC , 15 Oct 2017 09:21
The article obfuscates a distinction laid out by Aristotle, in The Politics: aristocracy - rule by the few, focused on the common good; and oligarchy - rule by the few (wealthy), focused on their selfish good. He argues that aristocracy, rule by the best, inevitably turns into oligarchy, rule by the wealthy. In Aristotle's three forms of government - rule by one, by few, by many - the three legitimate forms (monarchy, aristocracy, polity) degenerate into their evils twins (tyranny, oligarchy, democracy). For Aristotle, Democracy was not a legitimate form of government, but a corrupted form: mob rule, we might call it. The US Constitution deliberately set out to create a mixed form of government: monarchy (president); aristocracy (Senate and Supreme Court); polity (House of Reps.). From the beginning, Americans have focused on the potential for our "monarch" (president) to turn into a tyrant: Trump is the poster child for a single executive ruling on his own, selfish behalf. We have been less aware of the fact that the Senate has become a simple oligarchy, while the House has degenerated into a bastion of deputies chosen by what Aristotle would have called democracy, that is, a corrupted form of rule by the many. Aristotle's citizens - those who rule and are ruled in turn - can constitute about 10% of the population; in today's US that would mean 20+ million people actively and continuously involved in politics (i.e., not simply showing up every four years to mark a ballot). Millions of Americans have long done such things, and political life remains active at the local level in many areas. On the national level, the Tea Party has shown how this level of enhanced involvement can transform politics, and has further shown that a coherent, organized minority can demolish what we think of as democratic norms. They are about to elect a Senator in Alabama who has twice been removed as a judge on the state's Supreme Court (an elective body), for violations of judicial norms. Here in the US, all three forms of our original government - monarchy, aristocracy, polity - have degenerated into their evil twins. Yes, the wealthy 1% will always game the system in their favor, but until we restore each of the parts of our forma mixta, we can never reduce their advantages to a level consonant with a decent form of society. Under W Bush, the oligarchs got the tax rates (above all on capital gains) reduced to their 1929 levels. That legislation had a time limit, and Obama chose not to continue it: indeed, he raised capital gains rates a further 3.8% [making the rate 23.8% as against the 15% of Bush]. Now, the two greatest goals of the oligarchs are a return to the 15% rate and the abolition of the estate tax, so all of the fantastically rich Baby Boomers (say, Sec'y of Commerce Ross, net worth $2.5 billion) can leave their wealth unencumbered to their heirs, solidifying the oligarchy's control. The Tea Party, through all the yahoos now in the House, can focus on creationism, climate change denial, immigration, etc., while the oligarchs quietly change the tax system to perpetuate their dominance. Over here, we are already in fiscal year 2018 (started on Oct 1), so tax changes would really go into effect in 2019, that is, after the mid-term election. If Mnuchen and Co. get their changes to capital gains rates and other technical loopholes aimed at the 0.1% [sic], and eliminate the estate tax, we'll know that the oligarchs have eliminated any barriers to their collective dictatorship.
TheLibrarianApe -> Commem , 15 Oct 2017 09:20
This is a blindingly excellent article.

What's new is, like this article, we have the vocabulary to frame both the problem and the solution. Oligarchy is no longer inevitable and whilst the means of control are greater, the means for derogation are too and there are fewer oligarchs than plebs.

Its now easier to spot bad behaviour and harder to keep secrets. Oligarchs have to use force more often to hold into power and that tips their hand.

This article has left me (an avowed pessimist) feeling rather more optimistic.

BlueberryMuffin -> zippy200 , 15 Oct 2017 09:17
Liberalism is about freedom. Personal and economic. Not about "proletariat solidarity" and totalitarian Marxist regimes.
FE Lang -> GusDynamite , 15 Oct 2017 09:15
They learned their lessons well after the 60's, the last time the people really raised up against the machine, so they have given us all the; junk food at a low cost, all the TV and mindless sexually charged entertainment, all the "debt wealth", a simple minded, unread, semi-literate, beer swilling fool could ever ask for. And we all gladly gobble it up and follow the crowd, for who wants to be on the outside looking in...
Giftshop , 15 Oct 2017 09:12
There is always a ruling elite because power is the wellspring of all human actions. There is also a certain moral consciousness that many people argue is innate in human nature, and that consciousness is fairness. The fairness instinct survives where ordinary human sympathy may fail. Based upon this basic morality of fairness those of us who are willing to take risks in the interest of fairness need to prune and tend the ruling elites as soon as possible. We proles need to act together.

Democracy is not enough and besides democracy we also need reason, facts,and fighting spirit.

W.a. Thomaston -> awilson5280 , 15 Oct 2017 09:09
As the inventor of the "hydrodaktulopsychicharmonica" once said: " you have a Republic if you can keep it"
amwink -> awilson5280 , 15 Oct 2017 09:06
Sparta was more than just militarism, and slavery was also practised in Athens, as well as in Rome and quite much everywhere else in the ancient world.

Sparta did something that today's democracies have forgotten: it cared about protection of its citizens. That's the most elementary reason why a State exists, not to provide health or education.

Now, regarding a replacement, epistocracy has yet to be tried. And the same democracy, but with census suffrage, or via election of electors, who in turn elect the ones who will hold office, have worked quite well in many places, producing better politicians, less inclined to populism (take the Venetian Republic, for example).

logos00 -> apacheman , 15 Oct 2017 09:05

Waiting for the oligarchy to rot from within isn't what i would call a viable plan. Not when there is a far better and far more sure way to get the job done. Start with capping wealth accumulation.

One must have already broken, or at least sufficiently loosened, the oligarchic grip on politics to institute such a policy.

Here in the UK, things are the darkest they have been in my lifetime, including the Thatcher years, but we are in a moment of possibilities that can lead in opposite directions.

The author is surely right when he says

With all the upheaval in today's politics, it's hard not to think that this moment is one in which the future of the political system might be more up for grabs than it has been in generations.

Dominance of oligarchic political power, through neoliberalism, over the last four decades has effectively put such policies out of bounds.

We had a Labour government that won convincingly under Blair while declaring itself relaxed about the accumulation of great wealth.

richard160458 -> MattSpanner , 15 Oct 2017 09:05
And democracy failed after generations of poor decisions and war
richard160458 , 15 Oct 2017 09:02
Greece had a long period of decline at the hands of democracy. Plato wrote his Republic as a protest, and to put forward an alternative. Eventually the romans took control.

There are indeed parallels with today but given the external challenges I for one believe that western society will be overtaken by q new set of rules.

debt2zero , 15 Oct 2017 09:01
Very good, interesting article. You know, every now & then this paper, for all it's faults, serves up an article that is quite enlightened/ing.

The last one I recall was an article by Kenan Malik on identity politics . For what exists in this country, the UK, I have previously used the term "oligarchy by profession" ... meaning a pool of the usually upper half of the middle class, or a group in whom that group is disproportionally represented, who not only likely have a select education but who go on to become part of certain professions - accountants, lawyers, journalists, bankers, doctors etc. ... and of course, politicians tend to be drawn from these.

And revolving door arrangements is one of the ways this pool retains a certain cohesion, or as in the article "homogeneity in culture and values".

As for division, how many times have I read, "oh, we are so divided .. blah, blah", as though some journalists have an almost unconscious need to promote it.

Interesting article.

GusDynamite , 15 Oct 2017 09:00
Bit too late, really. Not to mention it's super easy to take what they want while we're all so distracted by arguing about who is the most racist misogynist, defending ourselves from the accusations or applauding comic book movies. Apparently we're so distracted that we're also all genuinely shocked that Hollywood is rife with pedophilia and extreme sexual harassment as though it's some revelation that we didn't know already, but that's another conversation.

If we're all so distracted then it's not difficult for our political 'representatives' -- I use that word very tentatively because they barely ever do -- to subject themselves to the oligarchs for a few scraps more than we have ourselves.

Maybe if we didn't bicker like kids we'd beat them.

PhilJoMar -> ConBrio , 15 Oct 2017 08:53
Either you've not read the article attentively enough or your bias is irremediable. Limiting govt still leaves economic power and the tendency towards monopoly untouched. The genetic impulse you mention is a spurious concept in itself. If there were such a genetic impulse we would not have seen such a change as the major advances of women in the last half century. Culture is the key, much more than any genetic impulse, which is practically meaningless and so explains nothing.

As wealth defense is so important to oligarchs, there is a constant pressure to cheat and break the law. One solution therefore is to apply the law but also to construct legislation with specific principles in mind. If the point of tax legislation is to contribute your share towards the general good then those who avoid and evade tax would be guilty of a technical breach but also a breach of the principle.

However our laws are skewed to allowing the wealthy to defend their wealth and so a party of the people is always needed. Always.

Lastly private schooling needs to be looked at. I mean FFS Eton has charitable status!

[Oct 16, 2017] The Guardian by Ganesh Sitaraman

Those who have economic power also have political power. Is this sop difficult to understand.
Notable quotes:
"... The system, in other words, can't really be "rigged" to work for the rich and powerful unless the people are at least willing to accept a government of the rich and powerful. If the general public opposes rule-by-economic-elites, how is it, then, that the wealthy control so much of government? ..."
"... To prevent this occurrence, ancient Greek elites developed institutions and practices to keep themselves united. Among other things, they passed sumptuary laws, preventing extravagant displays of their wealth that might spark jealously, and they used the secret ballot and consensus building practices to ensure that decisions didn't lead to greater conflict within their cadre. ..."
"... While the ruling class must remain united for an oligarchy to remain in power, the people must also be divided so they cannot overthrow their oppressors. Oligarchs in ancient Greece thus used a combination of coercion and co-optation to keep democracy at bay. They gave rewards to informants and found pliable citizens to take positions in the government. ..."
"... These collaborators legitimized the regime and gave oligarchs beachheads into the people. In addition, oligarchs controlled public spaces and livelihoods to prevent the people from organizing. They would expel people from town squares: a diffuse population in the countryside would be unable to protest and overthrow government as effectively as a concentrated group in the city. ..."
"... They also tried to keep ordinary people dependent on individual oligarchs for their economic survival, similar to how mob bosses in the movies have paternalistic relationships in their neighborhoods. Reading Simonton's account, it is hard not to think about how the fragmentation of our media platforms is a modern instantiation of dividing the public sphere, or how employees and workers are sometimes chilled from speaking out. ..."
"... Oligarchs would fund the creation of a new building or the beautification of a public space. The result: the people would appreciate elite spending on those projects and the upper class would get their names memorialized for all time. After all, who could be against oligarchs who show such generosity? ..."
"... To understand that, we can turn to an instant classic from a few years ago, Jeffrey Winters' Oligarchy. Winters argues that the key to oligarchy is that a set of elites have enough material resources to spend on securing their status and interests. He calls this "wealth defense," and divides it into two categories. "Property defense" involves protecting existing property – in the old days, this meant building castles and walls, today it involves the rule of law. "Income defense" is about protecting earnings; these days, that means advocating for low taxes. ..."
"... The challenge in seeing how oligarchy works, Winters says, is that we don't normally think about the realms of politics and economics as fused together. At its core, oligarchy involves concentrating economic power and using it for political purposes. Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality. ..."
"... Winters argues that there are four kinds of oligarchies, each of which pursues wealth defense through different institutions. These oligarchies are categorized based on whether the oligarchs rule is personal or collective, and whether the oligarchs use coercion. ..."
"... Simonton offers another solution. He argues that democracy defeated oligarchy in ancient Greece because of "oligarchic breakdown." Oligarchic institutions are subject to rot and collapse, as are any other kind of institution. As the oligarchs' solidarity and practices start to break down, there is an opportunity for democracy to bring government back to the people. ..."
"... Even with compulsory voting Australia still funnels votes to those we don't want to elect in the form of transferable 1st pass the post single member electorates. True democracy would grant proportional representation, and allow citizen initiated binding referenda. ..."
"... By these measures you could say America has been an oligarchy from its very conception. Look at the robber-barons of the 19th c. There are occasional "raisings of the veil" such as new deal or great society when the general public gets a fair go. The industrial boom of ww2 is what gave the working class a shot at living a decent life - and of course offshoring industry is precisely closing that door again. ..."
"... Tens of millions of Americans waited patiently for a Dem candidate to talk about our stacked decks, D.C. swamps, and broken systems -- instead, they gave us a Hillary coronation and expected us to embrace the pantsuit. ..."
"... After university econ training, and a long business career, I now consider education a terrible thing. Knowing what I know now about how our systems really work, when I observe our Congressional leaders looking into the camera with point-blank lies day in and day out, I feel they deserve execution; literally, I am feeling like heads should roll. ..."
"... In America, oligarchs win when Dems are center right (in practice, not rhetoric) and are sold out to the oligarchs. Case in point, HC. There is no counterbalance to those who are even further to the right. Oligarchs win without a legit 3rd party. ..."
"... Obama and the Dems lost 1,000 elected positions before Trump came along. It's because he sold out to the big banks. ..."
"... Small D Democrats. Not big D Democrats. The Clintons are clearly in the oligarch class, much like Trump. It is rather hilarious to hear Trump supporters talk about how he cares for the poor. ..."
"... Oligarchic institutions are subject to rot and collapse, as are any other kind of institution. As the oligarchs' solidarity and practices start to break down, there is an opportunity for democracy to bring government back to the people. In that moment, the people might unite for long enough that their protests lead to power. With all the upheaval in today's politics, it's hard not to think that this moment is one in which the future of the political system might be more up for grabs than it has been in generations. ..."
"... It never ceases to amaze me how Americans delude themselves into thinking that they live in a democracy. ..."
"... They don't come by it naturally. Their delusion is pushed along by very well oiled propaganda machines, probably mostly financed by the taxpayers themselves. ..."
"... Can't recommend Requiem For The American Dream highly enough, absolutely required viewing for anyone wishing to understand the mockery of democracy under which we live. ..."
Oct 15, 2017 | www.theguardian.com

A few years ago, as I was doing research for a book on how economic inequality threatens democracy, a colleague of mine asked if America was really at risk of becoming an oligarchy. Our political system, he said, is a democracy. If the people don't want to be run by wealthy elites, we can just vote them out.

The system, in other words, can't really be "rigged" to work for the rich and powerful unless the people are at least willing to accept a government of the rich and powerful. If the general public opposes rule-by-economic-elites, how is it, then, that the wealthy control so much of government?

The question was a good one, and while I had my own explanations, I didn't have a systematic answer. Luckily, two recent books do. Oligarchy works, in a word, because of institutions.

In his fascinating and insightful book Classical Greek Oligarchy, Matthew Simonton takes us back to the ancient world, where the term oligarchy was coined. One of the primary threats to oligarchy was that the oligarchs would become divided, and that one from their number would defect, take leadership of the people, and overthrow the oligarchy.

To prevent this occurrence, ancient Greek elites developed institutions and practices to keep themselves united. Among other things, they passed sumptuary laws, preventing extravagant displays of their wealth that might spark jealously, and they used the secret ballot and consensus building practices to ensure that decisions didn't lead to greater conflict within their cadre.

Appropriately for a scholar of the classics, Simonton focuses on these specific ancient practices in detail. But his key insight is that elites in power need solidarity if they are to stay in power. Unity might come from personal relationships, trust, voting practices, or – as is more likely in today's meritocratic era – homogeneity in culture and values from running in the same limited circles.

The ruling class must remain united for an oligarchy to remain in power

While the ruling class must remain united for an oligarchy to remain in power, the people must also be divided so they cannot overthrow their oppressors. Oligarchs in ancient Greece thus used a combination of coercion and co-optation to keep democracy at bay. They gave rewards to informants and found pliable citizens to take positions in the government.

These collaborators legitimized the regime and gave oligarchs beachheads into the people. In addition, oligarchs controlled public spaces and livelihoods to prevent the people from organizing. They would expel people from town squares: a diffuse population in the countryside would be unable to protest and overthrow government as effectively as a concentrated group in the city.

They also tried to keep ordinary people dependent on individual oligarchs for their economic survival, similar to how mob bosses in the movies have paternalistic relationships in their neighborhoods. Reading Simonton's account, it is hard not to think about how the fragmentation of our media platforms is a modern instantiation of dividing the public sphere, or how employees and workers are sometimes chilled from speaking out.

The most interesting discussion is how ancient oligarchs used information to preserve their regime. They combined secrecy in governance with selective messaging to targeted audiences, not unlike our modern spinmasters and communications consultants. They projected power through rituals and processions.

At the same time, they sought to destroy monuments that were symbols of democratic success. Instead of public works projects, dedicated in the name of the people, they relied on what we can think of as philanthropy to sustain their power. Oligarchs would fund the creation of a new building or the beautification of a public space. The result: the people would appreciate elite spending on those projects and the upper class would get their names memorialized for all time. After all, who could be against oligarchs who show such generosity?

An assistant professor of history at Arizona State University, Simonton draws heavily on insights from social science and applies them well to dissect ancient practices. But while he recognizes that ancient oligarchies were always drawn from the wealthy, a limitation of his work is that he focuses primarily on how oligarchs perpetuated their political power, not their economic power.

To understand that, we can turn to an instant classic from a few years ago, Jeffrey Winters' Oligarchy. Winters argues that the key to oligarchy is that a set of elites have enough material resources to spend on securing their status and interests. He calls this "wealth defense," and divides it into two categories. "Property defense" involves protecting existing property – in the old days, this meant building castles and walls, today it involves the rule of law. "Income defense" is about protecting earnings; these days, that means advocating for low taxes.

The challenge in seeing how oligarchy works, Winters says, is that we don't normally think about the realms of politics and economics as fused together. At its core, oligarchy involves concentrating economic power and using it for political purposes. Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality.

Winters argues that there are four kinds of oligarchies, each of which pursues wealth defense through different institutions. These oligarchies are categorized based on whether the oligarchs rule is personal or collective, and whether the oligarchs use coercion.

Warring oligarchies, like warlords, are personal and armed. Ruling oligarchies like the mafia are collective and armed. In the category of unarmed oligarchies, sultanistic oligarchies (like Suharto's Indonesia) are governed through personal connections. In civil oligarchies, governance is collective and enforced through laws, rather than by arms.

Democracy defeated oligarchy in ancient Greece because of 'oligarchic breakdown.'

With this typology behind him, Winters declares that America is already a civil oligarchy. To use the language of recent political campaigns, our oligarchs try to rig the system to defend their wealth. They focus on lowering taxes and on reducing regulations that protect workers and citizens from corporate wrongdoing.

They build a legal system that is skewed to work in their favor, so that their illegal behavior rarely gets punished. And they sustain all of this through a campaign finance and lobbying system that gives them undue influence over policy. In a civil oligarchy, these actions are sustained not at the barrel of the gun or by the word of one man, but through the rule of law.

If oligarchy works because its leaders institutionalize their power through law, media, and political rituals, what is to be done? How can democracy ever gain the upper hand? Winters notes that political power depends on economic power. This suggests that one solution is creating a more economically equal society.

The problem, of course, is that if the oligarchs are in charge, it isn't clear why they would pass policies that would reduce their wealth and make society more equal. As long as they can keep the people divided, they have little to fear from the occasional pitchfork or protest.

Indeed, some commentators have suggested that the economic equality of the late 20 th century was exceptional because two World Wars and a Great Depression largely wiped out the holdings of the extremely wealthy. On this story, there isn't much we can do without a major global catastrophe.

Simonton offers another solution. He argues that democracy defeated oligarchy in ancient Greece because of "oligarchic breakdown." Oligarchic institutions are subject to rot and collapse, as are any other kind of institution. As the oligarchs' solidarity and practices start to break down, there is an opportunity for democracy to bring government back to the people.

In that moment, the people might unite for long enough that their protests lead to power. With all the upheaval in today's politics, it's hard not to think that this moment is one in which the future of the political system might be more up for grabs than it has been in generations.

The question is whether democracy will emerge from oligarchic breakdown – or whether the oligarchs will just strengthen their grasp on the levers of government.

Ganesh Sitaraman is the author of The Crisis of the Middle-Class Constitution

curiouswes -> antdog , 16 Oct 2017 00:37

I think the USA is a republic and not a democracy. I also think the distinction isn't a subtle one. Many think we'd be better off as a democracy. I don't. In a democracy, the majority rules. That means when you are in the minority, you don't have a say. The electoral college prevents the larger states from squeezing out the smaller states. However some don't think that is necessarily a problem. Urban life is very different from rural life and we can't make all of the rules based on urban life.
hardmoney -> trundlesome1 , 16 Oct 2017 00:27
They're too busy being distracted with Bread and Circuses.
gregwani , 16 Oct 2017 00:24
Whilst the suggestion of "creating a more economically equal society" is obviously desirable, it's not exactly a practical recommendation against the context of the rest of the article.

Herein lies the key: "...they sustain all of this through a campaign finance and lobbying system that gives them undue influence over policy."

Possible solution? No vote; no donation.

Curtail corporate funding of political parties, Super PACs, Unions, etc. and have election campaigns financed from public funds ONLY. If you can't vote as an individual person/citizen, you can't contribute.

This would remove a big barrier to reform - lobbyists and political patronage - and ensure that elected leaders are unshackled, with the freedom to govern based on evidence-based policy and long-term planning rather than just rewarding the corporate elite who put them there.

BrunoForestier -> Hypatia415 , 16 Oct 2017 00:19
Even with compulsory voting Australia still funnels votes to those we don't want to elect in the form of transferable 1st pass the post single member electorates. True democracy would grant proportional representation, and allow citizen initiated binding referenda.
BrunoForestier -> FLanzy61 , 16 Oct 2017 00:12
White nationalism wasn't necessary when you were 90% of the population - it has only emerged with the mass immigration era, when socially engineered policies threaten to make you a minority in your own nation-state. (yes, I am aware that the indigenous population was here first and was disposessed - but America the nation state was clearly built predominantly on European settlement)

There used to be an effective form of identity politics - based on working class common interest - that brought a high standard of living to most people (even the oppressed Black minority). It is the splitting of that identity that has allowed the neoliberals to sideline class as a divider of common interest.

curiouswes -> nonsensefactory , 16 Oct 2017 00:07
regarding (1): not sure it is feasible and I don't think we should do it if it is. The market is a weird animal imho. Both the hedgers and the speculators can drive a market share price up or down and contrary to popular opinion, I don't believe the speculators are to blame when a company does well. A lot of people got financially devastated because they had holdings in Enron. I wouldn't want to punish those investors even further because they invested in a bad company.

regarding (2): I agree. The concept of globalism is a good concept. However the way it is being implemented isn't.

regarding (3): Again I agree. Most of the regular posters who agree with the media nonsense don't post on articles like this one because a paid troll sticks out like a sore thumb on articles like this.

BrunoForestier , 16 Oct 2017 00:00
By these measures you could say America has been an oligarchy from its very conception. Look at the robber-barons of the 19th c. There are occasional "raisings of the veil" such as new deal or great society when the general public gets a fair go. The industrial boom of ww2 is what gave the working class a shot at living a decent life - and of course offshoring industry is precisely closing that door again.
functor , 15 Oct 2017 23:56
I am not an expert on Greek history but wouldn't the example of Alcibiades suggest that when an oligarchy falls-- due to war and plague in the case of Athens -- dangerous demagogues who break away from the same oligarchy ride the "democratic" wave and cause even more misery like the idiotic invasion of Sicily? Weren't the democratic people-- the landless poor of Athens-- more inclined to war at that point than the oligarchs? In some sense aren't we seeing what happens when a member of the oligarchy breaks away in present day U.S-- Trump rode a populist wave that was very democratic and people powered-- and where has that got us? Sometimes true democracy can be a messy and frightening affair.

I offer no defense of oligarchies, but the older I get, the more I wonder whether democracy of the people, by the people, is really for ALL the people.

Take Brexit, Trump, or for a more remote example, the Fascist inspired Hindu right wingers in India. All of them are in many ways a truer representation of the voice of the people, but that voice is so ugly, so exclusionary, so narrow, that one might be forgiven to want the sedate stability of an oligarchy back.

Bewareofnazihippies -> ChesBay , 15 Oct 2017 23:55
I'm afraid I have to agree. When thinking on these issues, I have a recurring mental image, it's the crowd scene at Brian's window, in the greatest cinematic example of satire, Life of Brian.

Brian -"You are all individuals. You are all different! "

The crowd -"YES! WE ARE ALL INDIVIDUALS! WE ARE ALL DIFFERENT! "

Man -"I'm not"

The crowd -"Ssh! Ssh! "

antdog -> sejong , 15 Oct 2017 23:41
......ahhh, reclining in the facetious lounge; unfortunately, this amusement left us with a candidate ignoring the masses of the American population opening the door for Trump.

Tens of millions of Americans waited patiently for a Dem candidate to talk about our stacked decks, D.C. swamps, and broken systems -- instead, they gave us a Hillary coronation and expected us to embrace the pantsuit.

Meanwhile, tens of millions then voted for Trump, knowing point-blank he was lying; they happily voluntarily deceive themselves (current/active); how sad is this reality ?

mrkris -> TragicomedyBeholder , 15 Oct 2017 23:40
As someone already said, instead of treating poor people unequally well, why not treat rich people the same as everyone else- don't let them hide their money from the taxman, don't give the rich unfair breaks and handouts
curiouswes -> SoAmerican , 15 Oct 2017 23:40

Do you think that is going to inspire Americans to get out and vote?

When the choice for the most powerful office in the world comes down to a choice between Donald J Trump and Hillary R Clinton (who were friends before the election started), I tend to think that our problem is not due to voter apathy, but rather voter apathy is due to our problem.

Those who still participate, still think this is all about the left vs the right because they think they still have a choice. They do. they get to choose between neoliberalism and fascism.

Alex Cardosa -> koikoi , 15 Oct 2017 23:38
The way its always been done. At the end of a pike. The rest is just fantasy.
antdog -> boilingriver , 15 Oct 2017 23:31
After university econ training, and a long business career, I now consider education a terrible thing. Knowing what I know now about how our systems really work, when I observe our Congressional leaders looking into the camera with point-blank lies day in and day out, I feel they deserve execution; literally, I am feeling like heads should roll.

Our systems have been hijacked, and the interests of the masses of our populations are being completely ignored--what should be the penalty for selling out, via acute sophisticated engineering, the population of an entire nation ?

hardmoney -> boilingriver , 15 Oct 2017 23:30
"Start demanding some laws for them to follow that has some teeth when they lie to us."

Pretty difficult when the criminals are in charge of lawmaking.

hardmoney -> boilingriver , 15 Oct 2017 23:30
"Start demanding some laws for them to follow that has some teeth when they lie to us."

Pretty difficult when the criminals are in charge of lawmaking.

PGNEWC -> SoAmerican , 15 Oct 2017 23:30
I dont think its a belief in 2 parties but a belief in a type of fixed yin and yang that drives this

Opposites like Good v Evil , the Unknown Others (like Foreigners) v the known (your Family /Friends ) etc . We see things as Either/Or because it is the simplest way of making sense of our world. But the world is far more complex and nuanced than this and there are degrees of rightness and wrongness and we as you say take on board the whole rigid structure of one side or the other -- it plays right into the oligarchs hands

Bewareofnazihippies -> peter nelson , 15 Oct 2017 23:18
Your instant dismissal of zaarth's point of view is the essential problem of modern democracy - casual demeaning and disregarding attitude from the ruling elites towards an informed citizen expressing concerns of inequality and systemic concentration of political power to the oligarchs.

Typical.

There maybe no political will to address these issues, but there sure as hell is plenty of social will! As for your last sentence "- So redistributionist policies have no future. ", well, considering that we've had 40years of global wealth being redistributed to the 1%, it's about time it was spread around a bit more equitably, don't you think?

Be Gold , 15 Oct 2017 23:02
In America, oligarchs win when Dems are center right (in practice, not rhetoric) and are sold out to the oligarchs. Case in point, HC. There is no counterbalance to those who are even further to the right. Oligarchs win without a legit 3rd party.
koikoi , 15 Oct 2017 22:39
A article. A case in point - Iceland, where the elite owns the fishing fleet and controls the financial industry, whereas the majority of the population barely scrape by. People are furious but how do you overturn centuries of oligarch 'rule and law'?
vr13vr -> Dave514 , 15 Oct 2017 22:38
Disagree. "Why" is always a question. If you don't know and understand "why," the original intent of a law, you can't interpret and apply it properly. As a result, it gets perverted to the point that it does no longer make sense. We have plenty of examples in the US.

Without why you can't adapt to the changing environment either.

vr13vr -> Wolframite , 15 Oct 2017 22:35
But how successfully? And with how much resources, compared to various industrial and other deep pocket lobbies?
franklin100 -> kizbot , 15 Oct 2017 22:34
Yes, it's the same wherever people keep their mouth shut to keep their job. That's the corrosive effect of corruption.
hardmoney -> SoAmerican , 15 Oct 2017 22:31
Do you know how small the odds are to get a large group of people to rally (or vote) around a cause? This is why grassroots have a low success rate. The founding fathers certainly knew how small the odds are and gave the people a bone they naively believed to be useful and powerful; the right to vote. It is one of the biggest cons played on the people and has managed to keep the natives quiet and complacent, while the elite and powerful do their bidding.
franklin100 -> Nada89 , 15 Oct 2017 22:30
As the joke goes, I welcome our new oligarch overlord. Yes, most likely one fallen oligarch will be replaced by another.
kyoung21b -> helenus , 15 Oct 2017 22:09
The ones that rob you blind, wantonly if they're called republicans and apologetically if they're called democrats.
franklin100 -> Bewareofnazihippies , 15 Oct 2017 22:06
To get back to the argument about the oligarchs buying collaborators, everybody who keeps their mouth shut to keep their job falls into that category. So that's the majority in work.
boilingriver -> antdog , 15 Oct 2017 22:06
That's why i want to go after the politicians and bypass their evil, selfish, stupid pawns they are encouraging right now.

Start demanding some laws for them to follow that has some teeth when they lie to us.
They want to sanction Russia who was just repeating what republican/tea party had been saying.

antdog , 15 Oct 2017 21:58
"A loophole in American tax law permits companies with just 20 percent foreign ownership to reincorporate abroad, which means that if a big U.S. firm acquires a smaller company located in a tax haven, it can then "invert" – that is, become a subsidiary of its foreign-based affiliate – and kiss a huge share of its IRS obligations goodbye.........Over the next decade, corporate inversions could cost the U.S. Treasury nearly $20 billion" Rolling Stone

*******

They made this legal, folks, and it's just the tip of the iceburg. Meanwhile, not a peep (cricket, cricket, cricket.....)

sejong -> thenthelightningwill , 15 Oct 2017 21:56
As Putin said, when a spring is compressed all the way to its limit, it will snap back hard.

Trump caught that wave perfectly. Clinton was wading in the kiddie pool.

franklin100 -> MoonMoth , 15 Oct 2017 21:54
Corporate lobbyists have so much more wealth than the incomes of individual politicians, that is their political salary, that they are all bought not so much with brown envelopes but with jobs like Osborne's, a day's work a month for Blackrock for which he is paid £650k a year. It's so obviously not a payment for what will be done as for what has been done.
HistoryHacker , 15 Oct 2017 21:53
Thought provoking and excellent comments that should be read before opining. As for my opinion, it seems that communism was left out when it might just be the answer to a conundrum that seems unresolvable. Uniformity of wealth within reason (the rule of seven times) can be achieved and sustained. But that requires education which again, can be achieved and sustained. That is, if we don't blow ourselves to smithereens before we achieve such a heightened state which after all should be a...normal?!
thenthelightningwill -> sejong , 15 Oct 2017 21:51
Obama and the Dems lost 1,000 elected positions before Trump came along. It's because he sold out to the big banks. We don't need two Wall St. parties. Until the Dems learn to respect their voters and do things like support single payer, this is all we get.
sejong -> antdog , 15 Oct 2017 21:49
Debbie Wasserman's decide our candidates, thus, our elections.

You make a good point. DWS and HRC: it's all their fault that Trump is president.

antdog -> Will D , 15 Oct 2017 21:48
......whaaaa ? You mean to tell me coronation is not true democracy ?

I need to upchuck.

SoAmerican , 15 Oct 2017 21:47
The primary institution that drives oligarchy in the US is the "two party system". It is not enshrined in the Constitution. It is purely the working of the political class. The people need to quit believing that there can only be two parties.
antdog -> boilingriver , 15 Oct 2017 21:45
The spin and brainwash are now far, far more powerful than the 1960's.

How else do you explain tens of millions of formerly hardworking middle class, now on the outside looking in (with their adult children), continuing to wave the flag, with a large smile on their faces, all the way to the poorhouse day in and day out--and not even a peep?

SoAmerican -> zzoetrope , 15 Oct 2017 21:44
Honestly though, it becomes more undemocratic when people rag on it sy as you have done above. Do you think that is going to inspire Americans to get out and vote? What you don't understand, or maybe you do too well, is that the biggest threat to democracy in the US is apathy. When you present it as such a situation that there is no reprieve, then why should they vote?
Will D -> Andrew Stronto , 15 Oct 2017 21:35
As the article points out the oligarchs use selected messaging, which includes anti-left propaganda and misinformation. So the result is that any political movement that is left of centre (and the centre has shifted quite a lot to the right in the last few decades) is made to seem like hard-core socialism or even communism.

When you look at the policies from Bernie Sanders in the USA and Jeremy Corbyn in the UK, and see how they've been attacked by the right-wing media, but when you put them into the perspective of the policies of the 60' and 70's they aren't even particularly left-wing. Most would have been described as centrist policies.

The oligarchs have succeeded in moving the goal posts to the right and made centrist policies seem dangerously left-wing.

Will D -> Tom Wessel , 15 Oct 2017 21:27
They don't overlook it because they have been bought by it. Today's 'democrats' are complicit, and rely on it for their post-political income.
nonsensefactory , 15 Oct 2017 21:26
Modern oligarchs owe their political and economic power to a variety of structures and systems, such as:
(1) The limited-liability, shareholder-controlled corporation, designed to maximize profits for the shareholders while protecting them from the consequences of their actions (why can't one sue the shareholders of ExxonMobil for the actions of the company that they control?)

(2) The global neoliberal 'free-trade' unlimited-capital-flow system, which allows oligarchs to pit nation-states and workers against one another in a race to the bottom for the lowest wages and pollution and safety standards - a system promoted by both Democratic and Republican parties in the United States, which has boosted profits for oligarchs and destroyed the middle class.

(3) The monopolistic tightly-controlled corporate media system, which promotes the interests of the oligarchs who own and control it, setting the narrative played out across television, radio, print media and much of the Internet to the overall population in a remarkably coordinated fashion - such that most 'media' serves to distract or deceive the public, rather than to inform.

There are no doubt others - such as tax codes that allow the rich to accumulate vast wealth, while stripping wealth from poor people and the middle class - but those are among the most important factors.

SoAmerican -> Tom Wessel , 15 Oct 2017 21:23
Small D Democrats. Not big D Democrats. The Clintons are clearly in the oligarch class, much like Trump. It is rather hilarious to hear Trump supporters talk about how he cares for the poor.
boilingriver , 15 Oct 2017 21:19
Oligarchic institutions are subject to rot and collapse, as are any other kind of institution. As the oligarchs' solidarity and practices start to break down, there is an opportunity for democracy to bring government back to the people.

In that moment, the people might unite for long enough that their protests lead to power. With all the upheaval in today's politics, it's hard not to think that this moment is one in which the future of the political system might be more up for grabs than it has been in generations.

It always takes a revolution/ protest from the people to throw out the political corruption and then the rich just start again.
Until we get some laws that they have to follow and serious jail time when they do not, we will not have decent people to choose from. The reason we have such crappy choices is this is the only job in the world where you can lie and cheat to your boss (us) and face no serious consequences.

robinaldlowrise , 15 Oct 2017 21:02
It's difficult to see how Ancient Greece fits into either of those narratives if Aristotle's conclusions from his contemporary, careful, empirical (yes, really) investigations of the whole range of political variants present in Ancient Greece entered into their analyses. For a start, even in political units as small as a city-state, he rates democracy as a degenerate form of government (albeit the best of all three degenerate forms) that naturally tends towards oligarchy (another degenerate form), though – give or take some refinement of concepts involved – a proper mix of both results in the best form of "rule by the many", namely "polity", in an over-all ranking of forms of government by good or "correctness" that is topped by monarchy and tailed by tyranny.

Getting in to all this while not falling victim to the modern trigger word syndrome requires significantly greater subtlety of thought than seems to be deployed by either of the authors under consideration, though how much of their analyses has slipped by the author of this piece is unknowable on the basis of the evidence here available. Have any of the trio even considered a Ancient Ryanair trip to Ancient Greece for a third millennium looksee?

Andrew Stronto -> Hypatia415 , 15 Oct 2017 20:55
The oligarchs best work is done through divide and conquer and should they ultimately be truly threatened then they will prevail through an order out of chaos of their own creation. Most issues you mention like the widening gap between the rich and poor, climate change.. yada yada are engineered to fracture society to make us all easier to control. Oh and they love to stamp their handy work so keep an "eye" out for them !
Tom Wessel , 15 Oct 2017 20:53
" Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality . "

Hog wash! They know where the money is and they want it transferred into their pockets. And if some of that money trickles down to the less fortunate, they surely will take credit for it. The Clintons didn't become multi-millionaires by concentrating on inequality.

Roderick Llewellyn -> boilingriver , 15 Oct 2017 20:51
I suspect the article's Author, when he said "democrats" (notice lower case) was not referring to the political party the Democrats (upper case). He meant any who advocate for an increase in democracy. This presumably overlaps with the Democratic Party, but by no means is congruent to it.
Tom Wessel -> helenus , 15 Oct 2017 20:46
They are the ones that always have a smile on their faces and constantly give to charities from the monies they exploited from the ignorant masses. Then in retaliation, the masses put them on pedestals. It's a very simply routine. Wash, rinse and repeat.
boilingriver , 15 Oct 2017 20:43
Democracy is vulnerable to oligarchy because democrats focus so much on guaranteeing political equality that they overlook the indirect threat that emerges from economic inequality.

The Dem voters do not overlook that. To be fair the Dem politicians do look at economic policy. Affordable health care using the rich taxes, environment, clean drinking water and making CO responsible. Just look at what trump tea/party are dismantling. Dems are also for increasing min wage. They should do better, but they are not as worthless as republicans. The republicans work for the rich not us.

I find it strange that you never called out the republicans actions, just the Dems. The republicans are the ones putting in the policies/laws that are cementing the riches power and making our lives worse.

Hypatia415 , 15 Oct 2017 20:42
A very deep and timely article given that oligarchies threaten the very survival of our world. Think the widening gap between the rich and poor, climate change, environmental degradation, war and the mass movements of people fleeing all of the above.
Even with democracy and compulsory ballots in Australia voters still believe their best interests lie with the representatives of the oligarchs, the banks, financial services and transnational corporations.
Mercurey -> TragicomedyBeholder , 15 Oct 2017 20:41
Demonstrably not the case when one looks at successful periods of progressive policies such Butkers Education act. The idea that the fruits of life are distributed according to talent & effort is a grim joke that can be dismissed out of hand.

Social privilege repeats itself & counteracting that is a moral duty. As is exposing the myths that justify it.

RobertLlDavies -> peter nelson , 15 Oct 2017 20:29
You haven't got a clue. have you. I've spent years recruiting people into unions in small unorganised workplaces, where employers do their best to victimise anyone who tries to form a union. Many people are either afraid of joining a union - or they have no idea what unions do, except for the rubbish printed about in the anti-union papers (viz. most of them). I'm happy to say that, in the end, we succeed in enabling workers to get together in many workplaces to defend and improve their lot at work. I live in a traditional working class area, near many unionised and non-unionised workplaces. Whate about you? How many ordinary workers have you ever discussed these matters with? How many trades unionists?
stanphillips , 15 Oct 2017 20:28
Read the "Iron Heel" by Jack London" for a description of an extreme oligarchy set in the USA of the early twentieth century. The book is a narrative by the wife and partner of the main male character Ernest Everhard (interesting name I know). Some of Everhard's descriptions of what London saw as consolidation of the American oligarchs are succinct and chilling. If you haven't read it then it really demonstrates in a fictional sense how long the concept of modern oligarchies have been around:
http://www.gutenberg.org/ebooks/1164
hardmoney -> zzoetrope , 15 Oct 2017 20:19
"It never ceases to amaze me how Americans delude themselves into thinking that they live in a democracy."

They don't come by it naturally. Their delusion is pushed along by very well oiled propaganda machines, probably mostly financed by the taxpayers themselves.

zzoetrope , 15 Oct 2017 20:14

Our political system, he said, is a democracy. If the people don't want to be run by wealthy elites, we can just vote them out.

It never ceases to amaze me how Americans delude themselves into thinking that they live in a democracy. The US executive, arguable the most powerful collection of people in the world, is substantially un-elected. Only the President stands for election and he's not elected by the people but by an undemocratic electoral college; Hilary Clinton received the most votes and lost the election.

The rest of the Executive aren't elected, they're appointed and you can't "just vote them out".

Then there's Congress where electorates are so gerrymandered that in the vast majority of cases the results are foregone conclusions; national elections are decided in a few "swinging" seats. Congress is also corrupted by the dependence of the system on massive donations, by lobbyists, and vested interests.

Of the world's democracies, the Unites States must be one of the least democratic.

hardmoney , 15 Oct 2017 20:08
And the Oscar goes to America, land of the free and milk and honey; created, propagandized and brought to you by the Hollywood tv and film industry for the last 100 years.
skydolphinattakforce , 15 Oct 2017 20:05
in America the 2 partys pretty much control the election and they are both part of the oligarchy. so I don't think theres much hope for the U.S.
PennyCarter -> RBHoughton , 15 Oct 2017 20:02
I recently read an essay where the American political system is likened to a rodeo. The bull is the voting public being ridden by the oligarchs. If the oligarch falls off the bull the bull is distracted by the rodeo clown (the president) until he can get back on the bull.
Tom Wessel -> Manacatsaman , 15 Oct 2017 19:57
" I personally wonder,... just how much longer this level of stupidity will persist. "

Probably well into the disaster of global warming.

Tom Wessel -> peter nelson , 15 Oct 2017 19:53
" Who exactly are the oligarchs? Do you think that they know that they are oligarchs? "

I doubt a pervert or rapist looks at himself as such.

gerryinoz , 15 Oct 2017 19:52
Who are our oligarchs and who do they finance, lobby, influence and control in Canberra?
The law. The fucking law is mainly for the very wealthy or influential, not for grafters like me.
Still, all in all, in Oz we have a labor party that gave us decent wages, Medicare and super.I think our oligarchs are greedy bastards but not as severe as the American, Russian or Arab oligarchs. The French knew how to deal with theirs in the 18th century and a couple of ours could do with that treatment.
desertrat49 -> GimmeHendrix , 15 Oct 2017 19:51
As Socrates was forever doing...if we do not define our terms, we quickly end up in the weeds. Britain is King in Parliament (badly corrupted under Victoria!) and America is a Plutocratic Republic!...No Democracy intended...or delivered...but much mythologized none the less!
Tom Wessel -> aldebaranredstar , 15 Oct 2017 19:51
"kind of like taking a knee ...we shouldn't be pursuing niche interest anymore."

Police brutality is a "niche" Issue? I can see you haven't met a Brown Shirt you didn't like.

RBHoughton , 15 Oct 2017 19:51
The American people cannot vote out the oligarchs because they make the rules of the game and the electorate must comply. The author seems to suppose there is a democracy operating on this planet when the nearest we have approached that ideal is the supposedly representative democracies of numerous countries.

One of the features that reinforce the oligarchy in power in USA is the agenda of the nine Supreme Court judges who approved 'Citizens United' and assured the oligarchs that the man with the money would call the shots.

Another important point that does not surface in this article is the 600BC institution, jointly with democracy, of theatre. That allowed playwrights to present the naive electorate with plays enacting the hard choices that citizens would have to make now they were responsible for their own government. There is a group of greats scholars on the BBC's 2014 series "Guilty Pleasures" who discuss and approve this point.

JosephCamilleri -> Sailor25 , 15 Oct 2017 19:49
On balance over thousands of years some rich bastards made some good decisions? How scientific of you. Not so much a logical argument as a watery fart.
Bewareofnazihippies , 15 Oct 2017 19:48
Please Guardian, don't close this comments section too soon.
This topic truly goes to the heart of why so much of humanity's failings of governance and stewardship of the Earth is so malevolent.
The quality of the responses highlight that many readers recognize that this is THE issue that underlies so many of our existing problems.
Tom Wessel , 15 Oct 2017 19:48
" Ancient Greek elites developed institutions and practices to keep themselves united. "

Nothing couldn't be more relevant then the Guardian running Hillary Clinton articles. Saw at least 3 on the front page right now. Let's keep the elite neoliberals in power.

desertrat49 -> TallulahD , 15 Oct 2017 19:46
Like I said elsewhere, one has to first define citizenship and who has the franchise before one gets too carried away by talk of Democracy!
JosephCamilleri -> Amanzim , 15 Oct 2017 19:44
There are democracies and "democracies". India has a ruling class that rules for its class, so not really that democratic. India isn't USA, USA isn't Australia, Australian isn't Germany, Germany isn't the Netherlands. That's roughly the scale.
desertrat49 -> PennyCarter , 15 Oct 2017 19:44
One of the interesting conceits of American culture is the way that the mega rich envision themselves as simply middle class...one sees it all the time.
The short answer is that the politically aware Oligarchs know very well who they are....and the wannabes know who they are as well!
My favourite is still one of the Koch brothers saying that he had no problem with Oligarchy...so long as he got the government that he paid for! Beautiful!!
aldebaranredstar , 15 Oct 2017 19:40
More than oligarchs I see alliances built on niche interests, or interests that are particular to a group of people. these special interests are wedge issues for that group, kind of like taking a knee and how that affects the NFL and ripples through the whole culture. Too many niche interests are being pushed forward, and that's why there's no consensus or very little. That's why there is gridlock and stasis. we shouldn't be pursuing niche interest anymore. we need larger consensus agreements, things we can agree on in society as a whole, and we got to keep talking until we find that agreement. that's how I see it
sejong , 15 Oct 2017 19:33
A hundred years ago, as the West industrialized, oligarchs wielded power via the employment relationship. Beginning a generation ago with the transfer of manufacturing to China, the instrument of power shifted to media. Murdoch was one of the first to exploit this. And now we have Trump.
guest0987 -> Zaarth , 15 Oct 2017 19:28
Agree totally. Redistribution of wealth to keep a few from controlling everything is what we need. And this does have a future as moving to the left is the way for the US to go. The right has shown for at least the past 40 years to offer nothing.
Redredemptionist -> WhatTheTruth , 15 Oct 2017 19:22
Dear WT..., WT... do you mean by:

"the oligarchy of Socialism" ?
"giving people too many rights" ? and
"neutralises everything to a standstill" ?

Too many 'dog whistles' make a strong sound but no meaningful sense what so ever!

PennyCarter -> peter nelson , 15 Oct 2017 19:21
My guess is that oligarchs don't even think they are oligarchs. They probably think they are actually part of a meritocracy, having conflated the rigged political system with what they believe to be their superior abilities
Dave514 -> Dave514 , 15 Oct 2017 19:18
Sorry that was WSC.
JamesValencia -> Dave514 , 15 Oct 2017 19:17
The "?" was merely rhetorical, as is usually the case on t'interwebs :)
peter nelson -> MartinSilenus , 15 Oct 2017 19:14
The comments in this thread mostly seem to be by whinging old style Labour supporters, who can no longer hide the contempt that they have for ordinary people - your "apathetic proles".
Dave514 -> JamesValencia , 15 Oct 2017 19:14
"Parturient montes, nascetur ridiculus
mus." The original Latin quote used by WAX to accurately describe Attlee.
peter nelson -> 3melvinudall , 15 Oct 2017 19:12
Oh rubbish. People choose whether to join a union. It takes closed shop contracts to enforce union membership, and the fact that unions seldom form in right to work states prove that when given a choice most workers don't want to join a union.
peter nelson -> Timothy Everton , 15 Oct 2017 19:09
Nonsense. The American government was elected by the voters. Local and state government to draw the voting districts for US house races were elected by the voters. US Senate governor and presidential races cannot be gerrymandered. And Hillary Clinton WAY outspent Donald Trump.

Progressives need to stop whining and complaining about the Koch brothers and start putting together a slate of candidates and ideas that ordinary Americans want to vote for.

Sailor25 -> theseligsussex , 15 Oct 2017 19:06
Looted and raised off the back of slaves but in the process laying the foundation of western civilisation.

My point isn't that it's fair or right or good. My point is that the concentration of power and wealth in a small group of individuals often leads to incredible development that betters all of humanity down the line.

peter nelson -> Zaarth , 15 Oct 2017 19:06
Who cares what you support? There is no political will for such a thing and the general direction of democratically elected governments is toward the right not the left. So redistributionist policies have no future.
peter nelson -> Manacatsaman , 15 Oct 2017 19:04
Money IS speech. Surely if the founding fathers intended to protect any particular kind of speech, it must have been political speech. So if I want to use my money to promote a particular policy or political candidate then any attempt by the government to prevent that is obviously and clearly a violation of my right to political speech.
Bewareofnazihippies , 15 Oct 2017 19:01
One of the best articles I've read here. It's about time an article like this finally gets a hearing. I mostly read these kind of arguments and perspectives from the comments section. So well done.
JamesValencia -> rikmac78 , 15 Oct 2017 19:00
Well, given what I said above, one might expect me to agree, but I wouldn't: New Labour nevertheless did an enormous amound of good: A fairer britain, enormously improved public services, the business sector properly regulated. taxation improved.

The problem was Blair. The background was Labour, which kept on beavering away with Labour principles: "society first" in a word.

New Labour achieved a huge amount. A shame abour Blair. If John Smith hadn't dropped dead, it might be different. With emphasis on "might" - at least Smith, although also restructuring Labour towards the centre, wasn't so bent on reneging Labour core values.

Luckily the Labour party reneged little: Labour endures :)

nottrue , 15 Oct 2017 18:59
Very interesting. While it currently appears impossible to win back democracy there might be some hope. I sense that things might change soon. The debacle of the current electricity market in Australia and lack of action to mitigate climate change can be seen in the light of the Oligarchy's fear of losing their wealth base, which could end up in a rise of democracy.'
TallulahD , 15 Oct 2017 18:56
In Athens, enslavement for debt had been a fundamental law from the time of Draco in the 39th Olympiad in the 7th Century BC. However, in the sixth century BC, the lawgiver Solon ordained a radical new constitution: by cancelling all debts both public and private, he "liberated the people once and for all" thus paving the way for all citizens to be admitted into the Assembly: Aristotle, "The Athenian Constitution", Parts 6 and 43 (although the Athenian form of direct democracy was a limited concept by modern standards - to become a citizen one had to be an adult male, born of citizen parents).
Manacatsaman , 15 Oct 2017 18:38
Most people in the U.S. conflate democracy with capitalism; there's no comprehension of separateness of political and economic "systems". The prevailing idea is that "America is a nation of business" and in the 19th Century the Supreme Court declared corporations to be individual persons and most recently confirmed that "money is speech". So, the people who have the ability to vote out the oligarchy don't even know what one is, or why it's bad for them. Thus a lying, cheating, greedy "Billionaire" is seen by the middle and lower classes, or as I'm sure Trump refers to them behind closed doors, "my marks", as their savior. I personally wonder, as the Trump Administration works tirelessly to grind its base into the dirt, just how much longer this level of stupidity will persist.
SteveofCaley , 15 Oct 2017 18:38
The process of branding and advertising, a century old, places unmerited trust in non-human entities, corporations and institutions. Humans are slick and untrustworthy. We assume that Police Departments are always kind. If harm occurs, is it a rotten cop or rotten citizen? Pick one. Ask a disloyal NFL player. They hate the troops, peace, freedom and justice, right?
The modern oligarchy is to hide behind labels and brands. God so loved the world that he founded a privately-held nonprofit with tax advantages ...whatnow? Exxon owns your axxons, folks.
SocAlan , 15 Oct 2017 18:38

At the same time, they sought to destroy monuments that were symbols of democratic success.

Privatisation!

Sailor25 -> EquilibriaJones , 15 Oct 2017 18:35
People always die, the default position of humanity is grinding poverty.

What we should be looking at is why come civilisations escaped that. A modern Britain is less likely to die of poverty today than at any other time in history.

The concentration of wealth in small groups of individuals often provides the impetus for development. To much concentration of wealth means you end up with exploitation of the plebs the flip side leaves you with economic stagnation.

The key as in most things is getting the balance right.

SocAlan , 15 Oct 2017 18:32

They gave rewards to informants and found pliable citizens to take positions in the government.

Does this not remind one of the last Labour government?

Timothy Everton -> Dave514 , 15 Oct 2017 18:31
Do a bit of reading. I would suggest Nancy MacLean's "Democracy in Chains" for a start. It has a direct line to the big-money influence of the Koch family over the U.S. government. There are many others, of course.
Hector Hajnal -> DolyGarcia , 15 Oct 2017 18:30
ehmm well... thats something that must start within the family and the community, if family fails theres the community if community fails thats window open to attack. Even so I have been knew fellows and sisters that even in the must adverse circumstances manage to make themselves educated and with a good criteria vice versa with fellows from a good environment turn to be as... so is a matter of choose as well. The problem with that is that this are the times of internet instant gratification which create the perfect scenario to create a bunch of idiotics egocentric lunatics with not will nor performance at all just slaves to machines. So ehmmm we need some kind of a bomb which disables some of the technology, not all, just for a while and try to get some to nromal
Sailor25 -> imperium3 , 15 Oct 2017 18:29
I wouldn't like to live in an extreme oligarchy either but we must remember our present will be somebodies past.

Money we direct away from growth to support our current living standard makes the people of tommorow less wealthy.

As I posted earlier there needs to be balance but we shouldn't assume oligarchy is a bad thing in of itself.

Guangudo -> GimmeHendrix , 15 Oct 2017 18:28
I would say oligarchy or oligarchy, because "democracy" does not really exist, it never did. Nothing will change unless we do away with Darwinism.
Guangudo , 15 Oct 2017 18:15
"Democracy (Greek: δημοκρατία, dēmokratía literally "rule of the people"), in modern usage, is a system of government in which the citizens exercise power directly or elect representatives from among themselves to form a governing body, such as a parliament. Democracy is sometimes referred to as "rule of the majority".

Having this definition in mind I do find rather bizarre that everyone insists on calling such a system a "democracy" when it is a fact that women and slaves where not allowed to vote.

Nowadays is getting somehow worse, because manipulation and agnotology have upset everything. The systems control perfectly everything and this charade are done by a power in the shadow, and although most people ignore it, this Power is theocratic.

The fact that repeating a lie constantly does not make it an axiom ...

MartinSilenus -> sparx104 , 15 Oct 2017 18:12
1984 is my `favourite` book, the subtext is that there is in fact no hope from the proles, as Winston Smith comes to see. They are apathetic & any who might rouse them, are liquidated. They have the power to overthrow the party, but are mostly just ignored by it, & so just get on with their lives. The lesson is that power, without the will to use it, is meaningless: still true as it happens.
Dave514 -> 3melvinudall , 15 Oct 2017 18:07
My, my, you've got this all sorted out so we'll have a dictatorship that is able to abolish the Supreme Court and Congress. Wow!
rikmac78 -> JamesValencia , 15 Oct 2017 18:06
New Labour is simply a lighter shade of Tory power...
Pushk1n -> blogdubdrib , 15 Oct 2017 18:00
Francis Galton was a founder of the science of statistics and a bit of a snob.

Galton was a keen observer. In 1906, visiting a livestock fair, he stumbled upon an intriguing contest. An ox was on display, and the villagers were invited to guess the animal's weight after it was slaughtered and dressed. Nearly 800 participated, and Galton was able to study their individual entries after the event.

Galton stated that "the middlemost estimate expresses the vox populi, every other estimate being condemned as too low or too high by a majority of the voters",[45] and reported this value (the median, in terminology he himself had introduced, but chose not to use on this occasion) as 1,207 pounds. To his surprise, this was within 0.8% of the weight measured by the judges. Soon afterwards, in response to an enquiry, he reported[46] the mean of the guesses as 1,197 pounds, but did not comment on its improved accuracy. Recent archival research[47] has found some slips in transmitting Galton's calculations to the original article in Nature: the median was actually 1,208 pounds, and the dressed weight of the ox 1,197 pounds, so the mean estimate had zero error. James Surowiecki[48] uses this weight-judging competition as his opening example: had he known the true result, his conclusion on the wisdom of the crowd would no doubt have been more strongly expressed.

He thought the judges local yokels and was expecting to laugh instead he found that irrespective of perceived intelligence the mean of the wisdom of the crowd ( the 800 entering the competition for a prize) was surprisingly accurate.

There are more things in Heaven and Earth ....

Dave514 -> glenns , 15 Oct 2017 17:59
And you know this specifically how?
J4Zonian -> ashleyhk , 15 Oct 2017 17:58
US media hasn't been "leftist" ever. In the 1930s and a few other periods it's had significant minorities that were liberal or leftish, but otherwise, it's mostly right-of-center imperial support mechanism media; now and increasingly, it's extreme right wing (Fox, Murdoch (WSJ, National Geographic, etc.) Clear Channel and Sinclair dominating TV and radio with more than 1000 stations. Reporters are sometimes left-leaning but that has little or nothing to do with what's published. Hollywood tends to be liberal on social issues but rarely moves off the imperial support wagon except for occasional dips into history to communicate with platitudes. Any media that considers Obama and Clinton anything but right of center corporate duopolists is way over on the right wing; that includes everything 95% of people ever hear or see--all networks, cable, every daily newspaper... The Guardian a little bit, Pacifica radio's 5 stations, Mother Jones and sort of The Nation, Common Dreams and a few other sites, blogs etc.--that's the left in the US. Pitiful, especially considering that a large majority of people in the US favor very liberal positions on almost all issues except war, death penalty and imprisonment.
Dave514 -> JamesValencia , 15 Oct 2017 17:56
British Rail was even a greater disaster ushered in by Clement, the mountains laboured a d brought forth a mouse, Attlee
curiouswes -> RapidSloth , 15 Oct 2017 17:55
For me, things really took a decisive turn for the worst when Wilson was president. Before that, the defacto government wasn't codified. According to this wikipedia article the was a "growing concern" about the so called money trust.

The Pujo Committee was a United States congressional subcommittee in 1912–1913 that was formed to investigate the so-called "money trust", a community of Wall Street bankers and financiers that exerted powerful control over the nation's finances. After a resolution introduced by congressman Charles Lindbergh Sr. for a probe on Wall Street power, congressman Arsène Pujo of Louisiana was authorized to form a subcommittee of the House Committee on Banking and Currency.

from the article above:

In civil oligarchies, governance is collective and enforced through laws, rather than by arms.

Democracy defeated oligarchy in ancient Greece because of 'oligarchic breakdown.'
With this typology behind him, Winters declares that America is already a civil oligarchy.

I don't know much about economics, but from what I think I know, one can speed up or slow down the economy by increasing or decreasing the money supply respectively; and prior to Wilson's term, the government had that power. However after Wilson's term that power moved into the private sector because laws were passed. I see that as a huge problem and from what I can gather, so did Lindbergh:

The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.

TWOBOBS , 15 Oct 2017 17:51
I think the citizenry is being screwed by the oligarchy on both the left and the right, which tend to merge into the same thing. Both are about power and control and have very little to do with democracy or individual liberties. Neither the capitalists nor the socialists care much about you. You are a means to an end. Both the right and the left seek to control speech and thought through the media and through institutions. Both the right and left want a disempowered, compliant population.
JamesValencia , 15 Oct 2017 17:48
There's lots to think about there. Thanks for a good article, more on democracy please ! It strikes me we're in a situation where we need to relearn what it is, exactly.

What struck me most was the oligarchy eroding symbols of democracy, and taking over the legal system of government, and I'd add, taking over the management of government through privatisation of government services: The civil service increasingly outsourced to the private sector, that is, the oligarchy.

This is what "the small state" political project, currently centre stage in the UK and the USA, is leading towards: governments run by the private sector.

And the response is always "it's cheaper and more efficient! And democracy is the representative - who cares if government departments are shut down and their services delivered by the private sector? It means less tax !"

And we end up with Network Rail, and the other scandals of privatised services in the UK, and to Labour's undying shame, much of this was ushered in by New Labour.

Pushk1n -> Light_and_Liberty , 15 Oct 2017 17:46
I think you need to read the article. Trump fits every definition of an Oligarch, his actions are exactly how Oligarchs survive, true he may not be the only one in the US.
Skullen -> deeaiden , 15 Oct 2017 17:42
You sound slightly like a psychopath yourself.
johnthebaptiste -> alloomis , 15 Oct 2017 17:38
or even dictatorshiip
https://en.wikipedia.org/wiki/Elective_dictatorship
MalicX -> Elgrecoandros , 15 Oct 2017 17:37
Jessthecrip seems to have been supporting punishment of some kind for people whose actions demonstrably cause actual, serious harm to real people. You seem to consider the actions which create such actual harm (including many deaths) to be a 'political opinion'. I think that's where the difference in attitude lies.
Shannon Renee Kayne-Amoureux , 15 Oct 2017 17:35
Bilderberg Group, et al.
Pushk1n -> GimmeHendrix , 15 Oct 2017 17:35
You Think, the people were well and truly lied to by rather rich and unscrupulous people who hope to benefit from the chaos as this article makes clear this is the way that Oligarchy works by manipulating and dividing the demos.
curiouswes -> hardmoney , 15 Oct 2017 17:31

The problem is and always has been, life is not black or white, but gray. One man's fact is another man's differing opinion.

True. However, a women has the right to abort a fetus. That is a fact. Now we can have an opinion that she has the right to kill her own fetus, but that wouldn't be a fact because technically we can't ascertain that the fetus is alive because it doesn't necessarily "stay" alive if we remove it from the mother (at least not in the first trimester). Therefore legalized abortion isn't legalized murder. However it is unconstitutional to take everybody's guns away. It really takes verbal gymnastics to try to make the constitution say anything different, so the proponents for gun control swear up and down that they aren't trying to take everybody's guns away. However when you ask what their objective is, they say they want to stop people from killing each other with guns. Without that measuring rod (the constitution), they don't take that tone. Instead they argue that people don't need guns. The same can be said for speech. Hate speech imho does more damage than the right to bear arms, but the 1st amendment gives those fools the right to behave the way the did in Charlottesville. Those who tried to silence them walked on the 1st amendment, again in the name of the greater good. As a black man, I'm not about to side with people who think we need to keep those statues up. I know exactly what those statues represent. However again the constitution is there protecting their right to voice an opinion to say what I vehemently oppose. I can disagree with them but I don't have the constitutional right to silence them. When people want to force others not to speak on college campuses, that isn't constitutional. It is authoritarian. Authoritarianism in the name of the greater good. some don't have a problem with that kind of authoritarianism, but when it comes from the orange one, that's authoritarianism that nobody needs because it's really hard to find his "greater good". His sense of greater good generally seems to benefit some, while marginalizing others. Personally I think his impeachment is now months overdue, but, as you say, that is just my opinion. I think firing Comey was an authoritarian move. I think when a head of state can neutralize his detractors, in theory we can't get rid of him for anything, because he can simply fire any perceived threat to his power. The fact that he is still in power is an outrage to me. But then again, I think it was an outrage that HRC was even running for president. They dumped Gary Hart, because he was having an extramarital affair, but for some reason, HRC was able to walk through "airport security" with all of her baggage. But, "no election rigging" from state side. It was all done by the Russian oligarchs according to our wonderful media. However this is a democracy because we had a choice between, "Lock her up" and "I cannot tell the truth"
Zaarth , 15 Oct 2017 17:22
This is why I support wealth redistribution through progressive taxation. It's not so much about achieving "income equality" as it is about preventing power being concentrated in the hands of a few. Extreme wealth is a public danger. Many would trample on our rights for their own profit, convenience, or pleasure, and most politicians are all too eager to let the super wealthy buy their place as public masters.
Gunsarecivilrights -> Spudnik2 , 15 Oct 2017 17:19
Voluntaryism is to be commended. Compelling people to be charitable with force is not.
Adkult -> Newmacfan , 15 Oct 2017 17:02
Yet you were complaining about regions wanting to separate before. The EU doesn't fund Spain's regional parties by the way, as much as you'd like them to.
Spudnik2 -> Gunsarecivilrights , 15 Oct 2017 17:01
I accept that so much of what I see demands action. The world needs more helping hands and kindness.

You can believe in what ever you like, but actions make all the difference. Donate something like canned food, or volunteer someplace and you can make a real difference in someones life ( more than any book or bible ever did ).

memo10 -> mjmizera , 15 Oct 2017 16:45

The industrial-military complex of the 50-70s didn't just disappear, but morphed into today's structures.

15 years in Iraq & Afghanistan says it never changed at all.

memo10 -> clshannon , 15 Oct 2017 16:42

Not true, the standards are high enough, it is the fact that kids from disfunctional families and poverty cannot reach them. So the teachers just pass them on to the next grade anyway. You end up with poorly educated adults who 'know' education is useless according to their experience raising children who continue the cycle.

The curriculum is demanding enough. They just don't demand anything relevant to people's lives. As long as everything stays irrelevant they can continue rewarding the people who play by the system's rules and punish those who find that stupid and frustrating.

Ponderbelle -> Gamba Puirida , 15 Oct 2017 16:40
Reich has a soul full of light and empathy. Once people are allowed to attain their basic needs, the rest is mostly fluff. Nature provides every resource needed to sustain a wholesome existence...not a cash register one to be found in the fields of plenty. Ancient greed has never been faced full-on by humanity. The required efforts to shelter, feed and clothe ourselves are too often run over roughshod due to the number one vice: Profits first and foremost, with the essentials for survival marked for the highest bid; callously termed 'what the market will bear'.

Democracy? Not in many decades. We are under the total rule of organized business; which applies to most developed nations. The virtues of sharing and goodwill would be one remedy to the basic economic inequalities.

However, in our current bailout experiment (and, not a few economists are status quo baloney feeders) the inertia is in a free wheeling philosophical advantage to the gods of the highest profit. You'll never see any sympathy cards slated for modern economists. A simple evident reality is that
our basic needs for survival are the same. Damned if we can manage to seriously address that fact first and create systems which have a clear vision for the betterment and uplift of all.

It will not be long before the loud financial bubble pop sounds off again - it will be called the inevitable market correction or due to aggressive over reach. Oligarchy will feign much needed financial aid required. We deserve much better. I predict eventually a r e v o l t from those who suffer the insanity of deprivation in a world of plenty. Certainly in the US our votes are mean less and less with the likes of Citizens United. Corporations may be legal entities but they are N O T citizens. All that exists, exists for all.

kyoung21b -> TragicomedyBeholder , 15 Oct 2017 16:39
Yes much more rational to treat everyone "equally" like providing huge subsidies to, e.g. big oil, big ag, and big pharma so they too can appear to be performing equally.
Obtrectator -> deeaiden , 15 Oct 2017 16:37
Unworldly middle-class theorists create revolutions but almost invariably cannot control them. They tear up the rule-sheets, failing to understand that that loosens or destroys the restraints on psychopaths of whatever background, who then proceed to hack their way to the top.
Thus Lenin facilitated Stalin; Sun Yat-sen ultimately resulted in Mao; Desmoulins and the Girondistes were devoured by the Jacobins and their Reign of Terror.
alloomis , 15 Oct 2017 16:31
"He argues that democracy defeated oligarchy in ancient Greece because of "oligarchic breakdown." Oligarchic institutions are subject to rot and collapse, as are any other kind of institution. " unfortunately, democracy did not defeat oligarchy in ancient greece, except briefly in athens and its dependencies. and the usa is no kind of democracy. voting for who will be your master is not democracy, it is elective aristocracy. and that is the political arm of the economic oligarchy called 'capitalism.'
Bochi -> threeoutside , 15 Oct 2017 16:28

Who, exactly, doesn't think of "the realms of politics and economics as fused together"?

It's been the basic assumption of UK politics from 1997 until 2015 (at least) that there is only one "common sense" economic model that works, and that is an extreme market-oriented form of neo-liberalism.

Most of the electorate in this country still buy into neo-liberalism's deceitful platitudes as if the argument was over 40 years ago and democracy consists of choosing a few people to manage it every five years.

3melvinudall , 15 Oct 2017 16:26
Oligarchs in the US have, for 40 years, taken the power from the people. They have accomplished it by destroying the labor unions and any hint of a labor movement. They have taken control of the media by buying it ( 80 or so owners of MSM to 5 or 6 owners now), they control the narrative. They control what we talk about. They control the politicians by "dark money". Outside money floods strategic states to influence elections down to school board levels. Money is donated to universities with conditions to control who is hired to run certain schools within the university ( the economics school at FSU, for example). Economic policies and tax codes have funneled growth income to the top 140 families in the US. Now we are witnessing the cumulative efforts of these oligarchs bear fruit. Unions are meaningless, growth income flows to the wealth class, we talk about God, guns and gays in every election cycle, efforts to do away with all social programs and rig the tax codes so the middle class pays more and the wealthy pay less. I would say the Oligarchs are in control and have won. They control the courts and all branches of government....what is left? Can democracy survive now that they control the ballot box and the elections? And they certainly can control enough minds to win an election...we witness that in 2016.
GimmeHendrix -> Arch Stanton , 15 Oct 2017 16:20
'And Trump being the worst type of oligarch may create 'oligarchic breakdown' and bring the whole corrupt shitheap called US democracy crashing down.'

Contradictions in terms. Its either a democracy or an oligarchy.

GimmeHendrix -> threeoutside , 15 Oct 2017 16:18
You suggest a determinism which is false. Brexit is a classic example where the political will of the masses acts contrary to the immediate interests of domestic capital.
GimmeHendrix , 15 Oct 2017 16:12
Well its just been confirmed. We live in an oligarchy. One where the notion of democracy acts as an ideological support.
curiouswes -> hardmoney , 15 Oct 2017 16:09
Likewise.

Similar to Dorothy and her ruby slippers in the Wizard of Oz; she had the power all along, but didn't know it.

Ahh, the Ruby slipper analogy! Well done! I missed it, obviously :-)

sparx104 , 15 Oct 2017 16:07
Someone else seems to have understood this some time ago. ..

"'If there is hope,' wrote Winston, 'it lies in the proles.' If there was hope, it MUST lie in the proles, because only there in those swarming disregarded masses, 85 per cent of the population of Oceania, could the force to destroy the Party ever be generated. The Party could not be overthrown from within'"

RapidSloth -> curiouswes , 15 Oct 2017 16:06

it does show when the government is exceeding it's authority

Except that when you look at how much power the constitution has given to the state in the past three decades the answer to the question of whenever or not US is an oligarchy is should be rather obvious....

hardmoney -> curiouswes , 15 Oct 2017 16:00
"...we need some way to separate fact from opinion."

The problem is and always has been, life is not black or white, but gray. One man's fact is another man's differing opinion.

fragglerokk , 15 Oct 2017 16:00
Can't recommend Requiem For The American Dream highly enough, absolutely required viewing for anyone wishing to understand the mockery of democracy under which we live.
fragglerokk -> Gamba Puirida , 15 Oct 2017 15:59
Requiem For The American Dream also ... any adult would be extremely enlightened by watching it.
curiouswes -> zippy200 , 15 Oct 2017 15:55

Trouble is liberals on the one hand bang on about proletariat solidarity, yet on the other, peddle identity politics and turn a blind eye at increasingly fragmented communities.

"The Jews, will not, replace us!" I'm so glad the "president" rebuked this blatant display of identity politics in Charlottesville.

Elgrecoandros -> CommanderMaxil , 15 Oct 2017 15:54
That is a semantic argument over whether or not his votes can be taken to represent his views. It is still calling for punishment of political opponents because they disagree with the political opinions of the poster.
GusDynamite -> Skip Breitmeyer , 15 Oct 2017 15:48
Look, I'm not fan of the left way of things but to claim they are entirely to blame is willfully ignorant of conservative and right wing failings. I can hardly expect either to see my point and accept that they're the problem, the best I can do is pause now and then I know that I am the problem as much as any and try to mind myself. If we all just took responsibility for ourselves left and right and anything in between would matter far less.
hardmoney -> curiouswes , 15 Oct 2017 15:40
Hi wes, hope you are doing well. Yes, the people DO have the power, but they either don't know how or choose not to use it. Similar to Dorothy and her ruby slippers in the Wizard of Oz; she had the power all along, but didn't know it.
curiouswes -> RapidSloth , 15 Oct 2017 15:31

There is also the tendency of treating laws like dogma and the constitution like the bible.

I wouldn't call the constitution a bible, but it does show when the government is exceeding it's authority. In times when some are actually concerned about whether or not the USA is a oligarchy, we need some way to separate fact from opinion.

ID7380890 , 15 Oct 2017 15:27
Spot on article. Lots of loopy comments. Personally I find the positions the Guardian takes to be those that further the interests of our ruling elite.
Where are the discussions about Trust Law which is nothing more than a huge tax avoiding scheme for the wealthy.

How about the control of the legal costs the high street solicitor can claim when he wins for the average person against the badly behaved housing associations and landlords, the insurers and employers. It has forced good solicitors out of these types of litigation. The result is occurrences like Grenfell Tower. The Guradian always goes on about Legal Aid. Solicitors don't need poverty rate legal aid. They need the corrupt, the greedy and incompetent to pay the same rates per hour for the small man's lawyers when they lose as they pay for their own lawyers. This funds all the work those small high street solicitors do in investigating cases that go nowhere, and enables them to provide free advice.
Or take the continuous false fears propaganda of those who wish to ignore the Leave vote. The majority voted for an end to cheap migrant labour driving down wages and living standards for the working population, for an end to an economy dominated by financial services and house price inflation.

AnonForNowThanks -> Light_and_Liberty , 15 Oct 2017 15:26
What "people?"

Racially polarized voting does not constitute a "people." It echoes a much earlier time, when there was a slave society on American land.

Roughly 1 in 4 active duty enlisted men and women in the US Army are black, compared with about 13.5% of the total population, hence 80%+ higher than their representation in the general population.

You don't see a problem here?

Dave514 -> AnonForNowThanks , 15 Oct 2017 15:25
Not o my the two major Vet Organization but a myriad of Vet support groups.
curiouswes -> hardmoney , 15 Oct 2017 15:24
Hi Money!

I think the people really do have the power. I think as long as we have the bill of rights, the power is still ours to retain or relinquish. Just because the scotus doesn't strike down unconstitutional laws like the patriot act, brady bill (gone at the moment but likely to come back), I don't think it means that we have no power. It is just that well informed people such as yourself have a difficult time informing those less informed because the media is engaged in a very effective endeavor to keep them misinformed. As you correctly pointed out in another post, people will believe anything. It is only those who really care enough to actually stop and think are what you are saying, only those will be informed despite the efforts of the media to keep them in the dark. If you can get enough people behind you, I think you could really change this. Me? I don't think the masses care enough. I think they are good people. It is just that they can't think ahead enough to see the crisis as it presents itself today. They don't feel the sense of urgency and as long as the media continues this game of deception, they will be more worried about the local football team they any existential threat until the media makes it out to be an existential threat.

thank you for all you do and have done!

Gamba Puirida , 15 Oct 2017 15:15
IMO, Robert Reich's movie - Inequality for all - should be played and discussed in every class around the age of 16 in western countries.
AnonForNowThanks -> Dave514 , 15 Oct 2017 15:14
Which brings to mind another question: who lobbies for the homeless veterans? The oligarchs depend on the armed forces for their vast wealth and position, then discard them.
SunwynRavenwood , 15 Oct 2017 15:13
Then, of course, there is the guillotine.
Arch Stanton -> newsfreak , 15 Oct 2017 15:13
As the News International scandal showed, the British justice system / rule of law is the finest legal system that money can buy.
Hornplayer -> vinny59er , 15 Oct 2017 15:09
Trump the Sequel you mean?
Dave514 -> Hornplayer ,