There was a 1997 article, which later got republished online ten years ago, that I came across last week. The article in question was written by some Keynesian economic historian, Brad DeLong, who sought to address a question that has piqued my curiosity regarding “Fordism-Taylorism” since the Death of Bretton Woods. After the 1970s, we live in a world where Kapital flows more freely as units of Fiat Currency and where corporate power continues to be centralized into a smaller “Market” of Corporations with worldwide clout. In this world where Neoliberalism reigns without any serious opposition and backed by the Empire of Liberty, it has become fashionable to view the Planned/Command Economy as something archaic and outmoded. Even though the article is dated (DeLong alluded to the Dot-Com Bubble and incorrectly suggested that Apple might go under as a result), there are plenty of conclusions therein which remain valid three decades later. To begin, can any large Corporation assume the characteristics of a Planned/Command Economy within the confines of a Market/Mixed Economy?

DeLong argued that, in a Liberal Capitalist Parliamentary Democracy, Corporations function on a Production for Profit basis and supported by a Parliament operating on Production for Utility. These Corporations exchange goods and services for Kapital, which they in turn use to continue their production processes and absolve whatever Schuld they owe to lending privatized commercial banks at the Fractional-Reserve Banking System and shareholders at the Financial Markets. They are said to assume the characteristics of a Planned/Command Economy by establishing a hierarchical organizational structure where some governing body–the board of directors in this context–makes the key financial and economic decisions.

This is an understandable conclusion, given that most conceptions of the Planned/Command Economy rely on Intents of Command and Obedience, not the Incentives of Supply and Demand. Large Economic Organizations under Planned/Command Economies, if they are not Cooperatives, Small Businesses, Workshops or State Enterprises, tend to have hierarchical organizational structures. There is always some governing body within an Economic Organization determining what goods and services are to be made, what it will require and how much, and so forth. Without something like the Work-Standard, where all Currency is backed by the Quality of Arbeit, one must wonder if such an Economic Organization could exist in an actual Market/Mixed Economy. If so, then what forms could they assume and how could it survive and thrive on a purely Production for Profit basis?  

Fortunately, DeLong provides half of the answers to that question. Corporations have been able to survive in Market/Mixed Economies because of the following trends that have become constant since at least Death of Bretton Woods:

• Parliaments, whose activities always operate on Production for Utility, cannot be expected to acquire of its organizational needs from Civil Society alone. Barring the obvious sources of tax revenue, they can and will rely on whatever goods or services are being offered by Corporations. This becomes especially important if the Corporations in question are involved in economic activities that are strategically vital to the Liberal Capitalist nation under wartime conditions.
• Markets sometimes contain exceptions where it is necessary and proper for economic power to be concentrated in a small number of large, well-organized Corporations. There are certain production processes in economic life where the rates of Kapital Accumulation are simply too small to attract normal conditions and the overall costs are too high for smaller privatized commercial firms. Absent any nationalization on Parliament’s part, it becomes inevitable for certain production processes to be concentrated into a handful of Corporations.
• The increased importance of shareholders at the Financial Markets have made it possible for them to be vocal in how a Corporation operates. As Investors who invested Kapital into its economic activities, they do have a say on what the Corporation does. The amount of clout, however, is proportionate to how much the Investor has ownership over the Corporation.
• Together, Parliaments, Markets and the Fractional-Reserve Banking System all provide Incentives for Corporations to increase efficiency and cut costs to generate enough Kapital to satisfy all three. Each of them has their own vested interests in ensuring the survival of a Corporation. Parliaments view Corporations as convenient ways of sustaining Welfare Capitalist endeavors such as healthcare, pensions and insurance without running massive budgetary deficits. Markets and shareholders reward the ones that do well and punish those  that fail, ensuring that only the best will survive. And the Fractional-Reserve Banking System has found it necessary for Corporations to be well-supplied with enough Kapital to fulfill the aims of the other two.

Here, we find a convenient conceptual model of the Liberal Capitalism’s Tripartism, a “Social Corporatism” consisting of a triumvirate of Parliament, the Business Community, and the Fractional-Reserve Banking System. It is a stark contrast to traditional conceptions of Corporatism, where the State acts as the intermediate between the Business Community and Organized Labor. The Death of Bretton Woods demonstrated that Technology and Globalization can and will undermine Organized Labor, allowing them to be supplanted by the Fractional-Reserve Banking System.

Of course, I must restate that everything discussed thus far is only half of an earlier question. The other half concerns what forms would a Corporation, functioning as a Planned/Command Economy on a Production for Profit basis, assume in the Market/Mixed Economy of a Liberal Capitalist nation. It would have to be a very large Economic Organization with worldwide reach, widely traded on the major Financial Markets, viewed by shareholders and bank lenders as safe investments, has many lucrative government contracts with more than one Parliament, and offers generous social benefits, good wages, and/or labor union participation.

There are plenty of privatized commercial firms that contain aspects of those traits, but never do they exhibit all of them at once. If I had to hazard an educated guess on which Industry and Economic Sector that they might be a part of, I would assume the Corporation is involved in the Armaments Industry of its Manufacturing Sector. In other words, a Corporation that happens to be associated with a Liberal Capitalist nation’s Military-Industrial Complex.

Categories: Philosophy

Tags: Bretton Woods, Cold War, Corporatism, Economics, Finance, Fractional-Reserve Banking, Military-Industrial Complex, Philosophy, Politics, Psychology, Socialist Finance, Technology, Third Place, Work-Standard