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THE ISSUES

Originally Published: 1/2/2008

CORPORATISM & NEOFEUDALISM

By The Issue Wonk

 

Defining Corporatism, or Neo-Corporatism as some call it, is practically impossible. There are economic descriptors, political descriptors, social descriptors, and much debate about all of it. But the most common usage of the term holds that Corporatism is a political philosophy that promotes the interests of private corporations over the interests of the public. Given the wealth of the heads of these corporations, Corporatism can be viewed as a form of plutocracy.

 

According to some theories, Corporatism is an attempt to create a modern version of feudalism by merging corporate interests with those of the state. Known as “Neofeudalism” or the “New Feudalism,” it implies

 

a contemporary rebirth of policies of governance and economy reminiscent of those present in many pre-industrial feudal societies. The concept is one in which government policies are instituted with the effect (deliberate or otherwise) of systematically increasing the wealth gap between the rich and the poor while increasing the power of the rich and decreasing the power of the poor. This effect is considered to be similar to the effects of traditional feudalism. . . Among the issues associated with the idea of neofeudalism in contemporary society are class stratification, globalization, mass immigration/illegal immigration, open borders policies, multinational corporations, and “corporatism.”

 

. . .

 

Feudal systems . . . usually had the common feature of being ruled by an extremely wealthy and powerful upper class (nobles and aristocrats) with nearly complete legal power over the lives and well-being of the impoverished lower classes of laborers, craftsmen, service professionals, farmer workers, and bond-servants (individuals with debts so excessive that their only legal options were debtor’s prison, life as homeless “outlaws,” or service to the upper class as serfs or houseservants). The feudal upper classes were not subject to the same set of laws as the lower classes. Thus one of the basic criteria for categorizing a society feudalistic or neofeudalistic might be simply that its laws and customs are designed to best serve the landed and wealthy while offering substantially lesser legal protections to the landless and working classes and those in suffering under debt. Such a system need not evolve out of any deliberate desire to oppress the working classes but rather may arise simply through a process of changing the legal systems of a country over time to best serve the common interests of the upper classes (i.e. less taxation on unearned incomes and interest, more privileges for the wealthy than for the working class or landless, lesser penalties for committing crimes, right to purchase expensive exemptions from wartime drafts, etc.) (Wikipedia)

 

Is what we are seeing in the U.S. today Corporatism? Let’s look at some of the features as set out above.

 

Increasing gap between rich and poor. According to Johnston,1 “Income inequality grew significantly in 2005, with the top 1% of Americans – those with incomes that year of more than $348,000 – receiving their largest share of national income since 1928.” There’s no need to go into who has the power. It’s intuitive that the rich have more power than the poor. Class stratification goes hand-in-hand with income inequality. According to Long,2 “Social stratification refers to the division of society into layers (or strata) whose occupants have unequal access to social opportunities and rewards. People in the top strata enjoy power, prosperity, and prestige that are not available to other members of society; people in the bottom strata endure penalties that other members of society escape. In a stratified society, inequality is part of the social structure and passes from one generation to the next. . . People who occupy the same layer of the socioeconomic hierarchy are known as a social class.” It does appear that there is a growing gap between rich and poor, between upper and lower classes.

 

Globalization & the Rise of Multinational Corporations.  According to Wikipedia, globalization is a process “by which the people of the world are unified into a single society. This process is a combination of economic, technological, sociocultural, and political forces.” The rise of multinational corporations, the “outsourcing” of labor, and free trade have played crucial roles. “Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources. . . Critiques of the current wave of economic globalization typically look at both the damage to the planet, in terms of the perceived unsustainable harm done to the biosphere, as well as the perceived human costs, such as increased poverty, inequality, injustice and the erosion of traditional culture which, the critics contend, all occur as a result of the economic transformations related to globalization.” (Wikipedia) In other words, the inequalities driving us toward a new feudalism may be linked to the rise of multinational corporations and globalization.

 

Mass/Illegal Immigration and Open Borders. The rise of public outcry against illegal immigration has pointed out that “Corporatists” are in favor of a more “open border” policy. Even Michelle Malkin, a strong conservative who could be viewed as a proponent of Corporatism, called Bush on the carpet for his support of “open borders.”3 An increase in the illegal workforce, where illegal workers are paid significantly lower wages and no or few benefits, results in lower wages and less or no benefits for all workers -- a definite benefit to employers resulting in an increase in profits and more wealth for the wealthy. Additionally, having a large illegal workforce reduces the impact of workers’ unions, which also drives down wages and benefits. The advantages of immigration and open borders are numerous but they primarily accrue to the businesses that employ them.

 

Disparity in Legal Protections.  That disparity before the law exists is not in contention. Moran and Wildman4 stated that judicial decisionmaking and tax law illustrate “how racialized wealth disparities persist.” We’ve known for years that the disparity between sentencing for possession of crack cocaine, a choice of the lower classes, was significantly more stringent than for possession of powder cocaine, a choice of the upper classes.5 Luckily, this was recently remedied.6 What about debt? Wealthy people have plenty of assets to help them out when they get into debt. Lower income people used to have bankruptcy to help them out when they got into trouble, but Congress changed the rules to make it exceedingly difficult to utilize bankruptcy. The new law resulted in more protections for the corporations and fewer for the people.7 Remember the savings and loan crisis of the 1980s where taxpayers bailed out of the wealthy? Currently the president and Congress are looking at solutions to the mortgage crisis, but the policies are being dictated by the lender corporations.8 And, do I really need to remind you of the many “upper class” people in the news who get their hands slapped for the same things that you and I would spend months in jail? What about the commutation of Scooter Libby, a wealthy Dick Cheney friend who committed treason and is walking around free?9

 

Less Taxation on Unearned Incomes and Interest. We all know about the infamous Bush tax cuts that primarily benefit the wealthy.10 What I want to point out here, though, is the reduction of taxes on capital gains. Capital gains are the profit that result from the sale or exchange of an asset at an amount over the purchase price. This applies to everything, including stocks and bonds. For people making over $32,000 a year, capital gains, as well as interest income, are taxed at the rate of 15%. (Wikipedia) So, if you make $100,000 (adjusted gross income) in capital gains and interest, your tax rate on that money will be 15%. However, if you earn $100.000 (adjusted gross income) from wages, your tax rate is 28%. (See Internal Revenue Service tax rate tables.) Why should unearned income be taxed at a lower rate than wages? Because it makes the rich richer.

 

Thus we see the building blocks of a feudal state are all a part of Corporatism: Increasing the wealth of the already wealthy elite by reducing their taxation and allowing them to have different, less punitive, treatment under the law. Devaluation of the labor of the working class by allowing uncontrolled immigration, opposition to minimum wage laws, opposition to workers’ unions, and free trade policies which result in the loss of jobs. The rise of multinational corporations engaging in globalization which results in a further reduction of available jobs and destruction of the biosphere and increased poverty. No or little protection for financial difficulties of the lower classes. You might also add that the exorbitant cost of health care drives the working classes further into debt, a problem not experienced by the wealthy. (We should also include the feudal system of hereditary aristocracy which is seen today when a person’s family history is offered up as evidence of his/her qualification for holding public office.)

 

Corporatism is the super highway in creating a feudal state. Having been around since the Industrial Revolution, Corporatism was intermittently reigned in but started its latest rise after World War II and gained steadily until the 1980s when the “Reagan Revolution” catapulted it to the strength it has today. And while the problems and issues are largely seen as being promoted by Republicans, Wikipedia points out that it does not belong to one political party but is

 

emergent throughout the whole political system in all or at least several major parties. This definition describes a version of neofeudalism with its origin squarely in the realm of business interests and the interests of business owners actively advancing agendas that benefit them personally through political action committees and lobbying efforts directed at politicians not in one, but in every, political party. . . In this party-neutral definition there is no cabal or secret society deliberately guiding national politics, but rather the sum effect of the pressures put on politics by the wealthy and elite can be described as moving towards a sort of “new feudalism.”

 

Corporatism, as a means to the institution of neofeudalism, is largely focused on economics. The goal is to control the economy, control the money, control the wealth, and, thus, control the lives of the citizens. Another term closely related to these issues and one that is widely used in the American political lexicon is “privatization.” Privatization is “the transfer of ownership from the public sector (government) to the private sector (business).” (Wikipedia) In other words, the assets of the people, the “commons,” are transferred to corporations. Privatization is a tool of Corporatism.

 

That Corporatism is on the rise cannot be denied. That its purpose is to bring about a new feudalism is speculation. But the goal of instituting a new feudalism need not be present for that to be the result. We need to be cognizant of the possible outcome of these seemingly divergent policies and watchful of who is behind them and who profits from them. We must support politicians who will fight for policies that benefit all Americans and fight against policies that have no benefit other than to promote corporations and the wealthiest of the wealthy at the expense of all citizens.

 

_______________

 

1  Johnston, David Cay. The Gap Between Rich and Poor Grows in the United States. International Herald Tribune, March 29, 2007.

 

2  Long, Russ. Social Class (Stratification). Delmar University, August 3, 2007.

 

3  Malkin, Michelle. Bush’s Open Borders Platitudes, March 25, 2006.

 

4  Moran, Beverly I. & Wildman, Stephanie M. Race and Wealth Disparity: The Role of Law and the Legal System. Fordham Urban Law Journal, Vol. 4, No. 1219, 2007. Abstract published at Social Science Research Network.

 

5  Greenhouse, Linda. Justices Restore Judges’ Control Over Sentencing. The New York Times, December 11, 2007.

 

6  Fears, Daniel. For Crack Offenders, Earlier Shot at Release. Washington Post, December 12, 2007.

 

7  Sahadi, Jeanne. President Signs Bankruptcy Bill. CNN/Money, April 20, 2005.

 

8  Andrews, Edmund L. In Mortgage Plan, Lenders Set Terms, The New York Times, December 7, 2007.

 

9  Abramowitz, Michael. A Decision Made Largely Alone. Washington Post, July 3, 2007.

 

10 The Bush Tax Cuts: The Latest CTJ Data March 2007. Citizens for Tax Justice.

 

 

© The Issue Wonk, 2008

 

 

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