Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
“American Exceptionalism;” or, It’s Not State Capitalism When America Does It

Auburn University philosophy professor Roderick Long coined the term “conflationism” for the tendency to confuse the free market — whether in accusatory or apologetic polemics — with actually existing capitalism. Left-conflationism is the practice of attacking the evils of actually existing corporate capitalism as if they were the result of “laissez-faire” or the “free market.” Right-conflationism is the mirror-image defense of the status quo, as if “the imagined virtues of the imaginary freed market constitute a justification for the reality of existing corporatist capitalism” — that is, cloaking the defense of corporatism in “free market rhetoric.”

The January 21 issue of The Economist, which is dedicated to the theme of “State Capitalism,” is a stellar example of right-conflationism. The writers equate “State Capitalism” to some degree of state ownership and/or control of business firms competing in the marketplace, or to what used to be called “industrial policy” (i.e. government directing investment funds to those it regards as economic “winners”).

State Capitalism includes the Chinese model, in which the state organizes the Chinese equivalent of vertically integrated zaibatsu and reserves a major share of seats in senior management for government officials; Russian-style kleptocratic or oligarchical capitalism; and the petrostate State Capitalism in which the state directs petrodollars into state-favored development projects.

Such forms of “state-directed capitalism,” of course, are contrasted with the wholesome Anglo-American model of “liberal capitalism.” You know — what Mitt Romney calls “Our Free Enterprise System.” The ’80s and ’90s, it seems, were an era of “free market triumphalism” under the Great Helmsmen Thatcher and Reagan.

Well, not quite. So-called “liberal capitalism” has its own “reserved chairs,” it seems — for former corporate management as political appointees in federal agencies, and for former regulatory officials in the senior management of large corporations. Anyone who’s seen the recent virally circulated Venn diagrams of the personnel overlap between Monsanto and USDA personnel, or Pfizer and FDA, will immediately know what I’m talking about. And US President Barack Obama — that “socialist” fan of Saul Alinsky we hear so much about — certainly seems to have reserved a lot of seats in his Cabinet for former Goldman-Sachs and Monsanto higher-ups.

I wonder what the writers at The Economist think of a model of “liberal capitalism” in which international “Intellectual Property” accords are drafted in secrecy by representatives of the Motion Picture Association of America and Recording Industry Association of America, and only afterward offered for review to other “civil society organizations.” Or in which MPAA chief Chris Dodd proudly announces that the Stop Online Piracy Act was drafted in a “democratic process” in which “all the major stakeholders” had seats at the table (“all the major stakeholders” apparently consisting of the music, movie and software companies).

I wonder what they think of a transnational corporate economy in which the major “Western liberal capitalist” players are dependent on direct state subsidies, state-enforced “intellectual property” monopolies, or both for their profits.

Think about it. First, you have firms directly plugged in to the military-industrial and security-industrial complexes, with the DOD or TSA as their primary customers. You have the electronics industry, whose R&D was primarily government-funded throughout the Cold War, and which is protected from global competition by the drastic expansion of patent protections under the TRIPS accord. You have the biotech and pharmaceutical industries, at least half of whose research is taxpayer-funded and which are heavily dependent on government patent enforcement for their monopoly profits and market shares. And you have corporate agribusiness — ’nuff said.

Subtract all this, and what do you have left? A model of capitalism in which the commanding heights of the economy are an interlocking directorate of large corporations and government agencies, a major share of the total operating costs of the dominant firms are socialized (and profits privatized, of course), and “intellectual property” protectionism and other regulatory cartels allow bureaucratic corporate dinosaurs like something out of Terry Gilliam’s Brazil to operate profitably without fear of competition.

Some “liberal capitalism.” Capitalist? Sure. Liberal? Not so much.

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