Center for a Stateless Society » crony capitalism

These days, some policy makers are discussing rolling back America’s system of mass incarceration. Figures from Eric Holder to Rand Paul are proposing eliminating many mandatory minimum sentences. States like Colorado are legalizing marijuana. But while some policy makers talk about shrinking the prison state, prison expansion continues to be pushed and passed by legislators.

On the federal level, the Bureau of Prisons recently allocated $54 million to open the Thomson Correctional Center, a maximum security prison in Illinois. Democrats like Senator Dick Durbin and Illinois Rep. Cheri Bustos have praised the funding, which redirects resources away from production for human needs and towards punishment and state violence. They praise it essentially as a stimulus package. Durbin said, “This is the news we’ve been waiting for. The funding that the Bureau of Prisons reported to Congress today is a significant investment in the economic future of Northern Illinois.” Similarly, Bustos said “This investment by the Bureau of Prisons in Thomson prison means that construction can soon begin, workers can soon compete for good-paying jobs and Northern Illinois will no longer be home to an empty prison.” According to Bustos’ press release, the prison is “expected to provide a major boost to the local economy and create more than 1,100 jobs. Annual operation of the facility is expected to generate more than $122 million in operating expenditures (including salaries), $19 million in labor income, and $61 million in local business sales.”

This tells us a lot about the economics of mass incarceration, but not in the way Bustos and Durbin might want us to think. These Democrats are entranced by Bastiat’s famous “broken window fallacy.” They ignore the opportunity costs of incarceration, from the redirection of resources away from peaceful production of goods and services to the caging of people who could make valuable contributions to communities if they were free. Moreover, this use of public prisons as make-work programs reveals that the perverse incentives at work in prisons operated by profiteers like the Corrections Corporation of America or the Management and Training Corporation also play out in the operation of public prisons. While the opportunity costs and tax costs are dispersed across the general population, and the human costs are concentrated upon people who are systematically disenfranchised, the benefits of prisons are given to concentrated interest groups like prison guards. Thus, public choice theory suggests that those who benefit have more incentive and ability to influence policy than those who bear the costs, so we see a rise in incarceration, regardless of whether it’s good policy for the general public. The perverse incentives are easy to illustrate when ruthless corporate profiteers are the beneficiaries and rent seekers, but local populations that want jobs as prison guards have the same types of incentive problems. This is why we need to push not just against for-profit prisons, but against all prisons. The economic logic of state financed prisons encourages a growing prison state.

In my home state of Utah, we’re seeing similar growth dynamics play out. The legislature recently passed bills to build a new prison and expand the Central Utah Correctional Facility in Gunnison. Bids by private contractors will be taken by the Prison Relocation and Development Authority (PRADA) for the construction of the new prison. This may also provide an opportunity for the prison to be operated by a for-profit contractor like the Corrections Corporation of America or the Management and Training Corporation. But even if only the construction of the prison occurs for profit, this is a clear example of prisons as cronyism, with obscene profits being made to service the exercise of state power. The expansion of the prison in Gunnison is largely being justified based on extrapolations from current prison growth rates. In other words, the state is spending money on the assumption that drug prohibition and other policies that facilitate mass incarceration will and should continue for the foreseeable future.

So far I’ve discussed the economics of prisons as make work programs and crony capitalist rent seeking. But the prison state also thrives and grows based on an ideological commitment to punishment. Center for a Stateless Society senior fellow Roderick Long has argued that libertarians should reject punishment on philosophical grounds, and embrace restitution and defense in its stead. Recent speculation by philosopher Rebecca Roache postulates that in the future, punishment could be exacerbated, with advanced drugs being used to make prisoners feel as though they are suffering for a thousand years over the course of a mere eight hours. This is horrific on multiple levels. The type of trauma that could be caused to whomever the state wants to harm is terrifying to contemplate. Moreover, the basic idea seems to be rooted in a purely punitive mentality. Roache asks, “Is it really OK to lock someone up for the best part of the only life they will ever have, or might it be more humane to tinker with their brains and set them free? When we ask that question, the goal isn’t simply to imagine a bunch of futuristic punishments – the goal is to look at today’s punishments through the lens of the future.” This implies that justice is served by making “criminals” suffer. This method would do nothing to protect people from violence by likely reoffenders, nor would it assist in securing restitution for victims of harms. It would symbolize raw punishment and sadism, providing neither protection nor restitution. It is punishment distilled to its sadistic essence, and it’s sick indeed.

The punitive mentality is running rampant in the operation of America’s immigration system, but immigrants and their allies across the country are resisting the state’s violence and racism. My most recent column discusses the hunger strikes going on in Tacoma, Washington. Eunice Lee of the ACLU has a good blog post about the hunger strikes as well. Meanwhile, in my home state of Utah, immigrants are facing the full brunt of these punitive policies. The Cañenguez family is nearing their deadline to “voluntarily” (as if) self-deport, after which they face direct violence from Immigration and Customs Enforcement. These migrants have not been charged with any crimes, and they are at risk of gang violence if the US government forcibly sends them back to El Salvador. Of course, the violence of the American state is its own form of gang violence. A gang with legal power is plotting to send them back into harms’ way at the hands of gangs that lack state authority. This is what immigration enforcement looks like. Please sign their petition to help this family be left alone by the state’s thugs.

In addition to immigrant resistance, opposition to the prison state continues to build from the radical wing of the transgender liberation movement. The Sylvia Rivera Law Project, a collective and law center led by transgender people of color, continues promoting prison abolitionist politics. The latest issue of In Solidarity, a magazine by their Prisoner Advisory Committee, was just released and was introduced and celebrated by former trans political prisoner CeCe McDonald. I highly recommend the issue, as well as everything else the Sylvia Rivera Law Project puts out.

The punitive state is continuing its growth and violent depredations, but resistance continues to build. Until all are free, let’s fight every day to stop the prison state.

“Crony Capitalism” And “Corporatism”: True Enough — As Far As They Go

Kevin Carson — Fri, 27 Dec 2013 19:00:55 +0000

Recently Mike Konczal (“‘Corporatism’ is the Latest Hysterical Right-Wing Accusation,” The New Republic, December 15) attacked “corporatism” as a pernicious right-wing meme, ostensibly aimed at exposing Obama’s policies for “enriching the well-off” but in reality a “reactionary” agenda freeing big business from accountability.

I think he underestimates the extent to which the “corporatism” and “crony capitalism” critiques reflect a genuine opposition to collusion between big government and big business. For some on the maintream Right, like Sarah Palin and Newt Gingrich, it’s obviously a facile political maneuver unmistakable apologists for a right-wing, pro-corporate economic agenda. But even in the case of some on the Right, I think opposition to “too big to fail” and bailouts is closer in spirit to those of us on the anti-corporate Left than to those on the Center-Left like Konczal.

Of course even the sincere right-wing critiques of “crony capitalism” are woefully inadequate. Most of them focus mainly on criticism of Obama-era policies like subsidies to Solyndra, or at most take a few shots at George W. Bush’s TARP program and Medicare D as deviations from Reaganite orthodoxy. At best, they see “corporatism” and “crony capitalism” as something fairly recent that started with the Federal Reserve Act or New Deal, as deviations from the purer laissez-faire of previous years.

These conservatives and right-wing libertarians drastically underestimate the extent to which state intervention has been structurally central to capitalism as a historical system since its very beginnings. The enclosure of open fields for sheep pasture in late medieval and early modern times, the Parliamentary Enclosures of common woods, waste and pasture in the 18th century, the colonial enclosure of land in the Third World and eviction of native cultivators, the engrossment of Third World mines and mineral resources, the enslavement of nonwhite populations … nothing remotely resembling the contemporary concentration of economic power and wealth, or the model of corporate capitalism most people think of as “normal,” would ever have been possible without all these forms of state intervention.

But Konczal himself has a lot in common with the right-wingers in underestimating the sheer statism of pre-20th century capitalism. As a left-wing market anarchist, it turns out I’m actually way more anti-capitalist than Konczal. Many of the things he considers a normal part of the market are things that I consider illegitimate state interventions in the market on behalf of plutocrats and big business: “Intellectual property,” absentee title to vacant and unimproved land and corporate limited liability, for example.

Konczal accepts as self-evident measures to restrain corporate power for the “general welfare” a lot of things from the “populist and progressive eras” that are in fact of central structural importance to corporate capitalism as we know it. Marxists considerably further to the left than Konczal, like Gabriel Kolko (Railroads and Regulation, The Triumph of Conservatism), have argued that the main function of the regulatory state was to cartelize the economy and restrict price and quality competition in order to make stable oligopoly markets possible for the first time.

On the other hand, Konczal points to several forms of statism that right-wing ostensible enemies of “corporatism” ignore. For example, the “hard money” policies that right-wingers support in fact require a state-enforced monopoly on the issue of currency. And while Tim Carney praises Bill Gates and Warren Buffet as non-corporatist (in fact I’ve seen them more often praised by “Progressives”), as Konczal points out “it’s impossible to imagine their wealth without elaborate systems of intellectual property protection or limited-liability corporate structures.” My main difference from Konczal is that I view “intellectual property” and limited liability as fundamentally illegitimate. My vision of a genuine free market economy is a lot closer to Kropotkin’s Field’s Factories and Workshops than anything the folks at FreedomWorks or the Club for Growth have come up with.

So the Right is entirely correct that big business and big government are in collusion under the Obama administration. Where they go wrong is failing to recognize that they’ve been in such collusion for the past 500 or 600 years.