Back in the ’90s, the Financial Times referred to the G8 countries and the Washington Consensus they enforced as a “de facto world government.” As if we needed any reminder that such a global corporate regime exists in practice, consider the Trans-Pacific Partnership currently under negotiation. Although in theory the authority of all treaties signed by the U.S. derives from the U.S. Senate, the TPP’s provisions are off-limits to members of Congress. The corporate interests affected by it, however, have an intimate role in drafting those provisions on a day-to-day basis:
“…the text of the TPP is classified and members of Congress have restricted access to it. If they do read the text, they are not allowed to copy it or discuss any specifics of it. However, more than 600 corporate advisers have direct access to the text on their computers” (Margaret Flowers and Kevin Zeese, “The Trans-Pacific Partnership: We Won’t Be Fooled By Rigged Corporate Trade Agreements,” Activist Post, Oct. 2).
Matt Taibbi’s term “Vampire Squid” is as good as any for capturing the essence of this world government, so let’s call it that.
Don’t get me wrong. I don’t mean the kind of world government the Birchers and “New World Order” people talk about, created by a tiny cabal of Bavarian Illuminati, space lizards or Elders of Zion who sit around a table chuckling evilly while they worship the Eye in the Pyramid and plot to put fringes on the American Flag.
To be sure the Vampire Squid includes a lot of really evil sociopaths — especially in some of the highest positions of state, corporate and financial power — and they do a lot of really dirty stuff. And they’re not united by any esoteric ideology like Illuminism, and they don’t get their marching orders from Bohemian Grove or Davos.
To the extent that venues like the CFR and Davos are important, they’re ephiphenomena of the fact that so much interlocking corporate and state power was concentrated in so few centers in the first place. When people with power get together they conspire — just as much so as Adam Smith’s “men of any trade.” Just look at the stuff that gets discussed any time two or more county commissioners get together with their real estate developer friends at the county executive officer’s backyard cookout. But the conspiracies are a fairly minor, secondary phenomenon.
The world government’s Vampire Squid character results, by and large, not from the character of the people making it up, but as an emergent property of all their actions taken together. The vast majority of people involved in maintaining it, including many of those at its top echelons, never think of it as a world government. Most of them are well-meaning bureaucratic mediocrities who see their jobs as promoting national security and economic growth — no ironic scare quotes — and literally cannot conceive of any alternative to the system they are serving. Some are quite idealistic. At worst, among the vast majority, are the Albert Speer types who simply transfer material from their in-box to their out-box with no idea of (or interest in) what it’s about.
To the extent that there are sociopathic types involved at its top levels, most of them are simply the kind of morally colorblind types we see in corporate C-suites and the top ranks of government agencies, whose empathy and insight have atrophied from years of a Stanford Prison Experiment Effect. There are plenty of genuinely malicious sociopaths working as water-carriers for the system in places like Gitmo and Abu Ghraib, or advising Central American death squads or Pinochet’s Ministry of the Interior. But they’re just the same kind of amoral hired muscle you always find in service to any level of power, gravitating into an ecological niche created by the system itself – they’re not at all essential to its functioning.
Nevertheless, the Vampire Squid functions as a world government, and it does monstrous things. There have been heartening signs in recent years that it has been weakening in power, and a growing number of states are defying it or taking stabs at forming a counter-coalition. Still, the Vampire Squid is by far the single largest concentration of power in the world, controls virtually all international economic regulation, and can inflict massive pain — ranging from economic damage to military attack — just about anywhere in the world if it wants to badly enough. Through the U.S. military and intelligence services, it has the power over “nations and kingdoms,” in Jeremiah’s words, “to uproot and tear down, to destroy and overthrow, to build and to plant.”
The Vampire Squid is an interlocking directorate of the global financial sector, the military and intelligence services of the US hegemon and its allies (and all their black budget operations going on around the world), the global drug cartels and the most powerful industrial sectors (most of their business models centered either on “intellectual property” or the warfare-security state)
In 2011 the Swiss Federal Institute of Technology finished a global power mapping project which found that a core of 1318 interlocking companies controlled 80% of the global economic product (Andrew Gavin Marshall, “The Global Banking ‘Super-Entity’ Drug Cartel: The ‘Free Market’ of Finance Capital,” October 28, 2012). Within this core was a “super-entity” of 147 closely connected corporations (mostly banks) with major shares of ownership in each other, that together controlled 80% of world economic output.
Although conventional center-left or liberal critiques frame this as the insufficient power of nation-states to constrain this super-entity, in fact the banks and other powerful corporations comprising this entity depend on the policies of nation-states for virtually all of their wealth. Every penny that goes into this super-entity is a rent on artificial scarcities of one kind or another enforced by states: Land rents resulting from state enforcement of absentee titles to vacant and unimproved land; interest on artificially scarce credit resulting from state monopolies conferred on the banking industry; profits extracted from workers as a result of policies that make self-employment and cooperative production artificially difficult compared to wage employment; rents on the artificial difficulty and cost of replicating physical goods or information, resulting from “intellectual property”; and rents extracted from the consumer as a result of all sorts of other restrictions on who’s allowed to produce for a given market.
Without all these rents on artificial scarcity and artificial property rights enforced by states, there wouldn’t be any money flowing into the super-entity for it to use to bribe governments. It would dry up like a garden slug with salt on its back.
And it goes without saying that the considerable share of the super-entity’s total revenues resulting from the global narcotics trade wouldn’t exist without states criminalizing drug use and sales. If you stop to think about it, the biggest supporters of the War on Drugs are the drug cartels, the banks that launder their money – and governments like the U.S. that use the drug trade as a source of revenue for illegally funding death squads and other black ops.
Consider Afghanistan. One of the reasons the Taliban were so unpopular, and so easy to overthrow, was that they took a genuinely puritanical attitude toward drugs. They did their best to stamp out the production of opium poppies – a traditional source of extra income for economically pressed Afghan farmers. As a result, Afghanistan went from being the world’s leading producer of opium to producing virtually none in areas under Taliban control. Only the Northern Alliance – America’s ally – freely allowed poppy cultivation in areas under its control. When the U.S. unseated the Taliban and replaced them with a government based on the Northern Alliance, Afghanistan quickly resumed its place as the world center of opium production.
What we have is an interlocking global government composed of the biggest banks, corporations in industries whose business models depend directly on the military-industrial complex or “intellectual property” law, the drug cartels, and the military and intelligence communities of the most powerful states.
Like the European colonial empires of a century ago, the super-entity depends on local governments to act as its enforcers over the ruled population. In fact we can consider it a government in the same sense as they were acting through other governments. As Brad Spangler once argued, the bag man who pockets the loot is as much a part of the gang of robbers as the guy actually holding the gun. Government is the political means to wealth – the coercive enforcement of artificial scarcity and artificial property rights to extract rents. The corporate ruling class is the party exercising this means.
Establishment defenders of “free trade” falsely so-called refer to the Ricardian concept of “comparative advantage,” as if international trade bore any resemblance to the phenomenon Ricardo described almost 200 years ago. Most of what we call global “trade” today isn’t what people traditionally think of as trade at all – it’s internal transfers of unfinished goods between subsidiaries of larger transnational corporations, or sweatshops operating on contract for transnational corporations. And these transnational corporate headquarters wouldn’t be able to maintain the control they do over outsourced production in dozens of countries without the help of IMF and World Bank policies, patents, copyrights and trademarks. There wouldn’t even be workers in the sweatshops producing on contract for them if it weren’t for the role of national governments (in collusion with the landed classes and agribusiness) in enclosing land and driving peasants into the wage labor market.
In the real world there has never been anything resembling an “international division of labor” based on some pristine version of Ricardian “comparative advantage.” The great majority of “comparative advantage” has been artificial, created and maintained by government force. Michael Hardt and Antonio Negri write in Multitude:
The classic textbooks of political economy by Adam Smith and David Ricardo present the international divisions of labor as if they were natural phenomena that intelligent capitalists, knowledgeable of the various costs and benefits, could put to use. There have always been, however, hierarchies of power that coordinate and maintain these international divisions of labor, from colonial administrations to postcolonial power relations.
Central to the current international division of labor are two forms of coercive intervention. First is the expropriation and enclosure of land and natural resources, and the eviction of peasant cultivators, going back to the earliest days of colonialism. It’s continued to the present day by post-colonial governments in collusion with local landed elites and transnational agribusiness interests – backed up, when necessary, by the military might of First World powers like the U.S. when the local peasantry gets out of hand. Second is “intellectual property” law, which enables transnational corporations to outsource actual production to cheap labor sweatshop havens abroad and then retail the output for a twenty-fold brand name markup. It took forcible expropriation and eviction to create a landless working class willing to accept sweatshop employment on the terms offered. And it took copyright, patent and trademark law to secure monopoly control of the terms on which the output of independently owned factories could be marketed in the west.
The Vampire squid is extraordinarily good at extracting blood from the peoples of the world.
Consider the typical cycle of World Bank loans and “privatization” in a Third World country. The great majority of World Bank loans since WWII have been to subsidize the infrastructures needed for Western capitalists to realize capital investments overseas. They’ve gone to build road and utility infrastructures without which the relocation of manufacturing facilities to the Third World, or the creation of large-scale export agriculture to support American consumption, would have been impossible. In many cases the country in question was ruled by a dictator or other authoritarian elites utterly accountable to their public, who ran up enormous debts on such “development” projects. Once incurred, the debt can be used as leverage to blackmail the country into adopting neoliberal “reforms” — including the sale of taxpayer-financed infrastructures to global corporations on terms set almost entirely by the latter. And in the process of such “privatizations,” Third World governments typically spend as much money upgrading the infrastructures to make them salable as they realize from the sale. In the final stage, the new corporate purchaser asset-strips the infrastructure to recoup its expenditure, hollows out its productive capacity, and jacks up rates on users.
The US warfare machine is a helpful addition to this process. The facility with which Paul Bremer’s Coalition Provisional Authority in Iraq sped up this normal privatization cycle, for instance, is remarkable. The installation of friendly dictators like Pinochet or Putin is also quite helpful.
The present system referred to as “free trade” in the American corporate press is as statist and corrupt as anything done in the worst days of Warren Hastings’ rule in Bengal.