James Galbraith, in the first annual John Kenneth Galbraith lecture at the Canadian Economics Association, talks about the relevance of his father’s book The New Industrial State as a lens through which to see our current system:
One may argue that in the new millennium the large corporation has regained its central position on the American political scene – that we who are south of the border live in what I’ve called the “Corporate Republic.” Indeed one may argue for an understanding of the present American government almost precisely in terms of corporate governance as The Industrial State teaches it to be.
– We have the essentially clientelist character of decision making, unable to deliberate in an extended, goal-seeking way, because of the overriding necessity of deference to players who happen to occupy particular roles. Thus we have the capture of strategic direction – in national security, finance, regulation and other areas – by cliques who (like the Technostructure) can lay claim to expertise not available to outsiders, who can manufacture bogus expertise at will, claiming the privilege of dispensing it without fear of substantial contradiction.
– We have the public relations apparatus with the unique characteristic of a corporate propaganda machine, namely an inability to tell a truthful story that is consistent from one day to the next. Yet like the press releases of large corporations, this apparatus nevertheless expects and receives deferential treatment from the press. Meanwhile challengers and critics are treated as the financial papers handle trade unionists and tort lawyers.
– We had, until the rebellion of 2006, a rubber-stamping Board of Directors, to which in the modern United States we referred by the deferential title of “Congress.”
– We have the shareholders, nominal owners and participants in occasional elections, which the management was determined never under any circumstances to lose. Just how far that determination went, from rationing voting machines, to the “caging” of African-American voters (a felony crime), to the spurious prosecution of voter registration groups as revealed in the present scandal over the dismissal of United States Attorneys, and as many believe to electronic manipulation of the vote count itself, we are only beginning now to learn.
– Above all, we have the Chief Executive Officer as specialist in public relations – the man who spends his time on the golf course (or at the ranch) in order to show that he can, in order to advertise to the world that things are under control. Or more precisely to obscure the fact that they are not.
In this system, most of us are shareholders in the corporation, but we have only one or two shares, which buys us as individuals little or no influence. When it comes time for us to vote at the shareholders meeting, the small shareholders feel there’s little point in showing up or voting since their vote counts for little compared to the larger shareholders. Alienation and a sense of powerless ensues, and that suits the large shareholders fine.
The large shareholders are a fairly small group and it’s easier for them to get to know one another and form cliques in which they establish and finance an agenda that promotes their common interests. They have a tremendous organizational advantage in that respect that contrasts with the greater numbers and diverse interests and values of the smaller shareholders. The worst thing in their view would be for the small shareholders to organize to try to move the system in a direction that responds more effectively to their interests. A key element that defines the common ground among the large shareholders is that the smaller shareholders must be kept divided and their leaders coopted. On paper it’s a democracy; in practice it’s anything but. Politics is not about the system as it appears in a text book but how power is in fact distributed, and right now the power is concentrated in the hands of the large shareholders.
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