The Money Machine: Understanding The Crisis Of Corporate Imperialism

As I have indicated on my last two posts, here and here, the war in Iraq represents a fundamental crisis for corporate imperialism. Indeed, it is only one manifestation of that crisis. The others are global warming, the deteriorating dollar, and possibly “peak oil.” All of these intersect in that phenonemon I referred to as the “oil economy in my last post. It now occurs to me that the reason for this crisis needs to be explained in more detail. Indeed, the reason lies in the very nature of corporate capitalism.

The “essay that made me famous” — Defeat The Right In Three Minutes — described the rightwing agenda of the “cheap labor conservatives.” I set out the “what,” but I never really got into the “why.” Understanding why “cheap labor” — and a few other less critical components — are central to conservative ideology, is important to understand our present position, and what can be done about it.

So let’s start with a simple illustration of how capitalism works — the kind of simple illustration conservatives love. They like to use the local lemonade stand run by some neighborhood ten year old. He’s just like General Motors, doncha know. I’ve got a better example — using the same ten year old. Consider the lawn business. And by the way, you really can, no kidding, understand the impending global economic crisis starting right here. Come along and I’ll show you.

If you want to cut grass for your neighbors you need something really elementary, called a lawn mower. That machine is the core of your business, and they cost money. When you buy one to go into business — like my brother and I did, back in high school — you’ve made a capital investment. That’s what “capital” is. It is money invested in the machinery that produces goods and services. Now let’s look at the basic business model every successful grass cutting entrepreneur will eventually figure out.

Let’s start with the market, specifically, what the market will pay. The going rate to have your quarter acre postage stamp lot cut is 50 bucks. The question is how long it takes to earn that fifty bucks. You could use a human powered reel mower, take a half a day to do it, and strongly consider taking the afternoon off. Those babies are hard to push. The simple improvement of a gasoline powered engine — with corresponding additional investment — increases your productivity dramatically. Eventually, you will want one you can ride, with a sufficiently powerful engine to carry you, cut anything you’re likely to encounter, and do it quickly. In fact, industrial grade riding mowers can cut that quarter acre lot in 20 minutes. Subtract drive time, and you can do as many as two an hour — 20 a day, working 10 hours a day. And you can do 20 day in the summer, even if you have to work 12 hours a day.

That’s a thousand bucks a day. Cut it in half to 10 — one an hour. That’s five hundred bucks a day, 2500 bucks a week, 125 grand a year — only you don’t work all year. Okay, 60 grand a year. Oh wait, you can make 125 grand a year. Just buy another lawn mower. Of course, you’ll need someone else to run it, which is where things start to get interesting. You see, you have to pay that guy. How much? In fact, you could easily split it right down the middle, 25 for you and 25 for him. That’s a good deal for you. None of your time and energy is invested in delivering the service. You’re getting 25 bucks for an hour of HIS time. But of course, you invested in the machine. Industrial lawn mowers run around 8 grand, which means you will recapture your capital investment in 32 days.

Here’s the problem. So will he. More specifically, at 25 bucks an hour, and with a little personal thrift, your employee can save enough to buy his own lawn mower — and make the whole fifty bucks for himself. Then you have to find someone else to run yours, oh, and you have your former employee competing with you. Right now, you should be seeing why our landscaping entrepreneur has a definite interest in minimizing what he pays the help. He doesn’t want that employee to have enough to buy his own equipment, and become a competitor. The entire Republican cheap labor agenda can be understood with this simple example. They simply cannot allow too many entrpreneurs to have easy access to start-up capital. Instead, they require a work force who have no choice about working for that elite. It is an inherent structural demand of capitalism — and indeed, of any elite on top of any particular socio-economic system.

Contained within this basic model are a number of inherent tendencies. Capitalism is the creation of a production machine. Income is a function of turnover. The faster you can cut grass, or stamp out parts, or serve hamburgers, the more money you make. But you MUST keep that machine running, which means that your “money machine” needs constant demand for what it produces in the form of customers. It also needs constant demand for the money it creates. They’re called “employees.” Many businesses naturally have a never ending supply of customers. Grocery stores come to mind. Not only that, grass cutting — to continue our original example — has renewable demand since grass grows and constantly needs to be cut. Other businesses have no such built in constant demand. Do you really need another car every three years? You need a car, but every three years? How about computer hardware? Do you really need a new computer every two or three years? Does the new computer you buy really do anything your old computer wouldn’t? I’ve been using word processors since 1984, and I can tell you that the word processor was pretty much perfected back about 1990. The only reason I need a new one, is to run on the new machines.

Keep working and keep buying. That’s what the system eventually demands. What about savings, as some conservative cheerleaders suggest? Profit, including cutting costs, is for capitalists. Consumers need to keep spending. As the example above shows, the system actually winds up promoting waste. In the case of consumers, the point isn’t to get the equipment you need and make it last. It is to use it a while and throw it away — and buy another one. That capital equipment is humming along 24/7 making products. The owners need someone buying them. The fact that everybody who needs one already has a car, a computer, a refrigerator, a sofa, and a TV does manufacturers no good at all. They need you to buy another one.

This whole system requires energy – as in vast amounts that human beings are incapable of generating by themselves. Hence our dependence on fossil fuels. Here we have another example of “constant demand.” The machines themselves are consumers of fuel. Do you have a car? It has a gas tank, and that gas tank has to be filled over and over again. You might think of your car as a means of transportation, but the oil companies see it as the consumption side of their money machine. It burns oil as fast as they can refine it — making them money everytime your crankshaft turns over. Energy is the ultimate money machine at the very foundation of corporate capitalism.

This should clarify the situation in Iraq — including all of the Byzantine relationships among the various players there. The Persian Gulf is the gas tank of the industrial world. That’s why we’re there, and why we can’t “just leave.” It also puts Dubya’s collossal mismanagement of the whole business into stark relief. Controlling Iraq, and remaking the Middle East may indeed have made some sort of sense, from the point of view of a ruling class scion like Dubya. But you’d better do it right. Because as we now know, you can sure screw the pooch. Meanwhile, there are some bigger problems looming. We’re talking global warming and peak oil.

There are simple and obvious solutions to both of these problems. First, is simple conservation, primarily in the form of more efficient machinery. The second is finding a clean and renewable alternative energy source. The sun comes to mind, but there are others. Here’s the problem. These simple obvious solutions — to problems we’ve known about for years, if not decades — run counter to the structural demands of capitalism. Consume less? The system needs you to consume MORE. Free energy, anyone can access? The system prefers a finite resource, controlled by a small elite. Recall Bolivia, where Bechtel tried to monopolize drinking water — even persuading the Bolivian government to outlaw collecting rainwater. Now recall the language of “privatization” on the lips of every die hard rightwinger. Some extremists even want to privatize the roads, so that you can’t walk down the street without paying somebody for the privilege. They call that “freedom.” Go figure.

We are now ready for the ultimate paradox. You see, we have the technological capacity to produce everything we need, without working ourselves to death to do it, and without destroying the planet. In fact, our industrial technological capability is what has created “democracy” as a possibility. Prior to the industrial revolution, there was no democracy anywhere. Even the ancient Greek example wasn’t much of a democracy. It was more like a broadbased oligarchy, with a comparatively small segment of the population enfranchised. It is not an accident that concepts like “Democracy,” “human rights,” and “social justice” all came into existence along with the industrial revolution. Human powered economics requires serfs. Industrial economics does not — especially with the coming of the information revolution.

In other words, elites are obsolete. The only reason we are caught in this apparent trap of mindless rampant production and consumption for their own sakes, is to keep our vestigial elites safely ensconced in their positions of privilege. They need us. We don’t need them — unless we allow them, as we have, to get control of the machinery and keep us chained to it. The truth is that the oil economy is doomed, as is the consumption culture that is contemporary American society. They are doomed, because they are unsustainable — and we are rapidly approaching the limits of that consumption culture. The only question is what will replace it. We will either transform our centralized corporate dominated economy into a decentralized economic democracy, or we will re-establish something very similar to feudalism.

If you are a progressive activist, that is the long run you need to be thinking about. The neocons — starting with Leo Strauss himself — have been thinking about this stuff for decades.

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